Consolidated Sales Rise 4.6% to 952.5 Billion Won; Operating Profit Jumps 91% to 47.8 Billion Won, Global Share Reaches 46%
Of Lotte Chilsung Beverage’s first-quarter sales this year of 952.5 billion won ($680.7 million), 46% came from the global segment. A local consumer is selecting Milkis at a large supermarket in Russia. (Photo provided by Lotte Chilsung Beverage)
Lotte Chilsung Beverage said that despite uncertain external conditions, sales and operating profit rebounded across its beverage, liquor and global businesses.
The company’s first-quarter results for this year on a consolidated basis showed sales of 952.5 billion won ($680.7 million), up 4.6% year over year, or 42.2 billion won ($30.2 million). Operating profit came to 47.8 billion won ($34.2 million), up 91.0% year over year, or 22.8 billion won ($16.3 million).
In the beverage segment, first-quarter results this year on a separate basis showed sales of 414.2 billion won ($296.5 million), up 1.5% year over year, or 5.9 billion won ($4.2 million), while operating profit rose to 21.1 billion won ($15.1 million), up 62.0% year over year, or 8.1 billion won ($5.8 million).
In the first quarter, the beverage business posted growth in most categories, including carbonated drinks, juice, coffee, energy drinks, sparkling water and sports drinks, despite weak domestic consumption, a worsening external environment due to the high exchange rate and continued pressure from business expenses. Energy drink sales rose 8.7% year over year as demand increased not only for improved concentration but also for replenishing energy during exercise and outdoor activities. Sports drink sales increased 11.5% year over year, reflecting growing outdoor activity and consumer demand for healthy hydration.
For beverage exports, overseas sales rose 13.4% year over year, supported by strong exports of globally popular K-beverages such as “Milkis,” “Let’s Be” and “Aloe Juice.” A wide range of beverage brands were sold in more than 50 countries including the United States, Russia, Europe and Southeast Asia.
In the beverage segment this year, the company has continued to respond to the expanding zero-sugar trend and meet consumer needs by launching “Chilsung Cider Zero Yuzu,” “Pepsi Zero Sugar Peach Flavor” and the pineapple-flavored energy drink “Hot6 The King Pine Burst” in the first quarter.
In the liquor segment, first-quarter results this year on a separate basis showed sales of 194.2 billion won ($138.9 million), up 0.7% year over year, or 1.3 billion won ($930,000), while operating profit rose to 15.6 billion won ($11.2 million), up 9.6% year over year, or 1.4 billion won ($1.0 million).
In the first quarter, the liquor business was led by growth in soju, refined rice wine and RTD products despite continued weakening in consumer sentiment due to geopolitical risks stemming from the Middle East, high inflation and changes in alcohol consumption trends. Soju sales rose 2.6% year over year, led by “Saero,” which underwent its first renewal since launch. Refined rice wine sales increased 2.7% year over year, driven by growth in the “Subok One Cup” product amid rising preference for low-volume alcoholic beverages. RTD sales surged 74.4% year over year, supported by strong consumer interest in fruit sparkling alcoholic drinks and an expanded product lineup.
This year, the liquor segment is strengthening low-alcohol products in addition to its existing business to drive a rebound in the sluggish liquor market. To that end, in the first quarter it reorganized its fruit sparkling liquor brand under “Soonhari Jin” and expanded the lineup by newly launching “Soonhari Yuzu Jin” and “Soonhari Sangria Jin.”
In the global segment, which includes the performance of overseas subsidiaries in the Philippines, Pakistan and Myanmar, first-quarter results this year showed sales of 378.3 billion won ($270.7 million), up 11.1% year over year, or 37.8 billion won ($27.1 million), while operating profit came to 14.3 billion won ($10.2 million), up 2,123% year over year, or 13.7 billion won ($9.8 million). For overseas subsidiaries and exports, including beverage exports of 34.1 billion won ($24.4 million) and liquor exports of 21.5 billion won ($15.4 million), various beverage and liquor brands tailored to local consumer preferences were sold, lifting the global share of total sales to about 46%.
Among overseas subsidiaries, the Philippine unit, PCPPI, Pepsi Cola Products Philippines Inc., posted first-quarter sales this year of 258.9 billion won ($185.2 million), up 1.8% year over year, or 4.7 billion won ($3.4 million), on improved operating conditions, solid sales and better profitability. Operating profit reached 5.4 billion won ($3.9 million), turning to a profit of 8.7 billion won ($6.2 million) from a loss of 3.3 billion won ($2.4 million) a year earlier.
In the global segment this year, the company said it plans to focus on improving subsidiary profitability as it did last year, while securing competitiveness in fast-growing emerging markets and building a foundation for continued growth by expanding production capacity to meet rising demand for global brands such as “Milkis,” “Let’s Be,” “Saero” and “Soonhari.”
A company official said, “In the first quarter of this year, despite uncertain external conditions, efforts to improve profitability by business division were reflected in earnings, leading to a significant improvement in operating profit centered on the beverage segment and global business.” The official added, “Going forward, we will continue to enhance corporate value based on profitability-centered management and lay the foundation for sustainable growth.”
Choi Mun-hee
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