"Raw Material and Logistics Costs Surge" Orion's Operating Profit Last Year... Down 0.9% YoY

Last Year's Sales 2.3594 Trillion Won... 5.8% Increase YoY
Effect of New Product Launch and Overseas Market Expansion
Operating Profit Slightly Decreased Due to Increased Raw Material and Logistics Costs

[Asia Economy Reporter Eunmo Koo] Orion announced on the 9th that its consolidated operating profit for last year was tentatively estimated at 372.9 billion KRW, a 0.9% decrease compared to the previous year. During the same period, sales increased by 5.8% to 2.3594 trillion KRW.

Orion stated that although sales increased due to the launch of highly competitive new products and market expansion across all subsidiaries, operating profit slightly decreased due to soaring raw material and logistics costs.

By subsidiary, the Korean, Vietnamese, and Russian subsidiaries showed growth, but the Chinese subsidiary's operating profit decreased by 8.4%.

Orion Korea recorded sales of 807.4 billion KRW, a 5% increase from the previous year, and operating profit of 130.9 billion KRW, a 14.7% increase. Last year, 44 new products were launched, among which the granola product line saw sales grow by 43% compared to the previous year. Additionally, the 'Dr. You' brand contributed to growth by achieving annual sales of 68 billion KRW, a 48% increase.

Orion Korea plans to expand its beverage business this year by newly launching the health functional food 'Dr. You Immune Water' and diversifying the 'Dr. You Jeju Lava Water' product line.

The Vietnamese and Russian subsidiaries each achieved record annual sales last year. The Vietnamese subsidiary's sales grew by 16.9% to 341.4 billion KRW, and the Russian subsidiary's sales increased by 31.4% to 117 billion KRW.

The high growth in Vietnam is attributed to continuous new product development aligned with changing local consumer trends. The rice snack 'An' raised its market share to the mid-20% range, and new mass-produced bread products achieved annual sales of 17.5 billion KRW.

The Russian subsidiary's sales were driven by the popularity of Choco Pie products using jams such as raspberry. In the first half of this year, a new factory in Tver's Kriptsova is scheduled to be completed, aiming to expand Choco Pie supply and actively target Central Asia and Europe with new pie and biscuit products. However, operating profit decreased by 0.9% to 16.8 billion KRW due to global raw material price increases and the weakening of the ruble.

The Chinese subsidiary recorded sales of 1.1095 trillion KRW, a 1.7% increase, but operating profit fell by 8.4% to 167.8 billion KRW. This was due to soaring raw material costs, increased expenses from changes in the sales system, and a base effect from the temporary COVID-19 government subsidies in 2020.

Orion plans to focus on laying the foundation for the Chinese subsidiary's second leap this year. At the end of last year, the Chinese subsidiary appointed an R&D expert as CEO and shifted sales and marketing leadership to local management. Additionally, to maintain manufacturing costs, an integrated logistics system will be established, and various new products will be launched to target the market.

An Orion official said, "Despite the global economic downturn, we continued growth through the launch of highly competitive new products and the development of new markets. Although a challenging business environment is expected to persist this year, we will do our best to improve profitability through company-wide cost management, including deepening data-driven management and eliminating inefficiencies."

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