May 2026: Closing the Global Peer Discount via Operational Acceleration and Gold-Standard Capital Returns
KT&G is undergoing a profound qualitative transformation, successfully transitioning from a historically undervalued domestic monopoly into a high-growth global consumer player. Driven by its three core growth engines – overseas tobacco, Next Generation Products (NGPs), and health functional foods – the company is rapidly closing its historical return on equity (ROE) discount relative to global peers. A combination of explosive international sales and an aggressive, front-runner capital allocation policy has triggered a massive valuation rerating, pushing foreign ownership back above 50% for the first time in seven years.
Operational Highlights: Global Expansion Accelerating
KT&G’s operational engine is firing on all cylinders, led by structural tailwinds in its international divisions:
– Overseas Tobacco Surges: In 2025, overseas tobacco revenue hit ₩2.18 trillion (+30.1% YoY), fueled by strategic price hikes, product mix improvements, and an 11.2% volume increase. Momentum accelerated into Q1 2026, with international tobacco revenue skyrocketing 40.6% YoY to ₩660.2 billion.
– Localized Production Footprint: With new factories nearing completion in Kazakhstan and Indonesia, KT&G aims to produce over 50% of its total tobacco volume offshore by 2027. Macro tailwinds, specifically the persistent weakness of the Korean won, continue to amplify international margins.
– Next-Generation Products (NGP): Heated tobacco device sales have staged a strong recovery as pandemic-era raw material supply chain constraints have been completely resolved. The company is further expanding its future portfolio into high-margin segments like nicotine pouches.
– Non-Core Turnaround: Korea Ginseng Corporation (KGC)’s profitability rebounded through aggressive cost-efficiency measures and a pivot toward high-margin distribution channels. In the real estate segment, small-to-medium development projects have begun recognizing revenues, turning the division back into a positive contributor to operating profit.
Capital Allocation: The Gold Standard of “Value-Up”
KT&G has emerged as the definitive poster child for South Korea’s corporate governance reforms (including the 2026 Commercial Act amendment mandating the cancellation of treasury shares). The company aggressively preempted government mandates through peerless shareholder returns: KT&G’s total shareholder return (TSR) rate reached an unprecedented 108.9% in 2025, returning more capital via dividends and buybacks than total net profit earned during the year..
The 2024–2027 Capital Return Roadmap
The company’s original four-year plan to cancel 20% of its outstanding shares by 2027 was achieved well ahead of schedule. Following a final cancellation of 10.87 million treasury shares in April 2026, KT&G successfully retired 25.0% of its total 2023 share base, representing 33.48 million shares valued at ₩4.48 trillion.
Alongside these structural reductions in share count, the capital distribution toolkit is being deployed aggressively. Management implemented a dividend of ₩6,000 per share – amounting to a total of ₩627 billion and marking a 6.6% year-on-year increase -paired with ₩560 billion in active share buybacks, which yielded an aggregate cash return of ₩1.187 trillion. Looking ahead to the second half of 2026, as heavy capital expenditure (CAPEX) tapers off following the completion of key overseas factories, management is poised to unveil a new dividend reinforcement policy. This upcoming initiative is expected to be funded in part by the strategic securitization of up to 1 trillion won in non-core assets.
Market Performance & Foreign Inflow
The capital markets have responded dynamically to KT&G’s strategic alignment with activist fund demands and government market-boosting policies:
– Foreign Inflow Surge: Foreign ownership has spiked from 42.8% at the start of 2026 to 51.0%, marking a 7-year high. Top-tier global asset managers, including US-based Capital Group (Capital Research), net-purchased 750,000 shares across April and May 2026 alone.
– Stock Outperformance: Driven by the tightening of the share denominator via treasury retirement, KT&G’s stock price has surged nearly 30% YTD in 2026 (having closed at 143,400 won at year-end 2025 and continuing to hit new highs). This dramatically outperforms the KRX Consumer Staples Index, which grew just 16% over the same multi-year tracking period.
