Ladies and gentlemen, thank you for joining us today. Let us begin the conference call for Q3 2026 earnings report of CJ CJ. We will first have a presentation followed by Q&A with the investors dialed in for today's call. For anyone with a question, please press star and the number one. We will now begin CJ CJ's presentation for Q3 earnings report.
Hello, I'm Eun ho from the IR team, Corporate Finance Office, CJ CJ. Thank you for joining our Q3 2026 earnings conference call. Simultaneous Korean and English interpretation is provided for foreign investors during this call. Please note that today's materials contain forward-looking statements which may change depending on future business conditions. Also, figures in today's materials may be subject to change during the external audit process. First, let me introduce the management team joining us today.
We are joined by Mr. Chun Ki-sung , Head of Corporate Finance, Mr. Choi Min-jae, CFO of Technical Solution, Mr. Shin Dae-cheol, CFO of Performance Ingredients, Mr. Yang Seong-won, Head of Food Business Planning, Mr. Yong Dong-jung, Head of Korea Food Business Planning, and Kwon Gyeong-min, Head of Financial Strategy. Today, Mr. Chun will first present our Q3 results and review, followed by an update on key strategic initiatives. The IR team will then provide guidance on the Q4 outlook. After all presentations, we will proceed to the Q&A session.
Hello, I am Chun Ki-sung, Head of Corporate Finance at CJ CheilJedang. Today, I will cover the highlights of our Q3 2026 results and performance analysis by business unit. Please turn to page five. First, I will present the company-wide results for Q3 2026, excluding CJ Logistics.
Q3 sales were driven by growth in overseas GSPs and expanded sales of new products in Korea from Lifestyle Foods, increased sales of high value-added solutions from Technical Solution, and expanded sales of key products from Performance Ingredients, rising 5.7% YoY to KRW 4.23 trillion. For operating profit, despite company-wide cost pressures from rising logistics and raw material costs due to higher oil prices, we maintained profitability in Lifestyle Foods and expanded sales of feed amino acids. As a result, it increased by KRW 13.1 billion YoY to KRW 203 billion, with an operating margin of 4.8%. Net income came in at KRW 15.1 billion, down KRW 27.2 billion YoY, mainly due to foreign exchange valuation losses driven by the decline in the exchange rate. Next are our Q3 2026 results, including CJ Logistics.
Sales increased 7% YoY to KRW 7.3952 trillion, while operating profit decreased 7.4% to KRW 309.1 billion. Next on page seven is the performance analysis by business unit. First, let me turn to Lifestyle Foods. Sales increased 3.8% YoY to KRW 2.5744 trillion. Overseas sales grew as key GSP products in each region, including mandu and Hetbahn, continued to show solid growth. In Korea, sales also increased, supported by expanded sales of new categories and growth in online and convenience store channels. Operating profit was KRW 118.7 billion, flat year-on-year. Despite continued cost pressures from raw and packaging materials and logistics both in Korea and overseas, we maintained profitability through growth in Korean online and offline channels and cost efficiency measures. On the next page, I'll provide a breakdown of Lifestyle Foods sales. First, global food sales increased 3.7% YoY to KRW 1.5093 trillion.
In the U.S., despite a reduced translation effect from the exchange rate decline, continued solid growth in GSP products, particularly mandu and Hetbahn, drove 3% sales growth YoY. In Europe, expanded distribution of new mandu products and broader channel coverage accelerated volume growth, driving sales up by 26% YoY. In China, mandu and frozen rice sales expanded primarily through club and online channels, driving overall sales up by 8% YoY. In Vietnam, development of strategic categories such as rolls, gim, and noodles, along with regional expansion, drove 14% sales growth YoY. In Korea, sales increased 3.9% YoY to KRW 1.0651 trillion. Continued sales growth of major products such as Hetbahn and chicken, together with the development of new categories, including grilled fish and 1-Minute Ring, drove sales growth. Next, on page nine, is the performance of Technical Solution. Technical Solution sales increased 20.2% YoY to KRW 232.6 billion.
Technical marketing drove volume growth for specialty products, including TNR, while new sources of demand were secured for future growth products, supporting continued sales growth. Operating profit recorded an operating loss of KRW 24.2 billion, down KRW 15.6 billion YoY. Although sales to major customers increased through customized TNR solutions, strategic pricing to strengthen the competitiveness of the nucleic acid business, along with the preemptive investment spending in future growth businesses, such as BMS and health and wellness, led to a decline in profitability. Next, on page 10, I'll provide a breakdown of Technical Solution performance. First, let me turn to the taste and nutrition business. For nucleic acids, we expanded market share through effective management of strategic pricing. TNR continues to grow by expanding partnerships across key markets in Europe and North America.
PHA and the biomaterials business grew year-on-year, driven by major account wins in applications such as biodegradable straws and artificial turf infill. In the health and wellness business, we are driving sales growth through digital marketing, backed by our probiotic brand, BioCore, and a functional portfolio focused on skin health and diet. Next, on page 11, I'll walk you through Performance Ingredients performance. Performance Ingredients sales increased 7% YoY to KRW 1.423 trillion. Sales growth was driven by expanded sales of specialty products, including arginine and key feed amino acids, such as lysine. Operating profit increased KRW 28.7 billion YoY to KRW 108.5 billion. Despite lower profits due to price reductions for key FI products, including sugar, profitability improved YoY, backed by broad-based growth in feed amino acids. On the next page, I'll provide a breakdown of Performance Ingredients performance.
