(Corrects paragraph 7 to show adjusted profits rose to 231.9 billion yen, not 239.1 billion yen)
LONDON : Cigarette maker Japan Tobacco on Thursday reported a 12.8 per cent rise in first-quarter revenues at its cigarette business, boosted by foreign currency effects and users buying more expensive cigarettes or alternative products.
The maker of Benson & Hedges and Winston cigarettes said revenues rose 6.6 per cent on a constant currency basis. The unit’s adjusted operating profit was 3 per cent higher, at 231.9 billion yen ($1.49 billion).
WHY IT’S IMPORTANT
Cigarette makers’ traditional businesses are under pressure as a growing awareness of health risks and ever-stricter regulation drive falling smoking rates in some markets.
Japan Tobacco’s results show how, despite this, tobacco companies can still make big profits by hiking prices, and as other markets continue to grow.
The company and its rivals are also looking to grow revenues from alternative products, such as vapes, as smoking rates decline in some countries.
BY THE NUMBERS
– Core revenues at the cigarette business rose 12.8 per cent, or 6.6 per cent at constant currency, to 653.3 billion yen
– Adjusted operating profit rose 3 per cent, or 4.9 per cent in constant currency, to 231.9 billion yen
– Total cigarette volumes rose 1.7 per cent
– Volumes of the company’s smoking alternatives, such as vapes, rose 25.2 per cent, with revenues from this division up 17.7 per cent
– Volumes collapsed in some markets, including the United Kingdom where they fell 16.1 per cent in part due to tax increases, Japan Tobacco said.
– In others, they rose, including Italy and Turkey, up 12.5 per cent and 23.1 per cent respectively
(This story has been corrected to show adjusted profits rose to 231.9 billion yen, not 239.1 billion yen, in paragraph 7)