KT&G offers a rare combination of defensive consumer staples resilience, high-double-digit secular growth in international markets, and a world-class dividend yield. The upcoming H2 2026 dividend expansion framework will serve as the next major catalyst for compounding equity value.
April 2026: Profit Over Growth – How KT&G is Navigating the Structural Decline of Ginseng
KT&G’s health-functional food division has recorded a second consecutive year of declining sales. Korea Ginseng Corporation (KGC), the subsidiary managing the division, successfully bolstered operating profits by eliminating low-profit channels and reducing selling, general, and administrative (SG&A) expenses. However, as structural demand for red ginseng continues to soften, uncertainty remains regarding whether these cost-cutting measures can foster a fundamental business transformation.
KT&G’s health-functional food division recorded consolidated sales of ₩1.137 trillion in 2025, a 12.6% decrease from the previous year. This performance contrasts sharply with KT&G’s overall consolidated sales, which grew 11.4% to ₩6.58 trillion. While overseas cigarette sales and next-generation tobacco products (NGP) drove group-wide growth, the health functional food sector remained sluggish. In response to falling volumes, the company implemented strategic price hikes.
The domestic slump is rooted in a fundamental shift in consumer behavior. Data from the Korea Health Functional Food Association indicates that the domestic red ginseng market shrank by over 35% in five years – falling from ₩1.471 trillion in 2021 to ₩953.6 billion in 2025. Consequently, red ginseng’s market share in health-functional food category dropped from 25.9% to 16%. Conversely, the combined market share for multivitamins and single vitamins expanded from 13.6% to 18.1% during the same period. Red ginseng remains the preferred choice for consumers aged 51 and older, but among those aged 21 to 40, preference has shifted toward probiotics and vitamins, with red ginseng maintaining only an 8% purchase share in that demographic.
To mitigate the domestic demand downturn and inflation, KGC raised prices for flagship products in October 2025. The price for JungKwanJang Everytime (30 puches) rose 4.9% to ₩97,273 won, while HongSamJeong (240g) increased 4.3% to ₩200,000. As these adjustments occurred late in the year, their impact on annual performance was limited.
The overseas decline was even more pronounced, with sales plummeting 33% to ₩252 billion. China, the primary driver of this trend, saw sales drop 42.5% to ₩139.3 billion. The decline in China significantly outpaced declines in the U.S. (-6.7%) and other regions like Japan and Taiwan (-20.2%). The downturn in China is attributed to a combination of slowing local demand and strategic cost-efficiency measures. To optimize distribution and streamline channels, the company intentionally reduced advertising and promotions. Despite the overall slump, KGC reports growth in specific channels, such as Sam’s Club China, and is currently reorganizing its online and offline presence to optimize distribution.
Despite falling revenue, KT&G increased its health-functional food division operating profit by 4.7% to ₩102.8 billion, with operating margins increasing from 7.5% to 9.0%, primarily by slashing SG&A expenses. While profit defense through cost reduction has been effective, the strategy faces natural limits. With domestic demand in structural decline and weak demand persisting in Greater China, KT&G is looking toward diversification. The company aims to transition from a traditional export model to a localized, comprehensive health food business.
The core strategy involves:
– Developing localized products tailored to specific age groups and lifestyles
– Diversifying distribution through duty-free and online platforms
– Expanding the product portfolio beyond red ginseng into broader health food categories.
This pivot is intended to facilitate KGC’s evolution into a global comprehensive health company, though its success may depend heavily on the recovery of domestic and international economic conditions.
April 2026: KT&G Q1 2026 Preview – Record Overseas Momentum to Offset Domestic Decline, Shareholder Returns in Focus
KT&G is expected to report its Q1 2026 results in early-May, in line with its typical earnings cadence following the February full-year release. The upcoming print is likely to reinforce the core investment thesis: defensive earnings supported by accelerating overseas combustible growth, with incremental upside from next-generation products (NGPs) and a continued focus on shareholder returns.
