JTI 2017 Key Achievements & 2018 Guidance

Eddy Pirard President & Chief Executive Officer

Strong profit growth while investing for the future

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU&RQIHUHQFH Note: SoM on 12-month rolling average to December. Source: Internal estimates.

Winston: Driving the GFB growth momentum

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU&RQIHUHQFH Note: 2017 Volume and SoM variance vs. PY. * SoM on 12-month rolling average to December, based on JTI’s top-30 markets. Source: Internal estimates. Camel: Achieving record volumes

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Russia: Restored market share position

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: Quarterly SoM on 3-month rolling average. Source: Nielsen and Internal estimates. Russia: Winston and LD achieved record market share

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: Monthly SoM data. Source: Nielsen and Internal estimates. * Retail selling price for 20 cigarettes.

UK: Regaining market share momentum

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Iran: Exceptional performance led by Winston

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: SoM on 12-month rolling average to December. Source: Internal estimates. Asia Pacific: Expanding organically and by acquisitions

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Asia Pacific: GFBs drive organic volume for sustainable growth

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: Monthly SoM in December 2017. Source: Internal estimates.

Reduced costs driven by supply chain and process optimization

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ * Excluding the UK distributor impact. Entering 2018 with positive business momentum

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: SoM on 12-month rolling average to December, based on JTI’s top-30 markets. Source: Internal estimates.

2018 Guidance

Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Returning to top-line growth

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ * Based on JTI’s top-30 markets. Source: Internal estimates. Note: 2018 variance vs. PY. Core revenue at constant currency.

Roadmap to drive sustainable growth

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&RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ JT Group Consolidated Financial Results 2017 Results and 2018 Forecast

Naohiro Minami JT Group Chief Financial Officer

*Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended to facilitate the reader’s understanding of individual businesses. *For details of each term, please refer to annotations on slide 3 and 4.

FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. These statements appear in a number of places in this presentation and include statements regarding the intent, belief, or current and future expectations of our management with respect to our business, financial condition and results of operations. In some cases, you can identify forward-looking statements by terms such as “may”, “will”, “should”, “would”,“expect”, “intend”, “project”, “plan”, “aim”, “seek”, “target”, “anticipate”, “believe”, “estimate”, “predict”,“potential” or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, some or all of which may not be realized.

Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation: (1) decrease in demand for tobacco products in key markets; (2) restrictions on promoting, marketing, packaging, labeling and usage of tobacco products in markets in which we operate; (3) increases in excise, consumption or other taxes on tobacco products in markets in which we operate; (4) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products ; (5) our ability to realize anticipated results of our acquisition or other similar investments; (6) competition in markets in which we operate or into which we seek to expand; (7) deterioration in economic conditions in areas that matter to us; (8) economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate; (9) fluctuations in foreign exchange rates and the costs of raw materials; and (10) catastrophes, including natural disasters.

Adjusted operating profit: Adjusted operating profit = operating profit + amortization cost of acquired intangibles arising from business Adjusted OP: acquisitions + adjusted items (income and costs)* * Adjusted items (income and costs) = impairment losses on goodwill ± restructuring income and costs ± others

Profit: Profit attributable to owners of the parent company

Reduced-Risk Products (RRP): Products with potential to reduce the risks associated with smoking

GFB: Global Flagship Brands: Unitl 2017: Winston, Camel, MEVIUS, LD, Benson & Hedges, Glamour, Sobranie, Silk Cut, Natural American Spirit (9 brands)

From 2018: Winston, Camel, MEVIUS and LD (4 brands) Shipment volume: Includes fine cut, cigars, pipe tobacco, snus and kretek but excludes contract manufactured products, waterpipe (International tobacco business) tobacco and Reduced-Risk Products

Core revenue: Includes revenue from waterpipe tobacco and Reduced-Risk Products, but excludes revenues from distribution, (International tobacco business) contract manufacturing and other peripheral businesses.

Industry volume Industry volume of tobacco products in Japan market (including Reduced-Risk Products) (Japanese domestic tobacco business)

Cigarette industry volume Industry volume of cigarettes in Japan market (excluding Reduced-Risk Products) (Japanese domestic tobacco business)

Cigarette sales volume Excludes sales volume of domestic duty free, the China business and Reduced-Risk Products (Japanese domestic tobacco business)

Core revenue: Includes revenue from domestic duty free, the China business and Reduced-Risk Products such as Ploom TECH (Japanese domestic tobacco business) devices and capsules but excludes revenue from distribution of imported tobacco in the Japanese domestic tobacco business, among others.

