KT&G draws market attention with record earnings, $3.7 bil. return plan

KT&G, led by CEO Bang Kyung-man, is drawing market attention after posting record quarterly earnings and announcing a shareholder return plan worth 5 trillion won ($3.7 billion) over the next four years on Thursday.

While the broader Korean stock market came under heavy pressure on the same day, with the benchmark KOSPI falling more than 5 percent, KT&G shares bucked the trend, closing up 1.15 percent at 194,200 won.

The tobacco and consumer goods company reported consolidated revenue of 1.91 trillion won in the third quarter, up 4.3 percent from a year earlier, while operating profit rose 13.9 percent to 530.1 billion won. Both figures marked quarterly records.

At its Capital Markets Day, Bang unveiled a shareholder return policy covering 2027 to 2030, pledging to prioritize shareholder returns as the company generates sustainable earnings growth.

KT&G plans to raise its annual dividend to 8,000 won per share for 2026, up 33.3 percent from 6,000 won in 2025. It also aims to increase its dividend payout ratio from around 60 percent to at least 75 percent by 2030.

The company 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.

Bang forecast full-year 2026 revenue of 7 trillion won and operating profit of 1.5 trillion won, backed by overseas expansion across the company's cigarette, next-generation products (NGP) and health functional foods businesses.

In its overseas cigarette business, KT&G plans to strengthen flagship brands such as ESSE, expand into new markets and focus on premium products. It aims to achieve annual double-digit growth in both overseas cigarette revenue and operating profit through 2030.

The company also expects to save more than 550 billion won over four years by optimizing its global production network and expanding local operations, including at its new Indonesian factory, completed in October.

In the NGP business, KT&G plans to accelerate overseas expansion through global partnerships and direct local operations. It aims to bring LOOP, the nicotine pouch brand of Swedish company ASF, whose parent company it acquired late last year, to around 70 countries by 2030, including the United States, the world's largest market for the products.

For its health functional foods business, KT&G plans to expand overseas sales of red ginseng ingredients alongside its Jung Kwan Jang products. It is also exploring technology partnerships and product development with global food, beverage and beauty companies.

By 2030, KT&G aims to generate at least 70 percent of its 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.