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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