09 08-12 jt results-q1-1

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09 08-12 jt results-q1-1

  1. 1. Overview of Consolidated Financial Results for the 3 months ended June 30, 2012 CFO and Executive Vice President Naohiro Minami*Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended to facilitate the understanding of individual businesses.*For details of each indicator, please refer to annotations on slide 13. Caution concerning Forward-Looking Statements Forward- Forward-Looking and Cautionary Statements Forward- This presentation contains forward-looking statements about our industry, business, plans and objectives, forward- objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements reflect future expectations, identify strategies, discuss market trends, contain identify projections of operational results and financial conditions, and state other forward-looking information. forward- These forward-looking statements are subject to various known and unknown risks, uncertainties and other forward- risks, factors that could cause our actual results to differ from those suggested by any forward-looking statement; forward- these forward looking statements are not intended to be construed as our assurance for it to materialize in the construed future. We assume no duty or obligation to update any forward-looking statement or to advise of any change in forward- the assumptions and factors on which they are based. Risks, uncertainties or other factors that could cause uncertainties actual results to differ materially from those expressed in any forward-looking statement include, without forward- limitation: (1) health concerns related to the use of tobacco products; (2) legal or regulatory developments and changes; including, without limitation, tax increases and restrictions on sales, marketing and use of tobacco products, governmental investigations and privately governmental imposed smoking restrictions; (3) litigation in Japan and elsewhere; (4) our ability to further diversify our business beyond the tobacco industry; tobacco (5) our ability to successfully expand internationally and make investments outside Japan; investments (6) competition and changing consumer preferences; (7) the impact of any acquisitions or similar transactions; (8) local and global economic conditions; and (9) fluctuations in foreign exchange rates and the costs of raw materials. materials. 2 1
  2. 2. Consolidated financial results:Revenue and profit growth is driven by tobacco business, solid start in line with the startannual forecast 【Results for April-June 2012】 436.8 +17.2%Key driver: Revenue 512.1Top-line growth of tobacco business  Japanese domestic: 113.9 Sales volume grew due to Adjusted +45.8% 166.1 reverse effect of the EBITDA1 +37.0% earthquake impact 156.0  International: 76.4 Operating +68.2% Strong pricing, volume growth 128.6 Profit and mix improvement 46.1 +83.2% Profit2 84.5 2011 Reported 2012 At Constant FX (JPY BN) 2012 Reported 3Japanese domestic tobacco business:Revenue and profit growth driven by strong sales volume increase Reverse effect of the earthquake impact in the same period of prior fiscal year:  Restrictions on shipment volume and number of products shipped  Appropriation of earthquake-related losses 【Results for April-June 2012】 +59.2% 2011 (BNU, JPY BN) 2012 +108.5% 165.3 +59.5% 103.9 76.6 29.4 36.7 18.4 Total Sales Volume 3 Core Revenue 4 Adjusted EBITDA 1 4 2
  3. 3. Japanese domestic tobacco business:Market share recovered steadilyJT Share Movement 【New Product Launch for April-June 2012】 62.0% 61.0% 59.7% 59.4% 60.0% 59.1% 59.0% 58.0% 57.0% April May Jun (%) 65 JT Share(Quarter to Date) JT Share (Year to Date) 59.3 58.7 59.2 59.4 60 <New Product Launch> Hi-Lite Inazma Menthol 8 Box 55 Hi-Lite Inazma Menthol One Box 54.9 New product launch 53.6 in mid-May 50 50.9 45 40.8 40 40.8 35 FY3/2012 FY3/2012 FY3/2012 FY3/2012 FY3/2013 Q1 Q2 Q3 Q4 Q1 Source: TIOJ, JT EstimateTHIS SLIDE HAS BEEN DEVELOPED TO EXPLAIN JT’S PERFORMANCE TO OUR INVESTORS.  IT IS NOT INTENDED TO PROMOTE THE PURCHASE OF OUR PRODUCTS OR TO INDUCE SMOKING. 5International tobacco business:Adjusted EBITDA at constant rates of exchange increased driven by top-line growth by top- 【Results for Jan-Mar 2012】 Adjusted EBITDA 1 +21.4% +11.8% ($MM) -123 +215 -86 +101 1,094 1,008 901 2011 Reported Volume Price/Mix Costs 2012 FX 2012 Reported @Constant FX 6 3
