Thank you for participating in the investor meeting for Q3 2026 results at Japan Tobacco Inc. today. It's now my pleasure to introduce our CFO, Mr. Furukawa. Please.
Good afternoon. I'm Hiromasa Furukawa, CFO of the JT Group. Thank you very much for joining us today for JT Group's third quarter 2026 earnings briefing. I will begin by explaining our nine-month consolidated results for the fiscal year 2026. AOP at constant FX, our key performance indicator, increased by 16.9% year-on-year. The main driver was a strong top-line growth across all business segments, contributing to the growth all the way to net income. The FX impact was favorable, driven by depreciation of several currencies, including the Russian ruble, against the Japanese yen.
Operating profit increased by 24.2% year-on-year, driven by the increase in AOP, as well as a reduction in amortization cost of intangible assets arising from past acquisitions included in the adjustment items. Profit increased by an impressive 21.0% year-on-year, driven by operating profit growth despite higher financial cost and corporate income tax expenses. Next, I will detail the performance of each business segment, starting with the tobacco business and its volume performance. Please turn to slide five. Total volume, combining both combustibles and RRP, decreased by 3.3% year-on-year, in line with our forecast. In combustibles, although share gains continued, led by GFBs, volume decreased by 1.0% year-on-year, reflecting lower combustibles industry volume in markets including Japan, Russia, and the U.K.
RRP volume increased by 31.1% year-on-year, supported by steady volume growth in heated products volume, including the continued expansion of Ploom AURA in Japan and the contribution from LYO, a tobacco-free heated nicotine stick in Europe. Moving on to the financial performance of the tobacco business on slide six. At constant FX, core revenue increased by 8.7%. The price mix contribution was 9.6%, with robust pricing continuing to be the primary growth driver across many markets. Let me explain the AOP drivers by factor. Volume contribution was negative, mainly due to the lower total volume, driven by a decline in combustible industry volume in higher-priced markets. The price mix variance was driven by robust pricing, including in the key markets of Philippines, Russia, Turkey, the U.K., and the U.S.A.
These top-line growth factors fully offset higher investment towards Ploom, as well as inflation-driven increases in raw material costs and SG&A expenses such as labor, resulting in AOP at constant FX increasing by 16.6% year-on-year. As mentioned earlier, the FX impact was favorable. On slide seven, I explain the performance of the three clusters in the tobacco business. The graphs on this slide show year-on-year variances in total volume, RRP volume, core revenue, and AOP at constant FX for each cluster. Let me start with Asia, which includes the key markets of Japan, the Philippines, and Taiwan. Total volume and RRP volume increased by 3.4% and 32.1% year-on-year respectively, driven by robust combustibles industry volume and market share growth mainly in Bangladesh. Higher Ploom volume in Japan and Taiwan, and a temporary higher demand ahead of the RRP tax increase in Japan.
Regarding financial results, revenue and profit increased, mainly driven by positive pricing in Japan and the Philippines, as well as Ploom volume contributions in Japan. Next is Western Europe, which includes Italy, Spain, and the U.K. Total market share gains in several markets could not offset the lower combustibles industry volume, mainly in the U.K. As a result, total volume in this cluster declined by 3.9% year-on-year. RRP volume increased by 13.4% year-on-year, driven by Ploom share gains across markets. Core revenue and AOP grew as pricing contributions across several markets, including the U.K., offset negative volume effects primarily in the U.K. Moving on to EMA, which includes Romania, Russia, Turkey, and the U.S.A.
Total volume in this cluster decreased by 0.6% year-on-year as share gains in several markets led by Turkey as well as the higher Ploom volume growth were offset by lower industry volume, mainly in Romania, Russia, and the U.S.A. RRP volume increased by 43.9% year-on-year. The cluster reported an increase in both revenue and AOP, driven by pricing contributions, mainly in Romania, Russia, Turkey, and the U.S.A. While investment in Ploom and inflation-driven increases in raw material cost and SG&A expenses continued across clusters, these were offset by top-line growth. On slide eight, we highlight our RRP performance. As shown in the chart at the top, both RRP volume and RRP-related revenue are accelerating. I will explain Ploom's performance in Japan on the next slide. In other markets, heated product share growth continued through strategic marketing investment.
