Milbon (4919) H1 FY2026 Earnings Analysis: Significant Profit Growth and Full-Year Upward Revision Driven by Overseas Expansion and Structural Reform

Milbon Co., Ltd. has announced its consolidated financial results for the first half of the fiscal year ending December 31, 2026. Despite headwinds in the domestic salon market, such as consumer frugality and the postponement of new product launches, the company achieved strong results that significantly exceeded both the previous year's performance and internal forecasts, driven by overwhelming high growth in its overseas business and dramatic improvements in profitability . This report provides a detailed analysis of the company's performance highlights, factor analysis, regional trends, the upward revision of full-year forecasts, and future growth strategies based on the disclosed financial materials.

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1. Overview of H1 FY2026 Consolidated Results

During the first half of the fiscal year, the company delivered robust performance, with net sales and all profit levels significantly outperforming the same period last year.

As shown in the Consolidated Statement of Income in the slide above, net sales increased by 8.3% year-on-year to 26,878 million yen , exceeding the plan by 2.9% (+753 million yen). Regarding profitability, gross profit expanded by 10.5% year-on-year to 17,135 million yen , with the gross profit margin improving by 1.3 percentage points to 63.8% , up from 62.5% in the same period last year.

Operating profit surged by 72.7% year-on-year to 3,347 million yen , exceeding the company's plan (2,400 million yen) by 39.5% (+947 million yen) . Consequently, the operating profit margin improved significantly from 7.8% in the previous year to 12.5% . Quarterly net profit attributable to owners of the parent also showed phenomenal growth, rising from 419 million yen in the same period last year to 2,416 million yen (a 476.5% increase) .

This substantial profit growth was driven by the revenue-increasing effect of the core overseas business (gross profit increase of +1,295 million yen) , as well as improvements in the gross profit margin due to a reduction in inventory valuation losses (+164 million yen). These factors successfully absorbed cost increases such as personnel expenses (-234 million yen) and logistics costs (-136 million yen), while the deferral of promotional and R&D expenses to the second half (+363 million yen and +135 million yen against the plan, respectively) also contributed to the profit boost.

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2. Regional Performance: Overseas Leap and Enhanced Profitability

The greatest strength in these financial results lies in the company's expansion in overseas markets. The fruits of the global strategy promoted by the company are clearly reflected in the figures.

Looking at the regional performance in the slide above, it is evident that the presence of overseas operations in the overall portfolio has increased significantly. While domestic sales in Japan remained steady at 18,993 million yen, up 2.8% year-on-year, overseas net sales surged by 24.7% year-on-year (+16.7% on a local currency basis) to 7,884 million yen . Operating profit for the overseas business jumped from 297 million yen in the same period last year to 1,185 million yen (up 398.1%) , with the overseas operating profit margin rising sharply to 15.0% (compared to 4.7% in the previous year).

Trends by major country/region are as follows:

1. Breakthrough in the U.S. Market The U.S. market recorded phenomenal growth, with net sales reaching 1,668 million yen, up 45.0% year-on-year (+34.8% on a local currency basis) . The business turned from an operating loss of 141 million yen in the same period last year to an operating profit of 274 million yen (16.4% margin) . Even after the temporary tailwind from changing distributors for competing brands subsided, the deepening of collaborative systems with distributors and strong demand for hair care products (+36.9% local basis) continued, proving that growth has shifted to a higher gear.

2. Overwhelming Profitability in the South Korean Market South Korea continues to be one of the group's top earners, with net sales of 2,975 million yen (+15.5% year-on-year; +12.1% local currency) and an operating profit of 1,108 million yen (37.2% margin) . Growth is being driven by the dual engines of hair care products (+18.9%) and hair colorants (+12.0%).

3. Steady Improvement in the Chinese Market Although the environment in the Chinese market remains sluggish, proposals and educational activities for key salons have been successful, with net sales reaching 1,515 million yen, up 27.0% year-on-year (+12.8% local currency). Operating profit also recovered steadily to 209 million yen (up 78.7% year-on-year, 13.8% margin) .

