Korean instant noodle makers to deliver strong Q1 earnings on overseas demand

Nongshim Co.’s Shin Ramyun [Photo by Yonhap]

South Korea’s top three instant noodle manufacturers - Nongshim Co., Samyang Foods Co., and Ottogi Corp. - are expected to deliver better-than-expected earnings for the first quarter as wheat prices stabilized since late last year and ramyeon demand continued to grow overseas.

According to financial market tracker FnGuide Inc. on Wednesday, Nongshim, the country’s top instant noodle maker, is projected to post 45.6 billion won ($34.6 million) in operating profit for the first quarter, up 33 percent from a year earlier.

The estimated growth is higher than any other 20 local food companies. Some market insiders even expected its quarterly operating profit to rise more than 40 percent from a year ago to about 50 billion won.

Samyang Foods is projected to report 26 billion won in operating profit, up 6 percent from 24.5 billion won a year ago.

Samyang Foods overtook its rival Ottogi last year to become the second-largest instant noodle maker for the first time in 10 years.

“The improved results came on robust growth in outbound shipments,” one of the company’s officials said.

Samyang Foods posted 909 billion won in sales last year on the back of the global hit of its instant noodle Hot Chicken Flavor Ramen. The product’s overseas sales exceeded 600 billion won. The sales this year are expected to reach more than 1 trillion won.

Ottogi Corp.’s Jin Ramen [Photo by Yonhap]

Ottogi, the country’s third-largest instant noodle manufacturer, is expected to report an operating profit of 62.5 billion won, up 6 percent from the previous year.

Its sales of instant noodles account for about 25 percent of the entire sales, which is lower compared with Nongshim at 80 percent and Samyang Foods at 95 percent.

“Instant noodles sales have increased in global markets such as Vietnam,” said an unnamed official from the company.

All three companies are set to announce their first-quarter earnings on May 15.

The main factor that drove up the earnings was the increased overseas sales.

According to the data released by Statistics Korea, Korea’s instant noodle exports totaled $208 million, a 14.3 percent increase from the previous year‘s $181 million.

Nongshim has earned an average profit of 800 billion won per year from local production in the U.S. and plans to build its third plant in the country. Its U.S. best-selling Shin Ramyun sells for $1.5 per package, twice as high as the domestic price.

The three companies raised the price of ramyeon by about 10 percent in September and October last year. The hike came as they were under raw materials cost burden, with the price of wheat going up by more than 50 percent amid the Russia-Ukraine war.

Wheat accounts for more than 60 percent of ramyeon’s raw materials price. The wheat futures fell 40 percent to $6.2 per bushel at the end of last month, down from $10.44 a year ago.