Japan Tobacco Inc. · TSE:2914

Japan Tobacco — Morgan Stanley Global Consumer & Retail Conference 2010

49 slides from Japan Tobacco's conference presentation, Nov 16, 2010

  1. Slide 1: Japan Tobacco Inc. - Morgan Stanley Global Consumer & Retail Conference

    JAPAN TOBACCO INC. Yasuyuki Tanaka Chief Communications Officer Morgan Stanley Global Consumer & Retail Conference New York, 16 November 2010 *Please be reminded that the figures shown on these slides may be different from those shown in the financial statements as they are intended to facilitate un

  2. Slide 2: Caution concerning forward-looking statements

    Caution concerning forward-looking statements Forward-Looking and Cautionary Statements This presentation contains forward-looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and p

  3. Slide 3: Financial Results for 1H FY 3/2011

    Financial Results for 1H FY 3/2011

  4. Slide 4: Consolidated Financial Results for 1H FY 3/2011: Executive Summary

    Consolidated Financial Results for 1H FY 3/2011 : Executive Summary  Adjusted net sales and profits both grew.  In the Japanese domestic tobacco business, adjusted net sales and profits grew due to a heightened demand ahead of the excise-led price increase.  In the international tobacco business,

  5. Slide 5: Consolidated Financial Results: 1H FY 3/2011

    Consolidated Financial Results : 1H FY 3/2011 2009 2010 Change (JPY BN) 1H 1H Adjusted Net Sales 1) 986.7 1,035.2 +4.9% excluding tax EBITDA 279.3 306.4 +9.7% 2009 2010 ＜ Reference ： Before Change goodwill amortization ＞ 1H 1H Operating Income 163.7 198.8 +21.5% 2) Operating Income 213.3 246.0 +15.3

  6. Slide 6: Japanese Domestic Tobacco Business: 1H FY 3/2011

    Japanese Domestic Tobacco Business : 1H FY 3/2011 69.0 ＪＴ Share 67.0 2009 2010 FY09 Jul-Sep Change (BNU,JPY BN) 1H 1H 64.9% 65.1% 65.0 Total Sales Volume 78.6 86.5 +10.1% Apr-Jun 63.0 64.5% Apr-Sep Adjusted Net Sales 1) 318.8 351.4 +10.2% 64.9% excluding tax 61.0 Jul-Sep EBITDA 2) 133.5 150.1 +12.4%

  7. Slide 7: Japanese Domestic Tobacco Business: Volume Roadmap

    Japanese Domestic Tobacco Business : 1H FY 3/2011 【Volume Roadmap:2009 1H to 2010 1H】 Total sales volume for 1H FY 3/2010 78.6BNU Trend decline -around 5% Impact of excise-led price increase announcement -around 1.6% Reaction to impact of Around 1.1 MS promotion -around 0.5% month’s demand at the en

  8. Slide 8: International Tobacco Business Jul-Sep FY 3/2011 (preliminary)

    International Tobacco Business Jul-Sep FY 3/2011 (preliminary)

  9. Slide 9: International Tobacco Business: Executive Summary

    International Tobacco Business : Executive Summary-Results for Jul-Sep FY 3/2011 (preliminary)  Total and GFB shipment volumes in the Jul-Sep period returned to positive growth as anticipated.  Share of market continued to grow in most key markets.  Core net sales in the Jul-Sep period grew 5.8%

  10. Slide 10: International Tobacco Business: Results for Jul-Sep FY 3/2011

    International Tobacco Business : Results for Jul-Sep FY 3/2011(preliminary) <Jul-Sep (preliminary)> 2010 2010 2010 2010 (BNU,MM$) Jan-Mar Apr-Jun Jul-Sep Jan-Sep Total Shipment Volume1) 94.1 110.7 114.8 319.5 (-6.8%) (-3.9%) (+4.8%) (-1.9%) GFB Shipment Volume 54.6 63.7 66.7 185.1 (-4.4%) (-0.9%) (+