4. Expansion Investment in the EU Market The EU continues to see high growth, with net sales up 59.3% year-on-year (+39.8% local currency) to 383 million yen, driven by the expansion of direct sales systems in Germany and the development of new salons. While the business remains in an operating loss (33 million yen) due to upfront investments in personnel and management systems, the deficit has narrowed from the same period last year (67 million yen).

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3. Domestic Market Challenges and the Deployment of the "PRETOWA" Strategy

In the domestic beauty market, the environment remains challenging due to consumer frugality caused by rising prices, a decline in the "beauty consumption coefficient," and longer intervals between salon visits. Even under these circumstances, Milbon is demonstrating resilience through targeted measures for each category.

• Resilience in Hair Care Products : The premium brand "Aujua" grew steadily by 2.5% year-on-year. Combined with contributions from new products such as "Swae" (launched in February) and "Nizel" (launched in March), domestic hair care products overall grew by 4.4% year-on-year , exceeding the plan.
• Struggles and Recovery in Hair Colorants : Hair colorants (down 0.2% year-on-year) saw a decline in the fashion color segment due to market polarization and the postponement of the launch of the new hair color brand "PRETOWA" . However, the gray color segment, including the organic brand "Villa Lodola Color," remains solid.
• Future Outlook for "PRETOWA" : The highly anticipated next-generation hair color brand "PRETOWA" is scheduled for release on September 10 once a stable supply system is fully established. Although the sales target for this fiscal year has been revised from 1.0 billion yen to 0.7 billion yen due to the shortened sales period (from 7 months to 4 months), it is expected to be a powerful driver for domestic performance in the second half, having received high praise from both salons and distributors during pre-marketing.

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4. Upward Revision of Full-Year Forecasts and Response to Geopolitical Risks

Reflecting the strong performance in the first half and the outlook for the second half, the company has revised its consolidated earnings forecast for the full year ending December 2026.

As shown in the Revision of Full-Year Earnings Forecast in the slide above, the full-year consolidated net sales forecast has been raised by 800 million yen to 55,600 million yen (up 5.2% year-on-year) , and operating profit has been raised by 250 million yen to 6,550 million yen (up 15.9% year-on-year) . Net profit attributable to owners of the parent has also been revised upward to 4,600 million yen (up 33.8% year-on-year), and consequently, the ROE forecast is expected to rise from the initial plan of 8.6% to 9.3% .

It is worth noting that this revised plan already incorporates cost increases associated with the escalating tensions in the Middle East (approximately 500 million yen for rising raw material, supply, and logistics costs) . The company is avoiding disruptions to actual product supply by utilizing production bases in Thailand and China and building a global SCM. The policy is to balance cost control with sales expansion while intentionally increasing inventory (12,129 million yen at the end of the second quarter).

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5. Shareholder Returns and Improvement of Capital Efficiency

The company has demonstrated a clear stance not only on earnings growth but also on improving capital efficiency and strengthening shareholder returns.

• Dividend Policy : Under the progressive dividend policy, the company has decided to pay an interim dividend of 40 yen per share . Combined with the year-end dividend forecast (48 yen), the annual dividend is planned to be maintained at 88 yen .
• Share Buybacks : To improve capital efficiency and further strengthen shareholder returns, the company announced a share buyback program with a limit of 1.8 billion yen (up to 750,000 shares) . As a result, the total return ratio for FY2026 is expected to be 100.0% .

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Summary

The financial results for the first half of the fiscal year ending December 2026 strongly highlight that Milbon is evolving from a domestic-led growth structure into a company that achieves global revenue expansion and high profitability . Despite uncertain external environments such as geopolitical risks and rising raw material costs, the foundation for achieving the full-year targets is in place, supported by a robust SCM, the establishment of brand positions in various overseas markets, and the upcoming launch of the major new domestic product "PRETOWA" in September.