Japan Tobacco's FY tobacco profit rises almost 10%, set for more growth in 2025

LONDON : Japan Tobacco on Thursday reported a 9.7 per cent increase in annual adjusted operating profit from its tobacco business, thanks to selling more higher-priced packs of tobacco and its acquisition of U.S. tobacco company Vector Group.

The company, which makes Benson & Hedges and Winston cigarettes, said it expects tobacco-related revenues and operating profit to rise by a further 6.9 per cent and 8.1 per cent in 2025, even as its volumes decline by up to 2 per cent as smoking rates fall in some markets.

WHY IT'S IMPORTANT

Tobacco businesses like Japan Tobacco's face increasingly strict regulation and a growing awareness of health risks around the world, putting their sales under pressure in some markets.

However, Japan Tobacco and its rivals still make hefty profits, with sales rising elsewhere and smokers willing to pay more for their fix. Nevertheless, Japan Tobacco is looking to grow revenue from alternative products to offset volume declines.

BY THE NUMBERS

* Fourth quarter adjusted operating profit rose 56.1 per cent at constant currency in Japan Tobacco's tobacco division. Annually, it reported a 9.7 per cent rise in constant currency.

* Tobacco division core revenues grew 14.5 per cent at constant currency and volumes were up 3 per cent in the quarter. Annually, they rose 9.1 per cent and 2.4 per cent, respectively.

* The company forecasts a 6.9 per cent rise in core revenue and an 8.1 per cent rise in adjusted operating profit at its tobacco business in constant currency in 2025.

* Tobacco business volumes are expected to decline by between 1 per cent and 2 per cent this year, it forecasts. (This story has been corrected to clarify that the figures relate to Japan Tobacco's tobacco division, not the group, in paragraph 1 and throughout)