Consensus expectations point to a solid start to the year, with upside risk. Market forecasts indicate Q1 2026 revenue of ₩1.63 trillion, with operating profit expected at ₩330-335 billion, implying modest margin expansion driven by mix improvements and cost efficiencies. However, given the strength of overseas operations, the company is increasingly positioned to exceed expectations and potentially deliver record quarterly revenue, supported by a combination of pricing, improved product mix, and volume growth.
By business line, the global tobacco segment remains the primary growth engine – and is expected to further accelerate. Overseas combustible sales are forecast to deliver mid-to-high single-digit growth, with particularly strong contributions from Central Asia, Southeast Asia, and the Middle East. While the Middle East accounts for roughly 20% of overseas cigarette sales, the impact of inventory stockpiling limits short-term volatility tied to local demand conditions. As a result, a healthy growth trajectory is expected to continue into Q1 2026, reinforcing visibility on export performance. The combination of price increases, favorable product mix, and rising volumes is expected to drive a step-change in overseas profitability, further cementing the segment’s role as the company’s key earnings pillar. KT&G’s international business – already larger than its domestic tobacco segment on an annual basis – continues to benefit from expanded manufacturing capacity and improved route-to-market execution.
In the domestic market, structural decline persists but relative outperformance remains intact. Total cigarette demand in South Korea is expected to decline by 4% year-on-year to 12.3 billion units, while KT&G’s own sales volume is projected to fall by a more moderate 3%, implying a 0.5pp increase in market share to about 69%. This highlights continued resilience in the core franchise despite a contracting market.
In heated tobacco products (HTPs), KT&G is expected to maintain solid momentum, with category penetration moving towards 25% and KT&G’s category share at 47%, underscoring its competitive positioning in the next-generation segment. Next-generation products remain a key medium-term growth lever. Investors will continue to focus on the pace of international expansion and margin development, as the company scales its reduced-risk portfolio alongside its traditional combustible base.
Outside tobacco, divisional performance is expected to improve meaningfully. The Korea Ginseng Corporation (KGC) is projected to deliver a mixed but improving profile: domestic sales are expected to rebound by 7% on a low base and strong holiday-related promotions, while overseas sales may decline by 10% due to reduced promotional activity. Despite this, operating profit is forecast to increase by 44%, reflecting a clear shift toward profitability optimization. The real estate division is also expected to contribute positively, with both revenue and operating profit increasing on the back of recognition of small- and medium-scale development projects.
Capital allocation remains a central pillar of the investment case. KT&G continues to execute an active shareholder return policy, targeting total shareholder returns of ₩3.7 trillion over 2024–2027, comprising ₩1.3 trillion in share buybacks and ₩2.4 trillion in dividends, alongside share cancellation. Additional upside may be unlocked through enhanced efficiency of non-core assets, including 57 real estate projects and 60 financial asset cases, reinforcing the company’s commitment to balance sheet optimization.
From a broader perspective, Q1 should be viewed as a potentially stronger-than-expected start to the year, with growing confidence in overseas-driven earnings expansion. While domestic volumes remain structurally challenged, KT&G’s earnings profile is increasingly defined by its international footprint, pricing power, and disciplined capital allocation. The Q1 release is likely to strengthen the case for sustained growth, with investor focus centered on (1) the durability of overseas momentum, (2) continued NGP scaling, and (3) execution on shareholder returns.
April 2026: KT&G Re-rating Story Intact, but Execution Now in Focus
KT&G’s equity story in 2026 reflects a transition from valuation-driven upside to a more execution-dependent narrative. The stock has delivered a strong re-rating over the past two years, rising from around ₩80,000 in mid-2023 to a peak of ₩180,000 in early 2026, supported by improved investor sentiment and a clear commitment to shareholder returns. While recent price action suggests some loss of momentum following this rally, with the share price at around ₩160,000 and trading at roughly 14x earnings, KT&G remains reasonably valued relative to global tobacco peers, particularly when factoring in its volume and profit growth profile.
