Author: Staff Writer

Japan Tobacco Inc reported today that its domestic cigarette sales during the nine months to the end of December, at 89.7 billion, were increased by 0.4 per cent on those of the nine months to the end of December 2012.

Core revenue for the domestic tobacco business increased by 0.5 per cent to ¥505.1 billion but adjusted EBITDA was down by 1.1 per cent to ¥224.4 billion.

JT said sales volume and core revenue had been flat in the first nine months because its steady market share growth – 59.6 per cent for the full year 2012 to 60.8 per cent during April-December 2013 – had been offset by an overall industry volume decline.

Meanwhile, JT reported today, too, that it had applied to the Minister of Finance for approval to amend the list prices of most of its domestic tobacco products in conjunction with a planned consumption tax increase on April 1.

If approved, cigarette prices would be increased in most cases by ¥10 or by ¥20 per pack; so the price of a pack of Mevius, for instance, would rise from ¥410 to ¥430.

JT’s consolidated results included first nine-month figures for Japan Tobacco International, which saw its cigarette (and cigarette equivalent) shipments during the period January 1, 2013 to September 30, 2013, at 311.2 billion, down by 5.1 per cent on those of the equivalent period of 2012.

At the same time, global flagship brand shipments were down by 2.1 per cent to 198.2 billion.

Shipments were said to have been affected in part by industry contraction in Russia and Western Europe.

JTI’s core revenue increased by 25.0 per cent to ¥878.9 billion and its adjusted EBITDA was up by 31.9 per cent to ¥350.7 billion.

JT’s total (including also its pharmaceutical, beverage and food businesses) consolidated revenue grew by 10.7 per cent to ¥1,779.9 billion and its adjusted EBITDA increased by 16.1 per cent to ¥574.1 billion. Operating profit was up by 25.0 per cent to ¥514.4 billion.

“Internationally, we achieved robust growth driven by strong price/mix,” said Mitsuomi Koizumi, president and CEO. “Despite industry volume contraction, market share growth in most key markets confirmed solid business fundamentals.

“In Japan, robust performance of Mevius further expanded our overall market share.

“We will continue to strengthen the brand equity of our key brands such as Mevius, Seven Stars and Pianissimo, aiming to further increase our market share.

“The results over the last three quarters give me strong reason to believe that we will achieve our full year targets.”

Meanwhile, JTI reported separately that its cigarette (and cigarette equivalent) shipments during the year to the end of December, at 416.4 billion, were 4.6 per cent down on those of January-December 2012, 436.5 billion.

At the same time, global flagship brand shipments were down by 0.8 per cent to 266.6 billion.

Core revenue was up by 3.9 per cent to US$12,273 million and adjusted EBITDA was increased by 7.5 per cent to $4,623 million.

From 2015, JT and JTI should both be reporting their results based on a financial year that ends on December 31.

JT said today that its board of directors had resolved to change the company’s accounting period with the closing date moving from March 31 to December 31.

The change is subject to approval of an amendment to the company’s Articles of

Incorporation at the ordinary general meeting of shareholders due to be held in late June, and approval by the Minister of Finance, pursuant to the Japan Tobacco Inc. Act.

Japan Tobacco Inc. today announced the pending launch of Mevius Control One, which will feature the ADJUSTABLE® filter that, reportedly, can be used to vary tar levels.

The new 1 mg tar product will go on sale in the prefectures of Fukuoka, Nagasaki, and Saga in mid-February.

The filter is such that consumers can rotate it from a maximum to a minimum setting, an action that increases the volume of air flowing into the filter and, therefore, lowers the level of flavour and aroma.

Philip Morris International is to restructure its business in Egypt as part of an initiative aimed at enhancing its profitability and growth in markets across North Africa and the Middle East.

‘The new business model entails a new contract manufacturing agreement with our long-standing, strategic business partner, Eastern Company S.A.E., the creation of a new PMI affiliate in Egypt and a new distribution agreement with Trans Business for Trading and Distribution LLC,’ PMI said in a press note posted on its website yesterday.

To accomplish this restructuring and to ensure a smooth transition to the new model, PMI will record, in the fourth quarter of 2013, a charge of about $0.10 to its 2013 full-year reported diluted earnings per share.

“Today’s announcement marks the next stage in the highly successful evolution of our business in Egypt, which could not have been achieved without the significant contribution of our long-established partner, Al Mansour International Distribution Company S.A.E.,” said Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa Region and PMI Duty Free.

“PMI’s new operational model will ensure business continuity in this dynamic market, where PMI achieved currency-neutral, double-digit earnings growth and strong share gains in 2013. Furthermore, going forward, the new model will assure the continued expansion of our market presence and an increase in our share of the profit pool.”

PMI said that it was the leading international tobacco company in Egypt, where its products are contract manufactured by Eastern Co.

Its market share last year, at 22.9 per cent, was up by 4.7 percentage points on that of its 2012 market share, with the share of its premium brand, Marlboro, up by 1.1 percentage points to an estimated 7.3 per cent, and the share of its mid-priced L&M up by 3.3 percentage points to an estimated 13.1 per cent.

Overall, about 80 billion cigarettes were sold on the Egyptian market last year, about 2.8 per cent more than were sold during 2012.

