LOTTE (004990) Q2 2025 earnings summary

Executive summary

• Revenue for 2Q25 was KRW 4,043 billion, down 1.6% year-over-year; operating profit fell 13.9% to KRW 142 billion, mainly due to raw material cost pressures despite strong global F&B sales.

• Net loss narrowed to KRW 69 billion from KRW 147 billion in 2Q24, reflecting improved performance in some subsidiaries and reduced one-off losses.

Financial highlights

• Consolidated revenue for H1 2025 was KRW 15.76 trillion, with operating income of KRW 160.2 billion, and a net loss of KRW 160.4 billion, reflecting a challenging environment compared to prior years.

• 1H25 consolidated revenue was KRW 7,628 billion, down 2.8% year-over-year; operating profit dropped 31.7% to KRW 160 billion.

• F&B division 2Q25 revenue grew 1.4% year-over-year to KRW 2,452 billion, but operating profit declined 16.6% to KRW 113 billion due to higher cocoa prices and one-off costs.

• Retail (Korea Seven) saw 2Q25 revenue fall 9.5% year-over-year to KRW 1,255 billion, with operating losses narrowing to KRW 8 billion.

• Other businesses posted a 4.1% year-over-year revenue increase to KRW 512 billion and a 282.9% surge in operating profit to KRW 17 billion in 2Q25.

Outlook and guidance

• F&B companies expect improved earnings in 2H25, supported by consumption coupons, favorable weather, and stabilizing raw material prices.

• Retail expects a favorable business environment in 2H25 due to government consumption coupons and weather conditions.

• Management continues to focus on cost control, portfolio optimization, and ESG initiatives, with a target to reduce plastic use and carbon emissions.

• The group aims to maintain a dividend payout ratio above 35% and is considering further treasury share cancellations to enhance shareholder value.

• Ongoing expansion in overseas markets, especially in Southeast Asia, and continued investment in specialty chemicals and advanced materials.