Japan Tobacco Q1 2025 Results: Revenue Up 11.7% to $5.8 Billion, Heated Tobacco Sales Rise 28%

Key points of focus:

1.Japan Tobacco's revenue for the first quarter of 2025 reached 827 billion yen (58 billion USD), a year-on-year increase of 11.7%, driven mainly by its tobacco business.

2.Sales of new tobacco products (RRP) increased by 19.0% year-on-year, with significant growth seen in heated tobacco products (HTS) at 27.7%.

3.The market share of Ploom products in Japan as well as in overseas markets such as Russia and the UK continues to rise. The company will release a new Ploom device and pods on May 27th.

4.Management has confirmed that the tobacco business will be the core profit source, and has decided to pursue a medium-term strategic goal of achieving a 15% market share for heated tobacco in major markets by 2028.

On May 7th, Japan Tobacco (JT) released its financial report for the first quarter of 2025. According to the report, the company's sales revenue for the first quarter was 827 billion yen (5.8 billion USD), an increase of 11.7% compared to the same period last year. Adjusted operating profit was 273.8 billion yen (1.9 billion USD), a 20.8% increase year-on-year, while net profit attributable to shareholders was 157.5 billion yen (1.1 billion USD), a slight increase of 0.1% year-on-year. Management noted that the profit growth was mainly driven by the tobacco business.

Tobacco Business Continues to be the Core of Profits, With Strong Performance in Heated Tobacco Products

In the first quarter of 2025, the total sales volume of the tobacco industry was 134.4 billion units, a year-on-year decrease of 1.3%. Both conventional tobacco and heated tobacco experienced growth.

The sales of new tobacco products (RRP) continue to grow rapidly, with a 19.0% year-on-year increase in the first quarter of 2025, including a 27.7% year-on-year increase in heated tobacco products (HTS). In the domestic market in Japan, the company's sales of heated tobacco products and pods have both seen growth, with the Ploom brand increasing its market share in Japan. The company plans to launch new Ploom devices and pods in Japan on May 27th.

In overseas markets, heated tobacco products have achieved double-digit sales growth in Russia and the UK, demonstrating the group's gradual success in expanding into non-Japanese markets.

Management reiterated its long-term strategic goal of achieving approximately 15% market share in key heated tobacco markets by the end of 2028.

Non-tobacco Business Restructuring: Pharmaceutical Sector to be Divested, Focusing Resources on Two Core Businesses

The report also announced that JT has reached an agreement with Shionogi & Co., Ltd. to transfer its pharmaceutical business. The transaction is expected to be completed in the second half of this year, with the transfer of the pharmaceutical business expected in December and the transfer of Nioi Pharmaceutical Co., Ltd. expected in September. JT stated that this decision was based on the belief that pharmaceutical business is better suited to be operated by a pharmaceutical company focused on new drug development, which will help accelerate the development potential of its pharmaceutical assets.

After divesting its pharmaceutical business, JT Group will focus on two core business areas:

·Tobacco business serves as the main source of profits for the group

·The processed food business plays a supplementary role in profit growth.

Management Declares: Driving Towards Long-term Goals with the Tobacco Business

JT's chairman and CEO Masamichi Terada stated that the group will continue to expand the global market penetration of Ploom products on the basis of strong performance in the tobacco business, and advance towards the market share target for 2028.

"In the first quarter of 2025, JT Group has achieved strong performance driven by its tobacco business. We will continue to focus on the tobacco business as the core driver, achieve sustained profit growth, and steadily advance towards our medium to long-term goals with the expansion of products such as Ploom."