KT&G Corp., South Korea’s dominant tobacco company, said Thursday it aims to earn over half of its sales from overseas businesses in 2027 as part of its expansion strategy.
KT&G aims to achieve sales of 10 trillion won (US$8.1 billion) in 2027, compared with an estimated annual sales of 5.9 trillion won for the year of 2022.
Last year, it likely earned 33 percent of its overall sales from overseas operations.
While focusing on the conventional cigarette (CC) business, the company said it will reinforce its next-generation product (NGP) businesses that include heat-not-burn (HNB) products, and the health functional food product business.
“We will invest 4 trillion won to build new overseas production facilities and expand existing ones in the next five years to meet growing demand for NGPs, like HNB products,” KT&G Senior Executive Vice President Bang Kyung-man said during the company’s Investor Day 2023 event.
KT&G is considering Kazakhstan and Eastern Europe as possible locations for a new plant, said Bang, who also serves as chief financial officer and chief operating officer.
To raise the necessary capital, the company plans to sell some of its idle property assets and borrow money from banks, he said.
KT&G sells the lil ABLE HNB, or smokeless tobacco products. Lil ABLE is KT&G’s second heat-not-burn “platform” after its lil SOLID was released in 2017. The new product is available in three types of sticks — tobacco leaves, granular and liquefied.
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 sucks in.
KT&G has exported its HNB products, including its lil SOLID and lil HYBRID products, to more than 30 countries since 2020 through the sales networks of the New York-based Philip Morris International Inc.
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.
Source: Yonhap News Agency