Curly Tightens the Reins on Cost Cutting, Turns Black Ink

Decision to Absorb Subsidiary Plenary
Operating Loss of 77.8 Billion Won in First Half
Cost-Cutting Measures Taken to Achieve 'Turn to Profit'

Early morning delivery company Kurly is accelerating cost-cutting efforts by deciding to absorb its subsidiary Plannery. The company is determined to tighten its belt further and achieve profitability this year.

Seula Kim, CEO of Kurly

According to the distribution industry on the 7th, Kurly has decided to absorb its subsidiary Plannery and is currently proceeding with the merger process. Plannery operates the women’s career growth community ‘HeyJoyce’ and engages in brand marketing communication business. Kurly acquired 100% of Plannery’s shares in January last year and incorporated it as a subsidiary, but absorbed it into the parent company in just over a year.

Kurly explained that the merger is a decision to improve work efficiency. A Kurly official said, "Recently, while holding an offline Festa event, there was an opinion that it would be better to merge the two corporations into one to increase efficiency," adding, "After the acquisition, Plannery’s employees will continue to handle event operations and internal communications as before."

The decision also appears to reflect an intention to speed up profit improvement by reducing unnecessary expenses. The biggest benefit the parent company can enjoy when merging a wholly owned subsidiary is the reduction of overlapping sales and support organizations, thereby lowering cost burdens. For Kurly, which urgently needs to turn profitable, merging the subsidiary was an unavoidable option.

During the paid-in capital increase in May, Kurly offered investors who funded the company a drastic condition that if profitability is not achieved this year, they could acquire shares at a cheaper price. If losses continue this year, Kurly announced it would adjust the conversion ratio of convertible preferred shares held by anchor PE (KRW 100 billion) and Aspex Capital (KRW 20 billion) from 1:1 to 1:1.84. Convertible preferred shares grant the right to convert preferred shares into common shares, and setting a higher conversion ratio means the company is effectively lowering its own valuation.

To achieve profitability this year, Kurly needs to generate about KRW 80 billion in profit in the second half. According to the semi-annual report submitted last month, the operating loss in the first half of this year was KRW 77.8 billion. Thanks to reducing selling and administrative expenses by KRW 25 billion, the operating loss decreased by KRW 40 billion compared to the first half of last year (KRW 120.6 billion), but more significant cost-cutting is necessary to turn profitable. An e-commerce industry insider said, "Investors are no longer passively watching planned losses as before," and predicted, "Since it can also affect market trust, the company will do whatever it takes to improve profitability."

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