I am Naohiro Minami, Chief Financial Officer of the JT Group. Thank you for joining me in this briefing relative to our second quarter earnings results. I will start by covering the highlights of our consolidated financial results for the second quarter of 2021 year-to-date. Please take a look at slide four. Our Adjusted operating profit at constant currency, which is our performance indicator for consolidated profit, increased by 26.9% year-over-year, driven by continued positive momentum in the tobacco business. We can attribute this robust performance to longer than predicted effects of the volume increase in some high-margin markets due to travel restrictions, in addition to possible momentum in the international tobacco business with our market share gains across several markets abroad. Revenue was up year-over-year due to strong top-line performance in the tobacco business, despite lower sales in the pharmaceutical and processed food businesses.
Adjusted operating profit on reported basis was up as foreign exchange headwinds on the international tobacco business have been limited. Profit attributable to the owners of the parent company increased due to higher operating profit and improved financing costs. Let me move to the results for each business. First, let's look at volume in the Japanese domestic tobacco business. Total RMC industry volume decreased year-on-year due to growth in the RRP category and the effects of the October 2020 price hike, in addition to a natural decline. At the same time, share of the RRP category remains high at 29.5%, influenced by changes in consumer behavior with the pandemic, as well as new product launches supported by intensified sales promotion by each industry player. Next, let me discuss about our volume performance.
RMC sales volume was down due to a decrease in total industry volume, consumer preferences shifting from combustibles to RRP, the impact of down trading due to intensified competition in the value segment, and some market share decline. RRP sales volume stood at 2.1 billion units, up 300 million units year-on-year due to steady market share growth. Turning to our financial results. Despite a decrease in duty-free sales, core revenue grew by 3% year-on-year due to the positive effects of the RMC price hike in October 2020, which exceeded the impact of the volume decrease and the increase in year-on-year sales volume for RRP refills. Adjusted operating profit shows a major increase of 23.8% year-on-year due to top-line growth. Our year-on-year decrease in sales promotion related differences in promotion schedules, and investment related to the Ploom X launch concentrated in the second half of the year.
Let me again mention Ploom X, a new HTF device we launched the other day. Ploom X is the JT Group's first global device. Applying the new HeatFlow technology, it offers richer tobacco taste than our previous products. To be specific, we adopted a design that compresses a part of the inserted tobacco sticks from two sides, enabling efficient heat delivery throughout the tobacco stick. Furthermore, the device is designed for air to flow in through gaps between the outer surface of tobacco sticks and the heater for a pleasant quality and amount of vapor. The enhanced battery also allows for the device to heat faster and last longer. Design-wise, with no buttons on the surface of the device, it's stylish, beautiful, and offers an intuitive user experience.
We market Ploom X alongside with newly blended tobacco sticks, improved for maximum enjoyment of flavor and aroma with the new device. We are very proud of this product, into which we incorporated consumer requests we received not just in Japan, but from around the world. We are off to a great start with the pre-launch sales, and this encouraging start gives us a sense of success. We are already receiving positive feedback from our consumers, commenting that Ploom X offers a significantly enriched vaping experience compared to Ploom S, finding it to be much closer to combustibles, and that its compact size and front panel has a premium aesthetic. We began selling Ploom X through the Club JT online shop on July 26th and plan to make it available in Ploom shops nationwide on August 3rd, adding convenience stores and tobacco shops across Japan on August 17th.
Due to the tight supply of microchips of late, device supply may be limited in the future. Although our sales plan remains unchanged as of now, we will work to minimize the impact as much as possible. Outside Japan, we plan to introduce Ploom X in Russia later this year. Next, let me explain the results for the international tobacco business. Please turn to slide seven. Total volume shows a strong year-on-year increase of 8%, propelled by share momentum in key markets and many others, although the duty-free business has not recovered to pre-pandemic levels. The solid volume performance was due to the continuing market share momentum, robust demand in high-margin markets like the U.K. and Taiwan, and travel restriction continued, and the relative volume growth in markets that temporarily saw a drop in demand caused by lockdowns last year.
