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The headquarters of HiteJinro is seen in this file photo. (Photo: HiteJinro) |
[Alpha Biz= Ellie Kim] SEOUL, June 16 — HiteJinro is facing growing pressure on its cost-control strategy as a prolonged downturn in the liquor market tests the sustainability of its profit defense measures.
According to regulatory filings on June 15, HiteJinro posted first-quarter consolidated revenue of 590.8 billion won, down 3.6% from a year earlier. Operating profit fell 10.9% to 55.9 billion won, with the operating margin declining 0.7 percentage points to 9.5%, despite a 2.8% reduction in total costs.
Profitability in the quarter was largely supported by lower advertising expenses and declining raw material costs. Selling and administrative expenses fell by 4.9 billion won year-on-year, driven by a 21.9% drop in advertising spending. The ratio of advertising expenses to revenue has steadily declined to around 4% in the first quarter, down from 9.8% in 2023, leaving limited room for further cuts.
Raw material costs also eased, falling by 13.5 billion won to 156.3 billion won, supported by lower malt prices. However, industry observers warn that the trend may not be sustainable, as rising prices for packaging materials such as PET and aluminum cans — driven by geopolitical risks in the Middle East — are expected to offset the benefit from lower input costs starting in the second quarter.
Meanwhile, labor costs have increased. Employee compensation rose to 130 billion won in the first quarter, with its share of revenue climbing to 22% from 20.6% a year earlier. Retirement benefit expenses also surged, although the company attributed this to one-off executive retirements.
Analysts say these trends highlight structural limits to improving profitability through cost-cutting alone, as key expense categories such as logistics and service costs remain largely unchanged as a proportion of revenue.
HiteJinro said it is continuing company-wide efforts to improve cost efficiency and absorb upward pressure on raw materials and packaging costs.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
