KT&G announces plan to enhance corporate value aimed at achieving ‘ROE 15% and 3.7 trillion KRW in shareholder returns.’

KT&G (CEO Kyung-man Bang) announced the 'KT&G Corporate Value Enhancement Plan' on the 7th, which includes achieving an 'ROE of 15%' and 'returning 3.7 trillion KRW to shareholders' by 2027.

This value enhancement plan is focused on boosting profitability, optimizing assets, and financial optimization to significantly increase the current ROE (Return on Equity) from 10% to 15% by 2027.

KT&G intends to enhance profitability centered on the company's three core businesses (overseas cigarettes, NGP, and health supplements) by specifying focus areas within each business and continuing expansion to improve business operations. Additionally, about 1 trillion KRW in cumulative cash will be secured by restructuring low-yield, non-core assets such as real estate and financial assets, which will be used for growth investments and shareholder returns to enhance capital efficiency.

Particularly, investment efficiency will also be increased through innovative Capex investment strategies, such as strengthening global production partnerships. KT&G has optimized its previously announced Capex investment plan (2023-2027) of 3.5 trillion KRW to 2.4 trillion KRW. Despite the optimization of investment scale, the initially planned production capacity expansion and expected return on investment are projected to be maintained.

Moreover, the company's already top-tier domestic and international shareholder return policy will be strengthened. From 2024 to 2027, a total of 3.7 trillion KRW in shareholder returns is planned, including about 2.4 trillion KRW in cash dividends and 1.3 trillion KRW in treasury stock purchases. In addition, the 'KT&G Plus Alpha Program' will utilize funds generated from asset efficiency improvements for additional shareholder returns. These additional funds will primarily be used for the purchase and immediate cancellation of treasury shares, and with the enhanced shareholder return policy, 20% of the total issued shares (133,822,497 shares as of 2023) are expected to be cancelled by 2027.

The scale of treasury shares purchases and cancellations for this year has also been expanded according to the new corporate value enhancement plan. On the 7th, the KT&G board decided to use 150 billion KRW of funds secured from the liquidity of non-core, low-yield assets to buy and cancel 1.35 million treasury shares within the year. Consequently, KT&G's total shareholder return for this year, including existing treasury share cancellations, is expected to approach 1.4 trillion KRW, with the total shareholder return rate exceeding 100%. The scale of treasury share cancellations is also expected to be about 6.3% of the total issued shares for 2023.

Lee Sang-hak, KT&G's Executive Vice President, stated, "The company has been striving to grow corporate value and maximize shareholder value based on enhancing core competitiveness with ROE as a key indicator," and added, "We will continue to do our best to satisfy all stakeholders, including shareholders, through enhancing corporate value to the highest global standards."



(Photo Description) Presentation materials for the 'KT&G Corporate Value Enhancement Plan.'