KT&G (033780) Q3 2024 earnings summary

Executive summary

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

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

• Consolidated sales for the first three quarters of 2024 decreased by 1.6% year-over-year to ₩4.35 trillion, with tobacco accounting for 66.5% of sales.

• Operating profit for the period was ₩976.3 billion, down from ₩1.17 trillion in the prior year.

• Net income attributable to controlling interests was ₩840.4 billion, a decrease from ₩902.7 billion year-over-year.

Financial highlights

• Consolidated Q3 revenue: KRW 1.6363 trillion, down 3.1% year-over-year; operating profit: KRW 415.7 billion, up 2.2%; EBITDA: KRW 479.2 billion.

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

• Tobacco business revenue rose 7.7% YoY to KRW 1.0478 trillion, with operating profit up 23.7% to KRW 333 billion.

• Global CC sales volume grew 10.1% YoY to 16.32 billion sticks, revenue up 30.5% to KRW 419.7 billion, and operating profit up 167.2%.

• HFF revenue declined 1.7% YoY to KRW 405.8 billion, but operating profit rose 13.3% to KRW 68.8 billion.

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.

• The company is expanding its next-generation tobacco (HNB) business, with domestic HNB market share at 21% and device share at 68%.

• A 15-year global supply contract with PMI for next-generation tobacco products is expected to drive overseas growth.