Tokyo – February 7, 2018 JT Investor Meeting 5

Consolidated Financial Results

(JPY BN) Adjusted Operating Profit at constant FX 2017 Change Delivered solid profit despite a Actual vs. PY challenging business environment At constant FX • Impacted by a non-recurring unfavorable event Adjusted Operating Profit 583.2 -0.6% Reported • Revenue, Adjusted Operating Profit Reported • Stable with limited FX impact Revenue 2,139.7 -0.2% • Operating Profit, Profit Adjusted Operating Profit 585.3 -0.3% • Declined due to a decrease in gains from the Operating Profit 561.1 -5.4% sale of real estate assets

Profit 392.4 -6.9% • FCF • Increased mainly due to lower acquisition FCF 72.6 +388.8 (JPY BN) spending

(BnU, %) Shipment Volume vs. 2016 Profit growth driven by robust performance: • Continued market share gains Total 398.5 -0.1% • Acquisitions in the Philippines and Indonesia • Moderate Price/Mix gains GFB 285.9 +0.8% • Cost reduction through planned manufacturing footprint optimization • Impacted by a loss related to a UK distributor going into administration (US$ MM, %) At constant FX vs. 2016 Adjusted OP at constant FX (US$ MM) Core Revenue 10,457 -0.3% +9.9% +4.0% 3,219 3,095 +394 +71 -182 -159 3,401 Adjusted 3,219 +4.0% Operating Profit FY2016 Volume Price/Mix Others* FY2017 One- FY2017 time loss *Include product cost, marketing investment and SG&A © Copyright JT 2018 Tokyo – February 7, 2018 7

International Tobacco Business Results – Reported basis

(US$ MM, %) Reported USD basis vs. 2016 Adjusted OP reported basis (JPY BN)

+4.5% Core Revenue 10,498 +0.1% +11.5 +12.9 -9.3 336.2 351.3 FX impact Adjusted 3,138 +1.4% Operating Profit +2.1

FY2016 Operations Local currency Yen vs. USD FY2017 vs. USD

(JPY BN, %) FY2017 Reported JPY basis vs. 2016 vs. PY Actual FX rate RUB/USD 58.35 +15.0% Core Revenue 1,177.0 +3.4% GBP/USD 0.78 -4.8% TRY/USD 3.64 -17.2% Adjusted JPY/USD 112.16 +3.1% 351.3 +4.5% Operating Profit Note：Please refer to page 5 of Financial Results Supplemental Material for more details

(BnU, %, %pt) Sales volume / SoM vs. 2016 Cigarette sales volume declined while share increased Cigarette sales 92.9 -12.5% volume • Cigarette industry volume declined 12.9% • Continued to focus on brand equity enhancement and strengthened the No.1 JT Cigarette 61.3% +0.3%pt position in cigarette SoM • MEVIUS share recovered to the same level as prior year in spite of the price hike in MEVIUS SoM 31.4% -0.0%pt April 2016 Continuously expanding sales area of Ploom TECH • Capsules sales volume grew significantly in 4th quarter thanks to sales area expansion in Tokyo

Japanese Domestic Tobacco Business Results - Financial Results

(JPY BN, %) 2017 Actual vs. 2016

Core Revenue 590.6 -9.1% Profit decreased due to lower cigarette sales volume partially offset by the optimization of investments Adjusted 232.3 -10.7% Operating Profit

Core Revenue (JPY BN) Adjusted Operating Profit (JPY BN) -9.1% -10.7% +27.9 232.3 -78.1 +12.0 590.6 -62.9 +7.1 +7.1 649.7 260.2

FY2016 Volume Price/Mix Ploom FY2017 FY2016 Volume Price/Mix Others* FY2017 TECH/Others *Include marketing investment, SG&A, product costs and etc.

