Announcement of Corporate Value Enhancement Plan
Goals to Achieve by 2027
Additional Buyback and Cancellation of Treasury Shares Worth 150 Billion KRW This Year
Total Shareholder Return Rate Expected to Exceed 100%
KT&G announced a plan to enhance corporate value, aiming to achieve a 15% ROE (Return on Equity) and shareholder returns totaling KRW 3.7 trillion by 2027.
According to KT&G on the 11th, this corporate value enhancement plan is a concretization of the details revealed on the 7th, with the core goal of raising ROE from the current level of around 10% to 15% by 2027 through profitability improvement, asset efficiency, and financial optimization.
To improve profitability centered on its core business, KT&G plans to specify key focus areas within its three main business sectors: overseas cigarettes, electronic cigarettes (NGP), and health functional foods, and to advance business operations through continuous expansion. Additionally, by restructuring low-profit and non-core assets such as real estate and financial assets, the company aims to secure approximately KRW 1 trillion in cumulative cash, which will be used for growth investments and shareholder returns to enhance capital efficiency.
Investment efficiency will also be increased through innovation in Capex (capital expenditure) investment strategies, including strengthening global production partnerships. KT&G adjusted its total Capex investment plan of KRW 3.5 trillion (2023?2027), announced last November, to KRW 2.4 trillion. Despite the scale adjustment, the originally planned production capacity expansion and expected investment returns are projected to be maintained at existing levels.
Top-tier shareholder return policies domestically and internationally will also be strengthened. From 2024 to 2027, shareholder returns totaling KRW 3.7 trillion will be implemented, including approximately KRW 2.4 trillion in cash dividends and KRW 1.3 trillion in share repurchases. In addition, the 'KT&G Plus Alpha Program' will be launched to utilize funds generated from asset efficiency improvements for additional shareholder returns. The additional funds will be primarily used for share repurchases and immediate cancellation. According to the enhanced shareholder return policy, about 20% of the total issued shares (133,822,497 shares as of 2023) are expected to be canceled by 2027.
The scale of share repurchases and cancellations will also expand this year. On the 7th, KT&G’s board of directors resolved to use KRW 150 billion from funds secured through the liquidation of non-core and low-profit assets to repurchase and cancel 1.35 million shares within the year. As a result, KT&G’s total shareholder return this year is expected to approach KRW 1.4 trillion, including the cancellation of previously held treasury shares, with a total shareholder return ratio exceeding 100%. The scale of share cancellations is also expected to reach about 6.3% of the total issued shares in 2023.
Lee Sang-hak, Senior Vice President of KT&G, said, "The company has pursued corporate value growth and maximization of shareholder value based on strengthening fundamental competitiveness with ROE as a key indicator. We will continue to do our best to satisfy all stakeholders, including shareholders, through enhancing corporate value to a global top level."
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