KT&G posts record first-half sales, raises full-year outlook

KT&G set a new first-half sales record, driven by strong overseas earnings and a profitability-focused growth strategy. Operating profit extended its streak of double-digit growth to four consecutive quarters.

At an IR event Thursday, the company said second-quarter consolidated sales rose 9.9 percent year on year to 1.7016 trillion won ($1.19 billion). Operating profit climbed 18.5 percent to 414.5 billion won over the same period. KT&G raised its full-year sales growth outlook from 3–5 percent to 5–7 percent and its operating profit growth outlook from 6–8 percent to 10–13 percent.

By business segment, the core tobacco division posted sales of 1.2185 trillion won, up 11.7 percent year on year, with operating profit growing 18.8 percent to 382.5 billion won. The overseas cigarette business continued to expand rapidly despite uncertainties including the war in Iran, with second-quarter sales and operating profit jumping 18.9 percent and 45.6 percent, respectively. In the domestic cigarette market, KT&G held a commanding first-place position with a first-half market share of 67.9 percent.

The next-generation product (NGP) segment solidified its top position with a domestic market share of 48.2 percent. NGP sales grew approximately 23.8 percent year on year to 242.7 billion won, boosted largely by a higher proportion of premium sticks following the strong reception of the Lil Able 3.0, launched in February. KT&G plans to release new products in the second half to diversify its NGP lineup and further strengthen its market share.

KGC's health functional food division recorded second-quarter sales of 174.2 billion won, up 7.8 percent year on year. Overseas sales fell 9.4 billion won from a year earlier to 49.6 billion won, reflecting inventory adjustments in Chinese retail channels. Operating profit for the segment jumped 61.3 percent to 10 billion won, driven by expansion in high-margin sales channels.

Reflecting the strong earnings, KT&G's board resolved Thursday to raise the interim dividend to 2,000 won per share, up 600 won from last year's 1,400 won. The company said it would also consider raising the year-end dividend, supported by profit growth and capacity for shareholder returns.

KT&G plans to announce a new medium- to long-term shareholder return policy — incorporating enhanced dividends — in the fourth quarter. The previously planned share buyback and cancellation in the second half will proceed as scheduled.

"Operating profit from overseas operations increased significantly, and sales and operating profit both rose on the back of strong growth momentum in domestic NGP," said Lee Sang-hak, KT&G's executive vice president. "Building on this profit growth, we will continue to pursue shareholder return policies — including high dividends and share buyback and cancellation — to enhance shareholder value."