Japan Tobacco (JT) reported revenue of ¥1.08 trillion ($10.51 billion) during the first six months of 2016, 1.7 percent less than in the comparable 2015 period. According to JT, the decline was due to unfavorable currency movements in the international tobacco business despite steady top-line growth across all business.
Adjusted operating profit was down 3.2 percent to ¥318.3 billion, due to unfavorable local currency movements against the U.S. dollar, as well as the appreciation of the yen against the U.S. dollar.
At constant currency, adjusted operating profit increased 14.3 percent, driven by strong business momentum in the international tobacco business.
Operating profit increased by 15.5 percent, to ¥345 billion, as a result of gains from the sale of real estate assets in the first quarter.
In the international tobacco business, total and global flagship brand (GFB) shipments volumes increased 4.4 percent and 6.7 percent respectively, driven by continued market share momentum and acquisitions. The international business shipped a total of 199.7 billion cigarettes, including 140.7 billion GFBs, during the first half of 2016.
In U.S. dollars, adjusted operating profit at constant currency grew 17.7 percent, driven by volume growth and robust pricing while investments were accelerated. On a reported basis, adjusted operating profits declined 2.3 percent, due to adverse currency movements against the U.S. dollar. Adjusted operating profit in yen declined 9.3 percent due to the appreciation of the yen against the U.S. dollar.
In the Japanese domestic tobacco business, adjusted operating profit grew 3 percent, mainly driven by the retail price amendment of certain products including Mevius and the contribution of Natural American Spirit. The profit growth was also supported by the effects of measures to strengthen the competitiveness of the Japanese domestic tobacco business.
JT’s shipped 52.7 billion cigarettes domestically in the first six months of 2016.
“Our international tobacco business continues to deliver strong volume growth led by GFBs and market share gains,” said Mitsuomi Koizumi, JT’s president and CEO.
“This solid business performance combined with robust pricing allows us to revise our profit forecast upwards by targeting another year of double-digit profit growth at constant currency.”