Japan Tobacco Releases 2024 Financial Report: Heated Tobacco Business as the Core Growth

Japan Tobacco Inc. (JTI) Releases 2024 Financial Report: Revenue Growth Amid Market Challenges

On February 13, 2025, Japan Tobacco Inc. (JTI) unveiled its 2024 financial report, providing a comprehensive overview of the company's operational achievements, business development trends, and future strategic plans. The report highlights JTI's growth trajectory and potential in a complex market environment.

1. Financial Performance: Revenue Growth with Profit Fluctuations

• Revenue: In 2024, JTI achieved sales revenue of 3,149.8 billion JPY, a year-on-year increase of 10.9%.
• Operating Profit: Operating profit reached 697.2 billion JPY, up 3.7% year-on-year.
• Net Profit: Net profit attributable to the parent company was 463.4 billion JPY (approximately $3 billion), a decline of 3.9%.
• Core Tobacco Growth: On a constant currency basis, core tobacco revenue grew by 8.4% to 2,958.4 billion JPY.
• Adjusted Operating Profit: Adjusted operating profit on a constant currency basis increased by 9.7% to 782.7 billion JPY.

2. Business Segments: Tobacco Dominates, Non-Tobacco Diverges

• Tobacco Business: Accounting for 87% of total revenue, the tobacco segment remains JTI's core business. Traditional tobacco products saw volume growth in over 60 markets, with flagship brands like Winston and Camel performing strongly.
• Heated Tobacco (HTS): The Reduced-Risk Products (RRP) segment, particularly heated tobacco, was a key growth driver. RRP sales and revenue grew by over 20%, with HTS revenue surging by more than 40%. The Ploom brand now covers approximately 75% of the global HTS market, reaching 24 core markets and securing a 7.8% global market share.
• Pharmaceutical Business: Sales in the pharmaceutical segment slightly declined to 94.4 billion JPY (approximately $620 million), primarily due to intensified market competition.
• Food Business: The food segment showed growth momentum, with sales reaching 157.2 billion JPY (approximately $1 billion), contributing to the group's revenue diversification.

3. Development Strategies: Enhancing Consumer Experience and Expanding Market Presence

(1) Optimizing Consumer Experience

JTI has focused on enhancing consumer engagement, as exemplified by the successful 360° consumer interaction campaign for the Ploom X ADVANCED product in Japan. Following the product launch:

• The proportion of exclusive Ploom users increased by 1.0 percentage point.
• Overall customer satisfaction (CSAT) improved by 2.2 percentage points.
• Key metrics such as Ploom Club membership, Ploom website traffic, and consumer care interactions showed significant growth, strengthening brand loyalty.

(2) Acquisition of Vector Group in the U.S.

JTI's acquisition of Vector Group in the U.S. solidified its position as the fourth-largest tobacco company in the American market. The high-profit margins in the U.S. market (approximately three times the gross margin per cigarette compared to existing markets) have contributed significantly to the company's financial performance.

4. Outlook for 2025: Opportunities and Challenges Ahead

• Investment in Heated Tobacco: JTI plans to prioritize investment in heated tobacco, increasing marketing expenses to 4.2% of revenue in 2025. The company aims to launch the next-generation Ploom X+ device and expand its Swiss production base to boost capacity by 40%.
• Market Expansion: JTI plans to enter three additional European markets, targeting a double-digit market share in heated tobacco by 2028.
• Financial Forecast: On a constant currency basis, core revenue is expected to grow by 6.6%, with adjusted operating profit increasing by 8.4%. However, due to unfavorable foreign exchange rates, reported revenue is projected to grow by 3.9%, while adjusted operating profit and net profit are expected to decline. Tobacco product volume is anticipated to decrease by 1% to 2%.

Conclusion

JTI's 2024 performance showcased notable achievements, but the company faces significant challenges in 2025. As global tobacco market competition intensifies, JTI's strategic focus on innovation, consumer experience, and market expansion will be critical to its continued success.

Source: JTI