JT's cigarette volumes up

Japan Tobacco Inc.’s domestic cigarette sales volume during the three months to the end of September, at 23.8 billion, increased by 1.3 percent on that of July-September 2017, 23.5 billion.
In announcing its consolidated results today, JT said that despite increased demand ahead of a tax-led retail price revision, cigarette industry volume had decreased 1.1 percent during the quarter, impacted by the expansion of the reduced-risk product (RRP) category and the underlying ‘natural decline trend’.
But JT’s cigarette sales volume had increased 1.3 percent led by a solid performance by the MEVIUS brand and the extra demand ahead of the price revision, estimated by JT as equivalent to about 0.4 of a month’s sales.
JT’s cigarette market share during the third quarter increased by 1.5 percentage points to 62.5 percent from that of the third quarter of the previous year, and increased by 0.9 of a percentage point on that of the second quarter of this year. JT said that it had achieved cigarette market share gains for three consecutive quarters.
Core revenue during the third quarter, at ¥172.2 billion, was increased by 15.8 percent on that of the third quarter of 2017, ¥148.7 billion. At the same time, adjusted operating profit increased by 19.5 percent to ¥69.3 billion.
Meanwhile, Japan Tobacco International’s total shipment volume during the three months to the end of September, at 114.5 billion, was increased by 9.3 percent on that of the July-September 2017, 104.8 billion.
Within that total, GFBs (global flagship brands) shipment volume was increased by 2.1 percent to 70.6 billion, from 69.2 billion.
The shipment volume growth of 9.3 percent was said to have been driven by acquisitions in Ethiopia, Greece, Indonesia, the Philippines and Russia.  ‘Excluding acquisitions and inventory adjustments, total shipment volume declined 1.1 percent,’ JT said. ‘Quarterly volume increases and market share gains in France, Germany, Iran, Poland, the UK, the USA and several emerging markets did not offset the impact of industry volume contraction, notably in Russia and Taiwan. GFB shipment volume increased 2.1 percent, driven by Winston (+ 4.8 percent) and Camel (+ 0.9 percent).
‘Core revenue and adjusted operating profit core revenue increased 9.0 percent driven by volume contribution from acquisitions and a strong price/mix. Adjusted operating profit grew 9.5 percent including investments to strengthen the business foundation in the markets where we made acquisitions.’
Including the results of its other businesses, JT’s July-September revenue increased by 9.7 percent to ¥600.5 billion, while its adjusted operating profit increased by 12.7 percent to ¥193.2 billion. Operating profit increased by 11.8 percent to ¥174.8 billion.
In announcing the three-month and nine-month results, JT group president and CEO, Masamichi Terabatake, said that the group’s solid performance in the third quarter was mainly driven by robust pricing gains in the international tobacco business, leading it to revise upwards its forecast for adjusted operating profit at constant foreign exchange for the full year.
“With strong momentum in our business, I am confident that the JT group is well positioned to achieve its mid- to long-term objectives, but we will continue to monitor the impact of currency movements and geopolitical risks,” he was quoted as saying.
“Our total market share increased in Japan, demonstrating the resilience of our business and the strength of our brands. As for reduced-risk products, establishing a low-temperature heating category is taking longer than expected. We are therefore increasing our efforts to communicate the differences and benefits of the product compared to a high-temperature heating category.
“In light of a changing regulatory environment and consumer trends, we are convinced that demand for the low-temperature heating products will grow further. Establishing this category remains our first priority to achieve a leading position, and as we expect the RRP market to be more competitive, we will invest for future growth.
“We will continue to provide a range of choices within our portfolio strategy, including conventional tobacco products as the platform of the group’s profitability and RRP as our future growth driver.”