On February 14, Japan Tobacco (JTI) released its 2022 financial report. The financial report shows that JTI's revenue is 2,657.8 billion yen (20.1 billion US dollars) in 2022, which is a year-on-year increase of 14.3%; its net profit is 442.7 billion yen (3.34 billion US dollars), which is a year-on-year increase of 30.8%, and both revenue and net profit hit its history new highs.

Heated Tobacco Stick Market Share continues to grow as Ploom X doubles sales

JTI's Ploom X, a heat-not-burn tobacco device launched in August 2021, its sales is double in 2022 compared to last year. Meanwhile, JTI-related revenue increased by 18.7%, and adjusted operating profit grew by 31.7%. HTS (heated tobacco stick) market share reached 7.7%, an increase of 20% over the same period last year. In addition, the Reduced Risk Products (RRP) category also grew by 9.2%.

Overall, due to MEVIUS, Camel, and Ploom X's solid performance, the sales volume and market share of JTI tobacco have increased.

In addition, JTI's market share has increased in major markets such as Italy, the Philippines, Spain, Taiwan, and Turkey, etc.

The President and CEO of JTI, Masamichi Terabatake, said that 2022 is the first year of consolidating JTI's tobacco business structure. During the year, JTI strengthened its business capabilities through various steps. With the growth of Ploom X, there will be more good developments for JTI in the future, especially in HTS (Heated Tobacco Stick). This will support JTI's ambition to break even in the RRP category by 2028.

Two main businesse's revenue decreased, and the tobacco revenue reached 17.18 billion US dollars

JTI's tobacco business revenue was 2,315.2 billion yen (17.36 billion US dollars), an increase of 15.6% year-on-year; adjusted operating profit was 754 billion yen (5.65 billion US dollars), an increase of 18% year-on-year. The main reason is the increase in investment in Ploom X and input costs in the supply chain.

JTI's pharmaceutical business revenue was 82.9 billion yen (620 million US dollars), an increase of 3.1% year-on-year; adjusted operating profit was 11.1 billion yen (0.83 million US dollars), an increase of 0.5% year-on-year. The increase was mainly due to the revenue growth of its subsidiary Torii Pharmaceutical.

JTI's processed food business revenue was 155.5 billion yen (1.166 billion US dollars), an increase of 5.6% year-on-year; adjusted operating profit was 3.5 billion yen (0.26 billion US dollars), a decrease of 11.3% year-on-year. The decline in revenue was mainly due to the share transfer of bakeries, and the increase in profit was due to price adjustments in businesses such as frozen and room-temperature foods.

Forecast 1.1% decline in revenue in 2023 will invest heavily in heated tobacco sticks

JTI expects its revenue to fall 1.1% to 2,629 billion yen ($19.87 billion) in 2023; operating profit is expected to fall 6.4% to 612 billion yen; profit attributable to owners of the parent company is expected to fall 0.6% to 440 billion yen.
 

Masamichi Terabatake said JTI would have to invest heavily in HTS in 2023 to lay the foundation for future earnings growth.
 

JTI also intends to steadily increase DPS in line with the shareholder return policy, which aims to achieve a dividend payout ratio of 75% through sustainable growth in profits in the medium to long term. 

Reference: 2022 Earnings Report