Lotte Rental 1Q Operating Profit 56.9 Billion KRW...33.3% Decrease YoY
Impact of Temporary Reflection of Proactive Investment Costs
Lotte Rental's operating profit for the first quarter of this year shrank to two-thirds of the same period last year. The company explained that this was due to proactive investments for business expansion, such as next-generation system development, IT investment, and commercialization of used car rental products.
Lotte Rental announced on the 8th that it recorded consolidated sales of 656.9 billion KRW and operating profit of 56.9 billion KRW for the first quarter of this year. These figures represent decreases of 8.9% and 33.3%, respectively, compared to the same period last year.
Lotte Rental explained that the poor performance was a temporary phenomenon arising from the process of adjusting its business portfolio. First, it attributed the sales decline to a 1.7% decrease in the number of authorized vehicles compared to the same period last year, as it focused on profitability-centered operations. Since the third quarter of last year, the company reduced the scale of used car sales and shifted to the My Car Save (used car rental) product, which led to a decrease in sales. The number of used cars sold in the first quarter of this year also dropped by 33.3% compared to the same period last year.
The decrease in operating profit was explained as a result of upfront investments for business expansion, including next-generation system development, IT investment, and commercialization of used car rental products.
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From the second quarter, the company plans to strengthen its core business competitiveness and actively improve its performance. It also intends to reduce accident-related costs and diversify its funding portfolio to establish a stable foundation. Choi Jin-hwan, CEO of Lotte Rental, stated, "The improvement in our organizational structure aligned with the new growth strategy is progressing smoothly," adding, "The new business strategy cycle, which began in the second quarter of last year, will be fully reflected in our performance starting from the second quarter of this year."
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