CJ CheilJedang said on the 12th that in the first quarter, excluding CJ Logistics, it posted sales of 4.0271 trillion won and operating profit of 148.5 billion won. Sales rose 4.3% from a year earlier, but operating profit fell 26% in the same period.
◇ Japan dumpling market share tops double digits for the first time
According to CJ CheilJedang, the food business division recorded sales of 3.0384 trillion won and operating profit of 143 billion won in the first quarter. They rose 3.9% and 11.2%, respectively, from a year earlier.
Overseas food business sales came to 1.5555 trillion won, up 4.5% from a year earlier. Global strategic products (GSP) such as dumplings led growth. In the Americas, growth continued on the back of expanded sales of GSP such as dumplings and ambient rice, and a rise in pizza market share. Dumpling sales increased 15%, and ambient rice sales rose 7%.
In Japan, boosted by the effect of the new Chiba plant that began operations in September last year, dumpling sales jumped 17%, and market share topped double digits (11%) for the first time.
Europe and the Asia-Pacific region each posted a strong growth rate of 17%. In Europe, dumplings as well as chicken and noodles proved popular, while in the Asia-Pacific region, front-loaded by dumplings, seaweed snacks, and ambient products, sales in Vietnam and Oceania rose 32% and 31%, respectively, from a year earlier.
Domestic food sales were 1.4829 trillion won, up 3.2% from a year earlier. Processed food sales rose 9% on the back of the Lunar New Year gift set effect and solid sales of new products tied to intellectual property (IP). IP-linked new products such as the Netflix "Culinary Class Wars" chef collection drove sales growth. In contrast, the ingredients business, which manufactures and sells sugar, flour, oil, and starch, saw sales drop 7% due to price cuts and weaker soybean meal market conditions.
The bio business division saw sales increase, but profitability deteriorated sharply. Bio sales were 988.7 billion won, up 5.7% from a year earlier. However, operating profit was 5.5 billion won, down 92.4%. The operating margin fell from 7.7% in the first quarter of last year to 0.6% in the first quarter of this year.
While expanded sales volumes of key products such as specialty amino acids and nucleotides drove sales growth, price declines in high-margin products weighed on profitability. CJ CheilJedang said the sales proportion of specialty products rose from 11% in the first quarter of 2020 to 21% in the first quarter of this year.
In the securities market, the view is that although prices of key products such as methionine and lysine have recently turned upward, there is a time lag before they are fully reflected in results, so the improvement effect will be limited through the second quarter.
Ryu Eun-ae, an analyst at KB Securities, said, "Methionine is estimated to account for 10% of bio sales at CJ CheilJedang. Due to reduced supply following shutdowns at some facilities of major Asian competitors, prices are rising more than 200% from previous levels," adding, "The degree of pass-through to customers and the scope of reflection will likely be determined by pricing power and the terms of period contracts."
Including CJ Logistics, CJ CheilJedang's first-quarter sales were 7.1111 trillion won, down 1.4% from a year earlier. Operating profit fell 28.5% in the same period to 238.1 billion won.
◇ "Operating margin will reach 4% this year"
CJ CheilJedang plans to push for profitability improvements in the second quarter as well, focusing on overseas food and bio businesses. At the earnings release that day, CJ CheilJedang said, "Excluding CJ Logistics, sales this year will post a mid-single-digit growth rate, and the operating margin will be around 4%."
In the food business, the company will focus on expanding GSP sales, including dumplings, in key overseas regions. In the Americas, it will roll out digital marketing and the "bibigo for it" campaign centered on dumplings and ambient rice to raise awareness of the Bibigo brand and push to expand the Asian food category. In Europe and the Asia-Pacific region, it plans to strengthen the lineup of core products such as dumplings, chicken, and noodles and expand entry into new channels.
In Korea, the company aims to increase products tailored to health-management trends such as high protein and low sugar and expand sales of new products such as "Sovava Golden Holic." It plans to raise both growth and profitability through innovation in the online channel structure and expense efficiency.
The bio business division will pursue a recovery in results centered on specialty products. Improvements in the price spread between soybean meal and corn could act as a positive factor for a recovery in demand for feed-use amino acids. The company plans to diversify feed-use demand for arginine and expand sales for food use, focusing on the North American sports nutrition market.
A CJ CheilJedang official said, "In the second quarter, we plan to accelerate the expansion of new K-food territories overseas by putting GSP, including dumplings, at the forefront in key regions," adding, "We will work harder to improve profitability through expanded bio sales and management efficiency."