As a result, Ploom's category share across our 13 initial heated products market reached 11.6% as of August 2026. We continue to expand our portfolio and strengthen the Ploom brand equity while further growing share by consistently enhancing customer engagement across the entire consumer journey, from awareness and trial to purchase and retention. On slide nine, I will explain Ploom's performance in Japan, taking into account the two RRP tax-led price increases. As shown by the bars in the chart, the RRP tax-led price increases implemented in April and October this year, together with the resulting list price increases by each company, led to temporary higher demand ahead of the price increases in March and September, followed by a temporary decline in volume due to the subsequent demand normalization.
Regarding share evolution, the leading competitor benefited more largely from the temporary higher demand, briefly weighing on our share in March and September. As a result, our quarterly category share was affected by this impact. On the other hand, looking at the period following the first price increase, while volume declined in April, the month after the temporary higher demand occurred, it subsequently recovered. Share also rebounded significantly and has remained at a solid level, demonstrating a steady performance. In addition, quarterly category share on a shipment basis, excluding the impact of temporary demand, continued to grow steadily quarter-on-quarter, and the actual consumer demand-based share in October remained solid. While short-term fluctuations have occurred due to price increases associated with the tax hikes and the timing of marketing activities by companies, we remain confident in our ability to deliver sustained growth in Ploom.
Next, I will explain the results of the processed food business. Revenue increased by JPY 4.1 billion year-on-year, driven by price revisions and the sales growth of new products, mainly frozen udon. AOP increased by JPY 0.4 billion year-on-year as revenue growth offset higher raw material and logistic costs. From the next slide, I will guide you through our revised forecast for fiscal year 2026. First, I will explain our full-year consolidated revised forecasts. Core revenue at constant FX has been revised upward by JPY 44 billion from the previous forecast, reflecting the strong momentum in the tobacco business. As a result, core revenue is now expected to increase by 7.3% year-on-year. AOP at constant FX has also been revised upward by JPY 40 billion from the previous forecast, reflecting the upward revision of core revenue at constant FX.
Consequently, AOP is expected to increase by 16.1% year-on-year.
The FX impact on AOP is also expected to be positive. As a result, AOP on a reported basis is now expected to increase by 21.9% year-on-year. Operating profit has been revised upward by JPY 33 billion, reflecting the upward revision of AOP. Profit has been revised upward by JPY 18 billion, driven by the increase in operating profit. Profit is expected to increase by an outstanding 32.6% year-on-year. Free cash flow has been updated mainly to reflect the payment for the acquisition of the fine cut tobacco brands BREAK and Moro. Compared to the previous year, we expect an increase of JPY 323.3 billion, notably driven by the absence of the upfront payment associated with the Canadian litigation settlement recognized last year. The following slides explain the revised forecast of each business. First, let's look at the tobacco business, starting with volume expectations.
Total volume, including combustibles and RRP, is expected to decrease by 0.5% year-on-year, reflecting a resilient combustibles industry volume in Asia as well as favorable share momentum across markets like in Turkey. Turning to the financials and starting with the constant FX indicators. At constant FX, core revenue and AOP were revised upwards by JPY 47 billion and JPY 42 billion, respectively, from the previous forecast, reflecting topline performance driven by strong pricing. As a result, AOP at constant FX is now expected to increase by 15.7% year-on-year. The FX impact on AOP is expected to remain positive at broadly the same level as the 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 foods business.
The forecast for AOP has been revised upwards by JPY 0.5 billion from the previous forecast, driven by margin improvement from pricing initiatives and the cost-reduction efforts, despite a downward revision to revenue. Finally, please see slide 16. Following a strong first half, topline growth remained robust in the third quarter. In combustibles, performance was supported by ongoing share gains and pricing, while Ploom continued to increase both share and volume. As a result, for the first nine months, AOP at constant FX increased by 16.9% year-on-year, delivering outstanding growth. To reflect the strong momentum in the tobacco business through the third quarter, we have revised upward all P&L indicators. As a result, we expect to achieve record-high results across all indicators again this year.
