JT's Sales Down Only Slightly in First Quarter

Source from:  tr.itsmyiq.com Aug 1, 2008 08/04/2008

Japan Tobacco Inc's volume cigarette sales during the first quarter to June 30, at 42.0 billion, were 1.5 per cent lower than those of the first quarter of last year. The decrease was lower than might have been expected because, while overall cigarette consumption continues to decline due to demographic factors, in the quarter under review increased inventory in over-the-counter sales channels prior to the launch of age verification cards for vending machines helped to stem the losses. During the quarter, JT maintained its market share of 64.9 per cent through vigorous marketing, especially in respect of Mild Seven. However, net sales for the company's domestic tobacco business were down by 1.6 per cent to ¥842.6 billion and operating income fell 10.6 per cent to ¥55.8 billion. Overall results, including those of other business sectors, presented a different picture, however, with net sales up 41.0 per cent to ¥1,719.8 billion and operating income up 18.3 per cent to ¥110.4 billion. But net income was down 73.2 per cent to ¥16.9 billion partly because of foreign exchange appraisal losses at the end of the period related to euro-denominated bonds, losses on disposition and impairment related to the company's unused dormitories, and the decline in gains from the sale of fixed assets. President and CEO, Hiroshi Kimura, said he was pleased that Mild Seven had enjoyed a "solid performance" in Japan and contributed to maintaining JT's domestic market share. At the same time, as a responsible market leader, he said, the company was fully committed to expanding the 'taspo' card system aimed at preventing access to cigarette vending machines by underage people. Finally, he said that the company's international business, JT International, strengthened by the integration of Gallaher, was achieving quality top-line growth and enhancing its position as a driving force for the Group's profitable growth. JT International reported that its volume sales for the six months to the end of June, at 221.1 billion cigarettes, were increased by 38.3 per cent on those of the first six months of last year. Gallaher results have been included since April 18, 2007, and JTI's volume sales in the three months to the end of June, at 117.2 billion, were up by 15.3 per cent. Volume sales of the company's global flagship brands (GFBs) during the six month period were up by 34.9 per cent to 119.2 billion, driven by strong performances by Winston in Russia, Ukraine, Turkey, Spain, the Near East and the Philippines; Camel in Italy, Russia and Spain; and Mild Seven in Korea, Taiwan and Russia. GFB performance also reflected the additional contribution of B&H and Silk Cut in the UK and Ireland; and LD, Sobranie and Glamour in Russia, Ukraine and Kazakhstan. Net sales, including tax, at US$13.317 billion, were up by 72.8 per cent, while net sales excluding tax, at US$5.186 billion, were up by 54.6 per cent. Net sales per thousand cigarettes, excluding tax, rose by 11.4 per cent to US$23.5. Enditem