  4. 4. International tobacco business:GFB momentum continued, led by innovative Winston and LD offerings offerings【Results for Apr-Jun 2012】 GFB Shipment Volume Winston Shipment Volume (BNU) +5.2% +8.4% (BNU) 69.7 33.5 36.3 66.2 2011 2012 2011 2012 Total Shipment Volume 5 LD Shipment Volume +2.8% (BNU) +13.6% (BNU) 110.4 113.5 10.5 11.9 2011 2012 7 2011 2012International tobacco business:Market share gain continued in most key markets【12-month moving average】 ppt change June 2012 vs. last year Italy 21. 4% +1.0 France 16.7% +0.5 Spain 22.1% +1.7 UK 38.8% -0.2 Russia (total) 36.7% -0.7 Russia (GFB) 21.3% 21.3 +1.6 +1.6 Turkey 25.4% +2.0 Taiwan 38.3% -0.2 Source: AC Nielsen, Logista and JTI estimate 8 4
  5. 5. International tobacco business:Pricing, GFB growth and our broadened business base drove strong core revenue growth【Results for Jan-Jun 2012】 Core revenue6 +13.4% +6.6% ($MM) +468 -365 +253 6,093 5,728 5,372 2011 Reported Volume Price/Mix 2012 FX 2012 Reported @Constant FX Core revenue6 growth by cluster (at constant rates of exchange) (%) 19.8 15.5 6.1 6.7 SWE NCE CIS+ RoW 9Pharmaceutical business:Development of JTT-705 terminated (at licensee), steady progress for JTK-303 and JTT- JTK-MEK Inhibitor  Increase in sales of REMITCH® capsules 【Results for April-June 2012】 and Truvada® tablets at Torii Pharmaceutical Revenue  Increase in R&D expenses from advance in (JPY BN) compound developments +1.4 【Status of late phase clinical trials】 Status of clinical development at licensee 12.7 11.3 ■ JTK-303:Licensed to Gilead Sciences (US);Gilead has filed applications to US FDA and European Medical Association for 2011 2012 the single‐tablet regiment containing JTK‐303 as well as for JTK-303 as mono agent (JPY BN) Adjusted EBITDA1 ■ MEK Inhibitor:Licensed to Glaxo -0.8 Smith Kline (UK); preparing for filing for the treatment of Melanoma -3.5  JTT-705: Licensed to Roche (Switzerland); development -2.7 terminated 2011 2012 Status of clinical development at JT ■ JTT-751:Prepare for filing in FY3/13 10 5
  6. 6. Food business:Revenue and profit declined, but steady initiatives to achieve top-line growth continued top- 【Results for April-June 2012】  Both beverage and processed Revenue food business, were affected by, (JPY BN) among other factors, the reverse -1.5 effect of post-earthquake 90.1 88.5 temporary demand increase  Decline of revenue in the Beverage 47.3 46.5 beverage business, raw material cost increase in the processed Processed 42.8 42.0 food business Foods 2011 2012【Enhance the ‘Roots’ brand】 【Focus on Staple food products】 ■ New Products for Autumn Adjusted EBITDA1 (JPY BN) -1.4 5.8 4.4 2011 2012 11In closing: Steady start for the April-June period, in line with the annual forecast April- In the international tobacco business, while top-line performance for top- the January-June period has a firmer tone, the extent of depreciation of January- local currencies against the dollar was greater than our assumption assumption  we remain cautious due to economic outlook in the Eurozone and forex movements Japanese domestic tobacco business, pharmaceutical business and food business performed steadily Each business division to pursue its strategy to achieve the forecast forecast 12 6
  7. 7. <Annotations>1 Adjusted EBITDA : Operating profit + depreciation and amortization + impairment losses on goodwill ± restructuring-related income and costs2 Profit: Profit attributable to owners of the parent3 Total Sales Volume: (Japanese Domestic Tobacco Business) Excludes sales volume of domestic duty free and the China business4 Core Revenue: (Japanese Domestic Tobacco Business) Excludes revenues from distribution of imported tobacco in the Japanese domestic tobacco business and other peripheral businesses5 Total Shipment Volume: (International Tobacco Business) Includes cigars, pipe tobacco and snus, excluding contract manufactured products6 Core Revenue: (International Tobacco Business): Excludes revenues from distribution, contract manufacturing and other peripheral businesses. 13<Back up data> All the detailed figures comes to <Back up data> 14 7
