Cigarette maker Japan Tobacco has reported a 12.8% rise in first-quarter revenues at its cigarette business, boosted by foreign currency effects and users buying more expensive cigarettes or alternative products.
The maker of Benson & Hedges and Winston cigarettes said revenues rose 6.6% on a constant currency basis. The unit's adjusted operating profit was 3% higher, at 231.9 billion yen (€1.39 billion).
Price Increases
Cigarette makers' traditional businesses are under pressure as a growing awareness of health risks and ever-stricter regulation drive falling smoking rates in some markets.
Japan Tobacco's results show how, despite this, tobacco companies can still make big profits by hiking prices, and as other markets continue to grow.
The company and its rivals are also looking to grow revenues from alternative products, such as vapes, as smoking rates decline in some countries.
By The Numbers
Core revenues at the cigarette business rose 12.8%, or 6.6% at constant currency, to 653.3 billion yen (€3.92 billion).
Adjusted operating profit rose 3%, or 4.9% in constant currency, to 239.1 billion yen (€1.44 billion), while total cigarette volumes rose 1.7%
Volumes of the company's smoking alternatives, such as vapes, rose 25.2%, with revenues from this division up 17.7%.
Volumes collapsed in some markets, including the United Kingdom, where they fell 16.1% in part due to tax increases, Japan Tobacco said. In others, they rose, including Italy and Turkey, up 12.5% and 23.1% respectively.
Philip Morris
Elsewhere, Philip Morris International's goals for heated tobacco in the United States are reachable, analysts and investors say, even though rivals see limited potential in a market where vaping dominates.
The world's biggest tobacco company by market value will launch its flagship heated tobacco device IQOS in the U.S. in the second quarter, developing the brand pretty much from scratch.
Additional reporting by ESM
