JT’s domestic volume up over 12 months

Japan Tobacco Inc.’s domestic cigarette volume sales during the 12 months to the end of March, at 120.1 billion, were 3.3 percent up on those of the 12 months to the end of March 2013.

JT reported that the volume increase was down to a steady growth in market share and a one-off increase in demand ahead of a VAT hike.

And the company said that its Mevius brand had remained the main driving force in a 1.4 percentage point market share gain to 61 percent. “For the 12-month period since its rebranding in February 2013, total sales volume improved for the first time since 1998 (with the exception of the temporary impact of the March 2011 earthquake),” JT said. “The release of new products Mevius Premium Menthol Option and Mevius Premium Menthol Spread contributed to the company’s stronger presence in the growing menthol segment.”

The domestic cigarette business’ core revenue during the 12 months to the end of March, at ¥676.2 billion, was up by 3.4 percent on that of the previous 12 months, and adjusted EBITDA was up by 7.4 percent to ¥302.1 billion.

Meanwhile, Japan Tobacco International’s shipment volume during the 12 months to the end of December 2013, at 416.4 billion, was down by 4.6 percent on that of the previous year, 436.5 billion.

JT said that JTI’s volume had decreased by 4.6 percent primarily due to significant industry contraction and trade inventory adjustments in a number of markets. “Despite GFB [global focus brands] shipment volume growth in Austria, the Caucasus markets, Czech Republic, Germany, Hungary, Kazakhstan, Middle East and African markets, Romania, Southeast Asia markets, Sweden, Taiwan and Turkey, GFB shipment volume declined 0.8 percent [from 268.8 billion to 266.6 billion],” it said. “Year-on-year market share increased in France, Italy, Spain, Taiwan, Turkey and the U.K. In Russia total share of value and GFB share of market continued to grow.”

JTI’s core revenue increased by 27.3 percent to ¥1,200.7 billion, while adjusted EBITDA increased by 31.6 percent to ¥451.6 billion. Core revenue and adjusted EBITDA in U.S. dollars at constant foreign exchange increased by 6.1 percent and 11.3 percent, respectively: increases that had been driven by a strong price/mix and that had more than offset the 4.6 percent overall volume decline.

JT’s revenue during the 12 months to the end of March, at ¥2,399.8 billion, was up by 13.2 percent on that of the previous 12 months, while adjusted EBITDA was up by 20.9 percent to ¥751.7 billion, and operating profit was increased by 21.8 percent to ¥648.3 billion.

“Our international tobacco business reached double-digit EBITDA growth at constant currency against a backdrop of an increasingly challenging environment, once again demonstrating the strength of our business fundamentals,” said JT’s president and CEO, Hiroshi Kimura, in announcing the consolidated results.

“Domestically, Mevius has shown steady market share gains, establishing a solid market presence in the growing menthol segment.

“This year we continued to take a number of strategic initiatives to expand product and geographic portfolios and consolidate our core business, as shown by the successful completion of the global rebranding of Mevius, the acquisition of a stake in Russia’s leading tobacco distributor, and the introduction of the unique tobacco vaporizer Ploom in several markets.

“The 4S model is the source of our competitive advantage and uniqueness, enabling us to achieve sustainable growth. Adaptability to the changing operating environment is another key for continuous success. Guided by these principles, we will continue to place a top priority on business investments, while creating additional value for our products and operations and aiming to exceed the expectations of all our stakeholders.”

Meanwhile, reporting separately, JTI said that its shipments during the first three months of 2014, at 87.7 billion, were down by 5.4 percent, while GFB shipments, at 55.3 billion, were down by 5.5 percent.

Its core revenue was up by 1.2 percent to US$2,761 million, and its adjusted operating profit was up by 4.8 percent to US$1,023 million.