As for dividends, we determine our dividend per share in line with our shareholder return policy, which targets a payout ratio of 75%, ± 5%. We remain confident in achieving our latest earnings forecast and have therefore maintained our annual dividend forecast at JPY 272 per share, which we raised previously. Looking ahead, we will continue to steadily execute our business strategies, improving profitability through topline growth in combustibles and positioning heated products as the second growth engine alongside combustibles. This concludes my presentation. Thank you very much for your attention.
Thank you, Mr. Furukawa. Now, we'd like to move to Q&A session. Let me introduce to you the speakers who will answer your questions today. Hiromasa Furukawa, CFO of the JT Group, and Nobuya Kato, JTI Deputy CEO. Now, I will show you how to ask questions.
We are afraid we do not accept questions in this English line. If you have any question, please send an email to jt.ir@jt.com. We will introduce your question accordingly. Thank you for your understanding.
Thank you for waiting. The first question is from Mizuho Securities, Mr. Saji.
Thank you very much. Now I'd like to ask about the combustibles. It has been very solid, and I'd like to put a focus on Russian business. As for the key point, that includes page 27, and the downtrading is continuing. Then, your LD in the value segment continue to lose shares. So I'd like to know more about the market environment and also the share loss in the value segment. Also from January to September, RRPs mix is over 12%, I guess. So I'd like to know more about the combustibles vis-a-vis RRP, although you are not having the RRP at this moment. So how are they going to play around going forward in terms of the strategy? That's my first question.
The question is the market conditions performance in Russia and also the future strategy. JTI Deputy CEO Kato will answer your question.
Thank you for your question, Mr. Saji. Talking about the business environment in Russia, as you know already, the price increase along with the tax increase and also affordability is declining, when we look at the purchase capability of the consumers. Along with that, the down trading is progressing throughout the market. We have the strength in the mid-price and higher, so that is serving as a kind of headwind. Our performance is weakening. How we can counter those deterioration of the affordability, of course, we need to continue to have a close watch of the sustainability of this move and also the level.
Rather than accepting the trend as it is, we would like to enhance the portfolio at the appropriate price range. We would like to improve our performance in that trend. To be more specific, shortly, we are going to launch the new product in value segment. Along with that, we think we will be able to have the improvement in the share trend. Another point, the expansion of the heated product category, as you are aware, it is moderately expanding. Therefore, the combustible market itself continues to shrink. Also, as you know, in the heated product category, we are not playing in that category at this moment. However, we continue to watch the market trend, and then we are going to identify what we can do and what we should do.
Anyway, in Russia, our leadership position of our company remains unchanged, and that has been very solid. Going forward in terms of the market development, we are going to be flexible and we will take the appropriate action to continue the sustainable business.
Thank you very much. Basically, the pricing of the combustible will continue to drive as the growth in the next year onward. For the heated product and the RRP, you do not have any plan to enter into the market again. Is that right?
For the combustibles pricing, yes, your observation is correct. The drastic change of the pricing environment, we do not think that will be happening. Of course, we will continue to watch the market environment and also we will strike the good balance between the volume and the share, and then determine the pricing.
Next year, our tobacco excise tax plan is already announced just recently. Including that, we will monitor the affordability and also impact on the industry demand, and then we will consider the appropriate pricing. Talking about the heated product, let me reiterate, at this point of time, we will consider what we should do and what we can do. Going forward, based on those consideration, we would like to move forward.
Thank you very much.
Mr. Saji, thank you very much for your question. Let us move on to the next questions. Nomura Securities, Mr. Morita, over to you. Mr. Morita, can you hear me?
Thank you very much. I would like to know about your approach about the pricing overall. Last year or this year as well, you were talking about 8% or 9%. There has been a very strong pricing when it comes to the contribution to the revenue. Historically speaking, that 8% or 9% pricing as a level is quite high though, compared to what you have done in the past. So when we think about 2025, 2026, this strong pricing, why was that possible? Currently, the inflation is still continuing. So in high single digit level of the pricing level, do you think is that sustainable or is it going to be one day coming down to the level that we used to have in the past? I just want to know the prospect of what you think about the pricing down the road.
