Lotte Confectionery improves profitability in 1H Operating profit up 15% year-on-year

Translated by Kim So-in 공개 2021-08-02 07:56:03

이 기사는 2021년 08월 02일 07:52 더벨 유료페이지에 표출된 기사입니다.

Lotte Confectionery has improved its profitability in the first half, with a growth rate of operating profit on a consolidated basis rising to two digits again.

The company recorded revenue of 1.02 trillion won ($885 million) and an operating profit of 50.7 billion won in the first half, up 1.8% and 15.7% year-on-year. In the first half of 2020, the company’s operating profit increased by mere 3.07% year-on-year.

Lotte Confectionery’s stronger profitability in the first half is attributable to its overseas business. The company’s revenue and operating profit excluding earnings from its overseas entities were 754.8 billion won and 40 billion won, respectively, up 0.1% and 6.2% year-on-year.

The company’s revenue and operating profit from overseas entities increased by 8.6% and 38.9% to 285.4 billion won and 16.3 billion won thanks to higher operating profits from its businesses in Belgium, India, and Singapore.

Lotte Confectionery's primary goal this year is to restore its global business to pre-pandemic levels. The company’s overseas businesses recorded revenue of 158.9 billion won, down 10~20% compared to the pre-pandemic levels.

The company resumed operations of its overseas factories this year after the shut down due to the Covid-19 pandemic last year.

Its overseas businesses getting back on track seems to have an impact on the reduction in the ratio of cost of goods sold (COGS) against sales. The company’s COGS was 670.1 billion won and the ratio of COGS against sales was 65.9% on a consolidated basis. Its COGS grew by 10.4 billion won year-on-year, but the ratio fell by 0.2% points.

“The sharp rise in raw material prices in the second quarter put a burden on the COGS-to-sales ratio in the first half,” said an official at Lotte Confectionery.

Its strategy to strengthen its online distribution channels also helped earnings grow. The company generated revenue of 48.8 billion won in the first half through online channels, up 40% year-on-year.

The company aims to improve its earnings through online channels amid prolonged pandemic. Lotte Confectionery launched its online mall Lotte Sweet Mall earlier this year and has expanded its distribution channels to Naver’s Smartstore and Baedal Minjok’s grocery delivery service B Mart. (Reporting by Hyo-beom Lee)
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