Japan Tobacco (2914) Q2 2024 earnings summary

Executive summary

• Revenue and profit grew in the first half of 2024, led by strong tobacco pricing and RRP growth, with processed food also supporting profit.

• Operating profit rose 4.6% and net profit increased 6.3% year-on-year, supported by lower financial costs and improved working capital.

• Comprehensive income surged 48% year-on-year to ¥791.9 billion, driven by strong foreign currency translation gains.

• Upward revision of full-year forecasts for revenue, AOP, and profit, reflecting strong first-half results and favorable FX.

• Free cash flow grew by ¥24.9 billion to ¥179.8 billion.

Financial highlights

• Consolidated revenue for Jan–Jun 2024: ¥1,569.9B, up 12.7% year-over-year; core revenue up 6.2% at constant FX.

• Adjusted operating profit (AOP): ¥454.8B, up 2.7% at constant FX; reported AOP: ¥453.1B, up 2.3%.

• Operating profit: ¥432.7B, up 4.6%; net profit: ¥305.2B, up 6.3% year-over-year.

• Free cash flow: ¥179.8B, an increase of ¥24.9B year-over-year.

• RRP (Reduced-Risk Products) volume up 25.5% year-on-year; RRP revenue up 29%.

Outlook and guidance

• Full-year 2024 revenue forecast revised up to ¥3,109.0B (+9.4% vs. 2023); core revenue at ¥2,856.0B (+4.7%).

• AOP forecast raised to ¥745.0B at constant FX (+2.3%); reported AOP to ¥710.0B.

• Operating profit forecast at ¥660.0B; net profit at ¥475.0B.

• Annual dividend forecast maintained at ¥194 per share; payout ratio projected at 73%.

• Total tobacco volume expected to decline 0.5–1% year-on-year, with RRP growth offset by combustibles decline.