KT&G posts record Q3 earnings, unveils $3.7 bil. shareholder return plan
KT&G CEO Bang Kyung-man speaks during the company's Capital Markets Day in Seoul, Thursday. Courtesy of KT&G
Company targets global markets to account for 70% of cigarette revenue by 2030
KT&G posted record quarterly revenue and operating profit in the third quarter, driven by growth across its core businesses, while unveiling a four-year shareholder return plan worth 5 trillion won ($3.7 billion).
The tobacco and consumer goods company said Thursday that consolidated revenue rose 4.3 percent from a year earlier to 1.91 trillion won, while operating profit increased 13.9 percent to 530.1 billion won. Both figures marked quarterly records.
Its cigarette business generated record revenue of 1.31 trillion won, up 6 percent, and operating profit of 425.5 billion won, up 14.4 percent. Its operating margin improved 2.4 percentage points to 32.6 percent.
The global cigarette business marked its 10th consecutive quarter of growth in sales volume, revenue and operating profit. Its next-generation products (NGP) business maintained its leading market share in Korea while improving its product mix.
KGC, KT&G's health functional foods subsidiary, reported revenue of 372.2 billion won, up 3.4 percent, and operating profit of 80.1 billion won, up 12.2 percent.
At its Capital Markets Day, KT&G CEO Bang Kyung-man outlined a shareholder return policy covering 2027 to 2030. The company plans to raise its annual dividend to 8,000 won per share for 2026, up 33.3 percent from 6,000 won in 2025, and increase its dividend payout ratio from around 60 percent to at least 75 percent by 2030.
It will additionally repurchase and cancel 1.2 trillion won worth of shares over the four-year period. Including dividends, total shareholder returns are expected to reach 5 trillion won, with additional special returns possible if necessary.
KT&G forecasts full-year 2026 revenue of 7 trillion won and operating profit of 1.5 trillion won, backed by overseas expansion across its cigarette, NGP and health functional foods businesses.
For global cigarettes, it plans strategic price increases, a stronger focus on premium products such as ESSE and expansion into 30 additional markets. It will also strengthen local subsidiaries to gain greater control over pricing and product strategies.
The company targets more than 550 billion won in cumulative cost savings over four years through production network optimization, including operations at its new Indonesian factory, completed in October.
In NGP, KT&G plans to expand heat-not-burn products through direct overseas operations while maintaining global partnerships. It also aims to take its nicotine pouch brand LOOP into around 70 countries by 2030, including the United States, the world's largest market for the products. KT&G acquired LOOP's parent company, ASF, late last year.
KGC plans to expand overseas sales of red ginseng ingredients alongside its Jung Kwan Jang products and pursue technology partnerships and product development with global food, beverage and beauty companies.
By 2030, KT&G aims to generate at least 70 percent of cigarette revenue overseas. It also targets NGP revenue equivalent to at least 30 percent of cigarette revenue and overseas sales accounting for at least 30 percent of health functional foods revenue.
"By strengthening our three growth pillars — global cigarettes, NGP and health functional foods — and expanding their global reach, we will deliver growth centered on profitability, going beyond simple revenue growth," Bang said.