(JPY BN) Pharmaceutical vs. 2016 (abs.) Achieved a combined profit growth of about 15 billion yen Revenue 104.7 +17.5 • Pharmaceutical • Significant growth in royalty revenue Adjusted driven by the increased sales of out- 24.1 +14.4 Operating Profit licensed compounds • Robust sales of Torii Pharmaceutical

(JPY BN) Processed Food vs. 2016 (abs.) • Processed Food Revenue 163.1 -0.9 • Achieved profit growth for the fifth consecutive year due to sales efforts focusing on higher margin products Adjusted 5.4 +0.4 and cost reduction Operating Profit

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Tokyo – February 7, 2018 JT Investor Meeting 13

Consolidated Financial Forecast

(JPY BN) Adjusted Operating Profit at constant FX

2018 Change Aim to grow profit and invest for the future Forecast vs. PY amid a challenging business environment At constant FX Reported Adjusted Operating Profit 607.0 +3.7% • Revenue, Adjusted Operating Profit • To increase driven by international tobacco Reported business returning to top-line growth Revenue 2,220.0 +3.8% • Operating Profit, Profit Adjusted Operating Profit 600.0 +2.5% • To remain flat, reflecting unfavorable comparisons and an increase in intangible Operating Profit 561.0 -0.0% amortization related to business acquisitions • FCF Profit 394.0 +0.4% • To invest in Reduced-Risk Products and our FCF 300.0 +227.4 business foundations (JPY BN)

© Copyright JT 2018 Tokyo – February 7, 2018 JT Investor Meeting 14 Reduced-Risk Products: products with potential to reduce the risks associated with smoking International Tobacco Business Forecast – At constant FX

(US$ MM, %) At constant FX vs. 2017

Core Revenue 11,350 +8.1% 2018 shipment volume assumptions:

Adjusted • Total shipment volume: 3,600 +14.7% Operating Profit an increase of c. 4%（vs. 2017: 398.5 BnU）

• GFB* shipment volume: Profit to increase driven by top-line growth an increase of c. 2%（vs. 2017: 260.4 BnU*）

• Volume growth fueled by acquisitions and Both total and GFB shipment volumes to grow sustained momentum in emerging markets driven by acquisitions and sustained growth in • Returning to top-line growth, led by pricing emerging markets

• Continue to invest towards sustainable growth *GFB: Winston, Camel, Mevius and LD

International Tobacco Business Forecast – Reported basis

(US$ MM, %) Reported USD basis vs. 2017 Limited FX movements impact

2018 Core Revenue 11,500 +9.5% vs. PY FX assumptions RUB/USD 58.00 +0.6% Adjusted 3,600 +14.7% GBP/USD 0.74 +5.0% Operating Profit EUR/USD 0.83 +6.9% CHF/USD 0.98 +0.5%

(JPY BN, %) Reported JPY basis vs. 2017 TWD/USD 29.50 +3.2% TRY/USD 3.80 -4.1% Core Revenue 1,265.0 +7.5% IRR/USD 43,600 -11.0% JPY/USD 110.00 -1.9%

Adjusted 396.0 +12.7% Operating Profit

(JPY BN, %) 2018 Forecast vs. 2017 2018 estimation of Japanese tobacco market:

Core Revenue 573.0 -3.0% • Industry volume: a decline of over 4.5% (vs. 17’) (2017 industry volume is estimated at 172.0 BnU)

Adjusted • Cigarette industry volume: 202.0 -13.0% Operating Profit a decline of c. 17.5% (vs. 17’) (2017 cigarette industry volume: 151.4 BnU)

Revenue and profit to decline due to lower volume • RRP market share: c. 23% on average in 18’ • Ploom TECH sales expansion partially offset negative cigarette volume • Tax-led price increase is included based on certain Assumptions for 2018 forecast: assumptions Invest in business towards sustainable profit growth • JT cigarette sales volume: a decrease of over 16.5% (vs. 17’ actual) • Focused investment in RRP category, the growth driver • Further SoM gains to maximize sales volume of • RRP contribution: c. 15% of core revenue cigarette, the platform of profitability to support growth

Pharmaceutical and Processed Food Business Forecast

(JPY BN, %) Pharmaceutical vs. 2017 Continuously contribute to the Group profit growth Revenue 109.0 +4.1% • Pharmaceutical • Royalty revenue continues to grow Adjusted while expecting a negative impact 25.0 +3.8% Operating Profit related to the drug price revision

