이 기사는 2022년 02월 15일 08시04분 thebell에 표출된 기사입니다

KT&G, South Korea's dominant tobacco company, said its operating profit decreased last year on a suspension of its tobacco business in the U.S.

The company generated an operating profit of 1.32 trillion won ($1.1 billion) on revenue of 5.23 trillion won in 2021 on a consolidated basis. Its revenue increased by 3.4% while operating profit decreased by 10.4% compared to a year earlier. Net profit also decreased by 15.5% year-on-year to 990 billion won in the same period.

The decline in operating profit is due to a temporary increase in selling, general and administrative (SG&A) expenses. KT&G said in December 2021 that it will suspend its tobacco business in the U.S. for an unspecified period amid intensifying regulations and growing competition.

With the suspension of the business in the U.S., the company wasn’t able to utilize its tobacco inventory in the country as its operating asset. This resulted in an increase in allowance for bad debts, which led to a sharp increase in SG&A expenses. KT&G’s SG&A expenses grew to 1.55 trillion won in 2021, up 97.1 billion won year-over-year.

The prolonged Covid-19 pandemic has also delayed KT&G’s subsidiary Korea Ginseng Corp’s turnaround.

KT&G’s net profit sharply decreased due to a loss from discontinued operations of 51.4 billion won. All profits and losses related to the suspension of its tobacco business in the U.S. were separated from continuing operations and reclassified as a single account of income or loss from discontinued operations. The company recorded a loss from discontinued operations of 5.2 billion won in 2020.

Despite weakening profitability, the revenue growth has continued, posting revenue of over 5 trillion won for the second straight year. This is attributable to the growth of heat-not-burn tobacco products at home and abroad and an increase in domestic cigarette market share.

KT&G is expected to maintain its mid to long-term shareholder dividends policy it unveiled last year despite a decline in free cash flow. The company’s board of directors decided to pay out 575.9 billion won in dividends, or 4,800 won per share, for fiscal year 2021.

KT&G last year said it will pay out 1.75 trillion won in dividends over three years and retain an annual dividend payout ratio of 50% or higher. It had a dividend payout ratio of 58% based on preliminary earnings results in 2021 on a consolidated basis. (Reporting by Hyo-beom Lee)