CJ Cheiljedang (097950) Q3 2024 earnings summary

Executive summary

• Q3 2024 operating profit grew slightly as gains in Food Global, Bio, and Feed & Care offset declines in Food Korea.

• Online packaged/processed food sales in Korea rose 17%, offsetting weak offline sales.

• Americas and Europe drove food growth, with Mandu (+14%), Pizza (+11%), Roll (+9%) in the Americas, and Europe sales up 40%.

• Bio unit saw increased sales of high-margin products, including tryptophan (+21%) and arginine for feed (+35%).

• Feed & Care improved operating profit through restructuring and higher livestock productivity despite lower sales.

Financial highlights

• Sales excluding logistics: KRW 4.62 trillion; operating profit: KRW 276.4 billion; net profit: KRW 141.6 billion.

• Including logistics: sales KRW 7.414 trillion (down 0.4% YoY), operating profit KRW 416.2 billion (up 5.1% YoY), net profit KRW 212 billion (down 8.1% YoY).

• Food BU OP margin: 5.7% (excl. Schwan's PPA), 5.4% (incl. Schwan's PPA).

• Gross margin (excl. CJ Logistics): 28.5%, down 0.3 percentage points YoY.

• EBITDA (excl. CJ Logistics): KRW 506 billion, up 0.8% YoY.

Outlook and guidance

• Q4 sales growth expected in low to mid-single digits; operating profit margin forecasted at 5%-6%.

• Food Korea to benefit from new product launches, online channel expansion, and recovery in cooking oil sales.

• Global/Overseas food to maintain top market share and expand in Europe, Australia/Oceania, and new categories.

• Bio unit expects continued growth in lysine and specialty products, with upside from a Chinese economic rebound.

• Feed & Care to improve with year-end demand and livestock price recovery, maintaining strong profitability.