Japan Tobacco (JAPAF) Q2 2025 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good afternoon, I am Hiramasa Furukawa, CFO of the JT Group. Thank you very much for coming to the investor meeting. I will begin by explaining our six months consolidated results for the fiscal year 2025. Please see slide four. As shown on the slide, revenue and AOP increase strongly, both on a constant FX and on a reported basis. AOP at constant FX, our primary performance indicator, increased by an impressive 24.7% year-on-year, driven by a strong organic performance, boosted by the contribution of the Vector Group in the U.S., which we acquired last year. The foreign exchange impact on AOP remains negative, due to the appreciation of the Japanese yen from the second quarter onward. This led to the depreciation of major currencies and of several emerging market currencies against the Japanese yen. Operating profit increased by 10.9% year-on-year, driven by the increase in AOP, partially offset by impairment losses related to the transfer of the pharmaceutical business and higher amortization costs of intangible assets related to the vector acquisition, both of which were included in the adjusted items. Profit increased by 4.8% year-on-year, driven by the increase in operating profit, which exceeded higher financial costs and higher corporate income tax expenses. Moving on to the results of each business segment, starting with the tobacco business. Please see slide 5 for the volume performance of the tobacco business. Total volume, combining both combustibles and RRP, increased by 0.7% year-on-year. When excluding the unfavorable impact of inventory adjustments, mainly in Russia and Western Europe, total volume actually grew by 1.9% year-on-year. This solid volume of performance, in the context of a global declining combustibles industry volume, was driven by organ...