Tokyo, October 29, 2021

2021 Third Quarter Results

Year-to-Date Highlights (vs. 2020)

  • Revenue increased 10.9% to JPY 1,766.1 billion.
  • Adjusted operating profit at constant currency increased 21.9% to JPY 538.1 billion.
  • On a reported basis, adjusted operating profit increased 23.0% to JPY 542.9 billion.
  • Operating profit increased 23.2% to JPY 480.7 billion.
  • Profit attributable to owners of the parent company increased 31.3% to JPY 338.8 billion.

FY2021 Forecasts (vs. Previous Forecasts)

  • Revenue forecast is revised upward by JPY 80.0 billion.
  • Adjusted operating profit at constant currency is revised upward by JPY 62.0 billion.
  • Forecasts are revised upward for adjusted operating profit on a reported basis (JPY 71.0 billion) and operating profit (JPY 76.0 billion).
  • Forecasts are revised upward for profit attributable to owners of the parent company (JPY 58.0 billion) and free cash flow (JPY 72.0 billion).
  • The Company plans to offer an annual dividend per share of JPY 140.

Please refer to 'Data Sheets' (page 17) for more financial figures.

Masamichi Terabatake, President and Chief Executive Officer of the JT Group, said:

"The JT Group reported a robust year-to-date performance, driven by strong momentum across the tobacco businesses. Our volume performance continued to be strong, driven by market share increases and stable industry volumes from longer than expected travel restrictions.

"We revised our full year forecasts upward, reflecting the robust results delivered in the first nine months of 2021 and also favorable currency trends. Following the upward revisions of our forecast, we are pleased to inform our plan to raise our annual dividend guidance by 10 yen to 140 yen per share.

"In Japan, we have received very encouraging feedback from consumers on Ploom X. However, the global semi-conductor shortage is impacting production of heated tobacco devices, so for the remainder of the year, we will prioritize the device supply in the Japanese market where we have already launched Ploom X. We will continue to strive to secure share growth.

"In addition, with our one tobacco business new operating model from January 2022, we will further strengthen our business foundation as well as build a more agile and consumer-centric organization."

Investors' Meeting

An investors' meeting (phone conference) with members of the investor community will be held on October 29, 2021 at 5:00pm Tokyo Time. An on-demand audio recording of this conference will be available on our website (https://www.jt.com/investors/results/presentation_financial). For detailed information on the consolidated financial results, please visit the Company's website. (https://www.jt.com/investors/).

Note on Hyperinflationary Adjustments

The results and the forecasts for fiscal year 2021 on a reported basis have been adjusted to include the impact of hyperinflationary accounting, which has been applied since Q3 2020, in accordance with the requirements stipulated in IAS 29. Starting from Q1 2021, both the results and the forecasts on a constant currency basis have been calculated to exclude amounts of revenue and profit that have increased due to hyperinflation in certain markets.

1

2021 Q3 Financial Results

Consolidated Results

(billions of JPY)

2020 Q3

2021 Q3

Variance

2020 YTD

2021 YTD

Variance

Revenue

561.9

621.5

+10.6%

1,592.1

1,766.1

+10.9%

Adjusted operating profit

153.9

184.7

+20.0%

542.9

+23.0%

441.5

Operating profit

138.2

158.6

+14.8%

480.7

+23.2%

390.2

Profit attributable to owners

85.5

113.6

+33.0%

257.9

338.8

+31.3%

of the parent company

Adjusted operating profit at

153.9

173.0

+12.4%

441.5

538.1

+21.9%

constant currency

2021 Q3

  • Revenue
    Revenue increased by 10.6% to JPY 621.5 billion driven by increases in the international tobacco and Japanese-domestic tobacco businesses, partially offset by decreases in the pharmaceutical and processed food businesses.
  • Adjusted operating profit
    At constant currency, adjusted operating profit increased by 12.4% to JPY 173.0 billion driven by increases in the international tobacco, Japanese-domestic tobacco and processed food businesses, partially offset by a decrease in the pharmaceutical business.
    On a reported basis, adjusted operating profit increased by 20.0% to JPY 184.7 billion driven by positive foreign currency impacts in the international tobacco business.
  • Operating profit
    Operating profit increased by 14.8% to JPY 158.6 billion driven by an increase in adjusted operating profit.
  • Profit attributable to owners of the parent company
    Profit attributable to owners of the parent company increased by 33.0% to JPY 113.6 billion driven by increases in operating profit and improved financing costs.

2021 YTD

  • Revenue
    Revenue increased by 10.9% to JPY 1,766.1 billion driven by increases in the international tobacco and Japanese-domestic tobacco businesses, partially offset by decreases in the pharmaceutical and processed food businesses.
  • Adjusted operating profit
    At constant currency, adjusted operating profit increased by 21.9% to JPY 538.1 billion driven by increases in the international tobacco, Japanese-domestic tobacco and processed food businesses, partially offset by a decrease in the pharmaceutical business.
    On a reported basis, adjusted operating profit increased by 23.0% to JPY 542.9 billion, driven by positive foreign currency impacts in the international tobacco business.

2

  • Operating profit
    Operating profit increased by 23.2% to JPY 480.7 billion driven by an increase in adjusted operating profit.
  • Profit attributable to owners of the parent company
    Profit attributable to owners of the parent company increased by 31.3% to JPY 338.8 billion driven by increases in operating profit and improved financing costs.

