JTI 2017 Key Achievements & 2018 Guidance Eddy Pirard President & Chief Executive Officer Strong profit growth while investing for the future -7,SHUIRUPDQFH 3RVLWLYH*)%PRPHQWXPGULYHQE\PDUNHW 7RWDOYROXPH VKDUHJDLQV $GMXVWHG 3ODQQHGLQYHVWPHQWV± PDLQO\LQ5XVVLDDQG WKH8.± LPSDFWHGFRUHUHYHQXH RSHUDWLQJSURILW *)%YROXPH 6WURQJHUEXVLQHVVEDVHIURPDFTXLVLWLRQV &XUUHQF\QHXWUDOSURILWJURZWKOHGE\JOREDO VXSSO\FKDLQRSWLPL]DWLRQ &RUHUHYHQXH 2UZKHQLQFOXGLQJWKH8.GLVWULEXWRULPSDFW Note: 2017 vs. PY. At constant currency. &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ GFBs achieved robust share gains *)%VKDUHRIPDUNHW YV3< .H\ SS (PHUJLQJ SS PDUNHWV WR PDUNHWV WR SS SS 7DLZDQ ,UDQ WR WR SS SS DRIVERS 6SDLQ 3KLOLSSLQHV WR WR SS SS 5XVVLD WR %UD]LO WR &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 7KLUGFRQVHFXWLYH\HDURIVWURQJYROXPH 9ROXPH JURZWKOHGE\SRUWIROLRLQYHVWPHQWV PDUNHWVZLWK PDUNHWV /HDGLQJSRVLWLRQVLQPRUHWKDQPDUNHWV H[FHHGLQJ LQFOXGLQJ)UDQFH5XVVLD6SDLQ 7XUNH\ WR%Q8 GRXEOHGLJLW JURZWK %Q8 6R0 SS PDUNHWV PDUNHWVZLWK WR JURZLQJ6R0 UHFRUG6R0 Winston XStyle Duo - Russia &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 )RXUWKFRQVHFXWLYH\HDURIYROXPHJURZWK 9ROXPH PDLQO\GULYHQE\HPHUJLQJPDUNHWV PDUNHWVZLWK PDUNHWV *HRJUDSKLFH[SDQVLRQFRQWLQXHGZLWK H[FHHGLQJ QHZPDUNHWODXQFKHVVLQFH WR%Q8 GRXEOHGLJLW JURZWK %Q8 6R0 SS PDUNHWV PDUNHWV WR JURZLQJ6R0 H[FHHGLQJ 6R0 Camel Kretek - Indonesia &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. Russia: Restored market share position 6KDUHRIPDUNHW 6WURQJPDUNHWVKDUHJURZWKIXHOHGE\ +2.0pp SRUWIROLRLQYHVWPHQWV 5HVWRUHGNH\SULFHLQGLFHVWROHYHOWKH SOD\LQJILHOG 6KDUHLQWKHYDOXHVHJPHQW #2 28.4% LQFUHDVHGSSYV4¶ 27.2% 27.3% 27.2% 27.2% 26.7% 6LJQLILFDQWH[SDQVLRQLQDOOJURZLQJ FLJDUHWWHVHJPHQWV 4µYV4µ 23.2% 23.4% 22.7% 22.3% 21.9% )ODYRURQGHPDQGSS #3 21.1% &RPSDFWSS 4 4 4 4 4 &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 6KDUHRIPDUNHW :LQVWRQVWUHQJWKHQHGLWVPDUNHW OHDGLQJSRVLWLRQ *)% 6WURQJH[SDQVLRQLQIODYRURQ GHPDQGDQGFRPSDFWVHJPHQWV /'JUHZYROXPHDQGJDLQHGUREXVW VKDUHPRPHQWXP 6XFFHVVIXOPLJUDWLRQRI0RUH FRPSOHPHQWHGE\RUJDQLFJURZWK 'HF -XQ 'HF &RQWLQXHGVKDUHSURJUHVVLRQ GHVSLWHDFFHOHUDWHGSULFLQJDVRI +4.0% +8.2% -XQH Winston average price* &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 -7,VKDUHRIPDUNHW )&7 43.2% 'LVUXSWLYH\HDUGXHWRLQWHQVHSULFH 42.1% 42.3% 41.7% FRPSHWLWLRQLQILQHFXWDQG UHJXODWRU\FKDQJH 40.7% 0DUNHWVKDUHUHWXUQHGWRJURZWKDV 7RWDO RI4¶VXSSRUWHGE\ )LQHFXW± JURZWKRI6WHUOLQJDQG 39.7% 39.6% 39.4% 39.5% LPSURYHG$PEHU/HDIWUHQG 50& 39.1% &LJDUHWWHV± SRVLWLYHSHUIRUPDQFH RI% +DQG6RYHUHLJQ 'HF -XQ 2FW 1RY 'HF &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: Monthly SoM data. Source: Nielsen and Internal estimates. Europe: Resilient performance driven by GFBs 6KDUHRIPDUNHWLQ(XURSH ,QFUHDVHGSUHVVXUHGXHWR73' +0.3pp