Japan Tobacco 2025 H1 Financial Report: Net Profit Up 5% YoY to $2.1 Billion, Heated Tobacco Shipments Rise Nearly 30%

Key Points:

Core business data

·Second quarter: Net revenue of 907.6 billion yen (approximately $6 billion ), up 9.4% year-on-year; net profit of 162.4 billion yen (approximately $1.1 billion), up 9.8% year-on-year; adjusted operating profit of 273.3 billion yen (approximately $1.8 billion), up a significant 20.7% year-on-year. 

·First half of the year: Net revenue of 1.73 trillion yen (approximately $11.5 billion), up 10.5% year-on-year; adjusted operating profit of 539.9 billion yen (approximately $3.6 billion), up 19.2% year-on-year. 

New Tobacco Product (HTS)

·In the first half of the year, shipments reached 5 billion units, a significant increase of 29.5% year-on-year. 

·In the Japanese market, the new device PloomAURA has tripled its sales in the three weeks since its launch, helping JT's share in the Japanese HTS market rise to 13.6% in the second quarter. 

International Business Performance

·In the EMA region (including the Americas), tobacco revenue increased by 27.9% year-on-year, with adjusted operating profit surging by 49.8%, mainly driven by the acquisition and integration of the Vector Group in the United States. 

·In Western Europe, sales volume decreased by 5.8%, but revenue increased by 3.5% due to pricing strategies, leading to an 8.5% increase in operating profit. 

·In Asia (excluding Japan), both revenue and operating profit saw steady growth, increasing by 4.6% and 4.2% respectively. 

Outlook for the Full Year and Shareholder Returns

·The full-year adjusted operating profit growth forecast has been raised to 14.6% at constant exchange rates; 

·Annual earnings per share has been increased from 194 Japanese yen to 208 Japanese yen (approximately $1.4), with a mid-term dividend of 104 Japanese yen (approximately $0.7).

[2Firsts News Flash] According to a report on the official website of Japan Tobacco on July 31, Japan Tobacco (JT) has released its financial report for the second quarter and first half of 2025. The report shows that due to strong price strategies in the tobacco business, significant acquisition and integration effects in the United States, and continuous growth of HNB products (HTS), JT has significantly raised its full-year performance guidance for 2025 and announced an increase in annual dividends.

Core Financial Performance

In the second quarter (April-June), growth momentum remained robust, with all key financial indicators showing steady growth.

·Net income: 907.6 billion yen (approximately $6 billion), an increase of 9.4% year-on-year. 

·Net profit: 162.4 billion yen (approximately $1.1 billion), an increase of 9.8% year-on-year. 

·Adjusted operating profit: 273.3 billion yen (approximately $1.8 billion), an increase of 20.7% year-on-year. 

Cumulative Performance for the First Half of the Year (January to June)

·Net income: The cumulative net income for the first half of the year was 1.73 trillion Japanese yen (approximately $11.5 billion), an increase of 10.5% year-on-year.

·Net profit: In the first half of the year, it accumulated to 319.9 billion yen (approximately $2.1 billion), an increase of 4.8% compared to the same period last year.

·Adjusted operating profit: The accumulated profit for the first half of the year was 539.9 billion yen (approximately $3.6 billion), a 19.2% year-on-year increase.

Performance of Business Segments (First Half of 2025)

Traditional tobacco

·Financial performance: Tobacco product revenue was 1.55 trillion yen (approximately $10.3 billion), a year-on-year increase of 11.5%. Adjusted operating profit was 556.1 billion yen (approximately $3.7 billion), a year-on-year increase of 17.8%.

·Sales Performance: The total shipment volume was 283.3 billion units, a year-on-year increase of 0.7%, with traditional cigarette sales remaining stable.

Highlights of the new Reduced-Risk Products (RRP) business

·HTS shows significant growth: HNB product shipments reached 5 billion units in the first half of the year, a substantial increase of 29.5% compared to the same period last year, making it the top priority investment target for the company.

·PloomAURA: In May, the new device PloomAURA was launched in Japan and initial sales far exceeded expectations. In the first three weeks after its release, the total sales of devices were approximately three times higher than the previous model. This successful launch helped PloomAURA to capture a market share of 13.6% in the Japanese HTS category in the second quarter.

International Business Performance (First Half of 2025)

The international business of Japan Tobacco Inc. has shown varying performances in different regions, with the mergers and acquisitions effects being particularly prominent in the Americas.

·The EMA (Europe, Middle East, Africa, and Americas) region showed the strongest growth. At constant exchange rates, revenue from tobacco products increased significantly by 27.9%, while adjusted operating profit soared by 49.8%. This was mainly due to the integration effects of the acquisition of Vector Group Ltd. (VGR) in the United States.

·Western Europe: Exhibiting the characteristics of "quantity decline, price increase." Despite a 5.8% decrease in total sales volume, under successful pricing strategies, revenue grew by 3.5% at a constant exchange rate, and adjusted operating profits increased by 8.5%.

·Asia region (excluding Japan market): Stable performance. With constant exchange rates, tobacco product revenue increased by 4.6%, while adjusted operating profit increased by 4.2%.

Future Prospects and Shareholder Returns

Based on its strong performance in the first half of the year, JT has significantly raised its full-year earnings outlook and increased its shareholder return plan.

·Revised Full-Year Guidance: The company has revised its full-year forecast for adjusted operating profit growth (at constant exchange rates) to 14.6%.

·Increase shareholder returns: The company has raised its annual per share dividend expectation from the previous 194 yen to 208 yen (approximately $1.4), with a mid-term dividend of 104 yen (approximately $0.7).