2017 Third Quarter Results(January 1–September 30, 2017)
Naohiro Minami
CFO and Senior Vice President*Please be reminded that the figures shown on these slides may differ from those shown in the financial statements as they are intended tofacilitate the reader’s understanding of individual businesses.
*For details of each term, please refer to annotations on slide 3.

FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements. These statements appear in a number of places in this presentationand include statements regarding the intent, belief, or current and future expectations of our management with respect to ourbusiness, 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 these terms or other similar terminology. These statements are notguarantees 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 orachievements expressed or implied by these forward-looking statements. In addition, these forward-looking statements arenecessarily 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 varietyof 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 forwardlooking 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 inwhich we operate;(9) fluctuations in foreign exchange rates and the costs of raw materials; and(10) catastrophes, including natural disasters.

© Copyright JT 20172

<Annotation>
Adjusted operating profit:
Adjusted OP:

Adjusted operating profit = operating profit + amortization cost of acquired intangibles
arising from business acquisitions + adjusted items (income and costs)** Adjusted items (income and costs) = impairment losses on goodwill ± restructuringincome and costs ± others

Profit:Profit attributable to owners of the parent company

Shipment volume:

Includes fine cut, cigars, pipe tobacco and snus but excludes contract manufactured
products, waterpipe tobacco and emerging products(International tobacco business)(International tobacco business)

Includes revenue from waterpipe tobacco and emerging products, but excludes revenues
from distribution, contract manufacturing and other peripheral businesses.

Cigarette industry volume

Industry volume of cigarettes in Japan market (excluding emerging products)

Core revenue:(Japanese domestic tobacco business)

Cigarette sales volume

Excludes sales volume of domestic duty free, the China business and emerging products(Japanese domestic tobacco business)

Core revenue:(Japanese domestic tobacco business)

Includes revenue from domestic duty free, the China business and emerging products suchas Ploom TECH devices and capsules but excludes revenue from distribution of imported
tobacco in the Japanese domestic tobacco business, among others.

3© Copyright JT 2017

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Consolidated financial results
January – September 20175

Consolidated Financial Results

Adjusted operating profit at constant FX increased(JPY BN)

Jan-Sep
2016

Jan-Sep
2017

Changevs. PY

476.5

489.7

+2.8%

Revenue

1,618.5

1,592.9-1.6%

Adjusted Operating Profit

476.5

486.1

+2.0%

Operating Profit

494.6

469.7

-5.0%

Profit

350.0

333.7

-4.7%

At constant FXAdjusted Operating Profit
Reported© Copyright JT 2017

6Results by business segment
January – September 2017

7International Tobacco Business

Earnings growth remains on track for full year target(BNU, US$ MM)

Jan-Sep
2016

Jan-Sep
2017

Changevs. PY

Total Shipment Volume

304.2

298.0

-2.0%

GFB Shipment Volume

216.3

216.8

+0.2%

Core Revenue

8,062

7,941-1.5%

Adjusted Operating Profit

2,626

2,868+9.2%

Core Revenue

8,062

7,895-2.1%

Adjusted Operating Profit

2,626

2,747+4.6%

Core Revenue

873.1

882.9+1.1%

Adjusted Operating Profit

285.0307.1+7.8%

At Constant FX

Reported

JPY Basis (JPY BN）© Copyright JT 20178International Tobacco BusinessYear-on-year variance by cluster

Change vs. PY

Jan-Mar2017

Apr-Jun2017

Jul-Sep
2017

Jan-Sep
2017

Total Shipment Volume

-6.4%

0.9%

0.1%

-1.8%

GFB Shipment Volume

-5.9%

1.3%

0.8%

-1.3%

Core Revenue at constant FX

-5.9%

0.7%

-2.9%

-2.7%

Total Shipment Volume

-5.0%

-5.0%

-6.4%

-5.5%

GFB Shipment Volume

-4.0%

-3.8%

-5.6%

-4.5%

Core Revenue at constant FX-8.9%-11.4%-17.0%-12.5%

South & West Europe

North & Central Europe

Keynote in Jul-Sep 2017
North & Central Europe

South & West Europe•Share gains driven by solid GFB momentum•

Favorable inventory adjustments•Industry volume contraction and down-trading
continued•

Intensified competition in fine cut category
9© Copyright JT 2017

International Tobacco BusinessYear-on-year variance by cluster

Change vs. PY

Jan-Mar2017

Apr-Jun2017

Jul-Sep2017

Jan-Sep2017

Total Shipment Volume-6.7%-10.8%

-4.3%

-7.4%

GFB Shipment Volume-6.2%

-6.7%

-1.0%

-4.5%

Core Revenue at constant FX-6.2%-11.7%

-7.3%

-8.6%

Total Shipment Volume

3.4%

2.9%

8.0%

4.8%

GFB Shipment Volume

12.1%

11.9%

4.8%

9.4%

Core Revenue at constant FX

12.9%

13.3%

6.4%

10.7%

CIS+

Rest-of-the-World

Keynote in Jul-Sep 2017
Rest-of-the-world

CIS+•

Industry volume contraction and intense competitionin value segment continued•

Russia： market share recovery continued•

Acquisition in the Philippines*•GFB momentum remained strong•

Price/mix contribution from various markets© Copyright JT 2017

*completed on September 7th, 201710

International Tobacco BusinessProfit increased led by cost optimization while
continuing to invest for sustainable growth(US$MM, at constant FX)Core Revenue
Jan-Sep
2016

Adjusted OP
Jan-Sep
2016

8,062

2,626-169

Volume-160

Volume-1.5%+40

Price/Mix+363

Others*Jan-Sep 2017@ constant FX

+9.2%

+48

Price/Mix

7,941

Jan-Sep 2017@ constant FX

2,868*Include product cost, marketinginvestment and SG&A© Copyright JT 201711International Tobacco BusinessCurrency fluctuations impact was limited on profit
Core Revenue
Jan-Sep
2016

