KT&G Predicted to Experience Decline in Revenue and Profit
According to recent reports by South Korean media outlet Naver, financial firms are predicting that KT&G's revenue this year will decrease by 0.1% compared to last year, reaching 5.84 trillion Korean won. Operating profit may also see a decline of 10.5%, amounting to 1.13 trillion Korean won. This year, the company may experience its first revenue decrease since 2018, which has sparked doubts about the re-election of CEO Baek Bok-in by outsiders.
The company's second quarter revenue this year amounted to 1.33 trillion South Korean won, declining by 5.7% compared to the same period last year. The operational risk also dropped by 25.9% year-on-year. The performance of Mr. Bail Fu Ren this year is crucial for his re-election. Under his leadership, the company's revenue increased from 4.17 trillion South Korean won in 2015 to 5.85 trillion won last year. However, this year's performance may experience a significant decline.
Despite the current challenges, Bai Furen is still focused on strengthening the promotion of NGP (Next Generation Product) tobacco and expanding into overseas markets.
In January of this year, the company announced its plan to invest 40 trillion Korean won in its core business areas over the next five years, with the aim of achieving a sales target of 10 trillion Korean won by 2027. During the shareholder meeting in March, Bai Furen, the company's executive, emphasized the company's strategy of expanding the overseas market for heated tobacco products and reducing costs to maximize profits. Additionally, in November, the company began establishing a new factory in Kazakhstan with the goal of global sales for its heated tobacco and traditional cigarette products.
This year, the growth of the company's heated tobacco products division has stagnated. In 2020, the division's sales increased from KRW 279.3 billion to KRW 876.3 billion, nearly tripling in size. However, in the first half of this year, sales of the company's heated tobacco products declined from KRW 436.3 billion during the same period last year to approximately KRW 389.6 billion, marking a 10.7% decrease.
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