Japan Tobacco - Tobacco Reporter

JT Reports ‘Record’ Performance

The JT Group reported a profit of ¥482.3 billion ($3.2 billion) for 2023, up nearly 9 percent over the previous fiscal year. Revenue increased 6.9 percent year-on-year, to ¥2.84 trillion. For the fourth quarter, the company posted a profit of ¥40.3 billion and revenue of ¥684.1 billion, up 3.5 percent and 5.4 percent, respectively, over the comparable 2022 periods.

“I am pleased to report that the 2023 JT Group performance reached record high levels across all financial indicators, despite the challenges across our operating environment. Adjusted operating profit at constant FX [foreign currency exchange rates], our main indicator, exceeded our guidance and grew by 5.2 percent, driven by all business segments,” said JT Group President and CEO Masamichi Terabatake in a statement.

In the tobacco business, JT Group’s profit growth engine, performance was driven by solid pricing and continued share gains in combustibles. “We steadily expanded the geographic reach of Ploom X, making it available to adult consumers in 13 markets at the end of 2023,” said Terabatake. In Japan, the JT Group’s share of the heated tobacco sticks market reached 11.4 percent in December 2023.

Terabatake said the JT Group would continue to prioritize investments in heated tobacco sticks to fund the expansion of Ploom X, both in terms of share of segment and geographic footprint. The company aims to make Ploom X available in over 40 markets by the end of 2026. Combustibles, said Terabatake, will continue to drive profit by growing market share and revenue.

February 13, 2024

Nicotine Market Shares Flat in December

Consumer demand for nicotine products has fluctuated due to inflation and rising cigarette prices over the past 13-19 months. However, the Neilsen report covering the four-week period ending Dec. 30 shows that market shares are holding steady for both next-generation and traditional tobacco brands.

The market share of R.J. Reynolds’ top-selling Vuse e-cigarette remained flat at 42 percent in December at convenience stores, according to the report. While Vuse’s market share was unchanged, No. 2 Juul dropped from 24.3 percent to 24.2 percent for the report covering the four-week period ending Dec. 30.

As recently as May 2019, Juul held a 74.6 percent share in the U.S. electronic cigarette market. That’s when a series of regulatory actions led to product-reduction concessions, according to media reports.

Meanwhile, Altria Group’s ownership of No. 3 NJoy hasn’t resulted in a meaningful market-share increase so far. Nielsen cited a research error by why it did not include an update for NJoy in the latest report. It was at 2.6 percent in the previous report.

Fontem Ventures’ blu eCigs, an affiliate of Imperial Brands Plc, was unchanged at 1.2 percent.

The overall e-cigarette category was down 9.9 percent.

In traditional cigarettes, Philip Morris’ top market share was at 50.6 percent in the latest Nielsen report with top-selling Marlboro representing 45.6 percent of overall market share.

Meanwhile, Reynolds was at 33.2 percent with Newport at 12.9 percent and followed by Camel (7.8 percent), Natural American Tobacco (3.7 percent) and Pall Mall (3.7 percent).

ITG was at 8.5 percent overall, although ITG has said its market share is closer to 10 percent. Its No. 7 Winston brand remained at 2 percent, while Kool and Maverick remained tied for No. 8 at 1.8 percent.

Goldman Sachs analyst Bonnie Herzog said that “in terms of specific company trends, total nicotine sales declines improved across the board for Altria, BAT, Imperial and Juul, while decelerating for all other manufacturers broadly in the latest period.”

The decline in cigarette sales continues at a strong pace, said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette and health studies.

“Yet, as Altria results showed and Barclays recently highlighted, much of this is due to cross-category migration,” Sweanor said.

“People are switching to far lower-risk options. But disposable vaping products appear to currently be the greatest factor in this migration.”

TD Cowen analyst Vivian Azer said consumers’ cigarette “downtrading to discount and deep discount continues to benefit Imperial’s share trends.”

January 11, 2024

Firms Recognized for Sustainability

Philip Morris International and Japan Tobacco and British American Tobacco have been recognized for their sustainability efforts.

Philip Morris International has been included in the Dow Jones Sustainability World Index for the first time and for the fourth consecutive year in the Dow Jones Sustainability North America Composite Index.

The Dow Jones Sustainability World Index measures the sustainability performance of companies as identified by S&P Global through the annual Corporate Sustainability Assessment. The World Index includes the top 10 percent of the largest 2,500 companies in the S&P Global Broad Market Index based on long-term economic, environmental and social criteria.

“Investors and other financial stakeholders place increasing value on reliable, robust and timely measures of sustainability performance,” said Emmanuel Babeau, chief financial officer at PMI, in a statement.

