Orion eyes big sales in China, Russia

Chinese customers look at Orion’s “Choco Pie” at a supermarket in Beijing in this file photo. The confectionary company is expected to rake in more than 1.2 trillion won in sales in China this year. It’s also trying to ramp up sales in Russia and Southeast Asian countries.

By Park Si-soo

This is the fourth in a series of articles on Korean food companies and restaurants seeking to expand overseas ㅡ ED.

Tam Chul-kon, CEO of Orion

Last year was something special for confectionary maker Orion.

The company surprised investors in January by making itself the first Korean food company to hit 1 trillion won ($894 million) in sales in China last year. The news shot the firm’s stock price up over 1 million won in October, a milestone event that had previously only been achieved by corporate giants such as Samsung Electronics.

The company, known for its long-running hit chocolate cake “Choco Pie,” is now looking for double-digit growth in the world’s most populous nation this year. It’s also trying to ramp up sales in Russia, and Vietnam and other Asian countries with localized sales strategies and its overseas manufacturing and distribution network.

“We are making every effort to become the leading snack brand in China,” an Orion spokesman said. “Russia is a stepping stone for us to expand into other European countries. It’s the same with Vietnam; a gateway for Southeast Asia and the Middle East.”

Many analysts said Orion will keep up its current pace in China for a while.

“Orion is the only Korean food company whose products have been proven to be popular in China,” said Cho Hyun-ah, an analyst at Shinhan Investment. “Robust sales are expected to continue this year on the back of the release of new products and the operation of a new processing plant in Shenyang in December."

Cho forecasts a 28.2 percent increase in sales and a 37 percent hike in operating income in China. The firm currently runs four manufacturing plants in China. It has two others in Russia and another two in Vietnam.

Analyst Baek Woon-mok of KDB Daewoo Securities echoed the bright outlook, citing the company’s efforts to widen its sales network in China.

“Orion products are currently available at more than 1,300 Chinese shopping malls and smaller outlets. The number will increase continuously,” Baek said. “The expansion will become another factor behind the firm’s rapid growth in China, which I think will continue until 2014."

The company’s stock price surged last Friday to close at 1,182,000 won ($1,056), up 18,000 won or 1.55 percent from the previous day and narrowing the gap with Samsung Electronics’ 1,475,000 won.

The hike was attributed to a local securities firm’s positive outlook for Orion’s performance in China during the second quarter of the year, raising the possibility of an additional rise.

“Orion will enjoy robust sales growth in China during the second quarter,” said Han Kook-hee, an analyst at Woori Investment and Securities. “The firm is also expected to have a strong performance in Indonesia and other Southeast Asian countries.”

Han said Orion’s stock price could reach 1.4 million won.