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    2914   JP3726800000

JAPAN TOBACCO INC.

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Japan Tobacco : JT Group 2021 Second Quarter Investor Conference Presentation

07/30/2021 | 02:11am EDT

2021 Second-Quarter Results

Naohiro Minami

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 16 and 17.

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.

© Copyright JT 2021

2

2021 Second-Quarter Results

2021 Second-Quarter Consolidated Results

JPY BN

Jan-Jun

vs. PY

2021

Reported

Revenue

1,144.5

+11.1%

AOP

358.2

+24.5%

Operating profit

322.1

+27.8%

Profit

225.2

+30.5%

Adjusted Operating Profit (AOP) at constant FX: +26.9% vs. PY

  • Robust performance driven by our international tobacco business
  • On-goingstronger industry volume due to travel restrictions

Revenue

  • Increased driven by volume growth and price/mix contributions from the international tobacco business

AOP (On reported basis) and Operating profit

  • Increase in profit driven by strong topline
  • Limited FX headwinds

Profit

  • Improved financing costs

Note: The results for fiscal year 2021 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.

© Copyright JT 2021

4

Japanese-domestic tobacco business : Volume Performance and Financial Results

Volume (BnU) Jan-Jun 2021

Industry

JT

SoM/SoS*

Total Tobacco**

73.6

33.0

44.9%

(-3.3%)

(-8.2%)

(-2.4ppt)

RMC

51.9

30.9

59.5%

(-8.9%)

(-9.5%)

(-0.4ppt)

RRP**

21.7

2.1

9.8%

(+13.4%)

(+17.7%)

(+0.4ppt)

RRP

29.5%

-

-

market size**

*Share of Market / Share of Segment ** JT estimate (shipment based)

Industry Volume

  • RMC decreased due to higher RRP adoption, price hike as well as natural decline
  • RRP increased due to ongoing changes in consumer behavior impacted by COVID-19 and continuous new product launches supported by intensified sales promotion

JT sales volume and share performance

  • RMC declined due to lower industry volume as well as share decline from conversion to RRP and intense competition in the value segment as a result of down-trading
  • RRP steady SoS development with sales volume in line with the initial plan

Core revenue and AOP

  1. RMC price/mix
  1. Increase in RRP refill volume
  1. Lower marketing expenses driven by a higher skew to second half (-) RMC sales volume
    (-) Decrease in duty-free sales

Financials (JPY BN)

Jan-Jun

vs. PY

2021

Core revenue

256.4

+3.0%

AOP

101.3

+23.8%

© Copyright JT 2021

AOP Variance factors (JPY BN)

101.3

11.0

81.8

-17.2

25.6

Jan-Jun

RMC volume

RMC

RRP/others

Jan-Jun

5

2020

price/mix

2021

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 06:08:18 UTC.


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Sales 2021 2 210 B 20 115 M 20 115 M
Net income 2021 285 B 2 589 M 2 589 M
Net Debt 2021 443 B 4 028 M 4 028 M
P/E ratio 2021 13,1x
Yield 2021 6,09%
Capitalization 3 824 B 34 898 M 34 799 M
EV / Sales 2021 1,93x
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Nbr of Employees 58 300
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Mean consensus HOLD
Number of Analysts 15
Last Close Price 2 155,00 JPY
Average target price 2 308,57 JPY
Spread / Average Target 7,13%
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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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