Japan Tobacco Q3 profit falls,lifts annual forecast

  • Q3 op profit drops 26 pct to 65.7 bln yen after price hike
  • Annual profit forecast lifted to Y308 bln
  • New FY2010 projection lower than Y310.9 bln consensus

TOKYO, Feb 7 (Reuters) – Japan Tobacco (2914.T), the world’s No. 3 cigarette maker, posted a 26 percent drop in quarterly operating profit after a tax hike hit its domestic business, but raised its annual outlook as the resulting dip in tobacco sales was less than predicted and as the yen remained weaker than expected.

Japan Tobacco, 50 percent owned by the Japanese government and with close to two-thirds of the nation’s cigarette market, said earlier that sales volumes in Japan fell by almost half year-on-year in October-December following the tax hike.

The company, which ranks behind Philip Morris International Inc (PM.N) and British American Tobacco (BATS.L) in sales volumes worldwide, said operating profit fell to 65.7 billion yen ($799.5 million) in October-December.

The maker of the “Mild Seven” cigarette brand lifted its operating profit forecast to 308 billion yen from at 281 billion yen for the year to March, lower than the consensus of 310.9 billion yen in a poll of 14 analysts by Thomson Reuters I/B/E/S.

Japan’s government in October raised its duty by 70 yen ($0.85) a pack, but tobacco firms boosted prices higher, with the average price for a pack rising by more than one-third to 410 yen ($4.99) to offset the expected sales decline.

Last week, the world’s fourth-biggest cigarette maker, Britain’s Imperial Tobacco (IMT.L), surprised investors with a return to volume growth in the last quarter of 2010 boosted by business in emerging markets. [ID:nLDE7100T0]

As of Friday, shares of Japan Tobacco had risen over 20 percent since the implementation of the tax hike on Oct. 1, outperforming a 12.5 percent advance in the benchmark Nikkei 225. Its shares on Friday fell 2.1 percent to 333,000 yen before it released its earnings for the third quarter. ($1=82.17 Yen)

source: www.reuters.com

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