  11. Slide 11: International Tobacco Business: Performance by cluster

    International Tobacco Business: Performance by cluster 【Total shipment volume1) (Change from the same period last year）】 <Jul-Sep (preliminary)> 2010 Jan-Mar 2010 Apr-Jun 2010 Jul-Sep 2010 Jan-Sep Total -6.8% -3.9% +4.8% -1.9% S & W Europe -9.2% -3.1% +2.3% -3.4% N & C Europe +6.9% +4.1% -0.5% +3.3%

  12. Slide 12: International tobacco business GFB shipment volume

    International tobacco business GFB shipment volume <July-Sep (preliminary)> 2010 2010 2010 2010 (BNU ) Jan-Mar Apr-Jun Jul-Sep Jan-Sep GFB 54.6 63.7 66.7 185.1 Shipment Volume (-4.4%） (-0.9%） (+9.4%） （+1.5%） Winston 27.2 32.0 33.0 92.1 (-6.5%) (-0.6%) (+12.4%) (+1.7%) Camel 9.5 10.7 11.3 31.6 (-4.7%

  13. Slide 13: International Tobacco Business: Market Share in Key Markets

    International Tobacco Business: Market Share in Key Markets 2009 2010 2010 Sep1) Jun1) Sep1) Excise tax Price increase change Italy 18.1% 19.0% 19.4% Italy - - France 14.6% 15.5% 15.8% France - - Spain 20.5% 20.7% 20.7% Spain Jul 2) Jan,Jun UK 41.0% 41.0% 40.8% UK Jan 3), Mar Jan,Mar Russia 36.5% 36

  14. Slide 14: International Tobacco Business: Results for Jan-Sep FY 3/2011

    International Tobacco Business: Results for Jan-Sep FY 3/2011(preliminary) Core Net Sales excl. tax 1): <Jan-Sep (preliminary)> 2009 Jan-Sep to 2010 Jan-Sep (MM$) 8,000 7,800 +8.0% 7,600 +5.6% +168 7,400 7,200 +444 7,000 Jan-Sep 09 Jan-Sep 10 6,800 -48 7,591 Average Average Change 7,423 6,600 7,028

  15. Slide 15: Composition Ratio by Region

    International tobacco business July-Sep FY3/2011 Composition Ratio by Region <Jan-Sep (preliminary)> Shipment Volume1) Core Net Sales excluding tax2) North & North & Rest of the Rest of the Central Central World, 30% World, 26% Europe, 17% Europe, 11% CIS+, 31% South & CIS+, 48% South & West Europe,

  16. Slide 16: Full-Term Forecasts

    Full-Term Forecasts for FY 3/2011

  17. Slide 17: Forecasts: Executive Summary

    Forecasts: Executive Summary  EBITDA for the international tobacco business at constant rates of exchange remains unchanged at 6.2% growth.  The EBITDA forecast for the Japanese domestic tobacco business remains unchanged.  The forecast for adjusted net sales excluding tax was revised down due to

  18. Slide 18: International Tobacco Business: Forecasts

    International Tobacco Business: Forecasts for FY 3/2011 FY 3/2010 FY 3/2011 Difference from Change from Revised Initial Forecast FY 3/2010 Actual Initial Forecast (BNU, JPY BN) Forecast (c-b) (c-a)/a a b c Total Shipment Volume1) 434.9 433.0 428.5 -4.5 -1.5% GFB Shipment Volume 243.4 250.0 250.0 － +

  19. Slide 19: EBITDA Forecast: Initial to Revised Forecast

    Forecasts for FY 3/2011 EBITDA Forecast : Initial Forecast to Revised Forecast 2010 Initia l Fore ca st 513.0 Ja pa ne se Dom e stic Toba cco 0 Inte rna tiona l toba cco a t consta nt ra te of e x cha nge 0 Inte rna tiona l tobacco Fore x im pa cta t Loca l curre ncy vs.USD -6.0 Inte rna tiona l tob

  20. Slide 20: Thank you for your attention!

    Thank you for your attention！ 20

  21. Slide 21: Appendix

    <Appendix> Consolidated Financial Results for 1H FY 3/2011 Slide 22&23: International Tobacco Business : 1H FY 3/2011 Slide 24: Pharmaceutical Business : 1H FY 3/2011 Slide 25: Food Business : 1H FY 3/2011 Full-Term Forecasts for FY 3/2011 Slide:26: Forecasts for FY 3/2011 Slide 27: Japanese Domesti

