Japan Tobacco Profit Jumps 83% on Revival from Earthquake

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Japan Tobacco Inc., Asia’s largest tobacco company by market value, declared first-quarter profit increased 83 % as it regained some of the market share that was lost after the earthquake in 2011.

Net profit increased to 84.5 billion yen ($1.1 billion) from 46.1 billion yen in a previous year, the tobacco company declared in a statement yesterday.

The manufacturer and seller of Global Flagship Brands like Winston and Camel cigarettes deals with overseas trade and has launched new tobacco products as a domestic market does not produce high profit. The company’s share in the domestic tobacco market regained to nearly 59 % as of June, according to the company. Japan Tobacco’s market share had declined to 55 % in the year ended March 2012 from 64 % a year earlier after the March 11, 2011, earthquake hurt tobacco sales.

President Mitsuomi Koizumi said in a statement that tobacco business in Japan withstood the consequences of last year’s earthquake with steady market share recovery following a number of sales and marketing initiatives.

Tobacco sales increased 17 % to 512 billion yen from 437 billion yen in a previous year. The company left its prediction for the fiscal year ended March 31 unchanged at 318 billion yen.

In May JTI expressed a wish to buy Belgium-based Gryson NV for 475 million euros, or $597 million at the time, in order to expand in Europe’s roll-your-own cigarette market. Sales volumes are decreasing in Japan’s tobacco industry because of tax hikes and increased health consciousness.

A law passed in 2011 permitted the Japanese government, which is the cigarette maker’s biggest shareholder, to sell one-third of its entire holding in order to help pay for earthquake rebuilding. The government is the owner of 50 % of Japan Tobacco, in accordance with data compiled by Bloomberg.

Japan Tobacco intends to buy back as much as 250 billion yen of its shares if the government sells its shares, the tobacco company has said.

Japan Tobacco shares closed up 1.3 % to 2,445 yen ahead of the earnings announcement. The stock is up 35 % for the year in comparison with a 0.43 % gain for the broader Topix index.

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