Food Industry Feels Full This Fall... Q3 Performance Improvement

Q3 Earnings Expected to Improve Due to Major Product Price Increases
Dongwon F&B Operating Profit Up 11.8%

[Asia Economy Reporter Lim Hye-sun] The food industry, which raised prices of major products from the beginning of the year, received a satisfactory report card for the third quarter.

On the 5th, Dongwon F&B announced that its operating profit for the third quarter of this year reached 49.062 billion KRW, an 11.8% increase compared to the same period last year (43.855 billion KRW). Sales during the same period were recorded at 965.074 billion KRW, up 7.54%. The company explained that the acquisition of the meat processing company Sejung in July and the synergy with Dongwon F&B contributed to the improved performance.

Orion's operating profit for the third quarter grew 7.1% year-on-year to 116 billion KRW, more than doubling compared to the second quarter. Orion's operating profit increase is attributed to the price hike of Choco Pie by its overseas subsidiaries. In September, prices of four types of pies by the Chinese subsidiary were raised by 6-10%, and last month, the Russian subsidiary increased prices of all products by an average of 7%. In the fourth quarter, the price increase effect from overseas subsidiaries is expected to be fully reflected, leading to a more significant improvement in performance.

Lotte Chilsung Beverage's operating profit for the third quarter this year was preliminarily estimated at 85.4 billion KRW, a 46.3% increase compared to the same period last year. Sales rose 8.3% to 69.88 billion KRW. By business segment, the beverage division's operating profit increased 24.9% to 68.5 billion KRW, attributed to increased sales of Zero Cider and Pepsi Zero launched in February this year. The liquor division's operating profit surged 1096.8% to 11.9 billion KRW, due to higher operating rates at beer and soju factories and cost reductions by integrating logistics bases.

CJ CheilJedang also has a bright performance outlook. The consensus for CJ CheilJedang's third-quarter operating profit is 422.7 billion KRW, expected to increase 5.12% year-on-year. As the acquisition of Schwan's begins to bear fruit, the domestic food division is expected to show stable profitability improvement due to price increase effects.

Nongshim is also quickly recovering from the second-quarter performance slump. Nongshim faced difficulties as its main product, ramen, saw a significant drop in operating profit margin due to rising prices of key raw materials such as international wheat and palm oil. In fact, operating profit in the second quarter plummeted 58% year-on-year. In response, the company raised the shipment price of major ramen products, including Shin Ramyun, by 6.8% in August. The industry expects that the price increase in ramen shipments will result in an annual sales improvement of about 90 billion KRW.

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