JTI’s Growth Strategy
The role of acquisitions
Eddy Pirard
JTI President & Chief Executive Officer

Forward-Looking Statements
This presentation contains forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief, orcurrent 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” orthe negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actualresults, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed orimplied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may beincorrect or imprecise and involve known and unknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety ofassumptions, 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)

increase in awareness of health concerns related to smoking;(2)

regulatory developments; including, without limitation, tax increases and restrictions on sales, marketing, packaging, labeling and use of tobacco products, privately
imposed restrictions and governmental investigations;(3)litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products;(4)

our ability to further diversify our business beyond the traditional tobacco industry;(5)

our ability to successfully expand internationally and make investments outside Japan;(6)

competition and changing consumer preferences;(7)

our ability to manage impacts derived from business diversification or business expansion;(8)

economic, regulatory and political changes, such as nationalization, terrorism, wars and civil unrest, in countries in which we operate;(9)

fluctuations in foreign exchange rates and the costs of raw materials; and(10) catastrophes, including natural disasters.

© Copyright JT 2018

London – June 5, 2018

JT Investor Conference2This presentation contains images of our products in some slides. Those slides
have been included exclusively to illustrate JT Group’s strategy or performanceto our investors. They are not to be used for any other purpose.

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10 years of focused acquisitions
Key Acquisitions (2008-2017)2009
Kannenberg (Brazil)

2015
Fluxo (Brazil)

2009
Tribac (Zambia)

2015
ATI (Iran)2011
HCTF (Sudan)

2016
NAS (Outside US)

2011
Ploom (Global)*

2016
Tabacalera (Dom. Rep.)

2012
Gryson (Europe)

2016
BIS (Bolivia)

2013
Al Nakhla (Egypt)

2016
NTE (Ethiopia)*2013
Megapolis (Russia)*

2017
KDM & SDM (Indonesia)

2014
Ploom (Global)**2017
Mighty (Philippines)

2014
Zandera (UK)2017
NTE (Ethiopia)***2015
Logic (US)© Copyright JT 2018Leaf / Distribution

Other Tobacco Products

Cigarettes

Reduced-Risk Products

London
Ld – JuneJ5,5 20182018
Donskoy Tabak (Russia)
JT Investor Conference* Equity stake. ** Acquisition of trademarks and IP. *** Share purchase agreement bringing JTG’s share ownership to over 70%. Note: The Donskoy Tabak acquisition is expected to be finalized in Q3 2018.

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To balance our volume base
M&A Volume impact(cumulative)

JTI Total Volume mix progression+76 BnU

29%

41%

Othermarkets

38

2008-2017© Copyright JT 2018

71%
2759%

20072017

Top-10markets

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Note: JTI’s top-10 markets based on total volume.

To support our GFB expansion
GFB Volume (CAGR 2007-2017)

GFB+3% +3%+3%+7%+1%

to 260 BnU

to 53 BnU

to 46 BnU

to 18 BnU

© Copyright JT 2018

to 144 BnU

LondonLLond
ondon
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June 5,Jun
5, 2018
2018

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To fuel our growth in emerging markets
Emerging markets (2017 vs. 2007)

TotalVolumeGFB
VolumeCoreRevenueAdjustedOp. Profit+12%+54%+30%+7%©CCopyopyrigrighti ht JT 201
2018
8Copyright

JT InvIInvestor
nvestestortor ConfCConferenceonferenc
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Note: Reported figures.

To broaden our financial footprint&RUH5HYHQXHRIPDUNHWV00$GM2S3URILWRIPDUNHWV00+25%+36%

2007© Copyright JT 2018

Note: Reported figures.

2017

2007London – June 5, 2018

2017
JT Investor Conference8Clear priorities driving our business development efforts
Business Development Matrix Concept

Strategic Priorities

TargetHighStrengthen our base

Prioritizedopportunities

TargetStrategic fit
Expand our footprint

MediumTargetTargetTargetTargetTargetLow

TargetTargetEnhance our portfolio

Low

MediumHigh

Market potential© Copyright JT 2018

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9Assessing all targets holistically
M&A process steps

1

STRATEGIC FIT

2

MARKET POTENTIAL

3VALUATION

4

FINANCIAL IMPACT

5

M&A DECISION© Copyright JT 2018

Note: The above list is not exhaustive.

Main assessment areas
Geographic
footprint

FCFProductportfolio

Brandequity

Route toconsumer“Buy orbuild”

Macroeconomics

Operating environment

Discounted Cash Flow

Multiples

VolumeRevenue

Adjusted profit

Profittimeline

Funding

Management considers all the inputs holistically, ensures alignment withcompany’s strategy and verifies sustainability of returns for the long-term
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Proven track record of successful integration
Since 2015 ATI bolstered our existing footprint and performance in IranMarketShare*

Total
Volume

GFB
VolumeCore
Revenue+17pp

x3x4x3

JTI Iran performance - 2017 vs. 2014
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11* SoM based on a 12-month moving average to December 2017 vs. same period 2014. ATI (Arian Tobacco Industry) had a market share of circa 7% before being integrated to JTI. Note: Reported figures.

Proven track record of successful integration
Since 2012 GRYSON strengthened our growth platform in fine cut

MarketShare*Total
Volume

GFB
VolumeCoreRevenue+11pp

x2x3x2

JTI Fine cut performance - 2017 vs. 2011
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12* Western Europe SoM based on a 12-month moving average to December 2017 vs. same period 2011. Gryson had a fine cut market share of circa 4% in Western Europe before being integrated to JTI. Note: Reported figures.

Proven track record of successful integration
The FLUXO acquisition in 2015 strongly enhanced our in-market capabilities in Brazil

MarketShare*Winston
Volume

GFB
VolumeCoreRevenue+1.4ppx20x6x6

JTI Brazil - 2017 vs. 2015
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14* Monthly SoM based on December 2017 vs. December 2015. Note: Reported figures.

Looking aheadRecent acquisitions will contribute to our sustainable profit growthMarketStrategic fit

SoMgain

Annualized
volume gain

5Y industry
value potential*

Philippines

Increasing scale to boost GFB growth+23pp+16 BnU+50%

Indonesia

Gaining kretek capabilities and scale+2pp+7 BnU+40%

EthiopiaEntering a new attractive market+98pp+5 BnU

+180%

Russia**Strengthening portfolio and sales presence+7pp+16 BnU+35%© Copyright JT 2018

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Source: Internal estimates. * RMC retail industry value growth estimates (2021 vs. 2016 at constant FX, rounded up). ** The Donskoy Tabak acquisition is expected to be finalized in Q3 2018.

Opportunities remain for value enhancing acquisitions
Global RMC industry value**
attributable to other players

Global RMC industry volume* Share of market

Big-5~25%© Copyright JT 2018

Otherplayers>100$Bn

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Source: Internal estimates. * Covering 78 markets (excl. China). Big-5 = Altria, BAT, IMB, JT and PMI. ** RMC retail industry value covering 78 markets (excl. China).

JT Investor Conference16Closing remarks• Acquisitions broadened our footprint, contributing to JTI’s profit progression• Recent acquisitions will strengthen our business and financial base
• Attractive opportunities remain for further expansion, organically & through M&A• On track to deliver on our FY18 targets, with return to strong revenue growth© Copyright JT 2018

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