KT&G posts historic Q1 operating profit due to overseas sales of heat-not-burn products

KT&G’s profit jumped in the first quarter, breaking the company’s record for quarterly sales performance, as the Korean tobacco company’s products have gained traction overseas.

The firm reported on Thursday an operating profit of 364.5 billion won ($251 million) from January through March, marking a 27.6 percent on-year increase. Sales rose 14.3 percent to reach 1.7 trillion won.

KT&G has benefited from steady demand for tobacco around the globe, with the company flagging the Asia-Pacific and Eurasian markets as key drivers behind its first-quarter performance in a press release on Thursday.

The company’s tobacco business’s operating profit grew 27.2 percent on year to 321.6 billion won, bolstered by a 56.1 percent jump in its overseas cigarette operating profit over the same period. The revenue for its global cigarette business rose 24.6 percent to 559.6 billion won, with the company reporting balanced sales gains across major regions and record-breaking quarterly revenue.

Its sales of heat-not-burn tobacco products rose 51.5 percent to 241 billion won, supported by domestic and overseas growth, as well as a base effect from supply chain issues at its overseas device business during the previous year.

The healthy and functional food business of the Korea Ginseng Corporation — a subsidiary of KT&G — posted a 5.8 percent on-year gain in revenue, reaching 332.6 billion won, with operating profit up 53.3 percent. The company attributed the success to its Lunar New Year holiday promotion.

“Despite uncertainties due to geopolitical issues in the Middle East, a stable revenue growth trend has continued in all regions, including Asia-Pacific, Eurasia and new markets, leading to projections of sustained growth of the global cigarette business,” KT&G Chief Financial Officer Lee Sang-hak said.

The company also canceled 10.87 million treasury shares worth approximately 1.85 trillion won — equivalent to 9.5 percent of its total issued shares — last month and said that it would announce reinforced dividend payouts in the second half of the year.

BY KIM MIN-YOUNG [[email protected]]