Volumes down at JT and JTI in first nine months
Japan Tobacco Inc.’s domestic cigarette sales volume during the nine months to the end of September, at 81.3 billion, was down by 3.1 percent on that of the January-September period of 2014, 83.9 billion.
In announcing its consolidated results on Wednesday, JT said that volume sales had fallen because of an industry-wide volume decline and because of intensified competition in the sub-premium price segment.
Core domestic cigarette revenue had declined by 1.1 percent (from ¥483.5 billion to ¥478.2 billion) as a result of the lower sales volume, partly offset by an improved price/mix effect, which mainly occurred in the first quarter, and higher domestic sales of duty-free products.
Adjusted operating profit had increased by 5.1 percent (from ¥187.9 billion to ¥197.6 billion) due to the price/mix effect and the effects of measures taken to strengthen competitiveness. JT reported that in order to strengthen brand equity further, it had continued to undertake marketing and sales initiatives primarily focused on its Mevius brand.
‘In the framework of activities to fortify the brand portfolio, two Seven Stars menthol products were launched to support our growth in the expanding menthol segment,’ the company said. ‘This was in addition to the recent integration of the Caster and Cabin brands with Winston.
‘In a highly challenging competitive environment, JT’s overall share of market has remained stable at 59.9 percent for the nine-month period.’
Meanwhile, Japan Tobacco International’s total cigarette and cigarette-equivalent shipment volume, which includes fine cut, cigars, pipe tobacco and snus, but excludes contract manufactured products, waterpipe tobacco and emerging products, during the nine months to the end of September, at 295.6 billion, was down by 0.4 percent on that of the January-September 2014 period, 296.6 billion.
Within that total, GFBs (global flagship brands) shipment volume was increased by 5.7 percent to 205.4 billion.
The growth in GFB shipment volume was mainly driven by the markets of the Benelux countries and those in Canada, Czech Republic, France, Germany, Iran, Italy, Romania, South East Asia, Spain, Taiwan, Turkey and Ukraine.
‘Total shipment volume declined by a modest 0.4 percent, mainly due to the Middle East and Russia, partly offset by GFB growth and favorable trade inventory movements in Iran and Turkey, the company reported.
‘Market share continued to grow in most of the key markets, namely France, Italy, Spain, Taiwan, Turkey and the UK.’
JTI’s core revenue and adjusted operating profit in US dollars at constant foreign exchange grew by 7.3 percent and 13.3 percent respectively, driven by a robust price/mix and a positive GFB performance.
‘As a result of continued currency fluctuations against the US Dollar, on a reported basis, core revenue and adjusted operating profit declined 14.0 percent and 21.4 percent respectively,’ the company reported.
‘In Japanese Yen, core revenue increased 1.1 percent [from ¥936.9 billion to ¥946.9 billion] and adjusted operating profit decreased 7.7 percent [from ¥355.7 billion to ¥328.5 billion] due to the appreciation of the US Dollar.
Including the results of its other businesses, JT’s January-September revenue increased by 0.7 percent to ¥1,688.5 billion while its adjusted operating profit decreased by 2.6 percent to ¥510.3 billion.
Operating profit was down by 7.2 percent to ¥455.9 billion.
JT’s president and CEO, Mitsuomi Koizumi, said that the company’s international tobacco business had demonstrated a solid performance, driven by increased GFB shipment volume and significant pricing benefits.
“We will accelerate our investments to strengthen brand equity, geographic reach and our emerging products portfolio to continue achieving sustainable mid- to long-term profit growth,” he said.
“Domestically, against the backdrop of increasingly intensifying competition, initiatives to strengthen the product portfolio and brand equity further have ensured that our market share remains stable.
“The ongoing solid business momentum gives us confidence to achieve mid- to long-term profit growth at constant FX, allowing us to revise the forecast for year-end dividend per share upwards.”
