JT Group
2023 Nine-Month Results
Hiromasa Furukawa
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 18.
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:
- increase in awareness of health concerns related to smoking;
- 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;
- litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;
- our ability to further diversify our business beyond the traditional tobacco industry;
- our ability to successfully expand internationally and make investments outside Japan;
- competition, changing consumer preferences and behavior;
- our ability to manage impacts derived from business diversification or business expansion;
- economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;
- fluctuations in foreign exchange rates and the costs of raw materials; and
- catastrophes, including natural disasters.
© Copyright JT 2023 | 2 |
2023 Nine-Month Results
2023 Nine-Month Consolidated Results:
CR and AOP grew both at constant FX and reported basis
(JPY BN)
Core revenue
AOP
Revenue
AOP
Operating profit
Profit
2023
Jan-Sep
At constant FX
2,049.2
675.5
Reported
2,157.0
664.4
631.8
442.0
vs. 2022
+5.9%
+5.9%
+7.4%
+4.2%
+9.1%
+9.5%
Revenue and AOP*
- Solid pricing contribution in the tobacco business more than offset the impact of higher input costs within the supply chain and higher investments towards HTS**
- Continued AOP growth in the pharmaceutical and processed food businesses
- Unfavorable foreign exchange impact on AOP
Operating profit
- Increase driven by AOP growth as well as gains on sales of real estate and reduced amortization of trademark rights in the adjusted items
Profit
- Increase driven by operating profit growth
Note: The results for fiscal year 2022 and fiscal year 2023 on a reported basis have been adjusted to include the impact of hyperinflationary accounting in accordance with the requirements stipulated in IAS 29. The results for fiscal year 2022 and fiscal year 2023 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 2023
*AOP=Adjusted operating profit | 4 |
**HTS=Heated tobacco sticks | |
Tobacco Business Volume Performance: Strong first half momentum continued
(BnU)
Total volume
Combustibles
RRP
2023
Jan-Sep
410.6
404.2
6.5
vs. 2022 | Combustibles | Solid volume growth fueled by continued |
market share gains | ||
• Strong volume growth in the EMA cluster |
+2.1% | - Higher industry volume in Turkey | |
- Continued recovery in Global Travel Retail | ||
- Strong momentum in several emerging markets | ||
+2.1% | • Share gains in most key markets, including in Japan within the | |
growing value price segment | ||
+8.2% | • Growth-limiting factors: | |
- Industry volume contraction mainly in the Philippines and | ||
the UK | ||
- On-going business disruption in Sudan | ||
Incremental HTS volume driven by share | ||
RRP | ||
gains in Japan & new market launches | ||
Continued HTS segment share gains in Japan |
- Additional volume from Ploom X launches in several European markets
© Copyright JT 2023 | 5 |
Tobacco Business Financial Results & Drivers:
Solid profit growth driven by strong pricing contribution
(JPY BN)
Core revenue at constant FX
AOP
at constant FX
2023
Jan-Sep
1,891.3
1,866.7
676.8
688.0
vs. 2022
+7.4%
+6.0%
+3.6%
+5.3%
Volume
- Unfavorable market mix despite total volume growth
Price/Mix
- Pricing benefits in multiple markets, including the Philippines, Russia and the UK, partially offset by lower product mix due to downtrading, mainly in Japan and the Philippines
Note: The results for fiscal year 2022 and fiscal year 2023 on a reported basis have been adjusted to include the impact of hyperinflationary accounting in accordance with the requirements stipulated in IAS 29. The results for fiscal year 2022 and fiscal year 2023 on a constant FX basis have been calculated to exclude amounts of revenue and profit that have increased due to hyperinflation in certain markets.
