Category: Financial

JT’s domestic sales down
Japan Tobacco Inc.’s domestic cigarette sales volume during October, at 7.5 billion, was down by 12.5 percent on that of October 2016, 8.6 billion, according to preliminary figures issued by the company today. The October 2016 figure was down by 8.9 percent on that of October 2015.
Volume during January-October, at 77.9 billion, was down by 11.9 percent on that of January-October 2016, 88.3 billion. The January-October 2016 volume was down by 2.6 percent on that of January-October 2015.
JT’s market share stood at 62.1 percent during October, at 61.1 percent during January-October, and at 61.1 percent during January-December 2016.
JT’s domestic cigarette revenue during October, at ¥44.6 billion, was down by 12.4 percent on its October 2016 revenue, ¥50.9 billion, which was down by 4.7 percent on its revenue of October 2015.
Revenue during January-October, at ¥463.2 billion, was down by 10.5 percent on that of January-October 2016, ¥517.6 billion, which was increased by 0.7 percent on its revenue of January-October 2015.
November 17, 2017
Universal’s volume sales up
In reporting Universal Corporation’s results for the six months to the end of September, chairman, president, and CEO, George C. Freeman, III, said that during the second half of the company’s current fiscal year, sales of its African tobaccos would be impacted by reduced Burley production volumes in Africa, which mainly shipped in the third and fourth fiscal quarters.
“Less African Burley leaf was grown this fiscal year due to excess production and low grower prices in fiscal year 2017 and unfavorable weather conditions this fiscal year,” he was quoted as saying.
“Although we still expect our total shipments to be weighted to the second half of the fiscal year, we currently anticipate modestly lower total lamina sales volumes for fiscal year 2018.
“We are estimating that this fiscal year’s global Burley production declines will recover in next year’s crop.”
Meanwhile, Universal reported that net income for the six months ended September 30, was $29.7 million, or $1.16 per diluted share, compared with $19.8 million, or $0.54 per diluted share for the same period of the previous fiscal year.
Operating income for the six months ended September 30, of $51.5 million, was increased by $16.2 million on that of the first half of the previous fiscal year.
“Our results for the six months ended September 30, 2017, were in line with our expectations and reflected slightly higher total sales volumes and lower selling, general, and administrative costs,” said Freeman.
“In our second fiscal quarter, we continued to see the benefits of higher current crop sales and processing volumes and lower factory unit costs from the recovery in leaf production volumes this year in Brazil.”
November 8, 2017
Volumes down at Imperial
Imperial Brands’ volume shipments of cigarettes and other tobacco products calculated as ‘stick equivalents’ (SE) during the 12 months to the end of September, at 265.2 billion, were down by 4.1 percent on those of the 12 months to the end of September 2016, 276.5 billion.
The company said that its volume performance had bettered the industry’s, whose volume fell by 4.4 percent.
In announcing its preliminary results for the year to the end of September, the company said that, during the same period, its Growth Brand volume had increased by 5.5 percent to 159.6 billion SE.
Growth Brands were said to account for 60.2 percent of group tobacco volumes and for 47.6 percent of overall tobacco net revenue.
Tobacco net revenue was up by 8.2 percent, from £7,167 million to £7,757 million; tobacco adjusted operating profit was up by 7.0 percent, from £3,360 million to £3595 million; and total adjusted operating profit was up by 6.2 percent, from £3,541 million to £3,761 million.
“This was an important year of progress,” said chief executive, Alison Cooper. “Building on the work we have done to strengthen the brand portfolio, we significantly increased investment behind our key brand equities and have delivered share gains in most of our priority markets.
“Our results benefited from the overall share momentum which supported improved second half net revenue despite a particularly tough industry backdrop.
“As anticipated, whilst the increased investment impacted current year revenue and profit it is strengthening the business to support improved top-line growth going forward from both tobacco and next generation products.
“Our Growth Brands performed well, reinforcing our focus on quality growth, which we will be building on in FY18. We will also be stepping up our activities in next generation products, with new e-vapour launches in new and existing markets and consumer trials of heated tobacco products.
“We have continued to take decisive cost action to mitigate a tough trading environment and to protect our investments. Cash conversion remains strong and this is our ninth consecutive year of 10 percent dividend growth.
“We are well placed to continue to enhance shareholder value by building on the momentum in our tobacco business and realising opportunities in next generation products.”
November 7, 2017
AOI sales increased
The value of Alliance One International’s sales during its second quarter to the end of September, at US$447.3 million, was increased by 14.9 percent on that of the second quarter to the end of September 2016.
