[Edaily Reporter Kim Hyun-ah ] CJ ENM CO., Ltd.(035760)The company increased its third-quarter operating profit, driven by improved profitability in its film and drama business and the growth of TVING. The film and drama division, which supplies content to global over-the-top (OTT) services, significantly increased its operating profit despite a decline in revenue, while TVING continued its growth momentum, driven by increases in subscribers and advertising revenue. The media platform division also returned to profitability. Profitability in the commerce and music divisions stagnated due to investment burdens, and the division recorded a net loss of 25 billion won due to a deterioration in non-operating income and expenses, including valuation losses on derivatives resulting from rising exchange rates.

CJ ENM CO., Ltd. announced that it posted consolidated revenue of 1.1904 trillion won and operating profit of 22.1 billion won for the third quarter of this year. While revenue decreased by 4.4% compared to the same period last year, operating profit increased by 25.5%. The company posted a net loss of 25 billion won, marking a shift to a deficit. Although operating performance improved, the significant deterioration in non-operating income and expenses prevented the company from achieving a net profit.

Global Content Sales and TVING Advertising Drive Growth

The business segments driving the improvement in performance were movies and dramas, and the media platform. The movies and dramas segment recorded revenue of 285.3 billion won and operating profit of 15.5 billion won. While revenue decreased by 23.5% compared to the same period last year, operating profit increased by 126.8%. Profitability improved thanks to the supply of Netflix original content, the expansion of pre-sales to global OTT platforms, the diversification of overseas distribution channels, and the optimization of production costs.

The Media Platform segment posted revenue of 351.8 billion won, a 10% increase from the same period last year. Operating profit reached 5.9 billion won, marking a return to profitability. This performance was supported by growth in TVING subscribers and advertising revenue, as well as strong viewership metrics for key content, diversification of advertising products, and expanded sponsorships.

TVING also continued its growth momentum. Third-quarter revenue reached 120.5 billion won, a 22% increase from the same period last year, while the operating loss narrowed to 7.2 billion won. Subscriber growth and expanded advertising revenue drove revenue growth. Although the company has not yet moved out of the red, it managed to increase revenue while reducing the scale of its losses.

However, performance did not follow the same trend across all business segments. The music division posted revenue of 204.4 billion won, a 3.6% increase year-over-year, but recorded an operating loss of 7.3 billion won. Profitability was impacted by the base effect resulting from the strong performance of “Boys 2 Planet” in the same period last year, as well as investments in ENPLUS original intellectual property (IP) and the development of new artists.

The Commerce division posted revenue of 348.9 billion won and an operating profit of 6.7 billion won. Revenue decreased by 1.9% compared to the same period last year, and operating profit fell by 46.8%. The impact of the off-season, along with increased strategic investment and promotional expenses, weighed on profitability. In contrast, Mobile Content Commerce (MLC) transaction volume grew by 104.1% year-over-year, demonstrating strong growth.

Non-operating income/loss worsened by 117.8 billion won… Rising exchange rates also weighed on results

Despite the increase in operating profit, the company posted a net loss due to a significant deterioration in non-operating income/loss. CJ ENM CO., Ltd.’s non-operating income/loss shifted from a profit of 67.5 billion won in the third quarter of last year to a loss of 50.3 billion won in the third quarter of this year—a deterioration of 117.8 billion won over the past year.

The company explained that this was influenced by valuation losses on derivatives related to foreign currency bonds due to rising exchange rates, as well as fluctuations in the stock prices of affiliated companies. In other words, the losses stemmed from valuation losses on derivatives linked to the foreign currency bonds rather than losses on the bonds themselves.

The item that showed the greatest deterioration on the financial statements was “other non-operating income and expenses.” It shifted from a profit of 93.5 billion won in the third quarter of last year to a loss of 15.8 billion won in the third quarter of this year. The financial loss also widened, increasing from 34.4 billion won to 44.2 billion won.

Gains from investments in affiliates actually improved, rising from a profit of 8.4 billion won in the third quarter of last year to a profit of 9.7 billion won in the third quarter of this year. The scale of losses for individual companies and their impact on overall earnings cannot be determined based solely on publicly available data.

With non-operating losses of 50.3 billion won factored in, the pre-tax loss totaled 28.2 billion won. After incorporating corporate income tax-related gains, the final net loss was reduced to 25.0 billion won.

Cumulative Operating Profit Up 21.5%… Restoring Profitability by Business Segment Remains a Challenge Cumulative

revenue for the first three quarters of this year totaled 3.7233 trillion won, a 0.7% increase compared to the same period last year. Cumulative operating profit rose 21.5% to 57 billion won. In contrast, the cumulative net loss stood at 8.9 billion won.

Attention is also focused on whether TVING’s annual profit and loss will improve. Lee Jong-hwa, Head of Management Support at CJ ENM CO., Ltd., said, “When viewed on an annual basis rather than quarterly, TVING’s profit and loss appears to have clearly entered a trend of improvement compared to the previous year.”

While global content sales and TVING’s advertising business have established themselves as growth drivers, it remains to be seen whether investments in the music and commerce sectors will lead to improved profitability. Future performance is expected to hinge on the company’s ability to maintain its operating profit growth while minimizing the uncertainty in non-operating income and expenses caused by exchange rate fluctuations and changes in investment assets.