CJ Freshway Achieves 3.3% Operating Profit Margin in Q2, Highest in 5 Years

[Asia Economy Reporter Lim Hye-sun] CJ Freshway, a food ingredient distribution and group catering specialist under CJ Group, announced on the 11th that its operating profit for the second quarter increased by 603.7% year-on-year to 19.1 billion KRW. Sales amounted to 575.7 billion KRW, down 7.8%.

Accordingly, the operating profit margin relative to sales reached 3.3%, the highest in the past five years. Net profit for the period turned positive, increasing by 15.9 billion KRW to 13.2 billion KRW compared to the same period last year. The company explained that despite the spread of COVID-19, it was effective to reorganize the business portfolio focusing on high-growth areas such as kids and senior channels and manufacturing, based on differentiated capabilities.

By segment, the food ingredient distribution division recorded 435.3 billion KRW, down 12.3% year-on-year, but sales in the catering and dining-out channels increased by 21.5% to 249.6 billion KRW, reducing the decline. The catering channel showed a recovery to pre-COVID-19 levels as the number of school days for elementary, middle, and high schools increased compared to the previous year.

In particular, the kids and senior channels continued steady growth. Sales in the kids channel increased by 55.7% year-on-year. The positive impact came from not only supplying healthy and safe ingredients but also developing and providing various content for parents, childcare teachers, and infants. The senior channel also grew sales by 27.9% through customized services such as meal plans and educational support.

Sales in the group catering division rose 8.7% year-on-year to 118.6 billion KRW. Differentiation through various menus and special meals using a database of over 10,000 menu items led to a 93% increase in total new orders in the second quarter compared to the previous year. In particular, the industrial and office channels saw sales surge by 244%, supported by large orders from Korea Aerospace Industries (KAI), Samsung Display, and others.

Subsidiary Songlim Food also contributed to the growth. Songlim Food, which supplies sauces and other products to home meal replacement (HMR) and franchise channels, recorded sales of 12.5 billion KRW, an 18% increase year-on-year, driven by rising demand in dining out and HMR.

CJ Freshway plans to actively respond to the rapidly changing market conditions caused by COVID-19 by adding marketing and IT capabilities to its existing catering-focused business. Additionally, based on the concept of open innovation, it aims to concretize new businesses and enhance differentiation by advancing its core competencies in products and content.

A CJ Freshway official said, “Despite the difficulties caused by the spread of COVID-19 in the first half of the year, we were able to achieve meaningful results through selection and concentration to strengthen profitability,” adding, “In the second half, we plan to actively respond to market changes through the reorganization of management vision and mid- to long-term strategies.”

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