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Unknown Executive: Thank you very much for joining the Investor Meeting for Q3 2025 results of Japan Tobacco Inc. today. It's time. So let us start. But before we start, please make sure that your name on the Zoom screen is correct. Thank you very much for your cooperation. Now let me introduce our CFO, Mr. Furukawa.
Hiromasa Furukawa: Good afternoon. I am Furukawa, CFO of the JT Group. Thank you for joining us today for JT Group's Third Quarter 2025 Earnings Briefing. I will begin by explaining our 9 months consolidated results for the fiscal year 2025. Please see Slide 4. To begin with, let me clarify how the financial figures are presented. As announced during the second quarter earnings briefing, starting from the third quarter, we will treat the pharmaceutical business as a discontinued operation in accordance with IFRS. As a result of this reclassification, results and the forecast figures for the pharmaceutical business for the current fiscal year are presented as a single line under profit from discontinued operations. In this presentation, to provide a clearer understanding of our current and future business performance, we will explain each P&L indicator on the continuing operations basis. Now I will move on to explain the consolidated results. As shown on the slide, all indicators in the 9 months consolidated results showed significant growth. AOP at constant FX, our primary performance indicator, increased by an impressive 27.2% year-on-year, driven by a strong organic performance in the tobacco business boosted by the contribution of the Vector Group acquisition in the U.S.A. The foreign exchange impact on AOP remains negative, mainly due to the depreciation of emerging currencies against the Japanese yen. Operating profit increased by 20.8% year-on-year, driven by the increase in AOP, partially offset by adjustment items due to higher amortization cost of intangible assets related to the Vector Group acquisition. Profit from continuing operations increased by 16.6% year-on-year driven by the increase in operating profit, which offset higher corporate income tax expenses. Moving on to the results of each business segment, starting with the tobacco business. So please turn to Slide 5 for the Tobacco volume performance. Total volume combining both combustibles and RRP increased by 2.2% year-on-year. The solid volume performance following a strong first half and in the context of a global decline in combustibles industry volume was driven by organic growth and the inclusion of the volume from the Vector Group, which we acquired last year as well as accelerated RRP volume growth, mainly in Japan. Let me break down this performance by product category. Combustible volume increased by 1.7% year-on-year, mainly fueled by the EMA cluster. The main drivers of growth were the Vector Group inclusion and the continued market share gains across many markets, notably in Turkey. While industry volume remained robust in Russia and Turkey, showing better-than-expected trends, combustibles industry volume continued to decline in Japan and the U.K. RRP volume grew by a remarkable year-on-year increase of 27%, driven by continued growth in both volume and market share within the HTS segment in available markets as well as by the impact of new product launches of Ploom AURA and EVO premium sticks in Japan. Moving on to the financial performance of the Tobacco business on Slide 6. In the third quarter, we achieved double-digit growth in both revenue and AOP, driven by strong pricing and volume contributions. Let me explain each factor. The volume contribution was positive, mainly filled by the inclusion of the Vector Group. Regarding the Vector Group contribution, I can confirm that it has been in line with our initial expectation. The price mix contribution to AOP was very solid. Strong pricing contributions in many markets, including the Philippines, Russia and the U.K. outweighed the lower product mix, mainly due to down trading in Japan, the Philippines and Taiwan. These positive factors far exceeded the incremental investments towards Ploom and the inflation-led cost increases within the supply chain, including tobacco leaf and SG&A expenses such as labor. As a result, AOP at constant FX increased by 25.7% year-on-year. As I mentioned earlier, FX impact on AOP was unfavorable. Slide 7 reviews the performance of the 3 clusters in the tobacco business. The graph on this slide shows year-on-year variances in total volume, core revenue and AOP at constant FX for each cluster. Let me start with Asia cluster, which includes the key markets of Japan, the Philippines and Taiwan. Building on a first half momentum, total volume in the third quarter continued to grow, driven by market share gains in several markets, mainly in Taiwan and the higher Ploom volume in Japan. As a result, year-to-date total volume was resilient, decreasing merely by 0.2% despite lower