In Russia, which was one of the key drivers of this total volume growth, the shipment volume increased due to a decrease of illicit trade volumes, likely from lower cross-border movements, strong market share in combustibles driven by the growth of Camel products, and favorable inventory adjustment. Next, let me explain the financial results for our international tobacco business. Our core revenue recorded a high growth rate due to a positive volume variance contributed by the Philippines, Russia, Taiwan, and the U.K., and pricing effects mainly in the Philippines, Russia, and the U.K. Driven by top-line growth, Adjusted operating profit is up both at constant currency and on a reported Japanese yen basis. Total costs rose due to the increased investment in RRP and digitization.
While we see some negative currency effects, mainly created in the Iranian Rial and Russian Ruble, the effects have been limited compared with the previous year and have shown greater improvement in the recent years. With slide eight, let me move to the financial results for our pharmaceutical business. Total revenue was almost flat year-on-year, with a revenue increase at a consolidated subsidiary, Torii Pharmaceutical, mostly offset by a decrease in overseas royalty income. Adjusted operating profit decreased due mainly to the drop in overseas royalty income and recognition of losses associated with the termination of the development of a licensed compound and a lower profit at the Torii Pharmaceutical.
For your reference, I'd like to mention that the CORECTIM® ointment 0.25% for the treatment of pediatric patients with atopic dermatitis was listed on the Japanese National Health Insurance drug price list as of May 26th and launched on June 21st. Moving on into the processed food business, revenue was down by 1.9% year-on-year due to an unfavorable comparison to the pandemic-related increase in demand for household commodities in the previous year. This was in spite of the strong performance in the household commodities and the top line for the food service products being on the path to recovery in comparison to the previous year. Adjusted operating profit grew despite the revenue decrease due to a favorable comparison of the depreciation cost related to the booking of impairment losses for the factories and stores in the bakery business in 2020.
From the next slide on, I will talk about revised forecasts for 2021. Slide 10 is about the revised forecasts we are announcing today. We have made upward revisions to our initial forecasts, reflecting strong results for the first half of the year, notably from the international tobacco business. I will explain projected profit for each business segment in detail on the next slide and onward. Here is how we see the second half. Our performance in the second half will not be as strong as the first half, considering we are projecting far smaller effects from the temporary factors leading to the major volume increase in the international tobacco business in the first half and the concentration of expenses for the Japanese domestic tobacco business in the second half.
We expect an increase in Adjusted operating profit at constant currency, our group-wide performance indicator, by JPY 10 billion, or 2.0% from our initial projection, which would reflect an increase of 7.2% year-on-year as corporate expenses such as investment related to IT infrastructure unification between JT and JTI, which will be accounted as expenses, will partly offset the growth in the international tobacco business. On top of the business upside, our forecast on a reported basis to take into account lower currency headwinds as a result of the revised currency assumptions. The new assumption reflects several local currencies with stronger rates than we initially projected, and the yen tends to be far weaker than the dollar.
We revised our revenue forecast far above the initial figure due to the upsides caused by the weakening of the yen against the dollar, as well as upsides in the international tobacco business exceeding the downward revisions in the Japanese domestic tobacco and processed food businesses. On a reported basis, we will revise our forecast for adjusted operating profit upward into positive territory from the deficit we projected initially, reflecting strong results in the international tobacco business in the first half and our review of our currency assumptions. Based on these, our forecast for full-year operating profit and profit attributable to the owners of the parent company are now above those announced at the beginning of the year.
Although the forecast for Free Cash Flow is revised upward, led by the projected increase in Adjusted operating profit and revised capital investment, we will forecast it will show a year-on-year decrease because of the one-time cash flow, cash inflow from the sales of real estate. Next, I will explain the volume assumptions for the Japanese domestic tobacco business and the revised forecasts based on them. We have revised our forecast for total tobacco industry volume and RRP market share as shown, based on the strong results in the first half. The forecast for total RMC volume, on the other hand, has been lowered, taking into account greater than projected growth in the RRP category. Our forecast for RMC sales volume will be lower due to the consumer shift towards RRP and increasing competition in the value segment.
