Tobacco maker sets sights on double-digit growth buoyed by solid global performance
KT&G, South Korea's largest tobacco company, announced Tuesday that it has signed a memorandum of understanding with American tobacco giant Altria, laying the groundwork for strategic collaboration across both nicotine and non-nicotine product segments.
At a corporate briefing attended by KT&G CEO Bang Kyung-man and Altria CEO Billy Gifford, the two companies announced plans to jointly acquire Another Snus Factory, a Scandinavian nicotine pouch maker, to tap into the fast-growing global market for smoke-free nicotine alternatives.
KT&G said the partnership will leverage its global distribution network to support the rollout of both ASF and Altria products in international markets. Further operational details regarding the nicotine pouch segment will be disclosed at a later stage.
KT&G and Altria also agreed to bolster collaboration in traditional tobacco products as well as in the US health functional foods sector through Korea Ginseng Corp., a KT&G subsidiary, combining its product expertise with Altria’s robust go-to-market infrastructure.
“Through the MOU with the top-tier American tobacco manufacturer Altria, KT&G will secure future growth momentum by expanding its core business portfolio and reinforcing its competitiveness,” said an official from KT&G.
KT&G also unveiled its goal of double-digit growth in revenue and operating profit for the year, underpinned by CEO Bang’s localization-focused strategy.
In the second quarter, KT&G’s global cigarette business marked its fifth consecutive quarter of triple growth in revenue, operating profit and sales volume. Sales for the April-June period rose 8.7 percent on-year to 1.55 trillion won ($1.11 billion), while operating profit climbed 8.6 percent to 350 billion won.
“Strategic export price hikes and a higher share of premium products in our global portfolio have driven qualitative growth,” Bang said, adding that cost reductions from transitioning to a global manufacturing system have laid the foundation for long-term profitability.
As for its shareholder return policy, KT&G said it plans to implement a total payout ratio of 100 percent or more, maintain a dividend payout ratio above 50 percent, set a minimum dividend yield, and flexibly repurchase shares when prices fall below their long-term intrinsic value.
It set the minimum annual dividend per share at 6,000 won, an increase of 600 won from the previous year.
KT&G plans additional share repurchases and cancellations worth 260 billion won — up 100 billion won from last year. Having already canceled 10.4 percent of shares in 2023, the cumulative cancellation ratio is expected to rise once the new plan is executed.
“The company decided to pursue additional share repurchases and cancellations as well as high dividend payout policies based on the profits from the rapid growth of our global business,” the company official said.
minmin@heraldcorp.com
