[News Space=Reporter seungwon lee] The management performance and financial structure of pet specialty company Harim Pet Food (CEO Jun Heo) are showing signs of improvement.

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 30th, Harim Pet Food's sales, operating profit, and net profit in 2024 all showed significant improvements compared to the previous year. 

Last year, Harim Pet Food achieved sales of KRW 52.1 billion (a 14% increase from KRW 45.7 billion the previous year), operating profit of KRW 3.2 billion (a 78% increase from KRW 1.8 billion the previous year), and net profit of KRW 3.5 billion (a 150% increase from KRW 1.4 billion the previous year). 

Harim Pet Food recorded a significant increase in sales and net profit based on the growth of the pet food market. In particular, the operating profit rate achieved 6%, showing a notable improvement in profitability compared to 3.9% the previous year. 

Harim Pet Food's good performance can be attributed to its increased market share and sales in the pet food market. It also succeeded in reducing costs through the effect of reversing inventory asset valuation losses. It also achieved good results in terms of debt ratio and cash flow.

The debt ratio also improved significantly year-on-year to 34.73%, and the overall financial structure was stabilized, according to the analysis. Cash flow from operating activities also increased significantly to KRW 4.3 billion, up from -0.86 billion the previous year.

Since its establishment in 2017, Harim Pet Food has been strengthening its position in the domestic pet food market by recording steady sales growth. An analysis of sales changes over the past few years shows that the strategy centered on premium pet food products has been successful.

Harim Pet Food started with sales of KRW 200 million in its first year in 2017 and grew about 10-fold to KRW 2.2 billion in 2018. After that, it entered a full-fledged growth trajectory by exceeding KRW 10 billion in 2019. Following its first surplus in 2021 after five years of launch, sales in 2022 increased by 28% and operating profit by KRW 36.3 billion and KRW 1.9 billion, respectively, compared to the previous year. It continued to achieve double-digit growth compared to the previous year, reaching KRW 45.7 billion in 2023 and KRW 52.1 billion in 2024.

Harim Pet Food has been steadily growing as a domestic brand in the domestic pet food market, where imported feeds such as Royal Canin and Mars were dominant. In particular, the expansion of the premium product line and the possibility of entering overseas markets are expected to drive future growth. 

The analysis is that the company was successful in focusing on the premium market by focusing on 100% human grade feed without using synthetic preservatives such as 'The Real' and 'Babiboyak'.

In the domestic pet market, demand for premium pet food is on the rise due to the increase in companion animals and the spread of pet humanization (a culture of treating companion animals like family).

However, rising raw material prices and intensifying competition in the pet industry can act as major risks, and cost efficiency and product innovation are continuously required to overcome these.

A pet food industry insider said, "Considering that the Korean affiliate of the French Mars Group is Mars Korea and that the Mars Group's affiliate is Royal Canin, the sales of the first and second largest pet food companies alone are worth 500 billion won, and in this harsh reality, imported products dominate more than 70% of the Korean pet food market. As such, the competition between Shintobuli and other brands is set to intensify, as they also have superior product capabilities."

Meanwhile, with 15 million domestic pets, fierce competition is taking place among pet food companies over the 1 trillion won market.

According to the '2024 Korean Pet Food Market Forecast' data from the Korea Pet Food Association and Nielsen IQ Korea data, the annual sales of the Korean pet food market is approximately KRW 900 billion. The Korea Agro-Fisheries & Food Trade Corporation forecasted the pet food market size to be KRW 1.1803 trillion. Euromonitor International, a global market research firm, predicted that the global market size would reach USD 184 billion (KRW 255.37 trillion).

As a result of analyzing the performance reports of the top 5 pet market players in 2023, including sales and operating profit, Royal Canin Korea is in an overwhelming lead, with Korea Mars, Daejoo Industrial, Woori (merger of Daesan & Company and Daehan Feed), and Harim Pet Food (physical division of Jeil Feed's pet food division) closely following.

As of 2023, the sales ranking was Royal Canin > Korea Mars > Daejoo Industrial > Woori and > Harim Pet Food. The operating profit and net profit ranking was Royal Canin > Korea Mars > Daejoo Industrial > Harim Pet Food, and only Woori recorded an 'operating loss'. The operating profit ratio ranking was Royal Canin 12.6% > Korea Mars 9.4% > Daejoo Industrial 7.3% > Harim Pet Food 4%.