That for RRP will remain the same as that announced at the beginning of the year. We made a downward revision in our core revenue forecast by JPY 10 billion from our initial figure, taking into account the greater than projected decrease in RMC volume and delay in recovery of Japan's duty-free market. We strive to achieve the Adjusted operating profit level projected at the beginning of the fiscal year while making necessary investments, mainly in sales promotion for Ploom X and managing costs efficiently. Today, at the same time as today's earnings announcement, we announced the application of the price amendment ahead of the excise tax hike in October. As we have communicated, the amendments of the retail price were determined based on our policy to take into consideration factors including not only tax increase, but also lower demand and down trading following the price revision.
While our approach to price amendment remains unchanged, we will decide our course of action and apply for revisions of retail prices of certain brands, including our RRP products, at a later date to discern latest market trends and competitors. Furthermore, we announced yesterday that we will ask all our Japanese leaf tobacco growers if any of them would like to cease tobacco cultivation. This decision was made considering the circumstances in the recent Japanese domestic tobacco market trends and as a measure to secure a balance of supply and demand of leaf tobacco. These factors have also been incorporated into the revised forecasts. Now let me explain our volume assumptions for the international tobacco business and revised forecasts. We are on slide 12. We have revised our forecast upward for total shipment volume and GFB shipment volume due to strong performance in the first half.
We project total volume at the same level as in the previous year, with GFB sales volume up by about 3%. We have revised our volume assumptions for the second half of the year, considering that travel restrictions associated with the pandemic will be eased, and we expect a significant decrease in volume compared to the same period last year on more challenging comparisons. It has been a year since we have seen the positive industry volume effects in some high-margin markets related to travel restrictions, and some of these positive effects are expected to reverse in the second half. On top of that, in the second half, we expect significant industry volume decline due to factors including negative impact to the domestic demand in high-margin markets related to eased travel restrictions. Next will be the revisions of our financial forecasts.
We have revised our projection for core revenue at constant currency upward to reflect the higher volume forecast I spoke of previously by $250 million from the previous forecast. We have also revised our forecast on a reported Japanese yen basis upward by JPY 130 billion, as several local currencies have been stronger than the rates forecast initially, and the yen is far weaker than the dollar. We will revise Adjusted operating profit at constant currency upward by $100 million, and on reported basis, upward by JPY 45 billion. Figures on reported basis reflect the continuing negative currency effects, but we project that the gravity of the impact will diminish substantially. As I mentioned before, we plan to launch Ploom X in Russia later this year.
Regarding transformation, about which I spoke with you at the beginning of the fiscal year, we are on track to deliver on our cost-saving targets. Slide 13, please. This slide covers our revised forecast for the pharmaceutical business. We have revised our revenue forecasts upward as we expect overseas royalty income to be better than our initial forecast. We will hold our forecast for Adjusted operating profit at the same level as the initial forecast, despite overseas royalty income, which is expected to be better than initial forecast, will be offset by the losses recognized in association with the termination of the development of a licensed compound. Let me move on to our revised forecast for the processed food business.
Following the state of emergency, we project increasing sales of household products in the frozen and ambient foods business, while sales for food service products in both the frozen and ambient foods, as well as seasonings businesses, in addition to the bakery business, will likely have slower recovery than the initial forecasts. For that, we will revise our revenue forecast downward by JPY 1 billion from the initial figure. Meanwhile, we will work to achieve the Adjusted operating profit level forecast at the beginning of the fiscal year by improving the product mix of frozen and ambient foods and undertaking efficient cost management. Slide 15, please. As I have explained today, we have made upward revisions in our full-year forecasts to reflect our strong results in the first half.
In the second half of fiscal 2021, we will put our utmost efforts into building our share of the HTS market in Japan and preparing for the rollout in other markets, focusing on our new Ploom X product. Regarding progress towards combining our tobacco businesses and strengthening the Japan market, as we announced in February, we have completed our organizational redesign to be effective in fiscal 2022 and are making steady progress to prepare for implementation. On a separate note, we announced today that we will assign JTI's executive committee member as a new Senior Vice President at JT. In closing, I would like to focus on shareholder returns. Based on the revised forecast, our dividend payout ratio will be approximately 85%, which remains above the range I explained at the investor meeting in February. Consequently, the initial planned annual dividend of JPY 130 per share remains unchanged.
We plan to pay an interim dividend of JPY 65 per share as initially forecasted. Thank you very much for your attention.
