Japan Tobacco's Russian subsidiary sees significant slowdown in growth in 2023

MOSCOW. April 17 (Interfax) - JTI Russia (the largest manufacturer of tobacco products in Russia, a subsidiary of Japan Tobacco International) showed improved financial performance in 2023, but growth slowed significantly compared to the previous year.

Revenue increased 11.4% to 480 billion rubles from 430.8 billion rubles in 2022, the company's financials said. Revenue growth was 25.4% the year before. Net profit increased 8.5% to 47.2 billion rubles from 43.5 billion rubles, respectively. In 2022, net profit rose 50%.

Gross profit was 103.9 billion rubles in 2023 versus 94.6 billion rubles the year before, and sales profit totaled 57.8 billion rubles versus 56.4 billion rubles, the financial report said.

JTI Russia produces tobacco products at its Petro LLC and J.T.I. Donskoi Tabak LLC factories, and they are sold through one distributor, TK Megapolis JSC. The company has branches in 25 Russian cities, and separate divisions operating in a number of regions.

Japan Tobacco International (brands Winston, LD, Camel, Sobranie, Donskoi Tabak, Kiss, Play, Peter I, etc.) owns its Russian subsidiary through JT International Germany GmbH. The company announced it was suspending new investments and marketing activities in Russia in the spring of 2022.

Meanwhile, the performance of Imperial Tobacco's (Davidoff, Gauloises, JPS, Fine, West, etc.) former subsidiary, International Tobacco Group LLC, worsened in 2023. Net profit dropped 78.3% to 2.4 billion rubles from 11.1 billion rubles in 2022.

The company's revenue decreased to 71.9 billion rubles last year from 72.3 billion rubles the year before, while gross profit fell to 10 billion rubles from 13.7 billion rubles, and profit from sales dropped to 3.2 billion rubles from 5.3 billion rubles, respectively.

British Imperial Brands Plc, which includes Imperial Tobacco, announced the suspension of its business in Russia in 2022, including production at its factory in Volgograd, and sales and marketing activities. The company then announced it had transferred its Russian business to local investors.

The new owners of International Tobacco Group LLC (formerly Imperial Tobacco Sales and International Tobacco group LLC (formerly Imperial Tobacco Sales and Marketing) and International Tobacco group Volga LLC (Imperial Tobacco Volga) are owned by four individuals, including two associated with Mercury Group companies owned by Sergei Katsiev and Igor Kesaev.