Korea Investment & Securities said on Dec. 11 that overseas subsidiaries of Lotte Chilsung are expected to see profitability improvements begin in earnest next year. It maintained a "Buy" investment opinion and kept the target price at 160,000 won. The previous trading day's closing price of Lotte Chilsung was 129,500 won.
Korea Investment & Securities projected that in 2026, overseas subsidiaries of Lotte Chilsung will post 1.7026 trillion won in sales and 95.6 billion won in operating profit. Those figures would be up 8.9% and 39.0%, respectively, from a year earlier.
Kang Eun-ji, an analyst at Korea Investment & Securities, said, "The profitability improvement project that has been underway since 2024 will end in the third quarter of 2025, with one-off expenses such as plant consolidations wrapping up, and profitability will improve in earnest," and added, "From a mid- to long-term perspective, expanding regions for the overseas bottling business could contribute to future top-line growth and a higher share of overseas sales."
In particular, profitability improvements at the Philippines unit (PCPPI) are expected to stand out. Kang estimated PCPPI's sales for next year at 1.1504 trillion won, up 6.4% from a year earlier, and operating profit at 30.1 billion won, up 120%.
Raw sugar prices, which hit a five-year low, are also positive for Lotte Chilsung's profitability. Kang said, "With favorable harvests in Brazil and India, the main raw sugar producers, supply is expected to increase and raw sugar prices are falling," and noted, "Although the recent weakness of the won has increased cost burdens for imported materials and supplies, based on won input prices, raw sugar prices in 2026 are expected to fall by double digits from 2025." Brazil and India accounted for 24.2% and 15.5%, respectively, of global raw sugar output last year and this year.
Korea Investment & Securities projected that in 2026, Lotte Chilsung's sales will rise 5% from a year earlier to 4.2339 trillion won, with operating profit up 25.4% to 234.4 billion won.
This reflects not only improved results at overseas subsidiaries but also contributions from profitability gains in domestic beverage and liquor businesses through cuts in selling, general and administrative expenses and more efficient procurement of materials and supplies.
However, Kang said, "Fourth-quarter results this year are expected to be weak as one-off expenses, including expenses related to voluntary retirement and provisions for long-term employee benefits, are reflected," adding, "Caution is needed regarding increased short-term share price volatility."