Thank you. We'd like to start the Q&A session. In addition to Mr. Minami, Chief Financial Officer, Mr. Maeda, CFO of Japanese Tobacco Business, and Mr. Shimayoshi, JTI Deputy CEO, will answer your questions. Thank you for your patience. Our first question comes from Citigroup, Mr. Miura.
Hello. I'm Miura of Citigroup. Do you hear me well?
I hear you clearly. Thank you.
With regard to the dividend, I'd like to have your comment on that. 75% of the payout ratio, you made a commitment for that. After one year or two years or three years, this payout ratio may be coming down then the dividend, DPS can increase. That's my first question.
Thank you very much. Minami speaking. In February, we made announcement as of today, that based on the current, our status, the payout ratio will be about 85%. As mentioned, that will be well above the range we presented. Based on this, that we think will be in line with the initial guidance. Also, as we mentioned in February, our DPS growth, we have not given up, and the net profit growth will be monitored. If that's good, we will make a sufficient return to the shareholders, and that remains unchanged. Further down the road, one year or two years or three years from now, we would increase the net profit. Within this range, we'd like to have the management of the dividend.
Therefore, the net profit is increasing then, that if that is within the 70 or 80, then that are at the end of the year, the DPS might be increasing, and we'd like to respond in such a way. Of course, if that is below the 70%, of course that we need to consider that possibility as well. Thank you.
Well understood. Additionally, a possibility of the share buyback if the share price, although that is not very likely. If that moves drastically, then there is, of course, the possibility of share buyback. Is that right?
So far, that government sell off all our shares. Of course, we need to look at the smooth sell-down in the market, and also, in that, we have done the shares buyback. Of course, we cannot ensure 100% for the future direction. Of course, we would consider that. That's our understanding.
Finally, why are you so aggressive for the profit?
Aggressive for profit?
Your effort to increase the profit was very reflected in the figures.
That aggressiveness, I wonder what is the definition of aggressiveness. As a listing company, of course, in the mid to long term, the profit growth has been our management top priority, and it has been so. Of course, there has been some fluctuations so far. When we look back, we have been achieving the steady growth. I think that is of key importance. Therefore, if the growth stops, then some may ask that return should be increased. If that is the case, by achieving the growth, we like to consider the return to shareholders. That is our key interest.
Thank you very much. Also, Ploom X is so wonderful that I have been enjoying that for two weeks, and I have decided this is it. Thank you.
Thank you very much for that comment. Thank you, Ms. Miura.
Next, we would like to take the question from Mr. Saji, Mizuho Securities. Yes, thank you.
I would like to ask about the domestic tobacco business, the price policies, and also the price revision, and your strategy post the revision, and also the price elasticity. If you can talk about these things, please. You are going to apply for this price revision this time. With RMC, it's JPY 30, JPY 40 up per pack. The little cigars, you have a wide increase, and Camel is going up only by JPY 10. The rate of increase seems to be very different by brands.
What is in the background of this price strategy, and also about the price competition going on today, if you can just give me color on what's going on in the market right now. Regarding price elasticity, due to the price revision this time, how much do you expect in terms of price elasticity? Maybe compared to last time as well, would be very helpful.
Regarding the domestic price revision, Mr. Maeda, CFO of Japan Tobacco Business, will answer.
Hello, this is Maeda. Mr. Saji, thank you for your question. I would like to talk about the price elasticity, because that's the easy one. 0.3 is the answer. Next, about the price strategy. We have taken various price revisions this time, as you mentioned. Let me explain. For the cigarillos, in one sense, compared to the other RMC, the story is that the tax benefit will disappear. Basically, it will be a pass-through of the increased excise tax. We are going to ask the consumers to pay for that tax hike.
On the other hand, for RMC, as Mr. Minami just explained, there is the excise tax hike and also the impact of the shrinking of the market, and also estimations on down trading as well. We looked into all of these elements and made a comprehensive decision as to how we should price the products. Regarding Camel, as you well understand, there is a price competition going on because of pressure from competitors with new products being introduced, and we see that the price competition is intensifying as we speak. Yes, for this product, we have decided that we will increase the price by JPY 10 because there is such intense competition going on. The big picture has really not changed. We have this basic policy of making an appropriate pricing based on the tax hike that happened. That really is the basic policy.
