Looking back on fiscal year 2024, the Group faced a challenging business environment, with the emergence of geopolitical risks, rising supply chain costs driven by global inflation, and substantial fluctuation in foreign exchange rates. However, even under these conditions, thanks to strong top-line growth led by our tobacco business, consolidated revenue and adjusted operating profit (AOP) reached new record highs for the third consecutive year since fiscal year 2022.

In particular, in the tobacco business, which is the core driver of profit growth, expansion of market share in combustibles^*1 across many markets, including our key markets, along with pricing effects, continued to be the main impetus for profit growth. For combustibles, we have been implementing a strategy of continuous ROI improvement, and I believe our acquisition of U.S. company Vector Group Ltd. (Vector), which was completed in October 2024 contributed to this. With this acquisition, we expect not only to improve our ROI but also to expand our presence in the U.S. market, generate stable cash flow in hard currency that is resilient to exchange rate fluctuations, and contribute to profit over the medium to long term.

In Reduced-Risk Products (RRP),^*2 we strengthened investment in heated tobacco sticks (HTS),^*3 leveraging the profits generated from combustibles, and continued our geographical expansion of the Group’s global HTS brand, Ploom. As a result, we continued to make steady progress in fiscal year 2024, expanding into 11 new markets, including Jordan, the Philippines, and South Korea, bringing the total number of countries where we operate to 26 (as of the end of May, 2025).

While the processed food business also experienced an adverse business environment, it reached new record high AOP for the second consecutive year, which contributed to the Group's overall profit growth.

In addition, in lawsuits against defendant tobacco companies, including our local subsidiary in Canada related to smoking and health, the local court approved a comprehensive settlement plan on March 6, 2025 (local time). As a result, all lawsuits pending against our local subsidiary have been resolved, and not only has the uncertainty that has existed in our Canadian business for the past quarter century also been resolved, but we can now expect our Canadian business to continue to contribute to the Group in terms of earnings and cash generation.

*1

Combustibles: Combustibles include all tobacco products excluding contract-manufactured products and RRP

*2

Reduced-Risk Products (RRP): Products with the potential to reduce the risks associated with smoking. In JT’s portfolio, these products include heated tobacco products (HTP), e-vapor and oral

*3

Heated tobacco sticks (HTS): Heated tobacco products that directly heat tobacco sticks. One stick is equivalent to a stick of cigarettes

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Please see CFO message for details

“Fulfilling moments” has been the core value of the JT Group, even before its incorporation, and in fiscal year 2023 we redefined this as the JT Group Purpose. To realize this Purpose, we believe it is important to maximize the value of our existing businesses and to develop and execute businesses that contribute to “fulfilling moments.”

Maximizing the value of existing businesses

Our current core business is the tobacco business, and we are confident that it will continue to grow. Combustibles, in particular, are expected to continue to make up the majority portion of our sales volumes and earnings, and as such will continue to play an important role. Meanwhile, we are concentrating our business resources on RRP, particularly the HTS segment, which is expected to grow the fastest through fiscal year 2035, in order to establish HTS as a future profit growth engine. We are on track to achieve the break-even point for the RRP business by the end of 2028^*4, and aim to expand HTS share of segment to mid-teens level in our key markets, which include Japan and Italy.

*4

Break-even at market brand contribution level representing gross profit less commercial expenditure and before allocation of overheads

Development and execution of business that contributes to “fulfilling moments”

Independent of the established business divisions, we set up D-LAB, a corporate R&D organization to actualize the JT Group Purpose through research centered on “fulfilling moments,” in an effort to explore prospects and create seeds for future business. D-LAB is engaged in a host of activities to enable the Group to provide the value of “fulfilling moments” to many people decades from now. We will continue working with a long-term perspective to ensure that we can contribute to fostering “fulfilling moments” in society.

The operating environment surrounding the Group remains highly uncertain, with geopolitical instabilities, the impact of various countries’ policies on the global economy, the development of discussions regarding tax increases and regulations, and changes in consumer behaviors associated with these factors. We will continue to monitor these trends and respond flexibly.

