KT&G sees slight Q1 sales growth but profits decline

Apr.24.2023

KT&G's Q1 sales grew 0.1%, but operating profit dropped 17% due to higher input costs and a decline in real estate sales.

According to reports from Korean media, KT&G's comprehensive sales in the first quarter grew by 0.1% year-on-year to 14 trillion Korean Won ($1.05 billion), while operating profit fell by 17% to 2.761 trillion Korean Won ($207 million), which is expected to fall short of market expectations.

The reason for the decline in sales, according to Jang Ji-hye, a researcher at the Korean securities firm DS Investment & Securities, is that the cost of tobacco leaves has gone up, leading to a continued lack of profitability for cigarettes after the previous quarter. Additionally, there was a significant decrease in performance due to a decline in sales for the high-margin real estate business in Suwon.

Jang Ji-hye stated that due to the increased cost of cigarettes and a decline in the real estate industry, it is expected that KT&G's annual performance this year will struggle.

It is worth mentioning that Jang Ji-hye stated that KT&G's NGP business and KGC Ginseng Corporation had a stable performance in the first quarter. The decline was offset by strong sales of electronic cigarettes and new product Lil Able.

Jang Ji-hye stated that "although this year's performance is expected to be slightly subdued, KT&G is working with PMI to increase the number of NGP countries and showing a higher ratio of NGP compared to other global cigarette manufacturers.

He added: "Therefore, it is expected that the share of NGP business in KT&G's overall performance will increase from 14.7% in 2022 to 20.4% in 2027.

Further Reading:

Korean tobacco company, KT&G, has increased its short-term borrowing limit to 800 billion South Korean won. The company now requires a medium to long-term investment of 3.9 trillion South Korean won.

South Korea May Abandon Tax Hike on HNB, which Currently has a Tax Rate 90.4% Higher than Regular Cigarettes.

Phimo International's South Korean subsidiary appoints new CEO.

Reference(s):

KT&G, a South Korean tobacco company, has reported a steady growth in its electronic cigarette business and plans to expand its NGP (Next Generation Products) division within the group.

Effectiveness of switching to electronic cigarettes" - KT&G smiles

#North America #United States #Market #Disposable e-cigarettes

This document has been generated through artificial intelligence translation and is provided solely for the purposes of industry discourse and learning. Please note that the intellectual property rights of the content belong to the original media source or author. Owing to certain limitations in the translation process, there may be discrepancies between the translated text and the original content. We recommend referring to the original source for complete accuracy. In case of any inaccuracies, we invite you to reach out to us with corrections. If you believe any content has infringed upon your rights, please contact us immediately for its removal.

CNIPA Targets E-Cigarettes as Key Focus in Crackdown on Trademark Violations

National Intellectual Property Office issued a notice to strengthen management of illegal use of trademarks, promoting fair competition.

Nov.25 by 2FIRSTS.ai

BAT expands facial age-estimation checks: over 600 stores covered in Europe, targeting 1,000 by year-end

BAT has partnered with the Channel Islands Co-operative Society and Yoti to pilot facial age estimation in 10 Coop stores across Jersey. Customers scan a QR code and take a selfie; the system instantly deletes the image and returns only a yes/no against a minimum age threshold (set at 20) for the pilot. BAT already uses Yoti in 600+ stores across Europe and plans to reach 1,000 by year-end.

Oct.22 by 2FIRSTS.ai

Special Report｜With Charlie’s US Line Online, the US-Filled Vape Supply Chain Model Enters a New Phase

Charlie’s Holdings has activated its first US-based manufacturing and filling line, enabling the company’s Pachamama 25K vape series to meet Texas’ new domestic manufacturing requirements. As state-level rules tighten, the move signals a broader industry shift toward US-filled supply chains and marks an inflection point for brands historically reliant on China-based prefilled production.

Industry Insight

Dec.02

Zyn Retailers to Pay $3M Settlement for Violating San Francisco’s Flavored Nicotine Ban

San Francisco’s City Attorney’s Office has reached a $3 million settlement with three online tobacco retailers accused of illegally selling flavored Zyn nicotine pouches, violating the city’s 2017 ban on flavored tobacco products.