Good afternoon. Thank you for joining today's earnings call. We'll begin the 2022 Q3 earnings call for CJ CheilJedang. Today's call will begin with CJ CheilJedang's overview of Q3 performance, and we'll take questions next. If you need to ask questions, please, press star and wait on the line, please.
Good afternoon. I am Woo Won-sung, Finance Strategy Office, CJ CheilJedang. We'll now begin 2022 Q3 earnings call. This call is being simultaneously translated into English for foreign investors. Today, we're here with Mr. Kang Kyung-seok, Head of Finance Strategy Office, Mr. An Seung-jun, Head of Finance Planning Department, Mr. Kim Jung-woo, Head of Food Korea Business Management Department, Mr. Cho Jae-beom, Head of Food Global Business Management Department, Mr. Han Kyung-wook, Head of BIO Business Management, Mr. Kang Yeon-jung, Head of Bio Business Management Department, Mr. Kim Seung-jae, Head of Food and Nutrition Tech Business Unit, Mr. Hyun-Jo Hwang, Head of Feed and Care Business Management team.
Mr. Kang will first walk us through Q3 performance review, followed by key strategy and outlook by each business unit. After that, we'll take questions.
Good morning. This is Kang Kyung-seok. I'll first go over Q3 performance highlights, analysis of performance and key indicators by business unit and key strategy and outlook. Now please turn to page 5. In Q3, sales grew 22% year-over-year, and OP grew about 20%. Our food business, despite continued pressure on margin, thanks to greater exports and profitability overseas, posted a higher profit. Mandu, pizza, and other global key products' higher market shares also helped sales growth.
Our bio business unit, despite the growing cost of raw ingredients, successfully diversified product portfolios to achieve higher performance year-on-year. Also, with the launch of the new food nutrition and tech business unit, we will further speed up the food and nutrition solution business. I'll move on to the next page. Now on Q3 2022 performance. On this page, Q3 performance, excluding CJ Logistics. The sales grew 18% for food, 25% for bio, 29% for feed and care year-on-year, evenly driving growth across business units, holding 21.6% total growth to KRW 5,139.9 billion. Even with the increasing cost pressure, all business units were successfully achieving sales growth, and profit structuring permitted to reach 20% year-on-year growth in operating profit, or KRW 386.7 billion.
The net profit, thanks to the higher operating profit, grew 6% year-on-year to KRW 177.7 billion. Including CJ Logistics, the sales grew about 16% to post KRW 8,011.9 billion, with operating profits standing at KRW 484.2 billion. Now on page eight. I'll go over each business unit. First is food. The sales increased by 18% year-on-year. In Korea, while inflation continues, we introduced core and new products to respond to diverse consumer needs, and a strong strategy for Chuseok gifts. The sales have the year-on-year sales growth of 15% to achieve KRW 1,673.6 billion.
Out of Korea, broader experience of GSP categories and K-food, a stronger product lineup tailored to each market that are on-trend and consumer need-centric, and finally, focus on strategic channels have helped the double-digit sales growth rate, resulting in a 23% year-on-year growth to KRW 1,382.2 billion. The operating profit rose about 13% to 209.3 billion won. In Korea, to mitigate the unfavorable management landscape and continued pressure on ingredient prices, value chain-wide actions were taken for cost saving with pricing actions for selected products. Outside of Korea, a higher operating profit was helped by the U.S. business's robust profitability and stronger performance, GSP sales growth, country-level strategic pricing and cost saving with productivity and cost structure improvement.
If you look at the bar graph on the next page, the operating profit margin in Q3, when excluding Schwan's PPA, is 7.1%, and 6.8% when including Schwan's PPA. Next is on page 10. There are details on the food business in Korea. From the product standpoint, core product sales grew as we launched consumer needs-based differentiated products. From the channel perspective, we focused on online B2B, C store, or what we call growing channels for processed food, resulting in KRW 1,673.6 billion in sales for the food business in Korea. On the next page is a sales breakdown outside of Korea.
