KT&G unveils $2.6bn shareholder return plan

(KT&G Corp.)

KT&G Corp. pledged on Monday to return 3.7 trillion won ($2.64 billion) to shareholders through dividends and share buybacks by 2027, a move that is part of its value enhancement initiative.

The company will also allocate 1 trillion won in cash toward growth investments to secure future business opportunities.

The plan focuses on improving profitability and asset efficiency. KT&G aims to distribute around 2.4 trillion won in cash dividends and conduct share buybacks and cancellations totaling 1.3 trillion won by 2027.

To fund this shareholder return initiative, the company plans to increase its earnings and divest low-return, non-core assets.

Beyond the 3.7 trillion won in shareholder returns, KT&G plans to accumulate an additional 1 trillion won in cash, which will fund investments in growth areas and potentially increase shareholder returns under its KT&G Plus Alpha program.

“A portion of the funds will go toward growth investments, while the remainder will be used for share repurchases and immediate retirement,” said a KT&G official. “We plan to cancel 20 percent of the outstanding shares by 2027 in line with our enhanced shareholder return policy.”

KT&G has already ramped up its share buyback and cancellation efforts this year.

On November 7th, the board approved the allocation of 150 billion won, derived from asset efficiency improvements, to buy back and cancel 1.35 million shares by the end of 2024. Including previously canceled shares, KT&G’s total shareholder return for 2024 is 1.4 trillion won.

The company has outlined three primary growth areas for investment: international cigarette sales, heated tobacco products, and health supplements.

According to the company, funds accumulated through its capital efficiency project will be actively directed toward these strategic initiatives.

The momentum for KT&G’s shareholder-focused strategy is largely driven by the company’s new executive team and restructured board, which are collectively advancing the Group Capital Efficiency Improvement Project.

As part of this effort, KT&G has set a goal to raise its return on equity (ROE) to 15 percent by 2027.