Japan Tobacco Interim Results (fwd)

[Robert Weissman <rob@essential.org>]

Japan Tobacco Interim Results
Source: Business Wire, Thursday, 11/18/99

TOKYO--(BUSINESS WIRE)--Nov. 18, 1999--Japan Tobacco Inc. (JT)(TSE: 2914)
today announced its results for the six months ended September 30, 1999.

Consolidated Results

With the addition last year of Japan Beverage (formerly Unimat
Corporation) and the incorporation of six months figures for Torii
Pharmaceutical and the May and June figures for JT International (formerly
RJR International), consolidated sales rose by JPY 259.7 billion to JPY
2.1557 trillion.

Profits were affected by a number of adverse factors including the
continuing effect on JT's mainstay home market of the list price increase,
which accompanied the introduction of a tobacco special excise tax in
December last year. Other factors included the weakness of demand in JT
International's CIS, East European and duty free markets and JT's
amortization of intellectual property rights and goodwill of the three
newly consolidated companies.

As a result, operating profit was down by JPY 27.6 billion to JPY 81.6
billion. Recurring profit was similarly down by JPY 21.3 billion to JPY
76.0 billion and net profit down by JPY 20.0 billion to JPY 30.0 billion.

The full-year projections of an increase in consolidated sales of JPY
453.5 billion to JPY 4.33 trillion are unchanged from those announced on
November 5, 1999. This projection includes Torii Pharmaceuticals'
full-year figures and the consolidation of eight months of JT
International figures as well as an increase in JT's non-consolidated
sales.

Outlook

Although the domestic tobacco market is returning to normal, profits are
likely to be significantly affected by factors such as the weakness of JT
International's CIS, East European and duty free markets. Other factors
include the effects of the strong yen, coupled with the temporary
reduction in JT International's sales induced by the company's review of
inventory policy designed primarily to enhance brand value and the
increase in JT International's costs due to the modification of some
accounting practices. As a result for the full-year, JT expects to report
a recurring profit of JPY 123 billion, which is down JPY 42.2 billion
compared to last year. JT also expects to report a net profit of JPY 48.0
billion, which is down JPY 26.6 billion compared to last year.

EBITDA on the other hand is forecast to rise by JPY 23.1 billion to JPY
293.0 billion. (Note: EBITDA = Operating profit + depreciation +
amortization)

JT is aiming to enhance corporate value and get the best out of its recent
acquisitions by, among other things, implementing the overseas tobacco
business integration plan, which it is looking to finalize before the end
of this year, and strengthening the operational base of its diversified
business interests.

Japan Tobacco Inc., with sales in the year ended March 31, 1999 of US $32
billion (translated at a rate of US $1 = Yen 120), is one of the world's
largest manufacturers of tobacco products and has three of the world's top
five brands in its product portfolio. Since its privatization in 1985, it
has actively diversified its operations into pharmaceuticals and foods.

For reference: Non-consolidated Results

On a non-consolidated basis sales grew by JPY 68.8 billion in the first
six months of the current fiscal year to JPY 1.4633 trillion. Sales were
boosted by the list price increase that accompanied the introduction of a
tobacco special excise tax in December last year, and by the acquisition
of part of Asahi Chemical Industry's food products business. However,
factors such as the 5.3 billion cigarettes decline in domestic sales, the
amortization of intellectual property rights acquired in the purchase of
RJR International, and higher levels of strategic investment in
diversified businesses led to a decline in operating profit of JPY 17.2
billion to JPY 68.7 billion. On the other hand, although the acquisition
of RJR International led to an increase in financial expenses, offsetting
factors such as increased dividend income and a reduction in marketable
securities appraisal losses contributed to an improvement of JPY 13.4
billion in non-operating income. As a result, recurring profit declined by
just JPY 3.8 billion to JPY 72.0 billion and net profit by JPY 2.8 billion
to JPY 40.4 billion.

In the full year, JT expects sales to grow by JPY 122.9 billion to JPY
2.88 trillion. This reflects a decline from the prior year of 6.5 billion
cigarettes in domestic sales to 251 billion cigarettes and, on the
diversified business front, increased royalty income from the anti-HIV
drug Viracept(TM) and the consolidation of nine months results of Asahi
Chemical Industry's food products business.

At the same time, however, we expect profits to be lower over the year as
a whole, with full year recurring profit forecast to fall by JPY 27.3
billion to JPY 114.0 billion and net profit remaining flat at JPY 67.0
billion.

Note: SG&A expenses for the first half of last fiscal year included JPY
8.4 billion in enterprise tax, which is classified under corporation tax
for the first half of this fiscal year.

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Contact:

Hiroshi Shimizu

General Manager, Investor Relations

Japan Tobacco Inc.

Tokyo: 81-3-5572-4227

or

Anthony Andora

Gavin Anderson & Company

New York:  1-212-515-1995