Monthly Archives: May 2013

Japan Tobacco Forecast Record Net as Sales Rise

Japan Tobacco Inc. (2914), the world’s best-performing cigarette maker this year, raised its projected annual dividend by 35 percent after forecasting record profit on increasing overseas sales and a weaker yen. The shares climbed to a record.

Net income will probably be 415 billion yen ($4.2 billion) for the year ending March 2014, company said in a statement yesterday. The company jumped 2.7 percent to 3,595 yen, headed for a record close, as of 1:14 p.m. in Tokyo trading.

Japan Tobacco, which said it aims to make its Mevius the No. 1 global premium brand, is benefiting as a weaker yen boosts the value of overseas revenue, which accounted for about 48 percent of the company’s total in the last fiscal year. Asia’s biggest listed cigarette maker also said it would raise its payout ratio to 50 percent by fiscal 2015, one year earlier than previously planned, to support shareholders.

“We increased share in almost all major overseas market in the January to March period,” President Mitsuomi Koizumi told reporters yesterday in Tokyo. “We also expect to increase domestic share for the Mevius brand.”

The company’s annual profit forecast is higher than the 412 billion yen average of 18 analyst estimates compiled by Bloomberg.

A weaker Japanese currency will probably add about 70 billion yen to Japan Tobacco’s operating profit this year, Koizumi said yesterday. The yen has declined about 20 percent against the dollar in the past six months on Prime Minister Shinzo Abe’s vow to boost monetary and economic stimulus.

Dividend Increase

The company said it expects to pay dividends of 92 yen a share this fiscal year, compared with 68 yen in the previous 12 months. The maker of Winston cigarettes has gained 43 percent this year in Tokyo trading, the best performance among the 16 members of the Bloomberg GL Tobacco PB Index.

Net income fell 10 percent to 79.9 billion yen in the three months ended March in the absence of a one-time benefit a year earlier, the company said yesterday. Sales rose 5 percent to 511.8 billion yen in the period.

Japan’s government, which had owned 50 percent of the company, cut its stake to 33 percent in March to raise funds for reconstruction from the March 11, 2011 earthquake and tsunami. The cigarette maker bought back some of the stock and yesterday said it would not cancel the treasury shares.

Japan Tobacco also said its board opposed all four proposals made by The Children’s Investment Master Fund, which called for an increase in dividends and share buybacks.

Shareholder Return

“The significantly high amount of the proposed return far exceeds the amount of cash flow generated by the business and would require the company to make additional financial borrowing from a third party,” the company said in a statement yesterday.

The Children’s Fund has said the cigarette maker should match the higher payout levels made by global rivals. The fund made similar proposals last year that were also rejected.

Sales will probably jump about 12 percent this fiscal year to 2.37 trillion yen, according to the statement. The sales growth would be the fastest since 2008.

Cigarette sales in Russia and Turkey rose last year, driving up overseas sales 5.4 percent, the company said earlier this year. Domestic revenue jumped 7.2 percent in the year ended March as the company regained its market share, the company said April 12.

Japan Tobacco changed its top brand’s name Mild Seven to Mevius in February and reiterated yesterday that it expects it to become the world’s best-selling premium brand, without giving a timeframe.

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Posted by on May 2, 2013 in Tobacco Articles


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China tries to get serious on price limits for cigarettes

China’s tobacco regulator is trying to enforce a price ceiling on cigarettes this year amid a general move to promote the government’s austerity plans.

Luxury brands may not charge more than 1,000 yuan (HK$1,260) for a box of cigarettes, according to two internal “urgent notices” sent by the deputy director at China’s State Tobacco Monopoly Administration, Southern Weekly reported on Thursday.

While other countries are raising cigarette prices to deter people from taking up the habit, China’s upper price limit is aimed at cracking down on rampant corruption hidden in the sale and re-sale of exorbitantly priced cigarettes.

The state-owned China National Tobacco Corporation holds a national monopoly and controls an estimated 40 per cent of the world’s cigarette sales.

An enforcement of these measures would bring the highest possible price of a mainland pack of cigarettes down to 50 yuan, about the average price of a pack in Hong Kong. Currently, a cigarette box on the mainland can be worth thousands of yuan.

Restrictions on the sale of luxury cigarettes started to appear last year, Southern Weekly said, when the national monopoly holder had already told its subsidiaries not to supply tobacco to brands selling for more than 1,000 yuan a box.

In December 2008, Zhou Jiugeng, a Nanjing district official, was dismissed from his job after he was caught smoking Nanjing 95 Imperial cigarettes, priced at 3,000 yuan a box. He was later sentenced to 11 years in prison for corruption. Last year, the Huashang Daily reported that Good Cat branded cigarettes in Xian were sold for 5,600 yuan a box.

