Lotte Chilsung Opens Era of 1 Trillion Won Q2 Sales... "Strong Performance in Alcohol and Global Business"

Sales reach 1.0992 trillion KRW, up 38% YoY
Operating profit 60.2 billion KRW, up 1.8% YoY
Beverage operating profit plunges, offset by Soju and Philippine Pepsi

Lotte Chilsung Beverage has entered the era of quarterly sales exceeding 1 trillion won. Riding the K-wave, soju exports have increased, and the acquisition of Philippine Pepsi as a subsidiary last year significantly contributed to its external growth.

On the 27th, when Lotte Chilsung Beverage announced a price reduction for the soju brands 'Cheoeumcheoreom' and 'Saero,' soju bottles were displayed on the liquor shelves at Hanaro Mart Yangjae Branch in Seocho-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Lotte Chilsung Beverage announced on the 30th that its consolidated sales for the second quarter of this year reached 1.0992 trillion won, an increase of 38.1% (303.1 billion won) compared to a year ago. This is the first time Lotte Chilsung Beverage's sales have surpassed 1 trillion won. Operating profit for the same period was 60.2 billion won, up 1.8% (1.1 billion won) from the previous year.

The strong sales performance of Lotte Chilsung Beverage was driven by the alcoholic beverage sector and its global subsidiaries. By business segment, second-quarter beverage sales were 537.9 billion won, unchanged from last year. Meanwhile, alcoholic beverage sales rose 2% (4 billion won) to 202.2 billion won compared to a year earlier. In particular, sales of soju and Soonhari Lemon Jin RTD increased by 8.4% (7.2 billion won) and 38.7% (1.4 billion won) respectively year-on-year, leading the growth in the alcoholic beverage segment.

Despite a stagnant domestic soju market, Lotte Chilsung Beverage has found a breakthrough by gaining popularity domestically with its zero-sugar soju 'Saero' and sparking a K-soju craze overseas. According to the Korea Customs Service, soju exports recovered to 100 million dollars for the first time in 10 years last year. Export value in the first half of this year also increased by 4.7% compared to the same period last year. Through this, Lotte Chilsung Beverage's exports to the U.S. market have grown at an average annual rate of 46% over three years.

The sharp increase in sales of Philippine Pepsi, which was incorporated as a subsidiary in the second half of last year, also led to Lotte Chilsung Beverage surpassing 1 trillion won in quarterly sales. Philippine Pepsi recorded sales of 286 billion won in the second quarter, a 10.6% (27.5 billion won) increase from the previous year due to improved business conditions.

However, Lotte Chilsung Beverage is struggling with operating profits stuck in a narrow range amid rapid external growth. In particular, operating profit in the beverage segment for the second quarter plunged 26% (12.4 billion won) year-on-year to 35.4 billion won. Increased cost burdens such as raw sugar, frequent rainfall due to a prolonged rainy season, and unstable weather had adverse effects. Additionally, the high exchange rate has worsened the external environment and increased business expenses. However, operating profit in the alcoholic beverage segment rose 35.8% (800 million won) to 3.2 billion won, and Philippine Pepsi also increased by 62.2% (2.6 billion won) to 6.7 billion won during the same period, offsetting the beverage segment's slump.

A Lotte Chilsung Beverage official said, "We plan to strengthen sales activities for new products such as Milkis Zero Strawberry & Banana and Chilsung Cider Zero Green Plum in line with the full-scale summer peak season in the second half of the year," adding, "In alcoholic beverages, we will continue to enhance soju competitiveness through the renewal of Chum-Churum and the launch of the new product 'Saero Apricot.'"

The securities industry expects Lotte Chilsung Beverage's operating profit to recover sharply in the third quarter due to the effects of price increases. IBK Investment & Securities forecasted, "Although some cost burdens such as orange concentrate will remain, considering the price increase effects of key products like cider and Pepsi, operating profit in the third quarter is expected to improve significantly."

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