Overseas Tobacco Sales Surpass 1 Trillion Won... KT&G Sets New Record High Performance Last Year Again

Last Year's Sales 5.8724 Trillion KRW... Operating Profit 1.1679 Trillion KRW
Plan to Cancel 3.5 Million Treasury Shares Announced... Full Cancellation on the 16th
Total Dividend Resolved at 5,200 KRW per Share by the Board

KT&G recorded its highest-ever sales performance last year as its core business sectors, including overseas tobacco operations, NGP (Next Generation Products), and health functional foods, all showed balanced growth.

KT&G announced on the 7th through a disclosure that its consolidated operating profit for last year was tentatively estimated at 1.1679 trillion KRW, down 7.9% from the previous year. Sales increased by 0.4% year-on-year to 5.8724 trillion KRW, while net profit decreased by 7.8% to 926.6 billion KRW.

Operating profit for the fourth quarter of last year was 198.6 billion KRW, down 1.4% compared to the same period last year, with sales and net profit for the quarter at 1.4512 trillion KRW and 117.1 billion KRW, respectively.

Among KT&G’s three core businesses, the overseas cigarette division led the annual performance by setting a record high annual sales of 1.1394 trillion KRW. This achievement was driven by increased sales volume and price hikes in key regions, resulting in record sales. In particular, sales expansion of overseas subsidiaries with direct business structures in Indonesia and the cultivation of new markets in Africa and Latin America contributed to an increase in annual sales volume compared to the previous year.

The combined annual sales of the three core businesses, including overseas cigarettes, NGP, and health functional foods, rose 1.1% year-on-year to 3.3127 trillion KRW. Despite intensified competition in the domestic market, sales growth continued due to market expansion and the effect of new product launches. On the other hand, overseas business sales declined compared to the previous year due to a base effect from the prior year’s proactive increase in device export volumes amid global supply chain issues, despite strong growth in stick sales volume.

However, stick sales volume, an indicator of business growth and profitability, continued to grow both domestically and internationally. The annual stick sales volume totaled 13.94 billion units, with overseas sales volume at 8.24999 billion units and domestic stick sales volume at 5.71 billion units, marking double-digit growth rates of 43% and 14.4%, respectively, compared to the previous year.

Fueled by strong global cigarette sales centered on overseas subsidiaries and high growth in overseas NGP stick sales volume, global cigarette volume reached 61.4 billion units, surpassing 60 billion units for the first time in history.

The health functional food division also saw increases in both annual sales and operating profit due to expanded overseas sales. Annual health functional food sales rose 0.3% year-on-year to 1.3938 trillion KRW, while operating profit increased by 32.6% to 116.4 billion KRW, significantly exceeding the sales growth rate.

Meanwhile, KT&G set its 2024 management goals to achieve over 10% growth in consolidated annual sales and over 6% growth in operating profit. Sales and operating profit for the three core businesses in 2024 are expected to increase by more than 15% and 31.5%, respectively, compared to 2023.

On the same day, KT&G also announced a plan to retire treasury shares. This year marks the first year of implementing the three-year (2024?2026) mid- to long-term shareholder return policy announced last November. On the 16th, KT&G will retire 3.5 million treasury shares (worth approximately 315 billion KRW) currently held. Additionally, the company plans to repurchase more treasury shares in the second half of the year and retire all repurchased shares immediately.

Furthermore, the board of directors resolved on the same day to set the 2023 year-end dividend at 4,000 KRW per share. Including the interim dividend of 1,200 KRW, the total annual dividend is expected to increase by 200 KRW from the previous year to 5,200 KRW per share, with the final dividend to be decided at the shareholders’ meeting.

Earlier, KT&G disclosed a shareholder return policy for the next three years starting in 2024, which includes cash dividends totaling 1.8 trillion KRW and treasury share repurchases and retirements amounting to 1 trillion KRW, totaling approximately 2.8 trillion KRW, along with an additional retirement of about 10 million treasury shares (approximately 7.5% of total issued shares) currently held.

A KT&G official stated, “2023 was a year focused on establishing a business transformation strategy centered on the three core businesses. In 2024, we will continue to strengthen the competitiveness of our core businesses, expand a sustainable business portfolio, and actively implement shareholder return policies to simultaneously enhance corporate and shareholder value.”

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