Liquor division's operating profit rises 24.1%; company vows to focus on efficiency and profitability

A concept pop-up store for Lotte Chilsung Beverage's soju brand Saero, presented in Seongsu-dong, Seoul. [Lotte Chilsung Beverage]
A concept pop-up store for Lotte Chilsung Beverage's soju brand Saero, presented in Seongsu-dong, Seoul. [Lotte Chilsung Beverage]

Lotte Chilsung Beverage said Monday its third-quarter consolidated operating profit fell 37.9 percent from a year earlier to 57 billion won ($42 million). Sales declined 2.7 percent to 1.05 trillion won, while net profit dropped 34.6 percent to 40.5 billion won.

The beverage division posted third-quarter standalone sales of 513.3 billion won, down 4.7 percent, with operating profit tumbling 47.4 percent to 29 billion won. The company said sales fell across all product lines due to sluggish domestic consumption and intensifying competition in the beverage market, adding that rising raw material costs also weighed on profitability.

The liquor division fared better, with standalone third-quarter sales rising 2.5 percent to 198.2 billion won and operating profit climbing 24.1 percent to 17.2 billion won. Ready-to-drink alcohol sales surged 119.6 percent, driven in part by the company's decision earlier this year to rebrand its fruit sparkling alcohol line as "Soonhari Jin" and expand the lineup to include yuzu, sangria and sugar-free green lemon varieties.

Soju sales grew 2.2 percent, buoyed by a revamp of the Cheoeum Cheoreom brand and continued growth in Saero. Sales of cheongju rose 1.9 percent, supported by strong demand for the small-format product Subok One Cup.

The global division, which includes overseas subsidiaries in the Philippines, Pakistan and Myanmar, saw third-quarter sales slip 0.9 percent to 380.6 billion won, while operating profit fell 48.1 percent to 10.7 billion won. Lotte Chilsung Beverage cited higher raw material prices and increased logistics costs as the main factors.

The company also lowered its full-year earnings outlook, cutting its annual sales forecast by 20 billion won to 4.08 trillion won and trimming its operating profit target by 15 billion won to 185 billion won. Even with the revisions, both figures would represent growth compared with last year — sales up 2.7 percent and operating profit up 10.7 percent.

In September, Lotte Chilsung Beverage established an innovation task force to strengthen the competitiveness of its domestic business and improve its earnings structure. The company said it plans to focus on cost efficiency and profitability improvements going forward.


andy@heraldcorp.com