Tag: KT&G

  • KT&G Investor Wants New CEO Pay Structure

    KT&G Investor Wants New CEO Pay Structure

    Photo: bong

    KT&G shareholder Flashlight Capital Partners has demanded a revision of CEO compensation plan to normalize stock price.

    “In the recent past, KT&G’s former CEO was awarded a significant amount of compensation despite a 21 percent drop in KT&G’s stock price, while the KOSPI [The Korea Composite Stock Price Index] surged by 27 percent,” said Flashlight Managing Partner Capital Sanghyun Lee in a statement. “In March 2024, we urged the KT&G board to link the CEO compensation to stock performance, but no action has been taken so far,” Lee added.

    Under the plan proposed by Flashlight Capital, the CEO will receive a base annual pay of KRW100 million ($72,199) and be granted shares based on stock price milestones over the next three years. For instance, if the stock price doubles, the CEO will be awarded shares worth KRW10 billion.

    “Many of the current KT&G board members are under police investigation for potential bribe charges,” Lee highlighted. “Given that KT&G’s stock price is over a 50 percent discount compared to industry peers, we believe doubling the stock price is highly achievable, provided the board act promptly and decisively.”

    Flashlight Capital has proposed an extraordinary general meeting for shareholder approval and requested a response from the KT&G board by the end of July.

  • KTI to Make and Distribute KT&G Products in Europe

    KTI to Make and Distribute KT&G Products in Europe

    Photo: KTI/KT&G

    KT International (KTI) will be manufacturing and distributing KT&G’s products in Europe.

    Under the terms of an Oct. 20, 2023, agreement, KTI will have exclusive rights to manufacture and distribute KT&G’s products within the EU for three years. KT&G and KTI have agreed to a market entry plan aimed at expanding into strategic markets within the Western European region, with an initial focus on KT&G’s flagship Esse brand, which is the world’s bestselling super-slim cigarette.

    “We are delighted to join hands with KTI, a company with a robust footprint across Europe. Having already established a strong market presence in Asia, AMEA and Latin America, we believe that the agreement with KTI will serve as a pivotal step in accelerating our footprint across Europe,” said Chad Sul, general manager of KT&G’s Europe office.

    “After three years of collaborative efforts leading to the signing of this agreement, we see a strong cultural fit between our two companies. Also, we expect the synergy between our complementary brand portfolios to strengthen the market position of both companies. A significant amount of time had been taken to structure a competitive business model and to develop an innovative and consumer relevant product portfolio that is consistent to the global objectives and standards of KT&G. We thus look forward to a long and fruitful partnership between our companies,” said Stuart Buchanan, chief commercial officer of KTI.

    KT&G is a leading tobacco manufacturer in South Korea and the fifth-largest in the world by sales volume, with an annual sales revenue of approximately KRW6 trillion ($4.34 billion). Established in 2008, KTI is one of Europe’s fastest growing independent tobacco companies.

  • KT&G Supports Farmers

    KT&G Supports Farmers

    Photo: KT&G

    KT&G delivered welfare improvement support funds amounting to approximately KRW420 million ($303,020) to tobacco farmers.

    This year’s support funds will be used for health checkup fees, child scholarships and the purchase of fuel-saving devices for drying facilities targeting leaf tobacco growers.

    KT&G has been delivering welfare improvement support funds to leaf tobacco farmers annually since 2013, reaching a total of KRW4.28 billion this year. During the same period, the cumulative number of benefiting growers reached 15,212.

    Korean tobacco farmers have been struggling to secure labor due to the declining and aging rural population. Tobacco cultivation is difficult to mechanize, which makes it imperative to look after growers’ health, according to KT&G.

    The fuel-saving device recirculates the heat discharged during tobacco drying. Since 2022, KT&G has provided 214 units.

    The company also assists its farmers by purchasing all domestic leaf tobacco every year and dispatching employee volunteer groups to assist during the planting and harvesting seasons.

    “We continue to support the welfare improvement projects for farmers to alleviate their difficulties and provide practical help,” said Kim Jeong-ho, head of KT&G SCM headquarters, in a statement.

    “We will continue to provide consistent support to improve the health and economic conditions of leaf tobacco farmers.”

  • KT&G Reports Robust Overseas Performance

    KT&G Reports Robust Overseas Performance

    Photo: KT&G

    KT&G Corp. reported consolidated revenue of KRW1.29 trillion ($942.27 million) and operating profit of KRW236.6 billion for the first quarter ended March 31, 2024.

    The South Korean cigarette manufacturer’s overseas and domestic next-generation product (NGP) and overseas cigarette sectors sustained robust performances in the quarter, extending their trend from the previous year.

    Overseas NGP stick volume grew by 14.7 percent, reaching 2.11 billion sticks.

