LOTTE (004990) Q2 2024 earnings summary

Executive summary

• Achieved highest quarterly revenue driven by overseas expansion in the F&B division, with consolidated revenue up 6.2% year-over-year and operating profit up 3.7% year-over-year.

• Consolidated revenue for H1 2024 was ₩7.85 trillion, with operating profit of ₩234.5 billion, both down year-over-year.

• Net profit turned negative due to significant equity method losses and non-operating items, with net loss attributable to controlling interests at ₩223.9 billion, compared to a profit of ₩163.7 billion in H1 2023.

• Major subsidiaries include retail, chemical, food, and beverage, with diversified global operations.

• The group continued investments in bio, healthcare, and battery materials, and completed several M&A and restructuring activities.

Financial highlights

• Consolidated 2Q24 revenue: 4,108bn KRW (+6.2% YoY); operating profit: 165bn KRW (+3.7% YoY); net profit: -147bn KRW (down from 58bn KRW in 2Q23).

• H1 2024 consolidated revenue: ₩7.85 trillion (down from ₩7.32 trillion in H1 2023); operating profit: ₩234.5 billion (down from ₩493.7 billion in H1 2023); net loss: ₩223.9 billion (vs. net profit of ₩163.7 billion in H1 2023).

• F&B segment revenue up 15.5% YoY, operating profit up 22.4% YoY; Retail revenue down 6.6% YoY, operating profit turned negative.

• Gross margin improved to 30.8% in 2Q24 from 30.3% in 2Q23, but gross profit margin declined in H1 2024 due to higher costs.

• EPS: -₩3,130 (vs. -₩215 in H1 2023).

Outlook and guidance

• Focus on four new growth themes: Bio & Wellness, Mobility, Sustainability, and New Life Platform.

• Major investments planned in biologics, including 4.6 trillion KRW in Songdo Bio Campus by 2030.

• Management expects continued challenges in chemicals due to global oversupply and weak demand.

• Retail and food segments are focusing on premiumization, digital transformation, and overseas expansion.

• Ongoing investments in battery materials, bio, and healthcare are expected to drive future growth.