JAPAN
Japan Tobacco Inc. (JT) posted a lower-than-expected quarterly profit on, hurt by a sharp drop in domestic cigarette sales as more smokers switch to vaping products and more smokers are quitting than expected.
JT’s operating profit came in at JPY156.4 billion (US$1.37 billion) for the third quarter ended September, up from JPY149.6 billion a year ago but below an average estimate of JPY162.2 billion from five analysts polled by Thomson Reuters. For the first nine months of the year, profits were down 5% at JPY469.7 billion.
Although JT commands more than 60% of the cigarette market at home, it has been struggling to catch up in the heat-not-burn market, lagging Philip Morris International and its iQOS device.
Increasing demand for vaping products affected JT’s domestic cigarette sales, which fell 11.8% from a year ago in terms of volume over January to September. In September alone, the year-on-year decline was 13.6%. For 2017, Japan Tobacco kept its operating profit forecast at JPY565 billion, down 4.8% from the previous year.