Overseas Cigarettes and Domestic E-Cigarettes Drive KT&G to Record Half-Year Sales Despite Economic Downturn

Second quarter operating profit rises to 414.5 billion won, up 18.5% year-on-year

Achieves double-digit growth for four consecutive quarters

Sales up 9.9%, setting new half-yearly record

Interim dividend raised to 2,000 won, an increase of 600 won from last year

KT&G has continued its upward trend in performance, overcoming domestic and foreign challenges such as a high exchange rate and the Middle East war between the United States and Iran. The growth was driven by increased overseas cigarette sales in its core tobacco business and the rising domestic consumption of Next Generation Products (NGP), commonly referred to as electronic cigarettes. Based on these strong results, the company also plans to strengthen shareholder returns by expanding dividends.

On August 6, KT&G announced in a regulatory filing that its consolidated operating profit for the second quarter of this year was provisionally calculated at 414.5 billion won, an increase of 18.5% year-on-year. Sales during the same period reached 1.7016 trillion won, up 9.9% from a year earlier. Sales for the first half of this year exceeded 3.4 trillion won, marking a new half-yearly record. Operating profit has achieved double-digit growth rates for four consecutive quarters since the third quarter of last year. The company has revised its annual guidance, raising its expected year-on-year sales growth rate from the previous 3–5% to 5–7%, and its operating profit growth from 6–8% to 10–13%.

By business segment, the tobacco division recorded second-quarter sales of 1.2185 trillion won, an 11.7% increase year-on-year, and operating profit of 382.5 billion won, up 18.8%, leading the group's overall results.

In particular, the overseas cigarette business sustained robust quantitative and qualitative growth despite highly volatile external factors such as the Middle East war. Second quarter sales for this segment reached 557.7 billion won, up 18.9% year-on-year, and operating profit rose by 45.6% due to increased sales volume and strategic price hikes. The domestic cigarette segment also maintained its leadership, recording a 67.9% market share in the first half of the year.

The NGP business also held the number one position with a 48.2% market share, fueled by increased domestic consumption. NGP sales grew by approximately 23.8% year-on-year to 242.7 billion won, driven by the popularity of the premium sticks introduced with the launch of “lil AIBLE 3.0” in February. In the second half, KT&G plans to diversify its NGP portfolio further by introducing innovative new products using advanced technology.

The health functional food division of subsidiary KGC Ginseng Corporation reported domestic sales of 174.2 billion won in the second quarter, a 7.8% increase year-on-year. This was attributed to promotional campaigns tied to May’s Family Month and high oil price relief programs, plus brand campaigns for products such as “Gidarim Chimhyang” and “Everytime.” Overseas sales fell by 9.4 billion won to 49.6 billion won, reflecting inventory adjustments at Chinese distributors. The segment’s operating profit jumped 61.3% year-on-year to 10 billion won, supported by expansion in high-profit channels.

On the same day, KT&G’s Board of Directors resolved to increase its interim dividend for the first half from 1,400 won last year to 2,000 won, reflecting the strong half-yearly results. Building on profit growth and capacity for shareholder returns, the company also plans to consider raising its year-end dividend.

In addition, the company fully retired all treasury shares in April, meeting the original target of its value enhancement plan—scheduled through next year—ahead of time. KT&G plans to announce a new mid-to-long-term shareholder return policy, including further dividend increases, in the fourth quarter. The company also intends to proceed as planned with additional buybacks and cancellations of treasury shares in the second half of the year.

Lee Sanghak, Senior Executive Vice President of KT&G, said, "Operating profit from overseas businesses saw a significant increase, and strong growth momentum for domestic NGPs led to a simultaneous rise in both sales and operating profit. Based on these profit gains, we will continue our shareholder return policy—including high dividends and additional buybacks and retirements of treasury shares—to further enhance shareholder value."

This content was produced with the assistance of AI translation services.