KT&G (033780) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw record-high revenue and operating profit in the tobacco business, with global CC and NGP segments driving growth for two consecutive quarters.

• The three core businesses—Global CC, NGP, and Health Functional Food—surpassed KRW 1 trillion in combined quarterly revenue for the first time.

• Interim consolidated financial statements for the nine months ended September 30, 2024, were reviewed with no material misstatements under KIFRS 1034.

• The reporting period covers the nine months ended September 30, 2024, with comparative data for 2023.

Financial highlights

• Consolidated Q3 revenue was KRW 1.6363 trillion, down 3.1% year-over-year, with operating profit up 2.2% to KRW 415.7 billion and EBITDA at KRW 479.2 billion.

• Net income for Q3 was KRW 239.9 billion, down 28% year-over-year, and EPS was KRW 2,251, down 16.9%.

• For the nine months ended September 30, 2024, sales were W 4,352,382 million, operating profit W 976,313 million, and net profit W 840,425 million.

• Cash and cash equivalents at period end were W 1,219,849 million, up from W 1,031,953 million at the previous year-end.

• Gross margin for the nine months was 50.9%, and operating margin was 22.4%, both up year-over-year.

Outlook and guidance

• Global cigarette business expects continued double-digit growth and aggressive expansion into new markets, with differentiated pricing strategies.

• NGP business anticipates normalization and growth in overseas stick sales following new platform launches next year.

• HFF targets an 11% operating profit margin by 2027 through cost optimization and efficiency improvements.

• Company aims for 15% ROE by 2027, with annual ROE expected to reach 11% in 2024.

• The Group is assessing the impact of Pillar Two global minimum tax rules, with no material effect expected as of the reporting date.