Bio Business Struggles... CJ CheilJedang's Q2 Operating Profit Down 31.7% (Comprehensive)

Poor Sales of Essential Amino Acid 'Lysine' for Pig Feed
Food Division Sales Slightly Increase
Strengthened Position in North American Market

CJ CheilJedang managed to perform well in its core domestic and international food business divisions despite cost pressure, but struggled in its bio and materials business divisions, resulting in a weak performance in the second quarter of this year.

CJ CheilJedang CI

CJ CheilJedang announced on the 7th that its consolidated operating profit for the second quarter of this year was preliminarily estimated at 344.6 billion KRW, down 31.7% compared to the same period last year. Sales decreased by 4% to 7.2194 trillion KRW, and net profit fell by 49.6% to 127.5 billion KRW. Excluding the performance of CJ Logistics, a parcel and logistics subsidiary, operating profit decreased by 40.1% to 235.8 billion KRW, and sales dropped by 3.7% to 4.4233 trillion KRW.

The bio business division, which focuses on amino acids for feed additives, had a significant negative impact. Sales in this division for the second quarter were 892.6 billion KRW, down 20% year-on-year, and operating profit fell 76% to 39.8 billion KRW. This was due to a decrease in sales volume and price declines of major products such as lysine, an essential amino acid used in pig feed. This is closely related to the sluggish domestic demand in China, the largest consumer base, and the slow recovery of the global livestock market. As of the 31st of last month, the international lysine price was about 9.4 yuan per kilogram, down 22.7% compared to the same day last year. Earlier, CJ CheilJedang’s bio business division also saw weak lysine exports in the first quarter of this year, with operating profit dropping 89% year-on-year to 12.8 billion KRW.

The FNT (Food & Nutrition Tech) business, which focuses on seasoning materials and future food materials, also saw a slowdown in demand recovery and a delay in the China reopening effect, resulting in sales of 153.4 billion KRW, down 26% year-on-year. Operating profit was 44.5 billion KRW, down 17%. CJ CheilJedang stated, "Although the price of major products declined due to the delayed recovery of the global livestock market, the proportion and profit of high value-added items such as tryptophan, valine, arginine, and isoleucine increased," adding, "The bio and FNT business divisions plan to restructure their portfolios around high value-added specialty items to strengthen market dominance."

CJ CheilJedang Q2 Performance. The left side excludes CJ Logistics performance, and the right side includes CJ Logistics performance figures.
[Photo by CJ CheilJedang]

Meanwhile, CJ CheilJedang’s domestic and international food business division recorded sales of 2.7322 trillion KRW in the second quarter, up 2% year-on-year, while operating profit decreased by 15% to 142.7 billion KRW. Sales slightly increased as new products settled in the market and sales of home meal replacement (HMR) products grew. The overseas food business also continued to grow due to strong sales of K-food global strategy products such as dumplings, chicken, sauces, kimchi, and seaweed. By region, sales in the North American market increased by 13%, and the dumpling market share solidified at 49%, maintaining the top position. The leading frozen pizza brand 'Red Baron' of Schwan’s, a U.S. company acquired by CJ CheilJedang, surpassed Nestl?’s 'DiGiorno' to become the market leader for the first time.

A CJ CheilJedang official said, "Positive signals have been confirmed in domestic processed food demand," and predicted, "Food sales recovery is expected to accelerate in the second half of the year."

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