JT’s domestic and international volumes down

Japan Tobacco Inc reported today that its domestic cigarette sales volume during the year to the end of December, at 112.4 billion, was down by 3.6 percent on that of the year to the end of December 2013, 116.5 billion.

JT said that its volume had been affected by a decline in overall industry volumes, which fell by 3.4 percent.

Its market share in 2014 was 60.4 percent, down from 60.5 percent in 2013.

Core revenue for the domestic tobacco business fell by 1.0 per cent to ¥649.8 billion but adjusted operating profit was increased by 1.8 percent to ¥238.7 billion.

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) shipments during the year to the end of December, at 398.0 billion, were down by 4.7 percent on those of the year to the end of December 2013, 417.5 billion.

Global flagship brand shipments were down, too, from 267.5 billion to 262.2 billion.

JT reported that JTI’s total shipment volume decline had been driven primarily by industry volume contraction in Russia, which could not be offset by growth in the Benelux markets, the Caucasus, Germany, Hungary, the markets of the Middle East and Turkey.

Year-on-year market share had increased in the key markets of France, Spain, Turkey and the UK. And in Russia, the share of market accounted for by GFBs had continued to grow, driven by Winston, which had reached a record 15 percent.

Core revenue increased by 4.8 percent to ¥1,258.2billion, while adjusted operating profit rose by 8.8 percent to ¥447.1 billion.

In presenting the results, Mitsuomi Koizumi, president and CEO of JT, said the company’s international tobacco business had delivered another set of impressive financial results and continued to be the profit growth engine of the JT Group. “This strong performance was driven by a combination of pricing gains, continued growth in GFB share of market and share of value, and effective cost management,” he said. “We continue to prioritize quality top line growth and invest in our brands as well as our product portfolio and geographic footprint.

“Domestically, after the April consumption tax hike, we increased investment in brand equity with a particular focus on Mevius and higher unit price products, which resulted in an increase of our share of value.

“As we make the transition to a more agile sales operation, we will strengthen our ability to anticipate and respond to the consumers’ needs in what has become an increasingly competitive environment.

“I believe the determined pursuit of the ‘4S’ model standards will give us the ability to overcome any challenges that may lie ahead. Our highly motivated employees will create additional value for our consumers, leading to the sustainable profit growth and a competitive return to shareholders. Guided by these principles, we will continue to prioritize business investments, while aiming to exceed the expectations of all our stakeholders.”