2017 third-quarter results (July-September)
- Adjusted operating profit at constant FX grew 9.4%, driven by cost optimization. On a reported basis, adjusted operating profit increased 12.4% supported by positive currency impacts.
- Core revenue decreased 3.7% at constant FX due to negative volume and price/mix variance.Favorable currency movements resulted in reported core revenue decreasing 2.4%.
- Total shipment volume grew 0.3% driven by the acquisition in the Philippines. Excluding this acquisition, total shipment volume declined 1.2% mainly due to industry volume contraction.
- GFB shipment volume increased 0.5% driven by strong performance of Winston and Camel.
- Investment continued in emerging products. Logic, our e-cigarette brand, was launched in Russia. Our tobacco vapor product3 Ploom TECH was introduced in Switzerland in July and was expanded to four US states in September under the brand name Vapeleaf by Logic4.
2017 nine months year-to-date results (January-September)
- Adjusted operating profit increased 9.2% at constant FX led by cost optimization while investment was maintained in emerging markets and emerging products. On a reported basis, adjusted operating profit grew 4.6%.
- Core revenue decreased 1.5% at constant FX and 2.1% on a reported basis, due to total shipment volume declining 2.0% reflecting industry volume contraction in several key markets.
- GFB shipment volume grew 0.2% driven by share gains in several keys and emerging markets.
- Year-on-year market share5 increased in the key markets of France, Italy, Spain, and Taiwan.In Russia, GFB market share achieved a new record level driven by Winston, reinforcing our number one position in the market.
- At the end of September, we operated our vapor business in 11 countries, outside of Japan.
Mitsuomi Koizumi, President and Chief Executive Officer of JT, commented:
“We continue to generate strong earnings growth in the international tobacco business, led by our cost optimization initiatives. This, along with higher royalty revenues in the pharmaceutical business, drove the Group’s adjusted operating profit growth at constant FX.
“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.”
3 Tobacco vapor products contain tobacco which is heated rather than combusted during use to produce an inhalable vapor.
4 In the USA, Ploom TECH is sold by Logic Technology Development LLC, a member of Japan Tobacco Group, under the name “Logic Vapeleaf”.
5 Source: IRI, Logista, Nielsen, and JTI estimates on a 12-month rolling average, unless otherwise specified, for cigarettes and fine cut at the end of September 2017. Kazakhstan are on a 12-month rolling average at the end of August 2017. a 12-month share of market growth for August 2017 markets is calculated against a 12-month share of market at the end of September 2016.
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