CJ Freshway posts W23.5b operating profit in Q2, down 14% on year

CJ Freshway said Thursday its second-quarter operating profit fell 14 percent on-year to 23.5 billion won ($16.5 million), according to a regulatory filing.

Second-quarter sales rose 4.5 percent on-year to 923.2 billion won. Gross merchandise value came in at 1.36 trillion won, up 13.3 percent over the same period.

The company attributed the decline in operating profit to investment in expanding its online retail business and strengthening platform competitiveness.

All segments of its food ingredient distribution and food service operations continued to grow despite a slowdown in the dining-out sector.

Sales in the food ingredient and raw material distribution business rose 6.4 percent on-year to 418.4 billion won, with online sales up 51 percent. Sikbom, a B2B food ingredient platform in which CJ Freshway acquired a stake in March, drove the growth. Sikbom's cumulative GMV for the second quarter reached 151.3 billion won, up 25.8 percent on-year.

The food raw materials segment and franchise channel also expanded. Sales in the food raw materials segment climbed 14.3 percent on-year, while GMV in the franchise channel rose 11 percent.

Food service sales grew 2.9 percent on-year to 498.3 billion won. The food service ingredient segment posted higher sales, led by the kids and school meal channels. The institutional catering segment grew 4.9 percent.

New contract wins jumped 43.7 percent, driven by a string of new accounts including military catering at the Army Training Center and the 1st Marine Division. Concession channel sales grew 21 percent.

CJ Freshway plans to further strengthen its online business competitiveness in the second half of the year, centered on Sikbom. The company will focus on upgrading its product offerings and logistics services to improve customer convenience and operational efficiency.

"We will build a sustainable growth foundation through planned investment aimed at reinforcing the core competitiveness and decisive capabilities of our food ingredient distribution and food service businesses," said Im Seong-cheol, chief financial officer of CJ Freshway.