Japan Tobacco (JT) said falling cigarette sales due to market gains by tobacco heating products and other vapour devices are cutting into group revenue, but said it was sticking by its forecast for fiscal year 2017.

Cigarette volume fell 15.3 per cent or 4.2 billion sticks to 23 billion sticks in the January-March period. “This is mainly due to the continued industry volume contraction caused by the expansion of the tobacco vapour category and the continued market diminishing trend,” JT said. An increase in its mainstay Mevius brand last April also created an unfavourable comparison with first-quarter 2017, as consumers hoarded the brand ahead of the price hike, JT said. The company’s domestic market share was steady at 61 per cent.
Japan is currently the main market for tobacco heating devices introduced by JT, Philip Morris International and British American Tobacco.
Domestic tobacco core revenue fell 10.4 per cent compared with a 3.1 per cent decline in JT’s international business. Group revenue, including JT’s pharmaceuticals and processed food businesses, declined 5.2 per cent to JPY 506.1 billion (EUR 4.08 billion). Adjusted operating profit fell 8.6 per cent due to unfavourable currency movements, JT said. The full-year forecast sees adjusted operating profit near 2016. Group sales and unadjusted profit both are expected to drop by one third.