  8. 8. <Back up data> Consolidated Annual Forecast for FY 3/2013 FY3/2012 FY3/2013 Change (JPY BN) Actual Forecast Revenue 2,033.8 2,120.0 +4.2% Operating Profit 459.2 483.0 +5.2% Profit attributable to owners of the parent 320.9 318.0 ‐0.9% 1) Adjusted EBITDA 577.1 595.0 +3.1% at constant rates of exchange 1) Adjusted EBITDA 577.1 607.0 +5.2%  FY 3/2012: Adjusted Profit1) 290.8 BN Yen Adjusted EPS2) 152.65 Yen3) (As a basis for FY 3/2013 adjusted EPS at constant rates of exchange)  Aim for high single-digit growth per annum of adjusted EPS at constant rates of exchange over mid- to long-term1) Adjusted profit = profit attributable to owners of the parent + 3)  A 200 for 1 stock split  was conducted, effective as of July 1, 2012. impairment of goodwill, restructuring-related income/expenses and The figure is calculated on the assumption that this stock split took  tax/minority adjustments。 place  at the beginning of the prior fiscal year.2) Adjusted EPS = (Profit or loss attributable to owners of the parent +  Impairment of goodwill ± Restructuring‐related income and expenses ± Tax  and Minority interests adjustments)  / Diluted weighted average common shares  (excluding shares held as treasury shares) <Back up data> Composition Ratio by Cluster 【Results for January-June 2012】 BNU $MM 212.4 5,728 Rest-of-the-World 29% 32% 33% CIS+ 45% 17% North & Central Europe 11% South & West Europe 15% 18% Total Shipment Core Revenue Volume 16 8
  9. 9. <Back up data> Total Shipment Volume Growth (vs same period of prior fiscal year) 2012 2012 2012 Jan-Mar Apr-Jun Jan-Jun JTI 4.7% 2.8% 3.7% South & West Europe 13.0% -3.5% 3.9% Spain 38.7% -8.9% 9.1% Italy 13.3% 4.0% 8.3% France 7.8% -6.2% 0.4% North & Central Europe 7.0% -1.8% 2.5% UK 0.5% -2.5% -0.9% Ireland -3.1% -8.3% -5.8% Austria 7.8% -4.7% 0.7% Sweden -1.6% -5.0% -3.5% Poland 23.3% -4.4% 8.0% CIS+ 0.7% 3.1% 2.0% Russia 0.3% -0.2% 0.0% Ukraine 2.7% -2.5% -0.2% Kazakhstan 2.5% -2.9% -0.6% Romania -3.1% -2.3% -2.7% Rest of the World 5.7% 7.7% 6.7% Turkey 4.3% 10.5% 7.5% Taiwan -13.4% 8.4% -3.4% Canada 7.7% 1.2% 4.1% Malaysia 9.5% -2.6% 3.3% 17<Back up data> GFB Volume Growth (vs same period of prior fiscal year) 2012 2012 2012 Jan-Mar Apr-Jun Jan-Jun JTI 9.5% 5.2% 7.2% South & West Europe 14.0% -2.9% 4.7% North & Central Europe 13.4% 0.7% 6.7% CIS+ 13.9% 12.4% 13.1% Rest of the World -0.8% 1.3% 0.3% 18 9
  10. 10. <Back up data> GFB Shipment Volume 2012 2012 2012 BNU Jan-Mar Apr-Mar Jan-Jun GFB 61.1 69.7 130.8 (+9.5%) (+5.2%) (+7.2%) Winston 31.3 36.3 67.6 (+12.0%) (+8.4%) (+10.0%) Camel 9.6 10.4 20.0 (+6.8%) (-2.9%) (+1.5%) Mild Seven 4.5 4.8 9.3 (-12.0%) (+1.5%) (-5.5%) B&H 2.6 2.5 5.1 (+3.9%) (-8.9%) (-2.8%) Silk Cut 0.9 0.9 1.8 (-8.6%) (-14.8%) (-11.8%) LD 9.8 11.9 21.8 (+25.3%) (+13.6%) (+18.6%) Sobranie 0.3 0.4 0.8 (+54.4%) (+32.7%) (+41.4%) Glamour 2.0 2.5 4.5 (-6.4%) (-9.0%) (-7.8%) Numbers in ( ) : % change vs prior year 19<Back up data> Excise Tax and Price Increase for January-June 2012 January- excise tax price increase Jul, Sep 2011 Italy Sep 2011 i) Mar 2012 France ‐ Oct 2011 Temporary price reduction from Spain Apr 2012 June to Sep 2011 April 2012 Jan i) , Mar 2011 Jan, Mar, Sep 2011 UK Mar 2012 Mar 2012 Jan 2011 Jun, Dec 2011 Russia Jan, Jul 2012 June 2012 Turkey Oct 2011 Oct 2011 Taiwan Sep 2011 i) Mar‐Apr, Sep 2011 ii) ⅰ)Increase in VAT ⅱ)Price increase for some brands each month 20 10
  11. 11. <Back up data> Share of Key Markets (3 Month Average) 2011 2011 2011 2012 2012 Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Italy 20.6% 20.8% 21.0% 21.8% 22.0% France 16.2% 16.6% 16.5% 17.2% 16.5% Spain 20.6% 21.7% 21.8% 22.6% 22.3% UK 38.9% 38.8% 38.5% 38.7% 39.1% Russia 37.4% 37.2% 36.4% 36.5% 36.7% (GFB) 20.3% 21.0% 21.0% 21.3% 21.9% Turkey 23.9% 24.2% 25.0% 25.9% 26.3% Taiwan 37.7% 38.2% 37.7% 38.0% 39.2% Source: AC Nielsen, Logista and JTI Estimate 21<Back up data> FX Rate 2012 2012 2012 Jan‐Mar Apr‐Jun Jan‐Jun RUB/$ 30.15 31.06 30.60 (-2.8%) (-9.8%) (-6.4%) GBP/$ 0.64 0.63 0.63 (-0.6%) (-3.0%) (-1.8%) EUR/$ 0.76 0.78 0.77 (-2.0%) (-10.7%) (-6.4%) CHF/$ 0.92 0.94 0.93 (+4.3%) (-6.8%) (-1.3%) TWD/$ 29.71 29.61 29.66 (-0.7%) (-2.5%) (-1.6%) Yen/$ 79.35 80.18 79.77 (+3.7%) (+1.9%) (+2.8%) Numbers in ( ) : % change vs prior year 22 11
