First Earnings Report Since New CEO Inauguration
Operating Profit Expected to Rise 9.83% Year-on-Year
Global Success in Cigarettes, E-Cigarettes, and Health Supplements
Bang Kyung-man, the new president of KT&G, marked his 100th day in office earlier this month, and the first report card, the company's second-quarter performance this year, is expected to show a rebound. It is interpreted that the three core businesses that the company has positioned as its mid- to long-term growth strategies?global cigarettes (CC), electronic cigarettes (NGP), and health functional foods (Geongisik)?have achieved results in overseas markets.
According to the Financial Supervisory Service's electronic disclosure system and the securities industry on the 23rd, KT&G's consolidated second-quarter earnings consensus (market average forecast) for this year is an operating profit of 270.3 billion KRW, up 9.83% from the same period last year, and sales of 1.4001 trillion KRW, up 4.80%. Although sales and operating profit in the first quarter were 1.2923 trillion KRW and 236.6 billion KRW, down 7.4% and 25.3% respectively from the same period last year, they were expected to turn upward.
The increase in overseas market sales volume of the core tobacco business is analyzed to have led the performance rebound. According to the securities industry, KT&G's exports and overseas subsidiary tobacco sales during this period are expected to increase by 25.4% compared to the same period last year. This is the result of increased supply volumes centered on the Middle East and Indonesia. In the health functional food business, although the domestic market struggled due to weak consumption, sales in key markets such as the United States and China recorded double-digit growth rates, which is estimated to have offset losses.
Since being appointed as the head of KT&G through the regular shareholders' meeting at the end of March, President Bang has visited key overseas markets such as Indonesia, Mongolia, and Taiwan one after another over the past three months, strengthening global on-site management.
Mongolia is a market KT&G entered in 2001, and as of last year, it surpassed a 50% market share of the company's product sales, ranking first. In Taiwan, where exports began in 2002, the local cigarette sales volume exceeded 1 billion sticks for the first time last year. In addition, new factories are being established in Indonesia and Kazakhstan, where KT&G operates subsidiaries locally.
KT&G has set a goal to strengthen its market dominance in Indonesia this year and to foster new markets in Africa and Latin America, aiming to increase cigarette exports and overseas subsidiary sales by 24% compared to the previous year. Although NGP device sales are sluggish, the export volume of sticks, which have relatively high margins, is expected to grow by around 20%, generating profits. Kim Tae-hyun, a researcher at IBK Investment & Securities, pointed out, "Although cost burdens such as imported tobacco leaves remain, expectations for KT&G's profitability improvement are valid due to the expansion of high-priced duty-free sales and increased overseas tobacco sales."
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