Category: Featured

KT&G Reports Second-Quarter Results

Image: Tobacco Reporter archive
KT&G Corp. posted consolidated revenue of KRW1.34 trillion ($1.03 billion) and operating profit of KRW242.9 billion for the second quarter ended June 30, 2023, according to PR Newswire.
Sales of both combustible cigarettes and heat-not-burn (HnB) products were higher than in the comparison period.
HnB volumes jumped 43.5 percent to 3.63 billion sticks, driven primarily by the rapid global expansion of KT&G’s Lil brand. For the second quarter, KT&G’s overseas heat-not-burn category recorded sales volume of 2.21 billion sticks, a 72.7 percent growth year-over-year.
The company’s overseas combustibles revenue, including both overseas subsidiaries and exports, was KRW265.5 billion. The export revenue increased 5.9 percent year-over-year to KRW152.9 billion, mainly due to the favorable pricing in key markets, including Latin America and the Middle East. The favorable pricing has also increased the profitability of the combustibles exports, as the export operating profit grew 42.6 percent year-over-year. The overseas combustibles sales volume grew 2.6 percent year-over-year to 13.17 billion sticks.
KT&G also shared its plans on share repurchase and cancellation and interim dividend. As part of its three-year shareholder return policy, KT&G plans to acquire 3.47 million of its own shares (KRW0.3 trillion), representing 2.5 percent of its outstanding shares, within three months for cancellation. KT&G will be cancelling its own shares for the first time in 14 years.
In addition, the company declared its first-ever interim cash dividend of KRW1,200 per share. The interim dividend is scheduled to be paid out by Aug. 23. Including the interim dividend, the total dividend per share is expected to increase by at least KRW200 per share compared to last year’s KRW5,000.
August 3, 2023
New BAT Boss Calls for ‘Better’ Vaping Rules

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The newly appointed head of BAT has urged governments to apply “better regulations” toward vaping products and other tobacco alternatives.
Tadeu Marroco told the Financial Times that BAT is “very keen” to work with regulators to address problems such as underage vaping and the environmental impact of e-cigarettes.
“We need to have better regulations. We cannot ignore the benefit of migrating smokers out of cigarettes, but being unregulated, we have issues related to youth access and the environment,” Marroco said.
“The problem is that this is a phenomenon that has grown so fast, and the regulators are always catching up. But there are clearly opportunities for us to improve the level playing field.”
Since Marroco took the helm in May of this year, there has been an increased push around the globe to restrict flavored e-cigarettes, due in part to advice from anti-nicotine groups and the World Health Organization. India, Thailand and Argentina have all banned vaping products.
U.K. National Health Service guidelines suggest vapes can help people stop smoking, although they also state that the activity “is not completely risk-free.” The government said in April that it would offer 1 million smokers vape starter kits. Selling vapes to under-18s is illegal.
August 3, 2023
Manila Rolls Out Red Carpet for HTP Makers

Photo: PMI
The Philippines’ Department of Trade and Industry (DTI) is urging tobacco companies to manufacture their heated tobacco products in the country, citing surging domestic demand and export opportunities, according to the Philippine News Agency.
During the International Tobacco Agriculture Summit in Taguig City on Aug. 2, DTI Undersecretary Ceferino Rodolfo said while local demand for cigarettes is expected to decline from 49.61 billion sticks in 2022 to 39.06 billion sticks in 2027, sales of HTPs are poised to increase significantly during that period.
He cited a Euromonitor predicting HTP retail sales of HTPs to surge by 511 percent to 4.06 billion sticks in 2027.
Rodolfo said HTP producers would benefit the Philippines’ free trade agreements with regional markets. “HTPs, if manufactured in the Philippines, can be imported in ASEAN (except Vietnam), Australia, New Zealand, Japan, Korea, and Hong Kong at zero percent tariff duty,” he was quoted as saying.
In 2022, the top destinations for Philippine tobacco products included South Korea at $102.2 million, Thailand ($98.29 million) and Myanmar at $49.4 million.
According to Rodolfo, Philip Morris Fortune Tobacco aims to build a PHP9-billion factory in Tanauan, Batangas, for the production of IQOS devices.
August 3, 2023
Strong Start for Universal’s Tobacco

