South Korea's largest tobacco manufacturer, said Thursday its third-quarter net profit rose 198 percent from a year earlier on strong sales at home and abroad. 

Net income was tallied at 266.9 billion won (US$251.94 million) in the July-September period, nearly tripling from 89.45 billion won a year earlier, the company said in a regulatory filing. 

Sales rose 8 percent to 1.16 trillion won in the cited period, and operating profit surged 15.4 percent to 338.2 billion won. 

The numbers reflect the performance results by KT&G and its subsidiaries, including the Korea Ginseng Corp.

The government-backed tobacco maker's market share inched up
0.1 percent on-year to account for 61.7 percent of the Korean market, with improved sales of low- and mid- priced brands. 

"Sales improved in the third quarter because there was some speculative demand ahead of a hike in cigarette prices," Kim Sun-woo, an investor relations official, said during a briefing.

"Overseas sales in the traditional foothold of the Middle East as well as emerging markets in Asia and Africa rose, though the strong local currency partly cut the net profit."

The government announced last month it plans to raise tobacco prices by 2,000 won per pack from their current average of 2,500 won to curb the smoking rate.  A big bulk of the raised price are taxes.

If the bill is passed by the National Assembly later this year, the new prices would take effect starting in January 2015.

KT&G said it is closely monitoring the ongoing controversy over the tobacco bill to decide on the price as opposition lawmakers are against the price increase, arguing it would put a heavier tax burden on working-class people who have a higher population of smokers. Critics charge that the price hike is a government ploy to collect more taxes. 

"Once the tax rate is confirmed, we will flexibly adjust the cigarette price by taking into consideration the competitors, customers and the market," Park Jung-wook, the marketing head of KT&G, said, without elaborating.

The company said visual warnings on cigarette packs and bans on retail promotions would have negative impact on its tobacco sales in the long term once the tougher regulations come into place.

"If the warning graphic is introduced, it would make advertisements and displays on the storefront meaningless," Park said. "It could also add costs (of creating the warning label) and stir negative sentiment among employees and general public, which in turn could hurt sales of retailers."

South Koreans are among the heaviest smokers in the world, with just under half of all adult males smoking, government data show.

It compares with an average of 25.4 percent in the 34 members of the Organization for Economic Cooperation and Development.

The company also said it will continue to provide high dividend for investors, without specifying on this year's estimate. Its dividend yield ratio is currently 3.4 percent, which is more than three times the 1.14 percent average of listed Korean firms in 2013.

KT&G shares rose 3.15 percent to close at 94,900 won on the main KOSPI market on Thursday, while the broader market declined 0.37 percent. The earnings result was released during trading hours. (Yonhap)