[Company analysis] Japan Tobacco Inc. (日本たばこ産業)

「Japan Tobacco Inc. (日本たばこ産業)」 was established in 1985 and they manufacture and sell pharmaceuticals, foods and beverages including tobacco. Through its M & A and other activities, the company is expanding its tobacco business overseas, and is ranked fourth in the world market share(8.4%). The number of consolidated employees is about 44,485.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Japan Tobacco Inc.
Company name (Japanese)	日本たばこ産業
Date of establishment	Monday, April 1, 1985
Headquarters location	〒105-8422 東京都港区虎ノ門二丁目2番1号
Capital	100,000
Consolidated sales	2,215,962
Consolidated operating profit	564,984
Consolidated total assets	5,461,400
Consolidated capital	2,700,445
Capital adequacy ratio	49.4%
Consolidated number of employees	44,485

 

 

 

2. Summary and Features

 
「Japan Tobacco Inc. 」 is said to be one of Japan's leading companies in terms of market capitalization and among the top 10 in Japan. In fact, the company was founded under the Tobacco Monopoly Act implemented by the Japanese government during the Russia-Japanese War of 1904 to raise war costs. After the end of World War II, the GHQ reorganized this company into the「Nippon Senbai Kōsha(日本専売公社)」, which was predecessor of the current「Japan Tobacco Inc. 」and became privatized in 1985.

It is a company that handles "cigarettes" and has the same position as「KT & G」in Korea in that it has a history of being a public company. The decisive difference, however, is that while「KT & G」only owns a portion of its shares in the「Korean National Pension」, but in case of Japan Tobacco Inc., their 33.35% stake is belong to the Minister of Finance. In other words, it is a special company such as「International Petroleum Development Teishi Co., Ltd. (Inpex)」, which operates an energy-related business with half privatized status.

「Japan Tobacco Inc. 」is obligated under the Japanese Tobacco Business Law to purchase all of the Japanese leaf tobacco, and therefore has the exclusive right to manufacture tobacco in Japan. Therefore, the main business in Japan is tobacco production, and its market share in the Japanese domestic market has reached approximately 60%. Besides they also handle medical equipment, pharmaceuticals, processed foods and seasonings.

One of the features is that they are very active in overseas expansion. In 1999, this company had purchased「RJR international」, a subsidiary of「RJ Reynolds Tobacco」, and established 「JT International」. By adding 「JT International」 to its consolidated subsidiaries, 「Japan Tobacco Inc. 」was able to jump to fourth place in global market share.

In 2007, this company purchased the British「Gallaher」and  now they are pursuing the world's third-largest tobacco company,「British American Tobacco」. As for the breakdown of sales based on 2018, overseas sales account for 70% of the total. In fact, the tobacco market in Japan has been shrinking, so there is no other options for 「Japan Tobacco Inc. 」to make up for this without expanding oversea market.

 

 

 

3. Major Business

 

■ Tobacco business
As one of the world's leading tobacco manufacturers, they provide our own products in about 130 countries.

■ Pharmaceutical business
Since 1987, 「Japan Tobacco Inc.」entered the pharmaceutical business, they have been focusing on research and development with the goal of developing new drugs that can be used internationally.

■ Processed food business
This company operate a processed food business centered on frozen noodles, frozen rice, frozen bread and seasonings.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		2,143,287	2,139,653	2,215,962
Consolidated operating profit		593,329	561,101	564,984
Consolidated total assets		4,744,374	5,221,484	5,461,400
Consolidated net assets		2,528,041	2,842,027	2,700,445
Breakdown of sales	Japan domestic tabacco business	684,233	626,758	621,426
	Oversea tabacco business	1,199,190	1,237,577	1,312,342
	Pharmaceutical business	87,183	104,714	113,992
	Processed food business	164,078	163,138	161,388
	Others	8,604	7,466	6,815