JT's Volumes Down Sharply

Source from:  tr.itsmyiq.com Aug 9, 2007 08/10/2007

A surge in demand during the first quarter of last year is said to have been the main reason why Japan Tobacco Inc's volume cigarette sales fell by 21 per cent to 42.7 billion during the first three months of fiscal 2008, which ended on June 30. Net sales at JT's domestic tobacco business fell by 13.0 per cent to ¥856.7 billion and operating income decreased by 23.5 per cent to ¥62.4 billion, mainly because of buying ahead of a tobacco excise tax hike in July last year. Overall, JT, which has major interests in the pharmaceutical and foods businesses, recorded net sales down 5.4 per cent to ¥1,219.7 billion, operating income down 8.6 per cent to ¥93.3 billion, and net income down 15.2 per cent to 64.6 billion. JT's international tobacco business (JT International – JTI) remained the driving force of profit growth for the JT group, with organic growth of 25.3 per cent in net sales and an increase of 59.0 per cent in operating income compared to the results achieved during the same period of the previous year. (JTI's January-March results were incorporated into JT's consolidated financial results for the quarter that ended on June 30.) JTI today reported its results for the six-months to June 30. During that period, JTI's volume sales, at 159.3 billion cigarettes, were up by 40.2 per cent on those of the same period of last year. These figures include those for Gallaher, which was acquired on April 18, but organic volume growth momentum was maintained as well with pre-acquisition business reportedly rising by 10.9 per cent. Following the acquisition of Gallaher, JTI's Global Flagship Brands (GFB) comprise eight brands: Winston, Camel, Mild Seven, Benson & Hedges, Silk Cut, LD, Sobranie, and Glamour, which between them accounted for sales of 88.3 billion cigarettes. Winston, Camel and Mild Seven registered a combined growth of 13.9 per cent, driven by Winston in Russia, Spain, Turkey and Ukraine; Camel in Spain, France, Ukraine, Russia and Italy; and Mild Seven in Korea and Russia. Overall, the GFB performance reflected, too, the additional contribution of Benson & Hedges and Silk Cut in the UK and Ireland; LD in Russia and Kazakhstan; Sobranie in Kazakhstan; and Glamour in Russia, Ukraine and Kazakhstan. JTI's net sales, including tax, increased by 90.4 per cent to US$7.705 billion, and net sales, excluding tax, amounted to US$3.362 billion, an increase of 51.8 per cent. Net sales per thousand cigarettes, excluding tax, rose by 8.3 per cent to US$21.1. Meanwhile, JT has revised its net sales and earnings forecasts for the fiscal year ending March 31, 2008, to reflect the incorporation of Gallaher into its international tobacco business. Forecasted net sales for the year were revised upward from ¥4.89 trillion to ¥6.41 trillion. Forecasted operating income and net income were revised from ¥312.0 billion to ¥419.0 billion and from ¥186.0 billion to ¥256.0 billion respectively. Commenting on JT's results, Hiroshi Kimura, president and CEO, said: "Over the last 100 days, we have successfully formulated an integration plan for the Gallaher business which will create synergies for future business growth and position us for even greater expansion as a leading company in the global tobacco industry. We continue to invest heavily in building brand equity, with a focus on Mild Seven, and as a result have seen signs of growth momentum in JT's domestic market share. "I'm very proud to say that each of our businesses has been performing strongly toward the objectives of our medium term management plan 'JT2008'." Enditem