Commerce Was Good... CJ ENM's Q3 Operating Profit Slashed by 70% (Comprehensive)

CJ ENM's operating profit in the third quarter sharply declined by about 70% compared to last year.

CJ ENM Headquarters.

According to CJ ENM on the 8th, the operating profit for the third quarter was recorded at 7.4 billion KRW, down 71% from the same period last year. Sales decreased by 5.7% to 1.1109 trillion KRW. Considering that more than three securities firms had expected an operating loss of 16.4 billion KRW in the third quarter, the results appear to be better than market expectations.

By business segment, the commerce division performed well, but other areas showed sluggish results. The commerce division (CJ OnStyle) recorded an operating profit of 7.1 billion KRW, growing 23.2% year-on-year. Sales were down 2.9% to 300.3 billion KRW. Despite the seasonal off-season, profitability improved due to strengthening the one-platform strategy. CJ OnStyle stated, “We defended off-season profitability by focusing on a product portfolio centered on major brands and strengthening transaction volume,” adding, “We increased the proportion of travel, leisure, and rental transaction volumes, and boosted trendy TV transaction volumes such as fashion (A+G) and health supplements (Orthomol) by nearly 20% compared to the previous year.”

The media platform division’s sales recorded 314.3 billion KRW, down 8% year-on-year. Operating profit turned positive at 1.9 billion KRW. Although TV advertising revenue was sluggish due to delayed recovery in the advertising market, strengthening programming strategies across channels and platforms and easing the burden of amortization costs for TVING content had a positive effect.

The problem lies in the film and drama division. It recorded sales of 326.2 billion KRW and an operating loss of 20.4 billion KRW, posting a deficit. Although dramas such as “Soyoong-eopseo Geojitmal” and “Iroun Sagi” were simultaneously supplied to global platforms, increasing overseas sales, poor box office performance weighed on profitability.

The music division recorded sales of 170 billion KRW, supported by the successful debut of “Zero Base One” and growth in global convention sales, but operating profit fell 46% to 15.5 billion KRW. This decline in profit was due to last year’s strong performance. Zero Base One, which debuted in July, achieved a historic milestone as a “double million-seller” with their debut album selling 2.03 million copies and their second mini-album selling 1.45 million copies within one day of release. The “KCON LA 2023” held in August attracted a record-breaking 140,000 attendees, continuing strong convention live sales.

CJ ENM plans to focus on improving profitability by division starting in the fourth quarter. The commerce division will concentrate on fashion category sales during the FW season fashion peak in the fourth quarter. Additionally, they plan to maximize sales through large-scale one-platform promotions utilizing diverse forms of content commerce such as YouTube and short-form videos. CJ OnStyle stated, “We will expand the proportion of high-margin product portfolios,” and explained, “We will pursue profit growth through monthly large brand collaborations and live commerce enhancements such as the ‘OnStyle Fashion Week’ in November and the ‘Year-End Settlement Awards’ in December.”

The media platform division plans to strengthen content competitiveness centered on premium content to maximize advertising revenue and TVING viewership traffic. The film and drama division will focus on maximizing IP profitability by expanding global content distribution. For the music division, sales growth is expected to continue with year-end concerts by “JO1,” “INI,” “Lim Young-woong,” “Street Woman Fighter 2,” and the “2023 MAMA AWARDS” scheduled.

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