1
Contacts: Hideyuki Yamamoto, General Manager

Yuka Kin, Manager

Media and Investor Relations Division

Japan Tobacco Inc.

Tokyo: +81-3-5572-4292
E-mail: jt.media.relations@jt.com

FOR IMMEDIATE RELEASE

JT has Embarked on a Solid Start to Achieving
its Fiscal Year Outlook Ending March 31, 2010

TOKYO, July 30, 2009 --- Japan Tobacco Inc. (JT) (TSE: 2914) announced today its consolidated
financial results for the first quarter that ended June 30, 2009. While the first quarter net sales and
EBITDA were negatively affected by factors including currency fluctuations, the last year’s trade
inventory adjustments at the introduction of the “taspo” age verification vending machines in Japan,
a planned business model change in the Philippines and shipment issues in the Near East, JT sees it
has embarked on a solid start to achieving financial outlook for the fiscal year ending March 31,
2010, given its robust share performance in the domestic tobacco market and continued growth
momentum in its key international tobacco markets, which include Russia, the United Kingdom and
lead European markets. Net income increased due to improvements in non-operating and
extraordinary incomes/expenses, including foreign exchange gain/loss, losses related to impairment
and disposal of assets, and an absence of expenses related to the introduction of “taspo.”

1.

CEO Message

“We are off to a good start to achieving our outlook for this fiscal year” said Hiroshi Kimura,
President and CEO of JT. “Negative currency exchange and the factors specific to the markets
concerned affected our first quarter performance. Nevertheless, our fundamental momentum
remains solid in both the domestic and international tobacco businesses. We remain alert to
currency and economic volatilities, while the effects have been within the range of our estimates.”

2.

Highlights of the First Quarter



Sales volume
1
for the domestic tobacco business decreased 7.2 percent to 39.0 billion cigarettes
compared to the same period last year, largely due to the last year’s trade inventory adjustments
related to the introduction of the “taspo” age verification vending machines, which took place
between March and July 2008. Excluding this effect, our sales volume decline of 4.2 percent
was in line with our plan assumptions.



The international tobacco business’ net sales excluding tax
2
declined 21.0 percent compared to
the same period last year to ¥201.3 billion, primarily due to the negative currency impacts. Net
sales excluding tax grew 7.9 percent at constant rates of exchange. While total sales volume
3

decreased 1.4 percent to 100.9 billion cigarettes, sales volume for Global Flagship Brands
4

increased 2.6 percent to 57.1 billion cigarettes. Sales volume growth was largely attributed to
the continued momentum in Russia, the United Kingdom and lead European markets, which was
offset by a planned change in the business model in the Philippines and shipment issues in the
Near East.



Given the fundamentals in JT’s domestic and international tobacco businesses remain solid, and
the pharmaceutical and the foods businesses have been performing in line with the outlook, the
company maintains its outlook for the fiscal year ending March 31, 2010.

Units: Billions of Yen

1
Sales volume from both domestic duty free and the China Division were not incorporated in the above figures.
2
Net sales excluding tax does not account for revenue from the distribution, private label, contract manufacturing and
other peripheral businesses.
3
Total sales volume includes cigars, pipe tobacco and snus, but does not include private label and contract
manufacturing products.

1Q FY03/2009(A)
1Q FY03/2010(B)
Difference
(B)-(A)
Net change
(%)
Net sales including tax
1,719.8
1,463.1
-256.6
-14.9

Net sales excluding tax
5
559.2
474.8
-84.4
-15.1
EBITDA
6
180.6
142.5
-38.0 -21.1
Operating income
7
110.4
84.2
-26.1 -23.7
Net income
16.9
42.8
25.9 153.5


2

3.

Results by Business Segment



Domestic Tobacco Business

Sales volume decreased 7.2 percent in comparison to the same period last year to 39.0 billion
cigarettes, largely due to the last year’s trade inventory adjustments related to the introduction of
the “taspo” age verification vending machines, which took place between March and July 2008.
Excluding this effect, our volume decline of 4.2 percent was in line with our plan assumptions. In
the meantime, JT’s share of market has been performing robustly at 65.1 percent, thanks to sales
promotions aimed at securing product visibility and new product launches around its key brands.