Photo: Taco Tuinstra
Universal Corp. reported sales and other operating revenue of $517.7 million in the three months that ended June 30, 2023, up 20 percent over that posted during the same period last year. Operating income declined 17 percent to $11 million.
Tobacco operations sales and other operating revenues jumped 28 percent to $443.9 million, while Tobacco operations operating income increased 9 percent to $8.9 million.
“Our tobacco operations performed well and are off to a good start for our fiscal year 2024,” said Universal Corp. Chairman, President and CEO George C. Freeman III in a statement.
“Segment operating income was higher for our tobacco operations segment in the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022, even though we did not have the benefit of large shipments of carryover tobacco from certain origins that we had in first quarter of fiscal year 2023.
“Demand for leaf tobacco from our customers remains strong, and our level of uncommitted tobacco inventory was 16 percent of tobacco inventory at June 30, 2023. We are forecasting increased leaf tobacco production in fiscal year 2024, compared to fiscal year 2023, and believe that even with that increased production, leaf tobacco will remain in an undersupply position.”
Freeman also expressed satisfaction with the progress Universal has made integrating its plant-based ingredients platform. He attributed soften-than-expected demand in this segment to high customer inventory levels, but anticipated this situation to be temporary.
“We believe that we are well-positioned to capitalize on demand from our customers, and that with the investments we are making, we are a stronger partner for current and future customers due to the expanded range of capabilities and products that we can offer them,” said Freeman.
August 3, 2023
Juul Seeking $1 Billion in Funding

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Juul Labs is seeking to raise about $1 billion, reports Bloomberg News
The e-cigarette manufacturer, which had about $800 million in revenue in 2022, is reportedly working with Jefferies Financial Group for the fundraising.
In July, the company said it was exploring options including financing alternatives, to protect its business and help refinance an existing loan, as it dealt with lawsuits related to the marketing of its e-cigarettes.
In November 2022, Juul secured a cash infusion to keep the company in business while it appeals the U.S. Food and Drug Administration’s marketing denial order related to its vapor products.
A pioneer in the vaping business, Juul Labs has gone from dominating the U.S. e-cigarette market to fighting for its survival in a relatively short time.
Following its initial success, the company quickly came under regulatory scrutiny over its marketing practices. Critics blame Juul Labs for contributing to an “epidemic” of underage vaping.
August 3, 2023
Reynolds Earns Water Stewardship Cert

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Two Reynolds American Inc. manufacturing U.S. facilities have achieved Alliance for Water Stewardship (AWS) Certification. The American Snuff Co. facility in Clarksville, Tennessee, and R.J. Reynolds Tobacco Co.’s Whitaker Park site in Winston-Salem, North Carolina, both recently earned the designation. Reynolds Operations Center (ROC) in Tobaccoville, North Carolina, received AWS certification in 2022.
The AWS Standard is a globally applicable framework for improving water sustainability performance. It enables factories, facilities, and other water-using sites to better understand their water use and impact and to work collaboratively and transparently for sustainable watershed management. Receiving this certification showcases that the Clarksville and Whitaker Park sites have implemented AWS’ best practices in five important areas: good water governance, sustainable water balance, good water quality status, protection of important water-related areas, and safe water, sanitation, and hygiene for all.
“Attaining AWS Certification at two more Reynolds sites underscores our commitment to protecting natural resources that we rely on to run our business,” said Bernd Meyer, executive vice president of operations at Reynolds, in a statement. “I’m proud of our teams’ commitment to running efficient operations and being good water stewards in the communities where we work and live.”
Reynolds’ efforts to use water efficiently across its facilities will progress even further with the addition of the recently announced WaterHub planned for the ROC in Tobaccoville, North Carolina. The advanced water reclamation plant, a product of a NextEra Energy Resource subsidiary, is projected to reclaim more than 60 million gallons of water annually.
August 3, 2023
BMJ Affiliate to Buy Mativ Papers Business

