Lotte Chilsung Beverage's Q2 operating profit drops 10.4% due to rising costs

Lotte Chilsung Beverage experienced a significant drop in operating profit during the second quarter, with a 10.4% decrease compared to the same period last year. The company reported an operating profit of 55.8 billion won on consolidated revenue of 1.11 trillion won, a 2.4% increase year-on-year.

The decline in profitability is attributed to a confluence of external factors, including high oil prices and increased costs for raw materials and logistics. These pressures have heightened the burden of business expenses, impacting the company's bottom line. The beverage division, while seeing a 1.7% rise in revenue to 500.5 billion won, recorded a 13.2% decrease in operating profit to 20.5 billion won.

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This year's second quarter was difficult in terms of profitability due to worsening external variables such as high inflation, rising raw material prices, and global logistics cost burdens.

Despite these challenges, certain segments of the business showed resilience. Beverage exports, bolstered by popular brands like 'Milkis' and 'Let's Be', saw a 9.8% increase in revenue, with sales expanding across approximately 50 countries. The liquor division demonstrated remarkable improvement, with revenue up 3.2% to 195.1 billion won and operating profit surging by 156.6% to 7.5 billion won. This growth was largely driven by RTD products, particularly 'Sunhari Jin', which experienced a 143.3% sales jump.

Global operations also contributed to revenue, with sales from overseas subsidiaries reaching 458.5 billion won, a 3.4% increase. However, operating profit for these international ventures fell by 27.0% to 26.1 billion won due to rising oil and raw material costs. Lotte Chilsung Beverage aims to achieve 4 trillion won in revenue and 200 billion won in operating profit for the full year, focusing on management efficiency and strengthening its global brand presence.

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Going forward, we will concentrate our capabilities on establishing a stable growth foundation by enhancing our core competitiveness, fostering global brands, and improving profitability-focused operations.