New product promised

Japan Tobacco Inc’s domestic cigarette volume sales during the three months to the end of March, at 19.5 billion, were 15.0 percent down on those of the three months to the end of March 2017, 23.0 billion.
JT reported today that, at the same time, the industry’s cigarette volume, which was impacted by sales of reduced-risk products (RRP), was down by 15.6 percent from 37.7 billion to 31.8 billion.
The company’s market share rose by 0.5 of a percentage point to 61.4 percent.
JT estimated the overall RRP market in Japan during the first quarter at about 20 percent of the total tobacco industry volume. JT’s RRP sales volume was said to be 0.3 billion cigarette equivalent units with Ploom TECH’s market share estimated at between three and four percent where it was available.
JT’s domestic tobacco business core revenue declined by 10.1 percent, from ¥143.9 billion to ¥129.3 billion, while adjusted operating profit declined by 14.4 percent from ¥57.2 billion to ¥48.9 billion.
Meanwhile, Japan Tobacco International’s shipment volume during the three months to the end of March, at 98.4 billion, was increased by 7.3 percent on that of the three months to the end of March 2017, 91.7 billion. At the same time GFB (global focus brands) volume increased by 3.1 percent from 60.2 billion to 62.0 billion.
JT said that JTI’s increase in volumes had been driven by acquisitions in Ethiopia, Indonesia and the Philippines, and favorable inventory movements.  Excluding these, total shipment volume declined by 2.2 percent.
‘Volume increases across Iran, Romania, Spain, Turkey and emerging markets were unable to offset the impact of the industry volume contraction, notably in France, Russia and Taiwan,’ JT reported.
‘GFB shipment volume increased 3.1 percent growing across all clusters, mainly driven by the growth of Winston, Camel and LD.
‘Total and GFB market share grew in the key markets of France, Russia, Spain and Taiwan.’
JTI’s core revenue during the first quarter, at ¥294.8 billion, was increased by 6.8 percent on that of the first quarter of 2017, ¥276.0 billion, while adjusted operating profit increased by 4.7 percent from ¥92.0 billion to ¥96.3 billion.
“Our first quarter results illustrate a solid start for achieving our full year profit target in a business environment which remains challenging,” said Masamichi Terabatake, president and CEO of the JT Group.
“Our traditional tobacco products, the platform of the Group’s profitability, delivered robust top-line growth led by pricing in the international tobacco business. We also increased our market share in the Japanese domestic tobacco business driven by MEVIUS.
“M&A activities last year contributed to our top-line growth following our strategic geographical expansion.  Our recent decision to acquire Donskoy Tabak companies will reinforce our No.1 position in Russia after the closing.
“We continue to invest in Reduced-Risk Products on a global basis, as these will contribute to our future growth and ensure a wide choice of products for consumers.  In Japan, we will increase our presence both geographically and through product diversification.
“Since our operation of production equipment for the tobacco capsules is being stabilized with our effort to increase its output, we will start a nationwide roll-out of Ploom TECH in June and expand to convenience stores as of July.  We also are aiming to launch a new heated tobacco product as early as the year-end or early 2019.”