Japan Tobacco (2914) Q4 2025 earnings summary

Executive summary

• Achieved record-high financial results in FY2025, driven by strong tobacco business performance, successful integration of Vector Group in the US, and steady growth in the processed food segment despite a challenging environment.

• Revenue rose 13.4% year-over-year to ¥3,467.7 billion, with operating profit up 175.9% to ¥867.0 billion, mainly due to the absence of a large litigation provision and higher adjusted operating profit.

• Strategic focus on sustainable growth through investments in combustibles and RRP, especially heated products like Ploom Aura, and enhanced shareholder returns guided by the 4S Model.

• Continued commitment to purpose-driven management, innovation, and stakeholder value.

• Pharmaceutical business was deconsolidated and classified as discontinued operations after its transfer and sale.

Financial highlights

• Adjusted operating profit at constant FX grew 24.9% year-over-year to ¥927.5 billion, with core revenue up nearly 15%.

• Free cash flow increased by ¥102.2 billion to ¥272.7 billion, aided by higher AOP and non-recurrence of acquisition payments.

• Profit attributable to owners reached ¥510.2 billion, up 184.6% year-over-year, and basic earnings per share rose to ¥287.36.

• Dividend per share for 2025 set at ¥234, with a payout ratio temporarily exceeding the 75% target.

• Comprehensive income for the year was ¥686.4 billion, up 137.8% year-over-year.

Outlook and guidance

• For FY2026, revenue is forecast to rise 6.6% to ¥3,697.0 billion, with adjusted operating profit at constant FX expected to grow 8.9% to ¥964.0 billion.

• Profit attributable to owners is projected to increase 14.2% to ¥570.0 billion, with free cash flow also expected to rise significantly.

• Dividend for 2026 projected at ¥242 per share, maintaining a 75% payout ratio.

• Tobacco business AOP at constant FX expected to grow 8.5% in 2026, with volume expected to be flat to down 1%.

• Processed food business revenue expected to rise to ¥170.0 billion, but AOP to decrease to ¥8.0 billion due to higher raw material costs.