CJ accelerates business transformation in response to Trump presidency

CJ Group headquarters in Jung District, Seoul / Courtesy of CJ Group CJ CheilJedang's possible division sale to improve financial stability By Nam Hyun-woo CJ Group is speeding up its efforts to reshape its portfolio by shaking up its top brass and tapping into the sales of its cash-generating bio product business in apparent preparation for the growing uncertainties of its U.S. businesses under the incoming Donald Trump administration.

New CJ Corp. co-CEO Heo Min-heoi / Courtesy of CJ Group The group carried out its annual executive reshuffle across its affiliates on Monday, three months earlier than its usual schedule of February. Highlighting the shakeup was appointing Heo Min-heoi, currently CEO of multiplex unit CGV, as the new co-CEO of CJ Corp.



, the group’s holding firm. Heo is known as a financial specialist serving key roles in salvaging multiple CJ affiliates from downturns. Appointed CEO of CJ Foodville in 2012, he led a sweeping restructuring program that helped the company turn profitable.

In 2013, he served as the vice president of CJ Corp. to oversee the group’s overall management and succeeded CJ Group Chairman Lee Jay-hyun’s board positions at key affiliates, including CJ ENM, when Lee was jailed that year. Given his background, Heo’s appointment is viewed as CJ’s preemptive measure to improve its preparedness for growing uncertainties in the wake of the second Trump presidency.

CJ Group operates all of its business sectors, including food, bio, logistics and entertainment, in the United States. According to the group, its consolidated revenues from global business surged to 16.94 trillion won ($12.

17 billion) in 2022 from 7.16 trillion won in 2017. Over the same period, the American region’s share in the total sales grew significantly, rising from 16 percent to 49 percent.

This, however, means that the group has a high exposure to U.S. trade policies.

The second Trump administration is expected to adopt more aggressive protectionist policies, such as tariff hikes on all imports. This could affect exports of key CJ companies, including CJ CheilJedang, known for its Bibigo brand. A CJ CheilJedang plant in Fullerton, Calif.

/ Courtesy of CJ CheilJedang CJ CheilJedang’s recent bid to sell its bio product division is seen as an effort to improve financial stability to combat growing uncertainties in the U.S. According to investment banking officials, CJ CheilJedang has placed its bio product business up for sale, appointing Morgan Stanley as one of the lead managers for the deal.

With the official bidding process beginning next month, the market assumes that the division will be valued at over 6 trillion won. The division produces food seasoning ingredients and amino acids for animal feed, using microorganisms as raw materials. It holds the top share in the global feed amino acids market, posting 1.

07 trillion won in sales in the third quarter of this year. This accounts for 23.2 percent of CJ CheilJedang’s total revenue.

Despite the robust sales, the company is tapping into potential buyers as the division’s operating margin remains at a single digit — 7.7 percent for the third quarter — while Chinese competitors are threatening the company’s leadership with price competitiveness. “The bio product business is the second-biggest division in CJ CheilJedang, following the food business, but margin fluctuations stemming from price competitions with Chinese rivals have been working as a significant swing factor for the company’s stock price,” Kiwoom Securities analyst Park Sang-joon said.

“If the division is sold, the company is expected to see improvements in its earnings and financial stability, given that the company’s net debt reached 7.4 trillion won as of the third quarter ..

. If the net debt is reduced by at least 2 trillion won, it will enable a more positive assessment to the overall valuation of the company.”.