[THE INVESTOR] Shares in Orion, South Korea’s leading confectionery firm, dropped to its lowest level in three years on Aug. 17, as the company’s latest results missed market estimates by a large margin.

Second-quarter sales and profit fell far short of estimates as the company has struggled in the Chinese market due to soaring marketing costs in the face of growing competition from local rivals.

Orion shares traded at 763,000 won (US$693.20), down 15.6 percent as of 11:30 a.m.


“Sales in both Korean and Chinese market slumped during the period while its promotional spending surged to bring new product to the markets,” said Yang Il-woo, an analyst at Samsung Securities.

Orion’s consolidated operating profit plunged 41.2 percent to 27.9 billion won in the second quarter, missing the consensus estimate by over 50 percent. Sales declined 3.2 percent to 496.2 billion won.

Local brokerage firms including Samsung Securities and Hyundai Securities revised down their price target for Orion to 1.1 million won from 1.3 million won and 1.35 million won, respectively.

By Park Han-na (hnpark@heraldcorp.com)