Photo: SWM
BMJ affiliate Evergreen Hill Enterprise has offered $620 million to acquire Mativ Holding’s engineered papers (EP) business, which supplies papers to the tobacco industry.
“While a solid business, EP’s concentration in the tobacco industry is not aligned with Mativ’s long-term ambition and presents a more attractive value proposition under new strategic ownership,” said Mativ CEO Julie Schertell in a statement. “Our talented and dedicated employees will continue to deliver outstanding products and service to EP’s long-standing customer base, and we are confident in a smooth transition.”
Mativ intends to use the proceeds of the proposed transaction to pay down debt.
Subject to customary closing conditions, including regulatory approvals and satisfaction of the consultation process with the applicable works councils in France, the proposed transaction is expected to close in the fourth quarter of 2023
Based in Singapore Evergreen Hill Enterprise is part of a successful, Indonesian-based privately held group of diversified companies serving the tobacco, banking and consumer electronics industries, among other sectors.
The buyer is expected to fund the proposed transaction with existing cash balance and is not dependent on capital markets for financing
Mativ Holding was created out of the 2022 merger between Schweitzer-Mauduit International and Neenah, two leading global manufacturers of specialty materials.
BMJ said its business would continue to operate as usual. “There will not be an integrated structure between BMJ and SWM so that both companies will maintain the autonomy of action and confidentiality of projects,” the company wrote in a statement.
“Having said that, BMJ is delighted to be affiliated with SWM, a prominent supplier of engineered papers. This affiliation will open opportunities for BMJ to collaborate with SWM in some strategic areas, including, but not limited to offering complimentary geographic reach and product lines, ultimately providing comprehensive and unparalleled value to the customers and stakeholders.”
August 2, 2023
Malaysia: Illicit Tobacco Share Down Slightly

Photo: K Stocker
The share of Malaysia’s illicit cigarette market declined slightly this year, reports the New Straits Times.
According to a recent survey, Illegal products accounted for 55.3 percent of the domestic cigarette market in May, down 1.3 percent from a year ago.
The Confederation of Malaysian Tobacco Manufacturers (CMTM) attributes the drop to new anti-illicit measures, including the strict control on the shipment of tobacco products and increased enforcement efforts.
In Kelantan, the illicit incidence had declined to 50.2 percent compared to 70.6 percent in 2020 as a result of heightened enforcement actions in the state.
Despite the progress, the prevalence of illicit cigarettes remains extremely high by international standards. While legal cigarettes retail for between MYR9 ($1.98) and MYR12, the same products can be purchased for between MYR4 and MYR8 on the black market.
The government misses out on an estimated MYR5 billion in annual revenues due to tax-avoiding cigarettes.
The survey report also highlighted the notable increasing presence of cigarette packs with fake tax stamps in the market. Based on the study, the incidence of cigarette packs with fake tax stamps has increased to 8.5 percent from 4.9 percent in 2018.
Concerned about the persistence of illicit trade, the CMTM urged the Parliamentary Special Select Committee to carefully consider the impact of the Control of Smoking Products for Public Health Bill 2023 that is currently under consideration in Malaysia.
Among other measures, the proposed legislation would prevent those born in or after 2007 from buying tobacco or vapes. Policies should be based on substantiated science-based evidence and be designed to prevent any unintentional proliferation of illicit cigarettes, the CMTM said
August 2, 2023
Turning Point Releases Second-Quarter Results

