Camel Maker to Boost Prices on its Cigarettes

Published on April 14th, 2014 00:00

Japan Tobacco (JT) has increased by the most in 10 months in Tokyo trading after boosting its revenue outlook and declaring it would boost local prices by more than several industry experts predicted.

The manufacturer of Camel, Winston and Mevius cigarette brands increased up to 6.7 %, the largest daily achievement starting March 13, to 3,228 yen prior to trading at 3,159 yen. Net revenue will most likely boost 23 % to 423 billion yen ($4.1 billion) in the year closing March 31, the Tokyo-based company claimed in a report several days ago.

JT has ascribed to the government to increase prices for the majority of cigarette brands by about 10 yen per package for several brands and 20 yen for others along with an intended April boost in the country’s consumption tax. The company’s local sales volume expansion has been slow due to tax raises and increasing awareness of health issues as a result of cigarette use. “There was an optimistic response to the 20-yen price boost for Mevius,” stated Yoshiyasu Okihira, an expert at SMBC Nikko Securities. “Investors had considered that the boost would be around 10 yen according to preceding media studies.”

Mevius, the company’s key brand in Japan with approximately 30 % of the market, will boost by 20 yen to 430 yen per package, mostly to show a boost in the countrywide sales tax to 8 % from 5 % registered in April. “JT is focusing earnings instead of share in pricing Mevius, which we consider rather positive,” Keiko Yamaguchi, an expert at Goldman Sachs Group, stated.

The company’s forecast for net revenue of 423 billion yen is similar to the earlier outlook of 415 billion yen and the 431 billion-yen average of 19 experts estimates. Within the nine months completed December, sales increased 0.6 % to 530 billion yen for the local cigarette business, in comparison with a 24 % rise to 931.8 billion yen for foreign tobacco profits, as outlined by the company’s statement on Monday after the market closed.

International tobacco sales for the 12 months will most likely constitute 1.27 trillion yen, in contrast to the prior outlook for 1.245 trillion yen, in accordance with the report. The company kept its forecast for local tobacco sales of 703 billion yen untouched.