"Dedicated Growth Continues" KT&G, 1Q Operating Profit 316.5 Billion Won (Comprehensive)

Sales of 1.3957 Trillion KRW... 0.5% Decrease YoY
Strong NGP Sales and High Growth in Overseas Cigarettes
Cost Burden Increases Due to Global Inflation

KT&G recorded results in the first quarter of this year that met market expectations, supported by strong domestic and international sales of next-generation products (NGP) and high growth of overseas subsidiaries.

KT&G announced on the 11th through a public disclosure that its consolidated operating profit for the first quarter of this year was tentatively estimated at 316.5 billion KRW, a 4.9% decrease compared to the same period last year. Sales during the same period decreased by 0.5% to 1.3957 trillion KRW.

Looking at each business segment, the core tobacco business (cigarettes and NGP) posted solid results. KT&G’s tobacco business sales in the first quarter increased by 3.6% year-on-year to 857.6 billion KRW. Operating profit was 236.6 billion KRW, down 8.9% year-on-year due to the impact of sharp increases in raw material prices such as tobacco leaves.

Domestic cigarette sales in the first quarter recorded 389.7 billion KRW, up 0.5% year-on-year, despite a decline in sales volume due to reduced total demand, driven by increased duty-free sales. The domestic market share in the first quarter was 65.7%, up from 65.4% based on last year’s annual figure.

Overseas cigarette sales in the first quarter rose 17.1% year-on-year to 265.1 billion KRW. This was due to high growth of overseas subsidiaries such as the Indonesian subsidiary and expanded sales coverage in new market regions including Africa and Latin America. Sales volume in the first quarter also increased by 16.1% year-on-year.

In particular, the NGP segment’s domestic and overseas stick sales volume reached 3.22 billion units, marking a 41.9% increase year-on-year, continuing the growth trend. In the domestic market, market share continued to expand, with the first quarter domestic share rising to 48.4% from 47.5% based on last year’s annual figure, maintaining market leadership steadily. Overseas, stick sales volume surged 64.3% year-on-year due to deeper market penetration in existing countries, driving profitability growth. However, NGP domestic and overseas sales slightly declined by 2.8% year-on-year to 199.6 billion KRW due to a base effect from last year’s proactive expansion of device export volumes.

The health functional food business saw duty-free channel sales increase by 85.5% year-on-year due to an increase in inbound and outbound travelers, but overall sales decreased by 3.2% year-on-year to 384.1 billion KRW due to demand pull-forward from early Lunar New Year promotions at the end of last year. Operating profit rose sharply by 70.8% year-on-year to 55 billion KRW, driven by cost reduction effects and significant improvement in overseas business profitability.

A KT&G representative stated, “The three core growth businesses?NGP, overseas cigarettes, and health functional foods?continued to grow, surpassing 60% of total sales, and operating profit increased by 14% year-on-year. In particular, overseas performance led 80% of the sales growth of the three core businesses, strengthening fundamentals centered on global markets. We will continue to maintain solid growth momentum and accelerate the implementation of our global top-tier vision.”

Meanwhile, KT&G has introduced webcasting for this earnings announcement to strengthen communication with shareholders and stakeholders, and is expanding disclosure of profitability indicators by business segment. KT&G has been faithfully executing a three-year shareholder return plan worth approximately 2.75 trillion KRW since 2021, and plans to announce an expanded new shareholder return policy, including treasury stock cancellation, in the second half of this year.

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