Mandu, Hetbahn drive high growth, defend profitability

Tech materials unit posts operating loss amid strategic investment

Core materials segment sees sales and profit rise in tandem

An aerial view of CJ Blossom Campus in Jincheon, North Chungcheong Province [CJ CheilJedang]
An aerial view of CJ Blossom Campus in Jincheon, North Chungcheong Province [CJ CheilJedang]

CJ CheilJedang defended its profitability in the third quarter, driven by strong sales of core products including mandu and Hetbahn.

The company said Tuesday its third-quarter operating profit rose 6.9 percent year on year to 203 billion won ($150 million), while sales climbed 5.7 percent to 4.23 trillion won over the same period.

On a consolidated basis including subsidiary CJ Logistics, operating profit fell 7.4 percent from a year earlier to 309.1 billion won, while sales grew 7.0 percent to 7.4 trillion won.

The lifestyle food division posted sales of 2.57 trillion won and operating profit of 118.7 billion won. Sales rose 3.8 percent year on year, while operating profit held roughly flat. Growth in domestic online and offline channels, combined with cost-efficiency efforts, helped protect margins despite higher raw material and logistics costs.

Overseas food sales reached 1.51 trillion won, up 3.7 percent from a year earlier, driven by expanded sales of global strategic products including mandu and Hetbahn. The Americas maintained 3 percent growth despite a reduced currency translation effect from a decline in the won-dollar exchange rate, while Europe (+26 percent), Vietnam (+14 percent) and China (+8 percent) all posted strong gains.

Domestic food sales rose 3.9 percent year on year to 1.07 trillion won, supported by continued strong performance from flagship products such as Hetbahn and Sobaba. High-growth items including Bibigo Grilled Fish (+69 percent) and Beksul 1-Minute Ring (+24 percent) also contributed to the advance.

The tech materials division posted sales of 232.6 billion won, up 20.2 percent year on year, fueled by expanded sales of specialty products such as Taste N Rich, a natural fermentation-based seasoning ingredient, and growth centered on probiotic brands and functional portfolios in the health and wellness segment. Biodegradable biomaterial PHA also continued to grow on the back of new large-scale customers. However, the division recorded an operating loss of 24.2 billion won, reflecting strategic pricing adjustments for nucleotides and increased investment in future growth.

The core materials division posted sales of 1.42 trillion won and operating profit of 108.5 billion won, up 7.0 percent and 36.0 percent respectively from a year earlier. Sales growth was driven by specialty amino acids such as arginine and expanded lysine sales in North America. Despite margin pressure from price cuts in the food ingredients business in line with the government's price-stabilization policy, operating profit grew on broad-based gains in feed-use amino acid products.

CJ CheilJedang said it plans to sustain the momentum of its global strategic products in the fourth quarter while working to improve earnings and profitability in nucleotides and feed-use amino acids.

The lifestyle food division will expand retail distribution channels across key regions and strengthen supply competitiveness to build a foundation for sustained growth, with a particular focus on boosting Hetbahn's competitiveness in North America. The tech materials division will pursue higher sales and profitability during the nucleotide peak season while actively advancing future products such as Taste N Rich and PHA. The core materials division will concentrate on improving profitability in feed-use amino acids including lysine and arginine.

"Building on the growth of global strategic products such as mandu and Hetbahn, we will accelerate the expansion of K-food's presence in key regions and strengthen competitiveness across our business divisions through peak-season nucleotide response, broader feed-use amino acid sales, and improved profitability in future growth products," a company official said.

[CJ CheilJedang]
[CJ CheilJedang]

spa@heraldcorp.com