KT&G Raises 2026 Guidance as International Growth, NGP Push Drive Double-Digit Profit Gains
The South Korean tobacco giant increased its revenue and operating profit targets after posting an 18.5% profit rise in Q2, marking four consecutive quarters of double-digit growth.
Guidance Raised on Strong First Half
KT&G Corporation has revised its 2026 annual guidance upward after posting its highest first-half revenue on record and extending a streak of double-digit operating profit growth to four consecutive quarters. The company now expects revenue growth of 5% to 7%, up from a previous target of 3% to 5%, and operating profit growth of 10% to 13%, raised from 6% to 8% (earnings call, 2026-08-06).
Consolidated revenue in the second quarter reached KRW 1.7 trillion, with operating profit climbing 18.5% year-over-year to KRW 414.5 billion. Net income surged 152.3% to KRW 362.1 billion, driven by higher operating profit and currency-related gains (earnings call, 2026-08-06).
International Cigarettes Post Ninth Straight Triple-Growth Quarter
The international combustible cigarette business continued its momentum, recording "triple growth of volume, revenue and operating profit for 9 quarters in a row," according to CFO Sang-Hak Lee (earnings call, 2026-08-06). Sales volumes rose 7.3% to 17.92 billion sticks, while revenue increased 18.9% and operating profit jumped 45.6%.
The company secured "alternative routes" to maintain growth in the Middle East despite external uncertainties, while recording strong volume gains in Africa and Eurasia. Average selling prices continued to rise through pricing actions and product mix improvements (earnings call, 2026-08-06).
International business now accounts for 65.1% of KT&G's tobacco segment, underscoring the company's geographic diversification.
NGP Market Share Reaches 48.2% in Korea
KT&G's next-generation products business posted profit growth that outpaced revenue gains, as the lil Aible platform gained traction. The company's market share in Korea's heat-not-burn category reached 48.2%, widening its lead over the second-place competitor by 3 percentage points (earnings call, 2026-08-06).
Chief of NGP Dong-Pil Kim attributed the success to the June rollout of Aible 3.0, which reduced preheat time and added high-speed charging. The upgraded platform "received quite positive response from our consumers," he said (earnings call, 2026-08-06).
International NGP revenue grew 35.9%, supported by device launches in Russia and recovery from prior-year supply chain disruptions.
Domestic Cigarette Decline Slows
In Korea's combustible cigarette market, total volume declined just 1.2% year-over-year in Q2, a significant moderation from the typical 4% annual erosion rate. Chief Marketing Officer Chang Gu Huh suggested the slowdown may reflect reduced demand shift to synthetic nicotine e-vapor products following regulatory changes that took effect in April, though he cautioned it was "too early to say that this is a structural change" (earnings call, 2026-08-06).
Shareholder Returns Enhanced
The board approved an interim dividend of KRW 2,000 per share, an increase of KRW 600, with payment scheduled for September 7. KT&G indicated it is "assessing the possibility of increasing the DPS for our year-end dividend" and plans share buybacks in the second half (earnings call, 2026-08-06).
A new mid- to long-term shareholder return program will be announced in the fourth quarter, following the company's early completion of its 20% treasury share cancellation target under the November 2024 value plan.
MarginX data shows a cash dividend record date of August 20, 2026.
This article was generated by MarginX from the earnings call on 2026-08-06. It is not investment advice.