In the U.S., product innovation and core competency-powered GSP sales growth helped gains both in B2C and B2B, holding a 25% growth compared to the same period last year, or KRW 1,077.8 billion. In APAC and Europe, thanks to Bibigo's brand awareness in growing channels, K-food achieved higher sales to record a 15% growth, or KRW 303.8 billion. In Q3, the food business sales outside of Korea totaled about KRW 1,382.2 billion. Next is on bio. Next page twelve. Bio business unit, despite the higher ingredient cost, successfully diversified its product portfolio to achieve an upbeat performance. Sales grew 25% year-on-year. Operating profit grew 26% to KRW 160.3 billion.
If you look at by product segment, ANH products with grain prices remaining at their highest, maintained pricing higher than last year as the global grain supply remains volatile. By riding on trends towards the lower cost protein, the ANH business created new demand for specialty products. The HNH business, thanks to a stable nucleotide supply, solidifies market dominance to generate a high profit, especially partnerships with global customers of TasteNrich enabled capturing demand. CJ Selecta has incorporated the increase in soybean and soybean meal price into pricing to see higher soybean protein concentrate sales. By taking advantage of high oil prices, our soybean oil business achieved growth both in sales and profits.
If you look at the next page, Q3 operating profit margin for the bio business is 12.2% and value-add specialty products take up 13% out of total sales, maintaining a double-digit percentage contribution. Next is Feed & Care. Feed & Care has taken pricing action to respond to continued cost inflation under increasing livestock prices. We've also improved productivity, such as mortality rate, to maximize hog sales in Vietnam, generating top line growth and greater profitability. The sales grew about 29% year-on-year to KRW 774.7 billion. This was thanks to pricing action to mitigate ingredient cost increase. With the overall livestock price growing higher, sales in key countries rose year-on-year. The operating profit grew 94% year-on-year to a record KRW 17.1 billion.
This was driven by the rebound of Vietnamese hog prices and sales coming from mainly the livestock business. The feed business has strengthened high profit products and expanded channels to maximize sales. It has optimized ingredient cost while improving the qualitative aspect of the business structure through strategic pricing. The livestock business has taken early pricing actions in Vietnam while taking a flexible sales approach to achieve a higher profit. In Indonesia, broilers was the main focus to improve productivity, such as feed conversion ratio and mortality rate to strengthen competitiveness. Turning to page 16, if you look at CJ Logistics performance, we've stabilized the global profit and achieved a profit growth with higher ASPs. The sales in Q3 grew 9% year-on-year to KRW 3,113.4 billion. The operating profit grew 2% to KRW 107.7 billion.
Next is page 16, SG&A and non-operating income and expenses, excluding CJ Logistics. In breakdown, the labor cost increased by KRW 108.5 billion and transportation cost came down. This was with recategorized items under transportation. Non-operating income improved by KRW 9.1 billion year-on-year to - KRW 89.4 billion. I'll skip the next page as when including CJ Logistics, SG&A, and non-operating income and expenses mostly accrued from CJ Logistics. Next, we'll move on to key strategy and outlook by business unit. First, on the U.S. business.
Hello, I am JB Cho from Global Business Management. Despite challenging business environment, including inflation and economic slowdown, thanks to strategic sales increase based on premiumization and core competencies, the market shares of key products are constantly growing. First, the market share of Mandu in U.S. grocery exceeded 40% last quarter and reached 44% in October, widening the gap with the biggest competitor. Differentiation in taste and quality and DSD competency of Schwan's have led to higher distribution and shelf presence. The CJ's Bibigo brand has solidified its number one position in the market, owing to continuous improvement in brand awareness and market share. Next is the market share of pizza. Since acquisition of Schwan's, its B2C pizza market share has increased continuously.
