(LEAD) KT&G Q1 net rises 4 pct on increased exports

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SEOUL, May 11 (Yonhap) -- KT&G Corp., South Korea's dominant tobacco company, said Thursday its first-quarter net profit rose 4 percent from a year earlier helped by increased exports.

Net profit for the three months ended in March rose to 274.23 billion won (US$206 million) from 263.38 billion won during the same period last year, the company said in a statement.

"Increased tobacco sales in emerging markets, such as Indonesia, Africa and Latin America helped the quarterly bottom line," the statement said.

Operating profit fell 4.9 percent on-year to 316.55 billion won in the first quarter from 333 billion won a year ago. Sales were down 0.5 percent to 1.396 trillion won from 1.403 trillion won during the cited period.

Higher tobacco leaf and other raw material costs weighed on the operating income, the company said.

In January, KT&G signed a 15-year supply contract with Philip Morris International Inc. (PMI), in which the former will distribute its heat-not-burn (HNB) product "Iil" through the latter's sales networks in global markets, except for South Korea.

KT&G aims to earn over half of its sales from overseas businesses in 2027 as part of its expansion strategy. It aims to achieve sales of 10 trillion won in 2027, compared with 5.9 trillion won in 2022.

While focusing on the conventional cigarette business, the company said it will reinforce its HNB and health functional food product businesses.

HNB products are electronic devices that, unlike e-cigarettes, contain tobacco. The tobacco is heated to a high temperature without setting it alight and creating smoke that the user inhales.

KT&G has exported its HNB products to more than 30 countries since 2020 through the sales networks of the New York-based PMI.

The company earns 90 percent of its overall sales from the cigarette business division and the remaining 10 percent from the HNB division.

KT&G has four tobacco manufacturing plants, one each in South Korea, Russia, Turkey and Indonesia, whose combined capacity amounts to 13.6 billion cigarettes a year.

kyongae.choi@yna.co.kr
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