CJ Logistics Posts Continued Top-Line Growth in Q3, but Investment Costs Weigh on Profitability

[Financial News] CJ Logistics' operating profit in the third quarter fell about 25% from a year earlier. Revenue increased, but profitability deteriorated amid cost pressures and other factors. 
 CJ Logistics disclosed on the 10th that its operating profit for the third quarter this year was provisionally tallied at 110.5 billion won, down 25.3% from the same period a year earlier. Revenue for the period rose 9.5% to 3.3581 trillion won. 
 By business, revenue in the O-NE (parcel delivery) division rose 1.2% year on year to 976.5 billion won. Total parcel volumes increased 4.6% from a year earlier. Volumes of early-morning and same-day deliveries rose 8%, while e-commerce fulfillment volumes increased 16%. However, operating profit fell 39.5% to 38 billion won over the same period, due to higher investment costs for hub terminals, fewer operating days and other factors. 
Revenue in the Contract Logistics (CL) division rose 8.3% from the same period last year to 933 billion won.
 Operating profit was tallied at 49.2 billion won, down 11% from the same period a year earlier. Revenue in the Warehouse & Distribution (W&D) business grew 11.8%, driven by increased volumes from existing clients in health and beauty (H&B) and pharmaceuticals, as well as new contract wins. 
 The global business division saw revenue rise 13.1% year on year to 1.1679 trillion won, supported by solid growth in operations in strategic markets including the United States, India and Vietnam. However, operating profit fell to 11.8 billion won from the same period a year earlier amid investment costs to expand its global network and prolonged external uncertainties, including oil prices. Going forward, the global division plans to focus on expanding volumes and improving profitability, particularly in the United States, India and Vietnam.
 A CJ Logistics official explained, "Major business divisions, including parcel delivery, contract logistics and global operations, continued to post revenue growth, but operating profit declined due to fewer operating days resulting from the Chuseok holidays, service upgrades, a worsening external environment and other factors." 

[email protected] Lee Ju-mi Reporter