Over the medium to long term, we will continue to pursue mid-to-high single-digit average annual growth for consolidated AOP at constant currency. During the period covered by Business Plan 2025, from fiscal year 2025 to fiscal year 2027, we expect high single-digit growth in consolidated AOP at constant currency. In our core tobacco business, the business environment is expected to remain adverse, with a decrease in total industry volume, continued down trading, tightening of regulations and taxation on RRP, and increased competition. In combustibles, including traditional cigarettes, we aim to realize strong top-line growth driven mainly by market share growth and pricing, and in RRP, we will continue and increase focused investments in HTS to expand the geographic coverage of Ploom, and to capture a higher share of our existing markets, we intend to achieve break-even across the RRP category by fiscal year 2028.

Also, we announced entering into an agreement with Shionogi & Co., Ltd (“Shionogi”) to transfer the pharmaceutical business and our stake in TORII PHARMACEUTICAL CO., LTD. (“Torii”), a consolidated subsidiary of JT.

The pharmaceutical business and Torii have contributed to JT Group’s sustainable profit growth for a long period of time. However, in recent years, the environment surrounding the pharmaceutical business has been changing. To ensure Pharmaceutical’s drug discovery capabilities and benefits for patients continue to be developed, we have determined that the best option is to transfer the pharmaceutical business to Shionogi, a specialized pharmaceutical company that values both the pharmaceutical business and Torii with a focus on new drug discovery.

Upon completion, our group’s business portfolio will consist of two segments: the tobacco business and the processed food business, each keeping its strategic role. The tobacco business will remain the core driver of growth, and the processed food business will complement JT Group’s profit growth. We will strive to achieve the JT Group Purpose and deliver sustainable profit growth over the medium to long term.

Enhancing human capital

To realize further growth of the Group, it is the human resources that are the most important source of competitive advantage and our major strength. In the past, I was responsible for major acquisitions of overseas companies and the subsequent integration process. The experience made me acutely aware that diverse human resources were essential to the successful smooth integration and the subsequent growth of the acquired companies. The Group has employees of over 100 different nationalities. I strongly support the concept of diversity and inclusion—that respects different backgrounds and values, not only with regard to nationality, gender, and age but also experience and expertise, as it leads to the sustainable growth of the Group.

The Group’s concept of “people come first” recognizes that individual employees are its driving force. Guided by this idea, in fiscal year 2024 we clarified our definition of human capital and set focus targets for expanding human capital. Moreover, in a business environment marked by change, further enhancement of the Group’s organizational strength will be important for supporting its sustainable growth. I believe that organizational strength is nurtured when a company and its employees understand the company’s direction, work together toward its realization, voluntarily grow and contribute to each other, and build relationships of trust. I have always been proactive in visiting every workplace to engage actively in personal communication with employees to share and reinforce the Group’s direction and the values embedded in the JT Group Purpose. Looking ahead, we will further enhance organizational strength by understanding and examining the status of the Group’s employees based on the results of our employee engagement survey (EES).

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Please see Human capital in the JT Group for details.

As we aim for sustainable profit growth, we allocate management resources based on the 4S model, which is our management principle, and the JT Group Purpose. Specifically, we will prioritize investment in the tobacco business, which will lead to sustainable profit growth over the medium to long term, while continuing to strike a balance between profit growth through business investments and shareholder returns. We will continue to pursue further strengthening of shareholder returns by realizing profit growth over the medium to long term, with a target payout ratio of 75%^*5 as a competitive level in the capital market.

Even in the tough business environment that is expected to continue, we will work together in a united effort to continue producing products and services that exceed consumers’ expectations, as we aim for the sustainable growth of the Group. At the same time, in order for the Group to continue providing “fulfilling moments” to our various stakeholders through our businesses and fulfill a necessary role in society, I am personally committed to driving forward the uninterrupted evolution of the Group. I ask our stakeholders to continue their steadfast support for the Group now and in the future.

*5

Decided within a scope of about ±5%