Japan Tobacco (2914) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue 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.

• Adjusted operating profit at constant FX grew 20.8% year-on-year, driven by robust tobacco pricing and the Vector acquisition.

• Pharmaceutical business, including Torii, to be transferred to Shionogi, with an expected ¥6 billion profit decrease in FY2025; classified as discontinued operations from Q3.

• Dividend policy remains unchanged, with tobacco as the core profit driver and processed food as complementary.

Financial highlights

• Q1 2025 core revenue: ¥807.3 billion (+13.3% YoY at constant FX); reported revenue: ¥826.98 billion (+11.7% YoY).

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

• Operating profit: ¥248.8 billion (+15.3% YoY); profit: ¥157.5 billion (+0.1% YoY).

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

• Basic earnings per share for Q1 2025 was ¥88.69, nearly unchanged from ¥88.58 in Q1 2024.

Outlook and guidance

• 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, unaffected by the pharmaceutical business transfer.

• Confident in achieving full-year targets, though Q2 and beyond may see slower growth rates than Q1.

• Monitoring FX volatility and macroeconomic risks, with updates to forecasts as needed.