(JPY BN, %) Processed Food vs. 2017 • Processed Food • The sales of frozen and ambient Revenue 165.0 +1.1% processed food as well as seasonings expected to increase • CAPEX to expand capacity progressing Adjusted +1.9% as planned Operating Profit 5.5

Tokyo – February 7, 2018 JT Investor Meeting 19

Closing Remarks

 Profit growth target (Three-year CAGR) Management principle：4Smodel Adjusted Operating Profit at constant FX growth

Mid to high single-digit Shareholders

 Dividend per share

• 2017: JPY 140 (+7.7% vs. 2016） Consumers • 2018: JPY 150（+7.1% vs. 2017）

Employees Society

Masamichi Terabatake JT Group Chief Executive Officer

FORWARD-LOOKING STATEMENTS

• 2017 Overview

• JT Group mid- to long-term strategy

• Business Plan 2018 (three-year plan)

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Tokyo – February 7, 2018 JT Investor Meeting 5

2017 Overview ‐ A year of mixed results for the JT Group

• Delivered solid profitability under a challenging environment

Strong Performance • Continued investing for the future growth

SOM of over 60% • International: M&As RMC Robust International • Domestic: Ploom TECH initiatives Profit Tobacco Contribution Japanese Domestic Tobacco • Will deliver a full year dividend of Pharma& One-time Processed Negative Food Impact JPY 140 per share as committed Accelerated T-vapor Expansion

Tokyo – February 7, 2018 JT Investor Meeting 7

Our Management Policy • No change in our management principle, strategic framework and resource allocation

Management Principle Strategic framework

We strive to fulfill our responsibilities to our valued consumers, shareholders, employees and the wider society, carefully Quality Robust considering the respective interests of these four key stakeholder Competitive groups, and exceeding their expectations wherever we can. top-line × × business cost base growth foundations

Shareholders Resource allocation

• Resource allocation based on 4S model • Prioritize business investments • Focus on growth of tobacco business Consumers • Optimize scale and timing based on our growth agenda • Shareholder return policy

Employees Society • Enhance shareholder returns considering the Company’s mid- to long-term profit growth • Deliver sustainable and steady increase of DPS © Copyright JT 2018 Tokyo – February 7, 2018 JT Investor Meeting 8 Revolution of organizational capability

• Aim to be a company that initiates change and drives evolution

• Eliminate complexity and enhance agility across the organizations

• Encourage each employee to take actions towards change and innovation

• Demonstrate the strong leadership for the transformation

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Tokyo – February 7, 2018 JT Investor Meeting 11

Mid- to long-term target and the role of each business

Mid to high single-digit profit growth*

Pharmaceutical Business and Tobacco Business Processed Food Business JT Group’s profit growth engine Complement profit growth Mid to high single-digit profit growth of the Group

RRP(Reduced-Risk Products)** Pharmaceutical Business Drive the growth of tobacco business Continue to deliver profit through focused investment ・Promote R&D for next-generation strategic products ・Strengthen product portfolio and business foundation and maximize the value of each product

Traditional Tobacco Products Processed Food Business Remain the platform of profitability Grow via top-line expansion ・Enhance brand equity and expand market portfolio ・Focus on frozen and ambient processed food, seasonings and bakery items

© Copyright JT 2018 Tokyo – February 7, 2018 JT Investor Meeting 12 *Adjusted operating profit growth at constant FX in the mid- to long-term **RRP / Reduced-Risk Products: products with potential to reduce the risks associated with smoking Tobacco Business

Tobacco Business Strategy – Investment for future growth

• RRP enhances consumer satisfaction, and thus offers a real benefit to all of our stakeholders

• Reduced-Risk is the additional value most strongly coveted by consumers • RRP is now the centerpiece of our strategy and will drive sustainable future growth of the tobacco business • Investment in RRP is prioritized  Over 100 billion yen within next 3 years • No change in the importance of traditional tobacco products. Keep investing in • Brand equity enhancement in established markets • Geographic expansion into emerging markets

• Fulfill diverse consumer needs with the highest quality product portfolio

T-Vapor Diverse consumer needs Rethink Tobacco

Tobacco Heated Affinity Tobacco Pod Type Stick Type Further Evolution

Tobacco Infused Vapor Current Model Continuous Further Evolution Evolution Beyond Tobacco

