By Rocky Swift

TOKYO, Reuters Japan Tobacco (OTC:). (JT) announced Thursday that it is looking at selling Russian assets after having suspended marketing and investment activities in Russia last month as a result of Moscow’s invasion.

JT was the market leader in Russia after it announced that in March, it would continue to manufacture in Russia. The country has four factories with 4,000 workers.

After many brands around the world pulled out of Ukraine, and several governments, including Japan, imposed severe sanctions on Moscow, this announcement was met with criticism. Russia called its intervention in Ukraine “special”.

JT might consider the possibility of transferring Russian operations to another entity, so that employment and operations can continue. Koji Shimayoshi (Deputy Chief Executive) told analysts.

The company spokeswoman said that the spokesperson could not speak on prospective buyers. The company estimates that Russia will contribute approximately 8% to JT’s total revenue in the current fiscal year and about 15% to adjusted operating profits.

Japan’s Ministry of Finance holds a third of JT shares. This is a significant shareholder that generates approximately $1 billion annually in dividend income to the government.

JT, American competitor Philip Morris International and (NYSE:) hold approximately 20% each in the holding company Russian tobacco distributor TC Megapolis JSC. Megapolis was, until recently, run by a Russian billionaire sanctioned by the European Union for links to weapons production, a Reuters investigation https://www.reuters.com/world/europe/sanctioned-weapons-mogul-who-supplied-russias-troops-has-ties-philip-morris-2022-04-21 showed.

JT reported its first quarter results. Operating profit increased 11% to $1.37 billion ($178 billion yen).