First, let me turn to the animal nutrition business. Lysine grew through expanded sales volumes, particularly in North America, supported by prices recovering to prior year levels. For tryptophan, amid the delayed recovery in pork prices in China, we minimized the impact of lower sales through strategic regional sales. Specialty amino acids continued to grow by expanding demand through technical marketing and capturing opportunities arising from changes in the external environment, including wider corn and soybean meal spreads. In the food ingredients business, sales declined as we lowered prices for sugar and flour to support price stability. However, the cooking oil business grew on the back of normalized soybean processing operations. On page 13, I'll walk you through CJ Logistics performance. Here are the key results for CJ Logistics. Sales increased 9.5% YoY to KRW 3.3581 trillion.
Continued growth in O-NE fulfillment and new last-mile delivery drove growth in parcel volume and market share. Higher volumes from new order wins in W&D transportation drove CL sales growth. In addition, the expansion of the CL business value chain across global strategic countries supported the continued sales growth. Operating profit decreased KRW 37.4 billion YoY to KRW 110.5 billion. Fewer operating days, increased investments to strengthen competitiveness, and higher costs led to a decline in profits YoY. However, profits in the construction business increased as large-scale projects gained momentum and completion-related gains were recognized. Next, on page 15, we will walk you through our key strategic initiatives.
First, let me share the key global strategies for Lifestyle Foods business unit. In the U.S., we plan to sustain the growth momentum of Hetbahn by enhancing brand awareness, expanding consumer touchpoints, and entering core distribution channels. First, we will strengthen integrated online and offline marketing led by global campaigns and expand opportunities for K-food experiences at key consumer touchpoints, such as KCON, thereby enhancing product experience and familiarity. In addition, we are expanding our presence in major distribution channels, such as Walmart, Kroger, and Costco, while strengthening our sales base. Through these efforts, Hetbahn will further establish K-food as an everyday meal choice, and its 2026 sales in the U.S. are projected to grow 27% YoY. Next are the key strategies for domestic foods business.
For foods business in Korea, we will leverage competitiveness of key mega products such as mandu, Hetbahn, and chicken to actively develop fast-growing categories such as grilled chicken, fish, and 1-Minute Ring, thereby driving growth and profitability at the same time. For new products, we will manage profitability by upgrading the system and criteria for validating marketability and profitability. In addition, key mega products such as mandu, Hetbahn, and chicken will continue to deliver solid growth by improving distribution and marketing efficiency based on their market leadership. Next are the key strategies for the Technical Solution business unit. In the Technical Solution business unit, we will expand infrastructure to enhance customer responsiveness, thereby deepening business with existing key customers and accelerating collaborative projects with large customers. We are transforming the business model from the existing low-mix, high-volume production structure to a customer-tailored solution-providing system while building an end-to-end supply chain.
To better understand customer needs and respond in a timely manner, we are expanding infrastructure such as global technical centers. Last September, we opened the Singapore Technical Center, expanding the scope of tech support for customers in the APAC region. We're also expanding our portfolio of problem-solving solutions for customers through joint research and leveraging accumulated project references to identify opportunities for collaboration with new major customers. Based on these strategies, TNR is showing solid growth in both volume and revenue and is expected to record a revenue CAGR of around 29% from 2023 to 2026. Next are the key strategies for Performance Ingredients business unit. In the Performance Ingredients business unit, we will pursue region-specific strategies to expand profitability based on the improved soybean meal, corn spread, and favorable tariff conditions. As the soybean meal corn spread widens, it is positively affecting future demand for feed amino acids.
Rising soybean prices due to increased demand for soybean oil are limiting the decline in soybean meal prices, which we expect will serve as a positive factor for expanding demand for feed amino acids such as lysine and arginine. In addition, tariffs on Chinese lysine are expected to contribute to market normalization. Following the U.S. tariff implementation, Europe may also introduce additional measures following reinvestigation on anti-absorption. We expect this to create a favorable business environment. Against this backdrop, we will leverage our global production facilities to execute flexible production and distribution strategies tailored to regional competitive conditions. We will also optimize pricing by product format to mitigate cost burdens such as logistics costs. Next, on page 19, I'll share our Q4 outlook. For Q4, we expect consolidated sales, excluding CJ Logistics, to increase in the low single digits and the OP margin to be in the 5% range.
Despite reduced foreign exchange translation effects, we expect to continue our growth trend through growth in food GSP as well as improved performance and profitability in Technical Solution and feed amino acids. Lifestyle Foods is expected to continue expanding global sales and distribution channels for GSP products such as mandu and Hetbahn, though top-line growth is expected to partially limited due to foreign exchange impacts. Although raw material and logistics costs will remain a burden, profitability is expected to improve slightly through strategic resource allocation. Technical Solution is expected to post its highest quarterly performance as it enters the peak season for nucleic acids, and profitability in the BMS and health and wellness business is expected to improve, leading to better earnings.
Despite delays in the recovery of FI performance, Performance Ingredients is expected to offset raw material burdens and improve profitability through year-over-year performance gains in feed amino acids such as lysine, arginine, and SPC.