Roadmap of AOP variance (JPY BN)
Others
- Higher input costs within the supply chain
- Investments towards combustibles and RRP
101.3 | -47.2 | 688.0 | 676.8 | FX | ||||
653.4 | ||||||||
-11.1 | ||||||||
-19.6 | • Appreciation of JPY against several local currencies | |||||||
2022 | Volume | Price/Mix | Others | 2023 | FX | 2023 | ||
Jan-Sep | Jan-Sep | Jan-Sep | 6 | |||||
At constant | © Copyright JT 2023 | |||||||
FX |
Tobacco Business: Overview of the Clusters Performance
ASIA
0.2%
-1.7%
-7.8% | ||
Total | CR | AOP |
Volume |
AOP performance
Growth drivers
- Market share gains, notably in the key markets of JPN, PHI and TWN
- Robust pricing contribution in PHI
Growth-limiting factors
- Lower industry volume in PHI and TWN
- Lower product mix in PHI and JPN, investment towards HTS in JPN
- JPY depreciation impacting the procurement of raw materials
WESTERN EUROPE
13.1%
8.7%
-4.2%
Total | CR | AOP |
Volume |
AOP performance
Growth drivers
- Market share gains in most markets, including ITA
- Solid pricing contribution from DEU, FRA, ESP and GBR
-
JPY depreciation vs. EUR & GBP
Growth-limiting factors - Lower industry volume in GBR
- Higher investments for Ploom X
expansion
© Copyright JT 2023
EMA | ||||||
11.7% | 10.7% | |||||
5.4% | ||||||
Total | CR | AOP | ||||
Volume |
AOP performance
Growth drivers
- Market share gains in most markets and GTR volume recovery
- Pricing contribution from CAN, POL, ROU, RUS and TUR
Growth-limiting factors
- Higher input costs in the supply chain
- JPY appreciation vs. RUB
*All data on this slide refer to Jan-Sep 2023 vs. PY on a reported basis | |
CAN: Canada, DEU: Germany, FRA: France, ESP: Spain, GBR: Great | 7 |
Britain, GTR: Global Travel Retail, ITA: Italy, JPN: Japan, PHI: Philippines, | |
POL: Poland, ROU: Romania, RUS: Russia, TUR: Turkey, TWN: Taiwan |
Tobacco Business: Key Markets Takeaway
ASIA | WESTERN EUROPE | ||||||||||||
Japan | The UK | ||||||||||||
Industry size | Total volume | SoM | Industry size | Total volume | SoM | ||||||||
+0.7% | +2.3% | +0.6ppt | -16.4% | -19.2% | -0.9ppt | ||||||||
Industry dynamics YTD | Industry dynamics YTD | ||||||||||||
• Total industry volume was almost flat, as the RRP growth | • | Total industry volume decreased, due to several tax hikes | |||||||||||
offset a decline in combustibles | since the second half of 2021, easing of travel restrictions | ||||||||||||
• | Continued downtrading in combustibles and intense | and lower purchasing power due to inflation | |||||||||||
competition in HTS | • | Accelerated downtrading due to intense competition in the | |||||||||||
YTD performance | value cigarette segment and fine cut category | ||||||||||||
• | Total volume outperformed the industry, driven by a higher | YTD performance | |||||||||||
total market share (42.9%, +0.6ppt year-on-year) | • | Robust pricing contribution more than offset the volume | |||||||||||
• | Successful investments behind Ploom X driving continued | decline | |||||||||||
RRP share gains (13.0%, +1.0ppt year-on-year) | • Leading positions not impacted, despite lower market share | ||||||||||||
• | Market share grew in combustibles, led by Camel Craft and | *All data on this slide refer to Jan-Sep 2023 vs. PY | 8 | ||||||||||
MEVIUS-E series | © Copyright JT 2023 | ||||||||||||
Tobacco Business: Ploom X Japan Overview
- Ploom X continued to gain share of segment despite intense competition
- New "Ploom X ADVANCED" to further attract and retain users
12
10
8
6
4
2
Japan market: quarterly market share evolution
within HTS segment*
10.5%
7.2% | 9.3% | 9.5% | |||||
7.9% | 8.1% | ||||||
7.2% | 7.6% | ||||||
6.5% | |||||||
4.0% | 4.2% | * JT Group estimate (shipment based) | |||||
3.4% | HTS SoS is calculated as follows: | ||||||
3.4% | HTS volume / HTS industry volume | ||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
2021 | 2022 | 2023 |
This slide is intended only to explain operations of the JT Group, not to promote sales of tobacco or vaping products or encourage smoking or vaping among consumers.
© Copyright JT 2023 | 9 |
Tobacco Business: Ploom X Global Overview
- Assuming Ploom X availability in 28 markets by the end of 2024
- Geo-expansionplan for 2023 is on track
Ploom X geo-expansion
HTS industry | Launch schedule | |
composition* | ||
Poland | 10.3% | Warsaw / mid-September |
Hungary | 20.2% | Budapest / mid-September |
Romania | 8.9% | Bucharest / early October |
Greece | 19.6% | Athens / late October |
Kazakhstan | 13.2% | Almaty / early November |
Before | Jan-Mar | Apr-Jun | Jul-SepOct-Nov |
2023 | |||
Japan | Italy | Czech R. | Switzerland | Romania |
UK | Portugal | Poland | Greece |
Lithuania | Hungary | Kazakhstan |
*All HTS industry composition data on this slide except for Romania refer to eight months of 2023. HTS | ||
composition data for Romania is for nine months of 2023. | 10 | |
© Copyright JT 2023 |
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Japan Tobacco Inc. published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 06:18:00 UTC.