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    2914   JP3726800000

JAPAN TOBACCO INC.

(2914)
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Japan Tobacco : 2021 Second Quarter Results

07/30/2021 | 02:10am EDT

Tokyo, July 30, 2021

2021 Second Quarter Results

Year-to-Date Highlights (vs. 2020)

  • Revenue increased 11.1% to JPY 1,144.5 billion.
  • Adjusted operating profit at constant currency increased 26.9% to JPY 365.1 billion.
  • On a reported basis, adjusted operating profit increased 24.5% to JPY 358.2 billion.
  • Operating profit increased 27.8% to JPY 322.1 billion.
  • Profit attributable to owners of the parent company increased 30.5% to JPY 225.2 billion.
  • The Company announced to offer an interim dividend of JPY 65 as initially planned.

FY2021 Forecasts (vs. Initial Forecast)

  • Revenue forecast is revised upward by JPY 120.0 billion.
  • Adjusted operating profit at constant currency is revised upward by JPY 10.0 billion.
  • Forecasts are revised upward for adjusted operating profit on a reported basis (JPY 42.0 billion), operating profit (JPY 39.0 billion) and profit attributable to owners of the parent company (JPY 32.0 billion).
  • As announced in the initial forecast, the Company plans to offer an annual dividend per share of JPY 130.

Please refer to P.17 'Data Sheets' for more financial figures.

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

"JT Group delivered a robust performance in the first half, driven by strong business momentum. This was a result of continued market share gains in combustibles in many markets and continued tailwinds of strong industry volume trends due to travel restrictions in some mature markets.

"Considering this robust performance, we have revised our full year guidance upward.

"We have launched Ploom X, our next generation device for heated tobacco sticks in Japan, the world's largest heated tobacco market. Listening carefully to our consumers around the world, we have developed our first global model, offering a richer and enhanced taste, improved design, and a more intuitive user experience. Ploom X will gradually be rolled out across other markets.

"We are also making steady progress on several initiatives announced in February this year, including the rollout of our new operating model for the combined one tobacco business as well as measures to strengthen competitiveness in the Japan market. These initiatives will act as a catalyst for future growth while we continue to offer products and services which exceed our consumers' expectations."

Investors' Meeting

An investors' meeting (phone conference) with members of the investor community will be held on July 30, 2021 at 4:30pm 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

In accordance with the requirements stipulated in IAS 29, the JT Group has been applying hyperinflationary accounting adjustments since Q3 2020, so both the results and the forecasts for fiscal year 2021 on a reported basis include the impact of these adjustments. Starting from Q1 2021, both the results and 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 Q2 Financial Results

Consolidated Results

(billions of JPY)

2020 Q2

2021 Q2

Variance

2020 YTD

2021 YTD

Variance

Revenue

510.6

597.2

+17.0%

1,030.2

1,144.5

+11.1%

Adjusted operating profit

140.8

180.1

+28.0%

358.2

+24.5%

287.6

Operating profit

123.0

162.0

+31.6%

322.1

+27.8%

252.0

Profit attributable to

86.1

111.4

+29.4%

172.5

225.2

+30.5%

owners of the parent

Adjusted operating profit

140.8

178.2

+26.6%

287.6

365.1

+26.9%

at constant FX

2021 Q2

  • Revenue
    Revenue increased by 17.0% to JPY 597.2 billion driven by increases in the international tobacco, Japanese-domestic tobacco, pharmaceutical and processed food businesses.
  • Adjusted operating profit
    At constant currency, adjusted operating profit increased by 26.6% to JPY 178.2 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 28.0% to JPY 180.1 billion driven by positive foreign currency impacts in the international tobacco business.
  • Operating profit
    Operating profit increased by 31.6% to JPY 162.0 billion driven by an increase in adjusted operating profit.
  • Profit attributable to owners of the parent
    Profit attributable to owners of the parent increased by 29.4% to JPY 111.4 billion driven by factors that include increases in operating profit and improved financing costs.

2021 YTD

  • Revenue
    Revenue increased by 11.1% to JPY 1,144.5 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 26.9% to JPY 365.1 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 24.5% to JPY 358.2 billion, despite negative foreign currency impacts in the international tobacco business.
  • Operating profit
    Operating profit increased by 27.8% to JPY 322.1 billion driven by an increase in adjusted operating

2

profit.

  • Profit attributable to owners of the parent
    Profit attributable to owners of the parent increased by 30.5% to JPY 225.2 billion driven by factors that include increases in operating profit and improved financing cost.

In accordance with the requirements stipulated in IAS 29, the JT Group has been applying hyperinflationary accounting adjustments since Q3 2020, so the results for fiscal year 2021 on a reported basis include the impact of the adjustments. Starting from Q1 2021, 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 Q2

2021 Q2

Variance

2020 YTD

2021 YTD

Variance

Total shipment volume

107.8

118.7

+10.1%

211.9

228.9

+8.0%

GFB shipment volume

68.8

79.8

+16.1%

153.5

+12.6%

136.3

Core revenue1

314.0

387.3

+23.3%

736.3

+17.6%

626.1

Adjusted operating profit1

110.3

136.6

+23.8%

270.2

+26.1%

214.3

Reference(millions of USD)

