Category: News This Week

Revenue Up, Operating Profit Down at JT

Photo: Taco Tuinstra
Japan Tobacco’s revenue increased by 2.8 percent to ¥519.6 billion ($4.9 billion) in the first quarter of 2020 compared to the same quarter in 2019.
Operating profit decreased by 29.4 percent to ¥129 billion.
“Our consolidated first quarter results were strong, driven by robust growth in the international tobacco business, which had a strong first quarter and significant favorable pricing gains compared to the previous year,” said Masamichi Terabatake, president and CEO of the JT Group. “As of the first quarter, there was limited impact to our business following the Covid-19 outbreak.
“We are not revising the 2020 forecast. Given that the global impacts of Covid-19 are becoming prevalent from April onwards, we will continue to closely monitor how the pandemic and the currency headwinds impact our business and financials.”

April 30, 2020
Altria Withdraws Full Year Guidance

Photo: Altria
Altria Group announced strong performance from its core tobacco segments in the first quarter of 2020, even as it withdrew its full year 2020 adjusted diluted EPS guidance and 2020–2022 adjusted diluted EPS growth objective due to Covid-19 uncertainty.
The company’s net revenue was up by 13 percent in the first quarter of 2020 over the same period last year.
“The first quarter brought out the best in Altria’s employees as we navigated the dynamic tobacco environment and the unprecedented effects of the Covid-19 pandemic,” said Billy Gifford, Altria’s CEO. “We’ve approached these challenges together by focusing on the health and welfare of our employees, maintaining business continuity and supporting our communities.”
“We had an excellent start to the year, growing our first quarter adjusted diluted EPS by 18.5 percent, driven by the strength of our smokeable and oral tobacco products segments. Due to the uncertainties related to the impact of the Covid-19 pandemic on our diverse business model and economic recovery scenarios, we’re withdrawing our full-year 2020 adjusted diluted EPS guidance and, as a result, we’re also withdrawing our compounded annual adjusted diluted EPS growth objective. We’re continuing to assess the Covid-19 situation and intend to reestablish guidance at the appropriate time.”
“Our dividend is important to our investors and it remains a top priority for us. Our objective continues to be a dividend payout ratio target of approximately 80 percent of adjusted diluted EPS. For 2020, we expect to recommend a quarterly dividend rate to our board that reflects, among other things, our strong cash generation and the strength of our balance sheet.”
April 30, 2020
Juul to Cut a Third of Its Workforce

Photo: steheap
Juul Labs plans to cut a third of its workforce, according to the Wall Street Journal.
The cuts come after a slew of regulatory issues, lawsuits and falling market share but are not related to the coronavirus epidemic. Between 800 employees and 950 employees will lose their jobs under the restructuring plan.
“As part of our ongoing reset, we are constantly evaluating our operations and the best way to position our company for the long,” a Juul spokesman said.
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April 30, 2020
Broughton Expands Toxicology Team

Photo courtesy of Broughton Nicotine Services
Yvonne Wilding
Broughton Nicotine Services has hired five additional toxicology specialists to strengthen its support for companies in the electronic nicotine delivery systems (ENDS) sector.
The new team members are: Yvonne Wilding (director, product safety and compliance), Emmanuel Minet and Frazer Lowe (principal scientists), Djeren Simitdjioglu (associate toxicologist) and Anais Kahve (toxicologist).
Wilding is a highly experienced toxicologist with more than 10 years’ broad regulatory toxicology experience and 20 years pharmaceutical research and development experience at companies such as GlaxoSmithKline and AstraZeneca.
‘’We’re delighted to welcome these highly experienced individuals to our existing team,” said Chris Allen, vice president of scientific and regulatory affairs at Broughton. “Toxicology is an essential element of the scientific and regulatory support we provide to ENDS companies submitting premarket applications in the UK, US and emerging markets.
“Having a large team of toxicologists in-house collaborating with our analytical team and external suppliers will help us leverage improved efficiencies for clients and accelerate compilation of scientific data for regulatory projects to advance a smoke free future.’’
April 29, 2020
TPB Reports Robust Demand in Hard Times