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Turning Point Brands (TPB) announced financial results for the second quarter ended June 30, 2023.
Total consolidated net sales increased 2.6 percent to $105.6 million compared to the second quarter of 2022. Zig-Zag Products net sales increased by 1.1 percent. Stoker’s Products net sales increased by 7.3 percent. Creative Distribution Solutions net sales decreased by 1.3 percent. Gross profit increased 2 percent to $52.5 million, and net income increased 83 percent to $9.9 million. Adjusted net income increased 8.4 percent to $15.3 million.
“Our second-quarter results demonstrated continued progress against our plan,” said TPB President and CEO Graham Purdy in a statement. “The Zig-Zag segment grew double-digits sequentially from the first quarter as trade inventory normalized. Stoker’s had another solid quarter of performance led by double-digit growth in Stoker’s MST [moist smokeless tobacco]. We opportunistically purchased another $15.1 million in aggregate principal amount of our convertible notes during the second quarter while maintaining a strong cash balance. Given our solid first-half performance, we are raising our guidance for the full year.”
For the second quarter, Zig-Zag Products net sales increased 1.1 percent to $46.7 million. TPB’s Canadian and other smoking accessories businesses saw strong growth during the quarter, which was partially offset by declines in the U.S. rolling papers and wraps businesses.
For the quarter, the Zig-Zag Products segment gross profit was steady at $26.4 million. Gross margin declined 60 basis points to 56.6 percent, driven primarily by product mix.
“Our e-commerce business had another quarter of double-digit growth as we continue to build our omnichannel presence,” said Purdy. “We remain encouraged by our prospects with secular cannabis consumption growth trends driving demand for our products.”
For the second quarter, Stoker’s Products net sales increased 7.3 percent to $36.1 million. Double-digit growth of MST offset a decline in loose-leaf chewing tobacco. For the second quarter, total Stoker’s Products segment volume increased 0.7 percent while price/mix increased 6.6 percent.
For the quarter, the Stoker’s Products segment gross profit increased 10.4 percent to $20 million. Gross margin expanded 160 basis points to 55.4 percent due to MST pricing gains.
“Stoker’s continues to benefit from strong market share gains in both the MST and loose-leaf chewing tobacco categories as its value proposition continues to resonate with consumers,” continued Purdy.
August 2, 2023
Activists Slam Report

Photo: Tom
The World Health Organization’s recently published report on the global tobacco “pandemic” discounts the impact of harm reduction and vaping, according to Michael Landl, director of the World Vapers’ Alliance
“While filled with biased anti-vaping scaremongering and unfounded claims, the report’s overall direction is perplexing. Instead of prioritizing the crucial goal of reducing smoking rates, the WHO is directing its focus on vaping, which happens to be the most potent smoking cessation tool available.”
In the report’s foreword, Director-General Tedros Adhanom Ghebreyesus asserts that vaping would undermine anti-smoking efforts, claiming that e-cigarettes are harmful to both the people using them and those around them.
“Regrettably, the WHO appears to ignore reality and scientific evidence,” said Landl in a statement. “Countries that adopt an open and consumer-friendly approach to harm reduction products achieve significantly better results than those following WHO’s misguided path. Comparative data from Sweden and the United Kingdom demonstrate their remarkable success in reducing smoking rates, surpassing countries with a negative harm reduction approach by a wide margin.”
The WHO report also claims a gateway effect from vaping to smoking and alleges that vaping flavors target children. It further highlights that 121 countries have adopted vaping regulations, with 34 completely banning vape sales.
“The outdated and debunked theories propagated by the WHO report pose risks to public health,” said Landl. “The notion of a gateway effect from vaping to smoking lacks evidence. Furthermore, flavors are essential for adults as they play a crucial role in helping millions of smokers transition to vaping. Additionally, celebrating countries which ban a way less harmful alternative for smokers is absurd.”
According to a review of 15 studies, “a true gateway effect in youths has not yet been demonstrated,” according to Landl. Factors such as anxiety, parental smoking habits, peer attitudes and household income must be considered, he noted. Another study found that vaping is not a gateway to smoking but rather that negative circumstances in teenagers’ lives lead to risky behaviors. According to the Yale School of Public Health, vaping flavored e-cigarettes is linked to a 230 percent increase in adult smoking cessation, and a flavor ban, as suggested by the WHO, could drive five out of 10 vapers back to smoking or the black market.
“The lack of empathy for smokers and vapers, coupled with the outright denial of scientific findings, will have severe consequences for many lives,” said Landl. “The WHO seems to have lost sight of its ultimate goal – reducing smoking rates. While we all agree that teenagers should not smoke or vape, the report notes that only 45 percent of countries ban e-cigarette sales to minors, and 10 percent of countries impose no age restrictions on cigarette purchases. Why not address these real-life challenges? The WHO systematically disregards an abundance of scientific evidence supporting the benefits of vaping, not to mention the experiences of millions of vapers. Vaping is 95 percent less harmful than smoking and a more effective method to quit smoking compared to traditional products like gum and patches. Restricting or banning access to vaping will only lead to unnecessary loss of lives.”
August 1, 2023