Orion Vice Chairman and CEO Hur In-cheol
Orion Holdings Corp., a leading South Korean confectionery and snack maker, has been active in overseas markets for decades, particularly in China and Southeast Asia.
In 1995, it built its first Chinese affiliate, Pan Orion Corp. In Vietnam, Orion operates two factories – one in Hanoi and the other in Ho Chi Minh City.
The company’s efforts have resulted in business growth in target countries and decent dividends.
Last month, the snack maker’s flagship unit, Orion Corp., was paid out 133.5 billion won ($101 million) in its first dividend from Pan Orion since the launch of the Chinese affiliate.
“We are now posting over 200 billion won in operating profit and 1.2 trillion won in sales annually from our Chinese business. Our facility investment in China has been completed, meaning we expect a steady stream of dividends from China,” Orion Holdings Vice Chairman and Chief Executive Hur In-cheol, told The Korean Economic Daily in a recent phone interview.
(Graphics by Dongbeom Yun)
Orion is already receiving dividends from its Vietnamese unit.
Orion Food Vina Co., its wholly-owned subsidiary, paid 111.2 billion won in annual dividends to Orion Holdings in 2023. The Vietnamese unit is expected to pay 103.8 billion won in dividends this year, including 41.5 billion won in interim dividends already paid in April.
Orion Holdings expects a total of 348.5 billion won in dividends from China and Vietnam in 2023 and this year.
FACILITY EXPANSION IN KOREA
Hur said Orion plans to use dividends from its overseas units to expand its main facility in Jincheon, Korea.
The company plans to build a new packaging plant and a logistics center in Jincheon and to break ground on the facilities as early as this year’s end.
A Choco-Pie commercial in Vietnam featuring South Korean entertainer Lee Kwang-soo (Courtesy of Orion Food Vina)
“Our goal is to move the Gyeonggi Ansan packaging plant and Suji logistics center to Jincheon to integrate the production, packaging and logistics bases and increase efficiency,” said the vice chairman.
He said Orion Holdings also plans to steadily increase its dividend payment ratio. In February, the company said it is raising its dividend payout by 20% this year from last year.
M&A EFFORTS
The company is also actively pursuing mergers and acquisitions.
Earlier this year, it acquired a controlling stake in LegoChem Biosciences Inc., a Korean biotech startup, for 548.5 billion won in its push into the biopharmaceuticals segment.
After the acquisition, Orion changed the biotech firm’s name to LigaChem Biosciences Inc.
Orion’s popular snack Kkobuk Chips
“In our mainstay food, snack and confectionery businesses, we’re closely looking for M&A targets. If there’s a good opportunity coming up, we will actively review a takeover,” he said.
Best known for its signature snack cake product Choco-Pie, Orion has largely been active in Asian markets.
OVERSEAS FOCUS ON INDIA, US
The vice chairman said the company’s current overseas business focus is on India.
Orion built a production plant in Rajasthan, a state in northwestern India, in 2021 and is ramping up its facilities to meet growing demand for Choco-Pie and other snacks.
Orion’s LigaChem Biosciences, formerly known as LegoChem Bioscience
“If we make money from our overseas branches, we spend in the relevant country first and then invest extra profit from the country in Korea for facility expansions, shareholder returns and new businesses,” he said.
The vice chairman said he is also considering building a plant in the US, where Orion’s sales are rapidly growing.
Orion’s Turtle Chips, also known as Kkobuk Chips in some other regions including in Korea, and Choco Songi are particularly popular among teens in the US.
US sales of Turtle Chips are expected to surpass 20 billion won this year, up from 12 billion won in 2023.
“If a single product’s annual sales go above 40 billion, we’ll need a local factory,” he said.
By Sul-Li Jun
sljun@hankyung.com
In-Soo Nam edited this article.