combustible industry volume in Japan and Taiwan. Regarding the financial results, a strong pricing contribution, mainly in Japan and the Philippines outweigh the negative volume impact and lower product mix, mainly due to down trading in Japan, the Philippines and Taiwan. These factors resulted in higher revenue and AOP at constant effects. Turning to Western Europe, which includes the key markets of Italy, Spain and the U.K. Total volume decreased by 4.2% year-on-year due to lower combustible industry volume in several markets, primarily in the U.K. as well as unfavorable inventory movements mainly in Italy and Spain. These factors exceeded the positive share momentum in many markets, notably Italy and the U.K. and continued Ploom share gains in the HTS segment and several markets. Core revenue and AOP grew as the pricing contributions, mainly in Italy and the U.K offset the negative volume variance, mainly in the U.K. Moving on to EMA. This cluster includes the key markets of Romania, Russia, Turkey and the U.S.A. Total volume increased by 5% year-on-year, mainly driven by the inclusion of the Vector Group in the U.S.A. and market share gains in several markets, mainly in Turkey as well as improved industry volume in Russia and Turkey. The cluster reported an increase in both revenue and AOP at constant FX, driven by the increase of total volume, mainly in Turkey and the U.S.A. Pricing contributions were also strong mainly in Russia and Turkey. The robust top line growth across the board enabled each cluster to offset the incremental investment towards Ploom and inflation-led cost increases, including in the supply chain and S&G expenses. Slide 8 provides an update on the HTS share trends of Ploom in selected markets. As shown in the graphs, Ploom's share within the HTS segment is continuing to grow across the footprint. In Japan, the largest heated tobacco market globally, our HTS segment share growth accelerated, driven by Ploom AURA and EVO premium sticks, reaching an average share of 15.5% in the third quarter. . Our share gains remain solid, supported by competitive product and the successful marketing initiatives despite intense activities by competitors in terms of product launches or promotional campaigns. Out of Japan, despite intensifying competition, we have been steadily increasing our share within the HTS segment through in-person and online sales promotion and marketing activities, leveraging insights gained from each market. We have further expanded our geographic footprint with Ploom, now present in 28 markets as of the end of October. Slide 9 explains the performance of Ploom AURA and EVO premium sticks in Japan. The product launched at the end of May this year have shown strong initial momentum as mentioned in our Q2 earnings announcement, and this momentum has continued after the nationwide expansion in July. Compared to previous models, AURA has a higher proportion of new purchases. As indicated by the graph at the top left of the slide, this has contributed to an accelerated increase in the number of Ploom users, which has approximately doubled by the end of Q3 compared to 2 years ago. Also, as of August, AURA surpassed 2 million units in cumulative device volume, marking the fastest achievement of this milestone in our RRP journey. The graph at the top right of the slide shows our HTS volume by brand. Importantly, even after the launch of new products, sales volume of existing brands such as Mevius and Camel has continued to grow. EVO positioned as a premium offering has also steadily added volume. This well-balanced refill portfolio has driven overall HTS volume growth while outperforming the growth of the HTS segment and improved the product mix. In overseas market, we are gradually transitioning to AURA with launches completed in 8 markets as of the end of October, we plan to roll out to approximately 15 markets by the end of 2025. These developments give us confidence in our ability to continue increasing our market share, both in Japan and overseas. Next, I will explain the results of the processed food business. Revenue increased by JPY 1.8 billion year-on-year, mainly driven by the positive price revision of packaged cooked rice in frozen and ambient food business. However, this revenue increase could not offset higher raw material costs such as rice, resulting in an AOP decrease. From the next slide, I will guide you through our revised forecast for fiscal year 2025. First, I will explain our full year consolidated revised forecast. Core revenue at constant FX has been revised upward by JPY 109 billion from the previous forecast, reflecting the strong business momentum in the tobacco business. As a result, we now expect a 13.2% year-on-year increase in core revenue at constant FX. AOP at constant FX has also been revised upward by JPY 71 billion from the previous forecast, reflecting the upward revision of core revenue at constant FX. Consequently, AOP at constant FX