    KT&G also achieved its third consecutive quarters of revenue growth in the overseas cigarette business, driven by strategic pricing in core growth markets such as Indonesia. KT&G’s first-quarter overseas cigarette revenue recorded KRW291.8 billion, up 10.1 percent from the comparable 2023 quarter.

    While the company delivered notable results in core business areas, its consolidated revenue and operating profit for the first quarter decreased compared to the same period last year. This downturn was mainly driven by rising manufacturing costs, the completion of large-scale real estate development projects and reduced revenue from the health functional food sector amid lower consumer spending.

    “KT&G is committed to strengthening its competitiveness in core business areas and driving a business transformation aimed at making a significant leap forward to become a ‘global top-tier company,’” KT&G wrote in a press release.

    “Despite a number of headwinds, such as inflation-driven manufacturing cost pressure and economic recession, KT&G is striving to achieve a business turnaround in the second half of the year by strengthening global competitiveness and pursuing operational efficiency optimization.”

  • KT&G Provides Water Filters to Uganda

    KT&G Provides Water Filters to Uganda

    Photo: KT&G

    KT&G is providing 400 environmentally friendly water purification devices worth KRW110 million ($81,406) to 94 primary schools in Uganda. Park Hyeon-seok, KT&G’s Tanzania materials branch manager, attended a distribution ceremony on April 30 in Hoima City, at the heart of Uganda’s tobacco-growing area.

    Out of approximately 49.9 million nationals, 9.2 million lack access to safe drinking water, according to According to Uganda’s Water Environment Authority. This contributes to the spread of waterborne diseases such as cholera, and typhoid fever, leading to high infant mortality rates and social issues.

    The gravity-fed filtration devices supplied by KT&G will not only address Uganda’s drinking water hygiene issues but also replace the traditional water purification methods that involve boiling water using wood and charcoal, thereby saving the equivalent of up to 3,500 tons annually in carbon emissions.

    Exporting to more than 130 countries, KT&G says its tries to help solve various social issues in countries where it operates, especially in developing nations. In 2021, KT&G also supported a Tanzanian primary school by providing 1,300 water purification units. Additionally, the company has implemented CSR activities tailored to the specific conditions of various countries. These initiatives include supporting vocational training centers in Indonesia, establishing agroforestry education centers in Mongolia, and constructing schools in Laos.

    “We hope that this water purification support will help improve the sanitary conditions in Uganda,” said Shim Young-Ah, director of KT&G’s ESG management office, in a statement. “As a global corporate citizen, we will continue to focus on and fulfill our social responsibilities to countries in need.”

  • KT&G Expands in Indonesia

    KT&G Expands in Indonesia

    Photo: KT&G

    KT&G CEO Kyung-man Bang participated in groundbreaking ceremonies for the South Korean tobacco company’s second and third factories in Surabaya, Indonesia, on April 26.

    According to a company press release, Bang also visited KT&G’s Asia-Pacific headquarters in Jakarta during his trip, which was his first visit to an overseas business operation since assuming the top position at KT&G.

    Spanning approximately 190,000 square meters, KT&G’s second and third factories in Indonesia are set to commence operations in 2026. The combined production capacity of the factories is projected to reach 21 billion cigarette sticks per year. KT&G plans to make Indonesia its largest global production base, with an annual production capacity (including existing factory capacity) of 35 billion cigarettes, and focus on global market expansion.

    “We have been committed to delivering and accelerating our mid-[term] to long-term vision of becoming a global top-tier company by executing vigorous investment strategies and leading bold innovations,” said Bang during the ceremony.

    “Indonesia serves as our primary global export hub, driving the expansion of our export business in Asia-Pacific and the Middle East markets. We will continue to develop the global production hub in Indonesia as a core growth engine for the company,” Bang added.

    Last October, KT&G broke ground for a factory in Almaty Province, Kazakhstan, designed for exports across the Eurasian region. The following month, the company announced an expansion of its next-generation product capacity at its Daejeon factory.

    To accelerate its global expansion, KT&G recently separated its Asia-Pacific headquarters and Eurasia headquarters from the company, establishing them into separate business entities.

  • KT&G Sued

    KT&G Sued

    Photo: Ian O’Hanlon

    A former KT&G Corp researcher has filed a lawsuit against his former employer claiming that he was insufficiently compensated for inventing “the world’s first e-cigarette” while working at the firm, reports the Yonhap News Agency.

    Kwak Dae-geun demands KRW2.8 trillion ($2 billion), reportedly the highest amount ever claimed by an individual in a South Korean legal action

    According to the suit, Kwak joined the Korea Ginseng and Tobacco Research Institute in 1991 and began developing a tobacco-heating product in 2005.

     In July that year, he registered his first patent for a prototype. In December 2006, he registered another patent for an upgraded version with a controllable heater.