Structurally, KT&G’s growth strategy continues to center on international expansion and operational leverage. The company is increasingly positioning itself as a global tobacco platform, with overseas cigarette volumes expected to deliver double-digit growth. At the same time, its core combustible business – still accounting for more than 50% of the Group revenue – provides a degree of pricing power, particularly in mature markets. Additional support is expected from new overseas manufacturing facilities, which should enhance cost efficiency as utilization increases. Meanwhile, diversification into Next Generation Products (NGPs) and non-tobacco segments, particularly ginseng & health products, offers a stabilizing effect on earnings.
That said, risks are becoming more visible. Margin compression represents a key concern, particularly if cost pressures persist or intensify. The domestic Korean market, still accounting for a substantial portion of revenue, offers limited structural growth, increasing reliance on successful international execution. Expansion strategies must translate into sustainable profitability rather than simply volume growth. From an earnings perspective, the outlook remains constructive but less uniform. The company has guided for 2026 revenue growth of around 3–5% and operating profit expansion of 6–8%, translating into expected revenues of roughly ₩6.85 trillion and operating profit of ₩1.45 trillion. However, rising costs and a normalization effect following previous periods of strong growth could put pressure on earnings growth, highlighting a key tension in the investment case: while top-line momentum remains intact, margin dynamics may prove more challenging in the near term.
Shareholder returns remain a central pillar of the KT&G investment thesis. The company continues to offer an attractive and growing dividend, with 2026 payouts expected to exceed ₩6,000 per share. The long-term yield profile has been consistently above 5%, although the current yield is compressed to around 4% following the recent share price re-rating. This, combined with a 25-year track record of stable distributions and significant institutional ownership, continues to underpin investor confidence.
Overall, KT&G remains a high-quality defensive compounder with a solid medium-term outlook supported by global expansion and disciplined capital returns. However, the narrative is evolving. The earlier phase of multiple expansion appears largely complete, and future share performance is likely to depend increasingly on the company’s ability to deliver earnings growth in line with expectations. In that sense, KT&G is moving from a re-rating story to an execution story, a shift that will likely define its trajectory through 2026.
February 2026: KT&G Delivers Record Results on Overseas Expansion
KT&G reported record annual sales, supported by sustained growth across its overseas markets supplied through an expanding global manufacturing footprint. The company generated ₩6.5 trillion (c.US$ 4.5 billion) in revenue and ₩1.35 trillion in operating profit, marking a sixth consecutive year of sales growth. Operating profit increased 13.5% year on year, reflecting improved scale and profitability in international operations.
A central driver of performance has been KT&G’s network of 16 overseas marketing and production bases. The company operates subsidiaries in Russia, Indonesia, Uzbekistan, Kazakhstan, Taiwan and Turkey, alongside local branches in Tajikistan, Kyrgyzstan, Mongolia, China and across Europe. Its global manufacturing platform currently comprises five plants in Indonesia, Russia, Turkey and Kazakhstan, with an additional facility under construction in Indonesia scheduled for completion in the first half of the year. Combined annual production capacity stands at approximately 65 billion cigarette sticks.
KT&G’s brands have strengthened their competitive positions across multiple markets. The company maintains leading market share in Mongolia and Tajikistan, while its ultra-slim Esse brand has gained traction in Indonesia and the Bohem brand has expanded in Taiwan. Notably, overseas cigarette sales exceeded domestic sales for the first time last year, underscoring the structural shift in the company’s revenue mix toward international markets. The expansion has been evident over the past six years. Sales generated by foreign subsidiaries increased from ₩206 billion in 2020 to ₩713 billion in 2024, representing growth of 245%. Over the same period, overseas cigarette volumes rose from 10.3 billion to 21.9 billion sticks, effectively more than doubling.
