KT&G's Q2 Operating Profit Soars 18.5% on Strong Overseas Sales and NGP Growth

KT&G achieved both revenue expansion and improved profitability in the second quarter, primarily propelled by robust overseas cigarette sales and the growth of its next-generation tobacco (NGP) business.

The company announced on August 6 that its consolidated revenue reached 1.7016 trillion won and operating profit hit 414.5 billion won, marking increases of 9.9% and 18.5% respectively compared to the same period last year. The tobacco business segment was the main driver, with its second-quarter revenue and operating profit rising 11.7% and 18.8% to 1.2185 trillion won and 382.5 billion won, respectively.

Overseas markets showed particularly strong performance. International cigarette sales climbed 18.9% to 557.7 billion won, with operating profit surging 45.6% due to increased sales volume and strategic price hikes. This growth was achieved despite a volatile external environment, including the war in Iran. Domestic cigarette sales saw a modest 1.1% increase to 412.8 billion won.

The NGP business also demonstrated high growth, with second-quarter revenue up 23.8% to 242.7 billion won. The success of the 'Lil Able 3.0' model, launched in February, and an increased proportion of high-priced stick sales were key factors. KT&G, which holds a 48.2% market share in South Korea, plans to diversify its product line with new releases in the second half of the year.

In addition to business growth, KT&G is expanding its shareholder return initiatives. The board approved an interim dividend of 2,000 won per share, a 600 won increase from the previous year. The company also plans to consider raising its year-end dividend and will proceed with new share buybacks and cancellations in the second half of the year, following its early completion of share cancellation targets announced in 2023. Senior Vice President Lee Sang-hak stated, "Driven by a significant increase in operating profit from overseas business and strong growth momentum in domestic NGP, both revenue and operating profit have risen together. We will continue to enhance shareholder value through sustained shareholder return policies such as high dividends and share buybacks and cancellations."

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Overseas business operating profit increased significantly, and driven by the strong growth momentum of domestic NGP, both revenue and operating profit rose together. We will continue to enhance shareholder value through sustained shareholder return policies such as high dividends and share buybacks and cancellations.