Japan Tobacco (JT) lowered sales and earnings expectations for its domestic tobacco business due to the strength of vapour product sales and ongoing decline in the country’s smoking rate.

Adjusted domestic tobacco operating profit for the full year will be JPY 14 billion (EUR 107 million) lower than initially forecast at JPY 230 billion. The impact on consolidated operating profit will be JPY 10 billion, JT said. Core domestic tobacco revenue was adjusted down by JPY 18 billion yen.
However JT said the trend in foreign exchange rates should bring the parent company more profit than expected from its international business. Expected full-year adjusted operating profit from US-dollar based Japan Tobacco International should reap JPY 12 billion more than initially forecast, JT said. In addition to tobacco, JT business units include pharmaceuticals and processed food.
“In the Japanese tobacco business, cigarette industry volume decline puts further pressure on us, resulting in adjustments to our business performance,” said JT Chief Executive Officer Mitsuomi Koizumi. “In the meantime, our promising tobacco vapor product, Ploom TECH, continues to receive strong interest from consumers in Tokyo, where we launched at the end of June.”
Cigarette industry volume in Japan fell 11 per cent to 76.8 billion sticks in the first six months of 2017, JT said. The company’s volume declined 11.2 per cent to represent 46.8 billion of the total. Adjusted operating profit for the domestic tobacco business fell 7.4 per cent to JPY 120 billion on core revenue that dropped 7.6 per cent to JPY 294.4 billion.