  12. 12. [Reference Material]Analysis of Consolidated Financial Results forthe 3 months ended June 30, 2012*Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended to facilitate the understanding of individual businesses.*Please refer to slide 12 for each indicator. Caution concerning forward-looking statements Forward-Looking and Cautionary Statements This presentation contains forward-looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements discuss future expectations, identify strategies, discuss market trends, contain projections of operational results and financial condition and state other forward-looking information. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to differ from those suggested by any forward-looking statement; ; these forward looking statements are not intended to be construed as our assurance for it to materialize in the future. We assume no duty or obligation to update any forward-looking statement or to advise of any change in the assumptions and factors on which they are based. Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation: (1) health concerns relating to the use of tobacco products; (2) legal or regulatory developments and changes; including, without limitation, tax increases and restrictions on the sale, marketing and usage of tobacco products, governmental investigations and privately imposed smoking restrictions; (3) litigation in Japan and elsewhere; (4) our ability to further diversify our business beyond the tobacco industry; (5) our ability to successfully expand internationally and make investments outside of Japan; (6) competition and changing consumer preferences; (7) the impact of any acquisitions or similar transactions; (8) local and global economic conditions; and (9) fluctuations in foreign exchange rates and the costs of raw materials. 2 12
  13. 13. Financial Results for the 3 months ended June 30, 2012 (IFRS) Japanese Domestic Tobacco Business – Core Revenue 1 April-June 2011 103.9 Volume Effect +59.6 Price Effect +1.9 Others (including -0.1 China business and duty free) April-June 2012 165.3 80.0 90.0 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 (JPY BN) 3Financial Results for the 3 months ended June 30, 2012 (IFRS) Japanese Domestic Tobacco Business – Adjusted EBITDA 2 April-June 2011 36.7 Volume Effect +48.3 Price Effect +1.9 Costs -0.8 Sales Promotion -9.5 and Others April-June 2012 76.6 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 (JPY BN) 4 13
  14. 14. Financial Results for the 3 months ended June 30, 2012 (IFRS) International Tobacco Business – Core Revenue 3 Jan-March 2011 2,447 Volume Effect +151 Price and +226 product mix effect Jan-March 2012 at constant rates 2,824 of exchange Forex Impact 4 -93 Jan-March 2012 2,731 2,250 2,400 2,550 2,700 2,850 (MM US$) 5Financial Results for the 3 months ended June 30, 2012 (IFRS) International Tobacco Business – Adjusted EBITDA 2 Jan-March 2011 901 Volume Effect +101 Price and +215 product mix effect Costs -123 Jan-March 2012 1,094at constant rates of exchange Forex impact 4 -86 Jan-March 2012 1,008 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 (MM US$) 6 14
  15. 15. Financial Results for the 3 months ended June 30, 2012 (IFRS) Pharmaceutical Business – Revenue April-June 2011 11.3 Torii Pharmaceutical Co., Ltd (non-consolidated +1.4 IFRS basis) Royalty income, etc 0.0 April-June 2012 12.7 10.8 11.0 11.2 11.4 11.6 11.8 12.0 12.2 12.4 12.6 12.8 (JPY BN) 7Financial Results for the 3 months ended June 30, 2012 (IFRS) Pharmaceutical Business – Adjusted EBITDA 2 April-June 2011 -2.7 R&D expenses -0.4 (non-consolidated) Operating income of Torii Pharmaceutical Co., Ltd. -0.4 (non-consolidated IFRS basis) JT milestone revenue, -0.1 royalty income and others April-June 2012 -3.5 -3.6 -3.5 -3.4 -3.3 -3.2 -3.1 -3.0 -2.9 -2.8 -2.7 -2.6 -2.5 -2.4 (JPY BN) 8 15
  16. 16. Financial Results for the 3 months ended June 30, 2012 (IFRS) Food Business - Revenue April-June 2011 90.1 Beverages -0.7 Processed Food -0.8 April-June 2012 88.5 85.5 86.0 86.5 87.0 87.5 88.0 88.5 89.0 89.5 90.0 90.5 (JPY BN) 9Financial Results for the 3 months ended June 30, 2012 (IFRS) Food Business – Adjusted EBITDA 2 April-June 2011 5.8 Beverages -1.0 Processed Food -0.5 Overhead costs +0.1 April-June 2012 4.4 3.5 4.0 4.5 5.0 5.5 6.0 (JPY BN) 10 16
  17. 17. Financial Results for the 3 months ended June 30, 2012 (IFRS) Profit attributable to owners of the parent April-June 2011 46.1 Operating profit +52.2 Financial income/ +0.1 financial costs Income taxes/ Profit attributable to non-controlling -13.9 interest April-June 2012 84.5 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 (JPY BN) 11<Annotations> 1 Core Revenue: Revenue excluding revenues from distribution of imported tobacco in the Japanese domestic tobacco business and other peripheral businesses 2 Adjusted EBITDA : Operating profit + depreciation and amortization + impairment losses on goodwill ± restructuring-related income and costs 3 Core Revenue: Revenue excluding revenues from distribution, contract manufacturing and other peripheral businesses 4 Forex Impact: Forex impact is the fluctuation between USD and other currencies 12 17