It's just that we're looking more meticulously into each SKU and looking into the competitive situation of each SKU and really optimizing the price hike amount for each SKU.
I see. I think your competitors have not yet applied for the price hike. Now there were differences in the price increase, and maybe the price gap will be different than what you expect. Is there a risk on having a wider gap in the price against competitors?
This is not just about October. It's something that is already happening in the first half, right now, as we speak. More than we expected, the low price competition is intensifying. It is a fact that the competition is more tough on us right now. If you look at the current price, it's the current price. It's before the October tax hike.
There's a JPY 400 range where we have the main two competitors who are coming in with a pretty good brand, with a strong proposition. We are looking at the competitors' movement. Of course, we don't know how much they're going to apply for the October moment, but we are looking at the market condition that is developing in front of our eyes today to make these price decisions. That's it from me.
Understood. Thank you very much.
Thank you very much, Mr. Saji. Next question comes from Mr. Morita of Daiwa Securities.
Morita speaking. Thank you. Domestic RRP, I'd like to have your comment. This time, you are planning RRPs market has been revised upward. What is the current consumption of the RRP, and is it expanding than your expectation? What is your insight? Also, with regard to the price amendment, RMCs are estimated is 0.3, and given the last year's situation, what do you think about the RRPs? Also, Ploom X, you're going to have a launch. The share source of who are the key target for the Ploom X, that RMC is of your own product or that other company's product?
For the domestic tobacco business, that the CFO of Japanese Tobacco business, Mr. Maeda, will take that question.
Maeda speaking. Thank you for your question, Mr. Morita. For the RRP, for your first question, that market is increasing, and also the switch between the RRP and the RMC. I wanted to make our answer again, together. One or two years, in the last one year or so, there was one learning for us. It was that in the tobacco market, the major event, for example, in October pricing, or that might be tobacco specific issue but at the new year, that people tend to think that what will be the target for this year. That stop smoking might be one of the very common objectives at the new year. RRP, that the mix increase happened to be October or January. We have observed some spikes in those times.
When we make a plan, we haven't realized that kind of factor sufficiently, and that gap is shown in the run rate of this year. I think that is reflected there. Therefore, when we make a planning from now, we need to put that into consideration, also for those event, that the RRP mix might be increasing than our expectation, and we need to be aware of that development, and that is what we have learned. That is the one insight for the increase of the RRP. Ploom X, and we are very pleased to hear the good comment from Mr. Miura, and we are very confident with that product. We'd like to foster that brand. Also that we'd like to accelerate the growth.
With regard to the share, source of business, as I have been saying, that to some extent, there'll be the shift from the RMC to RRP, and that might be part of the reason why the mix is increasing. That the new entry customer for the RRP from the RMC, that is one of the key factors. Also, that other competitors' customers, we'd like to take the customers from other competitors. With this new product, newcomers of the RRP or the previous are consumers of the competitors. These will be the key sources for the growth.
Do you have any level that, how many percentages are coming from the other competitors, or how many will be the newcomers?
Well, of course, we do have the assumption in our planning. I don't think it makes much sense that if I give that to you, and Ploom X performance will be turning out. After the in-depth analysis, I'd like to give you those numbers. Thank you.
Also with regard to the consumption in October, the increase of price and RRP's price increase was rather limited. The price gap began to emerge. What is the impact on the elasticity? Do you have any data for that?
Well, I don't have the clear data at this moment. For the RMC, we see some customers who are directly affected by the price. When we see the shift from the RMC to RRP, the big difference is that they need to buy the device anew, otherwise they cannot enjoy the RRP. Therefore, this is the first hurdle, so that we cannot, simply compare the refill of the RRP and the RMC. Actually, that doesn't make sense. We haven't seen so many customers who see that differences. If we see the similar pricing opportunities again, then we may see much more notable trend. At this moment, we cannot give you the definitive answer.
Thank you very much.
Thank you very much, Mr. Morita. Next, we would like to hear from Morgan Stanley MUFG. Miyake-san, please.
Thank you. This is Miyake from Morgan Stanley. I also would like to ask about the domestic market regarding the environment in which you hiked the prices. You have the value-added tax and also the excise tax. You have the environment to hike your prices four years consecutively in the past. As of today, ultimately, I wonder what kind of stance consumers have to accept these price hikes as of today. The reason why I am asking is because for cigarettes, we are scheduling a price increase in October. I understand that this is really the final price hike in what is scheduled so far, but I think there will be more future price revisions going forward.
