Russia has seized control of four factories belonging to Japan Tobacco, escalating a pressure campaign against Tokyo over its support for Ukraine and its participation in Western sanctions.

President Vladimir Putin signed a decree late on Thursday placing the four Russian manufacturing subsidiaries of Japan Tobacco International under the temporary management of a Russian company, Industrial Assets. Japan Tobacco confirmed the move on Friday and said it was reviewing the details, its options and the impact on the group.

The four companies are Petro in St Petersburg, JTI Donskoy Tabak in Rostov-on-Don, JTI Yelets in the Lipetsk region and Kres Neva in the Leningrad region. Two are cigarette factories and two process tobacco materials. The business employs about 4,000 people in Russia, where Japan Tobacco International has operated since 1999.

Shares fall sharply in Tokyo

Shares in Japan Tobacco fell 19.3 per cent in Tokyo trading on Friday to 6,269 yen, down 1,500 yen from a record close of 7,769 yen on Thursday. The fall reflects the scale of the company's exposure: Russia accounts for about 10 per cent of group revenue and roughly a quarter of adjusted operating profit, according to Reuters, and the company holds about 35 per cent of the Russian tobacco market.

Tokyo demands the move be reversed

The Japanese government has protested through diplomatic channels and demanded the measure be withdrawn. Chief Cabinet Secretary Minoru Kihara announced the protest on Friday, and Finance Minister Satsuki Katayama said Tokyo would press for the decree to be reversed urgently.

The temporary management system, created by presidential decree in 2023, lets Russia appoint a manager for assets linked to so-called unfriendly countries. Ownership formally stays with Japan Tobacco, but its management rights are restricted and the appointed manager cannot sell the assets.