FOR IMMEDIATE RELEASETokyo, October 31, 2016

JT’s Consolidated Financial Results for FY2016 Third Quarter

Double-digit profit growth at constant currency driven by all businesses
Results for January 1 – September 30, 2016
All businesses in the group delivered solid performance leading to 11.8% growth in adjusted
operating profit at constant currency.

Revenue and adjusted operating profit declined 4.1% and 6.6% respectively due to unfavorable
currency movements in the International tobacco business. Operating profit grew 8.5% as aresult of higher gains from the sale of real estate assets in the first quarter. Profit attributable toowners of the parent grew 10.4%.

International Tobacco Business: Total and GFB shipment volumes increased 2.9% and 5.3%
respectively, driven by market share gains, contributions from seeding markets and acquisitions,as well as favorable trade inventory adjustments mainly in the first quarter. In US Dollars,
adjusted operating profit at constant currency grew 15.4%, reflecting positive volume, robust
pricing and accelerated investments. On a reported basis, adjusted operating profit declined
3.3%, due to adverse currency movements against the US Dollar. Adjusted operating profit inJapanese Yen decreased 13.2% due to appreciation of the currency against the US Dollar.

Japanese Domestic Tobacco Business: Adjusted operating profit grew 0.7% mainly driven by
the retail price amendment of Mevius and the contribution of Natural American Spirit, partlyoffset by increased sales promotions. The profit growth was also supported by the effects of themeasures to strengthen the competitiveness of the Japanese domestic tobacco business.

Forecast for FY2016
 The forecast for adjusted operating profit at constant currency is revised upwards by ¥10.0billion from the previous forecast, a 10.1% growth from the FY2015, due to upward revisions in
the International tobacco business and the Pharmaceutical business.
On a reported basis, the revenue forecast remains unchanged, and the forecast for adjusted
operating profit is revised upwards by ¥7.0 billion, reflecting underlying solid businessperformance of the Pharmaceutical business and revised exchange rate assumptions.

The forecast for profit attributable to owners of the parent is revised upwards by ¥5.0 billion
mainly due to the upward revisions of adjusted operating profit.

Mitsuomi Koizumi, President and Chief Executive Officer of JT, commented:“Our International tobacco business continues to deliver strong results, led by market share gains,volume growth and robust pricing. This solid performance has allowed us to further revise our profit
forecast upwards. Looking ahead, we will further accelerate investments, notably in GFBs, seeding
markets and emerging products, with the aim of strengthening our business to continue achieving
sustainable mid- to long-term profit growth. Domestically, our business performance remains stable
and is underpinned by initiatives to strengthen our product portfolio and brand equity, leading tosteady profit growth. Against the backdrop of an increasingly challenging environment surrounding
the JT Group, we are confident that our solid ongoing business will deliver robust profit growth atconstant currency.”1

Consolidated Financial Results for January 1 – September 30, 2016(billions of Yen)

January – September
2015
2016

Revenue

1,688.5

Adjusted operating profit

Difference

Net Change

1,618.5

-69.9

-4.1%

510.3

476.5

-33.8

-6.6%Operating profit

455.9

494.6

38.7

8.5%

Profit attributable to ownersof the parent 1

317.1

350.0

32.9

10.4%

510.3

570.6

60.3

11.8%

At constant currency:
Adjusted operating profit

Revenue
Revenue declined 4.1% due to unfavorable currency movements in the International tobacco
business despite growth in both the Japanese domestic tobacco business and thePharmaceutical business.

Adjusted Operating Profit
Adjusted operating profit at constant currency increased 11.8% mainly driven by the robust
price/mix effect in the International tobacco business. Adjusted operating profit on a reported
basis declined 6.6%, affected by unfavorable currency movements against the US Dollar in theInternational tobacco business.

Operating Profit
Operating profit grew 8.5% as a result of higher gains from the sale of real estate assets in thefirst quarter.

Profit Attributable to Owners of the Parent
Profit attributable to owners of the parent grew 10.4% due to increased operating profit.

