Dear members of the CJ family,
2023, the Year of the Rabbit, is upon us.
Hope you and your family another year of good health and happiness.
We would also like to sincerely thank you for doing your best around the world for CJ Group’s growth despite the unprecedented business challenges brought on by the Russia-Ukraine war and global inflation.
As the first year in the transition to endemicity and with the onset of global inflation, 2022 saw accelerated structural changes in not only public health but also in the economy and geopolitics.
With inflation at 40-year high, the US Federal Reserve and central banks around the world dramatically raised interest rates. The measure dealt a heavy blow to all global assets, including bonds, securities, and real estate.
The risk of global recession greatly increased last year due to Europe’s energy and supply chain crises and China’s zero-COVID policy and real estate crisis.
In such a challenging business environment, CJ Group once again posted record-breaking performance figures thanks to your tireless efforts. I would like to take this opportunity to thank you all again for doing your utmost in your respective roles.
Let’s go over each subsidiary’s 2022 performance. Despite a challenging business environment, CJ CheilJedang had a meaningful year, achieving record-high results and reinforcing the global competitiveness.
Although raw material prices soared globally, our food businesses boosted the bottom line and accelerated the globalization of K-food in the US.
The bio business achieved record-high performance by reinforcing R&D competitiveness and solution competency. It laid the groundwork for growth through futuristic innovation by expanding the scope of White and Red BIO and launching the Food & Nutrition Tech (FNT) business unit.
In the entertainment business, CJ ENM STUDIOS was launched to establish a system for securing exceptional contents. The company focused on further enhancing the business model by continuing to invest in TVING and other digital platforms.
CJ Logistics continues to improve profitability across the board and strengthen technology, infrastructure, and other core competencies. By redefining the direction of growth through futuristic innovation in parcel & e-commerce, CL, and global operations, CJ Logistics has paved the road for boosting its future competitive advantage.
CJ OLIVE YOUNG strengthened its omnichannel strategies, increased customer convenience and leveraged its merchandising competitiveness. In so doing, the company solidified its unparalleled market position while boosting profitability and accelerated global online expansion in line with global K-beauty trends.
The e-commerce sector struggled with slow growth in the home shopping market. Nevertheless, we established a ‘one platform’ strategy to restore the competitiveness of our existing business. We are also restructuring the business to strengthen our competencies in mobile live commerce (MLC) and brand businesses.
Although the theater business still has been slow, CGV enhanced the qualities of cineplexes by expanding special theaters, such as 4DX, and adopting a new space utilization model. We have done our best to improve operational efficiency and strengthen structural competitiveness.
CJ Freshway earned an operating profit structure of KRW 100 billion with continuous improvements in structural innovation, core business models, and unique products. Also, we sought new growth engines through qualitative evolution as a solution provider and the reinforcement of digital competencies.
CJ Foodville earned profit domestically and internationally by strengthening the fundamentals of improving the profit structure and upgrading the stores, and the global bakery business expanded especially in the US and Southeast Asia.
CJ members, the business environment is expected to be just as tough this year as it was last year.
Although past its peak, global inflation is still very high, so interest rate hikes are expected to continue through the first half of the year.
The growing risk of a worldwide recession will make things even harder for exporting businesses. Domestic businesses may also suffer from sluggish consumer consumption due to rising interest payments and falling housing prices.
Also, as the Russia-Ukraine war continues, US-China tensions are expected to escalate from a trade war to a geopolitical conflict.
A highly uncertain domestic and international business environment is both a crisis and a huge opportunity for us.
Companies that effectively cope with business uncertainties turn a crisis into an opportunity to jump ahead of their competitors.
Will we make a quantum leap forward and become a major global player? Or will we settle for the Korean market and decline into irrelevance? That depends on how effectively we attract and retain outstanding competencies and top talent this year and devise and execute a bold strategy for the future.
Although we posted the best-ever performance figures two years running, CJ Group’s market cap hasn’t budged. This implies that market confidence in CJ Group’s competitiveness remains inadequate.
That being the case, we must successfully execute our recently articulated 2025 mid-term strategy to catapult ourselves into being a global lifestyle company.
In executing the 2025 mid-term strategy for CJ’s radical renewal, we must apply the highest standards and set the highest achievable objectives. Top talent must lead the charge in embracing challenges and demonstrating an unquestionable ability to execute.
This marks the inaugural year for the execution of our mid-term strategy. Let me reiterate the direction toward which each of us must strive this year to secure CJ’s future and top talent.
First, we must grow through futuristic innovation based on CJ’s core value of ONLYONE.
Subsidiaries must continue to expand to new sectors and territories through bold and timely investments and M&As in innovation-driven business models that have been refocused to align with the four future growth engines of culture, platform, wellness, and sustainability.
We have already started new business operations in the promising field of BT, or biotechnology, and will continue to expand into related business sectors. We will also continue to find new business models in IT and make more aggressive investments for future growth.
This year, we will also work on ensuring financial stability. Given the risk of a global recession and a credit crunch, we must preemptively secure as much liquidity in cashable assets as possible to be able to make timely, bold investments.
Second, we need to preemptively secure and foster top talent and fundamentally improve our organizational culture. It is our talent that ultimately makes growth through futuristic innovation possible.
This year, we will continue to guarantee diverse opportunities and fair competition for determined and capable go-getters regardless of age, experience, or title. We will also offer exceptional compensation for stellar performance.
To allow top talent to grow quickly and explore new business segments or posts of interest, we will expand various growth opportunities such as group job postings, in-house ventures, (company-in-company), and spinoffs.
Our work arrangement will also evolve to allow our staff to realize their full potential. We will clarify the use of base offices, expand the rollout of flexible work hours, and accelerate the sweeping innovation of our corporate culture to facilitate self-directed immersion that leads to optimal performance.
Third, we must redefine and preemptively develop outstanding competencies in our key business areas to establish and fortify a structural competitive advantage that global competitors cannot surpass.
We must first further define our competencies and actual performance measures to accurately gauge our true capability so we can take preemptive action where needed.
Not only must we quickly identify future technologies and customer trends, we must also accelerate our digital transformation for greater efficiency and make bold R&D investments in secure cutting-edge technologies. We must also address major customer concerns to grow our customers’ confidence in us as a brand.
Members of the CJ family, to make the quantum leap and turn CJ into a global lifestyle company, we must humbly remind ourselves of the ONLYONE spirit, align ourselves with future trends and technologies, and reinvent CJ as a company that top talent wants to join, work for, and grow with.
We ask that this year, as always, you do your utmost for CJ Group’s continued growth. CJ executives and staff around the globe, and hope all your wishes for the year come true and that you and your family are blessed with good health and happiness.
We wish you a very happy New Year. Thank you.
