President Baek Bok-in of KT&G and CEO Andre Calantzopoulos of Philip Morris International pose after they signed a deal at the session “KT&G-PMI Collaboration” at the Four Seasons Hotel in Seoul on Jan. 29. (Photos: KT&G)

KT&G has struck a 2 trillion won tobacco export deal in the Middle East, eliminating uncertainties in its overseas mainstay markets. The latest mega-deal is expected to move the company closer to realizing its goal of being a global top four tobacco maker by 2025.

KT&G signed an agreement to export tobacco products worth 2.257.6 trillion won with Alokozay International, an importer & distribution company in the Middle East, on Feb. 28, the company said.

The latest deal followed a mega-deal in which KT&G partnered with Philip Morris International to export e-tobacco products via the latter’s sales networks in January.

The latest agreement calls for supplying cigarettes to Alokozay International for seven years and four months until June 2027. It also contains a new clause on annual minimum purchase amounts, which was not included in the previous contract.

The value of cigarettes KT&G will export down the road — 2.257.6 trillion won — was calculated based on the application of the clause.

The contract to export cigarettes to areas such as the Middle East and former CIS region countries is analyzed to have eased uncertainties in its overseas mainstay markets, as KT&G suffered a setback for the previous two years, influenced by geopolitical anxiety in the Middle East region and foreign exchange rate hikes.

KT&G said the latest contract secures sustainable growth momentum and raises corporate value on the back of exploring the long-term growth potential and profitability of the global tobacco business.

KT&G bagged 535.3 billion won in overseas tobacco export business last year, accounting for 28 percent, compared to 1.909.8 trillion won in domestic sales.

Security industry sources predicted that KT&G’s overseas sales would surge about 40 percent this year over last year. Consequently, the tobacco company’s operating profit is forecast to jump 9.2 percent to 1.509.4 trillion won this year.

KT&G is stepping on the gas on the exploration of overseas markets to achieve its goal of being a global top four company by 2025. The company plans to increase the number of its entry markets from about 80 to some 100 through aggressive new market exploration efforts.

An image photo of “lil Hybrid,” one of PMI’s heat-not-burn products.

KT&G’s earlier signing of a three-year contract to supply e-tobaccos with PMI is expected to serve as an opportunity to tap the global e-cigarette market in a full-fledged manner. The items KT&G will export include three existing heat-not-burn products - lil Hybrid, lil Plus and lil Mini - as well as lil Vapor, an e-vapor product.

KT&G’s e-cigarette export deal with PMI and the latest agreement to supply cigarettes is expected to make another leap forward in the global tobacco business through a twin track strategy of cigarette and e-tobacco product portfolio, a KT&G official said.