Strong Performance Driven by Global Product Launches and Price Increases
Enhanced High-Dividend Policy and Annual Share Buybacks and Cancellations Worth 660 Billion Won Plus
KT&G achieved record-breaking first-half sales of 3 trillion won for the first time, driven by the growth of its global business, with both sales and operating profit showing an upward trend.
On August 7, KT&G announced through a regulatory filing that its consolidated revenue for the second quarter of this year was provisionally tallied at 1.5479 trillion won, an increase of 8.7% compared to the same period last year. During the same period, operating profit also rose by 8.6% to 349.8 billion won, marking three consecutive quarters of simultaneous growth in both sales and operating profit since the fourth quarter of last year.
By segment, the tobacco business recorded solid growth, with sales and operating profit reaching 1.0906 trillion won and 321.8 billion won, respectively, up 10% and 1.6% year-on-year, thanks to the strong performance of the global business.
In particular, overseas cigarettes achieved 'triple growth' for the fifth consecutive quarter, with increases in sales, operating profit, and sales volume. Sales reached 469 billion won, up 30.6% from the second quarter of last year. Sales volume also rose by 9.1% to 16.7 billion sticks, setting new records for both quarterly sales and sales volume. Adjusted operating profit for the second quarter of this year, excluding the reversal of bad debt allowances on accounts receivable from last year, also surged by 51.1% year-on-year, securing strong growth momentum.
This performance is the result of CEO Bang-Kyungman’s top-priority initiatives since his appointment last year, including the global, locally-integrated value chain strategy and the transition to a CIC system. Additionally, in key regions such as Asia-Pacific, Central Asia, and Latin America, the company’s strategy of launching competitive new products centered on 'Esse', expanding the share of premium products based on increased brand power, and raising selling prices proved effective. Once the local sourcing system for raw materials at overseas factories is completed in the second half of the year, profit growth is expected to accelerate further due to cost reductions.
In the domestic NG business segment, increased sales of 'Lil Able' led to a first-half market share of 45.8%, while overseas stick sales volume rebounded to 2.2 billion sticks, a 4.2% increase year-on-year.
Operating profit from health functional foods, operated by KGC Ginseng Corporation, turned to a surplus at 6.2 billion won, as a profitability-focused strategy including marketing cost optimization was implemented despite the domestic economic downturn.
Meanwhile, at a board meeting held on this day, KT&G resolved to increase its interim dividend by 200 won to 1,400 won, reinforcing its high-dividend policy. The company also plans to consider further dividend increases in line with future share price and profit growth. In addition, starting from August 8, KT&G will repurchase and cancel approximately 300 billion won worth of treasury shares. Furthermore, in the second half of the year, the company plans to use funds raised through the liquidation of non-core assets such as real estate to carry out additional treasury share buybacks and cancellations. Previously, in the first quarter, KT&G completed the cancellation of treasury shares worth 360 billion won, equivalent to 2.5% of its total outstanding shares.
KT&G has announced a top-tier value enhancement plan, aiming to return a total of 3.7 trillion won to shareholders through cash dividends and share buybacks from 2024 to 2027, and to cancel more than 20% of its total outstanding shares, including newly repurchased shares. Accordingly, last year the company returned approximately 1.1 trillion won in cash to shareholders, achieving a 100% total shareholder return rate and canceling treasury shares equivalent to 6.3% of total outstanding shares. This year as well, KT&G is pursuing an even larger-scale value enhancement program, continuing its industry-leading policy to enhance shareholder value.
A KT&G representative stated, "We have secured mid- to long-term growth focused on profitability, driven by strong sales of new products launched in major global markets and price increases based on brand competitiveness. We will continue to advance our business with the goal of achieving double-digit annual operating profit growth. Based on these results, we will faithfully execute large-scale treasury share buybacks and cancellations, and maintain our high-dividend policy to prioritize shareholder value going forward."
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