Units: Billions of Yen, Billions of Cigarettes
1Q FY03/2009
(A)
1Q FY03/2010
(B)
Net change
(%)
Net sales including Tax
842.6
779.7
-7.5
Net sales excluding Tax
8
170.6
158.3
-7.2
EBITDA 75.5
69.6
-7.9
Operating income
55.8
54.6
-2.2
Sales volume
42.0
39.0
-7.2



International Tobacco Business

Net sales excluding tax and EBITDA declined 21.0 percent and 28.3 percent, respectively in
comparison to the same period last year, primarily because of the currency impacts. Net sales
excluding tax and EBITDA each grew 7.9 percent and 7.1 percent, respectively, at constant rates of
exchange. Although the total sales volume decreased 1.4 percent, GFB sales volume increased 2.6
percent. Sales volume growth was largely attributed to the continued momentum in Russia, the
United Kingdom and lead European markets, which were offset by a planned change in the
business model in the Philippines and shipment issues in the Near East. While the company will
continue to closely monitor currency fluctuations and economic downturns, it remains committed
to achieving the forecasted EBITDA for the fiscal year ending March 31, 2010, through a
combination of price increases and cost optimization.

Units: Billions of Yen, Billions of Cigarettes

January - March
2008
January - March
2009
Net change
(%)
Net sales including tax
743.3
568.3
-23.5

Net sales excluding tax
9
254.7
201.3
-21.0
EBITDA 94.7
67.9
-28.3
Operating income
52.2
33.3
-36.1
Total sales volume
102.4
100.9
-1.4
GFB sales volume
55.6
57.1
2.6



4
Global Flagship Brands (GFB) consist of eight brands: Winston, Camel, Mild Seven, Benson & Hedges, Silk Cut,
LD, Sobranie, and Glamour.
5
Net sales excluding tax does not account for revenue from the imported tobacco, domestic duty free, the China
Division, and other miscellaneous in the domestic tobacco business, in addition to the distribution, private label,
contract manufacturing and other peripheral businesses in the international tobacco business.
6
EBITDA was calculated as operating income + depreciation of tangible fixed assets + amortization of intangible fixed
assets + amortization of long-term prepaid expenses + amortization of goodwill.
7
Operating income excluding goodwill amortization related to the international tobacco business and the foods business
was ¥109.2 billion yen.
8
Net sales excluding tax does not account for revenue from the imported tobacco, domestic duty free, the China
Division and other miscellaneous.
9
Net sales excluding tax does not account for revenue from the distribution, private label, contract manufacturing and
other peripheral businesses.


3



Pharmaceutical Business

Net sales and EBITDA decreased to ¥11.1 billion and -¥2.3 billion respectively, in the first quarter
because there was no milestone revenue for JTT-705, a drug licensed to Roche for the treatment of
dyslipidemia. Nonetheless, performance of the pharmaceutical business has been in line with the
forecasted figures with the launch of REMITCH® CAPSULES in March, which is an oral
antipruritus drug. The company currently has nine compounds in clinical trial.

Units: Billions of Yen

1Q FY03/2009
1Q FY03/2010
Net change (%)
Net sales
16.1
11.1
-31.0
EBITDA 3.0
-
2.3
-
Operating income
2.1
- 3.2
-



Food Business

The food business recorded declining net sales of ¥98.8 billion. While the beverage business has
been performing steadily, the processed food business was affected by the exclusion of its chilled
processed food subsidiary from its consolidation following the company’s withdrawal from the
business field, and the restructuring of subsidiaries related to the business integration. Operating
income decreased by ¥0.9 billion to -¥3.6 billion due mainly to goodwill amortization related to the
acquisition of Green Foods Co., Ltd.

Units: Billions of Yen







4.

Outlook for the Fiscal Year Ending March 31, 2010 (consolidated)

The company maintains its financial outlook for the fiscal year ending March 31, 2010, in view of
the solid fundamentals of the domestic and international tobacco businesses, and the pharmaceutical
and the foods businesses whose performances are in line with the outlook.

Units: Billions of Yen
Fiscal year ended
March 31, 2009
Actual
(A)
Fiscal year ending
March 31, 2010
Forecast
(B)
Difference
(B)-(A)
Net change
(%)
Net sales including tax

6,832.3
6,000.0
-832.3
-12.2
Net sales excluding tax
10
2,243.6
1,985.0
-258.6
-11.5
EBITDA

646.2
475.0
-171.2 -26.5
Operating income

363.8
244.0
-119.8 -32.9
Net income

123.4
100.0
-23.4 -19.0
###
10
Net sales excluding tax does not account for revenue from the imported tobacco, domestic duty free, the China
Division and other miscellaneous in the domestic tobacco business, in addition to the distribution, private label,
contract manufacturing and other peripheral businesses in the international tobacco business.
1Q FY03/2009
1Q FY03/2010
Net change (%)
Net sales
112.6
98.8
-12.2
EBITDA 1.8
3.8
109.2
Operating income
-2.7
-3.6
-


4
Japan Tobacco Inc. is one of the leading international manufacturers of tobacco products. The company
manufactures internationally recognized cigarette brands including Winston, Camel, Mild Seven and Benson &
Hedges. Since its privatization in 1985, JT has actively diversified its operations into pharmaceuticals and foods.
The company’s net sales were ¥ 6.832 trillion in the fiscal year ended March 31, 2009.

