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SEOUL, South Korea, Aug. 8, 2024 /PRNewswire/ -- KT&G Corporation ("KT&G" or the "Company") (KRX:033780), South Korea's leading tobacco manufacturer, today hosted an earnings conference call and announced its financial results for the second quarter ended June 30, 2024.
The company reported consolidated revenue of KRW 1.424 trillion and operating profit of KRW 321.5 billion, marking year-over-year growth rate of 6.6% and 30.6%, respectively.
KT&G's second quarter growth was mainly driven by the robust performance in the Overseas Cigarette business, which is one of the company's 3 core growth businesses (Overseas Cigarette, Next Generation Product, Health Functional Food). The Overseas Cigarette business achieved growth in all key metrics, including revenue, operating profit, and sales volume. The revenue, in particular, reached an all-time high of KRW 359.1 billion, with an impressive double-digit growth rate of 35.3% this quarter. The operating profit soared by 139.1% year-over-year.
The domestic NGP (Next Generation Product or Heated Tobacco) business also saw growth in all 3 key metrics: revenue increased by 10.8%, operating profit by 42.8%, and sales volume by 7.7% year-over-year. The overseas business continued to improve its profitability, driven by an increased proportion of stick sales volume, which is the key growth driver of the business.
The Health Functional Food business also expanded growth overseas, with revenue increasing by 38.4% year-over-year to KRW 92.6 billion. This growth was driven by a 75.4% increase in revenue from China, a key market, reaching KRW 61.9 billion.
During the earnings conference call, KT&G also shared specific plans to execute the mid-to-long-term shareholder return plan introduced last year. The plan includes KRW 1.8 trillion in cash dividend, KRW 1 trillion allocated for share buyback, and cancellation of nearly 15% of its outstanding shares. In February, KT&G cancelled 3.5 million existing treasury shares (equivalent to around KRW 315 billion).
On the same day, KT&G's Board of Directors resolved to declare an interim dividend of KRW 1,200 and plans for share buyback and cancellation, demonstrating the Board's continued dedication to enhancing shareholder value by faithfully executing the shareholder return policy. The total annual dividend for this year, including the interim dividend, is expected to increase compared to last year and continue on an upward trend.
Moreover, KT&G plans to buy back 3.61 million treasury shares for immediate cancellation, worth approximately KRW 350 billion, starting from August 9, 2024. The total share cancellation amount for this year is expected to reach around KRW 665 billion. Additionally, KT&G plans to unveil a new corporate value enhancement plan in the second half of the year, continuing its strong commitment to the shareholder return policy.
Also, KT&G intends to accelerate the achievement of its vision towards a 'Global Top-tier' company by strengthening fundamental competitiveness and structural reforms centered around the 3 core growth businesses. To that end, in July, the company executed a MoU with Philip Morris International for collaboration on U.S. PMTA (Pre-market Tobacco Product Application) submission for KT&G's new NGP products.
KT&G also updated its full year outlook during the earnings conference call. The company projects the annual consolidated revenue to grow 2.5~3%, with operating profit expected to remain flat, reflecting changes in the business environment in the Health Functional Food and Real Estate sectors.
KT&G's spokesperson said: "We achieved growth in both revenue and operating profit in the second quarter by expanding our overseas business, which delivered solid performance in our core growth areas. We will continue to maximize corporate value by strengthening the competitiveness of our core growth businesses and enhance shareholder value through our best-in-class shareholder return policy."
