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
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.
