KT&G achieved record revenue and operating profit in the third quarter of this year, driven by growth in its overseas tobacco business.
Increased sales of overseas cigarettes and an expansion of premium products supported the company's performance.
To sustain this growth, KT&G plans to expand its overseas production and sales networks while pursuing a 5 trillion won shareholder return by 2030.
On November 5, KT&G reported that its consolidated revenue for the third quarter reached 1.9052 trillion won, a 4.3% increase from the same period last year. Operating profit rose to 530.1 billion won, up 13.9%. Both revenue and operating profit are the highest quarterly figures in the company's history.
The improvement in performance was primarily driven by the overseas tobacco business. Revenue from the tobacco segment in the third quarter was 1.3065 trillion won, a 6% increase compared to the previous year, while operating profit grew by 14.4% to 425.5 billion won. The operating profit margin increased by 2.4 percentage points to 32.6% year-on-year.
The overseas cigarette business has seen sales volume, revenue, and profit grow together for ten consecutive quarters, achieving record highs in both quarterly sales volume and revenue. The next-generation product (NGP) segment also maintained its leading market share in South Korea and improved profitability by increasing the proportion of high-priced stick sales.
The health supplement business also experienced growth. Revenue for KGC, a subsidiary, reached 372.2 billion won in the third quarter, a 3.4% increase from the previous year, while operating profit rose by 12.2% to 80.1 billion won.
During the 'Capital Market Day' held on the same day, KT&G announced its mid- to long-term business strategy and shareholder return plans. The annual dividend per share will be increased by 33.3% from last year's 6,000 won to 8,000 won, with a target to raise the current payout ratio from 60% to over 75% by 2030.
From next year until 2030, KT&G plans to buy back and retire 1.2 trillion won worth of its own shares. The total shareholder return, including dividends, is projected to reach 5 trillion won, with special returns considered if additional shareholder value enhancement is deemed necessary.
In its overseas tobacco business, KT&G aims to enhance profitability through price increases and an expansion of high-priced product sales. The company plans to target new markets in 30 countries where it has not yet entered, leveraging its flagship brands like 'Esse,' and expand its local operations.
Utilizing its global production network, including a newly completed factory in Indonesia, KT&G aims to achieve cumulative cost savings of over 550 billion won over the next four years.
The company will also strengthen its overseas expansion in the next-generation tobacco business. It plans to broaden its overseas sales network for heated tobacco products by adding direct market entry methods to its existing global partnerships. The brand 'LOOP,' acquired from Swedish nicotine pouch company ASF at the end of last year, aims to enter approximately 70 countries, including the United States, by 2030.
In the health supplement business, KT&G plans to expand its overseas operations not only through sales of Jeonggwanjang products but also by supplying ginseng raw materials. KGC is in discussions with global food, beverage, and beauty companies regarding potential technology partnerships and product development.
KT&G aims to increase the proportion of overseas revenue from its cigarette business to over 70% by 2030, while also expanding the share of NGP revenue and overseas sales in the health supplement sector to over 30% each.
Bang Kyung-man, CEO of KT&G, stated, "Through the advancement and global expansion of our overseas cigarette, NGP, and health supplement businesses, we will achieve growth focused on profitability rather than just revenue expansion. We will also enhance shareholder returns based on continuous profit growth."
* This article has been translated by AI.
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