Adjusted net sales excluding tax and Net income increased to ¥1,035.2 billion and ¥81.9 billion respectively, primarily as a result of heightened demand prior to the 1 October Japanese tobacco excise increase, and strong pricing and favourable foreign exchange rates in the international tobacco business.
EBITDA and Operating income increased 9.7% and 21.5% respectively, driven by the factors highlighted above in relation to adjusted net sales excluding tax and net profit. Growth in operating income also resulted from lower depreciation and amortization costs in the Japanese domestic tobacco business.
Japanese Domestic Tobacco Business: Adjusted net sales excluding tax and sales volume grew by 10.2% and by 10.1% respectively primarily as a result of heightened demand ahead of the 1 October tobacco excise increase. Market share for all brands and for the key brands were 64.9% (FY2009: 64.9%) and 45.7% (FY2009: 45.1%) respectively.
International Tobacco Business: Core net sales excluding tax and EBITDA increased by 9.2% and by 11.9% respectively in US dollars, driven by strong pricing and favourable foreign exchange rates. Market share10 continued to grow in most key markets, despite total shipment volume being 5.2% lower, as a result of industry volume contraction in a number of markets.
Forecast: Whilst EBITDA forecast for the Japanese domestic tobacco business and the international tobacco business at constant rates of exchange remain unchanged, the forecasts have been revised downward in order to reflect changes in foreign exchange rate assumptions. Adjusted net sales excluding tax forecast has also been downwardly revised due to lower sales volume in the Japanese domestic tobacco business and the currency exchange movements affecting the international tobacco business.
Hiroshi Kimura, President and Chief Executive Officer of JT, commented:
“In a difficult operating environment, our international tobacco business once again achieved increases in both net sales and market share in most key markets. In our domestic tobacco business, we forecast heightened sales volume ahead of the introduction of the 1 October unprecedented excise increase, accommodated the increase in demand smoothly and we will keep monitoring market developments closely. We will continue to meet consumer expectations across our businesses by focussing on product innovations and improvements to further strengthen brand equity.”