JTI Profit Report: Super Slim Cigarettes Saved the Day

Published on May 6th, 2010 08:45

Major points

Japan Tobacco International (JTI) is the third–biggest cigarette company in the world and the international division of Japan Tobacco. The company continued to increase presence in the majority of most important markets regardless of recession.

Net cigarette sales in European region added 7.2 percents, however, excluding taxes total cigarette sales dropped 2.5 percent to end up with 434.9 billion cigarettes.

Net revenues excluding taxes constituted US$ 9.682 billion, dropping 7.3 percent compared to the year before.

Highlights of 2009 performance

Though worldwide cigarette sales lost 2.5 percent, the company still showed a nice performance in the context of fluctuations in the global market. Hikes in excise taxes in key markets and challenges in financial markets almost have not affected JTI performance, as the company performed strongly in all primary markets, such as Germany, Spain, UK, Italy, Russia, France and Turkey. The only key market where JTI faced significant sale declines was Taiwan, where sales were hurt by a dramatic price increase. Still, the company expects the sales in Taiwan to rise back, as the smokers recover from shock.

JTI tobacco brands

International Flagship Brands

JTI portfolio includes eight best-selling flagship brands, among which are Winston and Camel (outside of US), Benson & Hedges, LD, Mild Seven, Glamour and Sobranie.

Total sale volumes in flagship brands portfolio lost 0.9 percent to end up with 243.4 billion cigarettes.

Total sales of Winston were down by 4.1 percent, as solid performance in Europe and Turkey was compensated by decrease in Russia, Ukraine, Philippines and Iran due to fluctuating economic environment.

Camel sale volumes were also down by 1.8%, because of volume drops in Russia, Spain and the Philippines. However, Camel sales went up in Italy, Germany and Ukraine.

Sales of Mild Seven were also down a little due to a decline in Taiwan, caused by significant tax increase.

Glamour Super Slims showed simply the best performance, by adding 15% to its international market share, with a growth in Russia, Poland and Ukraine, where it is the third-best selling cigarette brand nationwide.

LD, JTI’s key brand in the mid-value segment as well performed strongly with a growth of 8.2 percent, in Turkey, Russia, Ukraine and Poland.

Total sale volumes of Sobranie were higher than expected, as the premium class brand gained a 0.9 point market share.

Cigarette Sales by Regions

Whereas total sales decreased, the company managed to grow its market share in primary markets. JTI market share grew in Italy and France, even though sale volumes fell by 0.4 percentage points in South Europe. Strong sales in France, Portugal and Italy were offset by drops in Spain, due to a significant economic downturn. Overall, JTI’s flagship brands grew 2.5 percent in comparison with the previous year.

Central and North Europe was the most profitable region for the company, as sales increased by 7.6 percent, thanks to an impressive performance by Glamour, Sterling and LD brands. JTI increased its leadership position in the UK market, growing from 39.1 percent reported in 2008 to 40.4 percent in 2009.

As regards the rest of the world, total sale volumes dropped 8.0% because of unstable business environment and fluctuating exchange rate.

By Joanna Johnson, Staff Writer. Copyright © 2010 TobaccoPub.com. All rights reserved.


Related tags: japan tobacco | cigarettes sales | slims cigarettes | cigs sales | slims

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