April 17, 2024
South Korea's CJ CheilJedang clings to hope of selling off feed and livestock business
South Korean food giant CJ CheilJedang Corp. is seeking again to sell its loss-making feed and livestock subsidiary for as much as $1.4 billion to focus on its main business.
CJ CheilJedang has been selecting advisors to sell a 100% stake in CJ Feed&Care, investment banking industry sources said on April 12. The business produces feeds and sells livestock, specifically, pigs and chickens.
However, it may be difficult for CJ CheilJedang to find a buyer due to CJ Feed&Care's sluggish earnings, the sources said.
CJ Feed&Care reported an operating loss of ₩86.4 billion last year, swinging from a profit of ₩7.7 billion in 2022. Its profit was ₩150.6 billion in 2021. The company was the only subsidiary with an operating loss last year among CJ CheilJdang's units.
"CJ is expected to emphasise that earnings will significantly improve from this year as the feed business remarkably changes in line with the global market," said one of the sources. "They are highly likely to set a sale price based on the average operating profit of around ₩100 billion (US$72.3 million) for the last five years."
CJ CheilJedang also expected to attract buyers with CJ Feed&Care's large business networks as it is the biggest player in Asia's feed and livestock industry, industry sources revealed.
CJ CheilJedang previously put the subsidiary up for sale in 2019 and 2020.
CJ Feed&Care's latest loss resulted from economic slowdowns in Indonesia and Vietnam where it generates 70% of total sales. The company focuses on the broiler business in Indonesia and pig farming in Vietnam.
Operations in the Southeast Asian countries came under pressure as sales declined due to weakening demand while fixed costs increased. Expenses significantly grew due to the rising costs of grains and labor.
With CJ Feed&Care's sluggish business, CJ CheilJedang suffered a 22.4% drop in its operating profit on a consolidated basis last year.
- The Korea Economic Daily
