Japan Tobacco Inc. has announced a 100 billion yen (€746 million) plan to buy back its shares and forecast annual profit that missed analyst estimates, as the plummeting Russian ruble affected its biggest overseas market.
Net income at Asia’s largest listed cigarette maker will probably be 387 billion yen (€2.9 billion) for the year ending December 2015, it said in a statement.
That compares with the average estimate of 438.3 billion yen from 18 analysts compiled by Bloomberg. The company plans to buy back as much as 1.98 percent of its shares for as much as 100 billion yen, it said.
The ruble’s sharp decline amid international sanctions against Russia over the Ukraine crisis has deteriorated the Russian economic outlook, eroding Japan Tobacco’s profit there. At home, the cigarette maker’s sales volume growth has slowed as the falling population and rising awareness of illnesses caused by smoking hurt demand.
A weaker ruble against the dollar narrows Japan Tobacco’s profit margins as tobacco leaf imports, used for the products produced and sold in Russia, are paid in the U.S. currency.
Japan Tobacco, which sells Camel and Winston cigarettes outside of the U.S., forecast sales of 2.38 trillion yen for the year, and it expects to pay out a dividend of 108 yen per share.
Bloomberg News, edited by ESM
