Japan Tobacco’s (JT) reported revenue of ¥1.03 trillion ($9.84 billion) in the first six months of 2020, 2.7 percent less than in the first half of 2019. Growth in the international tobacco business was unable to offset declines in other business, according to the company. JT estimates the Covid-19 pandemic to have had an unfavorable impact on its business of around ¥35 billion.
JT’s adjusted operating profit was ¥287.6 billion over the six months (down 0.1 percent over the 2019 period) while its operating profit declined by 19.1 percent to ¥252 billion. Profit declined by 23.8 percent over the reporting period.
The company enjoyed significant favorable pricing gains in the international business, but robust currency-neutral performance was offset by stronger currency headwinds than initially assumed.
Operating profit and profit were impacted by a non-recurring one-time 2019 gain in JT’s pharmaceutical business, along with higher financing cost.
Volume trends in Japan returned to levels prior to the Covid-19-related state of emergency declaration after significant declines in April and May.
Anticipating lower tobacco volumes due to the Covid-19 impact and stronger currency headwinds, JT adjusted its fiscal 2020 forecast downward. The company now anticipates revenue of ¥2.01 trillion and adjusted operating profit of ¥457 billion for the full year.
“Although the tobacco industry was not immune to the impact of the pandemic, our performance was resilient during the first half of 2020,” said Masamichi Terabatake, president and CEO of the JT Group. “JT Group maintained solid business momentum and delivered robust growth in adjusted operating profit at constant currency driven by pricing gains in the international tobacco business.
“We have revised our forecasts based on reasonable assumption to date considering the current momentum, business environment and widening impact of currency volatility among other aspects. We believe that our solid business momentum will continue, despite of the Covid-19 challenges on our top-line.”