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Results by Business Segment
International Tobacco Business(billions of units, billions of Yen)

January - September2015
2016

Total shipment volume2295.6

304.2

2.9%

GFB shipment volume

205.4

216.3

5.3%

Core revenue3

946.9

873.1

-7.8%

Adjusted operating profit

328.5

285.0

-13.2%Net Change

Total shipment volume grew 2.9%, mainly driven by Brazil, France, Germany, Iran, Italy, Kazakhstan,
Korea, Middle East markets, the Philippines, South East Asia markets and Turkey, as well asacquisitions and inventory adjustments in the first quarter. GFB shipment volume grew 5.3%, led bybrand building initiatives, market share4 gains and the addition of Natural American Spirit. Market
share continued to grow in the key markets of France, Italy, Spain, Taiwan and the UK.
In US Dollars, core revenue and adjusted operating profit grew 10.9% and 15.4% at constantcurrency, respectively, driven by positive volume and robust pricing. Business investments also
increased, particularly in seeding markets and emerging products. On a reported basis, core
revenue increased 3.1%, as strong business momentum offset the impact of currency fluctuations.
Reported adjusted operating profit declined 3.3%, due to unfavorable currency movements. In
Japanese Yen, core revenue and adjusted operating profit decreased 7.8% and 13.2% respectively
affected by the appreciation of the currency against US Dollar.

Japanese Domestic Tobacco Business(billions of units, billions of Yen)

January – September2015
2016

Total sales volume5

81.3

79.7

-1.9%

Core revenue6

478.2

485.5

1.5%

Adjusted operating profit

197.6

199.0

0.7%

Net Change

Total sales volume decreased 1.9% due to lower industry volume and the negative impact of theretail price amendment of certain products including Mevius, partly offset by the acquisition ofNatural American Spirit. Despite the sales volume decline, core revenue grew 1.5% driven by theretail price amendment and the positive impact of the acquisition of Natural American Spirit.
Adjusted operating profit grew 0.7% due to higher core revenue and the effects of the measures tostrengthen the competitiveness of the Japanese domestic tobacco business, which was partly offset
by increased sales promotions.

3Pharmaceutical Business(billions of Yen)

January – September
2015
2016

Revenue

53.4

60.7

7.3

Adjusted operating profit

-3.3

4.2

7.5

Difference

Revenue increased ¥7.3 billion to ¥60.7 billion driven by royalty revenue growth from anti-HIV drugs,
Stribild and Genvoya, and a one-off milestone revenue contribution in the first quarter related to theprogress of an original JT compound that has been out-licensed. This revenue growth drove an
adjusted operating profit improvement of ¥7.5 billion to ¥4.2 billion.

Processed Food Business(billions of Yen)

January – September2015
2016

Revenue

120.5

120.1

-0.4

Adjusted operating profit

1.3

3.7

2.4

Difference

The processed food business continued to mainly focus on staple food such as frozen noodles,frozen rice, packed cooked rice and frozen baked bread. Although sales of staple food andseasoning steadily increased, revenue slightly decreased ¥0.4 billion to ¥120.1 billion mainly due toa decrease in sales of other processed food products. Adjusted operating profit increased ¥2.4billion to ¥3.7 billion as a result of product mix improvement and lower material cost from theappreciation of the Japanese Yen.

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Consolidated Forecast for FY2016
FY2015
Actual

FY2016
Previous
Forecast

FY2016
Revised
Forecast

Change fromFY2016
Previous
Forecast

Revenue

2252.92,120.0

2120.0-Adjusted operating profit

626.7

569.0

576.0

7.0

Operating profit

565.2

572.0

580.0

8.0

14.8
(2.6%)

Profit attributable to ownersof the parent

398.5

409.0

414.0

5.0

15.5
(3.9%)

626.7

680.0

690.0

10.0

63.3
(10.1%)(billions of Yen)

Change fromFY2015
Actual-132.9(-5.9%)-50.7(-8.1%)

At constant currency:
Adjusted operating profit

At constant currency, the forecast for adjusted operating profit is revised upwards by ¥10.0
billion from the previous forecast, a 10.1% growth from the FY2015, due to the upward revisionsof the International tobacco business and the Pharmaceutical business.

On a reported basis, the revenue forecast has not been changed from the previous forecast.

