[Click eStock] "Orion, Profitability Declines Due to High-Cost Raw Material Input"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities analyst maintained a buy rating and a target price of 170,000 KRW for Orion on the 17th. Although external growth continued, profitability slightly declined due to the use of high-priced raw materials.

Last month, Orion's consolidated sales by corporation amounted to 150.1 billion KRW, growing about 8% year-on-year. Operating profit was 17.6 billion KRW, down 9% during the same period. Analyst Eunjeong Park stated, “February is seasonally a period with fewer business days, but in terms of scale, it appears solid. However, due to the continued use of high-cost raw materials, most corporations experienced a decline in profitability compared to the same month last year.”

In China, sales increased 18% year-on-year to 59.9 billion KRW. Operating profit was recorded at 3.4 billion KRW, down 26%. Despite the Chinese New Year shipments being concentrated in January, all categories in China grew last month. Expansion of product displays and product competitiveness drove external growth. Choco Pie sales increased 25% year-on-year, and the snack segment grew 16%. Although manufacturing cost ratio rose by more than 5% due to the increase in major raw material prices, profitability decline was mitigated through cost management.

The domestic segment posted an operating profit of 9.8 billion KRW, growing 13%. Despite the COVID-19 base effect, external expansion continued due to new product launches. Analyst Eunjeong Park said, “Although high-cost materials were used, the cost ratio was maintained at the same level as the previous year due to reduced promotions. Efficient cost management led to profitability increasing by 2 percentage points year-on-year to 18%.”

Vietnam recorded sales of 22.1 billion KRW, up 6%, but operating profit decreased 35% to 3.2 billion KRW. Choco Pie and rice crackers appeared to continue growing. Russia's sales grew 11% to 7.9 billion KRW, while operating profit remained similar to last year at 1.2 billion KRW. Pie category strengthened, achieving nearly 40% growth in ruble terms.

This content was produced with the assistance of AI translation services.