SEOUL, March 14 (Korea Bizwire) – KT&G Corp., South Korea’s largest tobacco product manufacturer, said Tuesday it posted solid profitability last year due to growing demand abroad despite falling domestic consumption.
The company said its sales rose to 2.96 trillion won (US$2.57 billion) in 2016, up from 2.82 trillion won in the previous year.
The tobacco monopoly’s operating profit was 1.3 trillion last year compared to 1.23 trillion won in 2015.
The operating profit ratio rose to 44 percent last year, from 43.8 percent a year earlier.
The profit ratio figure is much higher than tech giant Samsung Electronics Co.’s 17 percent. The average operating profit ratio for South Korean manufacturers stood at 5.1 percent in 2015.
KT&G attributed the strong sales and profitability to growing overseas demand. Exports rose to 830.9 billion won last year, up from 681 billion won in 2015 and 533.1 billion won in 2014.
Domestic sales, however, declined to 1.83 trillion won last year from 1.92 trillion won in 2015 and 1.96 trillion won in 2014.
In 2015, KT&G’s sales abroad surpassed domestic sales for the first time.
The cigarette company said it donated 72.8 billion won to various charity organizations in 2016 and 80.8 billion won in 2015.
“The growing profitability is attributed to the surging prices of KT&G tobaccos abroad,” Han Kook-hee, an analyst at NH Investment & Securities, said. “The average price tag for KT&G tobaccos per pack was in the mid-20 cents range about five years ago, but it surged to the mid-30 cents range at present.”