The forecast for the reported adjusted operating profit is revised upwards by ¥7.0 billion as thenegative impact of unfavorable local currency movements against the US Dollar is more thanoffset by the solid performance of the Pharmaceutical business and the positive impact of thedepreciation of the Japanese Yen against the US Dollar.

Forecasts for operating profit and profit attributable to owners of the parent are revised upwardsby ¥8.0 billion and ¥5.0 billion respectively. The revisions are mainly due to stronger adjusted
operating profit growth.

Forecasts by Business Segment
International Tobacco Business7: Strong business momentum enables an improved price/mix
contribution in a number of markets. As a result, the forecast for adjusted operating profit in US
Dollars at constant currency is revised upwards by US$30 million, representing an increase of
12.4% from the previous year despite accelerated business investments. The reported adjusted
operating profit forecast is revised downwards by US$20 million, mainly due to revised
exchange rate assumptions for the UK Sterling. In Japanese Yen, the forecast for adjusted
operating profit remains unchanged due to a change in the exchange rate assumption for theJapanese Yen against the US Dollar.

Japanese Domestic Tobacco Business: Total sales volume forecast has been revised
downwards by 1.0 billion. This reflects the underlying business performance including lower
cigarette demand affected by the T-vapor category. Core revenue forecast is also revised
downwards by ¥6.0 billion. The forecast for adjusted operating profit remains unchanged at
2.7% growth from the previous year, by pursuing cost efficiencies while not compromisingsteady sales promotion activities.

5

Pharmaceutical Business: The forecasts for revenue and adjusted operating profit are revised
upwards by ¥4.0 billion to ¥ 86.0 billion and ¥4.5 billion to ¥8.5 billion respectively, due tostronger performance of anti-HIV drugs, Stribild and Genvoya.

Processed Food Business: The revenue forecast is revised downwards by ¥3.0 billion as aresult of the updates of the sales plan. The forecast for adjusted operating profit remains
unchanged supported by product mix improvement and cost reduction effect.

Dividend: The forecast for the fiscal year-end dividend per share remains unchanged.
Accordingly, a total annual dividend per share is to be ¥128, including the interim dividend of¥64.

###Japan Tobacco Inc. is a leading international tobacco company. Its products are sold in over 120 countries and its globally
recognized brands include Winston, Camel, Mevius, LD and Natural American Spirit. With diversified operations, JT is also
actively present in pharmaceuticals and processed foods. The company’s revenue was ¥2.253 trillion (US$18,679million(*)) in the fiscal year ended December 31, 2015.
*Translated at the rate of ¥120.61 per $1, as of December 31, 2015

Notes:
1

Profit in 2015 is from continuing operations.
Including fine cut, cigars, pipe tobacco and snus, but excluding contract manufactured products, waterpipe tobacco andemerging products.
3Revenue including waterpipe tobacco and emerging products, but excluding revenue from distribution, contract
manufacturing and other peripheral businesses.
4Source: IRI, Logista, Nielsen and JTI estimates on a 12-month rolling average, unless otherwise specified, for cigarettes
and fine cut at the end of September 2016. Spain is on a 12-month rolling average at the end of August 2016. 12-monthshare of market growth for August 2016 markets is calculated against a 12-month share of market at the end of August
2015.
5
Total sales volume excluding domestic duty free, the China business and emerging products.
6Core revenue including domestic duty free, the China business and emerging products.
7
The exchange rate assumptions for US $1.00 have been revised as follows; Russian Ruble 67.00 from 67.50, UKSterling 0.74 from 0.72, Swiss Franc remains unchanged at 0.98, Taiwan Dollar 32.30 from 32.50, Turkish Lira 2.95 from2.90 and Japanese Yen 106.45 from 105.80. The assumption for Euro remains unchanged at 0.90. Appreciation of theJapanese Yen and the Swiss Franc against the US Dollar negatively affects the consolidated financial result numbers.
Conversely, appreciation of the other currencies against the US Dollar has a positive effect.
Additional definitions are provided at https://www.jt.com/media/definitions/index.html.
2Contacts:

Ryohei Sugata, General Manager
Sayako Takahashi, Manager
Media and Investor Relations Division
Japan Tobacco Inc. Tokyo: +81-3-5572-4292
E-mail: jt.media.relations@jt.com

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