1. What Happened?: Earnings Summary

Korea McNulty recorded consolidated revenue of KRW 49.496 billion (a 10.7% increase year-on-year) in H1 2025. However, operating profit significantly decreased to KRW 453 million (a 52.1% decrease year-on-year), resulting in a net loss of KRW 177 million. More concerning is the decline in standalone revenue to KRW 24.738 billion (a 6.2% decrease year-on-year), with both operating profit and net profit turning negative.

2. Why These Results?: Analysis of Declining Profitability

The main causes of the deteriorating profitability despite revenue growth are increased selling, general, and administrative expenses (SG&A) and other expenses. Factors such as raw material price volatility and supply instability, sluggish coffee business performance, and intensified competition in the pharmaceutical and health functional food businesses seem to have contributed to this decline.

3. What’s Next?: Investment Strategy

The current investment recommendation for Korea McNulty is ‘Hold.’ Caution is advised against aggressive investment until the company addresses its serious profitability issues. It’s crucial to closely monitor the company’s future profitability improvement strategies and execution, as well as the performance improvement of its subsidiaries.

4. Investor Action Plan

  • Monitor Profitability Improvement Strategies: Check if the company is implementing strategies such as cost reduction, SG&A efficiency improvements, and development of high-value-added products.
  • Review Financial Soundness: Examine the company’s debt management and financial risk management plans, and continuously monitor improvements in its financial structure.
  • Assess New Business Development Status: Pay close attention to growth strategies and performance improvements in the pharmaceutical and health functional food businesses.