Image by Steve Buissinne from Pixabay
Turning Point Brands (TPB) announced its first quarter results for 2020.
Net sales decreased 1 percent to $90.7 million while gross profit increased 2.4 percent to $41.4 million. Net income decreased to $3.3 million, reflecting inclusion of premarket tobacco product application costs.
“Our results this quarter reflect the robust demand for our products even during challenging times,” said Larry Wexler, president and CEO of TPB. “Sales performance was driven by mid-teens growth in our core smokeless and smoking segments partially aided by trade load-in as a response to strong customer demand and the uncertain environment. We estimate trade load-in impacted sales in our core tobacco segments by $2 million. Our NewGen segment also delivered better than expected results after we reorganized the business last quarter.”
“As a result of the extraordinary situation we are facing [the Covid-19 outbreak], our focus during the quarter was on the safety and well-being of our colleagues and the communities and customers we serve. This focus serves as the basis for decisions we make as a company and how we react going forward,” said Wexler.
In response to Covid-19, TPB has implemented safety precautions, including split shifts in warehouses and manufacturing facilities, temperature scans, additional contactless hand sanitizing stations, protective equipment, social distancing guidelines, increased cleaning and sanitation, the suspension of unnecessary travel, the implementation of telecommuting where possible, videoconferencing, and tele-selling initiatives. Some of these changes are likely to remain in place even after the pandemic crisis is over, leading to ongoing cost savings.
April 29, 2020
Fontem Submits PMTAs for Myblu Products

Photo courtesy of Imperial Brands
Imperial Brands subsidiary Fontem US has submitted Premarket Tobacco Product Applications (PMTAs) to the U.S. Food and Drug Administration (FDA) seeking authorization for the continued marketing of a wide range of its Myblu electronic vapor products.
Fontem US’s Blu products play a fundamental role in the company’s goal of providing adult smokers with options that are potentially less harmful than combustible tobacco products. The PMTA submissions include data from a comprehensive range of laboratory and clinical scientific studies, including product analyses, behavioral data, nonclinical health risk information, and information on the impact to both users and non-users of tobacco products.
Fontem US believes the evidence provided shows that Blu electronic vaping products could play a role in the protection of the public health, in line with the guidance issued by FDA.
“We agree that the electronic vaping industry should be held to the highest product and marketing standards while providing adult smokers with alternative products that could serve the interest of the public health,” said Antoine Blonde, president of Fontem US.
“Fontem US looks forward to working with the FDA as the agency develops and enforces an evidence-based regulatory policy.”
April 29, 2020
Zimbabwe Union Calls for Auction Delay