is now expected to increase by 24.3% year-on-year. We are also expecting that the negative FX impact on AOP will ease versus the previous forecast, mainly due to the major currencies expected to be stronger against the Japanese yen. As a result, AOP on a reported basis has been revised upward by JPY 89 billion from the previous forecast. Operating profit has been revised upward by JPY 94 billion, reflecting the upward revision of AOP and expected gain on real estate in the adjusted items. Profit from continuing operation has been revised upward by JPY 62 billion, driven by the increase in operating profit. Profit from discontinued operation has been revised upward by JPY 6 billion compared to the previous forecast, reflecting an increase in royalty income from the pharmaceutical business. Free cash flow has been revised upward by JPY 44 billion, driven by upward revision of AOP. In the following section, we will explain the revised forecast by business segment. Let us begin with the volume assumptions for the tobacco business. Total volume, including combustibles and RRP has been revised upward to reflect the stronger than expected industry volume trends for combustibles in some key markets, such as the Philippines, Russia and Turkey, robust share momentum in many markets as well as continued HTS growth. As a result, the full year forecast is now expected to increase by 2% year-on-year. Turning to financials. Core revenue at constant FX has been revised upward by JPY 112 billion from the previous forecast. This revision effects -- reflects the updated volume assumptions applied to the strong pricing contribution since the beginning of the year. Compared to the previous year, this represents a projected increase of 13.8%. AOP at constant FX has also been revised upward by JPY 72 billion from the previous forecast, driven by the improved top line growth as a result. It is expected to increase by 22.5% year-on-year. As I mentioned earlier, while the FX impact on AOP is expected to remain negative, the magnitude of this impact is expected to be smaller than previous forecast. Slide 14 explains the revised forecast for the processed food business. The forecast for revenue has been revised downward by JPY 3 billion from the previous forecast, incorporating the latest sales results in the frozen and ambient food business. Forecast for AOP remains unchanged from the previous forecast as a downward revision of revenue is offset by expected lower cost. Finally, please see Slide 16. Following the solid performance in the first half, the third quarter results came in stronger than expected. In the tobacco business, robust organic growth and the contribution from the Vector Group acquisition drove remarkable top line growth. As a result, consolidated AOP at constant FX increased significantly by 27.2% year-on-year. In HTS, our investment focus, Ploom market share and volume continue to grow steadily across markets. In Japan, we are seeing strong performance from Ploom AURA and EVO launched in May, and will accelerate the transition to these products in overseas market as well. As for the full year forecast, we have revised all indicators upward, reflecting the continuing strong performance in the tobacco business and the easing of negative FX impact. As a result, we now anticipate record high figures across all indicators from revenue to profit. Finally, shareholder returns. Based on the revised forecast and our shareholder return policy, we plan to revise the annual dividend guidance upward by JPY 26 from JPY 208 to JPY 234. As previously communicated, we determined that dividend for the current period based on the payout ratio calculated on the continuing operations business. As per the revised full year forecast, the dividend payout ratio is expected to be 74.9%. This concludes my presentation. Thank you very much for your attention.
Unknown Executive: Thank you. Now I'd like to move to Q&A session. Let me introduce the speakers who will take your questions today. Hiromasa Furukawa, CFO of the JTI Group; and Nobuya Kato, JTI Deputy CEO. [Operator Instructions] The first questions come from Saji-san of Mizuho Securities.
Hiroshi Saji: I have questions about overseas. The driver is Russia and Turkey. I want to know the contents of their contributions, especially when we look at the year-to-date. The market in Russia is growing at the pace of 4% and Turkey is growing nearly 9%. Why is that so strong at both of those markets? And towards the year 2026, I'm wondering about the sustainability of the growth and also the potential risks, especially on the aspect of risks. Some concerns are the down trading that's accelerating in Russia market and also the other market in Turkey, probably thinking about the risk for next year after the PMI supply chain trouble is finished.
Unknown Executive: Okay. So regarding the result and the forecast for Russia and Turkey, JTI, Deputy CEO, Kato, is going to answer those questions.