  18. 18. Results for the 3 months ended Jun 30,20121. Summary of Business Performance (unit: JPY billion,%) 4.Consolidated financial position data (unit: JPY billion) 3M ended 3M ended Rates of As of end of As of end of Change Change Jun. 2011 Jun. 2012 Change Mar.2012 Jun.2012 Revenue 436.8 512.1 +75.3 +17.2% Total Assets 3,667.0 3,857.3 +190.3 Operating profit 76.4 128.6 +52.2 +68.2% Total Equity 1,714.6 1,895.5 +180.9 Profit before income taxes 72.1 124.4 +52.3 +72.4% Equity attributable to owners of the parent company 1,634.1 1,812.4 +178.4 Profit 47.8 86.4 +38.6 +80.8% BPS(attributable to owners of parent company) (yen) 858.09 891.60 +34.00 Profit(attributable to owners of parent company) 46.1 84.5 +38.4 +83.2% *: A 200 for 1 stock split is done, effective as of July 1, 2012. Calculated on the assumption that this stock split was conducted at the beginning of the previous fiscal Adjusted EBITDA*1 113.9 156.0 +42.1 +37.0% year. *1 :Adjusted EBITDA=Operating profit + depreciation and amortization+ impairment losses on goodwill ±restructuring-related income and costs 5.Liquidity* (unit: JPY billion) (Reference) (unit: JPY billion,%) As of end of As of end of Change 3M ended 3M ended Rates of Mar.2012 Jun.2012 Change Jun. 2011 Jun. 2012 Change Liquidity 431.2 367.8 -63.4 *: Liquidity=cash and deposits+marketable securities+securities purchased under repurchase agreements Adjusted EBITDA at constant rates of exchange*2 113.9 166.1 +52.2 +45.8% * 6.Interest-bearing debt (unit: JPY billion) *2 :3M ended Jun.2011-Actual As of end of As of end of 3M ended Jun.2012- Regarding international tobacco business, at the same foreign exchange rates between local Change Mar.2012 Jun.2012 currency vs USD and JPY vs USD as 3M ended Jun.2011 Interest-bearing debt 502.4 432.4 -70.02.Breakdown of net sales (unit: JPY billion,%) *: Interest-bearing debt = short-term bank loans + CP + bonds + long-term borrowings + lease obligation 3M ended 3M ended Rates of 7.Consolidated cash flows data (unit: JPY billion,%) Change Jun. 2011 Jun. 2012 Change 3M ended 3M ended Rates of Change Revenue 436.8 512.1 +75.3 +17.2% Jun. 2011 Jun. 2012 Change Japanese domestic tobacco 114.6 173.1 +58.5 +51.0% Cash flows from operating activities -38.1 98.1 +136.2 - Core revenue*1 103.9 165.3 +61.4 +59.2% Cash flows from investing activities -21.5 -26.4 -4.9 - International tobacco *2 216.9 233.6 +16.7 +7.7% Cash flows from financing activities -134.2 -140.5 -6.3 - Core revenue *3 201.4 216.7 +15.3 +7.6% Cash and cash equivalents, beginning of the year 244.2 404.7 +160.5 +65.7% Pharmaceutical 11.3 12.7 +1.4 +12.4% Foreign currency translation adjustments on cash 1.8 4.8 +2.9 +158.1% Food 90.1 88.5 -1.5 - 1.7% and cash equivalents Beverages 47.3 46.5 -0.7 - 1.5% Cash and cash equivalents, end of the year*1 52.2 340.7 +288.5 +552.1% Processed foods 42.8 42.0 -0.8 - 1.9% FCF*2 -60.3 72.3 +132.6 - Others 3.9 4.2 +0.2 +6.3% *1 Included in “Cash and cash equivalents” at the end of this quarter is ¥14.2 billion * (IRR 2,119.8 billion) held by the Group’s Iranian subsidiary, JTI Pars PJS Co.. Due to international sanctions and other factors imposed on Iran, the subsidiary’s ability to remit funds (Reference) (unit: USD million,%) outside of Iran is restricted. * Translated at the official exchange rate as published by the Central Bank of Iran. Due to international sanctions and other factors, 3M ended 3M ended Rates of significant disparity has arisen between the official exchange rates and rates offered by foreign exchange offices. Change Mar. 2011 Mar. 2012 Change *2 :FCF=(cash flow from operating activities + cash flow from investing activities) excluding the following items: From “cash flow from operating activities”: Dividends received / interest received and its tax effect / interest paid and its tax effect International tobacco From “cash flow from investing activities”: Cash outflow from purchase of marketable securities / proceeds from sales of marketable 2,447 2,731 +284 +11.6% securities /cash outflow from purchases of investment securities / proceeds from sales of investment securities / others (but not business- Core revenue*3 related