“ESG ratings are one part of the input dataset for many institutional investors. Through our annual integrated report, and the ever-strengthening processes and initiatives that underpin it, we aim to provide a holistic and extensive view of our performance across the most material sustainability issues for our business.”

PMI scored 85 out of 100 in the 2023 S&P Global CSA, reflecting a significant increase of 21 points since it first began engaging with the ranking in 2018. This is the first year PMI has recorded the highest CSA score out of 13 companies assessed in the tobacco industry by S&P.

Earlier this month, ISS ESG Corporate Rating qualified PMI as “Prime” status according to their rating methodology. Prime status is awarded to companies with an ESG performance above a sector-specific threshold, which means that they fulfill ambitious absolute performance requirements. According to ISS, the Prime rating classification qualifies companies for responsible investment. To date, PMI is the only tobacco company to have received Prime status qualification.

Japan Tobacco has been included in the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific) for the 10th consecutive year.

“We are honored that the JT Group has been selected in the DJSI Asia Pacific for the 10^th consecutive year,” said Hisato Imokawa, senior vice president and chief sustainability officer, in a statement.

“We are very pleased that our sincere and continuous efforts to address social and environmental issues throughout the entire value chain continue to be recognized at the highest level. We remain dedicated to fostering transparent and precise communication of nonfinancial information, a key focus in our recent agenda. We acknowledge the significance of this initiative in promoting engagement and dialogue with stakeholders, recognizing it as a crucial endeavor.”

The JT Group scored 79/100 in the 2023 S&P Global Corporate Sustainability Assessment (based on the score data as of Dec. 9, 2023).

that BAT was included in 2023 DJSI for the 22nd consecutive year, specifically listed in the Dow Jones Sustainability Europe Index, with a S&P Global CSA score of 80/100 (as of Dec. 8, 2023).

December 12, 2023

Japan Tobacco Appoints Executive Members

Japan Tobacco has appointed new executive members to the board of directors.

Koji Shimayoshi has been appointed as executive vice president (effective Jan. 1, 2024) and representative director (effective March 22, 2024). Shimayoshi is currently executive vice president of JT International. He joined JT in April 1993.

Shimayoshi will take the place of Kiyohide Hirowatari, who will become a member of the board, effective Jan. 1, 2024. Hirowatari will resign as member of the board upon conclusion of the 39th annual general meeting of shareholders scheduled for March 22, 2024.

Hiroko Yamashina and Kenji Asakura have been appointed members of the board, effective March 22, 2024. Yamashina is currently a member of the audit and supervisory board, and Asakura is currently representative director and chairman of Nagase and Co. Ltd. Main Kohda will resign as member of the board, effective March 22, 2024. Emiko Takeishi will also join the audit and supervisory board as a member.

Igo Dzaja will take on the role of senior vice president of marketing and tobacco business for Japan, effective Jan. 1, 2024. Kazuyuki Inui will take on the role of senior vice president of sales and tobacco business for Japan, effective Jan. 1, 2024. The following executive directors will resign effective Dec. 31, 2023: Eiichi Kiyokawa, Chigusa Ogawa and Shuici Hirosue.

November 17, 2023

JT Launches Ploom X Advanced in Japan

Japan Tobacco announced the launch Ploom X Advanced, a new model of heated tobacco device that has evolved in terms of taste and user comfort.

The company believes the new device will play a significant role in its mid- to long-term business strategy.

According to JT, the new device represents a significant improvement over the current model and incorporates advanced features, including:

An upgraded heating technology, dubbed “Power Heatflow,” which increases the maximum heating temperature from 295 degrees Celsius to 320 degrees Celsius to provide a richer flavor experience.
A new automatic heating function that automatically starts heating when a stick is inserted into the device.
Reduced charging time from approximately 110 minutes for the current model to approximately 90 minutes.

The device will be available at convenience stores and tobacco retailers nationwide in Japan starting on Nov. 21, 2023, at a suggested, tax-included retail price of ¥1,980 ($13.22).

Following the launch of Ploom X Advanced, JT will discontinue sales of the current Ploom X model in Japan.

October 30, 2023

JT Merges Dutch Subsidiaries

Japan Tobacco merged its JT International Holdings (JTIH) and JT International Group Holdings (JTIGH) on Aug. 23, the company announced on its website.

JTIGH, which was a pure holding company, will be dissolved, leaving JTIH as the surviving company.

A wholly owned subsidiary of JT International Group Holding, JTIH is based in the Netherlands. Its chairman and managing director is Biljana Ivosevic.

