Volume Declines at JT And JTI

Source from:  Tobacco Reporter 07/30/2010

Japan Tobacco Inc's (JT) volume cigarette sales during the three months to the end of June, at 35.9 billion, were 7.9 per cent lower than those of the three months to the end of June last year. Its market share, at 64.5 per cent, was down from 64.9 per cent, though the market share of its key brands - Mild Seven, Pianissimo and Seven Stars - was said to have held steady at 45.1 per cent. The company blamed the volume decline on the continuing reduction in overall consumption and the announcement of forthcoming price increases largely made up of an unprecedented excise hike due in October. Meanwhile, Japan Tobacco International's volume cigarette sales during the three months to the end of March, at 94.1 billion, were down by 6.8 per cent on those of the three months to the end of March last year, while sales of its Global Flagship Brands (GFB) were down by 4.4 per cent to 54.6 billion. However, JT said that because of JTI's well-balanced brand portfolio its market shares were continuing to grow in most key markets, including Russia, Italy, France and Turkey. JT blamed its international business' volume declines on the contraction of industry volumes in many markets and mentioned specifically the continuing unstable operating environment in Iran. In presenting its consolidated financial results for the three months to the end of June, JT reported net sales including tax up 0.3 per cent to ￥1,467.0 billion, and adjusted net sales excluding tax down 0.1 per cent to ￥474.1 billion, as growth in the international tobacco business offset lower net domestic sales. EBITDA was down by 6.9 per cent to ￥132.6 billion, operating income was down by 6.1 per cent to ￥79.1 billion and net income was down by 46.7 per cent to ￥22.8 billion. The domestic tobacco business' net sales including tax during the three months to the end of June were down by 7.0 per cent to ￥725.3 billion and adjusted net sales excluding tax were down by 7.7 per cent to ￥146.1 billion. EBITDA was down by 12.9 per cent to ￥58.3 billion, and operating income was down by 10.2 per cent to ￥47.2 billion. The international business' net sales including tax during the three months to the end of March were up by 10.6 per cent to ￥628.8 billion and core net sales excluding tax were up by 6.8 per cent to ￥215.1 billion. EBITDA was down by 1.5 per cent to ￥72.8 billion and operating income was down by 0.9 per cent to ￥39.1 billion. "Our international tobacco business once again demonstrated its underlying resilience, delivering increased net sales and share growth in most key markets despite the difficult operating environment," said Hiroshi Kimura, JT's president and CEO. "Our key brands' share in our Japanese domestic tobacco business continued to perform steadily notwithstanding market volume was down and the forthcoming unprecedented tobacco excise increase. "Across our businesses, we will continue to enhance our brand equity through focus on quality, innovations and improvements." JTI reported also its business results for the six months to the end of June (April-June figures preliminary), when its volume cigarette sales, at 204.7 billion, were down by 5.2 per cent on those of the six months to the end of June 2009. During the same periods, sales of GFBs fell by 2.5 per cent to 118.3 billion. The company blamed the volume decline on industry contraction in a number of markets, most notably those in Russia, Ukraine, Romania, Italy and Taiwan, and on the unstable operating environment in Iran. However, the company noted that declines in total sales and GFB sales were more moderate in the April-June quarter than in the January-March quarter. Core net sales excluding tax during the six months to the end of June, at US$4,970 million, were up by 9.2 per cent on those of the six months to the end of June 2009. This increase was said to have been driven by pricing and favorable currency exchange movements. At constant rates of exchange, core net sales excluding tax increased by 3.8 per cent to US$4,727 million, with an accelerated growth rate in the second quarter. Enditem