First-quarter overseas revenue rose 20.2%, outpacing Coway’s overall growth
The company is looking to the U.S. for cost efficiency and Indonesia for post-certification demand recovery
Seo Jang-won, CEO of Coway
[Insight Korea = Kim Ji-ho]
Coway Chief Executive Seo Jang-won is facing a key challenge: diversifying the company’s overseas revenue base. Coway’s international sales remain heavily concentrated in Malaysia. Seo is seeking to restore momentum by improving the cost structure in the U.S. and capturing delayed demand in Indonesia after the normalization of local certification procedures.
According to filings with South Korea’s Financial Supervisory Service on May 14, Coway posted consolidated first-quarter revenue of 1.3297 trillion won and operating profit of 250.9 billion won. The figures were up 13.2% and 18.8%, respectively, from a year earlier. Total rental accounts rose 10.9% to 11.73 million, extending the company’s double-digit growth.
Overseas Revenue Tops 40% as Malaysia and Thailand Drive Growth
Coway’s overseas subsidiaries stood out again in the first quarter. Their share of total revenue rose to 40.4% from 38.0% a year earlier, up 2.4 percentage points. Revenue from overseas subsidiaries increased 20.2% year over year to 537 billion won, well above the company’s overall sales growth of 13.2%.
Still, the company’s reliance on Malaysia remains pronounced. The Malaysian subsidiary posted revenue of 406.2 billion won and operating profit of 73.1 billion won, up 23.5% and 42.3%, respectively. The growth was driven by double-digit sales increases across major product categories and the launch of new air purifier products. Malaysia accounted for 75.6% of Coway’s total overseas revenue.
The Thai subsidiary also continued to grow rapidly. Monthly water purifier sales topped 10,000 units, helping the unit post revenue of 55.4 billion won and operating profit of 2.7 billion won. Those figures represented increases of 29.3% and 101.6%, respectively. The company said profitability is improving as account growth lifts the share of service revenue.
U.S. Sales Decline, Indonesia Remains in the Red
The U.S. subsidiary’s revenue fell 4.1% to 57.5 billion won. The decline reflected a high base from the previous year, when major wildfires in the western U.S. in January boosted demand for air purifiers. The door-to-door sales channel maintained stable growth, while the retail channel saw some volatility. Coway is seeking to broaden its U.S. market base through product diversification, including mattresses and massage chairs.
Operating profit in the U.S. rose 70.7% to 3.1 billion won, helped by commission-system changes and cost-efficiency efforts. Coway plans to maintain a stable improvement in profitability in the U.S. by focusing on more efficient business operations.
Indonesia remains a growth market with an unresolved profitability challenge. First-quarter revenue rose 14.7% from a year earlier to 12.6 billion won, but the subsidiary posted an operating loss of 400 million won. Growth slowed temporarily as administrative delays affected the process of obtaining SNI, or Standar Nasional Indonesia, certification.
The company recently completed SNI certification for hot-and-cold water purifiers, and production and sales are expected to normalize from late May. Coway expects local demand to remain solid and sees room for a recovery in growth through delayed demand once operations normalize. The Indonesian subsidiary, which turned profitable last year, is continuing to strengthen its business base and will focus this year on gaining a stable foothold in the local market and sustaining growth.
Coway plans to expand its customer base in Malaysia through new product categories such as BEREX products, air conditioners and washer-dryers. In Thailand, Indonesia and Vietnam, the company aims to stabilize sales channels and business operations by applying the know-how it has accumulated in Malaysia.
A Coway official said the company’s overseas business this year will focus on strengthening the competitiveness of major overseas subsidiaries such as Malaysia and the U.S., while supporting the stable market entry and expansion of growth markets including Thailand, Indonesia and Vietnam.
“Through successful market settlement and business expansion in new markets, we plan to strengthen our position as Global Coway,” the official said.
- This article was translated by ChatGPT. (이 기사는 챗GPT가 번역했습니다.)
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