Lotte Wellfood (280360) Q3 2024 earnings summary

Executive summary

• 3Q24 consolidated sales were KRW 1,078.5bn, down 0.7% YoY, and operating profit was KRW 76.0bn, down 5.7%, as cacao costs weighed on profitability.

• 9M sales declined 0.4% to KRW 3,073.7bn, while operating profit rose 19.5% to KRW 176.7bn, supported by domestic fats-and-oils profitability and overseas growth.

Financial highlights

• 3Q gross profit rose 3.3% to KRW 336.0bn; gross margin improved to 31.2% from 29.9%, while SG&A increased 6.3% to KRW 260.0bn.

• 3Q ordinary profit was KRW 61.8bn, down 35.6%, and net income was KRW 46.2bn, down 35.3%; 9M net income rose 27.7% to KRW 107.0bn.

• 9M gross profit increased 10.0% to KRW 940.4bn; gross margin was 30.6% versus 27.7%, and operating margin improved to 5.7% from 4.8%.

Outlook and guidance

• FY24 consolidated sales targeted at the prior-year level, with operating margin guidance of 4.5–5.0% versus 4.4% in 2023.

• Domestic sales guidance was growth of 1–2%, with a 7.5–8.5% operating margin; global sales growth was forecast at 6–8%, with a 5.0% operating margin.

• 2025 cacao prices were estimated at $6,000–$8,000 per ton; improved 2024–25 harvests were expected to gradually ease cost pressure in 2025.