KT&G reports triple growth in global tobacco market

Firm eyes global expansion with new manufacturing plants By Ko Dong-hwan KT&G headquarters in Seoul / Courtesy of KT&G KT&G reported "triple growth" in on-demand product volume, overseas sales and earnings in the third quarter, positioning itself to become a top-tier global tobacco company. The achievements come as the company has been making efforts to expand manufacturing capacity and introduce company-in-company (CIC) overseas to enhance production and management abroad. Alongside its latest quarterly report, the company has also announced a plan to increase dividend sharing with shareholders.

KT&G reported a 10.1-percent increase in cigarette production for overseas markets in the third quarter compared to the previous quarter. Additionally, overseas sales jumped by 30.



5 percent, and operating profits soared by 167.2 percent during the same period. During the July-to-September period, it exported 106 million cigarettes, marking a 6.

6-percent year-on-year growth. Its overseas subsidiary in Indonesia produced 5.7 billion cigarettes, a 17.

2-percent year-on-year increase. The company's overseas sales set records for the second straight quarter, and it expects its earnings from cigarettes and next-generation electronic products this year to surge by about 50 percent from the previous year. The robust growth came as KT&G is building a new manufacturing plant in Surabaya, the capital of Indonesia's East Java Province.

With construction progressing on a 190,000 square-meter site, the factory will start operating in 2026, with an annual production capacity of 21 billion cigarettes. Together with the existing plant in Indonesia, the company's manufacturing capacity in the country will increase to 35 billion cigarettes per year, the largest capacity from any of its overseas bases. Another new manufacturing plant is under construction in Almaty, Kazakhstan, on a 200,000 square-meter site, with the compeletion scheduled for next year.

In January 2023, KT&G introduced a subsidiary in Kazakhstan in charge of manufacturing and sales, completing a value chain across production, marketing and sales. The subsidiary is part of the company's ongoing measures to launch CICs in the 132 countries it currently exports to and dispatch vice president-level officials to these subsidiaries for local management. KT&G President Bang Kyung-man has confirmed that the company's productive expansion overseas has led to rapid market growth.

"It's our top mission to rise as a global top-tier tobacco manufacturer," Bang said. "The company's soaring value will haul values of its shareholders as well, completing the true value-up." With its return-on-equity goal set at 15 percent by 2027, KT&G has announced it will return dividends worth 3.

7 trillion won ($2.7 billion) until 2027, an extension from its previous goal to return 2.8 trillion by 2026.

The company also plans to buy back 1.35 million shares worth 150 billion won by the end of this year. The company said its share repurchase rate from 2023 will reach 20 percent by 2027.

.