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Japan Tobacco Inc. (JAPAF) Management on Q2 2021 Results - Earnings Call Transcript

Aug. 01, 2021 7:36 AM ETJapan Tobacco Inc. (JAPAF), JAPAY
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Japan Tobacco Inc. (OTCPK:JAPAF) Q2 2021 Earnings Conference Call July 30, 2021 3:30 AM ET

Company Participants

Naohiro Minami - Chief Financial Officer

Yuki Maeda - Senior Vice President & Chief Financial Officer

Koji Shimayoshi - Deputy Chief Executive Officer, JTI

Conference Call Participants

Nobuyoshi Miura - Citigroup

Hiroshi Saji - Mizuho Securities

Makoto Morita – Daiwa Securities

Haruka Miyake - Morgan Stanley MUFJ

Satsuki Kawasaki - UBS Securities

Keiko Yamaguchi - Goldman Sachs

Naohiro Minami

I am Naohiro Minami, Chief Financial Officer, of the JT Group. Thank you, for joining me in this briefing, relative to our second quarter earnings results. I will start by covering the highlights of our consolidated financial results for the second quarter of 2021 year-to-date.

Please take a look at Slide 4. Our adjusted operating profit at constant currency, which is our performance indicator for consolidated profit increased by 26.9% year-on-year driven by continued positive momentum in the tobacco business. We can attribute this robust performance to longer-than-predicted effects of the volume increase in some high-margin markets due to travel restrictions.

In addition, to positive momentum in the international tobacco business is our market share gains across several markets abroad. Revenue was up year-on-year due to strong top line performance in the tobacco business, despite lower sales in the pharmaceutical and processed food businesses.

Adjusted operating profit on reported basis was up as foreign exchange headwinds on the international tobacco business have been limited. Profit attributable to the owners of the parent company increased due to higher operating profit and improved financing costs.

Let me now move to the results for each business. First, let's look at volume in the Japanese domestic tobacco business. Total RMC industry volume decreased year-on-year due to growth in the RRP category and the effects of the October 2020 price hike in

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