KT&G lifts outlook after best quarter in 5 years

South Korean tobacco manufacturer KT&G said Thursday it posted record third-quarter revenue of over 1.8 trillion won ($1.24 billion), buoyed by solid growth in its core overseas operations.

Consolidated revenue rose 11.6 percent on-year to 1.83 trillion won, while operating profit increased 11.4 percent to 465.3 billion won, marking the highest quarterly level in five years.

The record-breaking performance led the company to raise its full-year guidance for both revenue and operating profit to double-digit growth, the company said.

The biggest boost came from its core cigarette business, where overseas cigarette sales set new records for the third consecutive quarter thanks to higher volumes and strategic price hikes in key regions such as Central Asia, Latin America and the Asia-Pacific.

Global cigarette sales in the third quarter climbed 24.9 percent on-year to 524.2 billion won, with operating profit and shipment volume up 22.4 percent and 12.8 percent, respectively.

KT&G Chief Financial Officer Lee Sang-hak credited the overseas success to the company’s “end-to-end localized value chain” and said it would continue to focus on future growth momentum in its e-cigarette and non-tobacco businesses like health functional food.

Overseas e-cigarette sales climbed as new device launches spurred demand for both hardware and consumable products. In partnership with US tobacco giant Altria, it is set to enter the nicotine pouch market next year through the acquisition of Another Snus Factory, a Scandinavian nicotine pouch maker.

In the health and wellness business, run by Korea Ginseng Corp., profitability-focused strategies drove a 3.9 percent on-year rise in operating profit, despite a 16.8 percent decline in sales.

KT&G also said it had completed a 260 billion won share buyback and cancellation on Oct. 28, as part of CEO Bang Kyung-man’s shareholder return policy aimed at enhancing corporate and shareholder value through disciplined capital management. The company raised its annual dividend floor to 6,000 won per share, up 600 won from last year.