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JT’s domestic volume down, international volume up

| August 3, 2015

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.”

573 jobs to be ‘affected’ by Moscow factory closure

| August 3, 2015

Japan Tobacco said on Friday that it was going to close its Moscow factory by the middle of next year because of the serious contraction that had occurred on Russia’s tobacco market.

‘The operating environment has changed dramatically in Russia, with significant declines in tobacco demand driven by tax increases, tighter regulations and a challenging economic situation,’ JT said in a note posted on its website.

‘The company came to this conclusion following a thorough analysis of the situation and of all available options.

‘The Moscow factory will cease to operate by mid-2016, with production moving to the company’s St. Petersburg factory.

‘This move will affect 573 jobs. Impacted employees will be offered generous compensation, significantly above the labor legislation requirements in Russia.’

JT said it was committed to maintaining a strong market presence in Russia and would continue to invest for sustainable business growth in the mid- to long-term.

The factory closure was expected to have minor effect on the group’s consolidated performance for the fiscal year 2015.

Greece looking to reduce tobacco tax avoidance

| August 3, 2015

Draft legislation introduced in Greece on Thursday is aimed at reducing the country’s black market in tobacco products, according to a story by A. Makris for greekreporter.com.

As described, the law would affect all aspects of manufactured tobacco, from packing to retail sales, based on the application of an electronically readable tax and security band.

Greek State Minister, Panagiotis Nikoloudis, who presented the draft legislation, said it was aimed at reducing tax avoidance while ‘cleaning up’ the sector for the benefit of licit players, who would regain their competitive advantage.

CORESTA documents available for download

| August 3, 2015

The CORESTA Secretariat said today that the following documents had been published in July and could be downloaded from: www.coresta.org.

• CRM No. 60 “Determination of 1,2-Propylene Glycol and Glycerol in Tobacco and Tobacco Products by Gas Chromatography” (update) (2015-07-06)
• CRM No. 61 “Determination of 1,2-Propylene Glycol, Glycerol and Sorbitol in Tobacco and Tobacco Products by High Performance Liquid Chromatography (HPLC)” (update) (2015-07-06)
• PTM SG CTR “2014 Proficiency Test Report – The Measurement of Diffusion Capacity of Cigarette Papers” (2015-07-28).

Imperial improving homes, infrastructure in Vietnam

| August 3, 2015

Imperial Tobacco’s Altadis Foundation has helped improve living conditions and transport infrastructure in the Dong Nai Province of Vietnam.

‘Working with our local partner the Dong Nai Food Industrial Corporation (DOFICO) we’ve supported the building of 10 new homes and have helped fund the opening of a new road in the Vinh Cuu district of the province to significantly improve communications,’ Imperial said in a note posted on its website.

“This is an underdeveloped area with limited economic resources,” said Jon Fernandez de Barrena, Imperial’s Indochina Cluster general manager.

“The people there depend on agriculture for their livelihoods but the poor condition of roads in the region makes it difficult for them to sell their produce.

“This new road is essential for improving the lives of the local population.

“Their homes were also of a very poor standard so, working with DOFICO and the Altadis Foundation, we’ve replaced some temporary structures with proper housing.”

Malaysia’s FCTC steering committee hikes prices

| July 31, 2015

Malaysia’s steering committee of the World Health Organization’s Framework Convention on Tobacco Control (FCTC) has decided that cigarette prices should be raised twice in a year, according to a story in The Star.

Health Minister Datuk Seri Dr S. Subramaniam said the decision had been agreed to by the steering committee on Thursday.

Under the decision, the minimum retail price of cigarettes would be increased from RM7 to RM9 from August 1.

And it would be increased again, to RM10, after a year.

“This is in line with the FCTC pledge that we signed in 2003,” Subramaniam told a press conference.

The committee agreed also to designate all public parks and public areas in national parks as no-tobacco-smoking zones. The areas include campsites, canopy walks and observation towers.

And it agreed to declare air-conditioned eateries as non-tobacco-smoking areas.

Subramaniam said that for the time being the authorities would concentrate on educating the public about the no-tobacco-smoking bans, but that they hoped fully to enforce the bans from the start of next year.