KT&G Right on Its Track

Tobacco monopoly posts record performance in 2008, despite sluggish economy with sales of cigarettes and ginseng leading the way

Korea Tobacco and Ginseng Corp. (KT&G) posted 2.645 trillion won in sales in 2008, up 9.6 percent YoY, operating profit of 975.3 billion won, up 19.8 percent YoY, and net profit of 894.3 billion won, up 35.3 percent YoY, the company announced recently.
The Korean tobacco monopoly also recorded good performance results in Q4 amid the sluggish economic conditions sweeping the country, with quarterly sales up 17.4 percent YoY at 724.9 billion won, 274.6 billion won in operating profit, up 47.8 percent YoY, and net profit of 245.3 billion won, up 81.7 percent YoY, thanks to increased exports and the depreciation of the won.
What helped the company to set such an envious performance record last year was astounding increases in the export of cigarettes, up 32.2 percent YoY, at 501.5 billion won with Q4 exports up 93.8 percent at 186.1 billion won, the company said.
Domestic sales of cigarettes amounted to 2.013 trillion won, up 2.5 percent YoY in 2008, while Q4 sales came to 492.4 billion won, down 0.9 percent YoY.
Behind the increase in operating profit in 2008 was the sale of expensive cigarettes and cost cutting measures, rising 36.9 percent YoY with Q4 operating profit up 37.9 percent YoY.
KT&G said it will continue to make efforts to maintain its competitive edge in the domestic market, expand into overseas markets and improve profitability. The company will continuously implement management reform and explore blue ocean to expand its exports so that it will be among top five cigarette companies in the world. It will always maintain top quality and design of its products and packages. It set its sales goal for 2009 at 2.909 trillion won with an operating profit of 1.150 trillion won.
The KT&G board of directors in a meeting on Jan. 22 decided to declare a 2,800 won per share dividend for 2008, which was submitted at the shareholders' meeting in March.
Korea Ginseng Corp., an affiliate of KT&G, saw annual sales last year rise 19.4 percent, operating profit up 22.8 percent, and net profit up 13 percent. In Q4, the affiliate recorded sales up 14.1 percent YoY, operating profit up 12 percent YoY and net profit up 6.7 percent YoY.
After successfully completing its privatization in 2002, KT&G has capitalized on its experiences to take stronger initiatives to reform and innovate its businesses, thereby effectively executing its business model diversification strategies and achieving solid management performance results. As a consequence, KT&G has grown into a globally competitive business, facilitating enhanced communication among stakeholders and practicing sustainable growth management.
By applying the three core beliefs of its management philosophy -- "Righteousness," "Enlightenment," and "Companionship" -- to every aspect of its business engagement, KT&G has continued to win commendations and respect for its business transparency and ethics such as corporate governance, ethical and transparent management practices, and business innovations, among others. KT&G has also shared its values with its clients, shareholders and constituents, further with the society at large with a greater sense of balance.
While improving its superior product quality and manufacturing capabilities by competing with foreign cigarette manufacturers in Korea, KT&G has dominated the domestic market with an over 70 percent share by developing and releasing new products marked by ceaseless technological innovations. KT&G has also successfully developed over 40 export markets including Russia, the CIS, the Middle East, Central Asia, China and Southeast Asia with its flagship product "Esse" spearheading its campaign.
In order to enhance its corporate value, KT&G will continue to reform and innovate its organization and businesses alike. By further strengthening its core businesses, developing growth drivers for the next generation, and achieving a better balanced business portfolio, KT&G will take a larger step toward building an exceptional global business with far stronger growth potential, profitability, stability, and sustainability. nw

Chairman &CEO Kwak Young-kyoon of KT&G Corp.