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KOBAYASHI Pharmaceutical Co. , Ltd. DISCLAIMER : This document has been translated from the Japanese original for reference purposes only . In the event of any discrepancy between this translated document and the Japanese original , the Japanese original shall prevail . Financial Results Briefing for Second Quarter of Fiscal Year Ending December 31 , 2026 Kobayashi Pharmaceutical Co. , Ltd. Norikazu Toyoda , President and Chief Executive Officer Yumi Nakagawa , Executive Officer and General Manager , Finance Headquarters August 6 , 2026
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 2/30 Introduction Regarding red yeast rice-related products We would like to reiterate our deepest apologies to our customers, business partners, and all other parties associated with our company for the concerns and inconvenience caused by the incident of our red yeast rice-related products in 2024. We continue to give priority above all to apologizing to and compensating our customers who have suffered health damage and our suppliers who have suffered losses, and we will do so sincerely and appropriately.
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 3/30 Progress of Compensation for Health Damage (for hospitalization and hospital visits) Those who have contacted the compensation desk 1,350 Those who have submitted compensation application documents 900 Number of people whose compensation application documents are currently being reviewed 10 Number of people whose compensation application documents have been checked 890 Those who have been found to be eligible for compensation 520 Those who are currently undergoing treatment or those who are currently negotiating compensation details 140 Number of people whose compensation has been paid 380 * Regarding death-related inquiries, our survey has identified no cases where death was clearly caused by the consumption of the product at this point. (Approximate figures)(as of July 31, 2026)
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 4/30 Summary of Financial Results （Unit: billion yen） Q2 cumulative (Jan. to Jun.) YoY change (Percentage) vs. plan Consolidated 70.7 +1.7 (+2.5%) -1.5 Domestic Business 51.9 +0.2 (+0.5%) -1.5 International Business 18.4 +1.4 (+8.2%) ±0 Net Sales （Unit: billion yen） Q2 cumulative (Jan. to Jun.) YoY change (Percentage) vs. plan Consolidated 2.1 -4.5 (-67.5%) +0.5 Domestic Business 4.2 -3.9 (-47.6%) +0.2 International Business -2.1 -0.7 (-%) +0.3 Operating Income [Summary of Sales] [Highlights of Domestic Business] - In addition to the slump in seasonal products (cold-related and heat relief products) and the termination of our own Direct Marketing Business, shipment controls due to the situation in the Middle East and the accompanying advertising constraints weighed on our year-on-year performance.. - On the other hand, products with continued advertising investment demonstrated strong promotional benefits, and healthcare in particular strongly drove the overall business, absorbing these negative factors and securing an increase in net sales for the Domestic Business as a whole. [Highlights of International Business] - The U.S. experienced a decrease in net sales due to the impact of production delays at outsourced manufacturers. - Mainland China saw a significant increase in net sales, driven mainly by Cooling gel sheets and Ammeltz, continuing from Q1. - Southeast Asia also saw steady sales of Cooling gel sheets and Ammeltz. [Summary of Operating Income] Vs. previous year: Operating income in Japan decreased due to a significant increase in advertising expenses as a rebound from the voluntary suspension of advertising in the first half of the previous year (resumed from July 2025). Vs. plan: The deterioration in gross profit due to lower-than-expected sales (-1.5 billion yen) was covered by advertising constraints accompanying shipment control due to the situation in the Middle East, resulting in operating income landing approximately 0.5 billion yen higher than expected.