Core revenue1

2,918

3,535

+21.1%

5,784

6,818

+17.9%

(+14.5%)*

(+15.0%)*

Adjusted operating profit1

1,025

1,247

+21.7%

1,980

2,505

+26.5%

(+29.2%)*

(+22.1%)*

*at constant currency

2021 Q2

  • Volume and market share2
    Total shipment volume increased 10.1% including favorable inventory movements. Excluding inventory adjustments, total shipment volume increased 9.1% building on favorable industry volume trend comparisons in several markets and quarterly market share gains. Share grew across all key markets of France, Italy, Russia, Spain, Taiwan, Turkey and the UK, in addition to many others, notably Brazil, Canada, the Czech Republic, Germany, Hungary, the Philippines, Poland, Romania and Ukraine. GFB shipment volume increased 16.1%, driven by strong growth from Winston (+14.5%), Camel (+39.3%) and Mevius (+9.9%).
  • Core revenue and adjusted operating profit1
    Core revenue and adjusted operating profit increased 23.3% and 23.8%, respectively, driven by solid volume, robust price/mix contribution as well as favorable currency movements.
    On a USD basis, core revenue at constant currency increased 15.0%, driven by a favorable volume contribution of USD 246 million and a positive price/mix variance of USD 192 million, notably from Canada, Iran, Kazakhstan, the Philippines, Romania, Turkey, the UK and Ukraine. At constant currency, adjusted operating profit grew by 22.1%, driven by a positive volume contribution of USD 163 million and a favorable price/mix variance of USD 165 million, partially offset by continued investments in the heated tobacco sticks segment. On a reported basis, core revenue and adjusted operating profit increased 21.1% and 21.7%, respectively.

2021 YTD

  • Volume and market share2
    Total shipment volume increased 8.0% including favorable inventory movements. Excluding inventory adjustments, total shipment volume increased 7.1%, driven by favorable industry volume trend comparisons in several markets, mainly due to on-going travel restrictions, and robust market share gains. Market share gains continued across many geographies, notably in in Austria, Brazil, Canada, the Czech Republic, France, Germany, Hungary, Italy, the Philippines, Poland, Romania, Serbia, Spain, Taiwan, Turkey, the UK and Ukraine. These positive factors more than offset the lower Duty- Free shipment volumes resulting from COVID-19 measures. GFB shipment volume grew 12.6%, fueled by the robust performance of Winston (+12.0%), Camel (+24.6%), LD (+3.4%) and Mevius

4

(+5.4%).

  • Core revenue and Adjusted operating profit1
    Core revenue and adjusted operating profit increased 17.6% and 26.1%, respectively, driven by a strong price/mix variance and a positive volume contribution, offsetting by unfavorable currency movements.
    On a USD basis, core revenue at constant currency increased 14.5%, driven by a robust volume contribution of USD 460 million and a positive price/mix variance of USD 379 million, notably from Canada, Iran, Kazakhstan, the Philippines, Russia, Turkey and Ukraine. At constant currency, adjusted operating profit grew 29.2%, driven by a favorable price/mix variance of USD 346 million and a positive volume contribution of USD 311 million. On a reported basis, core revenue and adjusted operating profit increased 17.9% and 26.5%, respectively.

International Tobacco Business (Quarterly) Performance Review by Cluster

South and West Europe

(billions of Units, millions of USD)

2020 Q2

2021 Q2

Variance

Total shipment volume

16.3

18.7

+14.5%

GFB shipment volume

13.7

15.9

+16.5%

Core revenue

493

621

+26.0%

(+15.7%)*

*at constant currency

  • Volume and market share2
    Total and GFB shipment volumes, including favorable inventory movements, increased 14.5% and 16.5%, respectively. Excluding inventory adjustments, total shipment volume grew 7.0%, driven by favorable industry volume trend comparisons versus the same quarter last year, and continued market share gains. Quarterly market share increased in Belgium, France, Greece, Italy, Luxembourg, the Netherlands, Spain and Switzerland.
  • Core revenue
    Core revenue grew 26.0%, driven by a positive volume contribution of USD 71 million, notably from Italy and Spain, and a favorable price/mix variance of USD 6 million. Excluding favorable currency movements of USD 50 million, core revenue increased 15.7%.
  • By market2
    In France, excluding inventory movements, total shipment volume decreased 4.7% despite continued quarterly market share gains (+1.8ppt) in cigarettes and fine cut. Factoring in favorable inventory adjustments, total, GFB and fine cut shipment volumes declined 4.3%, 4.7% and 16.3%, respectively, due to the unfavorable industry volume trend comparison versus the same quarter last year. Currency- neutral core revenue declined, as a positive price/mix was offset by a negative volume contribution. Year-to-date total shipment volumes were up 5.3%, or 4.0% excluding inventory movements, with GFB shipment volume increasing 6.1% and fine cut shipment volume declining 2.2%. Year-on-year market share increased 3.2ppt to 28.4%, fueled by GFBs.
    In Italy, excluding inventory movements, total shipment volume increased 7.7% fueled by a favorable industry volume trend comparison versus the same period last year and solid quarterly market share gains (+1.2ppt) in both cigarettes and fine cut. Accounting for favorable inventory adjustments, total

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Japan Tobacco Inc. published this content on 30 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2021 06:08:16 UTC.


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Financials
Sales 2021 2 206 B 20 125 M 20 125 M
Net income 2021 285 B 2 596 M 2 596 M
Net Debt 2021 443 B 4 039 M 4 039 M
P/E ratio 2021 13,1x
Yield 2021 6,09%
Capitalization 3 824 B 34 898 M 34 895 M
EV / Sales 2021 1,93x
EV / Sales 2022 1,86x
Nbr of Employees 58 300
Free-Float 54,2%
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Mean consensus HOLD
Number of Analysts 15
Last Close Price 2 155,00 JPY
Average target price 2 308,93 JPY
Spread / Average Target 7,14%
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Managers and Directors
Masamichi Terabatake President, CEO & Representative Director
Naohiro Minami CFO, Representative Director & Executive VP
Yasutake Tango Chairman
Hiroyuki Miki Executive Officer, Head-Research & Development
Kazuhito Yamashita Director, Head-Compliance & General Affairs
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