Photo: Taco Tuinstra
The National Union for Tobacco Industry and Allied Trade (NUTIAT) is calling for a delay in the opening of auction floors in Zimbabwe until the country’s lockdown is over.
The lockdown is set to end on Sunday, but the auction floors are set to open this week.
NUTIAT argues that the safety measures put in place are not enough to protect employees from contracting Covid-19.
“As tobacco employees, we are concerned about our safety if auction floors are allowed to open when the country is still under national lockdown,” said Tabuda Moyo, NUTIAT secretary-general.
“Opening up tobacco floors before end of lockdown could jeopardize the health of the workers, and with the absence of trade union leaders in the national Covid-19 taskforce, I see coronavirus increases coming to the floors. So, what we wish is that the selling and marketing season should wait until this lockdown is over,” Moyo said.
April 28, 2020
FDA Sends Warnings for Targeting Youth
Today, the U.S. Food and Drug Administration (FDA) issued 10 warning letters to retailers and manufacturers who sell, manufacture and/or import unauthorized electronic nicotine delivery system (ENDS) products targeted to youth or likely to promote use by youth.
The warning letters were sent to establishments marketing unauthorized products, such as a backpack and sweatshirt designed with stealth pockets to hold and conceal an e-cigarette, ENDS products that resemble smartwatches, or devices appearing as children’s toys such as a portable video game system or fidget spinner.
Warning letters were also issued to companies marketing e-liquids that imitate packaging for food products that often are marketed and appeal to youth, such as candy, or feature cartoon characters like SpongeBob SquarePants.
“The FDA is focused on manufacturers and retailers that make and sell ENDS products that are targeted to youth and increase their appeal. The public should really be outraged by these products. The FDA is especially disturbed by some of these new products being marketed to children and teens by promoting the ease with which they can be used to conceal product use, which appeals to kids because it allows them to conceal tobacco product use from parents, teachers, law enforcement or other adults,” said Mitch Zeller, director of the FDA’s Center for Tobacco Products. “Even in the midst of the COVID-19 pandemic, we have not lost our focus on protecting youth against the dangers of e-cigarettes and will do everything we can to take action. These warning letters should send a clear message to all tobacco product manufacturers and retailers that the FDA is keeping a close watch on the marketplace. If you’re marketing or selling these products to youth, the FDA will not tolerate it.”
The following retailers and/or manufacturers or importers received a warning letter:
Vaprwear Gear, LLC (manufacturer, online retailer)
Vapewear, LLC (manufacturer, online retailer)
Wizman Limited (manufacturer, online retailer)
EightCig, LLC (online retailer)
Ejuicepack, LLC (online retailer)
Vape Royalty, LLC (online retailer)
VapeCentric, Inc. (online retailer)
Dukhan Store (online retailer)
VapeSourcing (online retailer)
Shenzhen Uwell Technology Co., Ltd. d/b/a DTD Distribution Inc. (importer, retailer)
The FDA has also issued warning letters to 73 brick-and-mortar retailers for selling unauthorized flavored, cartridge-based ENDS products. This follows 22 warning letters that FDA issued last month for similar violations to online and brick-and-mortar retailers and manufacturers across the country. These warning letters are part of a series of ongoing actions consistent with the FDA’s recently issued policy of enforcement priorities for e-cigarettes and other deemed products on the market.
April 27, 2020
Imperial Brands Sells Cigar Business

photo: Image by Chris Frenzel from Pixabay
Imperial Brands has agreed to the sale of its premium cigar business, Premium Cigars, for €1.23 billion ($1.33 billion).
After adjusting for tax and other costs, the disposals are expected to realize net cash proceeds of around €1.09 billion. The proceeds will be used for debt reduction and will reduce September 2019 pro-forma net debt to EBITDA leverage by 0.2 times.
“We are delighted to be able to announce the sale of Premium Cigars in the current challenging global environment,” said Dominic Brisby and Joerg Biebernick, joint interim chief executives. “It has been a complex transaction involving joint venture partners and assets across multiple geographies, and we would like to thank everyone involved for working so hard to get the deal agreed.”
“We believe we have found the right long-term owners for Premium Cigars; they are committed to investing in the business to maximize future growth opportunities and are well positioned to further develop operations internationally,” Brisby and Biebernick added.
The sale will take place in two transactions documented under two sale agreements: one for the USA business (Premium Cigar USA) and another for the rest of the world business (Premium Cigar RoW).
Gemstone Investment Holding will acquire Premium Cigar USA for a consideration of €185 million. Allied Cigar Corp. will acquire Premium Cigar RoW for a consideration of €1.04 billion.
The transactions are expected to close in the third quarter of 2020. The Premium Cigar RoW transaction includes the sale of the Dominican Republic handmade premium cigar factory, which is expected to close in 2021.
April 27, 2020
Swedish Match Reports Record Quarter

Photo: Swedish Match
Swedish Match had a record quarter from product segments driven by U.S. businesses.
In local currencies, sales from product segments increased by 21 percent for the first quarter. Reported sales increased by 24 percent to SEK4.03 billion ($401.68 million)
In local currencies, operating profit from product segments increased by 30 percent for the first quarter. Reported operating profit from product segments increased by 34 percent to SEK1.65 billion.
Operating profit amounted to SEK1.59 billion for the first quarter. Profit after tax amounted to SEK1.16 billion for the first quarter. Earnings per share increased by 38 percent to SEK7.14 for the first quarter.
Net effect on revenue and results from Covid-19 impacts were positive in the first quarter but are expected to become negative in the second quarter.
Swedish Match nicotine pouch product ZYN is now available in approximately 80,000 stores in the U.S., and average sales per store continue to increase.
April 27, 2020