  22. Slide 22: International Tobacco Business: 1H FY 3/2011

    International Tobacco Business : 1H FY 3/2011 (BNU,MM$) 2009 1H 2010 1H Change Total Shipment Volume1) 216.1 204.7 -5.2% GFB Shipment Volume 121.3 118.3 -2.5% Core Net Sales excl. tax2) 4,552 4,970 +9.2% Core Net Sales excl. tax per thousand3)(US$) 21.3 24.5 +15.3% Jan-Jun 09 Jan-Jun 10 Average Aver

  23. Slide 23: International Tobacco Business: 1H FY 3/2011 Core Net Sales and EBITDA

    International Tobacco Business : 1H FY 3/2011 【Core net sales excl.tax1)】 【EBITDA3)】 Including Leaf/NTM Costs increase of 150MM$ Q2 FY3/2010 1,505 Q2 FY3/2010 4,552 Shipment Shipment volume change -57 volume change -158 Price and product mix +324 Price and product mix +333 Other -166 Q2 FY3/2011 at

  24. Slide 24: Pharmaceutical Business: 1H FY 3/2011

    Pharmaceutical Business : 1H FY 3/2011 Clinical development (as of Oct 28, 2010) Code Key Indication Stage Phase 2 (Japan) JTT-705(oral) Dyslipidemia Phase 2 (Japan) JTT-130(oral) Dyslipidemia Phase 2 (Overseas) (JPY BN) 2009 1H 2010 1H Change JTK-303(oral) HIV infection Phase 1 (Japan) Net Sales 22

  25. Slide 25: Food Business: 1H FY 3/2011

    Food Business : 1H FY 3/2011 (JPY BN) 2009 1H 2010 1H Change Net Sales 200.8 196.8 - 3.9 Beverages 96.4 100.7 +4.3 Processed foods 104.3 96.0 - 8.2 EBITDA 8.4 9.6 +1.2 Operating -5.6 -3.3 +2.3 Income  Sales for the beverage business grew due to the summer heat waves and initiatives focused on Roots

  26. Slide 26: Forecasts

    Forecasts for FY 3/2011 FY 3/2010 FY 3/2011 Difference from Change from Actual Initial Forecast Revised Forecast Initial Forecast FY 3/2010 (JPY BN) a b c (c-b) (c-a)/a Adjusted Net Sales excl. tax1) 1,980.9 1,973.0 1,905.0 -68.0 -3.8% EBITDA 526.7 513.0 495.0 -18.0 -6.0% Operating Income 296.5 295.

  27. Slide 27: Japanese Domestic Tobacco Business: Forecasts

    Japanese Domestic Tobacco Business: Forecasts for FY 3/2011 FY 3/2010 FY 3/2011 Difference from Change from Revised Initial Forecast FY 3/2010 Actual Initial Forecast Forecast (c-b) (c-a)/a a b (BNU,JPY BN) c Total Sales Volume 151.8 127.5 125.5 -2.0 -17.3% Adjusted Net Sales excl. tax1) 615.9 576.0

  28. Slide 28: International Tobacco Business: Exchange rate assumptions

    International Tobacco Business: Exchange rate assumptions Change from 10 Initial 10 Revised Jan-Sep 10 Initial Assumption Assumption Average Assumption a b c b vs a RUB/USD 29.50 30.10 -2.0% 30.24 GBP/USD 0.65 0.64 +1.6% 0.65 EUR/USD 0.68 0.75 -9.3% 0.75 JPY/USD 90.00 87.00 +3.4% 89.49  Exchange ra

  29. Slide 29: Pharmaceutical Business: Forecasts

    Pharmaceutical Business: Forecasts for FY 3/2011 FY 3/2010 FY 3/2011 Difference from Change from Initial Revised Initial FY 3/2010 Actual Forecast Forecast Forecast (c-a)/a a (BNU,JPY BN) b c (c-b) Net Sales 44.0 44.5 45.5 +1.0 +1.3 EBITDA -9.6 -14.5 -13.0 +1.5 -3.2 Operating Income -13.5 -18.5 -17.

