Integrated report

Business Plan 2022

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Every year the JT Group publishes a three-year rolling business plan, reflecting the changing operating environment, including economic trends, geopolitical risks and the competitive landscape. We will achieve sustainable profit growth by investing in our businesses, maximally leveraging our resources on a Group-wide scale and transforming ourselves even in a drastically changing operating environment.

* The content of this section is based on the information disclosed in February 2022.

Operating environment outlook 2022-2024

Uncertainties are expected to increase due to COVID-19, changes in consumer behavior caused by the pandemic and risks of global economic stagnation, in addition to changes in international political conditions, exchange rate fluctuations, and other factors.

In accordance, there is a necessity to:

  • Monitor changes in the business environment such as pandemic-driven governmental tax increases to secure financial resources, and tighter, more complex regulations
  • Consider uncertain geopolitical risks, such as economic sanctions or political unrest in some markets

RRP(Reduced-Risk Products)

  • Continued demand increase especially for HTS (heated tobacco sticks)
  • Intensified competition and regulatory developments in leading markets
  • Uncertainty in device procurement due to global semiconductor shortages


  • Continued downtrading and industry volume decrease in leading markets
  • Profit pool likely to expand through pricing opportunities

Group profit target

Mid- to long-term target

Consolidated adjusted operating profit (AOP) at constant FX growth rate of mid to high single digit

Outlook 2022-2024

Annual average growth of a mid single digit rate despite significant investments towards RRP

Supplemental note: Why we use adjusted operating profit at constant FX as the primary index for performance management

  • ・Adjusted operating profit is used to show, in a readily understandable way, our business performance for the current fiscal year, excluding any effects of amortization costs related to acquisition(s) in the previous years.
  • ・Previously, adjusted EBITDA had been used as an index forperformance management, but to better manage business investment and returns, starting with the 2014 Business Plan it was replaced with adjusted operating profit, as the latter does not require the addition of amortization and depreciation costs, which vary with the business investment in a given year.
  • ・In order to more clearly illustrate the strength of our businesses themselves, we adopt the figures at constant FX, thereby disregarding possible exchange rate fluctuations which can move upward or downward significantly over the short term due to factors not directly related to our businesses, such as geopolitical risks.

Roles and targets of each business

Tobacco Business

The tobacco business, the core and driver of the JT Group’s profit growth, aims to grow at a mid to high single digit CAGR over the mid to long term of AOP at constant FX.

Strategy of Tobacco Business

Prioritize investment of management resources towards HTS and combustibles.

  • Combustibles to remain the largest category over the coming decade
  • In RRP, HTS to be highest potential for sustainable profit growth

Strive to fulfill following goals by the end of 2027 (when the HTS segment is estimated to represent 15% - 20% *1 of the total tobacco industry):

  • Drive segment share for HTS in the key HTS markets*2 to the mid-teens level
  • Reach break-even*3 in the RRP category

Enhance investment in the HTS category to win more support from consumers*4 to:

  • Expand geographically (e.g., Russia and Europe)
  • Continue to improve products
  • Reinforce our strategic capabilities

*1 On a basis of revenue, excluding revenue in China
*2 Japan, Russia, U.K., Italy
*3 Global basis (assumes existing geographic footprint and the current expansion plan)
*4 Adult consumers. Minimum legal age for smoking varies in accordance with the legislation in each country.

Pharmaceutical Business/
Processed Food Business

The pharmaceutical and processed food businesses aim to complement the JT Group’s profit growth

  • Pharmaceutical business: Focus on R&D investments toward next-generation strategic products and maximize the value of each product
  • Processed food business: Ensure sustainable profit growth through quality top-line growth

Resource allocation policy

Resource allocation policy based on the 4S model

  • Prioritize business investments*1 for sustainable profit growth in the mid to long term
  • Strike a balance between profit growth through business investments and shareholder return

Shareholder return policy

  • Aim to enhance shareholder returns by realizing the Group’s mid- to long-term profit growth, while maintaining a strong financial base*2
  • Target a dividend payout ratio of about 75%, *3 a competitive level*4 in the capital markets
  • Consider implementing a share buy-back program, mainly taking into account the Group’s financial outlook of the respective year and mid-term capital needs

*1 Investment towards the growth of the tobacco business is our highest priority. Pursue growth of AOP at constant FX through quality top-line growth
*2 The Group will maintain a strong financial base that secures stability in case of changes in business environment such as economic crises and flexibility enabling expeditious responses to business investment opportunities
*3 To be in the range of approximately ±5%
*4 We monitor the shareholder return trends of Fast-Moving Consumer Goods companies which have a stakeholder model similar to our 4S model and have realized strong business growth