1. What Happened at Nongshim?

Nongshim’s Q2 2025 preliminary results reported revenue of KRW 867.7 billion, operating profit of KRW 40.1 billion, and net profit of KRW 36.4 billion, falling short of market consensus by 4.0%, 18.9%, and 20.7%, respectively. The significant decline in operating and net profit has raised concerns in the market.

2. Why These Results?

External Factors: Rising raw material prices (especially wheat), volatile exchange rates, and increased logistics costs negatively impacted profitability. Internal Factors: Increased investment costs in new businesses (smart farm) and intensified competition in the domestic ramen and snack market also contributed to the disappointing performance.

  • Raw Material Prices: Rising wheat prices increased cost burdens, and the volatility of palm oil prices poses further risks.
  • Exchange Rates & Logistics: Exchange rate fluctuations affected import/export prices and profitability, while rising oil prices and container freight rates led to increased logistics costs.

3. What’s Next for Nongshim?

While the short-term outlook appears negative, Nongshim maintains long-term growth potential due to its strong brand power, growing overseas sales, and investments in future growth engines like smart farms. A turnaround is possible if cost management and profitability improvement efforts in overseas markets prove successful.

4. What Should Investors Do?

The current investment recommendation for Nongshim is ‘Neutral’. While short-term profit decline is inevitable, investors should focus on the long-term growth potential. Careful monitoring of H2 earnings trends and external factors will be crucial for developing an effective investment strategy.