[Click eStock] "Nongshim Misses Estimates... Needs to Prove Overseas Growth Potential"

On February 13, Korea Investment & Securities maintained its "Buy" rating and target price of 450,000 won for Nongshim, stating that "it is time for the company to prove the growth potential of its overseas sales."

On the same day, Kang Eunji, a researcher at Korea Investment & Securities, commented, "For the time being, both domestic and U.S. operations will continue to face the burden of promotional expenses. This is because domestic consumer sentiment remains subdued, while competition in the U.S. ramen market continues to intensify."

In the fourth quarter of last year, Nongshim reported sales of 855.1 billion won and operating profit of 20.4 billion won, down 0.2% and 47.6%, respectively, compared to the same period a year earlier. Both sales and operating profit fell short of the market consensus by 3.2% and 46.0%, respectively.

Kang analyzed, "A one-off cost of 9 billion won related to ordinary wages was incurred, and profitability deteriorated due to the increased burden of promotional expenses both domestically and overseas, as well as higher raw material costs stemming from rising palm oil prices."

In Korea, despite strong sales of Shin Ramyun Tumba, revenue growth was limited by weakened consumer sentiment. Profitability declined due to the ongoing burden of promotional expenses since the second quarter of last year.

Overseas, it is estimated that Nongshim's U.S. subsidiary saw double-digit growth in shipment volume, driven by the operation of a new line at its second plant and expanded shelf space at Walmart. However, profitability declined as promotional spending increased during the peak season and for test sales promotions.

Kang pointed out, "The company needs to demonstrate the sustainability of the expanded Walmart shelf space and prove the growth potential of overseas sales through the global launch of Shin Ramyun Tumba."

She added, "In the first half of this year, Shin Ramyun Tumba is scheduled to be launched in global markets, including key U.S. distribution channels, as well as China and Japan. If a European sales subsidiary is established in the future, export volumes to Europe are also expected to rise rapidly, contributing to improved profitability."

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