Nobuya Kato: This is Kato speaking. I will take up your questions. So first of all, let me refer to Russia. Well, the business has been quite strong, and since last year, I think we've been often talking about this. The illicit trading and the flow in as a percentage to the market has been declining quite sharply since last year. And this year, there was a big decline as well. Well, this is probably the restriction getting much tougher for the illicit trade or the illicit tobacco imports. And I think they are starting to harvest the result of that restriction. Well, last year, the percentage of the illicit products has been -- has declined. So we had assume that there will be some reduction for this year as well. But that result has been much bigger than what we have thought. And as a result, there's been a push up demand for the cigarettes. And that trend is continuing. So that's the big driver for the steady business that we are enjoying in the market of Russia. Now turning our eyes to the total volume in the Turkey. Well, it's not limited to this year, but the total demand has been increasing for the entire industry for the past years. And I think we have communicated the same thing for the last few years, but they are going through -- the Turkish market is going through a hyperinflation. Against that backdrop, we are trying to work on the pricing to be in aligned with the inflation speed. Well, in the meantime, other consumable products, they are also going through the price hike. However, compared to the tobacco products, the pricing for the other consumables has been happening much at the faster price -- faster speed. So as a result, the tobacco product gives an impression that it is priced reasonably. And also the total population is growing in Turkey. With those reasons for recent years, including this year, the total demand is increasing. And also to build more on that, as you mentioned, in Turkey, we have Winston, which is growing. And then share is steadily growing. And this time, the volume expectation for the Q2 was quite steady, but our assumption is that the growth is going to be much big and the half of -- more than half of those growth will be coming from the steady growth in Turkey and also our market share is also growing. And that's the reason why the volume is increasing, and that we have come up with the upward revision for the volume increase. Talking about the risks, potential risks for the next year or the sustainability for the next fiscal year, whether the current situation is going to continue or not. First of all, talking about the overall market demand in Russia. We are wondering how much of the reduction we're going to see for the illicit products transaction in Russia. It's quite hard to foresee. Is it going to bottom out? Or is it going to be continuously reducing. We still need to see whether that will be the case or not. Now talking about the potential risks. That next fiscal year's VAT, the value-added tax is going to be increasing and also the tobacco excise tax, was originally planned to increase, but there is a law or the bill that, that will be much higher than the original assumption. The final confirmation is going to be done at the end of November. So at this point of time, we have no idea. However, according to the current proposed bill, the tax increase is going to be quite big. So if that will be the case, the possibility of down trade might be likely. And the total industry volume is going to be negatively influenced if that's the case. So that's the potential risk for the total market volume in Russian market. Well, in the meantime, for Turkey, the total demand in Turkish market seems to be continuing the current trend, meaning that for the next fiscal year, a reasonable growth for the total market is expected to happen because the pricing, in line with the inflation speed is going to be continuing. But looking at the pricing of other consumables well, the tobacco seems to be priced quite reasonable. So it's not going to be showing a wide gap, I guess. So that the total demand, that robust demand is going to continue is what we are assuming. Well, the PMI, because of the supply chain issue, we had the positive impact on our share. Is it going to change, meaning that we have taken their share, but is it going to be stolen back? Well, so far, right now, the PMI have made improvement in the supply chain issue and they say so. But our market share that we have grown and restore from them have not been dropped. We are maintaining the share that we have taken from them. So is the share going to be significantly dropping once next year comes? We don't think that is likely to happen. However, of course, peers are going to do the best of sticking back their position. So we need to respond to their measures, but trying to maintain or further grow our market share in that market. That's my answer.
Hiroshi Saji: Okay. So Russia and Turkey, we can expect a good business?
Nobuya Kato: Russia, we currently do not have a clear visibility of the tax increase that could be serving as a negative variance.
Unknown Executive: Thank you, Mr. Saji. Now we'd like to take the next question. Mr. Morita from Nomura Securities, please.
Makoto Morita: Sorry. I have one question about RRP. I'd like to have a clarification. And you said that JPY 650 billion investment up to '27 and you're going to have the profitability in '28 and also share growth has been very solid up to now. And then in the mid to long term, JPY 650 billion investment, and you're going to have the profitability in '28. Do you have any change in mind? And in the long term, your cash flow position is very good. So I think it will be possible for you to increase the investment. So do you have any thoughts about that?
Unknown Executive: This was a question about the RRP strategy and Mr. Kato will take that question.
Nobuya Kato: Thank you very much for your question. Mr. Morita. Investment for RRP, at this point of time, there is no major change. And as we have communicated, the JPY 650 billion is from '25 to '27, and of course, next year and onward, we continue to have the update. So for the usual update, we are going to have the usual investment update. And in '28, our target for the midterm, at this point of time, currently, we are in '25. So we have 3 years to go. And toward that, we will make our progress to achieve the target. And we will revisit our plan accordingly. And the cash, yes, have reached and also our performance in profit is very good. So I understand your suggestion to increase that investment rather than having the leeway and we're going to see the increase. First, we'd like to achieve the midterm target that we have pronounced before. And then we'd like to revisit our investment plan and update that and execute the plan. And next year and onwards, as you know, in February next year, we are going to have the 3-year earnings call. And also the midterm plan will be presented in that meeting. And at that point, I'd like to give you the update in terms of the direction and also our thought for the investment.
