JT INTERNATIONAL BERHAD CONTINUES TO GROW ITS MARKET SHARE DESPITE SIGNIFICANT INDUSTRY DECLINE
JT International Berhad’s Third Quarter Financial Results
For The Year Ending 31st December 2009
Third Quarter Results For Period Under Review
JT International Berhad registered consolidated revenue of RM276.5 million for the third quarter ended 30th September 2009, as compared with RM271.3 million achieved in the corresponding quarter last year. The marginal increase in revenue was attributed to higher cigarette prices offset by lower sales volume. Profit before tax in the current quarter was lower at RM36.1 million compared with RM40.1 million achieved in the corresponding quarter last year; the decrease was driven by lower sales volume and lower interest income offset partially by higher cigarette prices and lower marketing expenditure.
First Nine-Month Results For Period Under Review
For the nine-month period ended 30th September 2009, the Group posted consolidated revenue of RM856.9 million as compared with revenue of RM785.3 million achieved in the corresponding period in 2008. Profit before tax registered RM121.8 million, as compared with RM121.9 million achieved in the corresponding period in 2008. The increase in revenue was driven by the same factors mentioned above.
Tobacco Industry Operating Environment
In the nine-month period ended 30th September 2009, overall tobacco industry volume, as measured by the Confederation of Malaysian Tobacco Manufacturers, declined by 13.9% against the same period last year. This decrease was driven in part by the challenging economic conditions, which continues to accelerate the growth of the extremely low priced cigarettes and illegal cigarettes. Despite the industry volume decline, JT International Berhad continued to improve its performance, further growing its market share to 18.5% from 17.4% registered during the same period last year (source: AC Nielsen Retail Audit report). This good market share growth was driven primarily by Value Segment leader Winston, which increased its market share to an all time high of 9.7% from 8.4% registered during the same period last year.
Tobacco Industry Outlook
The operating environment for the tobacco industry is expected to remain very challenging in the last quarter of 2009. The continued high level of illicit cigarettes will exert further negative pressure on the sales volume of the legitimate cigarette manufacturers. A recent research survey, conducted by the Confederation of Malaysian Tobacco Manufacturers, showed that 36.7% of cigarettes sold in Malaysia are illegal as compared to 25.7% in 2008. Notwithstanding this, JT International Berhad is encouraged by the increased enforcement by various Government agencies to combat this serious threat, and will continue to work closely with the authorities in this ongoing fight against the illicit cigarette trade.
One of the key factors driving the growth of illicit cigarettes is high taxation. JT International Berhad is encouraged by the Government’s decision to impose a more moderate excise tax increase of RM10 per 1000 sticks on October 1, 2009, as compared with an increase of RM30 per 1000 sticks in the last two consecutive years. JT International Berhad is also encouraged by the recent Government announcement during the Federal Budget to allocate higher expenditure to enhance enforcement capabilities.
Despite the anticipated challenges ahead, JT International Berhad is committed to maintain its competitiveness and to deliver a satisfactory overall performance for the current financial year through continued effective investment behind its global flagship brands: Winston, Mild Seven and Camel.
JTI – Japan Tobacco International - is a subsidiary of Japan Tobacco Inc. (JT), the world’s third largest international manufacturer of tobacco products. JTI produces three of the top five worldwide cigarette brands: Winston, Mild Seven and Camel. Other international brands include Silk Cut, Sobranie of London, Glamour and LD. With headquarters in Geneva, Switzerland, and net sales of USD 10.6 billion in the fiscal year ended December 31, 2008, JTI has 23,000 employees and operations in 120 countries. JT International Berhad is the Malaysian arm of Japan Tobacco International.
For further information, please contact:
JT International Berhad
Tel: 03 - 2094 9011
Fax: 03 - 2095 0049