Thank you very much for the question. It is about the pricing. The current pricing is at the very high level. The underlying reason for that, and also whether that is sustainable or not, that will be answered by Kato.
Mr. Morita, thank you very much for your questions. As you just say, the positive contribution of the pricing has been quite big last year and this year. How the pricing is done is of course, coming at the backside of the tax hike and the inflation and the elasticity, the price elasticity. Those factors have been considered for us to work on the pricing. Of course, we have to look at the peer condition, and then we just set the brand equity as well, and the loyalty too.
When we look at the last one year or two years in the market, the market is on a downtrading situation, and something like a price competition is a thing in some part of the market. But in general, the price competition is not happening for the entire market overall. The availability of doing the pricing overall is, as an environment, I think that is continuing since last year into this year. Talking about the sustainability of the pricing at this level, when we look at this one to two years, really, the pricing was in favor and the situation was quite favorable, but to what extent that can continue, we cannot be over-optimistic. We should not be. At each region, each market, inflation level and affordability, regardless of the product that is, does not have to be limited to the tobacco products, but the pressure is mounting.
We have to monitor that situation. Of course, that is true for the consumers, but the macro and also the budget of the government, I think there has been much more pressures currently. The tobacco excise tax, how that is going to move going down the road, and how the consumer will be able to have the affordability. Affordability, we mean not only for the tobacco products, but for the other commercial products as well, and the price volatility. We have to look at that very closely. I said that we should not be over-optimistic, but we do not need to be pessimistic either. For next year and beyond, generally speaking, we think the fundamental would not change that much. The pricing environment is probably going to be quite favorable.
Still, whether the same level of the strong pricing can be taken or not, we think we need to monitor closely and then execute as we need to.
Okay. One confirmation. You were talking about the strong momentum for the pricing affordability and the elasticity, the competitive environment. Those were some factors that you have explained for the current pricing. But when you think about this elasticity or the affordability of the consumers, do you think you are starting to see the sign of the changes of the affordability of the consumer side? Because the competitive environment or the tax are not probably changing that much.
When it comes to the aspect of the consumers, I think your understanding is correct. Rather than the competitions, I think the tax is something that we have to be pretty keen to, because in some markets, the tax hike is happening more often than ever. So in that case, the total demand is negatively hit in several markets. So the consumer's affordability is basically up to the macro of that particular nation or the market, but the tax itself, it is something that we have to watch carefully.
In terms of the geography, last year, this year, any area that you have enjoyed a lot and that this year, however, the situation is changing so that they have to be keen to the potential risk research?
Okay, I understand your question. When we talk about the areas, the impact on the volume, for example, the affordability of the consumers is something that probably gives you some pictures, but like Asia or EMA area. Those markets are quite solid. However, when we look at the impact coming from the tax increase, the Western Europe and among EMA, the Eastern Europe. That market, the impact on affordability or the impact coming from the tax increase is something that we have to be aware of.
Okay, thank you very much.
Thank you, Mr. Morita. Now we would like to take the next question. Mr. Fujiwara of JP Morgan Securities, over to you.
Hello, I am Fujiwara of JP Morgan Securities. Thank you for taking my question. HTS, I would like to ask some question about the Japanese market. As was mentioned in the presentation, you talked about the temporary demand and also your share has been progressing steadily. So I would like to have the further comment. There was the tax increase and the price increase in October, and your pricing is higher than the competitors by about JPY 10 or JPY 20. So what was the share dynamic based on that? Also, talking about Philip Morris in Kyushu, they have launched a new device like VEEV by IQOS. So is that making any impact in terms of the share dynamics? Would you give us some more insight?
Based on the tobacco excise tax increase and the pricing in Japan and also the performance of the Ploom vis-à-vis the competitor's dynamics. Nobuya Kato will answer your question.
Mr. Fujiwara, thank you very much. Talking about the volume of the Ploom, the temporary demand in September. The price increase was higher than the April. In the case of the previous case, there was the temporary demand. This time it was higher impact, and that was reflected in the Ploom volume. As was presented by Hiromasa Furukawa, more than the temporary demand on our side, the volume increase of the competitor was more prominent. That is part of the reason why our share was a bit weaker in September. As also mentioned in the presentation, similar things happened at the March temporary demand and then the price increase in April.