Management has prioritized the development of a long-term global operating structure designed to address region-specific consumer demand while strengthening integration across manufacturing, marketing and logistics. Since assuming leadership in 2024, KT&G’s CEO has focused on streamlining overseas operations and reinforcing the company’s international value chain, including direct oversight of key growth markets in Southeast Asia and Central Asia.
The company’s improved operating profile has been reflected in capital markets. BlackRock has increased its shareholding to 5%, while KT&G’s share price has surpassed ₩170,000. Market capitalization has consequently moved above ₩20 trillion, positioning the company among Korea’s large-cap constituents. Overall, KT&G’s results highlight the growing importance of its international platform, with overseas sexpansion emerging as the primary engine of revenue growth and earnings momentum.
January 2026: Structural Growth Drivers and Shareholder Returns Support a Positive Investment Case for KT&G
KT&G continues to be viewed positively by the market as it enters 2026, with prevailing expectations centered on resilient earnings, accelerating overseas growth, and a more diversified profit structure. The investment case is underpinned by three core drivers: expansion of global cigarette operations, scaling of next-generation nicotine products, and stable cash generation supporting enhanced shareholder returns. These factors collectively reinforce confidence in the company’s medium- to long-term earnings trajectory despite near-term volatility in the domestic market.
For the fourth quarter of 2025, KT&G is expected to deliver results broadly in line with market expectations, with revenue estimated at around ₩1.72 trillion, representing year-on-year growth of c.10%, and operating profit projected at ₩240–245 billion, up close to 15% year-on-year. Earnings are supported by strong overseas tobacco shipments and non-core contributions, including real estate development income, which help offset softness in domestic cigarette volumes. On a full-year basis, the overseas segment is increasingly seen as the primary earnings stabilizer and growth engine.
Looking ahead, consolidated sales are forecast to trend toward approximately ₩6.8–7.0 trillion in 2026, with operating profit expanding to around ₩1.45–1.47 trillion. This outlook reflects continued pricing power in combustible products, a favorable geographic mix, and improved operating leverage as new overseas production facilities ramp up. Manufacturing bases in Turkey, Kazakhstan, and Indonesia are expected to play a critical role by reducing logistics costs, improving supply efficiency, and supporting localized market penetration. The Turkish plant alone adds annual capacity of c.12 billion sticks and is viewed as a key contributor to volume growth in emerging markets.
Beyond traditional cigarettes, KT&G’s strategic push into next-generation nicotine products is increasingly reflected in forward-looking valuations. The company’s expansion into nicotine pouches and heated tobacco products is seen as an important long-term growth option, particularly as demand for smoke-free alternatives accelerates globally. The acquisition of a Nordic nicotine pouch operator and deeper involvement in international distribution networks are expected to gradually lift margins and diversify revenue sources away from the mature domestic market.
Capital allocation remains a central pillar of the investment thesis. KT&G has committed to a minimum annual dividend of ₩6,000 per share and continues to execute share buyback and cancellation programs funded by strong free cash flow generation. This shareholder return framework enhances earnings per share visibility and supports valuation, particularly in a market environment where income stability and capital discipline are highly valued.
Risks to the outlook include slower-than-expected recovery in domestic consumption, execution risks related to overseas plant ramp-ups, and competitive intensity in next-generation products. Inventory adjustments and short-term fluctuations in certain segments may also weigh on quarterly comparisons. Nevertheless, the overall market view remains constructive, with target valuations clustered around the mid-₩170,000 range, implying meaningful upside from recent trading levels.
In sum, KT&G is increasingly perceived as a structurally transformed tobacco company, combining stable cash flows from its core business with global expansion, exposure to faster-growing nicotine categories, and disciplined shareholder returns—factors that collectively support a favorable medium-term investment outlook.
