Operating Profit Boils Again... Ramen Industry Overcomes the Difficult Period

Last Year's Cost Burden Causes Performance Drop
4th Quarter Rebound Due to Price Increase Effect
Export Uptrend, Record High Performance Expected

[Asia Economy Reporter Seungjin Lee] Although the operating profits of the three major ramen companies (Nongshim, Ottogi, and Samyang Foods) dropped sharply last year compared to the previous year, the effect of the price increase in the fourth quarter was fully reflected, helping them overcome the difficult period. Exports driven by the Korean Wave also showed an upward trend, and the highest performance is expected this year.

Overcoming the ‘Cost Burden’ Hurdle

According to financial information firm FnGuide on the 13th, the operating profits of the three ramen companies are all expected to have declined last year. Nongshim’s operating profit was recorded at 106 billion KRW last year, a 35% decrease compared to the previous year. Ottogi is expected to have decreased by 16% to 167 billion KRW, and Samyang Foods by 37% to 60 billion KRW.

Although operating profits decreased, the situation is not bad. Compared to 2019, before COVID-19, all three companies increased their operating profits by 10-30%. In particular, with the price increase effect reflected in the fourth quarter, there are forecasts that this year’s performance will surpass 2020, when demand surged due to ‘ramen stockpiling.’ In August last year, the three ramen companies simultaneously raised ramen prices by 6.8-11.9% due to rising raw material costs. As a result, Nongshim’s operating profit in the fourth quarter of last year increased by 26% compared to the previous year.

‘K-Ramen’ Expanding Globally

The upward trend in exports is also a positive factor for the three ramen companies. Riding the Korean Wave sweeping the world, including the Netflix drama ‘Squid Game,’ ramen export value last year reached an all-time high.

According to the Korea Customs Service and others, ramen export value from January to November last year was 607.9 million USD, a 10.6% increase compared to the same period the previous year. This already surpassed the previous annual record of 603.57 million USD in 2020 and is 3.3 times the 186.73 million USD recorded ten years ago in 2001.

By country, the export values to Japan, Taiwan, and Thailand, ranked 3rd, 4th, and 5th respectively, showed significant increases. These countries had already exceeded the total export value of the previous year by November last year. Although China and the United States, ranked 1st and 2nd in export value, had not reached the previous year’s export value as of November, considering December’s export figures, they are expected to achieve similar export values to the previous year.

Shin Dong-won, Chairman of Nongshim, emphasized in this year’s New Year’s address that since the status of ‘Shin Ramyun’ is rising overseas, focus should be placed on accelerating overseas business growth. Nongshim plans to complete the establishment of its second factory in the United States within this year at the earliest and start operations next year. Samyang Foods, following the establishment of its U.S. subsidiary Samyang America last year, is preparing to establish its Chinese subsidiary Samyang Foods Shanghai Co., Ltd. It is also expanding into the Middle East, including Syria and Lebanon.

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