investment securities, which are included in the investment securities item) International tobacco Core revenue at constant rates 2,447 2,824 +377 +15.4% of exchange*3*4 8.Capital expenditures (unit: JPY billion,%) *1 :Excluding revenue from the distribution business of imported tobacco 3M ended 3M ended Rates of Change *2 :International tobacco business: 3M ended Mar.2011 and 3M ended Mar.2012 Jun. 2011 Jun. 2012 Change *3 :Excluding revenue from the distribution, contract manufacturing and other peripheral business Capital expenditures 23.1 24.6 +1.6 +6.7% *4 :3M ended Mar.2011-Actual Japanese domestic tobacco 10.3 11.8 +1.5 +14.3% 3M ended Mar.2012- at the same foreign exchange rates between local currency vs USD as 3M ended Mar.2011 International tobacco* 7.3 7.4 +0.1 +1.3%3.Adjusted EBITDA by business segment*1 (unit: JPY billion,%) Pharmaceutical 1.2 0.8 -0.4 -33.8% 3M ended 3M ended Rates of Food 3.6 3.7 +0.1 +2.8% Change Jun. 2011 Jun. 2012 Change Other/Elimination and corporate 0.6 0.9 +0.3 +49.3% Consolidated Operating profit 76.4 128.6 +52.2 +68.2% * :International tobacco business: 3M ended Mar.2011 and 3M ended Mar.2012 Adjustment*3 37.5 27.4 -10.1 - 26.9% 9.Business data Adjusted EBITDA*1 113.9 156.0 +42.1 +37.0% 【Japanese domestic tobacco business】 3M ended 3M ended Rates of Change Japanese domestic tobacco Operating profit 26.9 68.2 +41.3 +153.2% Jun. 2011 Jun. 2012 Change Adjustment*3 9.8 8.4 -1.4 - 14.1% JT sales volume* 18.4 29.4 +11.0 +59.5% BNU Adjusted EBITDA*1 36.7 76.6 +39.9 +108.5% Total demand 45.1 49.4 +4.3 +9.5% BNU International tobacco Operating profit*2 52.4 67.1 +14.7 +28.1% JT market share 40.8% 59.4% 18.6%pt Adjustment*2*3 21.8 12.9 -8.9 - 41.0% JT net sales after tax per 1,000 cigarettes 544.4 550.8 +6.4 +1.2% JPY Adjusted EBITDA*1*2 74.2 80.0 +5.8 +7.8% *: Sales volume of domestic duty-free and China division is excluded, which was 0.8billion for 3 months ended Jun. 2011 and 0.8 billion for 3 months ended Jun. 2012, respectively. Pharmaceutical Operating profit -3.5 -4.3 -0.8 - Adjustment*3 0.8 0.8 +0.0 - 2.8% 【International tobacco business】 3M ended 3M ended Rates of Change Adjusted EBITDA *1 -2.7 -3.5 -0.8 - Jun. 2011 Jun. 2012 Change Food Operating profit 1.4 0.2 -1.2 - 86.2% Total shipment volume * 94.5 98.9 +4.4 +4.7% BNU Adjustment*3 4.5 4.2 -0.2 - 5.1% GFB shipment volume 55.8 61.1 +5.3 +9.5% BNU Adjusted EBITDA *1 5.8 4.4 -1.4 - 24.1% JPY/USD rate for consolidation 82.31 79.35 -2.96 +3.7% JPY Other/Elimination Operating profit -0.8 -2.6 -1.8 - RUB/USD rate for consolidation 29.30 30.15 +0.85 -2.8% RUB Adjustment *3 0.6 1.1 +0.5 +85.6% GBP/USD rate for consolidation 0.63 0.64 +0.01 -0.6% GBP Adjusted EBITDA *1 -0.2 -1.5 -1.3 - EUR/USD rate for consolidation 0.75 0.76 +0.01 -2.0% EUR (Reference) (unit: USD million,%) CHF/USD rate for consolidation 0.96 0.92 -0.04 +4.3% CHF 3M ended 3M ended Rates of TWD/USD rate for consolidation 29.51 29.71 +0.20 -0.7% TWD Change Mar. 2011 Mar. 2012 Change *: Total shipment volume includes cigars, pipe tobacco and snus, but does not include contract manufacturing. (unit: JPY billion,%) International tobacco Adjusted EBITDA*1*2 901 1,008 +107 +11.8% <Pharmaceutical business> 3M ended 3M ended Rates of Change International tobacco Adjusted EBITDA at constant Jun. 2011 Jun. 2012 Change 901 1,094 +193 +21.4% rates of exchange*1*2*4 R&D expenses 6.1 7.4 +1.3 +20.6% *1 :Adjusted EBITDA=Operating profit + depreciation and amortization+ impairment losses on goodwill ±restructuring-related income and costs <Food business> As of end of As of end of Change *2 :International tobacco business: 3M ended Mar.2011 and 3M ended Mar.2012 Mar.2012 Jun.2012 *3 :Depreciation and amortization + impairment losses on goodwill ±restructuring-related income and expenses and Number of beverage vending machines * 265,000 265,000 +0 others JT-owned 35,000 35,000 +0 *4 :3M ended Mar.2011-Actual Combined 84,000 85,000 +1,000 3M ended Mar.2012- at the same foreign exchange rates between local currency vs USD as 3M ended Mar.2011 *: Beverage vending machines include vending machines for cans and packs, etc. and for cups owned by other companies and operated by our subsidiary. "JT-owned" vending machines are owned by JT. "Combined" vending machines are owned by our subsidiaries or affiliates ,and focus on selling JT brand beverages but also sell non-JT brand beverages. 18
