KT&G profits jump in Q2, led by overseas cigarette sales

(KT&G)

South Korea’s leading tobacco manufacturer KT&G on Thursday reported a surge in its earnings in the second quarter of this year, largely driven by the upbeat performance of its overseas business.

The company posted 321.5 billion won ($233 million) in operating profits in the April-June period, a 30.6 percent jump from a year ago. Sales also increased 6.6 percent to 1.424 trillion won on-year.

Its overseas business, in particular, drove up its earnings overall, the company said.

Overseas cigarette sales soared 35.3 percent to 359.1 billion won compared to a year ago, while its operating profits more than doubled during the same period.

Other growth sectors -- heated tobacco sales at home and health supplements -- also contributed to the strong quarterly earnings.

In Korea alone, heated tobacco products posted 10.8 percent growth in sales and 42.8 percent growth in operating profits, respectively. The unit sales also jumped 7.7 percent.

Health supplement products recorded notable growth as well, with revenue increasing by 38.4 percent to 92.6 billion won, driven by a 75.4 percent surge in China sales.

During the earnings conference call, KT&G outlined plans to implement its mid-to-long-term shareholder return policy introduced last year. This includes 1.8 trillion won in cash dividends, 1 trillion won for share buybacks, and the cancellation of nearly 15 percent of its outstanding shares.

Starting Friday, KT&G will buy back 3.61 million treasury shares, worth approximately 350 billion won, for immediate cancellation, with total share cancellations for the year projected to reach around 665 billion won. The company also plans to introduce a new corporate value enhancement strategy in the second half of the year, reinforcing its commitment to shareholder returns.

“We achieved growth in both revenue and operating profit in the second quarter by expanding our overseas business, which performed well in our core growth areas," a KT&G official said. "We will continue to maximize corporate value by enhancing the competitiveness of our core businesses and strengthening shareholder value through our top-tier shareholder return policy.”

By Kim Hae-yeon(hykim@heraldcorp.com)