Forecast: A Decline of Japan Tobacco Market

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According to the announcement of Japan Tobacco (JT), it reported that compared with the tobacco revenue in the first half of 2019, revenues in the first six months of 2020 declined 2.7% and received ¥1.03 trillion ($9.84 billion). Also, JT pointed out that the international tobacco business's growth was unable to offset declines in other businesses. Moreover, JT estimates that the COVID-19 caused an unfavorable impact on its business, which may be lost around ¥35 billion.

Over the past six months, JT's adjusted operating profit was ¥287.6 billion (0.1% lower than the same period in 2019), while its operating profit declined by 19.1% to ¥252 billion. Furthermore, over the reporting period, its earnings continuously declined by 23.8%.

In the international business, the JT enjoyed a significant favorable pricing gain. However, the currency-neutral performance was offset by stronger currency headwinds.

Due to the COVID-19 crisis, the company anticipated lower tobacco volumes and stronger currency headwinds, and it adjusted the fiscal 2020 forecast downward. Besides, in 2020, JT expects revenue of ¥2.01 trillion and an adjusted operating profit of ¥457 billion for well business management.

According to president and CEO of the JT Group, Masamichi Terabatake said:

"Although the tobacco industry was not immune to the impact of the pandemic, our performance was resilient during the first half of 2020."

"JT Group maintained solid business momentum and delivered robust growth in adjusted operating profit at constant currency driven by pricing gains in the international tobacco business."

"We have revised our forecasts based on the reasonable assumption to date considering the current momentum, business environment, and widening impact of currency volatility, among other aspects. We believe that our solid business momentum will continue, despite of the Covid-19 challenges on our top-line."

This article is issued by Tobacco Reporter, for more information, please check:

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