  19. 19. Results for the 3 months ended Jun 30,201210.Account titles of P/L (unit: JPY billion,%) (unit: JPY billion,%) 3M ended 3M ended Rates of 3M ended 3M ended Rates of Change Change Jun. 2011 Jun. 2012 Change Jun. 2011 Jun. 2012 Change Revenue 436.8 512.1 +75.3 +17.2% Financial income 1.6 1.1 -0.5 - 30.2% Japanese domestic tobacco 114.6 173.1 +58.5 +51.0% Dividend income 0.4 0.3 -0.0 - 9.9% Core revenue*2 103.9 165.3 +61.4 +59.2% Interest income 0.4 0.6 +0.2 +40.5% International tobacco*1 216.9 233.6 +16.7 +7.7% Foreign exchange gain 0.7 - -0.7 - Core revenue*1*3 201.4 216.7 +15.3 +7.6% Other 0.0 0.1 +0.1 +4844.7% Pharmaceutical 11.3 12.7 +1.4 +12.4% Financial costs 5.9 5.3 -0.6 - 9.6% Food 90.1 88.5 -1.5 - 1.7% Interest expenses 4.3 2.7 -1.6 - 37.4% Beverages 47.3 46.5 -0.7 - 1.5% Pension/post retirement benefit 1.4 1.4 +0.1 +4.1% Processed foods 42.8 42.0 -0.8 - 1.9% Foreign exchange loss - 0.5 +0.5 - Others 3.9 4.2 +0.2 +6.3% Other 0.2 0.6 +0.5 +258.5% Cost of sales 195.2 216.8 +21.6 +11.1% Profit before income taxes 72.1 124.4 +52.3 +72.4% Gross profit 241.6 295.3 +53.7 +22.2% Income taxes 24.4 38.0 +13.6 +55.9% Other Operating profit 2.1 3.0 +1.0 +47.5% Profit 47.8 86.4 +38.6 +80.8% Gain on sale of tangible fixed assets, intangible Owners of the parent company 46.1 84.5 +38.4 +83.2% 0.2 1.6 +1.4 +593.6% assets and investment properties Non-controlling interests 1.7 1.9 +0.2 +13.8% Others 1.8 1.4 -0.4 - 23.9% Share of profit of investments accounted for using *1 :International tobacco business: 3M ended Mar.2011 and 3M ended Mar.2012 0.4 0.2 -0.1 - 35.3% the equity method *2 :Excluding revenue from the distribution business of imported tobacco SG&A 167.6 170.0 +2.4 +1.4% *3 :Excluding revenue from the distribution, contract manufacturing and other peripheral business Advertising expenses 3.6 3.8 +0.2 +5.0% *4 :Adjusted EBITDA=Operating profit + depreciation and amortization+ impairment losses on goodwill ±restructuring-related income and costs Promotion expenses 23.6 27.5 +4.0 +16.9% Freight and storage cost 7.3 6.8 -0.5 - 6.3% Commissions 8.8 9.5 +0.7 +7.9% Employee benefits expenses 61.6 61.6 +0.0 +0.0% R&D expenses 12.3 13.3 +1.0 +8.3% Depreciation and amortization 14.5 14.3 -0.2 - 1.4% Impairment losses 3.4 0.2 -3.3 - 95.1% Loss on sale of tangible fixed assets and 1.0 1.2 +0.2 +14.9% investment properties Corporation fee for termination of leaf tobacco - 0.0 +0.0 - farming Others 31.4 31.7 +0.3 +0.9% Operating profit 76.4 128.6 +52.2 +68.2% Depreciation and amortization 28.7 28.2 -0.5 - 1.8% Impairment losses on goodwill - - - - Restructuring-related income -0.1 -1.2 -1.1 - Restructuring-related costs 8.9 0.5 -8.4 - 94.7% Adjusted EBITDA *4 113.9 156.0 +42.1 +37.0% Japanese domestic tobacco Operating profit 26.9 68.2 +41.3 +153.2% Depreciation and amortization 9.8 9.6 -0.2 - 1.9% Impairment losses on goodwill - - - - Restructuring-related income - -1.2 -1.2 - Restructuring-related costs - 0.0 +0.0 - Adjusted EBITDA *4 36.7 76.6 +39.9 +108.5% International tobacco Operating profit*1 52.4 67.1 +14.7 +28.1% Depreciation and amortization*1 13.0 12.6 -0.4 - 3.2% Impairment losses on goodwill*1 - - - - Restructuring-related income*1 - 0.0 +0.0 - Restructuring-related costs*1 8.8 0.3 -8.5 - 97.1% Adjusted EBITDA *1*4 74.2 80.0 +5.8 +7.8% Pharmaceutical Operating profit -3.5 -4.3 -0.8 - Depreciation and amortization 0.8 0.8 +0.0 - 2.8% Impairment losses on goodwill - - - - Restructuring-related income - - - - Restructuring-related costs - - - - Adjusted EBITDA *4 -2.7 -3.5 -0.8 - Foods Operating profit 1.4 0.2 -1.2 - 86.2% Depreciation and amortization 4.4 4.2 -0.2 - 3.5% Impairment losses on goodwill - - - - Restructuring-related income - - - - Restructuring-related costs 0.1 - -0.1 - Adjusted EBITDA *4 5.8 4.4 -1.4 - 24.1% Others/Elimination Operating profit -0.8 -2.6 -1.8 - Depreciation and amortization 0.6 0.9 +0.3 +41.5% Impairment losses on goodwill - - - - Restructuring-related income -0.1 0.0 +0.1 - Restructuring-related costs 0.0 0.2 +0.2 +554.7% Adjusted EBITDA *4 -0.2 -1.5 -1.3 - 19
