CJ Freshway's second-quarter operating profit fell sharply due to expanded investment aimed at strengthening the competitiveness of its online food ingredient platform. However, its food ingredient distribution and institutional catering businesses continued to grow, lifting revenue.
CJ Freshway reported second-quarter operating profit of 23.5 billion won on a consolidated basis, down 14.2% from the same period last year, the company said in a regulatory filing on the 6th. Revenue over the same period rose 4.5% to 923.1 billion won.
The company said its food ingredient distribution and catering businesses maintained stable growth despite a slowdown in the dining-out sector. It explained that the decline in operating profit reflected the cost of strategic investments to expand its online business and strengthen platform competitiveness.
Revenue from the dining-out food ingredient and food raw material distribution division reached 418.4 billion won. Within this, online business revenue increased 51% year-on-year. Growth was driven by Sikbom, a B2B (business-to-business) food ingredient platform in which CJ Freshway acquired a stake this past March, while integrated delivery products linking CJ Freshway's logistics network with the Sikbom platform also expanded significantly.
The food raw material business and franchise clients also continued to grow. As a result of securing new customers through data-based sales, food raw material division revenue rose 14.3%, while the transaction volume through franchise channels increased 11%.
Catering business revenue totaled 498.3 billion won. Food ingredient supply expanded, centered on kids' and school catering channels, and the institutional catering division grew 4.9% year-on-year. In particular, as new orders increased from sites including the Army Training Center and the Marine Corps 1st Division, the scale of new orders rose 43.7% from last year. Concession business revenue also grew 21%.
CJ Freshway said it plans to raise the competitiveness of its online business centered on Sikbom in the second half and advance its logistics and product operations systems to strengthen customer convenience and operational efficiency.
Lim Sung-chul, CJ Freshway's chief financial officer (CFO), said, "We will foster our online platform business centered on Sikbom as a core driver of future growth, and strengthen the fundamental competitiveness of our food ingredient distribution and catering businesses to build a foundation for sustainable growth."
