CJ ENM swings red with 88.9 billion-won net loss in Q1

CJ ENM swung red in the first quarter this year to a 88.9 billion-won ($67 million) net loss, citing fewer advertisements in television and lack of profit from its films. Analysts forecasted a net loss of 1.9 billion won, according to FnGuide.

[CJ ENM]

CJ ENM swung red in the first quarter this year to a 88.9 billion-won ($67 million) net loss, citing fewer advertisements in television and lack of profit from its films.

Analysts forecasted a net loss of 1.9 billion won, according to FnGuide. Operating losses logged 50.3 billion won, falling short of market consensus of a 15.2 billion-won operating profit. The company explained losses came from increased production costs due to expansion on the number of produced content.

Sales recorded 949 billion won, below analysts’ expectations of 1.1 trillion won.

CJ ENM’s business unit consist of four categories: platform, music, commerce and content.

In the area of content, sales increased 9.2 percent on year to 236.1 billion won due to successful overseas distribution of content such as the variety show “Jinny’s Kitchen” and Tving original series “Island.” However, there were losses due to poor performance from its films “Phantom” and “Count.”

In the company's platform category, sales decreased 16.6 percent on year to 277.9 billion won. Reduced advertisement sales from television and increased production costs were cited as factors for loss.

“Compared to the year before, sales generated from TV advertisements decreased some 30 percent,” said CEO Koo Chang-gun at an online conference call Thursday. “On a positive note, the number of advertisers in the second quarter is increasing compared to the first quarter. We believe sales improvements will be made in the next quarter.”

Despite increase in production costs, CJ ENM’s lineup plans to release between 24 to 28 titles this year has not changed.

In music, sales jumped 31.2 percent on year to 119 billion won. Sales made from livestreaming concerts from “KCON Thailand,” “Street Man Fighter'' and boy band Ateez’s world tour contributed to growth, as well as sales made from project groups such as Kep1er’s Japanese EP “Fly-By,” Enhypen’s world tour and DVDs containing excerpts of JO1’s concerts.

In commerce, sales fell 0.4 percent on year to 316.1 billion won. The company explained profitability was maintained as sales recovered for products in health supplements, fashion and travels as well as efficient marketing strategies.

CJ ENM’s production house Studio Dragon’s sales skyrocketed 74.4 percent to 211.1 billion won. Net profit increased 17.8 percent to 18.4 billion won. Profits were made from expansion in the number of streaming original series and increase in the number of platforms where original content was streamed.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]