We continued to gain shares after that in the process of recovery. This time, unlike the March and April, our price increase was bigger than the competitors. We are seeing more of the normalized impact out of the temporary demand. In order to come to the conclusion, I think we need to wait for another one month or two months. Also another point presented in the presentation based on the real demand base in October. We are seeing the recovery very close to the September level before the temporary demand, so we need to take some more time, but current recovery track has been going. I would say that this is slightly skewed more at the positive side within our expected range. In the short term, this year, there were two tobacco excise tax increase in the pricing.
After a year, there have been some share dynamic changes, but toward the end of the year, we think we will continue to sustain the Ploom share. In the one year, for this year, we think we are seeing the solid growth of the Ploom and that growth momentum, we do have the strong confidence. Talking about the competitor's product, the impact out of that, this is the issue of other company.
In our understanding, first, our geographic area is limited. At this point in time, we are not very sure about the specific impact out of that.
The follow-up question, impact of the temporary demand in March. I think it was JPY 270 million. In September, what was the level of the temporary demand?
In our estimate, September was about JPY 400 million. I am talking about our shipment volume. The March is JPY 270 million and this time JPY 400 million. This is the quantitative comment, though I have commented more qualitatively later.
Thank you very much for your comment.
Mr. Fujiwara, thank you very much for your questions. The next question comes from Morgan Stanley MUFG Securities. Ms. Miyake. Over to you, Ms. Miyake.
Thank you very much. This is Miyake of Morgan Stanley. I have a question about the revised revision upward.
In Q3, the progress itself is probably better than your original assumption. In Q4, have you changed your house view about the prospect of the Q4 result, and also about the logistic cost? Because of the Middle East impact, the cost may go up. At the end of the first half, you made that comment already. Compared to that time of the comment, have you added something onto what you have expected to happen because of the Middle East impact in terms of the logistics cost?
Thank you very much for your questions. The first one is about the upward revision in the full-year forecast. Nobuya Kato is going to answer the factors behind that.
Thank you very much for your questions, Miyake-san. Regarding the year to go, for the Q4, the sales volume may slow down a little bit.
Along with that, the core revenue, AOP, compared to Q3, the growth is going to be slowing down in Q4. From the first half to second half of this year, the growth is estimated to slow down, and that was mentioned at the time of the first half earnings call. That is within our anticipation. This time, for the third quarter, the slowdown has already been obviously seen, and the same trend seems to be continuing in the Q4. This is within our expectation. Your second question is about the logistics cost. Any other additional factors to what we have said originally was your question. At the time of the Q2 earnings call, we have said that we have included whatever the visible cost increase will be. Are there any changes? Are there any additions that we have had since then?
We think we are just following what we have made the comment at the end of the Q2 so that the expectation hasn't changed.
Okay, thank you very much. When you look at the actual figure of the Q3, the result was better than what you have said at the time of the Q2 earnings call. So the upswing was bigger, and also the pricing that you were talking about was also big as a contributing factor. Am I correct to understand that, the pricing that you have taken at each market?
Roughly speaking, yes, you are correct.
Okay, thank you so much. In that case, Q4, you have, of course, the reactionally decline from the temporary demand increase and also some slowdown compared to the previous financial term. But in the first half, you had some imagination of the expectation to where to land at.
Any changes to that expectation, meaning that the progress in the Q3, the momentum was bigger than the original plan. Do you think that you're going to have the upswing and the positive impact kicking in the Q4 in addition to your original plan? Or are you just staying the same, remain unchanged?
For the first nine months, we have made some revisions because of the achievement. Then based upon that achievement for the first 9 months, we made the revision upward for the 12 months basis forecast. So the Q4, for the volume, I made some comments.
