[Click eStock] "KT&G, Temporary Suspension of US Operations Has Limited Financial Impact"

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities forecasted on the 15th that the short-term financial impact of KT&G's announcement of a temporary suspension of sales of combustible cigarettes in the United States is expected to be minimal.

Park Sang-jun, a researcher at Kiwoom Securities, stated, "Sales of combustible cigarettes in the U.S., which are subject to temporary suspension, account for about 4% of consolidated sales," adding, "Due to strengthened regulations and intensified market competition in the U.S. market, the company decided to temporarily suspend and review the business. It is estimated that the negative cash flow impact caused by the surge in escrow fund deposits was a burden."

Although the U.S. is one of the major export countries for combustible cigarettes with a high average selling price (ASP), the recent deterioration of the regulatory environment has led to increased expenses in selling and administrative costs, including payments for FDA equivalence testing services, negatively affecting operating profit this year.

Therefore, even if exports to the U.S. are suspended, it is explained that the reduction in regulatory-related selling and administrative expenses and an increase in export volume through expansion in other regions could mitigate the short-term financial impact.

This content was produced with the assistance of AI translation services.