Namyang Dairy ended a five-year run of losses and returned to profit. It is seen as the success of a business restructuring to diversify its portfolio carried out by its largest shareholder, H&Q. Still, it is unclear whether it can sustain high-intensity efficiency work over the long term. Recovering sales, which have fallen below 1 trillion won since 2020, also remains a task.

According to the Financial Supervisory Service's electronic disclosure system on Feb. 20, Namyang Dairy posted consolidated operating profit of 5.2 billion won last year, swinging from an operating loss of 9.8 billion won a year earlier. Net profit was 7.1 billion won, improving from 250 million won a year earlier.

Namyang Dairy's return to profit is seen as the result of high-intensity efficiency measures carried out under H&Q after it became the largest shareholder in 2024. Portfolio reorganisation and efficiency improvements in costs and expenses led to better profit and loss results.

Namyang Dairy first moved to erase traces of the owner family that had continued for 60 years. It introduced an executive officer system, splitting the existing owner-centred decision-making structure into the board of directors for oversight and management for execution. It separated the functions of the board and operating organisation and focused on improving the expertise and speed of decision-making.

After the change in management control, it formed a new board, reshuffled its organisational structure and launched a roadmap to normalise management. This accelerated the pace of Namyang Dairy's portfolio diversification.

Namyang Dairy expanded categories from a focus on white milk to milk, infant formula, protein, processed milk, coffee and tea. It reorganised ingredients and expanded its lineup around trends such as high protein and low sugar.

In milk, fermented milk and coffee, it strengthened functionality with lactose-free, fat-free and low-sugar products. In processed milk and snacks, it expanded its steady seller Choco Emong lineup by launching products such as Matcha Emong and Choco Emong Mini Unsweetened.

Namyang Dairy, a latecomer in the protein drink market, showed results. Takefit, which boosted sales in the fiercely contested convenience store market, is a protein drink brand Namyang Dairy launched in 2022.

According to the industry, Takefit Max ranked No. 1 in sales in South Korea's offline protein drink market in the first half of 2024, based on Nielsen data. Takefit also recorded No. 1 in convenience store sales starting in the second half of 2023. Convenience stores are known as the offline distribution channel for protein drinks with the largest share of sales.

Still, the industry remains concerned that Namyang Dairy's return to profit could be limited to the short-term effects of cutting costs. Namyang Dairy's operating profit margin last year was 0.57 percent.

Sales last year also fell to 914.1 billion won, extending a declining trend. That leaves restoring sales to 1 trillion won as an unresolved task, the report said. Namyang Dairy's sales were 948.9 billion won in 2020, 956.1 billion won in 2021, 964.7 billion won in 2022, 996.8 billion won in 2023 and 952.8 billion won in 2024. Since recording 1.03 trillion won in 2019, it has not climbed back above 1 trillion won.

The pace of share gains by new portfolio products such as protein drinks and processed milk also remains limited. According to Namyang Dairy's quarterly report for the third quarter of last year, the biggest revenue source is still milk products such as 'Delicious Milk', which account for 54.5 percent, or 373.6 billion won. According to the industry, in the protein market, Ildong Foodis' Hi-Mune is in the 40 percent range and Maeil Dairies' Selex is at 20 to 30 percent, maintaining a two-leader structure.

Going forward, whether sales recover and product competitiveness strengthens is cited as a variable that will affect results. Namyang Dairy plans to diversify its portfolio and secure market competitiveness through future product research and development.

New-category products that Namyang Dairy has launched since 2024 include Delicious Milk GT Super Zero Lactose-Free, Bulgaris Lactose Zero, Bulgaris No Sugar Added Plain, Takefit Monster Ultra High Protein, Matcha Emong, Orchard Apple Flavour Zero, Choco Emong Mini Unsweetened, and French Cafe Coffee Mix Stevia Goat Milk Protein.

A Namyang Dairy official said, "In the meantime, we were unable to focus on product research and development due to legal issues involving the former owner." The official added, "After the transition to the new largest-shareholder system, we are actively pursuing research and development as part of efforts to normalise management. As products developed through research and development, such as RTD products and beverages with reduced sugar content, are being launched, we expect management normalisation through this."