#South Korea #Seoul #revenue growth #Tobacco #KT&G

KT&G's Ambitious Path to Revenue Milestones

KT&G, a prominent player in the global tobacco industry, has set its sights on achieving a staggering annual revenue of KRW 6 trillion by 2025. During an earnings call held on February 5, 2026, the company announced its remarkable financial results for the fourth quarter of 2025 and outlined ambitious goals for 2026.

Current Performance Overview

As per the earnings report, KT&G achieved consolidated revenue of KRW 1.7137 trillion in the fourth quarter, marking a year-over-year growth of 10.1%. Operating profit during this period reached KRW 248.8 billion, showcasing a more significant year-over-year increase of 17.1%. Notably, the annual revenue reached an all-time high of KRW 6.5796 trillion, driven by robust sales across various segments. Operating profit also saw a healthy rise, climbing to KRW 1.3495 trillion, which translates to a 13.5% increase compared to the previous year.

Despite a one-time labor-related cost of KRW 70 billion impacting the profits, KT&G adjusted its figures accordingly, reporting an operating profit increase of 19.4% when considering these anomalies. This growth has been characterized as a result of the strategic vision implemented by CEO Kyung-man Bang, who has focused on reinforcing both core and global business capabilities alongside a commitment to profitability-driven channels.

Record-Breaking Global Cigarette Business

One of the standout aspects of KT&G’s performance has been the growth in its global cigarette business. For the first time, the revenue from this segment surpassed domestic sales, accounting for 54.1% of the total cigarette revenue, which hit KRW 1.8775 trillion. This segment recorded a robust year-over-year growth rate of 14.6%, owing to strategic price increases and higher sales volumes.

The average selling price saw impressive double-digit growth, further underscoring the successful implementation of pricing strategies across the board. Furthermore, the Next Generation Products (NGP) segment also showcased remarkable growth, bringing in KRW 890.1 billion, an increase of 13.5%, bolstered by innovations in product offerings and market expansions.

Forward-Looking Goals and Strategies for 2026

Looking toward 2026, KT&G laid out an aggressive roadmap focusing on capital expenditure investments amounting to KRW 2.4 trillion that aim to enhance global manufacturing capabilities. The factory in Kazakhstan has begun operations, and a new facility in Indonesia is slated to open soon, ensuring production capacity aligns with global demand.

KT&G is focused on further enhancing profitability through cost of goods sold (COGS) reductions and targeted price increases while anticipating growth in both quantitative and qualitative measures in the global cigarette market. To address evolving customer preferences, KT&G plans to diversify its NGP portfolio beyond heated tobacco products to encompass other nicotine-based items, including pouches following recent acquisitions.

Commitment to Shareholders

In alignment with the company's growth trajectory, KT&G is committed to maintaining a minimum total shareholder return of 100% and has projected to sustain a dividend payout ratio of 50% while currently offering a dividend per share of KRW 6,000. Management is poised to adaptively repurchase shares when market conditions indicate undervaluation relative to the company's intrinsic value.

CFO Sang-Hak Lee emphasized the strategic shift from an export-focused approach to a more localized business model, emphasizing the importance of bolstering global competitiveness and assuring future growth through innovative market entries and an expanded product portfolio.

In conclusion, KT&G is entering a robust phase of growth with ambitious revenue and profit targets as it continues to expand its footprint in the global tobacco market while ensuring strong returns for its shareholders.