Lotte Chilsung Beverage's CEO, Park Yoon-ki, delivered an alarming yet realistic assessment of the company's financial health at the 58th Annual General Meeting held on March 25, 2025. While sales grew significantly, the company’s profitability took a hit, reflecting the challenging economic landscape.
Speaking at the meeting in Lotte Hotel World in Songpa District, Park reported a double-digit growth in sales for the past year. Specifically, Lotte Chilsung's revenue surged to 4 trillion 245 billion won, marking a 24.8% increase from the previous year. Despite this impressive revenue figure, the cloud of decreased profitability loomed large.
Park noted that the company faced severe challenges in maintaining its profit margins, stating, "Last year’s domestic and overseas business environment was more difficult than ever due to global geopolitical risks and the effects of high interest rates and inflation." This sentiment reflects ongoing concerns among executives about operational viability amid rising business costs and tightening market conditions.
Indeed, the financial figures paint a mixed picture: while operating profits dropped by 12.2% to 184.9 billion won, the net profit saw an alarming 64% decrease, plummeting to 60 billion won. Park emphasized, however, that despite the downturn in profitability, Lotte Chilsung remains committed to investing in brand strength, exploring future business opportunities, and expanding its footprint in international markets.
In outlining the path forward, Park expressed clear intentions to bolster resilience against the backdrop of declining consumer demand in the beverage and liquor sector. He projected that upcoming challenges would emerge from various factors, including ongoing political instability, evolving U.S. tariff policies, and demographic shifts within the population. “We expect a contraction in demand across the beverage and liquor industry due to these uncertainties,” he highlighted.
Consequently, Lotte Chilsung has established scenario-based management plans to better navigate potential adverse effects stemming from exchange rate fluctuations and reduced consumer spending. Park reassured stakeholders about the company's strategy moving forward: “We are responding proactively to ensure at least minimal appropriate profitability.”
The focus on adaptability and strategic planning underscores the board’s commitment to facing these headwinds without compromising on long-term goals. Park affirmed, “We will strive to achieve the business plans set for this year, alongside executing our long-term strategies in a timely manner.”
The shareholders' meeting also included key reappointments and appointments of board members aimed at strengthening company governance. Park Yoon-ki was re-elected as an inside director, alongside Song Hyo-jin, who heads the Management Support Department, also gaining reappointment. Lee Young-gu, responsible for Lotte Group Food HQ, was newly appointed as an inside director.
In the efforts to ensure oversight and accountability, three external directors were either newly appointed or re-elected to the audit committee: Park Chan-joo, CEO of DKSH Performance Materials Korea; Ha Sang-do, a Professor of Food Engineering at Chung-Ang University; and Kim In-seop, an accountant at Inseong Accounting Corporation. This underscores Lotte Chilsung's commitment to governance, which is critical for navigating the complexities of today’s business environment.
As consumer habits shift amid demographic changes, the beverage and liquor industries are inevitably facing a paradigm shift that includes an aging population and lifestyle transformations that lean away from conventional consumption patterns. Park noted that these factors could have long-term impacts on the market.
Despite the bleak forecast, Park expressed gratitude for the shareholders’ continued support, emphasizing the importance of their trust as the company endeavours to adapt and grow in these turbulent times. He stated, “We appreciate the ongoing interest and support from our shareholders.” This reassurance is vital, given the uncertainties that lie ahead.
Conclusively, Lotte Chilsung Beverage is undeniably at a crossroads as it grapples with inflationary pressures and changing market dynamics. The company’s actions in the coming months will be crucial for maintaining its position in a competitive landscape while striving to turn around the declining profitability. Stakeholders will look keenly to Lotte Chilsung’s future decisions and performances, as they navigate through the unpredictable waters of today’s economy.
