[Edaily Reporter Kim Ji-woo ] #LotteChilsungBeverage saw its operating profit decline by double digits in the second quarter of this year despite revenue growth, due to rising raw material prices and logistics costs. While the alcoholic beverages division boosted profitability, weak performance from overseas subsidiaries dragged down overall profits.

"

LotteChilsungBeverage announced on the 5th that its consolidated revenue for the second quarter of this year reached 1.1129 trillion won, a 2.4% increase compared to the same period last year. Operating profit for the same period fell 10.4% to 55.8 billion won.

On a standalone basis, the beverage division’s second-quarter revenue was 500.5 billion won, up 1.7% year-over-year. Operating profit fell 13.2% to 20.5 billion won. The company explained that sluggish domestic consumption, a strong won, and rising prices for raw materials and logistics costs—driven by geopolitical instability in the Middle East—weighed on profitability.

By product category, sports drink sales rose 8.5% thanks to the early onset of hot weather and an increase in outdoor activities. Carbonated beverage sales increased by 3.1% due to demand for zero-calorie drinks and the seasonal peak period, while coffee beverage sales grew by 4.1% driven by demand for ready-to-drink coffee and the launch of new products.

Beverage export sales rose 9.8% due to strong sales of products such as “Milkis,” “Letsby,” and “Aloe Juice.” LotteChilsungBeverage exports its beverage products to approximately 50 countries, including the United States, Russia, Europe, and Southeast Asia.

The spirits division showed a notable improvement in performance. Second-quarter standalone revenue rose 3.2% to 195.1 billion won, while operating profit surged 156.6% to 7.5 billion won.

In particular, sales of ready-to-drink (RTD) alcoholic beverages, led by “Sunhari Jin,” surged 143.3%, driving overall growth. Soju sales rose 1.9% due to increased sales of “Cheonmucheong” and “Saero.” Wine sales grew 8.8%, fueled by the expansion of sales channels such as discount stores, restaurants, and bars. Sales of cheongju also rose by 1.8% due to increased sales of “Subok One Cup.”

Second-quarter sales for the global division—including overseas subsidiaries in the Philippines, Pakistan, and Myanmar—rose 3.4% to 458.5 billion won, but operating profit fell 27.0% to 26.1 billion won. Rising raw material prices due to high oil prices and geopolitical instability, along with increased logistics costs, weighed on profitability. Overseas subsidiaries accounted for approximately 41% of total revenue; when export performance is included, this figure rises to about 47%, indicating a growing global presence.

LotteChilsungBeverage plans to improve operational efficiency by reducing material costs and expanding its sales network in response to rising prices of key raw materials, such as cans and PET bottles. The company has set targets of 4.1 trillion won in consolidated revenue and 200 billion won in operating profit for this year. Cumulative revenue for the first half of this year reached 2.0654 trillion won, a 3.4% increase compared to the same period last year, while operating profit rose 18.6% to 103.6 billion won.

A LotteChilsungBeverage official stated, “Although the second quarter of this year presented profitability challenges due to worsening external factors—including high inflation, rising raw material prices, and increased global logistics costs—we were able to maintain revenue growth thanks to steady growth in our alcoholic beverage business, expansion in the RTD category, and increased beverage exports.” The official added, “We plan to focus on fostering global brands and improving our business structure with a focus on profitability.”