Agency eyes international growth with new manufacturing crops
By Ko Dong-hwan
KT&G headquarters in Seoul / Courtesy of KT&G
KT&G reported “triple progress” in on-demand product quantity, abroad gross sales and earnings within the third quarter, positioning itself to change into a top-tier international tobacco firm.
The achievements come as the corporate has been making efforts to develop manufacturing capability and introduce company-in-company (CIC) abroad to boost manufacturing and administration overseas. Alongside its newest quarterly report, the corporate has additionally introduced a plan to extend dividend sharing with shareholders.
KT&G reported a ten.1-percent enhance in cigarette manufacturing for abroad markets within the third quarter in comparison with the earlier quarter. Moreover, abroad gross sales jumped by 30.5 %, and working income soared by 167.2 % throughout the identical interval.
Through the July-to-September interval, it exported 106 million cigarettes, marking a 6.6-percent year-on-year progress. Its abroad subsidiary in Indonesia produced 5.7 billion cigarettes, a 17.2-percent year-on-year enhance.
The corporate’s abroad gross sales set information for the second straight quarter, and it expects its earnings from cigarettes and next-generation digital merchandise this 12 months to surge by about 50 % from the earlier 12 months.
The strong progress got here as KT&G is constructing a brand new manufacturing plant in Surabaya, the capital of Indonesia’s East Java Province. With building progressing on a 190,000 square-meter website, the manufacturing facility will begin working in 2026, with an annual manufacturing capability of 21 billion cigarettes. Along with the prevailing plant in Indonesia, the corporate’s manufacturing capability within the nation will enhance to 35 billion cigarettes per 12 months, the biggest capability from any of its abroad bases.
One other new manufacturing plant is beneath building in Almaty, Kazakhstan, on a 200,000 square-meter website, with the compeletion scheduled for subsequent 12 months.
In January 2023, KT&G launched a subsidiary in Kazakhstan in control of manufacturing and gross sales, finishing a worth chain throughout manufacturing, advertising and gross sales. The subsidiary is a part of the corporate’s ongoing measures to launch CICs within the 132 international locations it presently exports to and dispatch vice president-level officers to those subsidiaries for native administration.
KT&G President Bang Kyung-man has confirmed that the corporate’s productive growth abroad has led to speedy market progress.
“It is our high mission to rise as a worldwide top-tier tobacco producer,” Bang mentioned. “The corporate’s hovering worth will haul values of its shareholders as effectively, finishing the true value-up.”
With its return-on-equity aim set at 15 % by 2027, KT&G has introduced it is going to return dividends value 3.7 trillion received ($2.7 billion) till 2027, an extension from its earlier aim to return 2.8 trillion by 2026. The corporate additionally plans to purchase again 1.35 million shares value 150 billion received by the tip of this 12 months. The corporate mentioned its share repurchase fee from 2023 will attain 20 % by 2027.