Last year, the retail pack price of Marlboro, which enjoys close to a 75 per cent share of the premium segment, was E£15.50 (about $2.25).

About 85,360 farmers have so far registered for Zimbabwe’s 2014 tobacco selling season, up from about 65,000 at the same stage of last year, according to a story in The Standard quoting the Tobacco Industry Marketing Board.

The board’s chairperson, Monica Chinamasa, attributed the increase to the ‘lucrative cash payments’ that come with selling tobacco.

“That is the only sector which is presently paying farmers well,” said Chinamasa. “Maize is associated with delayed payments and low prices while cotton is even worse.

“Secondly, tobacco has a ready market. Every farmer wants to grow something which they can sell.”

Lorillard is due to host a results webcast and conference call from 09.00 hours on February 12 following the release of its fourth quarter and full year 2013 results.

The conference call for analysts and investors will be hosted by Murray S. Kessler, chairman, president and CEO, and David H. Taylor, executive vice president, finance and planning and CFO.

A results news release and the webcast of the conference call will be available under the Investor Relations section of Lorillard’s website at www.lorillard.com, where a replay will be available through February 19.

Participation in the conference call will be through (888) 239-6824 (domestic) or (706) 902-3787 (international), using the pass-code 35102157.

The replay of the conference call will be available through (855) 859-2056 (domestic) or (404) 537-3406 (international), using the pass-code 35102157.

The First Global Forum on Nicotine is due to be held in Warsaw, Poland, on June 27-28.

Professor Gerry Stimson said that his company, KAC, which will stage the forum, believed the timing was right for such an event, given the fast moving pace of knowledge and understanding around nicotine.

KAC stages public health and addictions conferences, and runs the Nicotine Science and Policy website www.nicotinepolicy.net.

Stimson said the broad idea of the forum was to take further steps to consolidate nicotine – rather than tobacco, cigarettes or tobacco control – as a focus for science and policy. The aim of the meeting would be to bring together a wide range of stakeholders to discuss the developing science of nicotine, patterns and use and uptake, and policy and regulatory issues.

The Conference would examine the current state of the debate about the use of nicotine across the globe; critically examine the science relating to the safety and use of nicotine; allow politicians, scientists, manufacturers, distributors and consumers to exchange views; and facilitate the development of links to enable on-going dialogue between different sectors.

The forum’s website is due to go live next week.

Tobacco growers in the Indian states of Andhra Pradesh and Karnataka have been asked to comply with flue-cured crop targets so as to ensure good prices at auction, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The Tobacco Board of India chairman, K. Gopal, said growers should exercise discipline in sticking to the flue-cured quotas of 102 million kg for Karnataka and 172 million kg for Andhra Pradesh.

“It is of the essence that the crop in the principal states should not exceed 270-275 million kg,” he said.

“Then farmers can expect remunerative prices on the floor.

“The trade should also support the farmers,” he added.

Over-production of flue-cured has been endemic in the two states, where farmers are generally financially impoverished and the opportunity to earn extra cash from tobacco is irresistible.

Meanwhile, two more auction platforms are being built in Karnataka and one more in Andhra Pradesh.

The smokers’ group Forest has come out strongly against the UK Labour Party’s plans to ban smoking in cars with children.

“Legislation is completely unnecessary,” said Forest director, Simon Clark.

“Most adult smokers accept that smoking in a car with children present is inconsiderate and the overwhelming majority choose not to.

“Banning smoking in private vehicles is a serious invasion of privacy.

“Education, not legislation, is the way forward.

“Smoking is banned in all enclosed public places, including privately run pubs and clubs.

“Now they want to prohibit smoking in private vehicles.

“What next? A ban on smoking in the home if children are present?”

The Labour Party is currently the main opposition in the UK parliament, for which elections are due to be held in 2015.

The Washington-based US Chamber of Commerce is lobbying against proposals by Ireland’s Department of Health to standardize the design of cigarette packs, according to a story by Tom Lyons for the Irish Times.

In doing so, the powerful lobby group has joined other business interests resisting the proposed change, including employer representative Ibec and the Law Society.

In a letter obtained by the Times, the world’s largest business federation with three million business members said it had ‘deep concerns’ about what it called the ‘proposed destruction of trademark and branding rights in the tobacco sector’.

‘We do not believe this initiative is well founded and we urge it to be reconsidered,’ said Myron A Brilliant, the chamber’s head of international affairs in writing to the Oireachtas [parliamentary] Committee on Health and Children, which is considering the issue.

‘The notion that the Irish Government is contemplating measures that would destroy any industry’s legitimate and legally sanctioned trademark protection and branding causes concern in the US business community and extends into many different sectors of our membership.’

Reynolds American Inc. is due to host a conference call and webcast at 09.00 hours Eastern Time on February 11 following the release of its fourth-quarter and full-year 2013 financial results before the market opens.

Daniel M. Delen, president and CEO, Thomas R. Adams, CFO, and Morris L. Moore, vice president of investor relations, will participate in the conference call and webcast.

The RAI webcast will be available on a listen-only basis at www.reynoldsamerican.com, at which address registration is available and a replay will be made available.

The conference call will be available too on (877) 390-5533 (toll-free) and (678) 894-3969 (international).