JTI volumes up in 2016

| February 6, 2017

Japan Tobacco Inc. reported today that its domestic cigarette sales volume during the year to the end of December, at 106.2 billion, was down by 2.8 percent on that of the year to the end of December 2015, 109.2 billion.

JT said that despite a positive performance by Natural American Spirit, the company’s domestic cigarette sales volume had decreased in the face of continued industry contraction, accentuated by the expansion of the T-vapor category, and the negative impact of the retail price amendment of certain products.

Core revenue for the domestic tobacco business was said to have increased by 1.2 per cent to ¥649.7 billion driven by the positive impact of the acquisition of Natural American Spirit and the retail price amendment of certain products, including Mevius.

And adjusted operating profit was said to have grown by 2.4 percent to ¥260.2 billion due to the higher core revenue and the benefits from measures taken to enhance the competitiveness of the business.

Meanwhile, Japan Tobacco International’s total tobacco (including cigarettes, fine-cut, cigars, pipe tobacco and snus, but excluding water-pipe tobacco, emerging products and contract manufactured goods) shipment volume during the year to the end of December, at 398.7 billion, was increased by 1.2 percent on that of the year to the end of December 2015, 393.9 billion.

And JTI’s Global flagship brand shipment volume was increased by 3.7 percent from 273.6 billion to 283.7 billion.

JT reported that JTI’s shipment increase was driven by its performances in Brazil, Egypt, France, Germany, Iran, Italy, Kazakhstan, Korea, Myanmar, the Philippines, Spain, Taiwan and Turkey. It was supported by acquisitions and favorable trade inventory adjustments, mainly in the first quarter.

The GFB shipment volume increase was said to have included the addition of two billion cigarettes from Natural American Spirit.

JTI’s core revenue fell by 9.1 percent to ¥1,138.8 billion, while its adjusted operating profit fell by 14.7 percent to ¥336.2 billion.

‘In US Dollars, core revenue and adjusted operating profit at constant currency increased 8.5 percent and 13.4 percent respectively, driven primarily by robust price/mix contributions, while the business continued investing in seeding markets and emerging products for future sustainable growth,’ JT said in reporting its results. ‘On a reported basis, core revenue increased 1.5 percent as positive price/mix and total shipment volume growth offset currency downsides, while adjusted operating profit declined 5.0 percent due to unfavorable currency movements.

‘In Japanese Yen, core revenue and adjusted operating profit decreased 9.1 percent and 14.7 percent respectively due to the appreciation of the currency against the US Dollar.’

JT’s consolidated revenue for the year to the end of December, at ¥2,143.3 billion, was down by 4.9 percent on that of the year to the end of December 2015.

Operating profit was increased by 5.0 percent to ¥593.3 billion, while adjusted operating profit was down by 6.4 percent to ¥586.8 billion.

“We are pleased that all the business segments have contributed to our profit growth at constant currency last year,” said Mitsuomi Koizumi, president and CEO of JT.

“Our international tobacco business achieved another year of double-digit profit growth at constant currency, primarily driven by robust pricing combined with GFB performance. At the same time we managed to increase market share in several key markets in a continuously challenging environment.

“Meanwhile, we have delivered steady profit growth in Japan, driven by the retail price change of Mevius and strong performance of newly added Natural American Spirit.

“We will continue to take a number of strategic initiatives to strengthen our brand equity, geographic reach and emerging products in our tobacco businesses.  Our sustainable profit growth will principally come through the tobacco businesses supported by the pharmaceutical and the processed food businesses.”

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