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Japan Tobacco Gains After Profit Forecast Increased: Tokyo Mover

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Feb. 7 (Bloomberg) -- Japan Tobacco Inc., the world’s second-largest listed cigarette maker, climbed the most in four months in Tokyo trading after raising its profit forecast and planned dividend.

Japan Tobacco gained 5.5 percent, the biggest advance since Sept. 20, to 406,500 yen at the close of trade in Tokyo.

A faster-than-expected sales recovery after the March 11 earthquake prompted the company to raise its full-year net income forecast by 17 percent to 189 billion yen ($2.5 billion), following a 34 percent gain in nine-month profit. Tokyo-based Japan Tobacco will also boost its annual dividend payout to a record, it said yesterday.

“Their results and dividends are good and their payout will improve, so I think this is a winner,” Mikihiko Yamato, an analyst at JI Asia in Tokyo, said by telephone. “There is a growing expectation that the company will increase dividends further next quarter.”

Japan Tobacco introduced seven redesigned Pianissimo thin cigarettes and two Mild Seven slim types last month, to help meet its goal to boost market share to 60 percent by March from 59 percent in December, it said in a statement.

Increased Sales

Sales for the year ending March 31 will probably climb to 2.54 trillion yen, compared with a previous estimate of 2.497 trillion yen. Operating profit, or sales minus the cost of goods sold and operating expenses, will rise to 365 billion yen, more than the earlier projected 329 billion yen, it said.

The company raised its planned second-half dividend to 5,000 yen a share. That will boost the full-year payout to 9,000 yen, from an earlier planned 8,000 yen, narrowing the gap with rivals including Philip Morris International Inc. and British American Tobacco Plc.

Japan Tobacco currently has the lowest 12-month dividend yield among the world’s five largest cigarette makers, based on data compiled by Bloomberg. The Children’s Investment Fund Management, a shareholder, has called for a dividend payout of 20,000 yen a share.

To contact the reporters on this story: Shunichi Ozasa in Tokyo at sozasa@bloomberg.net; Cheng Herng Shinn in Tokyo at hcheng52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net