Japanese Domestic Tobacco Business: Volume declined significantly following the tax and price increase although slightly better than earlier forecasts. Net sales remained flat.
International Tobacco Business: EBITDA grew strongly and both market share and GFB volume increased.
Adjusted net sales excluding tax declined slightly to ¥1,956.6 billion. EBITDA and Operating income increased by 2.7% and 10.9% respectively. Net income grew 4.7%.
Japanese Domestic Tobacco Business: Total sales volume decreased by 11.3% mainly due to volume decline following the 1st October tax and retail price increase. The decline was slightly better than earlier forecasts. Adjusted net sales excluding tax remained flat and EBITDA increased 2.6% due to pricing. New products were launched and packaging was redesigned for a number of existing products.
International Tobacco Business: EBITDA in US dollars grew 7.7% at constant rates of exchange, exceeding our growth forecast of 6.2%, while on a reported basis, EBITDA increased by 10.7%. Market share continued to grow in most key markets. GFB shipment volume continued to grow increasing by 2.7% year on year.
Dividends: The company’s board is recommending the year-end dividend of ¥4,000 per share, at an annualized sum of ¥6,800.
Forecast: Following the earthquake the Japanese domestic tobacco business’ operating environment remains unclear, making it difficult to reliably assess the impact of the earthquake on the business at this time. Accordingly adjusted net sales excluding tax is forecast in the range of ¥552.0 billion and ¥598.0 billion. EBITDA is forecast in the range of ¥227.0 billion to ¥261.0 billion. In the international tobacco business, EBITDA growth of 10.0% is forecast in US dollars at constant rates of exchange.
Hiroshi Kimura, President and Chief Executive Officer of JT, commented:
“Within our domestic tobacco business, following the earthquake, we have developed a supply resumption schedule which is aimed at significantly expanding the number of products available for shipment by no later than August, 2011. In addition to focusing on achieving a rapid recovery, our commitment to offer quality brands and services of high value that meet our consumer expectations remains unchanged.
Our international tobacco business continues to deliver a solid performance and act as a profit growth engine. The second half of 2010 showed signs of recovery with GFB growth and market share increase in most key markets. We will continue to focus on innovation and top line growth, targeting an annual 10% increase in EBITDA at constant rates of exchange.”