January 2026: KT&G: From Domestic Slowdown to Global Growth Engine – A 2026 Investment Outlook
KT&G entered 2026 riding a wave of strong international momentum even as its legacy South Korean cigarette business faces cyclical and structural headwinds. The company’s global cigarette segment has been a standout growth driver, delivering “triple growth” — volume, revenue and operating profit — for consecutive quarters, with overseas cigarette revenue up over 30% year-on-year and sales volumes rising meaningfully, contributing materially to consolidated results and underpinning a stock valuation near record levels in 2025.
In 2025, KT&G reported record quarterly results with consolidated revenue and operating profit growing double-digit (Q3 revenue up ~11.6%, operating profit up ~11.4%), driven by robust global cigarette performance and solid domestic next-generation product (NGP) sales. The company raised its full-year revenue and earnings guidance to double-digit growth, reflecting confidence in continued momentum.
KT&G’s strategic shift toward international markets is now bearing fruit. Its global footprint spans over 140 countries, and the company recently announced full-scale entry into the nicotine pouch market through the acquisition of Swedish nicotine pouch maker Another Snus Factory (ASF) with partner Altria, positioning the firm for structural growth beyond combustible tobacco. Beyond cigarettes and nicotine pouches, KT&G’s heated tobacco products (lil series) — including upgraded device platforms — are progressively contributing to overseas revenue, with international NGP revenue more than doubling year-on-year in recent quarters. KT&G’s overall 2026 sales is set to surpass ₩6 trillion, supported by sustained international combustible cigarette growth (~20%+) and expanding NGP & nicotine pouch businesses.
On the domestic front, KT&G continues to maintain leadership but has seen temporary pressures due to seasonal demand fluctuations, such as the timing of vacations and holiday periods affecting consumption patterns — a common trend in South Korea’s mature cigarette market. Although domestic volumes and next-gen product demand remain solid, they are less dynamic than the explosive international growth.
Another structural challenge in certain markets — notably Russia and parts of Central Asia — stems from the broader geopolitical environment. War-related sanctions and financial controls have complicated the movement of remittances back to South Korea and, in some cases, delayed collections, potentially placing temporary cashflow stress on working capital in these regions. KT&G’s heavy reliance on certain key geographies for a large share of growth — particularly CIS countries, the Middle East and Southeast Asia — introduces concentration risk. While diversification is increasing, the company’s performance remains sensitive to regulatory and macroeconomic shifts in these regions. A protracted conflict in Eastern Europe or renewed trade restrictions could weigh on future growth.
A highlight for investors has been KT&G’s aggressive shareholder return strategy. The Company has maintained or increased dividends for over two decades while committing to a payout ratio above 50% and commiting to a significant yield relative to global tobacco peers. Buybacks totaling c.₩360 billion (with further rounds planned) and a broader ₩3.7 trillion value-up plan through 2027 (including dividends and cancellations) reinforce KT&G’s commitment to returning capital.
Additionally, KT&G is divesting non-core assets, including a substantial program to sell underperforming real estate, with approximately 57 properties earmarked for sale by 2027 to raise nearly ₩1 trillion. The proceeds are being redeployed to core tobacco operations and shareholder distributions, enhancing balance sheet flexibility and lowering non-strategic drag. KT&G’s credit outlook remains stable, with strong core revenue and EBITDA growth through 2026, supported by diversified global cigarette and NGP growth. However, risks persist from volatile leaf tobacco prices, regulatory pressure (including potential tobacco tax increases), currency exposures and geopolitical disruptions that could impact cost structures and remittances.
In short, KT&G’s ongoing transition from a domestic tobacco player to a global nicotine platform company — backed by strong overseas cigarette growth, rising contributions from NGPs and nicotine pouches, robust shareholder returns and strategic asset optimization — presents an interesting long-term investment thesis. That said, investors should closely monitor geopolitical risks, cashflow liquidity in constrained markets and domestic consumption trends that could temper near-term performance.
