Hit by Sluggish Domestic Demand... CJ CheilJedang's Q2 Operating Profit Down 11%

Sales Growth in Overseas Food Business Driven by Japan and Europe
Domestic Food Business Operating Profit Plunges 30% Amid Weak Consumption
Bio Business Achieves Performance Growth Through Expanded Lysine Sales

CJ CheilJedang continued its overseas market growth in the second quarter of this year, driven by increased brand recognition for products such as Bibigo. However, sluggish domestic consumption led to a slowdown in its domestic food business, resulting in a less-than-ideal performance.

On August 12, CJ CheilJedang announced that its second-quarter sales, excluding CJ Logistics, were tentatively tallied at 4.3224 trillion won, a 0.2% decrease compared to the same period last year. Operating profit for the same period was 235.1 billion won, down 11.3%. On a consolidated basis, including its subsidiary CJ Logistics, sales stood at 7.2372 trillion won, showing a slight decrease of 1.5 billion won year-on-year, while operating profit fell by 7.0% to 353.1 billion won.

By business segment, the food business posted sales of 2.6873 trillion won, a 1% decrease from the same period last year, and operating profit dropped by 34% to 90.1 billion won. In the domestic food business (sales of 1.3185 trillion won), online processed food sales grew by 24% year-on-year, but overall sluggish domestic consumption led to a continued downturn in offline channels, resulting in a 5% decline in sales.

Overseas food sales reached 1.3688 trillion won, a 3% increase compared to the same period last year, maintaining growth momentum. This is attributed to the rising recognition of Bibigo and expanded entry into major distribution channels in key markets such as the United States, Europe, Oceania, and Japan, accelerating the 'K-Food global territory expansion.' In North America, which accounts for the largest share of overseas sales, robust growth in frozen rice, chicken, rolls, and pizza drove sales to 1.112 trillion won.

In Japan, a key region for new market expansion, sales of the fruit vinegar drink 'Micho' and dumplings surged, resulting in 37% sales growth. Notably, after securing dedicated Bibigo brand shelves at major retailers such as Aeon, Costco, Amazon, and Rakuten, the company recently expanded to nationwide stores of the major platform Don Quijote. It is also accelerating local business expansion by constructing a new production base in Chiba Prefecture.

Growth in Europe is also progressing smoothly. In the first quarter, following entry into French retailers E.Leclerc and Carrefour, Bibigo products were launched in the UK's major distribution channel Morrisons, resulting in a 25% increase in sales.

The bio business segment recorded sales and operating profit of 102.4 billion won, up 2% and 8%, respectively, compared to the same period last year. Despite a high base effect from high-value-added items such as tryptophan and specialty amino acids last year, sales and operating profit both increased due to higher lysine prices and expanded sales of soy protein concentrate (SPC). In particular, feed-grade histidine, one of the specialty products, achieved an impressive 88% growth rate, driven by expanding production and global market share in response to continued demand growth in the salmon feed market.

The Feed & Care segment saw sales decrease by 3% year-on-year to 555.3 billion won, but operating profit increased by 25% to 42.6 billion won. While sales declined somewhat due to lower feed prices, operating profit improved significantly thanks to strong performance in the Vietnamese livestock business and structural improvements focused on profitability.

CJ CheilJedang plans to accelerate the expansion of K-Food's global territory in the second half of the year through the establishment of a production base in Japan and the scaling up of global strategic products (GSP). For the domestic food business, the company aims to drive sales growth by accelerating digital transformation and continuously launching products that reflect consumer trends such as health and convenience.

The bio business segment will continue its growth by leveraging 10 production bases established across the globe, including in the United States, and maintaining cost competitiveness. The company will also focus on diversifying its specialty product portfolio, including arginine, histidine, valine, and TasteNrich. In particular, for lysine, the business environment is expected to remain favorable due to tariffs imposed by the European Union and the United States on Chinese products.

A CJ CheilJedang spokesperson stated, "We will strengthen our structural competitiveness with a spirit of being the first, the best, and the only one, while accelerating our leap to become a global leading company through innovative growth and securing future growth engines."

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