Samyang Foods recorded impressive results in the first quarter of this year, with sales of 500 billion won and an operating profit margin of 25%. There is also growing interest in the background of these results. An operating profit margin exceeding 20% is quite rare in the food industry.
Samyang Foods, led by its flagship brand "Buldak-bokkeum-myeon," has no production plants abroad. However, it has a high export ratio, with 8 out of 10 products sold overseas. The rise in exchange rates (weakening of the Korean won) has also worked favorably for Samyang Foods, leading to analyses that suggest an aggressive global distribution network expansion strategy has yielded results.
According to the food industry on the 16th, Samyang Foods recorded sales of 529 billion won and operating profit of 134 billion won in the first quarter of this year. This represents a 37.1% increase in sales and a 67.2% increase in operating profit compared to the same period last year. In particular, the operating profit exceeded the securities consensus (104.5 billion won) by 28.2%, achieving an earnings surprise.
The driving force behind the impressive results is exports. Samyang Foods' overseas sales in the first quarter reached 424 billion won, a 47% increase compared to the same period last year, with exports accounting for 80% of total sales. This growth can be attributed to steady growth across regions, centering on U.S., China, and Europe subsidiaries. The increase in first-quarter sales growth rate (37%) surpassed the growth rate of logistics costs and distribution commissions (33%), thus amplifying the 'economies of scale' effect.
In the first quarter of this year, the U.S. subsidiary recorded sales of $91 million (approximately 127.3 billion won), a 62% increase compared to the same period last year. The sales channels, which were previously limited to convenience stores and Asian markets, have expanded to major U.S. distribution channels. "Buldak-bokkeum-myeon" is reportedly available at 9 out of 10 Walmart stores and 1 out of 2 Costco stores in the U.S.
Samyang Foods is actively promoting the "Buldak" brand across the U.S. For example, the company partnered with the large-scale event "Coachella Valley Music and Arts Festival" held in California last April, conducting product sampling and QR-linked digital experience promotions. During the event, the Buldak brand booth attracted continuous visitor traffic, and online brand-related content garnered over 750 million views.
The popularity of Buldak is also evident in China and Europe. In the first quarter of this year, sales of Samyang Foods Shanghai Co., Ltd. in China increased by 22% year-on-year, recording 610 million yuan (approximately 118.4 billion won). "Buldak-bokkeum-myeon" is sold under the name "Huoji Mian" (火鷄麵) in China.
As local popularity rises, Samyang Foods announced plans to establish a factory in Jiaxing, China, by the end of last year. The factory, scheduled for completion in January 2027, will be the first overseas factory in 40 years since the Los Angeles factory in the U.S. (sold in 1998) and will produce products for the domestic Chinese market.
Buldak is gaining popularity in Europe as well. The European subsidiary, established in July last year, has begun to penetrate major distribution channels in the region, such as Albert Heijn and REWE, recording sales of 16 million euros (approximately 25 billion won) in the first quarter. Buldak is increasingly entering distribution channels in key countries such as the Netherlands, Germany, Italy, and France.
Analyses indicate that the weakening of the Korean won due to rising exchange rates also contributed to Samyang Foods' impressive results. Typically, food corporations import raw materials from overseas, process them, and sell them; thus, when the value of the won decreases, profit margins decline. However, for companies like Samyang Foods that generate most of their sales overseas, the effect of converting export revenues, calculated in foreign currencies like dollars, into won can result in an increase in sales and operating profits.
Han Yu-jeong, a researcher at Hanwha Investment & Securities, noted, "The exchange effect on this year's first-quarter sales is estimated at 21.1 billion won from the U.S., 9 billion won from China, 1.4 billion won from Europe, and -500 million won from Japan and Indonesia, totaling 21.1 billion won. The loss due to raw material costs from the weakening won is calculated at 10.1 billion won, leading to a final estimated exchange effect of 11 billion won on operating profit."
To respond to the soaring overseas demand, Samyang Foods began expanding its second plant in Miryang from 2023. The second plant is set to be completed at the end of this month, with trial production scheduled for June, and it will officially start operations in the second half of the year. In this case, Samyang Foods' annual production capacity will increase from 1.94 billion units to 2.63 billion units, an approximate 36% (690 million units) increase.
Although mutual tariffs (25% tax rate) are scheduled to be imposed by the Donald Trump administration in mid-July, forecasts indicate that the impact on Samyang Foods will not be significant. Kim Jin-woo, a researcher at Eugene Investment & Securities, stated, "Even with the imposition of mutual tariffs, the impact on this year's annual operating profit will be reduced by only 3.8% compared to a scenario without tariffs, and given the brand power of 'Buldak' products and robust global demand, it can be sufficiently overcome."
Securities analysts are unanimously raising the target price for Samyang Foods. Hanwha Investment & Securities set the target price at 1.7 million won, evaluating that it "is demonstrating incomparable growth and profitability." Other securities firms have also increased their target prices: ▲IBK Securities 1.45 million won ▲Yuanta Securities Korea 1.31 million won ▲Korea Investment & Securities and NH Investment & Securities 1.3 million won ▲KB Securities, Shinhan Investment & Securities, and LS Securities 1.25 million won.