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(2nd LD) KT&G's Q4 net falls 7 pct on weak domestic sales

All News 15:08 January 21, 2016

(ATTN: UPDATES with closing share price at bottom)
By Kim Eun-jung

SEOUL, Jan. 21 (Yonhap) -- KT&G Corp., South Korea's state-run tobacco producer, said Thursday its net profit decreased 7 percent in the fourth quarter from a year ago due to lackluster sales in the domestic market.

Net profit came to 162.17 billion won (US$134.08 million) on a consolidated basis in the October-December period, compared with 174.41 billion won a year earlier, the company said in a regulatory filing.

Operating income sank 8.1 percent on-year to 263.85 billion won, and sales dipped 17.5 percent to 855.67 billion won over the cited period, it said.

The numbers reflect the performances of KT&G and its subsidiaries, including Korea Ginseng Corp.

KT&G said domestic sales declined on-year because smokers hoarded cigarettes in the runup to a tobacco price rise in January 2015.

In contrast, overseas tobacco sales jumped 23.7 percent on robust performance in Russia, Turkey and Indonesia.

"Although the global business environment is not favorable, we will beef up overseas marketing efforts to expand global presence," Bang Kyung-man, a global business chief, said in a briefing.

KT&G said it has been negotiating with Iran's state-run tobacco maker since late 2015 to expand production facilities in light of sanctions relief on the Middle Eastern nation.

"Once we build additional production lines in Iran, it is expected to help boost sales," Bang said.

KT&G's domestic market share shed 4.2 percentage points from the third quarter to 58.8 percent due to fierce competition with foreign rivals, the company said.

For all of 2015, net profit jumped 32.2 percent to 987.9 billion won as margins improved after the tobacco price hike. Its operating profit gained 17.3 percent on-year to 1.23 trillion won and sales climbed 2.9 percent to 2.82 trillion won.

Shares of KT&G gained 0.47 percent to 106,500 won on the Seoul bourse, while the benchmark KOSPI edged down 0.26 percent.


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