Makoto Morita: The confirmation for RRP is going to be more important. And then your midterm plan in the mid of 10% line, that is a share plan. And I am not fully satisfied with that number. So don't you have an intention to increase the target again? And then you are going to have the payback of the investment in '28. Is that possible? And then do you stick to that number? Or according to the environment, are you going to be more flexible to change the ideas? I understand nothing is yet fixed as of today. But would you comment on your commitment position, how do you see?
Nobuya Kato: Yes, as you said, in the midterm or the mid- to long-term target, we can revisit those numbers any time. But currently, '25 and '26 and up to '28, we still have 2 or 3 years to go to achieve the target we have already presented. And then whether the current pronounced target is the viable or not and also whether we need to make the -- our progress to that achievement, we continue to monitor that progress. And if it needs, we have to revisit that, we will have the communication in due course. And what is most important for us to monitor is Ploom AURA. After the launch in Japan, it has been very robust. And also as commented in the presentation, and we are going to have the replacement in the existing market of the Ploom X. So the robustness of AURA in Japan, how we can sustain that very good momentum in Japan needs to be monitored and also in the other markets, how we can expand. And the share has been increasing steadily so far, but how we can accelerate the growth, we need to closely monitor the situation and as we have indicated. And I understand your comment was based on the expectation. But whether we will be able to have the more updated target or not, we are going to have the further consideration.
Makoto Morita: Thank you very much. I do have a high expectation.
Unknown Executive: Morita-san, thank you very much for your questions. The next 2 questions are from JPMorgan, Fujiwara-san.
Satoshi Fujiwara: This is Fujiwara of JPMorgan. I have one question. Well, regarding HTS business in Japan is my question. In the third quarter, in Japan, the share is 15.5%. It was very strong, wasn't it? But the other companies have had the national launch of the new device that was done in September. But even after that, your share momentum, was it sustained quite strong even after the launch of the new device by the competitor in Japan?
Unknown Executive: Well, regarding that question, Kato is going to answer.
Nobuya Kato: Fujiwara-san, thank you very much for your question. Well, in Q3, when we look at that quarter alone, the share was 15.5% SoS. On a monthly basis, the monthly report, we do not disclose the figure. But as a trend, for July and August, right after the launch, of course, the interest of the users or the customers were quite strong, and we conducted a very intensive promotional campaigns. Well, in the meantime, the month of September, Mevius have had the price up. And also, as you said, other players launched a new product or the new device into the market. So for the 2 months, July and August, compared to those 2 months, we had experienced a softer market in September. However, in October, we are already reaching at the end of October. But when we look at where we are now, after September, well, since the mid-October, we had resumed our campaigns and promotional activities. So compared to September, we saw recovery in October. So for the entire Q3, we generated 15.5%, but we think we are going to be exceeding that result. That's what we are seeing for the month of October. Well, the promotional campaigns for us and for other companies in the market, of course, there are some ups and downs, the fluctuations and changes month by month. But the Q3 momentum is continuing into the month of October as far as we see. We are quite confident that our momentum is being kept.
Satoshi Fujiwara: By the way, the 15.5%, the share for the 3 months in the category of HTS, is the share number 2, isn't it, the HTS itself? Is the share of the category as number 2, right, in the Q3? Well, in the quarter 3, yes, that's the case.
Nobuya Kato: Well, incidentally, well, this momentum is very strong continuously, as you say.
Satoshi Fujiwara: Well, the strongest competitor in the market is, of course, competing against you, but are you stealing the share in order to increase your share? The share source is coming from other 2 companies? Is that the case?
