[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

  1. 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.)
  2. Changes in accounting policies and changes in accounting estimates
    1. Changes in accounting policies due to revisions in accounting standards under IFRS:Yes
    2. Changes in accounting policies due to other reasons: None
    3. 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."

  1. 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

  1. 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

  1. 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
    1. 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.
    2. 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

  1. 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:

  1. increase in awareness of health concerns related to smoking;
  2. 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;
  3. litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;
  4. our ability to further diversify our business beyond the traditional tobacco industry;
  5. our ability to successfully expand internationally and make investments outside Japan;
  6. competition, changing consumer preferences and behavior;
  7. our ability to manage impacts derived from business diversification or business expansion;
  8. economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;
  9. fluctuations in foreign exchange rates and the costs of raw materials; and
  10. 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

  1. 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 -

  1. 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.