Japan Tobacco has forecast a 3.9% rise in 2024 core revenue for its cigarette business, as higher prices and growth in income from smoking alternatives offsets further volume declines for its traditional products.
While Japan Tobacco also has divisions focused on pharmaceuticals and processed food, tobacco makes up the vast majority of its income.
The maker of Benson & Hedges and Winston cigarettes said it also expected its key brands to keep growing market share, further helping to cushion the blow to volumes. Ever-stricter regulation and a growing awareness of health risks have seen smoking rates fall in some markets.
Investment In Smoking Alternatives
Masamichi Terabatake, president and CEO of Japan Tobacco, said in its full-year results statement that traditional tobacco will continue to be the profit engine of the group, but it would also invest further in expanding in smoking alternatives like vapes.
Like rivals, the company is looking to build up new revenue as its traditional streams come under pressure. It is focused in particular on its heated tobacco device Ploom X.
It has ramped up its efforts to roll the device out globally, and wants to make it available in 40 markets by 2026, up from 13 at the end of 2023.
It reported a 5.9% increase in core revenues in 2023 - just ahead of its guidance. Its adjusted operating profit also beat the forecasts it provided in the third quarter, rising 4.4% in constant currency.
Last week, British American Tobacco forecast low-single digit organic revenue growth, adding it expected a slow recovery in the United States economy. The maker of Dunhill and Lucky Strike cigarettes also reported a 5.2% rise in full-year profits, beating analyst expectations.