  20. 20. Results for the 3 months ended Jun 30,201211.Account titles of B/S (unit: JPY billion) (unit: JPY billion) As of end of As of end of As of end of As of end of Change Change Mar.2012 Jun.2012 Mar.2012 Jun.2012 Current assets 1,331.0 1,363.8 +32.8 Current liabilities 1,157.5 1,146.8 -10.7 Cash and cash equivalents 404.7 340.7 -64.0 Trade and other payables 298.7 288.4 -10.3 Cash and deposits 108.8 115.8 +7.0 Notes and accounts payable 165.4 157.8 -7.6 Short-term investment 295.9 224.9 -71.0 Other payables 71.7 57.6 -14.2 Trade and other receivables 327.8 357.5 +29.8 Other 61.5 73.0 +11.5 Notes and accounts receivable 311.8 343.4 +31.6 Bonds and borrowings※4 211.8 138.4 -73.4 Other 17.7 15.4 -2.3 Income taxes payable 42.5 52.7 +10.2 Allowance for doubtful accounts -1.7 -1.2 +0.5 Other financial libilities※4 8.0 8.1 +0.0 Inventories 446.6 458.5 +11.8 Provisions 5.7 5.0 -0.6 Merchandise and finished goods 112.5 130.1 +17.7 Other current liabilities※5 590.7 653.9 +63.2 Leaf tobacco 294.8 281.5 -13.3 Liabilities directly associated with non-current 0.1 0.3 +0.2 Other 39.3 46.8 +7.5 assets held-for-sale Other financial assets※3 27.4 29.6 +2.2 Non current liabilities 794.9 815.1 +20.2 Other current assets 123.2 174.2 +51.1 Bonds and borrowings※4 279.7 283.3 +3.6 Prepaid tobacco excise taxes 87.3 123.6 +36.3 Other financial liabilities※4 21.0 21.3 +0.3 Prepaid expenses 10.7 15.3 +4.6 Retirement benefit liabilities 315.0 320.8 +5.8 Consumption taxes payable 6.7 5.7 -1.1 Provisions 4.4 4.6 +0.2 Other 18.5 29.7 +11.2 Other non-current liabilities※5 92.2 97.2 +4.9 Non-current assets held for sale 1.4 3.3 +1.9 Deferred tax liabilities 82.5 87.9 +5.4 Non-current assets 2,336.0 2,493.5 +157.6 Liabilities 1,952.4 1,961.8 +9.5 PP&E 619.5 641.9 +22.4 Equity 1,714.6 1,895.5 +180.9 Cost 1,451.0 1,492.5 +41.5 Share capital 100.0 100.0 - Accumulated depreciation and Capital surplus 736.4 736.4 - -831.4 -850.6 -19.2 accumulated impairment losses Treasury shares -94.6 -94.6 - Land, buildings and structures 293.4 299.7 +6.3 Other components of equity -376.4 -225.3 +151.1 Cost 594.0 602.7 +8.7 Retained earnings 1,268.6 1,295.9 +27.3 Accumulated depreciation and Non-controlling interests 80.6 83.1 +2.5 -300.5 -303.0 -2.4 accumulated impairment losses Total liabilities and equity 3,667.0 3,857.3 +190.3 Machinery and vehicles 239.2 250.6 +11.4 Cost 670.6 695.3 +24.7 ※4 Bonds and borrowings(including other financial liabilities) (current & non-current) 520.5 451.1 -69.4 Accumulated depreciation and -431.4 -444.8 -13.3 accumulated impairment losses Derivative liabilities 5.1 6.1 +1.0 Tools, furniture and fixtures 55.8 58.6 +2.8 Short-term borrowings 43.5 44.4 +1.0 Cost 155.2 161.5 +6.2 Commercial paper - - - Accumulated depreciation and Current portion of long-term borrowings 78.2 1.1 -77.1 -99.5 -102.9 -3.4 accumulated impairment losses Current portion of bonds 90.1 92.9 +2.8 Construction in progress 31.1 33.0 +1.9 Long-term borrowings 49.3 48.6 -0.6 Cost 31.1 33.0 +1.9 Bonds 230.5 234.7 +4.2 Accumulated depreciation and Other 23.9 23.2 -0.7 - - - accumulated impairment losses Goodwill※1 1,110.0 1,221.9 +111.8 ※5 Other liabilities(current & non-current) 683.0 751.1 +68.1 Cost 1,110.0 1,221.9 +111.8 Tobacco excise taxes payable 240.5 315.8 +75.2 Accumulated depreciation and Tobacco special excise taxes payable 15.1 15.9 +0.8 - - - accumulated impairment losses Tobacco local excise taxes payable 191.4 201.4 +10.1 Intangible assets 306.4 327.9 +21.5 Consumption taxes payable 83.2 76.3 -6.9 Cost 848.0 888.8 +40.8 Provision for bonuses 39.7 18.3 -21.4 Accumulated depreciation and Compensated absences 18.6 19.9 +1.3 -541.5 -560.9 -19.3 accumulated impairment losses Other 94.5 103.5 +9.0 Trademark※2 257.3 276.0 +18.6 Cost 663.9 698.0 +34.1 Accumulated depreciation and -406.5 -422.0 -15.5 accumulated impairment losses Software 17.8 17.4 -0.4 Cost 97.3 99.6 +2.2 Accumulated depreciation and -79.6 -82.2 -2.6 accumulated impairment losses Other 31.3 34.6 +3.2 Cost 86.8 91.2 +4.4 Accumulated depreciation and -55.5 -56.7 -1.2 accumulated impairment losses Investment property 67.4 64.8 -2.5 Retirement benefit assets 14.4 16.3 +1.9 Investments accounted for using the equity 18.4 19.6 +1.1 method Other financial assets※3 67.5 65.3 -2.2 Deferred tax assets 132.2 135.8 +3.6 Total assets 3,667.0 3,857.3 +190.3 ※3 Other financial assets(current & non-current) 94.9 94.9 +0.0 Derivative assets 1.9 2.2 +0.3 Equities 39.1 37.7 -1.4 Bonds 8.8 9.0 +0.1 Time deposits 24.3 24.3 +0.0 Other 34.9 35.5 +0.6 Allowance for doubtful accounts -14.1 -13.8 +0.3 ※1 Goodwill 1,067.5 1,179.4 +111.8 International tobacco cash-generating unit Goodwill 25.4 25.4 - processed food cash-generating unit ※2 Trademark International tobacco business 254.5 273.2 +18.7 20

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