Japan Tobacco (2914) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw double-digit top-line growth, with consolidated AOP up 20.8% at constant FX, driven by robust tobacco pricing and the Vector acquisition.

• Pharmaceutical business, including Torii, to be transferred to Shionogi, resulting in a JPY 6 billion decrease in FY2025 profit; dividend policy remains unchanged.

• Tobacco business remains the core profit driver, with processed food as a complementary segment.

• Favorable FX trends and strong tobacco momentum position the group well for full-year targets.

• Revenue for Q1 2025 rose 11.7% year-on-year to ¥826.98 billion, with operating profit up 15.3% to ¥248.76 billion and profit attributable to owners at ¥157.48 billion, nearly flat year-on-year.

Financial highlights

• Q1 2025 core revenue: JPY 807.3bn (+13.3% YoY at constant FX); reported revenue: JPY 827.0bn (+11.7% YoY).

• Adjusted operating profit (AOP): JPY 273.8bn (+20.8% YoY at constant FX); reported AOP: JPY 266.6bn (+17.6% YoY).

• Operating profit: JPY 248.8bn (+15.3% YoY); profit: JPY 157.5bn (+0.1% YoY).

• Gross profit increased to ¥480.77 billion from ¥420.23 billion year-over-year.

• Tobacco business core revenue: JPY 738.5bn (+13.0% YoY); AOP: JPY 273.2bn (+17.8% YoY).

Outlook and guidance

• Confident in achieving full-year 2025 targets, with Q1's strong performance expected to continue, though growth may moderate due to higher costs and investments.

• Full-year 2025 revenue forecast is ¥3,273 billion (+3.9% YoY), with operating profit expected at ¥671 billion (+107.4%) and profit attributable to owners at ¥450 billion (+151.1%).

• Adjusted operating profit at constant FX for 2025 is forecast at ¥815 billion (+8.4% YoY).

• Annual dividend forecast remains at ¥194 per share, based on continuing operations.

• Currency volatility and macroeconomic factors to be closely monitored, with updates to guidance as needed.