Lotte Shopping (023530) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was KRW 3.57 trillion, down 4.6% YoY, reflecting a profit-oriented strategy amid a slow Korean economy and weak macroeconomic conditions.

• Operating profit rose 9.1% YoY to KRW 155 billion, driven by improved profitability in overseas business and core subsidiaries.

• Net profit dropped 53.3% YoY to KRW 29 billion, impacted by FX derivative and equity method losses.

• The company maintained a strong cash position with KRW 2.85 trillion in cash and cash equivalents at quarter-end.

Financial highlights

• Year-to-date revenue was KRW 10.51 trillion, down 3.8% YoY; operating profit increased 6.5% to KRW 326 billion.

• Q3 non-operating loss was KRW 104 billion, mainly due to FX and equity method losses.

• EBITDA for Q3 FY24 increased 2.8% YoY to KRW 428 billion, with a margin of 12.0%.

• Total assets at quarter-end were KRW 30,919.0 billion, with total liabilities of KRW 20,270.3 billion.

• Cash flow from operations was KRW 1,086.2 billion, with negative free cash flow due to high investment outflows.

Outlook and guidance

• Q4 expected to see highest revenue and profitability of the year, with recovery anticipated as weather cools and seasonal demand rises.

• Fresh foods expected to drive supermarket and hypermarket growth in Q4; e-commerce fashion category projected to grow around 7% as weather normalizes.

• Overseas business expansion to focus on shopping malls in Vietnam and diversification of store formats.

• Ongoing investments in new stores, logistics automation, and digital transformation are expected to support future growth.

• The company is targeting a shareholder return ratio of at least 35% and a minimum annual dividend of KRW 3,500 per share through 2026.