The increase was said to have been due primarily to the production of a larger South American crop and a 12.4 percent increase in average sales price due to favorable product mix.
At the same time, gross profit increased by 37.9 percent to US$69.3 million and gross profit as a percentage of sales improved to 15.5 percent from 12.9 percent last year.
Net income was US$1.0 million and adjusted EBITDA improved 40.5 percent to US$49.9 million.
In announcing the company’s results for the second quarter and first six months, president and CEO Pieter Sikkel said that AOI had achieved solid sales growth during the second quarter, and that volume was increasing as crop sizes had returned to more normal levels in many key markets.
Sales were planned to improve throughout the fiscal year, with each subsequent quarter building on the prior, based on the timing of crops and processing in the growing regions.
“Through the first half of this year total kilos sold increased 2.1 percent to 153.2 million kilos and sales increased 11.3 percent to $724.3 million this year versus last year as a result of the larger South American crop, increased customer demand primarily from Asia and Europe, and a 9.5 percent increase in average sales price due to favorable product mix,” said Sikkel.
“Lamina as a percentage of total sales was 14.2 percent higher when compared to last year. Additionally, the 2017 Brazilian crop now being sold is of higher quality than the El Niño-affected 2016 crop.
“Gross profit increased by 16.2 percent to $98.0 million for the first six months of this year and gross profit as a percentage of sales improved to 13.5 percent from 13.0 percent last year.
“These improvements were driven by sales that increased by 11.3 percent while total costs of goods and services sold only increased 10.6 percent.”
Sikkel said that the company was implementing initiatives that should grow its business platform, while continuing to enhance its sustainability and track-and-trace capabilities.
In addition, the company had recently made a further investment to expand its e-liquid capability and footprint established initially with its investment in Purilum, a leader in e-liquids and flavoring. Purilum had won the 2017 Golden Leaf Award for the company most committed to quality, affirming AOI’s commitment to high quality next generation products and their future.
“Future prospects for our business are bright and we are excited about developing and maximizing future opportunities that should drive improved profitability and enhanced shareholder value,” Sikkel said.
“We are taking measured steps to strengthen our preferred supplier role with customers, further developing our position as a key supplier for both traditional requirements as well as next generation reduced risk products.”
November 2, 2017
Market down by 11.8 percent
Japan Tobacco Inc.’s domestic cigarette sales volume during the nine months to the end of September, at 70.3 billion, was down by 11.8 percent on that of January-September 2016, 79.7 billion.
In announcing its consolidated results today, JT said its domestic sales volume had declined because of lower industry volumes – also down by 11.8 percent – caused by the expansion of the vapor category and the continuing long-term market contraction.
JT’s cigarette market share was said to have been 61.0 percent, on a par with that of last year.
Core domestic cigarette revenue during January-September, at ¥443.1 billion, was down by 8.7 percent from that of January-September 2016 because of the sales volume decline, partially offset by the benefit of a Mevius retail price amendment last year and increasing sales of Ploom TECH.
Adjusted operating profit declined 10.6 percent to ¥178.0 billion because of the lower core revenue and despite benefits that accrued from cost decreases.
Meanwhile, Japan Tobacco International’s total cigarette and cigarette-equivalent shipment volume (including fine cut, cigars, pipe tobacco and snus, but excluding contract manufactured products, waterpipe tobacco and emerging products) during the nine months to the end of September, at 298 billion, was down by 2.0 percent on that of the January-September 2016 period, 304.2 billion.
Within that total, GFBs (global flagship brands) shipment volume was increased by 0.2 percent to 216.8 billion, from 216.3 billion.
JT reported that JTI’s total shipment volume had declined by 2.0 percent, or 2.6 percent excluding the effect of its acquisition in the Philippines, because volume increases primarily in Iran, Taiwan and emerging markets were unable to offset the impact of industry volume contraction mainly in countries of the Commonwealth of Independent States.
Declining volumes caused US-dollar core revenue to fall by 1.5 percent to $7,941 million at constant foreign exchange, and by 2.1 percent on a reported basis due to currency fluctuations.
Adjusted operating profit increased by 9.2 percent to $2,868 million at constant foreign exchange because of cost optimization and despite investments in emerging markets and emerging products. On a reported basis, adjusted operating profit grew by 4.6 percent due to currency fluctuations.
