"CJ Emphasizes 'Beginner's Mind and Overcoming Crisis'... Year-End Personnel Move Key Points"

Possible Announcement as Early as This Week
Olive Young Avoids Worst Fair Trade Commission Sanctions
Performance-Based Renewal Appointments Expected

The year-end executive reshuffle in the business world is taking shape. Attention is focused on the personnel results of CJ Group, one of the major groups in the distribution sector, which has yet to announce its decisions. The uncertainty has been resolved as the Fair Trade Commission's investigation into CJ Olive Young, initially feared to face a fine bomb of several hundred billion won for violations of the Large-scale Distribution Business Act, concluded with a fine in the range of 1 billion won. This has led to expectations that the group will soon carry out its executive reshuffle. Chairman Lee Jae-hyun of CJ Group, who expressed concern about the stagnating growth of the company on the occasion of the group's 70th anniversary last month and emphasized responsibility to key management, is expected to focus on reforming underperforming group companies.

CJ CheilJedang Center

According to industry sources on the 11th, CJ Group is expected to announce the results of its 2024 regular executive reshuffle around the 18th of this month. This is nearly two months later than last year, when the reshuffle was conducted at the end of October. The delay is due to the executive evaluations, which form the basis of the reshuffle, starting two months later than early September last year, combined with the timing of the Fair Trade Commission's sanctions on Olive Young.

The industry is closely watching whether Lee Seon-jeong, CEO of Olive Young, will be reappointed in this reshuffle. Born in 1977, Lee became the youngest CEO in CJ Group last year and the first female CEO of Olive Young. Since her appointment, the company's performance this year has been decent, and the Fair Trade Commission's sanctions were not as severe as the company feared. Moreover, no legal actions were taken against current or former CEOs, leading to speculation that she might avoid a harsh reshuffle. Olive Young's cumulative sales up to the third quarter of this year reached 2.7971 trillion won, and operating profit was 274.2 billion won, surpassing last year's annual sales (2.7809 trillion won) and operating profit (271.4 billion won) within just three quarters. With some of the 'Fair Trade Commission risk' alleviated, there is also speculation that the company might resume its previously postponed initial public offering (IPO), aiming for stability.

Based on performance, the positions of the CEOs of CJ ENM and CJ CheilJedang are of interest. In last October's reshuffle, CJ Group appointed Koo Chang-geun, former CEO of Olive Young, as the 'relief pitcher' for CJ ENM, which had fallen into the red. Since his appointment, Koo has pushed for intensive restructuring to improve the financial structure of the entertainment division. Nevertheless, the company failed to rebound, posting losses in the first and second quarters this year. Key businesses such as media platforms, films, dramas, and commerce have underperformed, and the synergy with the ambitiously acquired U.S. production company Fifth Season has been slower than expected. However, in the recent third-quarter results, the company recorded an operating profit of 7.4 billion won, partially offsetting losses. A downside is the aftereffects of the organizational restructuring and downsizing initiated under Koo's leadership. An industry insider said, "The lack of synergy from mergers and acquisitions pursued by CJ ENM led to continued poor performance, and there was considerable internal dissatisfaction as employees bore the brunt of responsibility."

CJ Olive Young operating in downtown Seoul. Photo by Jinhyung Kang aymsdream@

CJ CheilJedang, a core affiliate of the group, is also experiencing poor performance as its bio-material business, including lysine, struggles. Excluding CJ Logistics, the consolidated operating profit for the third quarter this year fell 28.8% year-on-year to 275.3 billion won. Sales during the same period decreased by 9.1% to 4.6734 trillion won. While the food business division, the group's mainstay, showed growth by expanding its presence in overseas markets, the bio sector, identified as a future growth engine, continues to struggle due to the global livestock market downturn. Meanwhile, CEO Choi Eun-seok of CJ CheilJedang is approaching the end of his term in March next year, raising the possibility of changes.

Earlier, to commemorate the group's 70th anniversary, Chairman Lee Jae-hyun held a private 'strategy meeting' on the 3rd of last month with about 30 group affiliate CEOs and executives, emphasizing, "In a situation where the group's growth is stagnant, the sense of responsibility to recall the 'ONLYONE spirit' is more important than ever." The ONLYONE philosophy embodies Lee's management philosophy of creating products that are 'The First,' 'The Differentiation' (unique in the world), and 'The Best.' Having reaffirmed the original intention and expressed a strong will to overcome the crisis, it is widely expected that this executive reshuffle will convey a message. Other points to watch include the status of Kang Ho-sung, CJ's Chief of Management Support, who has expressed his intention to resign, and whether Chairman Lee's eldest son, Lee Seon-ho, head of CJ CheilJedang's Food Growth Promotion Office, will see his role expanded.

However, a CJ Group official drew a line, stating, "There is currently no set date or direction for the announcement of the executive reshuffle, and we cannot confirm any details."

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