Kobayashi Pharmaceutical (4967) Q2 2026 earnings summary

Executive summary

• Net sales increased by 2.5% year-over-year to 70.7 billion yen for the first half of FY26, but operating income dropped 67.5% to 2.1 billion yen due to a significant rise in advertising expenses and extraordinary losses related to office integration and product recalls.

• Domestic business saw a modest sales increase, driven by healthcare products, while international business grew mainly in Mainland China and Southeast Asia, offsetting declines in the U.S.

• The company continues to address the aftermath of the red yeast rice incident, prioritizing compensation and implementing robust quality and governance reforms.

• Comprehensive income rebounded to 3.1 billion yen from a loss of 0.9 billion yen in the prior year period.

Financial highlights

• Net sales: 70.7 billion yen (+2.5% YoY); Operating income: 2.1 billion yen (-67.5% YoY); Net income: 1.1 billion yen (-64.1% YoY); EBITDA: 6.9 billion yen (-36.9% YoY).

• Gross profit margin remained stable at 51.4%; gross profit rose slightly to 36.3 billion yen.

• Ordinary profit declined 58.5% YoY to 3.0 billion yen.

• Extraordinary loss of 0.7 billion yen recorded for office integration and 0.7 billion yen for product recall; further extraordinary items expected in Q3 and Q4.

• Advertising expenses surged 142.7% YoY to 6.7 billion yen in H1.

Outlook and guidance

• Full-year forecast unchanged: Net sales 173.0 billion yen (+4.4% YoY), operating income 12.5 billion yen (-16.2% YoY), net income 10.0 billion yen (+173.5% YoY), EPS 134.52 yen.

• No revision to dividend plan; interim 45 yen, year-end 61 yen; annual dividend per share forecast at 106 yen.

• Risks from the Middle East situation are being managed with price increases and expense controls; forecast assumes no further major disruptions.