Investing for growth in Kazakhstan andCentral Asian Markets
Dean Gilfillan
General Manager, Kazakhstan & CAM

Caution on Forward-Looking Statements
Today’s presentations contain forward-looking statements. These statements appear in a number of places in these presentations 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” or the negative of theseterms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance orachievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-lookingstatements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known andunknown risks and uncertainties. Forward-looking statements regarding operating results are particularly subject to a variety of assumptions, 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) decrease in demand for tobacco products in key markets;(2) restrictions on promoting, marketing, packaging, labeling and usage of tobacco products in markets in which we operate;(3) increases in excise, consumption or other taxes on tobacco products in markets in which we operate;(4) litigation around the world alleging adverse health and financial effects resulting from, or relating to, tobacco products ;(5) our ability to realize anticipated results of our acquisition or other similar investments;(6) competition in markets in which we operate or into which we seek to expand;(7) deterioration in economic conditions in areas that matter to us;(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 2015

London – September 18, 2015

JT Investor Meeting2This presentation contains images or packages of our brands
in some slides. Those slides have been included exclusively
to illustrate JT Group’s strategy or performance to ourinvestors. They are not to be used for any other purpose.

© Copyright JT 2015

London – September 18, 2015

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A hub of markets with strong growth potential• 6 emerging markets: Kazakhstan, Kyrgyzstan,Mongolia, Tajikistan, Turkmenistan and Uzbekistan• Cigarette industry value of 3.9 $Bn in 2014,
increasing 44% vs. 2010
• Cigarette industry volume of 51 BnU in 2014
• JTI outperforming industry volume driven by a solid
infrastructure and talented team
office and factory in Almaty (KZ)

Volume, 2014 vs. 2010
JTI

-10.6%© Copyright JT 2015

Source: JTI estimates+10.4%

IndustryLondon – September 18, 2015

JT Investor Meeting4Consistent volume and share growth driven by GFBs
JTI Total volume(BnU)
13.4

•
14.8

GFB volume doubled benefitting fromfocused investments, new line extensions
and brand migrations• GFB mix of 71%, up 31ppt vs. 2010

10.5

GFB

5.4
2010

2014

JTI Share of market•

Market share increased driven byWinston, LD and Mevius• 2 of the top-5 brands in Kazakhstan

29.2%• 4 of the top-10 brands in Central Asia

23.7%

2010
© Copyright JT 2015

Source: JTI estimates

2014
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Continued investments driving profit contribution
Investment(Index, 2010=100)•Focused investments to:• Expand GFB portfolio and equity• Enhance business infrastructure

x1.4
2010

•

x2.7

© Copyright JT 2015

• Develop talents

2014

EBITA
(Index, 2010=100)

2010• Strengthen trade partnerships

Profit almost tripled since 2010 driven by
volume gains, mix improvements as well
as strong price increases, primarily inKazakhstan

2014
London – September 18, 2015

Note: Investment includes trade marketing, brand marketing, sales and operating expenses. Investment and EBITA on a reported basis

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Focusing on GFBs

London – September 18, 2015

JT Investor Meeting7LD: Driving growth in ValueLD Total volume(BnU)•#4 brand across the hub with circa 10%
market share in 2014
• Volume more than doubled vs. 2010,
strengthening LD’s position in Value• Market share almost tripled vs. 2010, led
by Kazakhstan, Kyrgyzstan and Mongolia

5.0•

Growth driven by slimmer formats andmodern range (LD Club and LD Club Extra)Classic range

Modern range

2.12010© Copyright JT 2015Source: JTI estimates

2014
London – September 18, 2015

JT Investor Meeting8Winston: Enhancing Mid-Price leadership
Winston Total volume(BnU)

4.3•Strong volume increase with further
opportunities for growth led by its
compelling and evolving portfolio•Market share of 8.5% across the hub,up 5.8ppt vs. 2010•

Migrations and new line extensions
fueling Winston’s growth momentum
Classic range

