By Chino S. Leyco
Tokyo, Japan — Homegrown cigarette brand Mighty will help drive the sales and market share of Japan Tobacco, Inc.’s (JTI) international operations, according to the company’s chief executive.
While the global tobacco industry will remain challenging this year, Eddy Pirard, JT International chief executive officer, said the company will maximize new business growth opportunities to sustain its positive momentum.
According to Pirard, while JT International’s total shipment declined last year, it was tempered by the strong “organic” volume growth in Brazil, Egypt, Iran and the Philippines.
He also cited that the successful acquisitions in Indonesia, and the Philippines boosted JT International’s sales.
“Our two sizeable acquisitions in Indonesia and the Philippines boosted our total volume and strengthened the outstanding organic growth in Asia Pacific,” Pirard said in his report to JTI’s shareholders.
“In 2018, we target robust total volume growth of approximately four percent as we benefit from the volume contribution from our acquisitions in Asia and more recently in Ethiopia,” he added.
In September last year, Bulacan-based Mighty Corp. sold its assets for P46.8 billion to JT Philippines to settle the former’s tax liabilities with the Bureau of Internal Revenue (BIR).
The government had filed three tax evasion cases against the executives and owners of Mighty cigarettes for their R37.9 billion in unpaid excise taxes due to alleged use of fake tax stamps.
Following the acquisition, Pirard noted that JT International saw “strong growth” last year particularly in Iran and the Philippines. Such growth also softened the impact from price and portfolio investments in Russia and United Kingdom.
“For 2018, the operating environment is expected to remain challenging with excise tax increases fueling industry volume contraction and down-trading,” Pirard said.
“In spite of that, we anticipate a year of strong revenue and profit growth at constant currency, driven by positive volume, continued GFB [global flagship brands] momentum, favorable pricing as well as increasing contribution from emerging markets and reduced-risk product,” he added.
In 2017, JT International’s total shipment slightly dropped by 0.1 percent to 398.5 billion units.
But despite the decline, the company’s core revenue rose by 0.1 percent to $10.5 billion.
“To ensure long-term competitiveness and sustainable growth, we will continue to focus our investment strategy on GFB portfolio, emerging markets and reduced-risk product,” Pirard said.