Japan Tobacco Inc’s domestic cigarette volume sales during the three months to the end of March, at 25.5 billion, were 16.2 percent down on those of the three months to the end of March 2014, 30.4 billion.
JT reported today that the volume decline was down to an unfavorable comparison with that of the same period of the previous year when there was an increase in demand ahead of an April consumption tax hike.
‘As a result, core revenue and adjusted operating profit declined 12.6 percent and 14.3 percent respectively, partially offset by the price/mix effect and continuous cost reduction initiatives,’ the company said.
‘Amid intensified market competition the company continued to undertake marketing and sales initiatives primarily focused on Mevius. The February launch of three Premium Menthol Option Yellow products, an extension to the popular Premium Menthol line, underpinned the steady growth of the Mevius family’s overall share, which has been continuously improving to reach 32.1 percent this quarter from 31.3 percent in April–June 2014.’
Meanwhile, Japan Tobacco International’s shipment volume during the three months to the end of March, at 88.1 billion, was up by 0.5 percent on that of the three months to the end of March 2014, 87.7 billion. At the same time GFB (global focus brands) volume increased by 8.4 percent from 55.3 billion to 60.0 billion.
JT said that JTI’s volume increases had reflected positive performances in the Benelux markets, France, Germany, Italy, the Middle East, Spain, Taiwan and Turkey, as well as favorable trade inventory adjustments in the Middle East and Turkey. Market share had increased in a number of countries including France, Spain, Turkey and the UK.
‘Core revenue and adjusted operating profit declined 0.5 percent and 0.1 percent respectively, as a result of a number of local currencies depreciating against the US Dollar,’ JT said. ‘This was partially offset by the depreciation of the Japanese Yen against the US Dollar. In US Dollars, core revenue and adjusted operating profit declined 14.2 percent and 13.8 percent respectively. At constant FX, driven by robust price/mix, adjusted operating profit grew 13.1 percent, while core revenue increased 6.5 percent.’
JT’s revenue during the three months to the end of March, at ¥554.9 billion, was down by 5.5 percent on that of the three months to the end of March 2014. Adjusted operating profit was down by 2.9 percent to ¥158.6 billion, operating profit was down by 8.4 percent to ¥143.4 billion, while adjusted operating profit was increased by 5.6 percent to ¥172.5 billion.
“In a challenging business environment, including currency volatility, our international tobacco business fundamentals remain strong, and pricing continues to be a key driver, reflecting the strength of our brands,” said JT’s president and CEO, Mitsuomi Koizumi, in announcing the consolidated results.
“Domestically, despite intensified market competition, since last April Mevius has steadily extended its market share through a number of initiatives aimed at strengthening brand equity.
“Looking ahead, I believe our performance this quarter has provided a solid foundation for the 12-month forecast.”