JAPAN TOBACCO INC. Q1 FY2026 earnings call

• Consolidated results in first quarter showed significant increases in revenue and AOP on constant FX and reported basis, with AOB at constant FX increasing by 20.5% year-on-year. Operating profit and profit also grew. - Tobacco business had volume performance with combustibles maintaining share in many markets and RRP seeing strong growth. Financially, pricing contributions and favorable phasing of promotions drove growth. Clusters had different performances. - RRP saw accelerated grossing volume and revenue, with PRUME and AURA launched in many markets and share growing in heated products category. - Recently launched Leo brand in Poland and Italy for plume consumables. - Processed food business saw revenue growth due to price revisions of frozen udon noodles, with AOP growth offsetting higher raw material costs from rising rice prices.

Tobacco business: Total volume (combustibles and RRP) increased by 0.9% year-on-year. In combustibles, strong share momentum continued in many markets. RRP volume increased by 44.2% year-on-year. Financially, pricing contributions drove double-digit growth in revenue and AOP. Asia cluster total volume increased by 7.3% year-on-year, with revenue and profit significantly growing. Western Europe cluster total volume declined by 3.2% year-on-year, but core revenue and AOP grew due to pricing contribution. IMA cluster total volume remained in line with previous year, with revenue and AOP increasing due to pricing contribution. Processed food business: Revenue increased by 1.4 billion yen year-on-year, AOP increased by 0.9 billion yen year-on-year, driven by price revisions and offsetting higher raw material costs.

First quarter marked a strong start, remaining focused on delivering full year initial forecast. Tobacco business momentum continued, and direct impact from Middle East situation was minor at this stage.

Recent rapid deterioration in Middle East and Iran situation, potential impacts on operations in the region and performance impacts from rising crude oil prices, requiring continued close monitoring of national economies, FX movements, and supply chain costs.

Q: Question related to Russia market volume decline and heated tobacco products share.

A: Explanation of factors behind Russia volume decline and heated products market situation.

Q: Question about impact on Iran and Middle East.

A: Comment on Iranian operation status, financial impact, and monitoring of situation.

Q: Question about first quarter results, Japanese market temporary demand, and profit investment timing.

A: Discussion on Japanese market last-minute demand impact and investment timing difference.

Q: Question about profit change in first quarter, others cost and price mix.

A: Comment on others cost related to RRP investment and pricing progress.

Q: Question about biggest factor for stronger first quarter results.

A: Mention of pricing strategy in Philippines as a big factor.

Q: Question about PRUME category share in Japanese market.

A: Explanation of Japanese market PRUME share movement and ongoing monitoring.