JTI's Revenue and Profit Hits Record High in 2022

On February 14th, Japan Tobacco Inc. (JTI) released their financial report for the year 2022. According to the report, JTI saw a 14.3% increase in revenue, with earnings of ¥26,578 billion ($201 billion) compared to the previous year. Net profit also rose by 30.8% to ¥4,427 billion ($33.4 billion), marking a new record for both revenue and net profit.

JTI's 2022 financial report, as shown in the accompanying image.

The market share of heated tobacco sticks continues to grow as sales of Ploom X double.

JTI's heat-not-burn tobacco device, Ploom X, launched in August 2021, has doubled its sales in 2022 compared to the previous year. As a result of Ploom X's success, JTI's revenue related to the device increased by 18.7%, and their adjusted operating profit increased by 31.7%.

The market share of heat-not-burn tobacco products (HTS) has reached 7.7%, showing a 20% increase compared to the same period last year. As a result of the growth in HTS products, the reduced-risk product (RRP) category has also increased by 9.2%.

Overall, thanks to the robust performance of MEVIUS, Camel, and Ploom X, JTI's total tobacco sales and market share have both increased.

Furthermore, in major markets such as Italy, the Philippines, Spain, Taiwan, and Turkey, JTI has seen an increase in market share.

The President and CEO of JTI, Masamichi Terabatake, has announced that 2022 marks the first year of JTI's tobacco business structure integration. During this year, JTI has taken various measures to strengthen their business capabilities. With the growth of Ploom X, JTI anticipates further positive developments in the future, particularly in the heated tobacco stick (HTS) sector, which will support their ambition to achieve a balanced revenue stream in the Reduced Risk Product (RRP) category by 2028.

Revenue from two major business segments decreases, tobacco business generates $17.18 billion in revenue.

JTI's tobacco business revenue increased by 15.6% to 2,315.2 billion yen ($17.36 billion), while its adjusted operating profit rose by 18% to 754 billion yen ($5.65 billion) year-on-year. The increase was mainly attributed to higher investment in Ploom X and rising input costs within the supply chain.

Tobacco Business Report | Image Source: JTI

The pharmaceutical business of JTI recorded a revenue of JPY 82.9 billion (USD 620 million), which marks a 3.1% year-on-year increase. The adjusted operating profit was JPY 11.1 billion (USD 83 million), reflecting a marginal growth of 0.5% from the previous year. The increase is mainly attributed to the revenue growth of its subsidiary, Torigoe Pharmaceutical.

The processed food business of JTI has recorded a revenue of 155.5 billion yen ($1.166 billion), marking a 5.6% YoY increase. The adjusted operating profit is reported to be 3.5 billion yen ($0.26 billion), down by 11.3% YoY. The decline in revenue is attributed to the share transfer of bakery stores, while the price adjustments in frozen and ambient food business are the key reasons behind the rising profits.

It is predicted that revenue will decrease by 1.1% in 2023, prompting a significant increase in investment in heated tobacco products.

JTI predicts that its revenue will decrease by 1.1% to 2.629 trillion yen ($19.87 billion) in 2023. Its operating profit is expected to decline by 6.4% to 612 billion yen, and the net profit attributable to the owners of the parent company is anticipated to decrease by 0.6% to 440 billion yen.

According to Masamichi Terabatake, JTI must heavily invest in HTS by 2023 in order to lay the foundation for future revenue growth.

JTI plans to steadily increase its DPS in accordance with its shareholder return policy. The goal of this policy is to achieve a 75% dividend payout ratio through sustainable growth in medium to long-term profits.

Reference:

2022 Financial Results Announcement

For further reading:

Japan Tobacco's revenue in 2022 reaches a new historical high, and the company plans to invest heavily in heated pods in 2023.