Management information

Management principle

The 4S model

We strive to fulfill our responsibilities to our valued consumers, shareholders, employees and the wider society. Carefully considering the respective interests of these four key stakeholder groups, and exceeding their expectations wherever we can.

The 4S model

The 4S model is the JT Group's core competency. Our decision-making has been and will continue to be based on this management principle. To strive to fulfill our responsibilities to our valued stakeholders and exceed their expectations;

• For our consumers, we will offer superior products which meet or even go beyond their evolving needs. To achieve that, we will make the most of the JT Group's diversity to enhance our capacity in innovation.
• For our shareholders, we intend to strike an optimal balance between profit growth and shareholder returns. This means that we will enhance our shareholder returns based on our profit growth outlook in the mid- to long-term.
• For our employees, we will further evolve to become an attractive and respected company so that employees feel proud to be a part of it. For that, we will highly value the employees with a strong sense of commitment to deliverables and properly reward their accomplishments.
• The growth of the JT Group is dependent on sustainability of society. We will continue to contribute to society and in doing so enhance our company value.

Strategic framework

  • Quality top-line growth

    Among the strategic pillars, the JT Group places a particular emphasis on quality top-line growth, which is indispensable for sustainable growth. We aim to grow top-line by consistently offering innovative products.

  • Competitive cost base

    We continue to strive for further cost base improvement, while investing for future sustainable growth.

  • Robust Business foundation

    The business environment surrounding the JT Group has been changing fast. In order to respond, to drive evolution and even take advantage of the changes, we encourage each employee and organization to take actions towards change and innovation for continuous improvement.

Resource allocation

Business investment and capital policy

The JT Group is a global growth company. Investing for both external and organic growth, we historically increased profit, and eventually corporate value. We believe that opportunities exist to expand the earnings base, especially for tobacco business. Our investment will mainly focus on this core business to fuel its growth. As we expect pharmaceutical and processed food businesses to further contribute to the Group profit in the future, we will allocate our funds to best utilize existing assets and to further improve their profitability.

Under the Japan Tobacco Inc. law, we are subject to the restriction in issuing new shares. Given the circumstances, we plan to maintain a strong balance sheet for debt financing and to not cancel treasury stock. With sufficient debt capacity, we can consider share repurchase when the Government, who holds one-third of our outstanding shares, releases them in whole or in part in the future.

Shareholder return

We believe that maintaining a solid balance sheet is essential for JT Group as it will provide us the ground to continue aggressively pursuing business investment opportunities and cope with any adversity arising out of the volatile environment. At the same time, as we already mentioned, we intend to strike an optimal balance between profit growth and shareholder returns.
This means that we will enhance our shareholder returns based on our profit growth outlook in the mid-to long-term. In particular, we will deliver sustainable and steady increase of dividend per share. Dividend payout ratio is not an indicator for our management target, although it will be taken into consideration when deciding the dividend amounts. As for share buy-back, we will consider it after scrutinizing the mid-to long-term expectations of the company’s business environment as well as financial achievements and position, among other factors.

We will continue to monitor trends amongst the global FMCG companies that have a stakeholder model similar to our 4S model and that have achieved strong business growth.

Dividend Per Share (JPY)

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Corporate governance

We have enhanced our corporate governance, based on our belief that it is the means for conducting transparent, fair, timely and decisive decision-making for pursuing JT's management principle, the 4S model.