FORWARD-LOOKING AND CAUTIONARY STATEMENTS
This document contains forward-looking statements about our industry, business, plans and objectives, financial
condition and results of operations that are based on our current expectations, assumptions, estimates and projections.
These statements discuss future expectations, identify strategies, discuss market trends, contain projections of results of
operations or of our financial condition or state other forward-looking information. These forward-looking statements
are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to
differ materially from those suggested by any forward-looking statement. We assume no duty or obligation to update
any forward-looking statement or to advise of any change in the assumptions and factors on which they are based.
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.

health concerns relating to the use of tobacco products;
2.

legal or regulatory developments and changes, including, without limitation, tax increases and restrictions on the
sale, marketing and usage of tobacco products, and governmental investigations and privately imposed smoking
restrictions;
3.

litigation in Japan and elsewhere;
4.

our ability to further diversify our business beyond the tobacco industry;
5.

our ability to successfully expand internationally and make investments outside of Japan;
6.

competition and changing consumer preferences;
7.

the impact of any acquisitions or similar transactions;
8.

local and global economic conditions; and
9.

fluctuations in foreign exchange rates and the costs of raw materials.

Data sheets for 3 months ended June 2009
Data Sheet(1)
1. Summary of Business Performance
(unit: JPY billion)
6. Amortization relating to major acquisitions
(unit: JPY billion)
JT
Sales including excise tax
1,719.8
1,463.1
-256.6
Former RJRI
Sales excluding excise tax
*
559.2
474.8
-84.4
7.3
2.7
10
Apr-09
EBITDA
180.6
142.5
-38.0
Katokichi
Operating Income
110.4
84.2
-26.1
Goodwill
2.2
3.2
5
Dec-12
Recurring Profit
72.5
78.8
6.2
(unit: USD million)
Net Income
16.9
42.8
25.9
JT International
*
Former RJRI and Gallaher
(Reference:Figures for major profit items before goodwill amortization)
Trademark rights *
71
56
mainly 20
Operationg Income
137.2
109.2
-27.9
Goodwill
226
227
20
Recurring Profit
99.3
103.7
4.4
* Termination of trademark rights amortization: Former RJRI Apr-19, Former Gallaher Mar-27
Net Income
43.6
67.8
24.1
7.Capital expenditure
(unit: JPY billion)
2. Breakdown of net sales
(unit: JPY billion)
Capital expenditures
20.3
26.3
5.9
Domestic tobacco
8.2
8.7
0.4
Net sales including excise tax
*1
1,719.8
1,463.1
-256.6
International tobacco *
6.4
11.8
5.3
Domestic tobacco
842.6
779.7
-62.8
Pharmaceutical
0.8
0.6
-0.1
International tobacco
*1
743.3
568.3
-175.0
Foods
2.8
4.6
1.7
Net sales excluding excise tax
*1 *2 *3
559.2
474.8
-84.4
Others
1.7
0.0
-1.7
Domestic tobacco
*2
170.6
158.3
-12.2
* International tobacco business: 3 months ended March,2009
International tobacco
*1 *3
254.7
201.3
-53.4
8. Cash and cash equivalents *
(unit: JPY billion)
Pharmaceutical
16.1
11.1
-4.9
Foods
112.6
98.8
-13.7
Beverages
46.6
46.9
0.3
Cash and cash equivalents
169.8
122.5
-47.2
Processed foods
65.9
51.9
-14.0
*
Others
5.0
4.9
0.0
*1 International tobacco business: 3 months ended March,2009
9. Interest-bearing debt *
(unit: JPY billion)
*2
*3
Interest-bearing debt
996.0
972.2
-23.8
* Interest-bearing debt = short-term bank loans + bonds + long-term borrowings+ lease obligation
3. Leaf tobacco reappraisal profit / loss *
(unit: JPY billion)
10. Business data
Domestic tobacco business
JT sales volume* (billion cigarettes)
42.0
39.0
-3.0
-1.0
-1.0
-
Total demand (billion cigarettes)
64.8
59.9
-4.8
* Profit when denoted negative
JT market share
64.9%
65.1%
0.2%pt
JT net sales before tax per 1,000 cigarettes (JPY)
12,699
12,693
-6
4. Breakdown of SG&A expenses
(unit: JPY billion)
JT net sales after tax per 1,000 cigarettes (JPY)
4,056
4,056
0
*
SG&A
214.8
192.9
-21.8
Personnel *
57.9
