KT&G Achieves Impressive Profit Growth in Its New Leadership Year, Commits to Enhanced Shareholder Returns

KT&G Corporation's Remarkable Financial Turnaround

KT&G Corporation, South Korea's leading tobacco manufacturer, recently showcased a stellar performance in its financial results for the fourth quarter of 2024. Under the leadership of newly appointed CEO Kyung-man Bang, the company has significantly enhanced its profitability and overall financial health. In a report released on February 6, 2025, KT&G revealed impressive consolidated revenues of KRW 1.557 trillion, marking an 8% increase compared to the previous year. Operating profit also saw a healthy 5.3% rise, reaching KRW 208.5 billion.

The momentum didn't stop there. KT&G achieved a record annual revenue of KRW 5.91 trillion with a modest 0.8% growth year-on-year. Operating profit also climbed 1.5%, totaling KRW 1.185 trillion. These figures reflect the company's strategic focus on improving its core operations and optimizing its financial structure, which has allowed for balanced growth across various business segments.

Record Growth in Core Tobacco Operations

The tobacco segment at KT&G has displayed remarkable resilience, reporting revenues of KRW 3.906 trillion and an operating profit of KRW 1.082 trillion. This performance is attributed to a robust 10.3% increase in global sales volume, particularly for their flagship brand, ESSE. Notably, there was a striking 28% boost in annual revenue for ESSE, solidifying its status in the market.

The Next Generation Products (NGP) segment has also enjoyed sustained growth, with domestic and international sales volumes reaching 6.15 billion and 8.34 billion sticks, respectively. This translated to year-on-year growth rates of 7.7% domestically and 1.5% globally, demonstrating a strong demand for KT&G's innovative products.

Ambitious Goals for 2025

Looking ahead, KT&G sets ambitious performance targets for 2025, aiming for consolidated revenue growth exceeding 5% and operating profit growth of at least 6%. The company is keen to maintain and enhance its profitability through more efficient manufacturing processes and financial optimizations across its operations.

In alignment with its growth ambitions, KT&G plans to cancel approximately KRW 360 billion worth of treasury shares, which accounts for roughly 2.5% of all issued shares. The company also intends to repurchase and cancel an additional KRW 300 billion in shares within the year, in a move to sustain investor confidence and enhance shareholder value. Anticipated shareholder returns for 2025 are estimated at KRW 1.1 trillion, encompassing a significant dividend payout of KRW 600 billion.

Progressive Dividend Strategy

KT&G's commitment to its shareholders is further solidified by a year-end dividend of KRW 4,200 per share, marking an increase of KRW 200 from 2023. This dividend strategy signals KT&G's intention to consistently provide returns to its investors, with a total annual dividend per share rising to KRW 5,400, including interim dividends.

Moreover, CEO Kyung-man Bang has implemented a Corporate Value-up Plan targeting the period from 2024 to 2027. This initiative includes a planned cash return of approximately KRW 3.7 trillion, comprised of cash dividends and stock repurchases, alongside a commitment to reduce the total issued shares by at least 20%. In 2024 alone, KT&G executed cash returns totaling KRW 1.1 trillion through stock repurchases and dividends.

The robust performance illustrated by the increase in return on equity (ROE) to 12.2% showcases the company's enhanced profitability and capital efficiency.

A Positive Outlook

A spokesperson from KT&G emphasized the company’s strong performance in 2024, attributing growth in revenue and operating profit primarily to the tobacco business. Despite uncertainties looming in both domestic and international markets for 2025, KT&G is focused on maintaining its upward trajectory by strengthening its core businesses and diligently executing shareholder return initiatives. This reinforces KT&G's commitment to maximizing value and returns for its shareholders, ensuring a sustainable and lucrative future.

In summary, KT&G Corporation stands at a promising threshold, poised to solidify its leadership in the tobacco industry while delivering substantial rewards to its shareholders in the coming years.