Pulmuone Grows Domestically but Continues Losses in US and Japan [Click e-Stock]

Hopes Pinned on U.S. Rebound and Strong Growth in China

Pulmuone delivered solid results in the domestic market during the second quarter of this year, but failed to avoid losses overseas. Analysts point out that improving performance in the United States and Japan remains a key challenge.

On August 18, Yuanta Securities maintained its target price for Pulmuone at 21,000 won and its "Buy" investment rating, citing these factors. The previous trading day's closing price was 15,440 won.

In the second quarter of this year, Pulmuone posted consolidated sales of 839.1 billion won and operating profit of 19.6 billion won, up 5.8% and 16.1% year-on-year, respectively. These results were in line with market expectations (consensus).

The strong performance was attributed to the domestic food manufacturing and distribution segment, which implemented new product and high-margin channel strategies. Domestic food manufacturing and distribution sales reached 417 billion won, with operating profit at 24.6 billion won, marking record-high quarterly profitability. Seasonal products such as cold buckwheat noodles and naengmyeon, along with robust growth in "Pulmuone Danone" Greek yogurt, drove top-line expansion. The business-to-business (B2B) segment also saw improved margins thanks to new order growth and Foodmerce's channel strategy.

However, overseas performance was lackluster, with sales of 149.3 billion won and an operating loss of 7.8 billion won. In the United States, sales declined 3.6% year-on-year to 98.2 billion won due to adjustments in club channel sales, and the loss widened. In Japan, ongoing restructuring led to sluggish sales and a continued burden of fixed costs, resulting in sustained losses. On the other hand, China recorded sales of 29.6 billion won, up 29.8% over the same period. The company maintained profitability there, aided by strong performance in membership channels and frozen gimbap sales.

For the second half of the year, Pulmuone is pinning its hopes on a rebound in the U.S. market and continued growth in China. In the U.S., the expansion of tofu distribution and the full-scale launch of private brand (PB) products from the second quarter are expected to narrow losses. In China, growth is projected to continue through an expanded SKU lineup of frozen gimbap products. However, in Japan, the company expects only limited contribution to earnings until restructuring is completed in the fourth quarter of this year.

Domestically, the seasonal effect in food manufacturing and distribution is expected to continue, while the food service and distribution segment is likely to benefit from large-scale new concession and group catering orders.

Son Hyunjung, a researcher at Yuanta Securities, commented, "Stable growth in domestic food manufacturing and distribution and strong growth in China are positive, but volatility in net profit due to financial costs and exchange rate fluctuations poses a short-term risk. A rebound in U.S. subsidiary performance will be the key variable for a revaluation of the share price."

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