Product premiumization through innovation, sales growth based on DSD competency, and strategic pricing strategy resulted in YTD market share of 17.6%, which is 1.3 percentage points up from previous year, narrowing the gap with number one brand to 4 percentage points. With this, Schwan's total market share amounts to 23%, showing constant growth. This year, the food business in U.S. achieved high sales growth in frozen food category. Okay, moving on to the new business unit, FNT, Food and Nutrition Technology. The presenter will brief you on the overall trend and market size.
Hello, I am Kim Seung-jae from Business Management FNT. Looking into the mega-trend, demand for natural ingredients and nutrition solution is expanding as an increasing number of consumers are keenly interested in health and nutrition. Opportunities are on the rise in sustainable, eco-friendly alternative materials and solutions. Backed by the trends of personalized nutrition, the market based on personal food and nutrition data is expected to grow further.
In the perspective of demography, millennials, Generation Z, and senior citizens equipped with purchasing power are contributing to the growth of food and nutrition market. Lastly, a bigger emphasis is placed on transparency in nutrients, origin of ingredients, and certification, which leads to abundant opportunities in clean label, additive-free businesses. Let me share growth potential of promising areas in the food industry under this changing trends. Alternative protein and cultured protein market is expected to grow to KRW 93 trillion by 2025, up from KRW 59 trillion in 2021. During the same period, food ingredient market will grow to KRW 869 trillion from KRW 692 trillion. Nutrition market will record steady growth to KRW 612 trillion from KRW 499 trillion. Moving on to 24th page.
CJ CheilJedang established food and nutrition technology business unit to pool our competencies and seize the opportunity in this growing market. CJ CheilJedang's food business unit owns competency in B2C, such as trend catching, consumer understanding, market communication, quality assurance, and application. While bio has technology and infrastructure, including trained platform technology, manufacturing infrastructure and process, competencies in safety and ESG, global footprint, and analysis technique. CJ CheilJedang established a new business unit, Food and Nutrition Technology, in order to eliminate inefficiencies, for example, redundant investments, effectively combine foods, B2C competency, and bio's technology and infrastructure, and ultimately operate businesses in an integrated manner and secure new growth engine with agility. FNT, Food and Nutrition Technology, will play in promising areas, including future food ingredient, nutrition solution, alternative protein, and cultured protein.
Next is update on the reshaped organization and business portfolio. Now, CJ has four business unit: Food, FNT, Bio, and Feed&Care, which focus on competency building and development of new growth engines based on the core values of culture, platform, wellness, and sustainability. Food business aims to penetrate deeper into global consumers' daily life and create the value of new wellness through GSP scale-up, driven by Bibigo, global territory expansion, and entry into new and adjacent areas. Food and nutrition technology will run businesses of food ingredients, nutrition solution, alternative protein, and cultured protein. It plans to rapidly secure solution competency with differentiated materials and expand business step by step in key categories that are expected to grow in the future to become a total solution provider. Bio's HNH business is now placed under FNT.
Bio will concentrate on format differentiation and improvement of solution competency of ANH and reinforce the growth engines of white bio and red bio. Feed & Care will further develop its R&D competency and future-oriented business by focusing on high margin feed for aquaculture, maximizing productivity based on biosecurity, and accelerating growth with technology and new business. On the next page, we would like to share our thoughts on CJ's corporate value. The value of CJ's existing businesses has enhanced thanks to their high performance, profitability, and stability, contributing to increase in valuation. The total corporate value is expected to grow further in the long term as a new growth engine is added to the new business portfolio. Given the growth potential and competency of existing businesses, growth in EV/EBITDA multiple as high as global companies is anticipated.