Maybe 10 years, every year on a regular basis, maybe you will continue to hike the prices so that you do not lose profit as much as possible. I understand that that probably would be your policy, but then again, you have to face the low price, low volume zone, price competition that you're seeing right now. I just wanted to take a moment here to ask you what really the environment is like today.
Yes. Regarding the domestic price revision environment, we would like to hear from Mr. Maeda, again, CFO of the Japanese tobacco business.
Thank you, Ms. Miyake, about this question about the price environment, or maybe this is really about the price hike opportunity.
As you have well described, in the four years up to date, we've had the environment or the trigger or the opportunity to hike the price because of the tax hikes. Yes, it was consecutive over four years, and we were able to leverage that in an optimal form. This is how we reflect this. If we don't have any tax hikes in the future, what will we do? Well, there were some cases, not many, but a few cases where we were hiking the price without the tax hike. Actually, these cases are very few. Will we be able to hike the price every year even if we don't have a tax hike? I don't think we should be too optimistic to think that we can hike the price without tax hikes so easily in the future.
We had this program tax hike in the past four years, and we had good visibility into the future. Going forward, I guess we'll have to design this every year, one by one, and also maybe make decisions as we execute the initiatives of the times. We'll have to just continue to monitor the current situation and seize the opportunity for an appropriate price hike with less visibility compared to the past. Really, it is this year, the last year, where we have good visibility, as you well mentioned. For RRP, the tax hike will be executed next year, that is still visible, but it's really the last element that we have clearly in our vision going forward. From there on, we really need to monitor the environment well.
Thank you. One follow-up question, please. The RRP portfolio that you have can be divided into the low-temperature heating and the high-temperature heating markets, I think the market is very different depending on whether the temperature is low or high. As of the first half, regarding the refills, if you divide the story, how is the mix between low temp and high temp?
This is Maeda. I actually don't have detailed figures at hand right now, so I'll give you an image. If I say something wrong, I ask the IR team to follow up on this. Currently it's half-half. Half and half right now is the rough picture. The growth momentum is stronger for the high-temperature heat, not burn products.
Okay. In the low temperature, what do you have? Do you have Ploom TECH+ ? Is that the one with a higher mix?
Yes, exactly.
I see. Well, thank you.
Thank you very much, Ms. Miyake. Next question comes from Kawasaki-san from UBS Securities.
Kawasaki of UBS Securities speaking. Thank you. I'd like to confirm some figures. According to the report for this quarter, RRP, quarter-on-quarter, 100 million sticks of growth, but the RRP-related profit, although the volume is 10%, profit is down. Is it due to the upcoming device? You didn't push the device sales. Is that how we should understand that quarter-on-quarter, there is a gap between the volume and the profit? That is my first question. Secondly, the cash allocation in future, the return to shareholders was already asked by Ms. Miura. For the overseas M&A, what is your take and what is your priority by region or by product category? I'd like to confirm, I'd like to have the clarification on that priority. For the emerging market, there is some speculations that you may have the M&A.
I'd like to have your thought for the overseas growth through the M&A. What do you think about this? Thank you.
For the first question, RRP's earnings for the domestic, Ms. Maeda will take that question. For the second question, for the international business M&A, Mr. Shimayoshi will take the question.
Thank you.
Ms. Kawasaki. Why the volume is up and the sales is down, why? The answer is quite simple. As I said before, last year, Ploom TECH+ volume was high, and the growing is the Ploom S refill, and there is a tax difference and the sales is different. Also, there is some mix negative factors. That is the reason for that discrepancy. For the second question, for the overseas M&A, JTI Deputy CEO, Ms. Shimayoshi, will take that question.
Shimayoshi speaking. Do you hear me well? Yes, I can hear clearly. Thank you, Ms. Kawasaki. For the overseas M&A, I think there are two factors. The first one is about RRP, that IP or the technology and the capital investment. With regard to the value, that is not the material one that will hit the balance sheet. With regard to the RMC emerging economies, that we have been monitor closely this area, because of the COVID-19, that economy and also the effect has been fluctuating. I think the environment is not very good for us. We think sooner or later that will clear. Anyway, that we'll continue to monitor closely the emerging economies. I cannot make any specific comment on each project. Thank you.
