Kyochon Food & Beverage's new headquarters in Pangyo, Seongnam, Gyeonggi Province. [Kyochon Food & Beverage]
Kyochon Food & Beverage's new headquarters in Pangyo, Seongnam, Gyeonggi Province. [Kyochon Food & Beverage]

Kyochon Food & Beverage, the operator of the Kyochon Chicken franchise, said Friday its second-quarter consolidated operating profit fell 15.7 percent from a year earlier to 7.8 billion won ($5.5 million).

The company said the decline reflected its decision to absorb higher costs for key raw and subsidiary materials driven by a prolonged avian influenza outbreak that began in winter and external factors including tensions in the Middle East. Rising international crude oil prices also weighed on profitability by pushing up transportation and other selling and administrative expenses.

However, sales rose 4.9 percent year-on-year to 132.3 billion won, and net profit for the period climbed 13.3 percent to 5.1 billion won. The company attributed the improvement to the normalization of global store operations and sales expansion in new business areas such as alcoholic beverages.

"With raw material supply returning to normal, growing demand for chicken — fueled by the popularity of professional baseball, the World Cup and the peak Family Month season — drove the increase in sales," a company official said.

Kyochon Food & Beverage said it plans to strengthen its brand competitiveness in the second half of the year by stabilizing raw and subsidiary material supply and expanding its menu lineup.

"We will actively respond to demand from upcoming sporting events, the Boknal season and the year-end peak period, while continuing to grow sales and improve profitability through global business expansion and diversification of our new business revenue base," the company said.


korean@heraldcorp.com