Food business is seeing improvement in profit structure as well as expansion of global products such as GSPs and pizza. Bio, which is expanding the high margin specialty product, is evolving itself into a solution provider equipped with enhanced growth potential and stability. In feed and care, the share of high margin aquaculture feed is going up and downstream value chains are expanding. In the long term, CJ aims to achieve EV/EBITDA multiples equivalent to global players based on aforementioned efforts and performance. Now the company is developing into a solution provider of food, ingredients, and nutrition. Second, CJ can expand alternative protein business based on existing competency. Third, we can grow supplement business leveraging specialty category and personalized solution. Fourth, the white bio business will start in full swing, and fifth, the red bio business will be expanded.
All these factors serving as new growth engines will contribute to the growth of total corporate value. Next page is about CJ ESG initiatives. In spite of unfavorable conditions, CJ is making efforts to establish a sustainable financial system. In October 2021, CJ issued ESG bond for socially responsible investments for the first time in the food industry. We were able to save financial costs as a number of investor paid attention to CJ's bond issued for small and medium-sized suppliers. Part of the fund was used to create the shared growth fund for suppliers and financially support them by shortening the billing cycle. This contributed to building an ecosystem of win-win relationship and collaboration. A total of KRW 390 billion was raised since last year through ESG loans and bonds.
This fund is based on CJ CheilJedang's high score in DJSI and qualified for extra interest drop if additional ESG KPIs are achieved. CJ CheilJedang will continue on making efforts to lower the interest through a sustainability related funding and achieve ESG goals. Our subsidiaries will also be capitalizing on ESG loans. The company established a sustainable financing framework for sustainable management. By setting up the framework in advance related to assessment on sustainable and social purpose of funding and calculation methods, funding management, and follow-up reports, CJ CheilJedang has now secured financial competitiveness to raise sustainably related funding in a timely manner when in need. CJ CheilJedang gained credibility of its framework by acquiring certification from a global evaluation agency. Now we will brief you on Q4 outlook. Performance and outlook under the reshaped business portfolio will be announced from 2023.
The Q4 outlook is based on the existing business units. Food business in Korea is expected to respond to changing consumer trends through product expansion, focus on growing channels, and lead solid growth based on price normalization. Cost will increase due to challenging external environments, but the company will maintain its margin through strategic profit-driven operation and efficient resource allocation, and by targeting expanding demand for eating at home during economic slowdown. U.S. is anticipated to grow steadily based on strong position in the pizza market, increase in penetration of GSPs such as mandu, chicken, and Hetbahn, and sales growth of B2B following Asian menu expansion. Japan aims to grow further through rapid sales growth of GSPs including Bibigo mandu and kimchi, and diversification of SKUs and channels for Micho.
China will operate online promotion events in high season, focus on growing channels, and increase new product trials in order to continue on growth. In bio animal nutrition, the growth of specialty amino acid will make up for the stagnant performance of lysine and margin drop due to SPC market circumstances and raw material cost increase. In human nutrition, the performance will be back on track, thanks to the recovery of nucleic acid demand and the overall industry. TasteNrich is likely to show continuous growth. Feed&Care is expected to bounce back, thanks to the improvement of key indices, including feed sales, spread, and livestock productivity. All in all, the CJ CheilJedang sales growth in Q4 2022 is expected at high teens, with the OP margin around 5%. This is it for the presentation. We will now take questions.
In case of Korean question, it is going to be interpreted simultaneously, but English questions are going to be interpreted consecutively. Please speak slowly when you ask a question for the interpretation. We'll start taking questions from now. If you want to ask a question, please press star and one. If you wanna cancel, please press star and two. The first question is coming from Mr. Park Sang-jun from Kiwoom Securities.
Thank you for giving me the opportunity to ask the question. I have three questions. One is on the US sales. As the quarterly sales actually exceeded KRW 1 trillion, I know they're having expansion actions and the strong dollar and increased sales overall. The quarterly sales actually exceeded KRW 1 trillion. How do you project your target sales going forward? Because the strong dollar will not persist continuously. How much organically achieved top line growth are you expecting, and how much pizza and K-food would contribute to top line sales, top line growth? Then a second question is on market share.
