The domestic food industry's performance in the second quarter is expected to vary depending on the results from overseas markets. While companies benefiting from the global popularity of K-food continue to show stable growth amid prolonged challenges such as high inflation, shrinking consumption, and exchange rate instability, corporations relying on the domestic market have seen a decline in revenue.
According to FnGuide, as of the 31st, CJ CheilJedang, the leading corporation in the domestic food industry, recorded a second-quarter consensus (average forecast from securities firms) of 7.3597 trillion won in revenue and 364.4 billion won in operating profit. While revenue increased by 1.7% compared to the same period last year, operating profit decreased by 5%. Jeong Han-sol, a researcher at DAISHIN SECURITIES, noted, "The continued poor performance in the food institutional sector through the first half of this year has made a decline in profitability unavoidable."
LOTTE Wellfood's projected revenue for the second quarter of this year is 1.0805 trillion won, with operating profit estimated at 46 billion won. Revenue is expected to increase by 3.5% compared to the same period last year, but operating profit is anticipated to decrease by 27.3%. The cost burden from Kakao, along with expenses incurred during the integration of meat processing plants, will be reflected in the performance.
The beverage and alcohol markets are facing similar situations. LOTTE Chilsung Beverage is projected to achieve revenue of 1.122 trillion won and operating profit of 57.6 billion won in the second quarter. Revenue is expected to increase by 2.1% year-on-year, but operating profit is estimated to decline by 4.3%. Lee Ga-young, a researcher at Samsung Securities, stated, "Due to changes in domestic consumption habits, all categories are expected to continue to experience reverse growth," and added, "Alcohol sales of soju, beer, and other categories are decreasing due to changes in company dining culture. Most beverage categories are stagnant, particularly fruit drinks, which are facing consumption decline due to preferences for low sugar."
HiteJinro is also expected to see a slight increase in revenue of 1.1% compared to the same period last year, but operating profit is projected to decline by 2.2%, reaching 66.8 billion won. The analysis from securities firms indicates that both beverages and alcoholic drinks have been affected by sluggish domestic consumption.
In contrast, corporations that have expanded their presence in global markets maintained stable performance in the second quarter. A notable example is Samyang Foods. Samyang Foods is expected to achieve revenue of 548.1 billion won and operating profit of 129.3 billion won in the second quarter, marking increases of 29.1% and 44.5%, respectively, compared to the same period last year. The expansion of exports focused on the U.S. and Europe and increases in production capacity played beneficial roles.
Nongshim also appears to be improving its second-quarter performance, driven by the combined effects of new product launches and price increases. Revenue is projected at 900.1 billion won and operating profit at 49 billion won, showing increases of 4.6% and 12.3%, respectively, compared to last year. The positive responses in the market for new products like Shin Ramyun Tumba and Melon Kick have contributed positively.
ORION is also consistently achieving results in overseas markets. The estimated revenue for the second quarter is 780 billion won, with operating profit projected at 124.3 billion won, reflecting increases of 8.4% and 2.2%, respectively, compared to the same period last year.
In the securities sector, there is an expectation for an overall improvement in the food industry's performance in the latter half of the year. Jeong Han-sol of DAISHIN SECURITIES noted, "In the case of CJ CheilJedang, performance improvements are expected in the second half with the recovery of domestic consumption and the resumption effect of the Schwann's dessert line that was halted due to tornado damage in the U.S." A representative of Yuanta Securities Korea remarked, "Nongshim's performance improvement is anticipated to take shape starting from the second half, with recovery in domestic profitability and the effects of price increases in North America and the performance of Shin Ramyun Tumba visible in the third quarter."
The beverage and alcohol sectors are no different. Kwon Woo-jung, a researcher at Kyobo Securities, stated, "In the third quarter, negative operating conditions still exist, such as hot weather and excess distribution inventory," but added, "Overall recovery expectations in the market due to consumer coupon distributions and rebounds in consumer sentiment are positive." Park Seong-ho, a researcher at LS SECURITIES, noted, "LOTTE Chilsung is expected to see a reduction in cost burdens from orange concentrate and coffee starting in the second half," and pointed out that benefits from government policies aimed at boosting domestic consumption are expected.