Japan Tobacco expects the impact of the merger between its consolidated subsidiaries to be minor.

August 23, 2023

JT Launches ‘With 2’

Japan Tobacco has launched With 2, its new infused tobacco vapor device, under the company’s respective new brand, With. It will be sold at convenience stores and tobacco stores in Japan beginning Sept. 5, 2023, and will be available for presale online from Aug. 7, 2023.

With 2 is the first device of the new infused tobacco brand With. It features JT’s unique infused technology, which generates vapor while an atomized liquid passes through a capsule containing granulated tobacco.

Since tobacco vapor is generated the moment it’s inhaled, there is no delay in delivery, JT explained in a press note. There is almost no tobacco smoke smell with the product since tobacco leaves are not directly heated. The device is equipped with a dual mode that allows consumers to switch between two heating modes at the touch of a button. The high mode produces 1.3 times more vapor than the normal mode, delivering a more intense flavor experience, according to JT.

July 31, 2023

JT Group Reports ‘Solid’ Quarter

The JT Group’s revenues increased 9.9 percent to ¥1.39 trillion ($9.17 billion) in the second quarter of 2023, up 9.9 percent over the comparable 2022 period. Core revenue at constant exchange rates increased by 6.8 percent to ¥1.3 trillion, while adjusted operating profit at constant exchange rates increased by 4.7 percent to ¥434.3 billion. On a reported basis, adjusted operating profit increased by 6.7 percent to ¥442.8 billion. Operating profit increased by 8 percent to ¥413.6 billion, and profit increased by 8.7 percent to ¥287 billion.

“The JT Group posted another strong set of results for the first half, said JT Group President and CEO Masamichi Terabatake in a statement. “In particular, the tobacco business reported solid growth across its indicators, driven by a more resilient industry volume and continued market share gains, as well as robust pricing.

“Considering the accelerated investment towards heated tobacco sticks (HTS) in the second half of 2023, we have kept the full year forecast for adjusted operating profit at constant FX unchanged. On a reported basis, recognizing the current positive foreign exchange trend, we have revised upward our forecast, including the adjusted operating profit. Dividend per share guidance for full year remains unchanged taking into account our dividend policy at 188 yen per share. The interim dividend is 94 yen per share.

As announced in February, we are accelerating investment towards HTS to establish the foundation of our future growth. Ploom X is now available in six markets, following the launch in the Czech Republic in June, and will be launched in Switzerland in September. Geographical expansion is on track with the expectation to complete launches in 14 markets by the end of 2023 and 28 markets by the end of 2024.

July 31, 2023

JT Launches New Infused Tobacco Device

Japan Tobacco is launching a new brand named “With” and a new device named “With 2” for infused tobacco capsules in Japan this summer, the company announced on its website.

The company will discontinue its Ploom TECH, Ploom TECH + and Ploom TECH + With infused tobacco capsule devices, which are only in Japan. They will be available until stocks are sold out.

Ploom X, which is a device for heated tobacco sticks, is unaffected by this announcement and will continue to be sold and rolled out in a number of markets including Japan.

JT says it remains committed to investing in reduced-risk products. The company competes in the heated-tobacco segment with its Ploom brand and participates in the e-cigarette market with its Logic brand.

July 5, 2023

JT Boosts Investment in Heating Products

Japan Tobacco will invest ¥300 billion ($2.25 billion) in its tobacco-heating products (THPs), with ¥200 billion designated for marketing the sticks internationally, reports Nikkei Asia

“Last year, we couldn’t make the investment because there were not enough [heated-tobacco] devices due to the semiconductor shortage,” Japan Tobacco President Masamichi Terabatake was quoted as saying. “For 2023, we are back on track for procurements, and we are able to secure more than twice Japan’s supply volume compared to last year.”

JT plans to roll out its Ploom X THP in more than 10 countries this year, reaching at least 20 new countries by the end of 2024. Currently available only in Japan and the U.K., the product is set to debut in Italy this month.

To gain name recognition, JT will invest in pop-up shops and digital sales. It will develop flavors that match the tastes of each market.

In the U.S., JT formed a joint venture with Altria Group. The partners will seek permission from the Food and Drug Administration to market Ploom by early 2025.

While JT’s THP segment is currently in the red due to the forward investments, the company anticipates turning a profit in 2028 on overseas growth.

JT will also invest in research and development, looking to develop the second generation and third generation of Ploom X devices.

Global sales volume for cigarettes shrank 1.5 percent last year, JT said. By contrast, the global market for THPs last year grew 17 percent to $33.4 billion, according to Euromonitor International.

April 17, 2023

Tag: Japan Tobacco