E-Vapor Usability

Cigalike Closed Tank Open Tank

Japanese Domestic Tobacco Business – Business environment and objectives

• Business environment • Ready-Made Cigarette (RMC) industry to continue declining while RRP category to expand further • Multi-year excise tax increases in both RMC and RRP categories • Tightening regulation

• Roadmap towards target for 2020

2018 2019 2020年2020 • Expand Ploom TECH sales • Accelerate and maximize • RRP・RMC両カテゴリーにおけるAchieve the No.1 SOM nationwide RRP sales volume positionシェアNo.1を実現 in both RRP and • Maximize RMC sales volume RMC categories

© Copyright JT 2018 Tokyo – February 7, 2018 JT Investor Meeting 16 RRP / Reduced-Risk Products: products with potential to reduce the risks associated with smoking Japanese Domestic Tobacco Business – Strategies for RRP and RMC

• Roles of RRP and RMC RRP RMC Growth driver Platform of profitability to support growth

 Allocate resources with first priority  Ensure the overwhelming No.1 SOM position  Achieve No.1 SOM in the category with strong portfolio  Continue to enhance brand equity • Ensure the success of Ploom TECH by focusing on major 4 brands • Gain SOM by increasing product offerings • Gain further SOM  Strengthen business foundation • Seize pricing opportunities

Japanese Domestic Tobacco Business – RRP Portfolio Strategy

• Gain 40% SOM by the end of 2020 with expanded portfolio

• Ensure the success of Ploom TECH initiatives • Boost SOM by entering Heated Tobacco category

Tobacco Heated Infused Continuous Tobacco New product Vapor evolution (high-temperature launch (low-temperature ℃ ℃ heating) heating)

Guided Trial Ploom TECH ONLY Program

© Copyright JT 2018 Tokyo – February 7, 2018 JT Investor Meeting 18 RRP / Reduced-Risk Products: products with potential to reduce the risks associated with smoking Japanese Domestic Tobacco Business – Ploom TECH Performance in Tokyo

• Encouraging initial results • Penetration among consumers improving under limited supply of devices Off-take SOM at CVS in Tokyo Awareness Trial 3.3% 198 136 123 120 100 100 2.2%

May ‘17 Sep ‘17 Dec ‘17 May ‘17 Sep ‘17 Dec ‘17

Source: JT estimates (internet survey of approx.500 consumers in Tokyo) 1.4% The rates of awareness and trial in May ‘17 being indexed as 100 • Increasing number of facilities to exclusively admit the use of Ploom TECH Number of “No Smoking, Ploom TECH only” restaurants in Tokyo

End of End of End of Week 4 Oct ‘17 Nov ‘17 Dec ‘17 Jan ‘18 More than 800 Source: JT estimates Source: JT estimates, Weekly data at the end of January 2018

Japanese Domestic Tobacco Business – Ploom TECH Plans for capsule manufacturing capacity and sales expansion

• Steady build-up in capsule production • Sales area expansion continues: adding six major cities 20.0 from 5th February • Striving to improving the production efficiency • Nationwide expansion in September 2018 10.0 to secure capsule supply without shortage

5.0

2.4 Annual capacity available for commercialization （equivalent to billions of RMC sticks）

Beginning of 2017 End of 2017 End of 2018

• Macro environment remains uncertain • Expecting economic growth in most emerging markets but only moderate economic recovery in key markets • Unknowns due to currency fluctuations, changes in political climate and geopolitical risks • Challenging business environment continues • Industry volume decline, down-trading, increasing price competition, tighter regulation and illicit trade

International Tobacco Business – Business objectives and strategies

• Quality Top-line Growth

• Constantly delivering robust profit growth

Drive growth Grow in established markets Expand in emerging markets in the RRP category Brand equity Products portfolio Organic growth Products portfolio expansion BrandMarket equity share enhancement gains Seeding markets Capabilities M&A opportunities and foundation building SOMPricing increase opportunities / Pricing gain Organic growth / M&A Geographic/ Geographic expansion reach Continue to invest focusing on three pillars to drive future growth

Group profit target and shareholder return

Dividend per share (JPY) 150 • Profit growth rate target (Three-year CAGR) AOP at constant FX growth 140 130 Mid to high single-digit

• Dividend per share (2018 forecast)

JPY 150 (+7.1% vs 2017)