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 5/30 The Second Quarter of the Fiscal Year Ending December 31, 2026 （Unit: billion yen） Q2 (Apr. to Jun.) Q2 cumulative (Jan. to Jun.) Amount YoY change Margin Amount YoY change MarginFY25 FY26 FY25 FY26 Net sales 36.4 37.0 +1.8% － 69.0 70.7 +2.5% － Gross profit 19.4 18.8 -2.9% 50.9% 36.1 36.3 +0.5% 51.4% Operating income 4.1 0.8 -80.3% 2.2% 6.6 2.1 -67.5% 3.1% Ordinary income 4.8 1.3 -72.4% 3.6% 7.2 3.0 -58.5% 4.2% Net income 1.5 0.1 -93.5% 0.3% 3.1 1.1 -64.1% 1.6% EBITDA* 6.2 3.3 -47.0% 8.9% 10.9 6.9 -36.9% 9.8% *EBITDA = Operating income + Depreciation + Amortization of goodwill Sales Increased but Profits Declined. The company recorded approximately 0.7 billion yen as an extraordinary loss for office integration expenses associated with the relocation to the new research institute, "Saito R&D and Manufacturing Lab. " 「-」は「-」で表記
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 6/30 Factors behind Changes in Consolidated Operating Income Unit: billion yen (+ indicates increase and - indicates decrease) Impact of production costs +0.2 Impact of SGA -4.7 Sales price hike +0.7 Manufacturing personnel costs-0.4 Depreciation-0.2 Factors for changes in operating income Change in gross profit due to sales Raw material prices Fixed costs Other production costs Advertising expenses Personnel costs Depreciation and amortization Other SGA expenses FY26 Q2 operating income -0.3 -0.5 -0.9 +0.2 -0.2 -0.2 -4.0 FY25 Q2 operating income 6.6 Operating income decreased due to the impact of the full-scale resumption of domestic advertising. 2.1 +1.3
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 7/30 Domestic Business (Sales Breakdown by Product Category) (Unit: billion yen) Q2 (Apr. to Jun.) Q2 cumulative (Jan. to Jun.) Amount YoY change Amount YoY changeFY25 FY26 FY25 FY26 Healthcare products 15.1 (14.4) 15.4 (15.3) +2.2% (+6.8％) 28.6 (27.1) 29.2 (29.0) +2.0% (+7.0%) Household products 13.5 13.0 -3.4％ 22.1 22.0 -0.4％ Body warmers 0.3 0.1 -44.3％ 0.9 0.7 -23.7％ Total 28.9 （28.2) 28.7 （28.6) -0.9％ (+1.3％) 51.7 (50.2) 51.9 （51.8) +0.5％ (+3.1％) Total operating income 5.6 2.6 -53.9% 8.1 4.2 -47.6% Margin 19.5% 9.1％ ー 15.8％ 8.3% ー Examples of strong-performing products Inbound-tourism-deman d-related sales (Q2 cumulative) Although sales of household products decreased, partly due to the suppression of advertising and sales promotion activities associated with the impact of the Middle East situation, the increase in sales of healthcare products, to which advertising significantly contributed, drove performance. Domestic net sales excluding former direct marketing products increased by 3.1%. Operating income decreased due to the resumption of advertising, etc. 2025 2026 2.3 billion yen 2.6 billion yen BREATH CARE Nodonool *Figures in parentheses exclude former direct marketing products. Net sales
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 8/30 Effects of domestic advertising Sell-out status of products for which TV advertising resumed in the healthcare-related product group, excluding seasonal items* *Monthly average of SRI(YoY change) 120% 110% 90% 80% Jan Feb MarApr May Jun Jul Aug Sep Oct Nov Dec 2025 Following the resumption of advertising in July 2025, the recovery trend has continued, particularly in the healthcare-related product group. 100% 2026 Sell-out trend after the resumption of advertising Apr May Jun Excluding products affected by the Middle East situation (suppression of advertising and sales promotion), a certain advertising effect has been maintained since April. Examples of strong-performing products thanks to advertising Hemorind Dasmock ：Excluding products affected by the Middle East situation (suppression of advertising and sales promotion)
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 9/30 Total operating income -1.4 -1.8 ー ー -1.4 -2.1 ー ー Margin ー ー ー ー ー ー ー ー (Unit: billion yen) Q2 (Apr. to Jun.) Q2 cumulative (Jan. to Jun.) Amount YoY change Amount YoY change FY25 FY26 Including effect of foreign currency translation Excluding effect of foreign currency translation FY25 FY26 Including effect of foreign currency translation Excluding effect of foreign currency translation U.S. 3.0 2.8 -7.8% -18.2% 7.8 7.2 -8.5% -14.0% Mainland China 1.0 1.5 +49.1% +30.0% 2.4 3.5 +43.9% +30.4% Hong Kong 0.6 0.7 +11.3% +1.7% 1.2 1.4 +14.7% +8.2% Southeast Asia 1.5 1.9 +30.6% +15.8% 3.5 3.9 +12.4% +1.5% Other 1.0 1.1 +7.4% -6.6% 1.8 2.2 +19.3% +6.2% Total International Business 7.3 8.2 +12.2% -0.8% 17.0 18.4 +8.2% -0.5% International Business (Performance by Region) Increased sales and decreased profit. The decrease in sales in the U.S. was covered by other countries and regions. (Effect of foreign currency translation: Net sales +1.4 billion yen, Operating income +0.5 billion yen) Net sales