January 2026: KT&G To Achieve ₩6 Trillion In Sales For The First Time
KT&G’s annual sales is expected to surpass ₩6 trillion (US$4.1 billion) for the first time in its history. While the domestic cigarette market has entered a mature phase and overall demand continues to decline, KT&G is accelerating its transformation from a traditional tobacco company into a global nicotine platform enterprise. This is driven by rapid growth in its overseas tobacco business, a recovery in the next-generation product (NGP) segment, the expansion of new businesses such as nicotine pouches, and the simultaneous implementation of an unprecedented shareholder return policy. This growth trend is expected to continue in 2026, positioning the “₩6 trillion in sales” not as a one-off event but as the starting point for structural growth.
In 2025, KT&G’s consolidated sales and operating profit are projected as ₩6.47 trillion (US$4.4 billion) and ₩1.34 trillion (US$920 million), representing a year-on-year growth of 9.5% and 13%. The key driver of KT&G’s improved performance is its overseas combustible cigarette business. In the past, the Company relied on promotional discounts and value pricing policies to boost volume, but it has recently shifted its strategy by reducing discounts and increasing the proportion of high-margin products. This has established a qualitative growth structure in which both average selling price (ASP) and sales volume increase simultaneously. In particular, the pace of growth has accelerated in the Commonwealth of Independent States (CIS), the Middle East, and Southeast Asia, as local production has expanded and distribution networks have stabilized. The impact of the expanded Kazakhstan plant has been fully reflected, and a new plant in Indonesia is scheduled to begin operations in 2026. The expansion of overseas production bases is expected to lead to both reduced logistics costs and favorable currency effects, directly improving profitability. KT&G’s overseas combustible cigarette sales is set to grow by more than 30% and c.20% in 2025 and 2026, respectively. This is the backdrop for KT&G’s overall tobacco sales increasing, even as domestic cigarette demand declines.
Heated Tobacco Products have also become a pillar of structural growth. The growth has been hampered in the past two years due to supply disruptions of devices in Vietnam, but most of these issues have been resolved. In Korea, KT&G’s premium device lineup, including lil Solid, lil Able and lil Hybrid, gained significant traction, while overseas, the Company is preparing to launch new global platforms through partnership with Philip Morris International (PMI) or on its own. KT&G also hopes to benefit from the recent launch in the key Russian market (- the second largest heated tobacco market after Japan).
KT&G’s growth momentum is expected to continue in 2026 with annual sales and operating profit projected to reach ₩6.77 trillion and ₩1.46 trillion, respectively. – driven by the high growth of overseas combustible cigarettes and NGPs (Next-Generation Products). In September 2025, KT&G partnered with Altria to jointly acquire Another Snus Factory Stockholm AB (ASF), a Swedish nicotine pouch company. This marked KT&G’s full-scale entry into the rapidly growing nicotine pouch market, centered in Northern Europe. ASF owns the LOOP brand, which holds leading market positions in Sweden, Norway and Iceland. Starting from Q1 2026, ASF’s performance will be reflected in KT&G’s earnings and KT&G plans to leverage its existing distribution networks in the Middle East and Asia-Pacific to expand the reach of its nicotine pouch products.
Another significant change at KT&G is the full-scale implementation of its shareholder return policy. The Company previously announced plans to return a total of ₩3.7 trillion to shareholders between 2024 and 2027. The plan includes ₩1.3 trillion in share buybacks and ₩2.4 trillion in dividends. Additionally, KT&G has opened the door to further returns by selling non-core real estate and financial assets. As overseas plant expansions near completion, annual capital expenditures (CAPEX) are expected to decrease to the ₩200 billion range from 2026 onward – which could fund increased dividends and share buybacks.
Furthermore, the potential for an increase in tobacco taxes is also viewed as a positive factor for KT&G’s mid- to long-term growth. The last tobacco tax hike in South Korea occurred in January 2015, and there has been no change in the tax rate for more than 10 years. Past cases show that while demand may contract in the short term, price hikes have led to improved margins and positive stock performance in the mid- to long-term. A tobacco tax increase in South Korea could be supportive of KT&G’s earnings growth in the long-term.
