Nov. 1 (Bloomberg) -- Japan Tobacco Inc., Asia’s largest listed cigarette seller, boosted its operating profit forecast for the fiscal year on benefits from a weaker yen, asset sales and higher prices in some overseas markets.
Operating profit will probably be 632 billion yen ($6.4 billion) for the year ending March 2014, higher than its previous 616 billion yen forecast, the company said in a stock-exchange statement yesterday. That compares with the average estimate of 640 billion yen from 20 analysts compiled by Bloomberg.
Japan Tobacco, the seller of the Mevius brand, is benefiting as a weaker yen boosts the value of overseas revenue. The yen has fallen about 12 percent against the dollar this year as Prime Minister Shinzo Abe’s economic measures called Abenomics induced the depreciation of the currency.
“I think there is still room for upward revision,” on foreign exchange, said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co.
The company expects a gain of 66 billion yen in operating profit this fiscal year from a weaker home currency.
Net income jumped 65 percent to 139 billion yen in the second quarter to September as sales rose 12 percent to 611.2 billion yen.
Overseas tobacco business sales rose 22 percent to 596.2 billion yen in the first half of the year, on weaker yen and price increases in some markets including Russia and U.K. Domestic tobacco sales climbed 0.5 percent to 352.3 billion yen.
The company sold some real-estate assets during the period, which was part of the reasons for raising its forecast for annual operating profit, Executive Deputy President Hideki Miyazaki said, without providing details.
The company will consider raising its worker’s remuneration, he said.
The Tokyo-based company this week said it is cutting 1,600 jobs, or about 18 percent of the company’s workforce, and closing four factories in the country as part of its plan to boost domestic competitiveness and profitability.
Japan Tobacco said tobacco tax increases, tightening regulations, growing health consciousness and an aging society are turning into challenges for its domestic tobacco business. The ratio of smokers in Japan fell 4 percentage points to 20.9 percent over the last four years, according to company’s website.
The job cuts will be made through a voluntary retirement program that will be offered to eligible employees in the Japanese domestic tobacco business and corporate functions, it has said.
Japan Tobacco shares closed unchanged at 3,550 yen before the earnings announcement.
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