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Biz News Korea(Eng)

Korea’s tobacco price hike fattens makers instead of curbing smorking

Collected: 2016.09.23

Distributed: 2016.09.26

Source: Go Direct

The 80-percent hike in tobacco price starting January last year mostly have fatten manufacturers without much helping to bring down the smoking rate in Korea.

According to disclosure statements to the Financial Supervisory Service (FSS), the three top sellers KT &G of Korea and importers Philip Morris Korea and British American Tobacco (BAT) Korea had profits far outperform sales performance last year thanks to the sharp rise in product prices.

KT&G recorded sales of 2.8 trillion won ($2.54 billion) last year, up 2.9 percent from a year ago. Its net profit on the other hand jumped 32.2 percent to 987.9 billion won.

Philip Morris reported sales gain of 15.3 percent to 810.8 billion won while net profit more than doubled the growth pace with 33.9 percent jump to 191.7 billion won. Sales of BAT declined 13.5 percent to 391 billion won, but the importer was able to record a net profit of 27 billion won last year from a loss of 9.6 billion won in 2014.

The two foreign brands have been accused by the Board of Audit and Inspection (BAI) for hoarding stocks ahead of the price hike to save taxes of over 200 billion won.

By Oh Soo-hyun

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