Lotte Chilsung Beverage (005300) Q3 2024 earnings summary

Executive summary

• Q3 2024 consolidated sales rose 28.3% year-over-year to 10,650 billion KRW, but operating profit fell 6.6% to 787 billion KRW and net profit dropped 34.4% to 445 billion KRW.

• For the nine months ended September 30, 2024, consolidated sales reached 31,012 billion KRW, with beverage segment accounting for 79% of sales and 82% of operating profit.

• Overseas subsidiary Pepsi-Cola Products Philippines, Inc. (PCPPI) contributed significantly to consolidated results, with notable growth in the Philippines, Pakistan, and Myanmar.

• Continued expansion in zero-calorie and health-oriented products, with new launches in both domestic and overseas markets.

Financial highlights

• 9M 2024 consolidated sales reached 31,012 billion KRW, up 34.5% year-over-year; operating profit was 1,757 billion KRW, down 13.3%.

• Gross margin for Q3 2024 was 35.5%, down from 39.9% in Q3 2023; gross margin for 9M 2024 was 34.8%.

• Debt-to-equity ratio improved to 174.1% as of September 30, 2024, from 180.7% a year earlier.

• Net income attributable to controlling interests for 9M 2024 was 80.7 billion KRW, down from 165.9 billion KRW year-over-year.

• Basic EPS (common) for the period was 8,025 KRW.

Outlook and guidance

• Targets revenue of 5.5 trillion KRW, ROE of 10–15%, and D/E ratio of 100% or less by 2028.

• Aims for a shareholder return rate of 30% or more on a consolidated basis by 2028.

• Focus on expanding zero-calorie and health-oriented product lines, strengthening liquor competitiveness, and accelerating overseas growth.

• Continued investment in R&D and overseas market expansion, especially in North America and Southeast Asia.

• Ongoing cost management and efficiency initiatives to improve profitability.