Japan Tobacco (2914) Q2 2026 earnings summary

Executive summary

• Revenue and adjusted operating profit (AOP) increased significantly in H1 2026, with revenue up 17.7% to ¥1,986.1 billion and AOP at constant FX up 19.4% year-on-year, driven by strong tobacco and processed food businesses.

• Operating profit rose 29% year-on-year to ¥644.9 billion, and net profit increased 28.9% to ¥431.8 billion, supported by lower financial costs and reduced amortization of intangible assets.

• Results exceeded initial forecasts, fueled by robust pricing, positive FX impacts, and strong performance in key markets.

• The pharmaceutical business was classified as discontinued operations following its transfer and sale in 2025; all figures reflect continuing operations.

• Annual dividend guidance raised by JPY 30 to JPY 272, based on improved profit outlook and shareholder return policy.

Financial highlights

• Consolidated revenue for Jan–Jun 2026 rose 17.7% year-over-year to JPY 1,986.1 billion; core revenue at constant FX in tobacco rose 10.6% year-on-year, with price mix contributing 10.2%.

• Adjusted operating profit (AOP) increased 26.2% to JPY 661.7 billion; at constant FX, AOP grew 19.4%.

• RRP (reduced-risk products) volume surged 33.8% year-on-year, led by Ploom's 43.5% growth; RRP-related revenue up 40.7%.

• Processed food revenue increased by JPY 2.5 billion year-on-year to JPY 79.2 billion, mainly from price revisions in packed cooked rice.

• Free cash flow revised upward by JPY 121 billion, mainly due to higher AOP.

Outlook and guidance

• Full-year 2026 revenue forecast revised upward by JPY 188.0 billion to JPY 3,885.0 billion (+12.0% vs. 2025); core revenue at constant FX revised up by JPY 80 billion, now expected to grow 6% year-on-year.

• AOP at constant FX revised up by JPY 24 billion, now expected to increase 11.6% year-on-year; AOP forecast raised by JPY 80.0 billion to JPY 1,035.0 billion (+16.9% vs. 2025).

• Net profit forecast increased by JPY 74.0 billion to JPY 644.0 billion (+29.0% vs. 2025).

• Dividend guidance raised by JPY 30 to JPY 272, with a payout ratio of 75.2% after Canada adjustment.

• H2 expected to see softer volume and moderated growth due to tax-driven price increases and higher supply chain costs.