Japan Tobacco Inc.

Japan Tobacco said 2025 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 free cash flow rose by JPY 102.2 billion to JPY 272.7 billion. In Tobacco, AOP at constant FX increased 23.5%, core revenue grew almost 15%, RRP volume and revenue rose 28% and 24%, and heated-product revenue grew by almost 50% at constant FX. For 2026, the group expects core revenue at constant FX to rise 3.6%, AOP at constant FX to rise 8.9%, operating profit to rise 6.2%, and profit to rise 14.2%; Tobacco AOP at constant FX is guided to rise 8.5%, with volume expected to be between flat and down 1% year on year.

Takehiko Tsutsui framed the new business plan as a continuation of JT’s long-term growth model, centered on the JT Group purpose and the 4S management principle. He said the company will keep investing for future growth, with a particular emphasis on strengthening Combustibles, building heated products into a second profit engine, and using D-LAB to pursue longer-term new business opportunities. His tone was confident but cautious, repeatedly noting that the environment remains uncertain and that execution, organizational strength and communication with capital markets will matter.

Hiromasa Furukawa emphasized that 2025 benefited from strong tobacco performance and the Vector Group acquisition, which boosted AOP and volume, while FX was a headwind. He highlighted free cash flow of JPY 272.7 billion, the Canada litigation-related cash-flow/profit adjustment, and the dividend plans of JPY 234 for FY2025 and JPY 242 for FY2026, corresponding to a 75.2% payout ratio. On 2026, he guided to core revenue growth of 3.6% at constant FX, AOP growth of 8.9%, and explained that FX should be unfavorable because of emerging-market and U.S. dollar weakness versus the yen.

Analysts pressed management on JT’s strengths and weaknesses versus global peers, the expected payback and profitability of the JPY 800 billion RRP investment program, the pace of Ploom AURA rollout, and what will drive tobacco profit growth in 2026. Tsutsui said JT’s strengths are continued growth investment, clear strategy and a long history of building new capabilities, while RRP is still at an early stage and needs stronger execution. On RRP profitability, he said the company is broadly in line with its direction toward the 2028 ambition, but the timing could move because innovation is uncertain; he described the goal as directional rather than tied to an exact year.