The results for fiscal year 2021 on a reported basis have been adjusted to include the impact of hyperinflationary accounting, which has been applied since Q3 2020, in accordance with the requirements stipulated in IAS 29. Starting from Q1 2021, the results on a constant currency basis have been calculated to exclude amounts of revenue and profit that have increased due to hyperinflation in certain markets

3

Results by Business Segment

International Tobacco Business

(billions of Units, billions of JPY)

2020 Q3

2021 Q3

Variance

2020 YTD

2021 YTD

Variance

Total shipment volume

118.0

120.0

+1.7%

330.0

348.9

+5.7%

GFB shipment volume

77.0

81.7

+6.2%

235.2

+10.3%

213.2

Core revenue1

330.4

390.6

+18.2%

1,126.9

+17.8%

956.5

Adjusted operating profit1

100.5

128.8

+28.2%

399.0

+26.7%

314.8

Reference(millions of USD)

Core revenue1

3,116

3,540

+13.6%

10,359

+16.4%

8,901

(+6.6%*)

(+11.7%*)

Adjusted operating profit1

949

1,168

+23.1%

3,673

+25.4%

2,929

(+16.2%*)

(+25.0%*)

*at constant currency

2021 Q3

  • Volume and Market share2
    Total shipment volume increased 1.7%, including unfavorable inventory movements. Excluding inventory adjustments, total shipment volume grew 2.1%, building on quarterly market share gains in a stable industry volume, partially resulting from lower illicit trade volume. Share grew across the key markets of France, Italy, Russia, Spain, Turkey and the UK, in addition to many others, notably Brazil, Canada, the Czech Republic, Germany, Iran, the Philippines, Poland and Romania. GFB shipment volume increased 6.2%, driven by continued growth from Winston (+5.8%), notably in Iran, Italy, Poland, Turkey, and Camel (+21.7%), mainly in Russia.
  • Core revenue and Adjusted operating profit1
    Core revenue and adjusted operating profit increased 18.2% and 28.2%, respectively, driven by a robust price/mix contribution, as well as favorable volume and currency movements.
    On a USD constant currency basis, core revenue grew 6.6%, driven by a favorable price/mix contribution of USD 184 million, notably from Canada, Kazakhstan, the Philippines, Russia, Taiwan and Turkey, and a positive volume variance of USD 21 million. Adjusted operating profit increased by 16.2%, driven by a positive price/mix variance of USD 180 million and a favorable volume contribution of USD 13 million, partially offset by continued investments in the heated tobacco sticks segment.

2021 YTD

  • Volume and Market share2
    Total shipment volume increased 5.7%, including favorable inventory movements. Excluding inventory adjustments, total shipment volume grew 5.4%, driven by robust market share gains and favorable industry volume comparisons in several markets, mainly due to on-going travel restrictions and lower illicit trade volume. Market share continued to increase across all key markets as well as other markets, notably Austria, Brazil, Canada, the Czech Republic, Germany, Kazakhstan, the Philippines, Poland, Romania, Singapore and Ukraine. GFB shipment volume grew 10.3%, fueled by the solid performance of Winston (+9.8%), Camel (+23.6%) and Mevius (+2.8%).

4

  • Core revenue and Adjusted operating profit1
    Core revenue and adjusted operating profit increased 17.8% and 26.7%, respectively, driven by a strong volume contribution, solid price/mix variance and favorable currency movements.
    On a USD constant currency basis, core revenue increased 11.7%, driven by a robust volume contribution of USD 481 million and a positive price/mix variance of USD 563 million, notably from Canada, Iran, Kazakhstan, the Philippines, Russia, Taiwan, Turkey and Ukraine. Adjusted operating profit grew 25.0%, driven by a favorable price/mix variance of USD 527 million and a positive volume contribution of USD 325 million.

International Tobacco Business (Quarterly) Performance Review by Cluster

South and West Europe

(billions of Units, millions of USD)

2020 Q3

2021 Q3

Variance

Total shipment volume

17.8

17.2

-3.4%

GFB shipment volume

15.1

14.6

-3.5%

Core revenue

560

549

-2.0%

(-2.8%*)

*at constant currency

  • Volume and market share2
    Total and GFB shipment volumes, including unfavorable inventory movements, decreased 3.4% and 3.5%, respectively. Excluding inventory adjustments, total shipment volume grew 0.5%, driven by continued market share gains. Quarterly market share increased in Belgium, France, Greece, Italy, the Netherlands, Spain and Switzerland.
  • Core revenue
    Core revenue decreased 2.0%, due to a negative volume contribution of USD 15 million, mainly from unfavorable inventory movements notably in France and Spain. Excluding favorable currency movements of USD 5 million, core revenue decreased 2.8%.
  • By market2
    In France, excluding inventory movements and despite continued quarterly market share gains (+1.2ppt) in cigarettes and fine cut, total shipment volume decreased 4.1% due to lower industry volume. Factoring in unfavorable inventory adjustments, total, GFB and fine cut shipment volumes declined 11.2%, 10.1% and 6.8%, respectively. Currency-neutral core revenue declined due to negative volume and price/mix variances. Year-to-date total shipment volume was down 0.1%, or up 1.3% excluding inventory movements, with GFB shipment volume increasing 0.8% and fine cut shipment volume declining 3.6%. Year-on-year market share increased 2.6ppt to 28.7%, fueled by Winston and Camel.
    In Italy, excluding inventory movements and despite continued market share gains (+0.6ppt), total shipment volume decreased 0.6% due to lower industry volume versus the same quarter last year. Accounting for favorable inventory adjustments, total, GFB and fine cut shipment volumes increased 5.0%, 6.9% and 6.8%, respectively. Currency-neutral core revenue increased, driven by a solid volume contribution. Year-to-date total shipment volume grew 4.4%, or 2.8% excluding inventory adjustments, with GFB and fine cut shipment volumes up 6.6% and 1.8%, respectively. Year-on-year market share increased 1.1ppt to 26.3%, led by Winston.

5

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Japan Tobacco Inc. published this content on 29 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2021 06:07:04 UTC.