TOKYO, July 30, 2009 --- Japan Tobacco Inc. (JT) (TSE: 2914) announced today its consolidated financial results for the first quarter that ended June 30, 2009. While the first quarter net sales and EBITDA were negatively affected by factors including currency fluctuations, the last year’s trade inventory adjustments at the introduction of the “taspo” age verification vending machines in Japan, a planned business model change in the Philippines and shipment issues in the Near East, JT sees it has embarked on a solid start to achieving financial outlook for the fiscal year ending March 31, 2010, given its robust share performance in the domestic tobacco market and continued growth momentum in its key international tobacco markets, which include Russia, the United Kingdom and lead European markets. Net income increased due to improvements in non-operating and extraordinary incomes/expenses, including foreign exchange gain/loss, losses related to impairment and disposal of assets, and an absence of expenses related to the introduction of “taspo.”
“We are off to a good start to achieving our outlook for this fiscal year” said Hiroshi Kimura, President and CEO of JT. “Negative currency exchange and the factors specific to the markets concerned affected our first quarter performance. Nevertheless, our fundamental momentum remains solid in both the domestic and international tobacco businesses. We remain alert to currency and economic volatilities, while the effects have been within the range of our estimates.”
Sales volume for the domestic tobacco business decreased 7.2 percent to 39.0 billion cigarettes compared to the same period last year, largely due to the last year’s trade inventory adjustments related to the introduction of the “taspo” age verification vending machines, which took place between March and July 2008. Excluding this effect, our sales volume decline of 4.2 percent was in line with our plan assumptions.
The international tobacco business’ net sales excluding tax declined 21.0 percent compared to the same period last year to ¥201.3 billion, primarily due to the negative currency impacts. Net sales excluding tax grew 7.9 percent at constant rates of exchange. While total sales volume decreased 1.4 percent to 100.9 billion cigarettes, sales volume for Global Flagship Brands increased 2.6 percent to 57.1 billion cigarettes. Sales volume growth was largely attributed to the continued momentum in Russia, the United Kingdom and lead European markets, which was offset by a planned change in the business model in the Philippines and shipment issues in the Near East.
Given the fundamentals in JT’s domestic and international tobacco businesses remain solid, and the pharmaceutical and the foods businesses have been performing in line with the outlook, the company maintains its outlook for the fiscal year ending March 31, 2010.