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Japan Tobacco (JAPAF) Q2 2018 Results - Earnings Call Transcript

Aug. 05, 2018 12:54 AM ETJapan Tobacco Inc. (JAPAF)
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Japan Tobacco (OTCPK:JAPAF) Q2 2018 Earnings Conference Call August 2, 2018 3:00 AM ET


Naohiro Minami - Senior Vice President and Chief Financial Officer

Koji Shimayoshi - Deputy Chief Executive Officer and Executive Vice President Business Development and Corporate Strategy

Hisashi Ishikawa - Vice President, Head of Tobacco Business Planning Division


Nobuyoshi Miura - Citigroup Global Markets Japan Inc.

Hiroshi Saji - Mizuho Securities Co.

Naomi Takagi - SMBC Nikko Securities Inc.

Satoshi Fujiwara - Nomura Securities Co.

Ritsuko Tsunoda - JPMorgan Chase & Co.

Makoto Morita - Daiwa Securities Group Inc.

Keiko Yamaguchi - Goldman Sachs Japan Co.

Naohiro Minami

[Interpreted] I am Naohiro Minami, Chief Financial Officer of the JT Group. Now, I will take you through the results for the first-half of 2018 and full-year revised forecast.

First, I will explain the consolidated financial results for the first half of 2018. Please look at Slide 3. Adjusted operating profit at constant FX, our KPI, increased by 3.1% year-on-year, mainly driven by the strong performance in the international tobacco business, despite the continuous challenging environment in the Japanese domestic tobacco business.

On a reported basis, revenue increased due to the top-line growth driven by acquisitions and pricing benefits in the international tobacco business, more than offsetting the decline in the Japanese domestic tobacco business.

Adjusted operating profit increased as well despite the FX headwinds. On the other hand, operating profit and profit declined by 3.5% and 4.2% respectively, mainly due to two factors: first, there is an unfavorable comparison as we had a one-off profit of around ¥9 billion in the prior year, which was the reversal of cost impairment loss of an affiliate share; and the second, trademark amortization related to acquisitions increased about ¥5 billion.

Regarding the detailed analysis of business segment results, please take

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