On February 13, 2025, Japan Tobacco Inc. (JTI) announced its financial results for 2024, showcasing the company’s operational achievements, business development, and future strategic plans. The report highlights the significant growth of JTI’s heated tobacco segment (HTS), which has become the core driver of the company’s overall performance. This article provides a detailed analysis of JTI’s 2024 financial performance, business segment performance, and future development strategies.

I. Financial Performance: Revenue Growth with Profit Fluctuations

1. Sales Revenue

In 2024, JTI’s sales revenue reached ¥3,149.8 billion, a year-on-year increase of 10.9%. At constant exchange rates, core tobacco business revenue grew by 8.4% to ¥2,958.4 billion.

2. Operating Profit and Net Profit

• Operating Profit: Operating profit for 2024 was ¥697.2 billion, up 3.7% year-on-year.
• Net Profit: Net profit attributable to owners of the parent company was ¥463.4 billion (approximately $3 billion), down 3.9% year-on-year.

Despite the decline in net profit, JTI’s strong performance in core tobacco and heated tobacco segments provided solid support for overall revenue growth.

II. Business Segments: Tobacco Leads, Non-Tobacco Diverges

1. Tobacco Business

The tobacco business remains JTI’s primary revenue driver, accounting for 87% of total revenue. Traditional tobacco products achieved volume growth in over 60 markets, with flagship brands Winston and Camel performing particularly well.

2. Heated Tobacco Segment (HTS)

The heated tobacco segment (HTS) is the core of JTI’s Reduced-Risk Products (RRP) growth. In 2024, RRP volume and revenue both grew by over 20%, with HTS growing by more than 40%.

• Ploom Brand: The Ploom brand covers approximately 75% of global HTS sales, entering 24 core markets and achieving a global market share of 7.8%.

3. Non-Tobacco Business

• Pharmaceutical Business: Sales slightly declined to ¥94.4 billion (approximately $620 million), mainly due to increased market competition.
• Food Business: Showed growth momentum, with sales reaching ¥157.2 billion (approximately $1 billion), contributing to the group’s revenue diversification.

III. Development Strategies: Enhanced Experience and Strategic Acquisitions

1. Optimizing Consumer Experience

JTI conducted a 360° consumer engagement campaign for its Ploom X ADVANCED product in the Japanese market, significantly enhancing consumer experience.

• User Ratio: The proportion of exclusive Ploom users increased by 1.0 percentage point.
• Customer Satisfaction: Overall customer satisfaction (CSAT) improved by 2.2 percentage points, and the Net Promoter Score (NPS) also increased.
• Brand Loyalty: Metrics such as Ploom Club membership, Ploom website unique visitors, and consumer care interactions all showed growth.

2. Acquisition of Vector Group

By acquiring the US-based Vector Group, JTI became the fourth-largest tobacco company in the US, further consolidating its global market position. The high profit margins in the US market (approximately 3 times the gross margin per cigarette compared to existing markets) also brought significant financial benefits to the company.

IV. 2025 Outlook: Opportunities and Challenges

1. Prioritizing Investment in Heated Tobacco

JTI plans to increase its marketing expenditure to 4.2% of revenue in 2025 and launch the next-generation Ploom X+ device. Additionally, the company will expand its Swiss production base, increasing capacity by 40%, and enter 3 new European markets, aiming to achieve a double-digit market share in heated tobacco by 2028.

2. Performance Forecast

• Core Revenue: Expected to grow by 6.6% at constant exchange rates.
• Operating Profit: Adjusted operating profit is expected to grow by 8.4%.
• Net Profit: Net profit is expected to decline due to unfavorable foreign exchange rates.
• Tobacco Volume: Expected to decline by 1%-2%.