On slide one, page 37, I see there are some market share data, but I feel that there has been declining market share. I know that there's been growth of market share, but is there any specific reason to why you see a decline in market share? The third is on SG&A. Then I see that QoQ YoY labor cost has been on the rise. So, has there been any specific reason why there's been such a hike in labor cost? Thank you.
Regarding global sales, yes, in the third quarter we've seen great performance, especially in the endemic phase, especially in the U.S. and Europe. Especially the U.S. has seen great performance in CB and food services, both with double-digit growth. The reason behind this is that in the endemic phase, despite the pricing actions, pizza's growth has been strong. After the acquisition of Schwan's, we've been able to drive and keep its synergy using DSD of CJ Schwan's. We've been able to actually expand our presence using DSD. That has been the reason behind our great performance in the third quarter. Going forward in the U.S., key retailers will struggle with delivery. Despite this
The food service segment and our consumer brand and B2C, are we able to keep up with the current momentum for growth? We believe that we will be able to keep up with double-digit growth. Especially, in the Asian category, we are number one in terms of the market position, just so we want to actually or narrow the gap to number one market share holder in the pizza market as well. We believe that we will be able to keep up with the current upbeat performance going forward. On your second question regarding the Korea key product market share. For some selected products that we've seen the declining market share, and this is actually offline market share data.
We actually manage offline market share from a fair share perspective. For example, Mandu and offline, we've seen some products that have recorded slightly lower market share, but we've seen greater market share in online segment. While the market itself is not growing, but our Mandu performance is growing, online and export channel-specific strategies have been the power of such growth. Plain rice, when we look at online channels like Coupang, has seen the greater performance, a higher performance. Most online performance has exceeded the offline performance. If you look at all channels, then we are actually growing.
For soup and stew quarter three, our chicken ginseng soup and stew has been our area of focus, so we actually had to manage different menu items. If we divide a non-soup and stew and the chicken ginseng soup, then we still see, you know, moderate performance of our soup and stew. But porridge has suffered a decline. We want to go ahead for differentiation rather than just eliminating that pricing action. We're trying to expand our profit with our differentiation for porridge products. Regarding your third question on QoQ and YoY labor cost increase. For business expansion, we've recruited more to expand our business, and also there has been the salary increase to incorporate the inflation.
Overall, the base salaries have increased. In CJ Bioscience, Batavia, last Q4, we've welcomed new businesses. That's been incorporated in our YoY data, so that's why there has been the increase. Also with that, there has been some more cost for employee benefits. Especially when we look at Schwan's higher performance, there has an increase in incentives. Of course, there's been a hike in labor cost, so both fixed expenses but there has been the increase in variable expenses as well.
We'll take next question. Next question is coming from Paul Hwang from Citi Securities.
Good afternoon. This is Paul Hwang from Citi Securities. I have a question on the FNT and the Q4 guidance. First, on FNT.
I've seen the press release, and I see that by 2025, the sales target is KRW 2 trillion. There are many different part of FNT business, you know, nutrition solution to alternative protein. What do you see as a growth driver for FNT sales and FNT performance? Also, in the same article that I read, I saw that you need to expand, you know, value chain, that you're reviewing strategic investment to ensure that there's a VC for FNT. I wonder if the 2025 sales target KRW 2 trillion includes organic only or and inorganic as well. Are there any specific plans for investment and M&A for FNT?
Second question is on the Q4 guidance. OP, you project about the 5%, but the last Q4. I believe that was about the 5.2%, but your Q4 OP projection is 5%. Does this include incentives as well? The FNT business unit. To answer your first question, as you've seen on news, to achieve our 2025 KRW 2 trillion sales target, there will be a specific portfolio. Food ingredient and nutrition solutions, which we already seen sales from, and alternative protein and cultured meat or cultured protein. Yeah, all of them would contribute to the KRW 2 trillion sales goal by 2025. Regarding our investment plan, this is a new organization, so we wanna minimize the CapEx investment arising from a new business unit launches.
