▲ This undated file photo shows the Hybe headquarters in Seoul. (Yonhap)

(LEAD) Hybe-Q3 earnings

(LEAD) Hybe shifts to red in Q3 on N. American restructuring, IP investment

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SEOUL, Nov. 10 (Yonhap) -- South Korea's K-pop powerhouse Hybe on Monday reported a net loss for its third quarter, reversing a year-ago profit as the company absorbed one-off costs related to the restructuring of its North American operations and stepped up investments in global artist intellectual property (IP).

The entertainment company posted a net loss of 52 billion won ($35.8 million) for the July-September period, a sharp turn from the 1.4 billion-won profit recorded a year prior, according to a regulatory filing.

The company also recorded an operating loss of 42.2 billion won, compared with an operating profit of 54.2 billion won in the previous year. Sales rose 37.8 percent to 727.2 billion won.

In a shareholder letter released Monday afternoon, Hybe CEO Lee Jae-sang attributed the profitability decline to temporary, strategic factors, specifically citing one-off costs incurred during the restructuring of the North American business and proactive investment in expanding global artist IP.

"The combination of the two factors caused the operating profit margin to fall by approximately 12 percentage points during the quarter," he said, asking shareholders to understand that the cost stemmed from "structural changes for future profitability improvement and investments for mid-to-long-term growth."

The CEO projected a financial rebound, forecasting that fourth-quarter performance would incrementally improve as "most of the one-off factors reflected in the third quarter" will be resolved.

Looking ahead, Hybe expects a significant improvement in earnings starting next year as its flagship group BTS prepares to return with a new album and launch a world tour.

The company also anticipates stronger profitability from its "multi-home, multi-genre" artist development strategy, its Weverse fan community platform, and the restructuring of its "next entertainment" business for its long-term growth vision.

"We'll be able to achieve stable profitability with an operating profit margin of double digits or more in the mid-to-long term," Lee said.

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