In Japanese Yen, core revenue and adjusted operating profit increased by 1.1 percent to ¥882.9 billion and by 7.8 percent to ¥307.1 billion, respectively, due to the appreciation of the US Dollar.
Including the results of its other businesses, JT’s January-September revenue fell by 1.6 percent to ¥1,592.9 billion, while its adjusted operating profit increased by 2.0 percent to ¥486.1 billion. Operating profit was down by 5.0 percent to ¥469.7 billion.
JT’s president and CEO, Mitsuomi Koizumi, said that the company continued to generate strong earnings growth in the international tobacco business, led by its cost optimization initiatives. “This, along with higher royalty revenues in the pharmaceutical business, drove the group’s adjusted operating profit growth at constant FX,” he said.
“The continuing cigarette industry volume decline puts further pressure on our Japanese tobacco business, resulting in adjustments to our forecast.
“In the meantime, our tobacco vapor product, Ploom TECH, continues to be well received by consumers. We are increasing the production capacity as we prepare to expand our sales areas nationwide in the first half of 2018.
“In the international tobacco business, we are delivering our strategic initiatives with the acquisitions in Indonesia and the Philippines which expand our geographic reach.
“At the same time, we’ve also been investing in emerging products.
“In a challenging industry environment, we commit to achieving sustainable profit growth by executing these on-going initiatives.”
November 1, 2017
SM’s sales up and down
Swedish Matches snus shipments in Scandinavia during the three months to the end of September, at 61.7 million cans, were increased by about two percent on those of the three months to the end of September 2016, 60.6 million cans.
During the same periods, shipments of moist snuff in the US were down by about six percent to 33.6 million cans, while shipments of snus and nicotine pouches outside Scandinavia were increased by 74 percent to 3.5 million cans.
Swedish Match’s share of the Swedish snus market was down by 2.2 percentage points to 64.9 percent, while its share of Norway’s snus market was down by 1.2 percentage points to 52.0 percent.
The company’s cigar shipments during the three months to the end of September, at 405 million pieces, were increased by about one percent on those of the three months to the end of September 2016, 402 million pieces.
During the same periods, the company’s chewing tobacco shipments, excluding contract-manufacturing volumes, fell by about six percent to about 1,636,000 pounds.
Sales increased by one percent in local currencies, but reported sales declined by one percent to SEK4,069 million for the third quarter.
“This has been an exciting quarter for Swedish Match, where we have further demonstrated our commitment toward our vision of a world without cigarettes as evidenced by our efforts in modern smokeless products,” said CEO Lars Dahlgren in reporting Swedish Match’s third quarter and nine-months results.
“We have been introducing innovative new products, and continued to expand in new markets, organically as well as via the acquisition of the Danish smokeless tobacco business, V2 Tobacco.
“In the world around us, there exists a continuously growing interest, from consumers, industry players and certain important policymakers, in tobacco harm reduction. Where regulators have yet to acknowledge a more science-based approach to tobacco regulation, we have continued to make our voice and solid fact base heard.
“At the same time, we have continued our strong commitment toward our more traditional businesses, often in very competitive environments.
“For the quarter, sales and profit from product areas demonstrated resilience. Currency translation effects turned negative this quarter but sales grew in local currencies for both snus and moist snuff and other tobacco products…”
October 30, 2017
PM USA’s volume down
Philip Morris USA’s domestic cigarette shipment volume during the third quarter to the end of September, at 30,828 million, was 6.2 percent down on that of the third quarter of 2016, 32,864 million.
Marlboro volume was down by 6.0 percent to 26,445 million, while the volume of the company’s other premium brands was down by 6.9 percent to 1,567 million. Its discount-brand volume was down by 7.3 percent to 2,806 million.
In presenting its third-quarter and nine-month figures, Altria said that total cigarette industry volumes had declined by an estimated 3.5 percent during the third quarter. ‘The smokeable products segment’s reported domestic cigarettes shipment volume declined by 6.2 percent in the third quarter, primarily driven by the industry’s rate of decline, trade inventory movements, retail share declines and one fewer shipping day,’ it said. ‘After adjusting for trade inventory movements and calendar differences, PM USA’s domestic cigarettes shipment volume decreased by an estimated 4.5 percent.’
Meanwhile, Altria reported that for the first nine months of 2017, total cigarette industry volumes had declined by an estimated 3.5 percent. ‘The smokeable products segment’s reported domestic cigarettes shipment volume decreased by 4.0 percent, primarily driven by the industry’s rate of decline, retail share declines and one fewer shipping day, partially offset by trade inventory movements,’ it said. ‘When adjusted for trade inventory movements and calendar differences, PM USA’s domestic cigarettes shipment volume decreased by an estimated 4.0 percent.