Nobuya Kato: Well, I should say the answer is, yes, we are stealing the share according to our data. As Furukawa mentioned in the presentation, the buyers of the Ploom AURA included the new purchases, actually about 60% of the purchases are the new users or the new customers, of which about half is a switch over from the heated products of the competitors. So it's about the purchase of the device. Well, the retention rate is about the same or not or the other -- those customers who have made a switch over retaining the same products and buying the same products? Of course, that's a separate story. However, we are stealing the share from the other 2 peers. Well, from the starter, at the time of the launch of AURA, I think we have communicated some messages that there was on blind testing conducted to compare our product against the competitors. We just wanted to make sure that our products tasted better compared to the product -- the competitor's product. And then we have found out that the users have found out, about more than half of the customers who have tried out said that our products taste better. So we're very confident.
Unknown Executive: Thank you, Mr. Fujiwara. Now I'll take the next question. From Morgan Stanley MUFG Securities, Ms. Miyake, please.
Haruka Miyake: I'm Miyake of Morgan Stanley. I also would like to ask about the HTS share improvement in Japan. I'd like to have more color. On Page 9, in Q3, EVO alone might have taken about 20% of the total in volume. And then there is a price hike for the Mevius. So I'm not sure about the impact on volume by that price hike. So EVO growth, how is that compared with the initial forecast? And also maybe as brand after the price increase, what was the development? And also in October, whether there was the recovery or not, would you give us a color by brand?
Unknown Executive: So it was a question about the HTS development in Japan by brand. Kato will take that question.
Nobuya Kato: Thank you for your question, Ms. Miyake. In the first half, in this meeting, after the launch of EVO, we had a very high interest from the consumer. So I have talked about that in that meeting. And even after that, in the last few months, the performance has been very stable. And we were able to have the incremental performance. And out of the EVO's buyers, there was a question whether we are taking shares from the other competitors. And out of the EVO's purchases, those who use the other peers HTS was about 30% or so. So this was a switchover from the other peers' product. So we were very -- our products were very well received. And EVO in August, we have added the Berry Crystal, Banana Crystal, new flavors were also were accepted. So we have increased our flavor type and EVO as a whole, that the high-end premium price product, we were able to capture the consumers with that product. And for Mevius, the impact by the price hike, yes, we thought that we're going to have the price hike, and we anticipated some impact and the share at the Mevius declined a bit. On the other hand, that said, many consumers remained within our portfolio. To be specific, they have shifted slightly to Camel. So we continue to capture those consumers. And in September and 1 or 2 previous months, and Mevius price JPY 520 and EVO is JPY 550. So the price gap is just JPY 30. So some consumers are enjoyed to try the EVO with that price gap and they liked it. So EVO was able to capture new customers without the price gap. So as a whole, our portfolio strategy was very effective. And also we were able to increase the share as a whole.
Haruka Miyake: Thank you very much. And this EVO's performance, was it better than your initial expectation? In summertime, you said immediately after the rollout, we are seeing the trial demand.
Nobuya Kato: Yes. After that, I said that we need to monitor closely for some time. And then September and October results, we were able to capture the certain consumers. So whether that was much higher than our expectation, well, but we were able to capture. And also EVO was able to capture the consumers, and that led to the share gain of the Ploom as a whole. That has made a positive contribution.
Unknown Executive: Ms. Miyake, thank you for your questions. The next is Mr. Miyazaki of Goldman Sachs Japan.
Takashi Miyazaki: This is Miyazaki. Thank you very much for taking up my question. Well, I'm just thinking about your direction towards the next fiscal year, basically, probably the high single-digit OP growth is your expectation, I guess. But you had the significant growth this year. Are there going to be any reactionally decline? Or are there going to be like a slowdown for the next fiscal year? Well, I think the previous people have questioned about the volume slide. But I think you are quite positive about the volume itself. Any concerns for the cost side or -- and it's also towards the next fiscal year, the year 2026, the pricing is probably going to be made as a decision in the third quarter and the fourth quarter. Well, I think any decision that you're going to make in the second half is going to be making an impact on the pricing for the 2026. So are you thinking about the pricing for the next fiscal year? Is the decision going to be made in the second half?
Unknown Executive: Thank you very much for the question. Regarding the outlook for the fiscal 2026. Kato-san, over to you.
