Japan Tobacco : 2022 First Quarter Results (CFO Presentation)

JT Group

2022 First-Quarter Results

Nobuya Kato

JT Group Chief Financial Officer

*Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended to facilitate the reader's understanding of individual businesses.

*For details of each term, please refer to annotations on slide 12.

FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, or current and future expectations of our management with respect to our business, financial condition and results of operations. In some cases, you can identify forward-looking statements by terms such as "may", "will", "should", "would", "expect", "intend", "project", "plan", "aim", "seek", "target", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized.

Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation:

• (1) increase in awareness of health concerns related to smoking;

• (2) regulatory developments; including, without limitation, tax increases and restrictions on sales, marketing, packaging, labeling and use of tobacco products, privately imposed restrictions and governmental investigations;

• (3) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;

• (4) our ability to further diversify our business beyond the traditional tobacco industry;

• (5) our ability to successfully expand internationally and make investments outside Japan;

• (6) competition, changing consumer preferences and behavior;

• (7) our ability to manage impacts derived from business diversification or business expansion;

• (8) economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;

(9) fluctuations in foreign exchange rates and the costs of raw materials; and

(10) catastrophes, including natural disasters.

Humanitarian aid in Ukraine

• • Supporting relocation of employees and their families to safer areas, including outside the country

• • Committed $5 million funding to support access to health, medical, food and daily necessities in Ukraine and surrounding countries through:

  •  Contributing funds to Japanese and international humanitarian organizations and hospitals

  •  Managing global humanitarian efforts by working closely with several aid organizations to establish relief efforts and provide immediate help to affected people

  •  Implementing a campaign of matching personal humanitarian donations of employees.

Update on the Russia situation and potential impact on full-year forecasts

Business overview of Russian market

• • Suspended all new investments and marketing activities as well as the planned launch of Ploom X

• • Given the challenging and unpredictable environment, continuing to evaluate various options for the Russia business, including the potential transfer of ownership

Financial impact and potential implications to full-year earnings guidance

• • Several risks of cost increases expected despite short-term cost-saving effects related to the suspension of Ploom X launch

  - Energy price hikes and increased import/export costs

• • Implications on full-year earnings forecast cannot be reasonably estimated at present. Any forecast revision will be communicated along with the second quarter financial results or later.

• • Russian market accounts for approximately 8% of revenue and 15% of adjusted operating profit in the 2022 consolidated financials forecast disclosed on 14th February, 2022

• • FX: a 1% deviation of JPY against RUB from the assumption rates will lead to approximately JPY 1.5 billion impact on full year 2022 adjusted operating profit forecast*

*FX sensitivity guidance is as follows: 1% depreciation from the assumption rates against JPY by GPB leads to approximately +1.0 billion yen / by TWD leads to +1.0 billion yen / by PHP leads to +1.0 billion yen / by EUR leads to a little over +0.5 billion yen / by TRY leads to less than +0.5 billion yen / by CHF leads to -0.5 billion yen on full year 2022 adjusted operating profit forecast

2022 First-Quarter Consolidated Results

(JPY BN)

2022 Jan-Marvs. 2021

Reported

• Revenue 581.5 +6.2%

• AOP 194.9 +9.4%Operating Profit

• 178.4 +11.4%

• Profit 124.1 +9.1%

Core revenue at constant FX: +3.8% vs. 2021

Adjusted operating profit (AOP) at constant FX: +4.5% vs. 2021

• • Driven by increases across all businesses, mainly fueled by strong pricing in the tobacco business

Revenue, AOP and Operating profit on a reported basis

• • Driven by top-line growth across all businesses along with favorable FX movements in the tobacco business

Profit

• • Increased driven by operating profit growth, partially offset by higher corporate income tax

Note: The results for fiscal year 2021 and fiscal year 2022 on a reported basis shown above 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, results on a constant FX basis have been calculated to exclude amounts of revenue and profit that have increased due to hyperinflation in certain markets.