[Click eStock] "Nongshim Expected to Surpass Q3 Expectations... Entering a Comfortable Earnings Growth Phase"

On October 23, Hanwha Investment & Securities stated that Nongshim is expected to deliver results in the third quarter of this year that surpass market expectations, diagnosing that the company is at the beginning of an earnings growth phase.

Han Yoojeong, a researcher at Hanwha Investment & Securities, said, "Nongshim's consolidated sales for the third quarter are projected to reach 873 billion won, up 2.7% year-on-year and 0.6% quarter-on-quarter. Operating profit is expected to be 47.9 billion won, an increase of 27.4% compared to the previous year and 19.3% compared to the previous quarter, exceeding the consensus estimate of 44.2 billion won."

In the domestic market, despite monthly volatility due to the distribution of consumption coupons, quarterly ramen sales are estimated to have grown by 2.9% year-on-year, with a market share of 55.7% following a turnaround in September. Han explained, "The impact of the approximately 7% price increase for ramen and snacks implemented in March 2025 was fully reflected from the third quarter, improving the operating margin in Korea to 5.0%, up 2.2 percentage points from the previous year."

However, the export segment was sluggish due to the aftermath of restructuring trading partners. Standalone export sales are estimated to have declined by 5.2% year-on-year, and combined sales in North America are also projected to have decreased by 3.3% compared to the previous year. She analyzed, "Due to a decrease in volume and increased promotional expenses, the operating margin in North America is estimated to be 5.1%, down 2.6 percentage points year-on-year."

Nongshim is expected to move out of a period of declining profits and enter an earnings growth phase starting this quarter. She stated, "After seven consecutive quarters of declining profits since the fourth quarter of 2023, the company has entered a growth phase from this third quarter. The base effect from one-off costs related to ordinary wages reflected in the fourth quarter of last year has alleviated the burden on profitability."

Future growth momentum is expected to come from the United States and Europe. She added, "The effects of the price increase implemented in the United States in July are expected to be fully reflected from the fourth quarter. In addition, sales of collaborative products with K-Pop Demon Hunters began in September in the United States, with additional SKU expansion underway in October."

She also stated, "The growth contribution from the European subsidiary, which is pursuing the expansion of new distribution channels and countries since its establishment, as well as the Noksan export-only plant scheduled for completion in the third quarter of 2026, will serve as grounds for future export sales growth and a valuation re-rating."

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