KT&G boosts shareholder returns with high dividend payouts, buybacks

ESSE cigarette products move along conveyor belts at KT&G's Sintanjin plant in Daejeon in this 2024 photo. Korea Times file

KT&G is fueling speculation of record-high shareholder returns this year, after the nation’s largest tobacco company pledged Wednesday to maintain a high dividend payout throughout 2025.

The optimism follows the company’s robust second-quarter performance, marking a third straight quarter of growth in both sales and operating profit. Revenue in the first half of the year also surpassed 3 trillion won ($2.14 billion) for the first time, as KT&G continued its long-standing policy of returning large profit shares to shareholders.

On Aug. 7, KT&G’s board of directors approved a 200 won increase in dividends to 1,400 won per share, reinforcing its high-dividend policy. The company also announced plans to repurchase and cancel 300 billion won worth of treasury shares starting the following day.

To further reinforce its shareholder return plan, the company said it will carry out another share repurchase and cancellation in the second half of this year, using proceeds from the liquidation of noncore assets, including real estate. In the first quarter, the company canceled 360 billion won worth of treasury shares, equivalent to 2.5 percent of its outstanding shares.

Earlier, KT&G announced a 2024–27 "value-up plan" that includes 3.7 trillion won in cash returns through dividends and a share repurchase-and-cancellation program targeting 20 percent of its outstanding shares. Last year, the company delivered 1.1 trillion won in cash returns, achieving a 100 percent total shareholder return, while canceling 6.3 percent of its issued shares.

KT&G CEO Bang Kyung-man / Courtesy of KT&G

“We will carry out share repurchase and cancellation schemes as planned and maintain our high-dividend policy to prioritize shareholder value,” KT&G Chief Financial Officer Lee Sang-hak said. “These policies will remain in place through the third and fourth quarters.”

Since 2024, the company has been repurchasing and canceling at least 20 percent of its outstanding shares each year, including treasury stock. This has resulted in annual dividend payouts totaling between 580 billion and 590 billion won.

Experts predict KT&G will continue paying out high dividends this year, backed by its strong performance. The company said it expects double-digit growth in operating profits starting from last year. Kelly Kim, an equity analyst at Morgan Stanley’s Seoul office, projected the dividend per share will "likely rise to over 5,800 won, given KT&G’s high payout ratio and steadily increasing operating profit."

KT&G shares hit a record high of 149,400 won on Aug. 8, a day after the company released its second-quarter results, marking a 40 percent surge since the start of the year.

The company reported second-quarter sales of 1.55 trillion won and an operating profit of 350 billion won, up 8.7 percent and 8.6 percent year-on-year, respectively. Its global cigarette business achieved a "triple growth" in sales, operating profit and sales volume.

KT&G said part of its strong performance came from CEO Bang Kyung-man’s push for full local integration of value chains in foreign markets across the Asia-Pacific, Central Asia and Latin America. The company also cited new products centered on its signature ESSE brand, the expansion of its premium product range and price increases leveraging brand strength as contributing factors.