JT and JTI's Volumes Down

Source from:  Tobacco Reporter 04/29/2010

Japan Tobacco Inc's domestic cigarette sales during the year to the end of March, at 151.8 billion, were down by five per cent on those of the year to the end of March 2009. The volume decline, which had been expected, was nevertheless said to have accelerated during the second half of the year. JT said that its market share was "basically flat year on year" at 64.9 per cent. The company's net domestic tobacco business sales fell by 5.1 per cent to ￥615.9 billion and EBITDA declined by 5.4 per cent to ￥257.6 billion. Operating income increased by 8.0 per cent to ￥203.3 billion, due primarily to the completion in April 2009 of the amortization of costs related to former R. J. Reynolds International trademark rights. Meanwhile, Japan Tobacco International's volume sales during the 12 months to the end of December 2009, at 434.9 billion, were 2.5 per cent down on those of the previous 12-month period. Good volume growth in Turkey, the UK, Russia and Italy did not compensate for declines in Iran, Ukraine and the Philippines. The company reported that its market share had increased year on year in the key markets of Italy, Spain, France, the UK, Russia and Turkey. "In Italy, market share increased from 17.1 per cent to 18.5 per cent and, in the United Kingdom, market share rose from 39.1 per cent to 40.4 per cent," it said. "In Russia, despite accelerated market contraction and down-trading, sales volume grew 1.4 per cent, resulting from LD and Glamour's strong performances. Market share in Russia continued to increase, from 35.7 per cent to 36.8 per cent." Even sales of JTI's Global Flagship Brands decreased, though by only 0.9 per cent to 243.4 billion. "Sales volume for LD grew by 18.2 per cent, reflecting its mid/value positioning, with solid performances in Russia, Poland, Ukraine and Turkey," JTI reported. Glamour's sales increased by 7.9 per cent with strong growth in Russia, but sales of Winston fell by 4.1 per cent. Strong volume growth for Winston in Italy, France and Turkey was offset by declines in Iran, due to the continuing unstable operating environment there, in the Philippines, where the business model changed, in Ukraine, with excise-led market contraction, and in Russia, with down-trading coupled with market contraction. Sales of Camel and Mild Seven decreased by 1.8 per cent and 3.0 per cent respectively. At JTI, favorable pricing combined with volume gains in Europe drove adjusted net sales excluding tax to increase by 7.2 per cent and EBITDA to increase by 14.9 per cent at constant rates of exchange. On a reported basis, adjusted net sales, excluding tax and EBITDA, declined by 16.1 per cent and 26.1 per cent respectively due to adverse currency movements. "Despite the difficult operating environment, our international tobacco business delivered a resilient performance and increased market share in most key markets," said Hiroshi Kimura, president and CEO of JT. "In the year ahead, the market environment within which both of our tobacco businesses operate will remain challenging. "In both our home market and across our international business we will continue to invest in our brand equity. "In addition, in our home market, we will take all necessary measures to mitigate the impact of the planned excise increase and anticipated resulting volume decline. "In our international business, we will continue to focus on initiatives to sustain top-line growth." Enditem