"Unstoppable Growth of E-Cigarettes" KT&G Achieves Record Quarterly Sales (Comprehensive)

Consolidated Sales of 1.6209 Trillion KRW... 8.5% Increase YoY
KGC Insamgongsa Sees Overseas Sales Recovery Including China Due to Duty-Free Demand Recovery
Plans to Enhance Shareholder Value Including Dividend Increase

[Asia Economy Reporter Eunmo Koo] KT&G achieved its highest quarterly sales ever, driven by the growth of domestic and international heated tobacco products in the third quarter of this year and the strong performance of its global tobacco business. However, profitability was somewhat sluggish due to increased selling and administrative expenses.

KT&G announced on the 3rd that its consolidated sales for the third quarter of this year were preliminarily estimated at 1.6209 trillion KRW, an 8.5% increase compared to the same period last year. Operating profit for the same period was 405.6 billion KRW, down 2.7%. On a separate basis, sales amounted to 970.4 billion KRW, up 4.3% year-on-year, while operating profit decreased by 5.1% to 307.8 billion KRW.

By business division, total demand for domestic combustible cigarettes was 16.99 billion sticks, down 0.4% year-on-year as consumption shifted to heated tobacco products, and KT&G’s sales volume also decreased by 0.4% due to the decline in demand. However, thanks to the effect of new product launches and increased sales of ultra-slim products, KT&G’s market share rose by 0.1 percentage points from the previous year to 65.2%.

Meanwhile, domestic heated tobacco products saw continuous demand growth, with penetration rising to 16.7%. In the third quarter, the stick share within the heated tobacco product market steadily grew to 48.5%, maintaining KT&G’s leading position in the domestic market, supported by a high device share.

Overseas combustible cigarettes saw increases in both sales volume and revenue, thanks to increased exports to new markets and growth led by the Indonesian subsidiary. Sales volume (overseas subsidiaries + exports) rose 29.7% year-on-year to 12.2 billion sticks, and revenue increased 43.7% year-on-year to 254.6 billion KRW, driven by higher sales in premium markets and favorable exchange rate effects. Overseas heated tobacco products continued to see growth in device and stick sales due to expanding local demand.

KGC Ginseng Corporation also posted sales of 429 billion KRW in the third quarter, a 2.7% increase compared to the same period last year. In particular, overseas export sales grew as domestic duty-free demand recovered, mid-to-low priced special sales increased, and the Chinese market strengthened following the lifting of Shanghai lockdowns. Operating profit rose 9.2% to 74.8 billion KRW. KGC Ginseng Corporation explained that this was due to the strategic adjustment of home shopping programming and the recovery of high-margin duty-free channels.

KT&G stated, “We expect external management challenges such as inflation and rising costs to continue in the fourth quarter, so we will proactively respond to external uncertainties by strengthening management efficiency across business divisions and further solidify our market-leading position in core businesses such as launching new platforms for heated tobacco products. At the same time, we plan to further strengthen the sustainable growth foundation in future strategic business areas such as global heated tobacco products and global health functional food red ginseng.”

Additionally, in line with the mid-to-long-term shareholder return policy announced last year, KT&G plans to repurchase treasury shares worth 350 billion KRW again this year following last year and is considering increasing the dividend per share by more than 200 KRW compared to the previous year, demonstrating its commitment to enhancing shareholder value.

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