[This is an English translation prepared for reference purpose only. Should there be any inconsistency between the translation and the original Japanese text, the latter shall prevail.]
October 31, 2023
Consolidated Financial Results
for the Nine Months Ended September 30, 2023
Name of the Listed Company: | JAPAN TOBACCO INC. (Stock Code: 2914) |
Listed Stock Exchange: | Tokyo Stock Exchange |
URL: | https://www.jti.co.jp/ |
Representative: | Masamichi Terabatake, Representative Director and President, |
Chief Executive Officer | |
Contact: | Hiromasa Furukawa, Senior Vice President, Chief Financial Officer and Corporate |
Communications | |
Telephone: | +81-3-6636-2914 |
Scheduled date to file Quarterly Securities Report: October 31, 2023
Scheduled starting date of the dividend payments: -
Drawing up supplementary documents on quarterly financial results: Yes
Holding quarterly investors' meeting: Yes (for analysts and institutional investors)
(Yen amounts are rounded to the nearest million, unless otherwise noted.)
1. Consolidated Financial Results for the Nine Months of the Fiscal Year Ending
December 31, 2023 (from January 1, 2023 to September 30, 2023)
(1) Consolidated Operating Results (Cumulative) | (Percentages indicate year-on-year changes.) | |||||||
Revenue | Operating profit | Profit before income taxes | Profit for the period | |||||
Nine months ended | Millions of yen | % | Millions of yen | % | Millions of yen | % | Millions of yen | % |
September 30, 2023 | 2,157,018 | 7.4 | 631,847 | 9.1 | 586,209 | 9.4 | 444,532 | 10.1 |
September 30, 2022 | 2,008,548 | 13.7 | 579,341 | 20.5 | 535,596 | 15.5 | 403,930 | 18.7 |
Profit attributable to | Comprehensive income | |||||||
owners of the parent | Basic earnings per share | Diluted earnings per share | ||||||
for the period | ||||||||
company | ||||||||
Nine months ended | Millions of yen | % | Millions of yen | % | Yen | Yen | ||
September 30, 2023 | 442,010 | 9.5 | 757,058 | (39.3) | 249.01 | 248.95 | ||
September 30, 2022 | 403,807 | 19.2 | 1,247,747 | 139.6 | 227.53 | 227.45 |
(2) Consolidated Financial Position
Equity attributable to | Ratio of equity | Equity attributable to | |||
Total assets | Total equity | attributable to owners | |||
owners of the parent | of the parent company | owners of the parent | |||
company | to total assets | company per share | |||
As of | Millions of yen | Millions of yen | Millions of yen | % | Yen |
September 30, 2023 | 7,101,511 | 4,001,649 | 3,919,075 | 55.2 | 2,207.55 |
December 31, 2022 | 6,548,078 | 3,616,761 | 3,540,435 | 54.1 | 1,994.78 |
2. Cash Dividends
Annual dividends per share
First quarter-end | Second quarter-end | Third quarter-end | Fiscal year-end | Total | ||
Year ended December 31, | Yen | Yen | Yen | Yen | Yen | |
- | 75.00 | - | 113.00 | 188.00 | ||
2022 | ||||||
Year ending December 31, | - | 94.00 | - | |||
2023 | ||||||
Year ending December 31, | 94.00 | 188.00 | ||||
2023 (Forecast) | ||||||
Note: | Revisions to the cash dividends forecasts most recently announced: None |
3. Consolidated Earnings Forecasts for the Fiscal Year Ending December 31, 2023 (January 1, 2023 to December 31, 2023)
(Percentages indicate year-on-year changes.) | |||||||||
Profit attributable to | Basic earnings | ||||||||
Revenue | Operating profit | owners of the parent | |||||||
per share | |||||||||
company | |||||||||
Millions of yen | % | Millions of yen | % | Millions of yen | % | Yen | |||
Year ending | 2,844,000 | 7.0 | 678,000 | 3.7 | 464,000 | 4.8 | 261.39 | ||
December 31, 2023 | |||||||||
Note: | Revisions to the consolidated earnings forecasts most recently announced: Yes |
[Additional Information] Growth rate in adjusted operating profit at constant FX:
The Group has set its group-wide target for annual average growth rate in adjusted operating profit at constant FX, at mid to high single-digit over the mid- to long-term, and will continue to pursue this goal.
(Percentages indicate year-on-year changes.)