This year, since the beginning of the year, the cash inflow, and I didn't have any clear view for the outlook. After half a year, more than expected, that the sale, our environment was achieved. Due to the COVID-19, there has been some turmoil in the emerging economy, and I think you can take it as a kind of opportunity to think about the overseas M&A. This can be the trigger for you. When the situation is normalized, are you going to consider the M&A possibility? Do you think that's a better option for you?
Thank you very much for that very encouraging, supporting comment. Mainly emerging countries, that demand has been rather volatile. It's very hard for us to see the market size accurately. Also when there is the drastic taxing changes, it's also hard to see. There are some overlapping factors in some countries. To put it simply, the variation is very hard at this moment.
Understood. Thank you.
Minami speaking. One additional comment. Basically, it is correct that Shimayoshi mentioned, and in other side of the coin, so far we have the different time scale for the medium and long term.
We were thinking about M&A and also the short-term M&A, which would make a positive contribution to the portfolio so that we've had two different time scales. Lately, the immediate effect or the short-term cash flow improvement and investment to have such impact will be explored further. From that perspective, as mentioned before, that currently the environment is very volatile and the future visibility is rather poor. Under this circumstance, it is very hard for us to make the future forecast. That is my additional comment. Thank you.
Well understood. Thank you very much.
Thank you, Satsuki Kawasaki. Next, we would like to hear from Goldman Sachs, Yamaguchi-san, please.
Yes. This is Yamaguchi from Goldman Sachs. Can you hear me?
Yes, please.
Yes. Thank you. Regarding domestic business, RRP competition. At the same time, basically, as you, Philip Morris seems to be launching a new product as well, focusing more on the nicotine kick as they have in the past. The competitive edge that they have had may really not be reversed, is my opinion. I'm wondering what you think about your confidence regarding the new product and the differentiation. Also, they, Philip Morris, will use a lot of expense in the first half. I'm wondering what you think about their moves. Maybe this is the background as to why you're going to decide the price revision, the absolute amount, maybe more later on while seeing the current situation.
I want to ask about the timing of your decision-making as well.
Yes. Regarding the domestic RRP business, Mr. Maeda, CFO of Japanese Tobacco Business, will answer.
Yes, this is Maeda. Thank you very much, Ms. Yamaguchi. The first question is a very good question. I'm wondering how I can possibly answer this one. Let me see. The device and the refill, in any sense, have been really in this kind of competition and I think this competition will continue in the future as well. We, JT, is going to continue to launch new attractive products into the market. This Ploom X is not the end of our efforts. We're going to create a strong roadmap going forward. In long-term vision, we really need to continue to participate in this battle going forward, and it really is the management's consensus that we continue with this battle.
On the other hand, for Ploom X, speaking of this specifically, first of all, when you hold the device, it fits very well into the palms of your hand. It's really a feel that you can't really experience with other devices. It's unprecedented. When it comes to the taste of the product, the device and the refill both contribute to a better taste so that customers can enjoy the tobacco experience. It's a very good product that is coming up. When a competitor launches a new device, now, this is one of the sensitivities, the major sensitivity that we will have to be aware of in the second half. Then again, with the confidence that we have towards Ploom X, leaves us very strong.
Just because we have a competition coming up, we're not wavering because we are confident that we are providing the most appealing proposition that we can give at the time. I think we were able to accomplish that at this time with Ploom X. Regarding the Ploom X performance in the second half, we have very high hopes, and that is not changing at all. One more thing regarding RRP price list. If you're asking whether the competitor's pricing has influenced our decision, actually, no. We actually are in the third place, and we are the follower. We're trying to catch up to the other competitors. That's why we want to wait till the very last minute to make the decision regarding the prices and make a file for the prices after we have really taken time to see what's going on in the market.
That's why this is separate in terms of timing. Thank you.
Understood. Thank you very much.
Thank you, Ms. Yamaguchi. This concludes our call today, for the conference call for the 2021 second quarter results at Japan Tobacco today. Thank you very much for your participation.