JT Reports Record Sales in 2009

Source from:  Tobacco Reporter 05/04/2009

Japan Tobacco Inc. posted record net sales and EBITDA for the fiscal year that ended March 31, 2009. Top-line growth achieved by the international tobacco business and consolidation of Gallaher contributed to strong results for the period. At the same time, declining domestic demand, among other factors, prompted the company to close three cigarette factories in Japan. "Growth in our global flagship brands in the international tobacco business, in addition to two consecutive years of increased domestic market share, has contributed to a strong year of achievement," said Hiroshi Kimura, President and CEO of JT. "We aim to carry our growth momentum into another year of progress, both with the continued success of our international tobacco business, and further gains in market share domestically." Net sales and EBITDA increased to ￥6,832.3 billion and ￥646.2 billion, respectively, as a result of top-line growth by the international tobacco business and the consolidation of Gallaher and the Katokichi Group. Operating income and net income decreased to ￥363.8 billion and ￥123.4 billion, respectively, largely due to goodwill amortization related to acquisition of Gallaher and the Katokichi Group. Due to the continuing market decline and the introduction of the "taspo" age verification system for cigarette vending machines, sales volume for the domestic tobacco business decreased 4.7 percent to 159.9 billion cigarettes, and net sales declined to ￥3,200.4 billion, compared to the previous year. EBITDA decreased to ￥272.2 billion, due in part to increased sales promotions with a focus on over-the counter sales channels, which recorded a rise in sales following the introduction of "taspo." JT posted increases in market share for two consecutive years to 65.1 percent. This was achieved through focused investment in building the equity of the company's key brands, including Mild Seven, and in programs supporting sales in over-the-counter channels. Market share for Mild Seven grew robustly to 32.3 percent. The international tobacco business achieved solid growth in the full year that ended December 31, 20087, as a result of GFB-driven top-line growth and the consolidation of the Gallaher acquisition. Net sales excluding tax and revenue from the distribution business grew 16.5 percent to ￥1,102.3 billion. EBITDA increased by 24.8 percent to ￥337.9 billion. Due to goodwill amortization related to the acquisition of Gallaher, operating income decreased by 14.9 percent to ￥174.7 billion. Operating income showed an increase of 31 percent, to ￥269.0 billion, when the impact of amortization is excluded. Sales volume grew 17.3 percent to 452.3 billion cigarettes and GFB sales increased 20.8 percent to 245.5 billion cigarettes. Enditem