KT&G has announced its “Enhancement Plan for Corporate Value,” aiming to achieve a 15% return on equity (ROE) and a shareholder return of 3.7 trillion KRW by 2027. The core strategy is to raise the ROE from the current level of 10% to 15% by enhancing profitability, optimizing assets, and refining the financial structure. A higher ROE indicates better profitability.
KT&G plans to improve profitability by focusing on its three key business areas: overseas cigarettes, next-generation products (NGP), and health functional foods. The company will detail and expand crucial aspects within these sectors. Additionally, KT&G will restructure non-core, low-yield assets such as real estate and financial assets to secure around 1 trillion KRW in accumulated cash, which will be used for growth investments and shareholder returns to enhance capital efficiency.
The company will also innovate its investment strategies, such as strengthening global production partnerships, to improve investment efficiency. Originally, KT&G planned a total investment of 3.5 trillion KRW from 2023 to 2027, which has now been adjusted to 2.4 trillion KRW.
KT&G will strengthen its shareholder return policy, distributing approximately 2.4 trillion KRW in cash dividends and 1.3 trillion KRW in share buybacks, a total of 3.7 trillion KRW over four years from 2027. The “KT&G Plus Alpha Program” will use resources generated from asset optimization for additional shareholder returns, primarily for share buybacks and immediate cancellation. By 2027, KT&G aims to cancel 20% of its total issued shares.
For 2023, the company will increase its share buyback and cancellation. KT&G’s board resolved to use 150 billion KRW from liquidating non-core, low-yield assets to buy back and cancel 1.35 million shares within the year. With existing share cancellations included, KT&G’s total shareholder return for the year is expected to reach approximately 1.4 trillion KRW, with the total shareholder return rate surpassing 100%. The share cancellation percentage is projected to be about 6.3% of the total shares issued in 2023.
Lee Sang-hak, Senior Vice President of KT&G, stated, “The company has been striving for corporate value growth and maximization of shareholder value based on strengthening its core competitiveness with ROE as a key indicator. We will continue to do our best to satisfy all stakeholders, including shareholders, by enhancing corporate value to a global top level.”
Since the inauguration of CEO Bang Kyung-man in March, along with Senior Vice President Lee Sang-hak, KT&G’s board has been focusing on strengthening global core competitiveness, optimizing the financial structure, and enhancing corporate value. The board has prioritized the “Group ROE Enhancement Project” to achieve a 15% ROE by 2027, aiming for global top-level corporate value that satisfies all stakeholders.