We want to actually minimize the overlap, the would investments with bio business unit, and then we want to actually maximize synergy. We are actually detailing our plan as to what we're going to do with investment, but we want to ensure that we build growth engines through some CapEx investment, but this is still under review. Within our plan, the CDMO and the M&A, these are some of the things that we're taking under review right now. The third question for Q4 operating profit margin forecast. As you mentioned, 5% is including the incentive payouts. After taking into account incentive payouts, we believe that the Q4 will be better than our anticipation.
This outlook and/or forecast will be updated later on to when we see some visibility.
Next question is from Kim Jong-min from Meritz Securities.
Thank you for the opportunity to ask a question. I have three things to ask. In food business, after the price raise, following the overall inflation, was there any price resistance from the consumers? Next year, because of the inflation and high price, what kind of changes are you expecting in the food business, and what is the strategy of your side to differentiate your company? Second question is about bio overseas. The share of the specialty is stagnant at 13%. I see some changes in lysine sales as well. What is the room for improvement in the sales of lysine, and also the margin is over 10% constantly.
In the past market, the normal margin is around 10%. Is it right judgment to make, the 10% margin rate? In FNT, the third question is about FNT. The feed additive and the food additive, if there were no synergy between these two, then now we have the new business unit, is there any worry or concerns about reducing the existing sales and performance of the existing businesses?
Let me answer to your question about food business. In case of Korea business in food, in the third quarter of 2022, we saw 10% growth QoQ, year-on-year, and this is thanks to the JSP growth. In case of food ingredients, we saw 24% growth, and this was thanks to the ASP growth, and the sales was slightly decreased.
In the fourth quarter, ASP is going to contribute to the overall growth. About the resistance from the consumers, we are seeing some inelastic demand, and the Hetbahn, Dasida, Jang, all these products have shown constant growth in volume. We are going to respond to the changing trends with new products and expand our channels in the CVS and online. In B2B, we are seeing less consumers are spending. If the consumption demand for restaurants decrease, of course it is going to influence our business, but we believe that we can handle this with our portfolio change. In B2B, we have Creeat, the brand Creeat, which can make us outperform the existing businesses in the food market.
I guess you couldn't hear the front part because of the audio issues, so let me summarize. In the third quarter, yes, we saw 10% growth average and this was thanks to 90% of ASP and this was overall. Of course, we are seeing some decrease, but overall, this was thanks to the ASP increase. Looking into the anticipation about the inflation, we are seeing an inelastic demand in the market, especially in the third quarter. Our core products have shown steady growth in volume. In consideration of these factors, we are going to drive future growth and respond to the changing trends and focus on growing channels such as online channel and CVS convenience stores so that we can deal with the inflation and minimize impact from the consumer sentiments deterioration.
Let me answer to your question about bio business. Our OP margin of bio business in the past was mainly focused on one or two SKUs, and that was why we were vulnerable to external environment changes. Yes, that was true. However, we continued on sales growth of specialty products such as Valine, and this has contributed to the OP growth, not only sales growth. Now, it is equivalent to the lysine growth in the past. In the first half of 2022, because of the high price of grains and overshooting, yes, the margin was a bit deteriorated. However, in the fourth quarter we are seeing drop in sales price and considering the economic situation, the OP, the profit might drop a bit. However, we are going to continue on 10% OP margin based on our portfolio diversification and balanced portfolio.
Let me answer to your question about FNT. As I explained before, the FNT is established in order to handle and address the market change in advance. That's why the strain manufacturing technology of bio is going to synergize with B2C of food business to catch up with the recent trend and marketing communication. This means that we can create synergy of bio and food in at the same time. This means that we are going to create more synergy rather than deteriorating the synergy between the two business units.
Moving on to the next question. The next question will come from Park Sang-jun from Kiwoom Securities.