  30. Slide 30: Food Business: Forecasts

    Food Business: Forecasts for FY 3/2011 FY 3/2010 FY 3/2011 Difference from Change from Initial Revised Initial FY 3/2010 Actual Forecast Forecast Forecast (c-a)/a a (BNU,JPY BN) b c (c-b) Net Sales 394.6 390.0 383.0 -7.0 -11.6 EBITDA 14.4 18.5 15.0 -3.5 +0.5 Operating Income -13.6 -9.0 -12.5 -3.5 +1

  31. Slide 31: Reference Material: Analysis of Consolidated Financial Results for Q2 FY 3/2011

    [Reference Material] Analysis of Consolidated Financial Results for Q2 FY 3/2011 and Full-term Forecast for FY 3/2011

  32. Slide 32: Caution concerning forward-looking statements

    Caution concerning forward-looking statements Forward-Looking and Cautionary Statements This presentation contains forward-looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and p

  33. Slide 33: Q2 Results: Japanese Domestic Tobacco Adjusted Net Sales

    Q2 Results for FY 3/2011  Japanese Domestic Tobacco Business – Adjusted Net sales excluding tax 1) Approx. 1.1 month’s heightened Q2 FY3/2010 318.8 demand ahead of price increase Volume effect +32.2 Price and -2.0 product mix effect Others +0.5 Q2 FY3/2011 351.4 300 310 320 330 340 350 （JPY BN） 1)

  34. Slide 34: Q2 Results: Japanese Domestic Tobacco EBITDA

    Q2 Results for FY 3/2011  Japanese Domestic Tobacco Business – EBITDA 1) Approx. 1.1 month’s heightened demand ahead of price increase Q2 FY 3/2010 133.5 Volume effect +24.2 Price and product mix -0.2 Cost increase -1.5 Leaf tobacco reappraisal gain/loss -2.1 Sales promotion and others -3.8 Q2 FY 3

  35. Slide 35: Q2 Results: International Tobacco Core Net Sales

    Q2 Results for FY 3/2011  International Tobacco Business – Core Net sales excluding tax 1) Q2 FY3/2010 4,552 Volume effect -158 Price and product mix effect +333 Q2 FY3/2011 at constant rates 4,727 of exchange Forex impact2) +244 Q2 FY3/2011 4,970 （MM$） 4,200 4,400 4,600 4,800 5,000 1) Core net sal

  36. Slide 36: Q2 Results: International Tobacco EBITDA

    Q2 Results for FY 3/2011  International Tobacco Business - EBITDA before royalty payments to JT Q2 FY3/2010 1,505 Volume effect -57 Price and product mix effect +324 Others -166 Q2 FY3/2011 at constant rates 1,606 Including Leaf/NTM Costs of exchange increase 150MM$ Forex impact1) +79 Q2 FY3/2011 1

  37. Slide 37: Q2 Results: Pharmaceutical Net Sales

    Q2 Results for FY 3/2011  Pharmaceutical Business - Net sales Q2 FY3/2010 22.1 Torii Pharmaceutical +1.0 Co.,Ltd. (non-consolidated) Royalty income, etc. +0.0 Q2 FY 3/2011 23.1 20 21 22 23 （JPY BN） 7

  38. Slide 38: Q2 Results: Pharmaceutical EBITDA

    Q2 Results for FY 3/2011  Pharmaceutical Business - EBITDA Q2 FY 3/2010 -4.9 R&D expenses (non-consolidated) +0.3 Operating income of Torii Pharmaceutical Co.,Ltd. -0.4 (non-consolidated) Royalty income, etc. +0.2 Q2 FY 3/2011 -4.8 -6 -5 -4 -3 -2 -1 （JPY BN） 8

  39. Slide 39: Q2 Results: Food Net Sales

    Q2 Results for FY 3/2011  Food Business - Net sales Q2 FY 3/2010 200.8 Beverages +4.3 Processed foods etc. -8.2 Q2 FY 3/2011 196.8 190 192 194 196 198 200 202 204 206 （JPY BN） 9