Operations
Local Currencyvs.
USD

Adjusted OP
Jan-Sep
2016873.1-12.4

-5.5

285.0

+25.7

Operations+1.1%

Local Currency
vs.
USD(JPY BN)

-13.7

+7.8%

Net FX impact-3.6
USD vs. JPY

Jan-Sep
2017© Copyright JT 2017

+27.7

882.9

+10.1

USD vs. JPY

Jan-Sep
2017

307.1

12

Japanese Domestic Tobacco Business

Cigarette sales volume was weak and operating
environment continues to be challenging(BNU, JPY BN)

Jan-Sep
2016

Jan-Sep
2017

Changevs. PY

Cigarette industry volume

130.8

115.3

-11.8%

Cigarette sales volume

79.7

70.3

-11.8%

SoM of JT

61.0%

61.0%

+0.0%pt

Core Revenue

485.5443.1-8.7%

Adjusted Operating Profit

199.0

178.0

-10.6%

13© Copyright JT 2017

Japanese Domestic Tobacco BusinessProfit decreased impacted by lower cigarette volume
despite pricing effect and optimization of investmentsCore Revenue
Jan-Sep
2016

-55.0

+5.8

© Copyright JT 2017

443.1

Price/Mix

-44.2

+6.8

-10.6%+16.4

Others*Jan-Sep
2017(JPY BN)

199.0

Volume-8.7%+6.8

OthersJan-Sep
2017

Jan-Sep
2016

485.5

VolumePrice/Mix

Adjusted OP

178.0*Include product cost,marketing investment and SG&A14

Ploom TECH

Ploom TECH: Expanding sales area in Tokyo
Expanding sales area in Tokyo
June 29th“Ploom Shops” launched

July 10tharound 100 tobacco stores in theTokyo metropolitan area

▽October 30th

further expansion to total around
500 tobacco stores in Tokyo

November 1st

tobacco capsules being available at

4 Ploom Shops opened in Tokyo
as of October 31, 2017

convenience stores across Tokyo

Launching two new flavors of tobacco capsules on November 1st15© Copyright JT 2017

Pharmaceutical and Processed Food Businesses

Pharmaceutical: Significant profit growth mainly driven
by royalty revenue increase
Processed food: Lower profit due to weaker topline(JPY BN)

Jan-Sep
2016

Jan-Sep
2017

Change(abs.)

Changevs. PY

Revenue

60.7

74.2+13.5+22.2%

Adjusted OP

4.2

15.8+11.6+274.4%

Revenue

120.1

117.3

-2.8

-2.3%

Adjusted OP

3.7

3.0

-0.8

-20.4%

Pharmaceutical Business

Processed Food Business© Copyright JT 201716

2017 Revised Forecast

17

Consolidated Financial Forecast

Adjusted operating profit at constant FX to growdespite a challenging competitive environment(JPY BN)PreviousForecast

RevisedForecast

Change vs.
PreviousForecast

Changevs. PY

597.0592.0-5.0+0.9%

Revenue

2,125.0

2,130.0+5.0-0.6%

Adjusted Operating Profit

589.0

591.0+2.0+0.7%

Operating Profit

565.0

565.0--4.8%

Profit402.0

402.0--4.7%

At constant FX
Adjusted Operating Profit
Reported© Copyright JT 201718

International Tobacco BusinessNo change to 9% profit growth target from updated
assumptions(BNU, US$MM)
Previous
Forecast

Revised
Forecast

Change vs.
Previous
Forecast

Changevs. PY

Total Shipment Volume

391.0

398.0+7.0-0.2%

GFB Shipment Volume288.0286.0-2.0+0.8%

Core Revenue10,440

10,440--0.5%

Adjusted Operating Profit

3,3753,375-+9.1%

Core Revenue

10,37010,510+140+0.2%

Adjusted Operating Profit

3,230

3,280+50+6.0%

Core Revenue

1,152.0

1,170.0+18.0+2.7%

Adjusted Operating Profit

359.0

365.0+6.0+8.6%

At Constant FX

Reported

JPY Basis (JPY BN)

19© Copyright JT 2017

Japanese Domestic Tobacco Business

Downward revision mainly due to lower cigarette sales
volume(BNU, JPY BN)

Previous
Forecast

Revised
Forecast

Change vs.
Previous
Forecast

Changevs. PY

Cigarette Sales Volume

93.0

92.0-1.0-13.4%

Core Revenue

602.0

591.0-11.0-9.0%

Adjusted Operating Profit

230.0

225.0

-5.0-13.5%© Copyright JT 201720

Pharmaceutical and Processed Food Businesses

Pharmaceutical: Strong royalty revenue leading toupward revision
Processed food: Aiming to achieve profit growth(JPY BN)Previous
Forecast

Revised
Forecast

Change vs.
Previous
Forecast

Changevs. PY

Revenue

102.0

103.0+1.0+15.8

Adjusted OP

23.0

24.0+1.0+14.3

Revenue

165.0

163.0

-2.0-1.1

Adjusted OP

6.0

5.5

-0.5+0.5

Pharmaceutical Business

Processed Food Business21© Copyright JT 2017

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Closing23

Closing Remarks

Consistently invest in business toward mid- to longterm profit growth Aim to achieve 2017 profit growth target
at constant FX basis
Management principle：4Smodel Continue to invest in emerging products
and expand our geographic reach

Shareholders

 Annual dividend per share of JPY 140,
same as initially planned

Consumers

Employees© Copyright JT 2017

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