    Subsequently, he developed a full e-cigarette set, and registered a patent for part of the device in 2007 before leaving the company in 2010 as part of corporate restructuring.

    After Kwak’s departure, KT&G allegedly registered patents for some of his technologies without recognizing his contributions.

    In addition to his claim about compensation, Kwak contends that a prominent rival global tobacco firm was able to commercialize its internal heating-based e-cigarette model in South Korea in 2017 due to the absence of overseas patents.

    Kwak’s requested damages reflects his portion of the revenue KT&G is expected to generate through Kwak’s patented technology during the 20-year patent term, as well as what KT&G would have earned if it had registered patents overseas.

    KT&G counters that it has properly rewarded Kwan in the form of offering a technology advisory deal, and that Kwak had agreed not to raise any legal issues.

    The firm also said the technologies invented by Kwak are not currently used in the products it is selling.

    The e-cigarettes being sold by the global firm in question, meanwhile, did not involve technologies patented by Kwak, according to KT&G, which also noted that the rival firm had already commercialized early-model heated tobacco-type products in 1998.

  • New KT&G CEO Engages Employees

    New KT&G CEO Engages Employees

    On the April 17, KT&G President Bang Kyung-Man (third from the left) held a casual meeting with employees to kickstart his focus on communication management. (Photo: KT&G)

    Three weeks after his inauguration, KT&G’s newly appointed president, Bang Kyung-man, engaged in a casual meetings with employees to demonstrate his commitment to robust communication.

    The event was held on the 20th floor of KT&G’s Seoul headquarters, and attended by about 20 employees from various jobs and ranks.

    Bang shared his personal growth story, from joining KT&G as a new recruit in 1998 to taking on the role of CEO 27 years later. In addition to sharing his insights as a company senior, he sought employees’ opinions on the company’s mid- to long-term vision and growth strategies.

    Following his appointment as CEO on March 28, Bang immediately visited KT&G’s Chungnam Headquarters and Seo Daejeon Branch, emphasizing communication with the sales team on the ground.

    “This event was organized to reflect the management’s desire to communicate freely with team members, breaking away from traditional formats and fostering consensus on the company’s vision,” KT&G wrote on its website. “We will continue to promote a culture of bidirectional communication among staff to develop a more horizontal and flexible organizational culture.”

  • KT&G Volunteers Assist With Transplanting

    KT&G Volunteers Assist With Transplanting

    Photo: KT&G

    KT&G volunteers transplanted tobacco seedlings to help tobacco farmers who are struggling with labor shortages.

    The volunteer team consisted of 36 members from the SCM Headquarters Raw Material Business Division and the Gimcheon Factory. They visited a tobacco farm in Jangan-myeon, Boeun-gun, Chungcheongbuk-do, and transplanted about 32,000 tobacco seedlings across approximately 15,000 square meters of farmland.

    KT&G workers have volunteered on tobacco farms for 18 years not only helping with seedling transplantation but also supporting tobacco leaf harvesting activities during the summer, which require intensive labor in hot weather.

    “KT&G has been engaging in activities that provide practical help to farmers for a long time,” said KT&G’s SCM Division Head Jeong-ho Kim in a statement. “We will continue to make efforts to grow together with the farming community and the local society.”

    Additionally, KT&G has been supporting welfare improvement projects for domestic tobacco farmers. In June last year, KT&G paid KRW520 million ($372,949) for tobacco farmers’ health checkups, children’s education fees and support for devices that reduce fuel for curing barns. Since 2013, the cumulative support amount has reached approximately KRW3.85 billion, benefiting a total of 13,050 farmers.

  • Investor Welcomes Independent Directors

    Investor Welcomes Independent Directors

    Photo: KT&G

    Flashlight Capital Partners, a significant shareholder of KT&G Corp. welcomed the cigarette manufacturers’ appointment of an independent director, which the investor said would enhance governance and shareholder value.

    At its recent annual meeting, KT&G appointed Kyung-Man Bang as its new CEO. Shareholders also approved the appointment of Dong-hwan Shon and Sang-wook Kwak as outside directors

    “We view this appointment as a victory for all shareholders, irrespective of size or nationality,” said Sanghyun Lee, managing partner of Flashlight Capital, in a statement. “With the addition of a truly independent director committed to advancing shareholder interests, KT&G has taken a crucial step towards governance normalization.”

    In a letter addressed to KT&G’s new board of directors, Lee outlined asked the company to link the compensation of the board and CEO to performance; investigate the underperformance of KT&G’s Lil heat-not-burn product in Japan; and exit the asset management business, among other actions.

    “With the appointment of the new board of directors, especially Mr. Shon, we are optimistic that KT&G’s future will be characterized by increased transparency and improved governance standards,” said Lee.