Despite Won's Rise, Overseas Business Shines... KT&G Posts Record Quarterly Results: "More Than KRW 5 Trillion in Shareholder Returns"

Third-quarter revenue of KRW 1.9 trillion and operating profit of KRW 530 billion mark record highs

Strong overseas cigarette business and domestic NGP sales

Annual dividend per share raised from KRW 6,000 to KRW 8,000 this year

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KT&G achieved its highest-ever quarterly results as strong overseas business and domestic sales of next-generation products (NGP), including heated tobacco products, offset the impact of a decline in the won-dollar exchange rate in its core tobacco business. Building on this performance, the company plans to raise its annual dividend per share by 2,000 won from last year and, starting next year, carry out share buybacks and cancellations worth 1.2 trillion won over four years, among other measures, to return more than 5 trillion won to shareholders.

KT&G President Bang Kyungman presents the company’s shareholder return plans at its Capital Markets Day, an event outlining its third-quarter earnings, future shareholder return plans and business strategy. Photo provided by KT&G.

KT&G disclosed on Thursday that its consolidated operating profit for the third quarter of this year was provisionally tallied at 530.1 billion won, up 13.9% from a year earlier. Revenue for the same period rose 4.3% to 1.9052 trillion won. Both third-quarter revenue and operating profit were the highest on record for a quarter, surpassing the previous records of 1.8269 trillion won in revenue and 465.3 billion won in operating profit, set in the third quarter of last year.

By segment, revenue from the tobacco business rose 6% from the same period last year to 1.3065 trillion won, while operating profit increased 14.4% to 425.5 billion won. The overseas cigarette business recorded simultaneous growth in sales volume, revenue and profit for the 10th consecutive quarter, achieving record quarterly sales volume and revenue. Third-quarter overseas cigarette revenue increased 10.5% from a year earlier to 579 billion won, while sales volume rose 6.2% to approximately 19.6 billion cigarettes.

The NGP business generated revenue of 294 billion won at home and abroad. Domestic revenue amounted to 173.9 billion won, maintaining its No. 1 market share. Revenue from health functional foods at subsidiary KGC also rose 3.4% year over year to 372.2 billion won, while operating profit increased 12.2% to 80.1 billion won.

Alongside its third-quarter earnings announcement on Thursday, KT&G held a 'Capital Markets Day' to outline its future shareholder return plans and business strategy. At the event, the company said it would set its annual dividend per share for this year at 8,000 won, up 2,000 won (33.3%) from last year, and raise its dividend payout ratio from the current level of about 60% to at least 75% by 2030. It also plans to buy back and cancel 1.2 trillion won worth of its own shares over four years starting next year. Through these measures, it will return a total of 5 trillion won to shareholders, including dividends, and will also consider additional special shareholder returns if it determines that further enhancement of shareholder value is needed.

Regarding its future business strategy, KT&G forecast group revenue of 7 trillion won and operating profit of 1.5 trillion won this year. It said it would strengthen the competitiveness of its overseas cigarette, NGP and health functional food businesses and actively expand its push into overseas markets. To that end, in its overseas cigarette business, the company plans to raise prices for key brands such as Esse and increase the share of premium products in sales, while targeting potential markets, including 30 countries where it has yet to enter, and expanding the operations of its local subsidiaries.

KT&G set a target of increasing the overseas share of cigarette business revenue to at least 70% by 2030, while raising the NGP share of tobacco business revenue and the overseas share of health functional food revenue to at least 30% each. It also outlined plans to save more than 550 billion won in cumulative costs over the next four years by optimizing its global production network, including through the new factory in Indonesia completed last month.

KT&G President Bang Kyungman said, "We will achieve profitable growth by advancing and expanding globally our three growth pillars: the overseas cigarette, NGP and health functional food businesses. We will increase shareholder returns and enhance shareholder value based on sustained earnings growth."

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