The following is a summary of the Japan Tobacco Inc. (JAPAF) Q4 2023 Earnings Call Transcript:
Financial Performance:
Japan Tobacco reported an increase of 5.2% in their Adjusted Operating Profit (AOP) in 2023, and a revenue growth of 6.9% YoY, primarily due to their Tobacco business.
The company saw an increase in Operating profit by 2.9% assisted by real estate sales and reduced trademark right amortizations.
Net profit rose by 8.9% due to reduction in financial and corporate income taxes.
The free cash flow saw an increase by ¥60.8 billion to ¥443.7 billion.
For the year 2024, an increase of 3.9% YoY in core revenue is predicted which would be driven by the Tobacco business, but AOP is expected to stay flat YoY at JPY 728 billion.
Business Progress:
There has been an increase in revenue in the Pharmaceutical business due to enhancement in sales in the section of skin diseases and allergens.
Despite losses in the Processed Food segment due to the transfer of the Bakery business, AOP increased YoY, helped by top line growth.
The company plans to maintain its resource allocation policy which prioritizes sustainable profit growth through increasing investments especially in their tobacco business.
A mid to high-single-digit average annual growth in Adjusted Operating Profit (AOP) at constant FX is being aimed for by the company.
The company aims to maintain top line growth in Combustibles through marketing investment, pricing contributions and cost efficiencies.
Furthermore, they're aiming to cover approximately 80% of the global Heat-Not-Burn (HTS) demand by the end of 2025 and make Ploom X available in 40 markets by the end of 2026.
The company is actively working on resolving social issues through their sustainability strategy and is looking for future business opportunities through their corporate R&D initiative, D-LAB.
More details: JAPAN TOBACCO INC IR
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