According to a report from Yonhap News Agency on May 11th, KT&G announced its first quarter operating profit for 2023. Its revenue for the first quarter was 1.395 trillion Korean won, a decrease of 0.5% compared to the same period last year, and its operating profit was 316.5 billion Korean won, a decrease of 4.9% year-on-year.
Performance declines but slightly exceeds external expectations.
Earlier, securities firms projected that KT&G's operating profit for the first quarter of this year would be KRW 2.941 trillion, but the actual operating profit for the first quarter of KT&G was KRW 3.165 trillion, slightly exceeding market expectations.
The financial investment industry believes that despite increased export sales of KT&G cigarettes and heated, non-combustible products, as well as strong performance from its Indonesian subsidiary, the company will face increasing cost pressures due to rising prices of raw materials such as tobacco and sluggish sales of heated, non-combustible products.
It should be noted that KT&G's tobacco business had a revenue of 857.6 billion won in the first quarter, representing a 3.6% year-on-year increase. However, operating profit was 236.6 billion won, marking an 8.9% year-on-year decrease, caused by skyrocketing prices of raw materials such as tobacco leaves.
Overseas markets are experiencing rapid growth, and there is significant increase in the new tobacco business.
In the first quarter of 2023, KT&G reported a 0.5% year-on-year increase in domestic cigarette sales, reaching KRW 389.7 billion. The company's domestic market share for the same period was 65.7%, higher than the previous year's annual rate of 65.4%.
In the first quarter of 2023, overseas cigarette sales reached 265.1 billion Korean won, a year-on-year increase of 17.1%. KT&G attributes this growth to the performance of its subsidiary companies in Indonesia and other overseas markets. Additionally, the company's performance in regions such as Africa and Latin America has also shown an increase.
In the area of new tobacco products, the sales volume of pods domestically and internationally continues to grow, reaching 32.2 million units, a year-on-year increase of 41.9%. The domestic market share in the first quarter was 48.4%, higher than the annualized figure of 47.5% last year, while overseas pod sales increased by 64.3% year-on-year.
The ginseng company under the umbrella reported sales of 384.1 billion Korean Won, showing a year-on-year decrease of 3.2%. However, sales through duty-free channels increased by 85.5% year-on-year, benefiting from the increase in inbound and outbound tourists.
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KT&G, a South Korean tobacco company, announced that their operating profit for the first quarter decreased 4.9%, totaling 3.165 billion won, despite continued growth in their electronic cigarette business.
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