Japan Tobacco: Q1 2024 Results

Share on facebook
Share on twitter
Share on email
Share on whatsapp
Share on linkedin

Tobacco Segment: 88% weight in revenue, 100+% weight in adj. operating profit in Q1 2024

Top-line & Bottom-line Results – Tobacco Segment Only1

Excluding Pharmaceuticals and Processed Food Segments; adjusted, at constant currencies

Revenue: +6.6% in Q1 2024, driven by positive price/mix variance from all clusters and RRP-related revenue growth (+17.7%, led by Ploom X in Japan), partially offset by volume decline in Asia (-4.5%) cluster

Operating profit: +4.9% in Q1 2024, driven by core revenue growth and partially offset by higher investments towards heated tobacco and higher supply chain costs

Total Volume: +2.1% (combustible volume +1.7%; RRP volume +25.2%)

RRP weight – Q1 2024: 1.9% by volume and 3.7% by revenue

RRPs: Ploom X (heated tobacco)

– Ploom X is now available in 17 markets: 4 new markets so far in 2024 and 4 additional markets planned by June 2024 => geographical expansion plan on track

– Set to reach mid-teen heated tobacco segment share in key markets and RRP break-even by 2028

– RRP volume growth (+25.2%), driven by continued momentum in Japan and increasing contributions from the other markets

– RRP volume contribution: 2Bn Japan + 0.5Bn other markets (still 80% Japan vs. 34% for PMI in FY23)

– Japan: Solid market share gains in an increasingly competitive market due to aggressive promotions and price reductions by competitors. RRP category now makes up 42.2% of the total tobacco industry volume. JT’s total category share reached 13.5% (i.e. 11% Ploom + 2.5% hybrid platforms) in Q1 2024

– Other markets: Steady growth since the launch (fueled with expansion in distribution), reaching between 1.3% (Hungary) and 4.6% (Czechia) segment share in different markets


– Combustibles volume growth (+1.7%) driven by the Global Flagship Brands (GFB) and the EMA cluster (mostly, Turkey and Russia)

– GBP volume: +6.3%, driven by Winston (+9.8%) and Camel (+10.5%)

– EMA: Volume +5.7%, Core Revenue +13%, Adjusted Operating Profit +9.4%

– Continued combustibles industry volume decline in the UK (-14.4%), Japan, the Philippines and Taiwan => JT’s cluster volume: Asia -4.5%, Western Europe flattish

FY24 Forecast

– No revisions for the time being: assessing uncertainties (including FX trends) and revisions, if any, to be announced at the Q2 2024 results release or later

Recall: FY24 Guidance from the FY23 Results release

– Tobacco segment (at constant FX): core revenue +4.5%, operating profit +2%

– Basic EPS: ¥256.3. Based on the share price at the time of writing (¥4,342), JT now trades at 17x 2024EPS (the second best multiple among the industry majors after ITC)

Our Recollection

Overall, combustible volume growth (+1.7%) combined with pricing/mix improvements helped deliver mid-single digit revenue & operating profit increase in Q1 2024. Thanks to the geographical expansion of Ploom X and progressive category share gains in Japan, year-on-year RRP volume growth accelerated: from only +3% in Q1 2023 to +17% in Q3 2023 to +25.2% in Q1 2024. We will continue to closely watch Ploom X’s performance in the expansion markets (i.e. whether the segment share is progressively increasing towards the mid-teens).

In Feburary 2023, we noted: “In the League of Laggards to the transformation to RRPs (Altria, Imperial, JT), we clearly favor JT due its size/scale, higher emerging market exposure (supporting the combustible volume), very low indebtedness and strong focus on expanding its presence in the heated tobacco category”.

JT shares increased +65% since our call (i.e. correction from an overly undervalued level, further fueled by the general market interest in Japanese equities) and are now trading well-above the key ¥4,000 level. For further details: Japan Tobacco: Share Price Surge. Although we still favor JT over Altria and Imperial Brands (in terms of business strength & growth), we need to underline that the strong price momentum – rather than the strength in business fundamentals – is driving the JT shares up at this stage (recall: JT now trades at a premium to the industry leader, PMI, despite RRPs having less than 4% weight in its total revenue).


  1. https://www.jt.com/investors/results/forecast/index.html ↩︎

Call Request:

We will reach out to you within 24 hours to discuss your request. Please note that we only respond to requests with a valid business e-mail address
Disclaimer: The content in our Market Pulse section is/shall not be construed as investment advice. It is for informative purposes only and does not take into account the individual needs, investment objectives and specific financial circumstances. Any action taken upon the information in our Market Pulse section is strictly at the reader’s own risk. We assume no responsibility or liability for the actions taken. Moreover, we also assume no responsibility or liability for any errors or omissions in our content – which is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness even if we only depend on the infromation sources that are believed to be accurate.

Session Request

We will reach out to you within 24 hours to discuss your request. Please note that we only respond to requests with a valid business e-mail address