The volume may slow down slightly, and that is included in our expectation. But the magnitude of that slowdown in terms of the percentage, that could be the same. However, the baseline was up, and then the slowdown happened. So when we talk about the volume only, in the beginning of the year, we said that the flattish or the negative 1%, the 1% decline or so, but this time we're talking about a 0.5% decline. So it's within the expectation, but it's not as big as 1% decline. Well, including the actual, we thought that we have been just landing at what we have said.
Okay, thank you so much. That's all from myself. Thank you.
Thank you, Ms. Miyake. Now I'd like to take the next question. Mr. Miyazaki of Goldman Sachs Japan, please.
Hi, Miyazaki of Goldman Sachs. Thank you for taking my question.
Well, I'd like to have the confirmation of the current progress. That the pricing, and also looking at your analysis for the profit change, that's included in others. And the pricing, well, that is shown in the material. Toward the next year, compared with last year, how do you see the current progress? For example, you talked about Russia. There was announcement of the tax increase. Would you comment on the other regions as well? Do you think you're going to have the similar opportunity for the pricing, or is that already done? For the next year, you're going to expect the impact out of the pricing? Do you have the big expectation or not? Also looking at the Q3 results, well, I think the cost is up by about JPY 33 billion in others. I think that's comparable with that of the Q2.
So quote-unquote, we continue to see such level of the increase. Compared with the last two years, I think the pace of the expenses increase is getting milder. With that cost increase, are you able to do what you want to do?
So the question was, the pricing in this year, having the eye for the next year, also the focus for the pricing in next year and others. Others in the AOP's variance analysis. On the cost and also future level, Kato is going to make the comment.
Thank you for your question, Mr. Miyazaki. The pricing. Well, there might be some overlap with what I have already mentioned, but this year and Q4 also, we continue to take pricing as we have been doing in the previous period. So next year, the pricing environment will continue to be robust.
In the major market, we need to be watchful for the industry demand. That will affect the affordability. Of course, we need to be watchful for the tax scheme. So having that in mind, we like to continue to take the appropriate pricing. So next year, well, we think we're going to have the resilient base, also based on the possible changes, we like to take pricing. Talking about the cost side in Q3 and Q4, how it's going to be played out. I think that's your key question. In the Q4 compared with Q3, the cost will be increasing. That includes the marketing expenses in Q4. Every year, there is a slight skew into Q4, also there is some phasing impact out of that expenses. So in Q4, including the marketing cost vs Q3, the cost will be higher.
Next year, I talked about the high level talk about the pricing for the next year. With regard to the actual plan for the next year, I would like to let you know in February with the presentation. Please wait for the opportunity in February.
Thank you very much. Again, about others, I would like to have that clarification again for the cost in Q4 last year-on-year. There was an increase of the expenses by about JPY 44 billion. Last year there was increase of the expenses, but this year, in Q4, the cost increase magnitude will be bigger than that of Q3. Is my observation correct?
You were asking about the year-on-year compared with the previous year, and I talked about our Q3 and Q4 of this year. Sorry for that.
Generally speaking, expenses includes the investment for the RRP or the Ploom or the sales promotion cost, and that is a big chunk of that. Throughout the year, we have been increasing the investment for that. Quarter- to- quarter, in Q4, year-on-year basis also, we are going to see the increase. In Q4, cost increase is higher year-on-year basis, and when you compare with that of Q3, it is going to be bigger. Yes.
Cost increase in Q3 was smaller than my assumption. You are making the investment into the Ploom and within that, were you able to do what you wanted to do?
Yes. Basically, yes. We were able to do.
Especially for the sales promotion and marketing expenses?
Of course, we do have the plan, but we need to look at the actual current condition of each market and also vis-à-vis the competitors. Then we are taking the prime timing to execute the plan. Up to Q3, actually there was some phasing and pushed out to Q4 to some extent. However, what we want to do and what we need to do, we were able to do at the proper timing.
Thank you very much for your comment.
Mr. Miyazaki, thank you very much for your questions. The next questions are from SMBC Nikko Securities, Mr. Furuta.
This is Furuta of SMBC Nikko. Thank you very much. I want to know about the prospect for the next year. Just as always, I think you are going to be targeting at the high single-digit growth if nothing changes. Over the course of last two years, you are looking at the level of about 20% or so, or more than that, probably coming from the resilient pricing. Not only the high single digit, but probably the double digit is a target line, isn't it?
