KT&G pledges to up shareholder returns

A presentation from KT&G's third-quarter earnings call on Thursday details the company's plan to enhance corporate value. (KT&G)

South Korea's top tobacco company KT&G unveiled a new program designed to enhance its corporate value, primarily focused on increasing shareholder returns, Monday.

The program centers on improving profitability, optimizing asset efficiency and streamlining financial operations to reach a return-on-equity target of 15 percent by 2027.

To drive profitability, KT&G will focus on its three core business areas: overseas cigarette sales, next-generation products and healthy functional foods. The company aims to continually expand its strategic emphasis within these sectors to optimize operations.

Additionally, KT&G plans to restructure low-yield and noncore assets, including real estate and financial assets, to secure approximately 1 trillion won ($715 million) in cash, which will be directed toward growth investments and shareholder returns.

KT&G intends to implement an expanded shareholder return policy. Over the four years of 2024 to 2027, the company looks to allocate 3.7 trillion won, comprising 2.4 trillion won in cash dividends and 1.3 trillion won in share buybacks. Proceeds from asset optimization will be prioritized for share repurchases and immediate cancellations, aiming to reduce the total number of shares by 20 percent by 2027.

KT&G’s total shareholder return for this year is expected to approach 1.4 trillion won, with a projected return rate exceeding 100 percent. The company estimates that the share cancellation volume will amount to approximately 6.3 percent of its total issued shares in 2023.

"KT&G has consistently pursued corporate value growth and maximization of shareholder returns, focusing on enhancing core competitiveness with ROE as a key indicator," said Lee Sang-hak, vice president of KT&G. "We will continue our best efforts to raise corporate value to world-class standards, meeting the expectations of shareholders and stakeholders alike."

By Hwang Joo-young(flylikekite@heraldcorp.com)