Thank you for the opportunity to ask a question. I have a question about the pizza of the U.S. business. After since the M&A, we saw increase in market share. From your perspective, what were the achievements that you made to widen the gap with the competitor? From now on, if you are to increase, further increase the market share, I believe that you have planned a lot of strategies. What should CJ do to catch up in the market to narrow the gap with the number one brand? Please elaborate on the strategy about the channel as well, and what's your target market share?
In case of pizza of Schwan's, we have Red Baron and Freschetta and Tony's. We have three brands under Schwan's. These are the major brands. Schwan's divides the brands into mass, premium mass, and various segments. Our focus is Red Baron brand.
In order to narrow the gap with the Company N, the number one brand, we have about 2% gap with the number one brand. This year, Schwan's has launched Fully Loaded, which is the innovative new products, as it was able to premiumize its brand and products thanks to this Fully Loaded pizza. In order to deal with the competition with the number one brand, Schwan's has the direct sales competency, DSD. This is the differentiation strategy of Schwan's. Of course, the competitor is running pricing strategy under the inflation circumstances. It is also implementing a lot of strategies to handle the inflation. However, Schwan's has also executed strategies to, about its price adjustments. In Red Baron, its market share in the B2C frozen pizza is growing constantly.
In 2019, right after the M&A, it was 14%, the market share, but it increased to 16.3%. In 2022, September YTD, it's 17.6%. In October, it's 19%. We have been narrowing the gap with the number one brand continuously. Our expectations about the future market share in the short term, we told you that we have 2% gap with the number one brand. I believe that we can catch up with the number one brand within 2023. Once we achieve this target, we are going to have the number one pizza brand under Schwan's.
Next question is from Kim Jong-wook, nim from Merrill Lynch.
Hi. Thanks for letting me ask the questions here. Despite the volatile aspects, I see that there has been no significant losses when we look at the non-operating profit. Then also second, the feed, I see there's been improvement and how do you project the improvement for feed business going forward for Vietnam and Indonesia. Then third question. I know Schwan's has been recording solid performance. Has there been any reaction or response from the number one pizza brand that they were talking about or Nes tlé?
First on your second question on feed and care. Our feed business, most of our business is affected by, you know, imported ingredient business. I know you've asked questions separately for Vietnam and Indonesia. In Q3, we've seen that ingredient cost has remained stable and, with cost increased before Q3, we've been actually taking pricing actions to mitigate that. I think we could actually maintain the current spread level by Q4. For Vietnam and Indonesia in Q4, I believe that spread will improve. Compared to Q4, we believe that spread will be higher. That's it for question two.
As I mentioned before to answer the previous question, we see that the Schwan's MS is growing, but it's true that at the same time that we are actually capturing the market share from the number one brand. In 2021, 2022, these two years were the pandemic period and there hasn't been any meaningful reactions or responses that we've seen of the number one brand. Maybe there have been promotions, possibly with the lower pricing, but we've actually haven't seen any promotions as such from the number one brand.
Usually, December is the season for pizza with a lot of promotions, but with the current market landscape, the number one player hasn't actually shown any reactions or actions to go for more aggressive promotions. Regarding your first questions on non-operating profit, there have been many variables and then also there have been different factors taken into account. We cannot actually. We're careful in deciding on trends for certain quarters specifically. Looking at the third quarter, we've seen the KRW 9.1 billion to KRW 10 billion of improvement. Previously with benchmark rates going up, we've seen more costs, but we've been able to hedge against you know, aspects related to risks.
With the strong U.S. dollar, we have different tools or different actions in place. They are having improvements in other areas. Compared to last year, non-operating profit has been at a lesser loss, because we've been able to steer clear of some of the losses that we experienced last year. As the time is almost up, we will take the last question.
There is no question waiting, but if you want to ask a question, please press star and one. There's no further questions. That will be the end of CJ CheilJedang Q3 earnings call. Thank you everyone for joining.