Hyundai Green Food Co., a leading food service company in South Korea that has seen a steady rise in its earnings in recent years, is expected to report an on-year increase in its earnings this year again as fast growth in overseas markets helped to offset dip in domestic sales.

Hyundai Green Food is projected to generate 90.5 billion won ($80.6 million) in operating profit and 2.26 trillion won ($2.08 billion) in revenue this year, according to analysts polled by Korea-based market data provider FnGuide on Tuesday. That’s up 3.0 percent and 6.9 percent, respectively, from the previous year.

The bright outlook largely owes to the company’s upbeat sales in food services to cafeterias at companies for employees. Hana Financial Investment estimates that Hyundai Green Food will rake in 659.9 billion won in revenue from the flagship business this year, up 5.3 percent from a year ago. It’s a quite bullish projection considering the company’s major customer Hyundai Motor Co. went on strike.

Market analysts expect an increase in the company’s supply of food services to overseas customers to more than offset the dip in its domestic sales. Its sales to the company cafeteria at Kia Motors Corp.’s factory in Mexico and those at a Kuwaiti oil refinery and a Chongqing, China plant began to be reflected in the company’s financial statement from the second quarter and the third quarter, respectively.

The global food service market is valued at about 350 trillion won and several companies in the U.S. and France are raising billions of dollars from food service business alone, said an unnamed Hyundai Green Food official, adding that the company will take an aim at overseas markets beyond Korea.

On top of the growing sales in overseas markets, Hyundai Green Food’s role as a holding company for companies affiliated with Hyundai Department Store is also expected to help it further improve its earnings later. As of the end of June, Hyundai Green Food owns a controlling stake of 14 major affiliates, including Hyundai Department Store (12 percent), the key enterprise of the mid-sized conglomerate, Hyundai Home Shopping (15.5 percent), Hyundai HCN (6.1 percent), Hyundai Livart (28.5 percent) and Everdigm (45.2 percent).

More than 37 percent of Hyundai Green Food shares are owned by family members including Chung Kyo-sun, vice chairman of Hyundai Department Group (15.28 percent), Chung Ji-sun, chairwoman of Hyundai Department Group (12.67 percent) and Chung Mong-keun, the group’s honorary chairman (1.97 percent), and specially related parties like Hyundai Shopping (7.76 percent). The National Pension Fund invested to buy an 11.32 percent interest in Hyundai Green Food on expectations about the company’s fast growth despite a low price-dividend yield of 0.2 to 0.3 percent each year.

Hyundai Green Food will likely be re-evaluated when the corporate governance issue comes to the fore, experts say.

“Hyundai Green Food virtually sits at the apex of the entire governance in Hyundai Department Group,” said Lee Sang-heon, an analyst at HI Investment & Securities Co. “It may expand its holding company role in the future following changes in the group’s governance structure.”

By Yong Hwan-jin

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