Japan Tobacco (2914) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered a strong start with consolidated revenue rising 15.2% year-over-year to JPY 924.0 billion, and operating profit up 24.7%, driven by robust tobacco business performance and RRP momentum, especially Ploom.

• Adjusted operating profit (AOP) increased 22.8% year-over-year, with net profit up 27.3%, supported by improved financial income/expenses and reduced amortization costs.

• The Pharmaceutical Business was classified as discontinued operations, with only continuing operations reflected in current results.

• Positive FX impact, notably from the Russian ruble, contributed to profit growth.

• The Middle East situation is being monitored, but no material operational impact has been observed.

Financial highlights

• AOP at constant FX increased by 20.5% year-over-year, with core revenue at constant FX up 9.8% to JPY 842.5 billion.

• Revenue and AOP in the tobacco business saw double-digit growth, driven by pricing and favorable phasing of promotional activities.

• RRP volume surged 44.2% year-over-year, with Ploom showing strong momentum and RRP-related revenue up 37.3% for the 12-month period ending March 2026.

• Processed food business revenue rose by JPY 1.4 billion year-over-year, offsetting higher raw material costs.

• Gross profit for Q1 2026 was ¥544.96 billion, up from ¥462.40 billion in Q1 2025.

Outlook and guidance

• Full-year guidance remains unchanged, with management confident in achieving targets barring major surprises.

• FY2026 revenue is forecast at ¥3,697.0 billion (+6.6% YoY), operating profit at ¥921.0 billion (+6.2%), and profit attributable to owners at ¥570.0 billion (+11.7%).

• Q2 and beyond expected to see increased investment, especially in RRP marketing, and possible deceleration in top-line and volume growth, already factored into guidance.

• Adjusted operating profit at constant FX is expected to grow at a high single-digit annual average during the 2026–2028 business plan period.

• Dividend payout ratio for FY2026 is set at 75.2%, with a forecast total dividend of ¥242 per share.