KT&G Releases 2025 Financial Report: Overseas Business Thrives, Net Profit Faces Challenges

KT&G Releases 2025 Financial Report: Overseas Business Thrives, Net Profit Faces Challenges

Korea Tobacco & Ginseng Corporation (KT&G) has released its financial results for the second quarter and first half of 2025, revealing strong growth across multiple business segments. However, despite rising revenue, net profit faced pressure due to increased costs and intensifying market competition.

1. Financial Highlights

• First-half 2025 revenue exceeded KRW 3 trillion (approx. USD 2.16 billion) for the first time, setting a historical record.

• Q2 2025 revenue reached KRW 1.5479 trillion (approx. USD 1.114 billion), up 8.7% year-on-year.

• Q2 net profit was KRW 143.5 billion (approx. USD 103 million), down 54.1% year-on-year, indicating significant profitability pressure.

2. Strong Traditional Tobacco Growth, Outstanding Overseas Performance

KT&G’s traditional tobacco segment remains its core revenue driver:

• Overseas cigarette revenue rose 30.6% year-on-year to KRW 469 billion (approx. USD 338 million), with robust demand in Asia-Pacific and the Middle East.

• Domestic cigarette revenue dipped slightly by 0.6% to KRW 408.3 billion (approx. USD 294 million), with sales volume down 5.14% year-on-year. However, market share continued to grow.

Strong overseas performance, especially in Asia-Pacific and Middle East & Africa, has provided sustained growth momentum for KT&G’s traditional tobacco business.

3. Heated Tobacco: Slight Revenue Decline, Continued Market Penetration

KT&G’s heated tobacco brand lil continued to expand in domestic and international markets:

• Heated tobacco revenue reached KRW 196.1 billion (approx. USD 141 million), down 0.8% year-on-year.

• Market penetration in South Korea rose to 22.8%, up from 21.1% a year ago.

Although facing market headwinds, KT&G remains a leading player in the heated tobacco category, with overseas sales up 4.2% year-on-year in Q2.

4. Diversified Businesses Add New Growth Drivers

Beyond tobacco, KT&G’s health functional foods and real estate segments also performed strongly:

• Health functional foods (KGC Ginseng Corporation) posted revenue of KRW 220.6 billion (approx. USD 159 million), with operating profit turning positive to KRW 6.2 billion (approx. USD 44.64 million).

• Real estate business revenue rose by KRW 143.7 billion (approx. USD 103 million) year-on-year, with operating profit surging to USD 127 million.

This diversified strategy has injected new vitality into KT&G’s growth beyond the tobacco sector.

5. Shareholder Returns & Outlook

To enhance shareholder returns, KT&G announced:

• Increasing interim dividend to KRW 1,400 (approx. USD 1.01) per share, up KRW 200 year-on-year.

• Launching a USD 216 million share buyback program, with repurchased shares to be cancelled, further boosting shareholder value and capital efficiency.

The company stated it will continue to drive overseas cigarette growth in H2 2025 while enhancing global cost competitiveness, targeting double-digit operating profit growth for the full year.

6. Conclusion: Overcoming Challenges, Embracing the Future

Despite a decline in net profit, KT&G achieved significant revenue growth in the first half of 2025 through strong overseas expansion, stable market share, and a diversified business portfolio. With its shareholder return plans and deepening globalization strategy, KT&G remains well-positioned in the competitive market.

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Disclaimer

The content of this article is for reference only. All financial data, business analysis, and market information are based on publicly available sources, with some information derived from KT&G’s official financial report. Nothing in this article constitutes investment advice. Investment decisions should be made cautiously, and readers assume their own risk.

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