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- Revenue and operating profit decreased YoY due to global inflation and the completion of large-scale real estate development projects
- Expects to achieve a turnaround in the second-half with strengthened competitiveness in core business areas and business transformation
SEOUL, South Korea, May 9, 2024 /PRNewswire/ — KT&G Corporation (“KT&G” or the “Company”) (KRX:033780), South Korea’s leading tobacco manufacturer, today announced its financial results for the first quarter ended March 31, 2024. The company reported consolidated revenue of KRW 1.292 trillion and operating profit of KRW 236.6 billion.
KT&G’s overseas and domestic Next Generation Product (“NGP”) and overseas cigarette sectors sustained robust performances in the first quarter of 2024, extending their strong trend from the previous year.
In the first quarter of 2024, NGP stick volume, a core growth driver for the NGP business, achieved growth in all key metrics, including sales volume, revenue, and operating profit. Particularly, the overseas NGP stick volume saw an impressive double-digit growth of 14.7%, reaching 2.11 billion sticks.
KT&G also achieved its third consecutive quarters of revenue growth in overseas cigarette business, driven by strategic pricing strategy in core growth markets such as Indonesia. KT&G’s first quarter overseas cigarette revenue recorded KRW 291.8 billion, a 10.1% growth YoY.
While the company delivered notable results in core business areas, its consolidated revenue and operating profit for the first quarter decreased compared to the same period last year. This downturn was mainly driven by rising manufacturing costs, the completion of large-scale real estate development projects, and reduced revenue from the health functional food sector amid lower consumer spending.
Despite headwinds in the first quarter, KT&G foresees a positive outlook for stronger business performance in the second half of the year, under the leadership of new CEO Kyung-man Bang. After assuming the CEO role in March 28th, Mr. Bang has been spearheading a strategic business transformation focused on driving significant growth in three core business areas: NGP, overseas cigarette, and health functional food.
As part of the business transformation, Mr. Bang led an organizational restructuring that focuses on maximizing business performance by strengthening responsible management system within each business unit. Under the new organizational structure, Strategy, Marketing, and Manufacturing units have been established directly under the CEO, with each unit head granted substantial responsibility and authority to enhance their unit’s operational efficiency and execution. For the overseas business, regional organizations have been restructured into independent companies to build a strong management system that accelerates the company’s international expansion.
In addition to driving a business transformation, KT&G is implementing a project to boost ROE, with the aim of enhancing profitability. The company is also dedicated to enhancing shareholder value and joining initiatives of the South Korean government-led Corporate Value-up Program through faithful execution of its new three-year (2024-2026) shareholder return policy. This policy includes a cash return of KRW 2.8 trillion and cancellation of nearly 15% of its issued shares.
KT&G’s spokesperson said: “KT&G is committed to strengthening its competitiveness in core business areas and driving a business transformation aimed at making a significant leap forward to become a Global Top-tier company.” “Despite a number of headwinds, such as inflation-driven manufacturing cost pressure and economic recession, KT&G is striving to achieve a business turnaround in the second half of the year by strengthening global competitiveness and pursuing operational efficiency optimization,” the spokesperson added.
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