PM USA’s domestic-market retail share during the three months to the end of September, at 50.5 percent, was down by 0.6 of a percentage point on that of the third quarter of 2016.
Marlboro’s market share was down by 0.5 of a percentage point to 43.2 percent, while the share of the company’s other premium brands was down by 0.1 of a percentage point to 2.7 percent, and the share of its discount brands was unchanged at 4.6 percent.
Middleton’s cigar shipment volume during the first three months, at 385 million, was increased by 6.6 percent on that of the three months to the end of September 2016, 361 million, as Black & Mild volume rose by 6.7 percent to 381 million and other-cigar volume was unchanged at four million.
USSTC’s domestic smokeless products shipment volume during the third quarter, at 212.6 million cans and packs, was down by 1.8 percent on that of the three months to the end of September 2016, 216.4 million.
Shipments of Copenhagen and Skoal, taken together, were down by 2.0 percent to 195.7 million packs and cans, while shipments of other brands were increased by 1.2 percent to 16.9 million packs and cans.
USSTC reported that its domestic shipment volume had declined by 1.8 percent and 1.7 percent in the third quarter and first nine months of 2017 respectively, driven primarily by declines in sales of Skoal. ‘After adjusting for trade inventory movements and other factors, USSTC estimates that its domestic smokeless products shipment volume declined approximately three percent in the third quarter and 1.5 percent for the first nine months,’ Altria said. ‘USSTC estimates that the smokeless products category volume grew approximately 0.5 percent over the past six months.’
USSTC’s retail share of the domestic smokeless products market during the three months to the end of September, at 53.8 percent, was down by 1.1 percentage points.
The share of Copenhagen and Skoal, taken together, fell by 1.2 percentage points to 50.4 percent, while the share of the company’s other brands increased by 0.1 of a percentage point to 3.4 percent.
Altria’s 2017 third-quarter reported diluted earnings per share (EPS) were increased by 73.2 percent to $0.97 on those of the third quarter of 2016, with comparisons affected by special items. Third quarter adjusted diluted EPS, which excludes the impact of special items, increased by 9.8 percent to $0.90.
“Altria delivered outstanding performance in the third quarter and for the first nine months of 2017 as our core tobacco operating companies generated strong income growth,” said Marty Barrington, Altria’s chairman, CEO and president. “Our financial performance continues to strengthen in the second half, as we expected.”
“And we continued to focus on rewarding shareholders through the first nine months, paying out more than $3.5 billion in dividends and repurchasing nearly $2.4 billion in shares. In August, Altria’s board of directors voted to increase our quarterly dividend per share by 8.2 percent.”
“The business is performing well in a competitive environment, and we continue to expect full-year adjusted diluted EPS growth of 7.5 percent to 9.5 percent.”
October 27, 2017
Universal to webcast results
Universal Corporation is due to webcast a conference call on November 7 following the release of its results for the second quarter of fiscal year 2018 after market close on that date.
The conference call will begin at 17.00 Eastern Time and will be hosted by Candace C. Formacek, vice president and treasurer.
The webcast will be available online on a listen-only basis at www.universalcorp.com, and a replay will be available at that site through February 5.
A taped replay of the call will be available from 20.30 on November 7 through November 20 at (855) 859-2056, using the telephone replay identification number 5697004.
October 26, 2017
Tobacco tax over-inflated
Echoing back a phrase made famous by the Prime Minister, Theresa May, campaigners in the UK are urging the Chancellor to help consumers who are “just about managing” by rejecting a second increase in tobacco duty this year.
According to the smokers’ group Forest, tobacco duty costs those with low incomes a far larger proportion of their income than it does those on higher incomes, and further hikes, it says, would only exacerbate this unfairness.
‘Measuring expenditure on tobacco duty as a percentage of disposable income, in 2015/16 tobacco duty cost the average household in the lowest-income bracket almost eight times what it cost the average highest-earning household,’ Forest said in a press note issued today.
‘Although the average household among middle-earners spent 38 per cent more on tobacco duty than the poorest households; as a percentage of disposable income the poorer households were still worse off.’
Tobacco duty, says Forest, costs the poorest households 2.3 percent of their disposable incomes compared to 0.3 percent in the wealthiest households.
“Tobacco duty is a regressive tax because it hurts low income households more than the average household and far more than the wealthiest households,” said Simon Clark, director of Forest.