  40. Slide 40: Q2 Results: Food EBITDA

    Q2 Results for FY 3/2011  Food Business - EBITDA Q2 FY 3/2010 8.4 Beverages +1.9 Processed foods -0.9 etc. Overhead costs +0.1 Q2 FY 3/2011 9.6 5 7 9 11 （JPY BN） 10

  41. Slide 41: Q2 Results: Recurring Profit and Net Income

    Q2 Results for FY 3/2011  Recurring profit  Net income Q2 FY 3/2010 66.0 Q2 FY 3/2010 135.1 Recurring +51.0 Opearing Income +35.1 profit Extraordinary Non-operating +15.9 profit.loss, -35.1 income/loss income tax etc Q2 FY 3/2011 186.1 Q2 FY 3/2011 81.9 120 130 140 150 160 170 180 190 50 60 70 80

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  43. Slide 43: Summary of Consolidated B/S as of Sep. 30, 2010 (Assets)

    Summary of Consolidated B/S as of Sep. 30, 2010  Assets Current Assets: up JPY 116.0 BN Compared to B/S as of Mar. 31, 2010 【Decrease in cash and deposits/short- term investment securities 】 down 30.3 BN •Payment of a fine to the Canadian authorities Mar. 31, 2010 3,872.5 •Repayment of interest-be

  44. Slide 44: Summary of Consolidated B/S as of Sep. 30, 2010 (Liabilities & Net Assets)

    Summary of Consolidated B/S as of Sep. 30, 2010  Liabilities & Net Assets Liabilities : down JPY 33.8 BN Compared to B/S as of Mar. 31, 2010 【Decrease in Loans payable】 down JPY 30.0BN Mar. 31, 2010 3,872.5 Loans payable -30.0 【Decrease in Commercial papers】 down JPY 119.0 BN Commercial Papers -11

  45. Slide 45: Revised Forecast: Japanese Domestic Tobacco Business

    Revised Forecast for FY 3/2011 compared to results of the previous fiscal year  Japanese Domestic Tobacco Business – Adjusted Net Sales excluding tax1)/EBITDA2)  Adjusted Net Sales excluding tax1)  EBITDA2) FY 3/2010 615.9 251.2 FY 3/2011 Revised Forec ast 568.0 219.0 450 500 550 600 650 700 100

  46. Slide 46: Revised Forecast: International Tobacco Business

    Revised Forecast for FY 3/2011 compared to results of the previous fiscal year  International Tobacco Business – Core Net Sales excluding tax1)/EBITDA2)  Core Net Sales excluding tax1)  EBITDA2) FY 3/2010 9,682 2,965 FY 3/2011 10,240 3,260 Revised Forecast 10,110 3,150 ※At constant rates of excha

  47. Slide 47: Revised Forecast: Pharmaceutical Business

    Revised Forecast for FY 3/2011 compared to results of the previous fiscal year  Pharmaceutical Business– Net Sales/EBITDA  Net Sales  EBITDA FY 3/2010 44.0 -9.6 FY 3/2011 Revised Forecast 45.5 -13.0 0 10 20 30 40 50 -20 -15 -10 -5 0 （JPY BN） （JPY BN） 【Positive factors】 【Negative factors】  Increa

  48. Slide 48: Revised Forecast: Food Business

    Revised Forecast for FY 3/2011 compared to results of the previous fiscal year  Food Business– Net Sales/EBITDA  Net Sales  EBITDA 14.4 FY 3/2010 394.6 FY 3/2011 Revised Forec ast 383.0 15.0 200 300 400 7 11 15 （JPY BN） （JPY BN） 【Positive factors】 【Positive factors】  Growth in key business  Str

  49. Slide 49: Revised Forecast: Recurring Profit and Net Income

    Revised Forecast for FY 3/2011 compared to results of the previous fiscal year  Recurring profit  Net income FY 3/2010 255.3 FY 3/2010 138.4 Recurring Operating -15.5 profit +5.6 income Extraordinary Non-operating +21.1 profit/loss, -29.0 income/loss income tax, etc. FY 3/2011 FY 3/2011 261.0 Revi

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