Nobuya Kato: Miyazaki-san, thank you very much for your questions. So direction or the tone for the next fiscal year. Well, as you know, we will explain in the meeting in February. But just giving you some color of the direction of where we are heading for. Let me answer in the scope as much as I can answer. Well, for the current fiscal year, we had experienced the share growth. And also the pricing, those base momentum that we built this year is expected to carry on next fiscal year. But well, this fiscal year, the magnitude of the growth was particularly strong, I think, more than we had expected, especially in some main markets. The industry -- total industry trend demand itself were quite strong and there was a big growth in market share in Turkey, too. So as somebody also asked a question, the Turkey's total demand will grow, but the share itself, is it going to grow at the pace like this year? No, it's unlikely. The Russia's total demand because of the tax hike, there are a risk, as I mentioned earlier. And as you know, the difference between this year and the next year is the impact of the Vector inclusion. The impact is contributing for the 9-month period for the current fiscal year from Q1 to Q3. However, that effect, which has already been captured for the current fiscal year is no longer happening for the next fiscal year. So the growth rate exceeding the 20% as we have experienced this year is not going to be happening again for the next fiscal year. Well, as you mentioned in the question, as we have shown you the target in the rather mid- to long-term basis, we're looking at the high single-digit growth. We wanted to deliver that target in the midterm range. And with that in mind, for the next fiscal year and beyond, we'd like to continue our strenuous effort. And talking about the cost side because you mentioned the cost side, let me refer to that as well. The plan for the next fiscal year, we will review the cost side as well and making the plan for the next year but the cost itself is, of course, getting the influence by the inflation itself. The raw material cost, the processing cost, labor, all of those items, the cost items are likely to go up. And one more point to mention is the second half of this year, especially Q4, Ploom AURA, the transition to Ploom AURA is making the progress. Well, for this, we are going to be continuing with this transition in the remainder of the market, and after transition, quite significant marketing investment or the promotional activities with the spending is going to be happening to some extent. For the current fiscal year, some of the promotions has started in the Q3 or especially Q4, and that is going to have the impact on the full year basis for the next fiscal year. So the investment in HTS for the next fiscal year, especially for AURA, the transition to AURA. And the post transition stronger push of the AURA products, meaning the BID, the marketing investment is probably going to be a bit bigger for the next fiscal year, more than this year.
Takashi Miyazaki: Well, I think the very strong pricing was good for this year, and that trend is probably continuing for the next fiscal year, I guess. And I understand that you are going to be working on that but it's not going to be having the mix aggravation because of the trading down by the consumers or anything. Am I right to understand that, you don't have that kind of a concern because you're also conducting the price hike?
Nobuya Kato: Well, thank you for that question. Well, including in Q4 of this year and the next fiscal year, we think we'll be able to seize the opportunities for pricing. In the meanwhile, the good performance or the strong performance of the current fiscal year included the bigger contribution coming from the pricing, the size of the contribution of the pricing was quite big. So that magnitude may not recur for the next fiscal year because that magnitude was quite big this year. We have to look at the market situation, the total demand situation and also the down trading sign -- the sign or signal depending upon the market, that we talk about, the down-trading signal may be stronger. But our policy of working on the pricing, that direction would not change. That will remain unchanged.
Unknown Executive: Thank you, Mr. Miyazaki. We are running out of time. So we'd like to take the last question. SMBC Nikko Securities, Mr. Furuta, please.
Tsukasa Furuta: I'm Furuta of SMBC Nikko Securities. Thank you. I'd like to ask about the next year. As you have mentioned, the Russia and Turkey that are concerned about the reactive trend and also the investment of the Ploom. And next year, you're going to stick to the mid-to high single digit?
Unknown Executive: So for the next fiscal year, Kato will take that question.
Nobuya Kato: Thank you very much for your question, Mr. Furuta. As of today, that midterm, high single-digit growth, that policy remains unchanged. And also, we continue to aim for that. And when we talk about the next fiscal year, we'd like to give you the specific number. And also, we'd like to give you the more deep dive information. But as of today, aiming the high single digit for the midterm, that remains unchanged.
Tsukasa Furuta: Then for this year, the growth is over 20%, then, whether -- don't you have any concern for the reactionary decline for the next year? That is for the clarification.
Nobuya Kato: Right. The reaction decline, not the high single digit, but to be lower than that for the growth or the flattish growth, I think you are referring to that kind of concern. And now we don't have such concern as of today.
Unknown Executive: Mr. Furuta, thank you very much. With this, we'd like to wrap up the final session of the Q&A. And with this, we'd like to close the session of the investor meeting of the Q3 2025. Thank you very much for your participation today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]