Modern range

1.52010© Copyright JT 2015

Source: JTI estimates

2014
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JT Investor Meeting

9Delivering sustainable growth andinvesting for the future

London – September 18, 2015

JT Investor Meeting10Kazakhstan: Solid #2 player in an increasingly profitable market
GFB Share of market•#2 player with market share above 37%
driven by GFB share growth•14%

Increasing industry value resulting inmarket profitability

2010• Minimum Retail Selling Price since 2007
to secure government revenue

22%

2014
•

Industry value($MM)

Market dominated by a growing Value
segment, representing 64% of the totalindustry volume1,437718
2010

2014

© Copyright JT 2015

Source: JTI estimates. Note: Industry value on a reported basis

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11Kazakhstan: LD and Winston outperforming the industry
Winston & LD Volume, 2014 vs. 2010(BnU)
Winston

Mid-Price

LD

Value

+0.8+1.1

Winston and LD Share of market
2014

vs. 2010 (ppt)

Winston

5.8%

+3.2

LD

12.6%

© Copyright JT 2015

LD and Winston outperformed theindustry, fueling GFB volume growth•Strong volume and share of market gains
vs. 2010 driven by the expansion ofslimmer formats•JTI has 4 of the top-8 brands in themarket, with LD and Winston being #2and #5, respectively

+1.7

-2.1

Source: JTI estimates•• LD is also the #1 in super slims, and• Winston is the #1 in Mid-Price+6.9
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12Kazakhstan: Driving GFB scale and profitability
Investment(Index, 2010=100)•• GFB mix reached 75% in 2014 fueledby new line extensions and brandmigrations

x1.22010

•

x2.4
2010
© Copyright JT 2015

• Mevius launched in early 2015 to seize
opportunities in Premium

2014

EBITA
(Index, 2010=100)

Increasing investments to enhance further
GFB equity and portfolio

Profit more than doubled vs. 2010 mainly
driven by GFB growth and price increases• Kazakhstan is today one of JTI’s top-10
profitable markets

2014
London – September 18, 2015

Note: Investment includes trade marketing, brand marketing, sales and operating expenses. Investment and EBITA on a reported basis

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JTI, the undisputed leader in Kyrgyzstan
GFB Share of market

70%•More than doubled share of market since2010 to exceed 70%•GFB volume almost quadrupled over thelast 5 years, representing 97% of total
volume in 2014

•Key drivers of success

32%20102014• Winston and LD are the top-2 brands inthe market

GFB Volume(BnU)• Best direct coverage of retail andfocused investment are paying off
4.0
1.1
2010
© Copyright JT 2015

Source: JTI estimates

2014
London – September 18, 2015

JT Investor Meeting

14

The leading international tobacco company in Mongolia
GFB Volume(MMU)•540• GFB volume doubled vs. 2010 driven byMevius and LD2014• Strong heritage of Mild Seven andsuccessful rebranding to Mevius

270
2010
Mevius Volume(MMU)

230
120
2010
© Copyright JT 2015

Leading position driven by GFB positive
growth momentum•

Continuous investment to pursue future
share and volume opportunities whilefurther enhancing profitability•

Long standing relationship with Mongolian
distributor

2014
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More opportunities ahead driven by additional investments•

Strong top and bottom-line growth achieved over thelast years in Kazakhstan, Central Asia and Mongolia•

GFB volume and share increased significantly driven
by an expanding portfolio as well as increasingavailability and visibility at point of sales•

Seeding investments continue with the recent
localization of production in Uzbekistan• Industry volume above 11BnU (28% of the hub)• Local production provides a leveled playing field• Strong brand equity of Winston© Copyright JT 2015

London – September 18, 2015

The opening ceremony of the manufacturing facility in Uzbekistan. From left to right:
Thomas A. McCoy (JTI President & Chief Executive Officer), Kakhramon Alimov(co-founder of the Tobacco Tashkent factory), Akira Saeki (JT Executive Deputy
President & President of Tobacco Business), Fumihiko Kato (Ambassador of Japanto Uzbekistan) and Ali Gadjiev (co-founder of the Tobacco Tashkent factory)

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