Lotte Wellfood (280360) Q2 2024 earnings summary

Executive summary

• Q2 sales rose 0.3% YoY to KRW 1,044.2bn; operating profit rose 30.3% to KRW 63.3bn, expanding margin to 6.1% from 4.7%.

• H1 consolidated revenue was KRW 1,995.3bn vs KRW 2,000.2bn; operating income rose to KRW 100.6bn from KRW 67.2bn and attributable net income to KRW 63.6bn from KRW 14.5bn.

Financial highlights

• Q2 gross profit increased 12.6% YoY to KRW 326.9bn; gross margin rose to 31.3% from 27.9%.

• Q2 net income was KRW 40.7bn vs KRW 12.4bn and ordinary profit KRW 58.8bn vs KRW 24.4bn; attributable net income was KRW 42.1bn vs KRW 13.4bn.

• H1 consolidated gross profit increased to KRW 604.4bn from KRW 529.9bn, while SG&A rose to KRW 503.7bn from KRW 462.7bn.

Outlook and guidance

• FY24 sales growth guidance: 5–7% overall, 2–4% domestic and 15–17% global; targeted operating margins are 5–6%, 4.5–5.5% and 8–9%, respectively.

• Domestic priorities include restoring fats-and-oils profitability and growing the Health & Wellness mix; global plans emphasize India growth and productivity improvement.

• Domestic Health & Wellness sales mix target is at least 20% by 2028, vs 10.5% as of June 2024.

• Product development focuses on low-sugar, low-calorie, plant-based, high-protein and functional foods, including ZERO, OKcal, JOEE and Easy Protein ranges.