Until recently, luxury cigarettes have been frequently bought with government funds. In 2009, Hubei ordered its officials to smoke their way through 230,000 locally sourced packs of cigarettes as part of an economic stimulus package.

Apart from being a status symbol, exorbitantly priced cigarettes are often given as gifts, which can conveniently be passed on or swapped for cash at pawn shops. One in six people in Beijing have received cigarettes as a gift, a health researcher at China Medical University told Bloomberg.

A serious crackdown on allowing officials to use public funds for cigarettes could have a “significant impact” on the industry, an unnamed official with the Yunnan subsidiary of China National Tobacco told the Guangzhou-based weekly. Premium cigarettes, those selling at more than 15 yuan per pack, account for 60 per cent of the company’s profit, Bloomberg reported in February. The industry employs 20 million people.

The move comes after President Xi Jinping called for government austerity in a Politburo meeting on December 4. Earlier this week, the People’s Daily, the party’s national mouthpiece, shamed a low-level official for splurging half a local farmer’s annual salary on a banquet while Premier Li Keqiang (brother to one of the deputy directors at the State Tobacco Monopoly Administration) was shown eating plain rice porridge.

China has more than 300 million smokers, including half the adult male population, the Ministry of Industry and Information Technology said in December.

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Posted by on May 2, 2013 in Tobacco Articles


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Portable Cigarette Machine

Republic Tobacco has launched the new Swift Portable 100MM Cigarette Machine. Like its name, making cigarettes is a breeze!  Portable and lightweight, it packs into a carry-on bag or suitcase without weighing down luggage. It even fits in a glove box, keeping smokers make-your-own (M-Y-O) ready and able to inject cigarettes, even on the go. The shiny red machine features a built-in grip handle, slip resistant bottom and steady-grip crank arm design, and includes a tobacco tamper.  It works with any 100MM filter tubes and fresh tobacco. Cigarettes are made in three easy steps and one swift motion.  Fill the tobacco chamber, place a tube on the nozzle, pull the handle and the result is a perfect cigarette! The Swift 100MM Cigarette Machine is individually boxed and sold in counter display boxes of four. It instantly displays in a small footprint on the counter or a shelf.  Display units are packed six per case.

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Posted by on May 2, 2013 in Tobacco Articles


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Proposed Bill Would Ban “E-Cigarettes” Where Tobacco Is Already Prohibited

California lawmakers are scheduled to consider SB 648 Tuesday which would ban the increasingly popular “electronic cigarettes” in the same areas where actual cigarettes are banned.

Some 100 e-cigarette users in Southern California are planning to take a bus to Sacramento Monday night to testify in front of lawyers about the benefits of “vaping.”

“I usually vap throughout the day; I grab it when I need a hit of nicotine,” said Rodney Johnson, owner of Beach City Vapors in Signal Hill, who recently quit smoking after 25 years.

“I feel 100 percent better. I’m no longer winded when I’m walking up steps,” he said. “I wake up in the morning and instead of wanting that first cigarette, I don’t even vap for an hour or two hours before even leaving home.”

Electronic cigarettes allow the user to ingest nicotine and vapor, but they do not give off smoke. Instead, the user exhales water vapor. The nicotine is heated inside the device, and available in different dosage in flavored cartridges.

“I switched to electronic cigarettes because I was looking for a healthier alternative to stop smoking tobacco,” Pamela Cube said. “I’ve tried many other ways, but this has been the most successful product for me.”

Lawmakers want to ban the e-cigarettes because they believe it could encourage smoking. They argue the products should be in the same category as regular tobacco products. Other critics question whether the second-hand smoke could be harmful.

“There is nicotine in it, and there are other impurities,” said Dr. Eknath Deo, an oncologist at Long Beach Memorial Medical Center. “You do get second-hand or third-hand smoke.”

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Posted by on May 2, 2013 in Tobacco News


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Kazakhstan to go graphic

Kazakhstan will start requiring pictorial health warnings on cigarette packs from July, according to Azhar Tulegaliyeva, director of the Medical Care Organization Department. The country will be the first nation in the Commonwealth of Independent States to mandate cigarette graphic warnings in line with the World Health Organization’s Framework Convention on Tobacco Control, which Kazakhstan ratified in 2007.

Under the new law, cigarette packs will contain smoking-related diseases such as stroke and heart attack, and show the threat of miscarriage among pregnant women and the impact of smoking on premature aging of the skin.

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Posted by on May 2, 2013 in Tobacco News


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