OREANDA-NEWS. August 3, 2011. Adjusted net sales excluding tax3 and EBITDA4 declined by 13.1% and 8.4% respectively, due to the negative impact of the October 2010 tax and price increase and the earthquake on the Japanese domestic tobacco business. Net income5 increased by 2.4%.

Japanese Domestic Tobacco Business: Total sales volume6 decreased by 48.8% due to the October 2010 tax and price increase and the earthquake. This decline was within the range of forecasts previously provided. Adjusted net sales excluding tax7 and EBITDA declined by 31.4% and 20.9% respectively. During the quarter, the business' performance has improved progressively.

International Tobacco Business:, Core net sales excluding tax8 and EBITDA increased by 4.4% and 10.3% respectively in US dollars, driven by strong pricing and a 2.1% increase in GFB shipment volume. Core net sales excluding tax and EBITDA in US dollars grew 6.5% and 16.7% respectively at constant rates of exchange. Market share increased in most key markets, including Turkey, Taiwan, Italy, France and Russia.

Consolidated financial results for the 3 months ended June 30, 2011 Units: Billions of Yen

 

1Q FY03/20119 (A)

1Q FY03/2012 (B)

Difference (B)-(A)

Net Change (%)

Adjusted net sales excluding tax

471.5

409.6

-61.9

-13.1

EBITDA

133.0

121.8

-11.2

-8.4

Operating income

79.5

71.9

-7.5

-9.5

Net income

22.1

22.7

0.5

2.4

Forecast for the year ending March 31, 2012

> While adjusted net sales excluding tax is forecast to decline by 1.6%, EBITDA and net income are forecast to increase by 1.4% and 10.8% respectively. The net sales decline is due to the temporary impact of the earthquake on the domestic tobacco business and an expected stronger appreciation of the Japanese yen against the US dollar in the international tobacco business. Earnings increases will be driven by favourable pricing in both the Japanese and the international tobacco businesses.

Hiroshi Kimura, President and Chief Executive Officer of JT, commented:

"Our domestic tobacco business' performance is adversely affected by the unprecedented tax and price increase and the earthquake, but the full year forecasts remain within the range previously provided. Now that the supply of all products has resumed and purchase order ceilings on the majority of our products have been removed, we are doing our utmost to strengthen our competitiveness, with the aim of regaining market share as quickly as possible. Our international tobacco business continued to generate strong revenue, GFB and market share growth. We are forecasting another year of increased EBITDA and net income group-wide."

JT's Consolidated Financial Results for the 3 months ended June 30, 2011