Lotte Chilsung Beverage Co., Ltd.'s Q3 operating profit falls 37.9%; alcoholic beverages perform well, but beverage and global businesses struggle

[Financial News] Lotte Chilsung Beverage Co., Ltd. posted weak results in the third quarter of this year despite strong performance in its alcoholic beverages business, as profitability deteriorated in its beverage and global businesses.
Lotte Chilsung Beverage Co., Ltd. disclosed on the 9th that its consolidated operating profit for the third quarter of this year was 57 billion won, down 37.9% year on year. Revenue fell 2.7% to 1.0501 trillion won.
The beverage division's standalone operating profit for the third quarter of this year fell 47.4% to 29 billion won, while revenue declined 4.7% to 513.3 billion won.
Sales declined across all categories, including carbonated drinks, coffee and sports drinks, as challenging market conditions persisted, with continued weakness in domestic consumption and intensifying competition in the domestic beverage market.
In particular, operating profit also declined as sales continued to fall amid increased cost burdens from sustained rises in raw and auxiliary material prices related to the war in the Middle East during the first half of this year, as well as weakened consumer sentiment. However, beverage exports rose 6.1% year on year, buoyed by sustained growth in overseas demand for products such as Milkis and Let's Be.
The alcoholic beverages division's standalone operating profit for the third quarter rose 24.1% year on year to 17.2 billion won, while revenue increased 2.5% to 198.2 billion won.
The alcoholic beverages business continued to grow by strengthening its core competitiveness through the development of new products tailored to rapidly changing consumption trends and the renewal of key products.
Sales of ready-to-drink (RTD) alcoholic beverages grew 119.6% year on year, more than doubling, following active marketing that included a brand revamp early this year, bringing fruit-flavored sparkling alcoholic beverages under the name “Soonhari Jin” and expanding the lineup from yuzu and sangria to unsweetened green lemon.
Sales of soju products rose 2.2% year on year, buoyed by growth in “Chum-Churum,” which marked its 20th anniversary with a revamp and expanded product lineup, and “Saero,” whose cumulative sales surpassed 1.3 billion bottles about four years after its launch.
The global business segment, which includes results from overseas subsidiaries in the Philippines, Pakistan and Myanmar, recorded revenue of 380.6 billion won in the third quarter, a slight 0.9% year-on-year decline. Operating profit fell 48.1% to 10.7 billion won.
A Lotte Chilsung Beverage Co., Ltd. representative said, “Even amid a challenging business environment, we will strengthen our core competitiveness, respond flexibly to market changes through thorough cost-efficiency efforts and sound management focused on profitability, and firmly establish a foundation for growth.”

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