LPSOHPHQWDWLRQDQGLQWHQVHFRPSHWLWLRQ (QWHULQJZLWKLPSURYLQJPDUNHW 18.4% 18.1% 18.2% VKDUHPRPHQWXP 5HVLOLHQW*)%SHUIRUPDQFH +0.3pp &DPHODQG:LQVWRQDFKLHYHGVKDUH UHFRUGLQVHYHUDOPDUNHWVLQFOXGLQJ &]HFK5HSXEOLF1HWKHUODQGV 6SDLQ 16.0% 15.9% *)% 15.7% 2QJRLQJFKDOOHQJHVLQ)UDQFH *HUPDQ\DQG,WDO\ 'HF -XQ 1RY &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: Monthly SoM data. Source: Internal estimates. * Excluding the UK. Iran: Exceptional performance led by Winston 'RXEOHGLJLWYROXPHJURZWKIRU WKHWKLUGFRQVHFXWLYH\HDUGULYLQJ 6R0 UREXVWILQDQFLDOFRQWULEXWLRQ 6WURQJOHDGLQJSRVLWLRQZLWK PDUNHWVKDUHDERYH 1HZYROXPHDQGVKDUHUHFRUG IRU:LQVWRQWKH50&EUDQG 9ROXPH 6XSHULRULQPDUNHWFDSDELOLWLHV IROORZLQJWKH$7,DFTXLVLWLRQ &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Note: SoM on 12-month rolling average to December. Source: Internal estimates. Asia Pacific: Expanding organically and by acquisitions -7,YROXPHJURZWKLQ$VLD YV3< 7RWDO 2UJDQLF $FTXLVLWLRQV %Q8 %Q8 %Q8 &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Asia Pacific: GFBs drive organic volume for sustainable growth *)%YROXPHJURZWKLQVHOHFWHG$VLDQPDUNHWV YV3< 7:1 3+/ .25 .+0 7+$ KEY DRIVER 6*3 005 910 ,'1 &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ Philippines & Indonesia: Acquisitions to shape our future 7ZRRIWKHODUJHVWFLJDUHWWH «ZKHUH-7,VWUHQJWKHQHG PDUNHWVLQ$VLD« VLJQLILFDQWO\LWVSUHVHQFH %Q8 6R0 /HDGHUVKLS +LJKHUUHDFK YV LQWKHYDOXH 0RXWOHWV EHIRUHWKH VHJPHQW IURP0 DFTXLVLWLRQ 6R0 3UHVHQFHLQ +LJKHUUHDFK YV )XOO)ODYRU 00RXWOHWV EHIRUHWKH +DQG5ROOHG IURP0 ,'1 -31 %*' ,1' 910 3+/ DFTXLVLWLRQ NUHWHN &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 &RVWEDVHHYROXWLRQ DWFRQVWDQW); 6LJQLILFDQWFRVWEDVHUHGXFWLRQOHGE\SODQQHGLQLWLDWLYHV WRGHFUHDVHSURGXFWFRVWVGULYHVSURILWJURZWK (IILFLHQFLHVIURPPDQXIDFWXULQJIRRWSULQWRSWLPL]DWLRQ %HQHILWVIURPORZHUOHDIDQGQRQWREDFFRPDWHULDOFRVWV &RQWLQXRXVLPSURYHPHQWRIEXVLQHVVSURFHVVHVWRIXUWKHU VWUHQJWKHQRXUFRPSHWLWLYHQHVV &RS\ULJKW-7 Tokyo – February 7, 2018 -7,QYHVWRU0HHWLQJ * Excluding the UK distributor impact. Entering 2018 with positive business momentum 6R0LQWRSPDUNHWV *)%OHGVKDUHJURZWKDFURVVWRSPDUNHWV 6WUHQJWKHQHGSRVLWLRQLQNH\PDUNHWV 6WURQJRUJDQLFJURZWKLQHPHUJLQJPDUNHWV ([SDQGHGEXVLQHVVIRRWSULQWZLWKDFTXLVLWLRQV *)% ,PSURYHGFRVWEDVH &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 JXLGDQFH ,QGXVWU\ *)% -7, &RUH ,QGXVWU\YROXPHFRQWUDFWLRQWRFRQWLQXH YROXPH YROXPH YROXPH UHYHQXH 7DUJHWLQJUREXVWYROXPHJURZWK )RFXVRQIHZHUDQGELJJHU*)%V a 6XVWDLQHGPRPHQWXPLQHPHUJLQJPDUNHWV a a 6LJQLILFDQWEHQHILWVIURPDFTXLVLWLRQV 6WURQJFRUHUHYHQXHJURZWKOHGE\SULFLQJ &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 -7,NH\GULYHUV %XVLQHVVHQDEOHUV )RFXVLQJLQYHVWPHQWVLQ PDUNHWVWKDWPDWWHU 5DLVLQJWKHEDULQ 5HGXFHG5LVN3URGXFWV (QKDQFLQJHPSRZHUPHQW DFFRXQWDELOLW\ &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,