JT’s domestic volume down, international volume up

Japan Tobacco Inc.’s domestic cigarette sales during the six months to the end of June, at 53.1 billion, were down by 3.7 percent on those of the six months to the end of June 2014. Volume sales were said to have been ‘affected’ by an industry-wide volume decline.

In announcing its results, JT said that it had continued to undertake marketing and sales initiatives primarily focused on Mevius.

The continued popularity of Premium Menthol Option products, an extension to the Premium Menthol line, had driven further the growth of the Mevius brand’s overall share, which had been improving consistently and had reached 32.3 percent in April-June 2015, up from 31.3 percent in the same quarter of the previous year, when the brand was significantly affected by the temporary slowdown that followed a consumption tax hike.

Core revenue for the domestic business during the six months to the end of June, at ¥312.2 billion, was down by 1.0 percent on that of the six months to the end of June 2014, while adjusted operating profit was increased by 6.8 percent to ¥125.8 billion.

JT said that core revenue declined as a result of the decrease in volume sales, partly offset by an improved price/mix effect.

Meanwhile, Japan Tobacco International’s volume during the six months to the end of June, at 191.2 billion, was increased by 0.3 percent on that of the six months to the end of June 2014, 190.6 billion.

Shipments of JTI’s global flagship brands (GFB) were up by 7.2 percent from 123.0 billion to 131.9 billion.

JTI’s overall and GFB shipment volume increases were said to have reflected positive performances in the Benelux markets, the Czech Republic, France, Germany, Italy, Spain, Taiwan and Turkey, as well as the favorable impact of last year’s trade inventory adjustments in the Middle East and Turkey. JTI’s market share grew in most of its key markets, namely France, Spain, Taiwan, Turkey and the UK.

JTI’s core revenue during the six months to the end of June, at ¥609.2 billion was up by 1.2 percent on that of the six months to the end of June 2014, ¥602.0 billion, while adjusted operating profit was down 3.2 percent from ¥219.9 billion to ¥212.9 billion.

In US dollars, core revenue and adjusted operating profit at constant foreign exchange rates were said to have grown by 6.7 percent and 14.6 percent respectively, driven by a robust price/mix and positive GFB momentum.

On a reported basis, core revenue and adjusted operating profit declined 13.9 percent and 17.5 percent respectively as a result of currency fluctuations against the US dollar.

Including the results of JT’s other businesses, the group’s revenue during the six months to the end of June, at ¥1,171.7 billion, was little changed from that of the six months to the end of June 2014, ¥1,172.0 billion.

Adjusted operating profit was increased by 1.9 percent to ¥327.9 billion while operating profit was down by 6.7 percent to ¥290.0 billion.

JT’s president and CEO, Mitsuomi Koizumi, said the group’s international tobacco business had shown solid first half-year results amid a continuously challenging operating environment.

“In the second half of the year, we will accelerate our investments to further strengthen brand equity, geographic reach and emerging product portfolio,” he said.

“Domestically, we witnessed steady progress toward our full year target, despite increasingly intensifying market competition.

“Looking ahead, the solid business performance and profit growth have laid a firm foundation for achieving our annual goals.”