[Apha Biz=(Chicago) Reporter Paul Lee] Nongshim sells NongShim Communications, an advertising agency subsidiary. INNOCEAN, an affiliate of Hyundai Motor Group, is mentioned as a candidate for acquisition.

According to related industries on the 23rd, Nongshim is negotiating with Innocean to sell NongShim Communications. "It is true that we have decided to sell NongShim Communications outside," a Nongshim official said. "We are in the early stages of discussions with Innocean and will push ahead with related procedures such as due diligence."

NongShim Communications has focused on traditional media advertising businesses such as television and newspapers, and has been evaluated that the global market and new media sector are somewhat vulnerable. This is the background of a recent drop in advertising handling and performance. According to the Korea Federation of Advertising, Nongshim Planning's ranking in terms of advertising handling fell from 24th in 2021 to 35th last year.

Last year's performance also deteriorated. Sales fell 4.8 percent on-year to 20.7 billion won last year, while operating profit fell 57.5 percent to 500 million won. This is due to the termination of contracts with external customers with high profit margins.

Another reason for the sale of Nongshim Planning is that the proportion of Nongshim's internal transactions has increased recently due to a decrease in external customers. Of Nongshim Planning's 20.7 billion won in sales last year, internal transactions of the group accounted for 62.8% with 13 billion won. As Nongshim was newly designated as a large business group with assets of more than 5 trillion won last year, the Fair Trade Commission's monitoring of giving all the work to its affiliates has been tightened.

 

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