Japan Tobacco Inc.

For 2025, JT said revenue, AOP, operating profit and profit for the period all reached record highs. Consolidated AOP at constant currency increased 24.9% year on year, while Tobacco AOP at constant FX rose 23.5% year on year; core revenue in Tobacco increased almost 15% and adjusted operating profit grew over 23%. Free cash flow increased by JPY 102.2 billion year on year to JPY 272.7 billion. In Tobacco, RRP volume rose 28% and revenue 24%, heated-products volume expanded by 3.2 billion units and 38.6% year on year, and heated-product revenue grew almost 50% at constant FX. In Combustibles, volume increased 1.7% year on year and the profit margin rose 3.4 percentage points year on year. Looking to 2026, group core revenue at constant FX is expected to rise 3.6%, AOP at constant FX 8.9%, operating profit 6.2%, profit 14.2%, and free cash flow is expected to increase significantly. Tobacco segment guidance calls for core revenue at constant FX up 3.4%, AOP up 8.5%, and total volume between flat and down 1% year on year. The annual dividend for 2025 is planned at JPY 234 per share, and 2026 dividend guidance is JPY 242 per share, implying a 75.2% payout ratio.

Takehiko Tsutsui framed the quarter as proof that JT’s long-term investment model is working, saying the company is strengthening both Combustibles and RRP while investing for future growth without hesitation. He emphasized that RRP, especially heated products, will become a second profit engine, and that D-LAB and M&A remain part of the effort to build future businesses. His tone was confident but measured, with repeated references to uncertainty, the need for urgency, and the importance of stronger dialogue with capital markets.

Hiromasa Furukawa said the 2025 results were driven by strong tobacco performance, with the Vector Group acquisition adding to organic growth, and noted that AOP at constant currency rose 24.9%. He highlighted that free cash flow reached JPY 272.7 billion, up JPY 102.2 billion year on year, and explained that 2025 profit was below the third-quarter forecast because of the rapid deterioration in Iran’s exchange rate. For 2026, he guided to 3.6% core revenue growth at constant FX, 8.9% AOP growth, 6.2% operating profit growth, 14.2% profit growth, and a higher dividend of JPY 242 per share on a Canada-adjusted basis.

Analysts pressed on the durability and timing of RRP profitability, the size and purpose of the JPY 800 billion investment plan, and whether JT still expects to make RRP profitable by 2028. Management said the direction remains toward profitability, but Tsutsui avoided giving a precise year, calling the timing dependent on innovation and saying the company is broadly in line directionally. Questions also focused on Ploom AURA and EVO; management said consumer feedback has been positive in Japan and overseas, but warned that commercial execution, awareness, acquisition and retention still need to improve. Another question addressed M&A, and Tsutsui said JT will consider deals that improve ROI in combustibles or bring IP, new business models or missing capabilities in RRP, with Vector cited as the kind of disciplined transaction they like.