54.4
-3.5
International tobacco business
5.3
4.1
-1.1
Total sales volume* (billion cigarettes)
102.4
100.9
-1.4
Sales promotion
36.0
29.2
-6.7
GFB sales volume (billion cigarettes)
55.6
57.1
1.5
R&D
11.2
12.1
0.9
JPY/USD rate for consolidation (JPY)
105.25
93.76
△
11.49
Depreciation and amortization
22.4
20.1
-2.3
* Including cigars, pipe tobacco and snus, excluding private label and contract manufacturing products
Others
81.8
72.8
-9.0
*
Pharmaceutical business
R&D expenses (parent company) (JPY billion)
5.8
5.4
-0.4
5. EBITDA by business segment
*1
(unit: JPY billion)
Foods business - Beverage business
Number of beverage vending machines *
254,000
255,000
1,000
Consolidated EBITDA
180.6
142.5
-38.0
JT-owned
32,000
31,000
-1,000
Operating income
110.4
84.2
-26.1
Combined
76,500
80,000
3,500
70.1
58.2
-11.9
*
Domestic tobacco EBITDA
75.5
69.6
-5.9
Operating income
55.8
54.6
-1.2
19.7
14.9
-4.7
International tobacco EBITDA
*3
94.7
67.9
-26.7
Operating income
52.2
33.3
-18.8
42.4
34.5
-7.9
Pharmaceutical EBITDA
3.0
-2.3
-5.4
Operating income
2.1
-3.2
-5.4
0.8
0.9
0.0
Foods EBITDA
1.8
3.8
2.0
Operating income
-2.7
-3.6
-0.9
4.5
7.5
2.9
Others EBITDA
5.1
3.2
-1.8
Operating income
2.5
2.9
0.4
2.6
0.3
-2.2
(Reference)
(unit: USD million)
International tobacco EBITDA (Before royalty payment)
*1 EBITDA=operating income + depreciation and amortization
*2
*2
*3 International tobacco business: 3 months ended March,2009
Excluding revenue from imported tobacco, domestic duty free, the China Division and othermiscellaneous in the domestic tobacco business, the distribution, private label, contractmanufacturing and other peripheral businesses in the international tobacco business
Excluding revenue from the distribution, private label, contract manufacturing and other peripheralbusinesses.
3 months
ended
Jun. 2009
As of end of
Jun. 2009
Change
Beverage vending machines include vending machines for cans and packs, etc. and for cups owned by othercompanies and operated by our subsidiary. "JT-owned" vending machines are owned by JT. "Combined"vending machines are owned by our subsidiaries or affiliates ,and focus on selling JT brand beverages but alsosell non-JT brand beverages.
3 months
ended
Jun. 2008
Change
Sales volume of domestic duty-free and China division is excluded, which was 1.0 billion for FY ended
　
Mar.
2008 and 0.9billion for FY ended
　
Mar. 2009, respectively.
As of end of
Mar. 2009
As of end of
Jun. 2009
Change
Year
ended
Mar. 2008
Change
As of end of
Mar. 2009
Cash and cash equivalents = cash and deposits + marketable securities + securities purchased under repurchase agreements
Termi-
nation
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
Years to
amortize
Trademark rights
As of end of
Jun. 2009
Year
ended
Mar. 2009
Years to
amortize
As of end of
Mar. 2009
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
Change
Change
Change
3 months
ended
Jun. 2009
3 months
ended
Jun. 2009
Year
ended
Mar. 2009
3 months
ended
Jun. 2008
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
3 months
ended
Jun. 2008
Change
Year
ended
Mar. 2008
Excluding revenue from the imported tobacco, domestic duty free, the China Division, and othermiscellaneous.
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
Change
Change
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
Change
Personnel expense is the sum of compensation, salaries, allowances, provision forretirement benefit, legal welfare, employee bonuses and accrual of employee bonuses.
Change
Leaf tobacco reappraisal profit / loss
3 months
ended
Jun. 2008
3 months
ended
Jun. 2009
Advertising and general publicity
Depreciation and amortization = depreciation of tangible fixed assets + amortization of intangiblefixed assets + amortization of long-term prepaid expenses + amortization of goodwill
Depreciation and amortization
*2
Depreciation and amortization
*2
Depreciation and amortization
*2
Depreciation and amortization
*2
Depreciation and amortization
*2
Depreciation and amortization
*2
948
789
-159