Adjusted operating profit at constant FX | |||||
Nine months ended | Millions of yen | % | |||
675,502 | 5.9 | ||||
September 30, 2023 (Cumulative) | |||||
Year ending | 764,000 | 5.0 | |||
December 31, 2023 (Forecast) | |||||
Note: | Revisions to the consolidated | earnings forecasts most recently announced: | Yes |
The Group also discloses certain non-GAAP financial measures that are not required or defined under IFRS, which is the accounting standard the Company applies. These non-GAAP financial measures are used internally to manage each of the business operations to understand their underlying performance, in view of the Group's target for mid- to long-term sustainable growth, and the Group believes that these financial measures are useful information for users of the financial statements to assess the Group's performance. For details of these financial measures, please refer to "Proper use of earnings forecasts, and other special matters, (2)."
For detailed information on the consolidated financial results, please refer to the materials for investors' meeting that were released on the Company's website (https://www.jt.com/investors/) on October 31, 2023.
Notes
-
Changes in significant subsidiaries during the current period (changes in specified subsidiaries resulting in change in scope of consolidation): Yes
Excluded: One company (JT INTERNATIONAL GROUP HOLDING B.V.) - Changes in accounting policies and changes in accounting estimates
- Changes in accounting policies due to revisions in accounting standards under IFRS:Yes
- Changes in accounting policies due to other reasons: None
- Changes in accounting estimates: Yes
For details, please refer to "1. Matters Regarding Summary Information, (1) Changes in Accounting Policies and Changes in Accounting Estimates."
-
Number of shares issued (ordinary shares)
a. Total number of shares issued at the end of the period (including treasury shares)
As of September 30, 2023 | 2,000,000,000 shares |
As of December 31, 2022 | 2,000,000,000 shares |
- Number of treasury shares at the end of the period
As of September 30, 2023 | 224,694,743 | shares |
As of December 31, 2022 | 225,146,463 | shares |
- Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended September 30, 2023 | 1,775,085,981 shares |
Nine months ended September 30, 2022 | 1,774,714,367 shares |
- Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
- Proper use of earnings forecasts, and other special matters
- The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions and suppositions deemed to be reasonable by the Company. Actual business and other results may differ substantially due to various factors. These forward-looking statements are not intended to be construed as our assurance for it to materialize in the future. Please refer to "FORWARD-LOOKING STATEMENTS" for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecasts.
- The Group also discloses certain non-GAAP financial measures that are not required or defined under IFRS, which is the accounting standard the Company applies. These non-GAAP financial measures are used internally to manage each of the business operations to understand their underlying performance, in view of the Group's target for mid- to long-term sustainable growth, and the Group believes that these financial measures are useful information for users of the financial statements to assess the Group's performance.
Adjusted operating profit
Adjusted operating profit presented is operating profit (loss) less amortization cost of acquired intangibles arising from business acquisitions and adjustment items (income and costs). Adjustment items (income and costs) are impairment losses on goodwill, restructuring income and costs, and other items. Furthermore, adjusted operating profit at constant FX is also presented as additional information. The Group has set its group-wide target for annual average growth rate in adjusted operating profit at constant FX, at mid to high single-digit over the mid- to long-term, and will continue to pursue this goal. Adjusted operating profit at constant FX is a financial measurement that excludes foreign exchange effects calculated and translated using the foreign exchange rates of the same period of the previous year from adjusted operating profit for the current period in the Tobacco Business. The results for the nine months ended September 30, 2023 on a constant FX basis exclude the increase in profit due to inflation in some markets calculated using certain methods.
The Group makes accounting adjustments to the financial statements of subsidiaries that operate in hyperinflationary economies according to the requirements stipulated in IAS 29 "Financial Reporting in Hyperinflationary Economies."
Attached Materials | ||
Index | ||
1. | Matters Regarding Summary Information | 2 |
(1) | Changes in Accounting Policies and Changes in Accounting Estimates | 2 |
(2) | Revisions to the Consolidated Earnings Forecasts Most Recently Announced | 2 |
2. Condensed Interim Consolidated Financial Statements | 4 | |
(1) | Condensed Interim Consolidated Statement of Financial Position | 4 |
(2) | Condensed Interim Consolidated Statement of Income and Consolidated Statement of | |
Comprehensive Income | 6 | |
(3) | Condensed Interim Consolidated Statement of Changes in Equity | 8 |
(4) | Condensed Interim Consolidated Statement of Cash Flows | 10 |
(5) | Segment Information | 12 |
(6) | Note on Premise of Going Concern | 16 |
- 1 -
1. Matters Regarding Summary Information
- Changes in Accounting Policies and Changes in Accounting Estimates
The material accounting policies adopted for the condensed interim consolidated financial statements are the same as those for the consolidated financial statements for the year ended December 31, 2022 except the following item. The Group computes income taxes for the interim period based on the estimated average annual effective tax rate. The Company and certain subsidiaries have transitioned from the consolidated taxation system to the group tax sharing system from the year ending December 31, 2023.
