KT&G Reports for the first quarter of 2024; Solid performance in the next-generation products and overseas cigarettes sectors

  • Revenue and operating profit declined year-on-year due to global inflation and the completion of large development projects
  • It expects a turnaround in the second half thanks to strengthened competitiveness in its core businesses and business transformation

Seoul, South Korea, May 9, 2024 /PRNewswire/ — KT&G Corporation (“KT&G” or the “Company”) (KRX:033780), South Korea a leading manufacturer of tobacco products, today announced its financial results for the completed first quarter March 31, 2024. The company recorded consolidated revenues of 1.292 trillion KRW and operating profit 236.6 billion KRW.

KT&G’s overseas and domestic next-generation products (“NGP”) and overseas cigarettes sectors maintained strong performance in the first quarter of 2024, confirming their strong trend of the previous year.

In the first quarter of 2024, NGP stick sales volume, the main growth driver of NGP’s business, achieved growth in all key metrics, including sales volume, revenue and operating profit. In particular, the volume of foreign NGP sticks recorded an impressive double-digit growth of 14.7%, reaching 2.11 billion sticks.

KT&G also achieved its third consecutive quarter of revenue growth in its overseas cigarette business, driven by a strategic pricing strategy in key growth markets such as Indonesia. It reported KT&G’s overseas cigarette revenues in the first quarter 291.8 billion KRWwhich means an increase of 10.1% y/y.

While the company achieved significant results in its core businesses, its consolidated revenue and operating profit for the first quarter declined compared to the same period last year. The deterioration of the economic situation was mainly caused by rising production costs, completion of large development projects and reduced revenues from the functional food sector due to lower consumer spending.

Despite challenging conditions in the first quarter, KT&G anticipates a positive outlook for improved business performance in the second half of the year under the leadership of new CEO Kyung-man Bang. After taking over as general director of… March 28volMr. Bang is leading strategic business transformation with a focus on delivering significant growth in three core business areas: NGP, Foreign Cigarettes and Healthy Functional Foods.

As part of the business transformation, Mr. Bang conducted an organizational restructuring that focused on maximizing business performance by strengthening the responsible management system in each business unit. Under the new organizational structure, reporting directly to the CEO, strategy, marketing and production units were created, with each unit manager being given significant responsibility and authority to improve the unit’s operational efficiency and execution. For overseas operations, regional organizations have been transformed into independent companies to build a strong management system that accelerates the company’s international expansion.

In addition to business transformation, KT&G is implementing a project aimed at increasing ROE in order to increase profitability. The company is also committed to increasing shareholder value and joins initiatives led by the South Korean government Company value improvement program by faithfully implementing its new three-year (2024-2026) shareholder return policy. This policy includes a cash refund of 2.8 trillion KRW and cancellation of nearly 15% of the issued shares.

A spokesman for KT&G said: “KT&G is committed to strengthening its competitiveness in its core businesses and driving business transformation with the goal of making a significant step forward and becoming a leading A top-class global company“Despite a number of headwinds, such as inflation-induced pressure on production costs and economic recession, KT&G is committed to achieving business recovery in the second half of the year by strengthening global competitiveness and striving to optimize operational efficiency,” the spokesman added.

SOURCE KT&G Corporation