TOKYO (AFP) — Japan Tobacco Inc. said Thursday its net profits dived 73 percent in the fiscal first quarter due to foreign exchange related losses and weak domestic sales.
Net profit dropped to 16.9 billion yen (157 million dollars) in the three months to June from 63.1 billion a year earlier, despite a 41 percent surge in revenue to 1.72 trillion yen after the takeover of British rival Gallaher.
Operating profit gained 18 percent to 110.45 billion yen.
JT has enjoyed a major boost from its acquisition last year of Gallaher for 2.25 trillion yen, the biggest-ever foreign acquisition by a Japanese firm -- a move aimed at offsetting the impact of fewer Japanese lighting up.
But in the first quarter, its bottom line was hit by losses on euro-denominated bonds as well as a decline in gains from asset sales.
Domestic sales in the tobacco business slipped 1.6 percent while overseas sales were up 172.8 percent after the Gallaher takeover.
"Our international tobacco business, strengthened by the integration of Gallaher, is achieving quality top-line growth and enhancing its position as a driving force for the group's profitable growth," JT chief executive Hiroshi Kimura said in the earnings statement.
For the fiscal year to March, JT kept its forecast for a 38 percent tumble in net profit to 148 billion yen and a 27.8 percent drop in operating earnings to 311 billion. Revenue is seen rising 3.1 percent to 6.61 trillion yen.
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