Thank you very much for your question. Our house view about the growth for the next fiscal year. Our CFO, Furukawa-san, is going to take that question.
This is Furukawa. Thank you very much for the question. The following about how we are going to grow for next year, as we said, the profit growth for the next year and beyond is going to be explained at our earnings call in February. On the constant FX base of the expectation of the growth, that latest growth is currently estimated at 16.1%, meaning that the launch pad or the baseline for the next fiscal year is going to be much higher.
It's going to be coming from the pricing of the combustibles and also the heated products sales volume expansion, the top line growth, continual RRP investment, and the cost inflation coming from the cost inflation. So in the plan period, from 2026 to 2028, there's no change for the 2026 to 2028 on a constant currency basis. Again, the details and also the prospect are going to be explained much more in details in February meeting, but that's the direction that we're thinking about at this point.
Okay. Thank you so much.
When we think about the drivers for the business in the next year and onwards, you're talking about the pricing, combustibles, those are probably going to be the main drivers. But which cluster is going to be the driver and any other factors that we should be paying attention to other than the pricing?
Talking about the next fiscal year's profit growth, what the drivers are. Mr. Kato-san is going to build on that idea.
Furuta-san, thank you for your question. Pricing is going to be the first driver, the single greatest driver, and probably what the level of that is going to be will be the big point for us. When it comes to pricing, that could serve as a negative side on the volume growth, so that the total demand and other factors will be probably coming from the pricing. Pricing could have an impact on the volume entirely. The volume mix and the pricing needs to be net net, and then think about what kind of impact it is going to have on our growth. We need to appropriately study. As our CFO, Furukawa-san said, the RRP and the Ploom, that growth, of course, is going to drive the business as well.
If the top line grows, then of course, bottom line will improve, the margin will improve. That will be the contribution we see on the business of Ploom. That is what we want to structure. Also the supply chain cost. At the time of Q2, we had a certain expectation as figures, and then in Q3, there was not a big change since then. As we said, the inflation is one factor, and other logistics and energy cost. The logistic cost, energy cost, the world is changing. Along with that change, in the second half, we did not make a big change for the figures. What kind of changes we are going to see down the road needs to be reflected in a figure that we will see, and then we will incorporate those figures when it comes to the next plan to think about.
What kind of impact will be seen on our potential growth going forward, of course, be incorporating those potential impact coming from the cost side as well.
By cluster, if you could give some color on that.
Talking about the cluster by cluster, the momentum of this year, especially Asia, the momentum in Asia was strong. Among EMA, Turkey was obviously going very healthy. The U.S. was also going well. The strong momentum in some markets seems to be continuing. It is not really likely to drop sharply or anything. That stronger momentum is likely to continue. We think we will be able to continue. That said, to what extent we will be able to continue that momentum, that stronger momentum, or are we able to further drive that momentum or keep the momentum?
We think we need to scrutinize and then reflect that on our plan for next year.
Okay. Thank you so much.
Thank you, Mr. Furuta. Now we would like to take the final question. Mr. Igarashi of Daiwa Securities, please.
I am Igarashi of Daiwa Securities. I would like to ask finally about the domestic RRP. Recently you have the new device, Ploom CUBE. What is your expectation for that new product, and share momentum, whether you can see the momentum increase or the share increase?
The question was about the Ploom CUBE. Kato will answer your question.
Thank you very much for your question, Mr. Igarashi. As you are aware, the design or the shape of the CUBE is smaller than the previous generation, Ploom X. For the customers who love that shape, we wanted to continue to offer that shape of the product. AURA has been very popular. Taste-wise, flavor-wise, they use the same stick. Function-wise, the AURA and CUBE are the same. Now we offer a different new design for the consumers who love that shape. We are expanding the option with a new design. The main product is AURA. Putting CUBE and AURA together for the Ploom as a whole, we would like to continue to have further growth.
Thank you very much. That is all from me.
Thank you, Mr. Igarashi. With this, I would like to conclude the meeting. Thank you so much for your participation. Please make sure that you disconnect. Thank you.