Nongshim reported increased revenue in the third quarter of this year, driven by growth in overseas markets such as the United States and China, as well as strong exports. However, rising raw material costs and logistics expenses led to a decline in operating profit.
The company announced on November 13 that its consolidated operating profit for the third quarter was 49.7 billion won, an 8.6% decrease compared to the same period last year. Revenue rose to 929.6 billion won, marking a 6.7% increase. The operating profit margin fell from 6.2% in the third quarter of last year to 5.3% this year, a decline of 0.9 percentage points.
Net profit for the period was 29.7 billion won, down 41.3% year-on-year, impacted by increased foreign exchange losses amid heightened currency volatility.
The revenue growth was largely attributed to overseas operations. Sales from overseas subsidiaries reached 296.4 billion won, an 11.4% increase from the previous year. Overseas subsidiaries accounted for 31.9% of total revenue. Domestic sales rose by 4.6% to 633.2 billion won.
Regionally, significant growth was observed in China and the United States. Sales from the Chinese subsidiary increased by 20.8% to 110.5 billion won, driven by an expanded product range in growing retail channels such as snack shops and membership-based supermarkets. The U.S. subsidiary also saw sales rise by 12.4% to 159.3 billion won, buoyed by strong performance in major retail channels like Costco and Walmart. Nongshim is also expanding its presence in new retail channels such as Target, Aldi, and HEB.
In South Korea, sales growth was led by the noodle and product export sectors. Noodle sales increased by 3.0%, supported by the popularity of products like Shin Ramyeon Rose, while exports to Europe and Southeast Asia also showed growth. Conversely, sales of snacks and beverages fell by 4.1% and 2.6%, respectively.
However, domestic operations faced declining profitability due to rising cost pressures. The operating profit for the South Korean division was 31.0 billion won, down approximately 25% from 41.3 billion won in the same period last year. Increases in the prices of key raw materials such as palm oil, along with rising shipping and energy costs, contributed to this decline.
Increased advertising and logistics costs also pressured profitability. Consolidated selling and administrative expenses for the third quarter rose to 223.5 billion won, up 17.8 billion won from 205.7 billion won in the same period last year. Advertising expenses increased from 20.4 billion won to 29.3 billion won, while transportation and storage costs rose from 36.5 billion won to 39.9 billion won.
Despite these challenges, cumulative performance for the first three quarters of this year showed an upward trend. Consolidated operating profit reached 176.4 billion won, a 17.1% increase compared to the same period last year. Cumulative revenue totaled 2.8197 trillion won, up 7.1%, while net profit rose by 4.2% to 145.1 billion won.
The share of overseas operations is also on the rise. In the third quarter, the cumulative share of overseas sales, including exports, reached 39.4%, an increase of 2.6 percentage points compared to the same period last year.
* This article has been translated by AI.
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