JT's Sales Down But Recovering Well

Source from:  Tobacco Reporter 04/27/2012

Japan Tobacco Inc's domestic cigarette sales volume during the 12 months to the end of March, at 108.4 billion, was 19.5 per cent down on that of the previous 12 month period. The reduction, which was in line with expectations, was caused partly by an unprecedented tax and price hike at the beginning of October 2010 (in October 2010, JT's volumes, at 3.6 billion, were down by 72.0 per cent on those of October 2009) and by the massive disruption caused to the company's manufacturing and distribution operations following the earthquake and tsunami of March 11 2011. It was only in July last year that JT was able to start shipping all of its then 73 products, and only in August that it was able completely to remove purchase order ceilings. JT's domestic cigarette market share stood at 60 per cent during March, down from 64.1 per cent for the year to the end of March 2011. The tobacco business' core revenue during the 12 months to the end of March, at ￥611.9 billion, was down by 3.2 per cent on that of the 12 months to the end of March 2011. Its adjusted EBITDA, which excludes a compensation payment being made to leaf tobacco growers who are voluntarily ceasing cultivation, was increased by 6.1 per cent to ￥262.3 billion, and its operating profit was up by 3.4 per cent to ￥209.3 billion. In announcing the company's consolidated results, which included those for Japan Tobacco International and the group's food and pharmaceutical businesses, president and chief executive officer, Hiroshi Kimura, said the JT-11 mid-term management plan targets set three years ago had been achieved, despite "the significantly challenging environment we have faced recently, including the economic crises, excise hikes and the earthquake. "In order to meet the goals that will take our business to the next stage, we are prioritising business investments for sustainable future growth. In addition, we are improving the attractiveness of our shareholder return. We have an underlying strategic emphasis on achieving quality top line growth, and strengthening cost competitiveness and the business foundations that support these efforts. At the same time, we continue to make progress in enhancing our corporate governance as a global company, which includes evolving our disclosures and the planned appointment of independent and external board members at the next AGM. "Looking ahead, we are confident that we can achieve sustainable growth of adjusted EBITDA, adjusted EPS and the dividend pay-out ratio over the medium to long-term, in the increasingly uncertain business environment. The board and management team aim to achieve this growth by further fulfilling our responsibilities to each of our stakeholders, at which our consumers are the centre, including shareholders, employees and society, in accordance with our management principles." During the year to the end of December 2011, JTI's shipment volume, at 425.7 billion was down by 0.6 per cent on that of the year to the end of 2010. But shipment volume for the company's global flagship brands (GFB), at 256.5 billion, was up by 2.6 per cent. JTI's core revenue was up by 0.8 per cent to ￥894.6 billion, adjusted EBITDA was up by 13.3 per cent to ￥314.8 billion, and operating profit was up by 11.7 per cent to ￥252.4 billion. Meanwhile, JTI announced separately its first quarter 2012 results. During the three months to the end of March, JTI's shipment volume, at 98.9 billion, was 4.7 per cent up on that of the first quarter of 2011. And GFB shipment volumes were up by 9.5 per cent to 61.1 billion. Enditem