(Changes in Accounting Policies)
The Group has adopted the following new accounting standards, amended standards and new interpretations from the year ending December 31, 2023.
IFRS | |
IAS 1 | Presentation of Financial |
Statements | |
IAS 12 | Income taxes |
Description of new standards and amendments
Amendments to require companies to disclose their material accounting policy information rather than their significant accounting policies
Adoption of temporary exception to the requirement from tax law enacted or substantively enacted to implement international tax reform-the Pillar Two model rules
The adoption of the above standards and interpretations does not have a material impact on the condensed interim consolidated financial statements.
IAS 12 states a temporary exception to eliminate the need for recognition or disclosure for deferred tax assets and liabilities related to the Pillar Two model rules. The Group has adopted this exception retroactively.
The Group does not recognize any deferred tax assets and liabilities related to the Pillar Two model rules.
(Changes in Accounting Estimates)
The Group had previously used a period of 10 to 15 years for the estimated useful lives of tobacco production machinery. However, in consideration of changes in the business environment, the Group has, from the year ending December 31, 2023, revised the estimated useful lives for some tobacco production machinery to 18 years based on estimated economically useful lives that are more consistent with actual conditions and applied this change prospectively.
As a result, operating profit for the nine months ended September 30, 2023 increased by ¥6,623 million compared to the figure calculated using the previous method.
(2) Revisions to the consolidated earnings forecasts most recently announced
The Group has revised the earnings forecasts in light of circumstances up until now.
(Billions of yen) | ||||
Changes from the consolidated earnings | Year-on-year | |||
forecasts most recently announced | ||||
Earnings forecasts | changes | |||
Amount | % | [%] | ||
Revenue | 2,844.0 | 85.0 | 3.1 | 7.0 |
Adjusted operating profit | 721.0 | 38.0 | 5.6 | (0.9) |
Operating profit | 678.0 | 45.0 | 7.1 | 3.7 |
Profit attributable to owners of | 464.0 | 7.0 | 1.5 | 4.8 |
the parent company | ||||
Adjusted operating profit at | 764.0 | 34.0 | 4.7 | 5.0 |
constant FX | ||||
- 2 -
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, or current and future expectations of our management with respect to our business, financial condition and results of operations. In some cases, you can identify forward- looking statements by terms such as "may", "will", "should", "would", "expect", "intend", "project", "plan", "aim", "seek", "target", "anticipate", "believe", "estimate", "predict", "potential" or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward- looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties.
Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized.
Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation:
- increase in awareness of health concerns related to smoking;
- regulatory developments; including, without limitation, tax increases and restrictions on sales, marketing, packaging, labeling and use of tobacco products, privately imposed restrictions and governmental investigations;
- litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;
- our ability to further diversify our business beyond the traditional tobacco industry;
- our ability to successfully expand internationally and make investments outside Japan;
- competition, changing consumer preferences and behavior;
- our ability to manage impacts derived from business diversification or business expansion;
- economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;
- fluctuations in foreign exchange rates and the costs of raw materials; and
- catastrophes, including natural disasters.
Notes on the Russia-Ukraine War
The Group is fully committed to complying with all applicable sanctions, restrictions, etc. while continuing business operations. In parallel, given the continued challenging and complex environment, we continue to evaluate various options, including the potential transfer of ownership of our Russian tobacco business.
As this moment, the Company is unable to reasonably estimate the outlook and the impact on its financial results. The Company will promptly make announcements regarding this matter if anything occurs that should be disclosed.
