JT is the latest tobacco multinational to publicly announce its departure from the Russian market.
Japan Tobacco (JT) announced it is considering the sale of its operations in Russia, JT International Russia, after it suspended investment and marketing activities in the country but continued manufacturing operations last month.
JT is the largest cigarette producer in Russia, enjoying close to 40% of the world’s fourth-largest cigarette market. The company has about 4,000 staff and four factories in Russia. In 2018 it paid about US$1.6 billion to buy Donskoy Tabak.
“We are considering a sale as an option as it may be better to separate the business and hand over it to a third party,” said Koji Shimayoshi, deputy c.e.o of JT’s international business unit. “We are closely analyzing what could happen to the business, our brands, and the employees if we suspend our business.”
JT is the latest major international tobacco company to speak publicly about potentially leaving Russia. Last month Philip Morris International announced its plans to scale down it manufacturing operations in Russia as well as looking at options to exit the country. British American Tobacco and Imperial Brands also announced they were looking for parties to which they could transfer their business in Russia.
JT’s first-quarter operating income rose 11% from a year earlier to JPY178 billion (US$1.4 billion), beating analyst estimates. Revenue rose 6.2% to JPY582 billion. The company’s full-year forecast remains unchanged, but the company also emphasized the uncertainty of the Russian market. Any forecast revision will be made at the second quarter earnings or later if necessary. Full-year operating profit is projected to rise 7% and sales are expected to fall 0.4%.