“In order to help those who, in Theresa May’s words, are ‘just about managing’, we urge the Chancellor to resist the temptation to increase tobacco duty for a second time this year.”
Meanwhile, Forest claims that the use of a ‘flawed’ measure of inflation has cost smokers an additional £1.35 billion in tobacco duty since 2010.
According to the group, the practise of increasing tobacco duty using the retail price index (RPI) rather than the consumer price index (CPI), which experts believe is a more accurate measurement of inflation, has resulted in smokers being unfairly overtaxed.
The duty escalator, which was reintroduced in 2010, increased the price of tobacco every year by inflation plus two per cent. Inflation, says Forest, was calculated using the RPI not the CPI. This, says the group, has resulted in smokers paying even more duty than they should reasonably have been expected to pay.
Forest estimates that smokers were overtaxed by almost £46 million in 2010/11, rising to £252 million in 2016/17. The forecast for 2017/18 is almost £310 million which means smokers will have been overtaxed by more than £1.35 billion since 2010.
“Smokers have been punished enough for their habit,” said Clark. “Tobacco duty is already scandalously high without the Chancellor using a flawed measure of inflation to extract even more money from the pockets of law-abiding consumers.”
October 23, 2017
PMI’s 3Q volume down
Philip Morris International’s cigarette shipment volume during the third quarter (July-September), at 198,465 million was down by 4.1 percent on that of the third quarter of 2016, 207,051 million.
Shipments were down in each of its four regions: by 2.6 percent to 60,062 million in Asia, by 3.5 percent to 20,452 million in Latin America & Canada, by 4.6 percent to 68,837 in Eastern Europe, Middle East and Africa (EEMA), and by 5.6 percent to 49,114 million in the European Union.
Overall shipments of Marlboro during the third quarter fell by 6.1 percent to 68,886 million. Shipments of Marlboro were said to have fallen in the EU, mainly due to its performance in Germany, Italy and Spain; in the EEMA, mainly due to the new excise tax implemented in Saudi Arabia in June 2017 that resulted in the doubling of the retail price of Marlboro from SAR12 to SAR24 per pack; in Asia, mainly due to ‘out-switching’ to HeatSticks in Japan, partly offset by the brand’s performance in Indonesia and the Philippines; and in Latin America & Canada, mainly due to its performance in Mexico.
Meanwhile, shipments of Philip Morris were increased by 47.1 percent to 12,838 million and shipments of Chesterfield were up by 21.7 percent to 15,116 million; but shipments of other PMI brands fell.
L&M shipments were down by 6.1 percent to 23,809 million; Parliament shipments were down by 6.9 percent to 11,354 million; Bond Street shipments were down by 15.3 percent to 9,912 million; Lark shipments were down by 9.6 percent to 6,321 million; and shipments of other cigarettes were down by 10.8 percent to 50,229 million.
Total shipments of HeatSticks reached 9,725 million units during the three months to the end of September, up from 2,089 million during the three months to the end of September 2016.
In its Asia region, shipments of HeatSticks rose from 2,006 million to 8,826 million, while they increased from 56 million to 464 million in the EU, and from 27 million to 427 million in EEMA. Shipments of HeatSticks in Latin America and Canada, where they had not registered in the third quarter of 2016, were eight million in the third quarter of this year.
PMI’s reported and adjusted diluted earnings per share (EPS) during the third quarter of 2017, at $1.27, were increased by $0.02 on those of the third quarter of 2016.
Reported net revenues, at $20.6 billion, were up by 3.5 percent, while net revenues, excluding excise taxes, at $7.5 billion, were up by 7.0 percent.
Reported operating income, at $3.1 billion, was up by 3.1 percent, while operating companies’ income, at $3.1 billion, was up by 2.2 percent, and adjusted operating companies’ income, at $3.1 billion, was up by 2.2 percent.
“As expected, our third-quarter financial results were very strong, including double-digit currency-neutral EPS growth,” said CEO André Calantzopoulos.
“We recorded a sequential improvement in our total volume performance, driven by both our combustible and reduced-risk products, and grew our international market share.
“Despite pressure on profitability from adverse developments in Russia and Saudi Arabia, as well as significant investments behind IQOS, which continues its stellar performance, we are on track to deliver full-year currency-neutral adjusted diluted EPS growth of approximately nine percent to 10 percent, highlighting both the strength of our combustible business and the exciting potential of a smoke-free future.”
October 20, 2017