Kt&G Corp Gdr 144A

Ladies and gentlemen, I am Kay Park, Head of Investor Relations at KT&G. Thank you for attending KT&G's 2025 Third Quarter Earnings Report. Today's presentation will be provided in English in simultaneous interpretation and the Q&A session in consecutive interpretation. The materials can be found via the live webcast screen or downloaded from the company website. Please allow me to introduce the management team in attendance today. With us we have Mr. Sanghak Lee, Chief Finance and Operating Officer, Mr. Chang-Koo Ho, Chief Strategy Officer, Mr. Min Seok Hwan, Chief of Global Business, Mr. Youngchan Yoon, Chief of Marketing, Mr. Daehwa Hong, Chief of NGP, Mr. Sangjun Woo, Chief of Real Estate Business, Mr. Yongbeom Kim, Head of Finance Office, and Mr. Taewon Kim, Chief of Future Strategy at KGC. Please be advised that the earnings we're about to present today have yet to be audited by the outside auditor, therefore are subject to change in the audit process, and any forward-looking information discussed in the call today may differ from the actual results to be reported in the future. With that, we will present our 2025 third quarter earnings. We will begin with key items from our consolidated earnings and then move on to each business segment. The presentation will be followed by a Q&A session with the management team. I will first invite Mr. Sanghak Lee, our CFO and COO, to share with you key Q3 performances and updates on the business. Ladies and gentlemen, I am Sanghak Lee, COO and CFO of KT&G. I would like to begin by extending my deepest gratitude to our shareholders and investors for all the interest and support you have shown for KT&G. Please allow me to share with you our key performance for the third quarter of 2025, the full year outlook, and our plans on the nicotine pouch business. First of all, KT&G has set a new record for quarter operating profit in five years, reaching highest ever revenue and profit at the same time for a quarter. This performance is a result of continued robust growth in global CC and strong earnings across the entire tobacco business. With improved profitability in health functional food and expanded profit in real estate. On top of this, we were able to achieve double digit growth in both revenue and operating profit on consolidated basis. The global CC business continued its streak of record high earnings for three consecutive quarters. Both volume and ASP grew in double digits, and this drove quarter revenue up by 25% versus the previous year, surpassing $500 billion won for the first time. That being said, Reflecting the growth trend that has continued into the third quarter, we are raising our full year guidance for 2025. Based on the strong growth momentum in the global market, we now anticipate our full year revenue and operating profit to grow by double digits compared to the previous year.

and moving on to our plan for the nicotine pouch business.

AT&G is materializing our entry into the nicotine pouch category, which is the fastest growing category in the industry. In September, we executed a strategic partnership with Altria, the number one tobacco company in the U.S., and signed a joint acquisition agreement for another snooze factory, or ASF, ASF has established itself in the Nordics with high market share in Iceland, Sweden, and Norway based on its nicotine pouch brand Loop. Starting from next year, we plan to engage in full-fledged global market expansion beyond the five Nordic markets going into Western Europe, Middle East, Africa, Asia, and North America. Going forward, KT&G intends to enforce global business-oriented structural changes and business expansion to create a sustainable competitive edge and growth momentum to maximize corporate and shareholder value. I ask for your unwavering support for KT&G. Thank you. And now we will move on to the details of our Q3 earnings. consolidated earnings in page four. Strong results across the tobacco business, including robust global CC growth, along with improved earnings in real estate, drove Q3 consolidated revenue up by 11.6% YOY to 1.8269 trillion won. Operating profits were up 11.4% to 465.3 billion won. Net income was impacted by currency fluctuations in the quarter with higher currency-related non-operating profits driving income up by 73.4% to 418.7 billion won. EPS rose by 81.7% to 389.8 billion won. EBITDA grew by 12.3% to 540.5 billion won with EBITDA margins at 29.6%. Next is on reasons behind movement and earnings. In page five. In the tobacco business, there was a $100.4 billion increase in cost connected to the volume increase. The positive impacts from a better product mix and pricing added $34.1 billion in profit. Total cigarette and NGP stick volume increase was plus $90.4 billion. An appreciation of the dollar against the won was a $12.7 billion won impact, totaling to a $36.8 billion won increase. The HFF business that was operated under a profit-centered policy showed a $2.7 billion won increase. Real estate profits also rose by $8 billion won with progress in development projects. These factors combined led to a 11.4% year-on-year increase in consolidated operating profit. Next, I will move on to performance by business segment and page six. Starting with tobacco. Q3 tobacco business revenue was supported by Global CC that once again broke the record for highest ever quarter revenue. as well as strong results across the board with CC and NGP to rise 17.6% YOI to 1.2323 trillion won. Such revenue growth led to Q3 profit growth of 11% to 371.8 billion won. Meanwhile, the share of global business in tobacco continued to expand with the double-digit growth in global CC volume to rise 1.8 percentage points to 62.3%. Let's go into each tobacco segment in page seven.