- 3 -
2. Condensed Interim Consolidated Financial Statements
- Condensed Interim Consolidated Statement of Financial Position
As of December 31, | (Millions of yen) | ||||
As of September 30, 2023 | |||||
2022 | |||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 866,885 | 869,042 | |||
Trade and other receivables | 477,239 | 570,067 | |||
Inventories | 691,906 | 826,945 | |||
Other financial assets | 37,677 | 77,975 | |||
Other current assets | 649,181 | 636,265 | |||
Subtotal | 2,722,889 | 2,980,294 | |||
Assets held for sale | 702 | 2,791 | |||
Total current assets | 2,723,591 | 2,983,085 | |||
Non-current assets | |||||
Property, plant and equipment | 775,957 | 812,785 | |||
Goodwill | 2,446,063 | 2,708,089 | |||
Intangible assets | 246,442 | 228,129 | |||
Investment property | 9,495 | 8,324 | |||
Retirement benefit assets | 57,792 | 68,495 | |||
Investments accounted for using the equity | 56,943 | 53,560 | |||
method | |||||
Other financial assets | 140,366 | 158,800 | |||
Deferred tax assets | 91,430 | 80,243 | |||
Total non-current assets | 3,824,487 | 4,118,426 | |||
Total assets | 6,548,078 | 7,101,511 | |||
- 4 -
As of December 31, | (Millions of yen) | ||||
As of September 30, 2023 | |||||
Liabilities and equity | 2022 | ||||
Liabilities | |||||
Current liabilities | |||||
Trade and other payables | 540,089 | 486,271 | |||
Bonds and borrowings | 137,308 | 59,858 | |||
Income tax payables | 37,470 | 77,043 | |||
Other financial liabilities | 40,065 | 47,235 | |||
Provisions | 26,610 | 11,868 | |||
Other current liabilities | 781,093 | 881,055 | |||
Subtotal | 1,562,635 | 1,563,329 | |||
Liabilities directly associated with assets | 29 | - | |||
held for sale | |||||
Total current liabilities | 1,562,664 | 1,563,329 | |||
Non-current liabilities | |||||
Bonds and borrowings | 821,003 | 954,126 | |||
Other financial liabilities | 41,735 | 44,243 | |||
Retirement benefit liabilities | 244,116 | 261,697 | |||
Provisions | 26,490 | 38,799 | |||
Other non-current liabilities | 195,248 | 184,669 | |||
Deferred tax liabilities | 40,061 | 53,000 | |||
Total non-current liabilities | 1,368,653 | 1,536,533 | |||
Total liabilities | |||||
2,931,317 | 3,099,862 | ||||
Equity | |||||
Share capital | 100,000 | 100,000 | |||
Capital surplus | 736,400 | 736,479 | |||
Treasury shares | (490,183) | (489,200) | |||
Other components of equity | 104,309 | 406,686 | |||
Retained earnings | 3,089,909 | 3,165,111 | |||
Equity attributable to owners of the parent | 3,540,435 | 3,919,075 | |||
company | |||||
Non-controlling interests | 76,326 | 82,574 | |||
Total equity | 3,616,761 | 4,001,649 | |||
Total liabilities and equity | 6,548,078 | 7,101,511 | |||
- 5 -
- Condensed Interim Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Condensed Interim Consolidated Statement of Income
Nine months ended September 30, 2022 and 2023 | (Millions of yen) | |||
2022 | 2023 | |||
Revenue | ||||
2,008,548 | 2,157,018 | |||
Cost of sales | (806,482) | (879,375) | ||
Gross profit | 1,202,066 | 1,277,643 | ||
Other operating income | 10,873 | 22,786 | ||
Share of profit in investments accounted | 6,266 | 6,814 | ||
for using the equity method | ||||
Selling, general and administrative expenses | (639,863) | (675,397) | ||
Operating profit | 579,341 | 631,847 | ||
Financial income | 17,758 | 29,654 | ||
Financial costs | (61,503) | (75,292) | ||
Profit before income taxes | 535,596 | 586,209 | ||
Income taxes | (131,666) | (141,677) | ||
Profit for the period | 403,930 | 444,532 | ||
Attributable to: | ||||
Owners of the parent company | 403,807 | 442,010 | ||
Non-controlling interests | 123 | 2,521 | ||
Profit for the period | 403,930 | 444,532 | ||
Interim earnings per share | ||||
Basic (Yen) | 227.53 | 249.01 | ||
Diluted (Yen) | 227.45 | 248.95 |
Reconciliation from "Operating profit" to "Adjusted operating profit"
(Millions of yen)
Operating profit
Amortization cost of acquired intangibles arising from business acquisitions
Adjustment items (income)
Adjustment items (costs)
Adjusted operating profit
2022 | 2023 | ||
579,341 | 631,847 | ||
55,872 | 45,038 | ||
(8,326) | (14,544) | ||
10,936 | 2,015 | ||
637,823 | 664,356 | ||
- 6 -
Condensed Interim Consolidated Statement of Comprehensive Income
Nine months ended September 30, 2022 and 2023 | (Millions of yen) | ||||
2022 | 2023 | ||||
Profit for the period | |||||
403,930 | 444,532 |
Other comprehensive income
Items that will not be reclassified to profit or loss
Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
1,5732,637
41,665-
43,2382,637
Exchange differences on translation of foreign operations
Net gain (loss) on derivatives designated as cash flow hedges
Total of items that may be reclassified subsequently to profit or loss
Other comprehensive income (loss), net of taxes
Comprehensive income (loss) for the period
Attributable to:
Owners of the parent company
Non-controlling interests
Comprehensive income (loss) for the period
783,774 | 307,020 | ||
16,805 | 2,869 | ||
800,579 | 309,889 | ||
843,817 | 312,526 | ||
1,247,747 | 757,058 | ||
1,246,060 | 749,622 | ||
1,687 | 7,436 | ||
1,247,747 | 757,058 | ||
- 7 -
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Japan Tobacco Inc. published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 09:51:06 UTC.