Japan Tobacco (JAPAF) Q1 2026 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good afternoon. I am Hiro Masafurukawa, CFO of the JT Group. Thank you very much for joining us today for JT Group's first quarter 2026 earnings briefing. I will begin by explaining the consolidated results for the first quarter, marking a strong start to the year. As shown on the slide, both revenue and AOP recorded significant increases on both constant FX and reported basis, mainly driven by a robust quarter and the tobacco business. AOB at constant FX, our key profit management indicator, increased by 20.5% year-on-year, resulting in strong operating profit and profit growth. The FX impact was positive, mainly driven by the appreciation of several currencies, including the Russian ruble, against the Japanese yen. Operating profit increased by 24.7 percent year-on-year, driven by the increase in AOP, as well as a reduction in amortization costs of intangible assets arising from past acquisitions included in the adjustment items. Profit increased by 27.3% year-on-year, driven by operating profit growth. In addition, financial income and expenses improved in the first quarter. Due to the recent rapid deteriorating situation in the Middle East and Iran, we have reclassified certain balance sheet items related to Iran in our consolidated financial statements in accordance with IFRS. As a result, we expect impacts from foreign exchange gains and losses arising from Iran-related balance sheet items to be mitigated. Next, I will move on to the performance of each business segment, starting with the volume performance of the tobacco business. Please turn to slide 4. Total volume, combining with combustibles and RRP, increased by 0.9% year-on-year, representing a solid performance, considering the global industry volume contraction. In combustibles, strong share momentum c...