Japan Tobacco raises annual cigarette sales forecast again

LONDON : Japan Tobacco on Thursday raised the full-year revenue forecast for its tobacco business for the second consecutive quarter, citing higher prices and better than expected third-quarter volumes.
The maker of Benson & Hedges and Winston cigarettes said it now expects core revenue at the tobacco business to rise 9 per cent in constant currency terms over the full year, versus the 5.1 per cent previously expected.
WHY IT MATTERS
While Japan Tobacco is looking to ramp up revenue growth from smoking alternatives, such as its heated tobacco device Ploom, its third quarter results show how cigarette sales continue to drive hefty profits for their makers despite heavy pressures on tobacco businesses.
Those pressures include ever-stricter regulation and falling sales in some markets amid growing awareness of health risks, which the sector has so far successfully offset by raising prices for those who continue to smoke.
BY THE NUMBERS
* Tobacco unit’s core revenue and adjusted operating profit up 8.1 per cent and 3.7 per cent respectively in constant currency.
* Unit’s total volume up 2.4 per cent, with a 2.1 per cent increase in tobacco volumes and an 18.1 per cent increase in volumes for smoking alternatives.
* Full year adjusted operating profit forecast also raised to 9 per cent growth at constant currency, versus the 5.4 per cent forecast previously.