KT&G to Improve Transparency with Q1 2023 Preliminary Results

On April 24th, according to a report from Yonhap News Agency, KT&G (Korea Tobacco & Ginseng Corporation) will announce its preliminary performance for the first quarter of 2023 on May 11th.

KT&G has announced its plans to increase transparency to the public. Starting with the release of its latest financial report, KT&G will disclose the sales revenue and operating profit of each of its divisions, which will be categorized into tobacco, dried food, real estate, and other businesses.

In the global tobacco industry, KT&G will further disclose the sales proportion in major overseas regions and provide real-time online streaming for global investors to watch and gain information.

Earlier, KT&G disclosed for the first time the revenue and sales data for its domestic and overseas next-generation tobacco products (NGP) when it reported its Q4 2022 financial performance in February.

According to a report by 2FIRSTS, DS Investment & Securities, a South Korean securities investment company, previously predicted that the NGP business of KT&G and KGC Ginseng Corporation would perform well in the first quarter.

KT&G's comprehensive sales increased by 0.1% year-on-year to 1.4 trillion Korean won in the first quarter, but operating profits fell by 17% to 276.1 billion Korean won, which is expected to fall short of market expectations.

However, the decline in operating profits was offset by strong sales of electronic cigarettes and the new Lil Able model.

According to Zhang Zhihui, a researcher at DS Investment & Securities, the profitability of cigarette sales will continue to weaken in the upcoming quarter due to the rising input costs of tobacco. Additionally, there will be a significant decline in performance due to a drop in sales of the high-profit margin real estate business.

Zhang Zhihui said:

Due to an increase in cigarette production costs and a decline in real estate performance, it is expected that KT&G's annual performance this year will be disappointing.

It has been reported that KT&G has chosen to increase transparency, potentially due to demands from external investors.

Flashlight Capital Partners (FCP) has sent a proposal to KT&G, requesting that they improve transparency regarding investor relations (IR).

In this proposal, FCP requests the proactive notification of an IR schedule and the disclosure of sales performance in both domestic and international regions.

KT&G has stated that it has been actively preparing measures to strengthen its communication with the capital market.

2FIRSTS will continue to monitor the first quarter performance disclosure of KT&G. Stay tuned for updates.

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KT&G reported a 17% decrease in operating profit in the first quarter, but their new tobacco business showed strong growth.

References:

KT&G will announce its provisional first-quarter results on April 11 and will disclose the operating profits of each division.