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 10/30 International Business (Net Sales by Region) -0.7 billion yen YoY in Q2 cumulative [Major topics] Decrease in sales of healthcare products due to continued production delays at contract manufacturers. +0.4 billion yen YoY in Q2 cumulative [Major topics] -Performed steadily as the impact of inventory adjustments and import delays of Cooling gel sheets in the previous year has run its course. -Sales increased as growth in other countries offset the impact of a weak flu season in Thailand and Malaysia. +1.1 billion yen YoY in Q2 cumulative [Major topics] Following Q1, shipments of Cooling gel sheets and Ammeltz progressed smoothly. U.S. Mainland China Southeast Asia Net sales trends (Q2 cumulative total) (Unit: billion yen) Net sales trends (Q2 cumulative total) (Unit: billion yen) Net sales trends (Q2 cumulative total) (Unit: billion yen) 4.6 6.9 7.8 7.2 4.0 3.4 2.4 3.5 3.8 4.4 3.5 3.9 FY23 FY24 FY25 FY26 FY23 FY24 FY25 FY26 FY23 FY24 FY25 FY26
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 11/30 Impact of Middle East Situation (As of July 31, 2026) Impact on supply chain Requests for price increases continue, centered on the following raw materials. Procurement delays and restrictions are trending toward resolution: Packaging materials (bottles, films, etc.) Petrochemical raw materials (alcohols, surfactants, etc.) The actual impact is limited to some products because we procure from a variety of suppliers. Impact on business Loss of sales opportunities due to shipment control of standard products (to suppress stockouts) and cancellation of some promotional products. Cost increases due to requests for raw material price increases. Financial impact (Variance from initial plan) Net sales: -1.0 billion yen (First half: -0.5 billion yen, Second half: -0.5 billion yen) Operating income: -2.0 billion yen (First half: -0.3 billion yen, Second half: -1.7 billion yen) Only reflects confirmed events at this point (excluding uncertain future risks). Assumes no profit improvement effects from various countermeasures (details of improvement effects on the next page). Countermeasures - Promotion of alternative procurement - Expense control - Optimization of product prices [Regarding product price increases] - From August shipments: 40 items including body warmers - From September shipments: 121 items including Liquid BLUELET Examples of products subject to price increases
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 12/30 Unit: billion yen (+ indicates increase and - indicates decrease) Gross profit increase due to sales increase Rise in raw material prices Depreciation Advertising expenses Personnel costs Other Additional implementation of product price increases FY26 operating income (Initial plan) -0.8 -1.1 -1.0 -3.0 FY25 operating income 14.9 The -2.0 billion yen impact on operating income from the Middle East situation (a -0.5 billion yen decrease in gross profit due to lower sales and a -1.5 billion yen additional rise in raw material prices) will be covered by +0.5 billion yen from additional product price increases and +1.5 billion yen from expense control, keeping the published forecast unchanged. Although we will continue to monitor the risk of sales downside due to the materialization of seasonal factors (such as warm winter and a lull in infectious disease outbreaks), there are no changes to the initial plan at this point. 12.5 +5.0 -1.5 -0.5 -1.5 Gross profit decrease due to decreased sales Additional rise in raw material prices 12.5 Expense control +0.5 +1.5 FY26 operating income (Latest forecast) Initial plan Impact and countermeasures of Middle East situation Full-year forecast of changes in operating income Full-year Forecast of Changes in Operating Income
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 13/30 Extraordinary income and loss are scheduled to be recorded from Q3 onwards as follows. Impact on profit Item Amount of extraordinary income/loss recorded (billion yen) Timing of recording + Recording of extraordinary income associated with the application for the tender offer for PAL TAC shares + Approx. 3.3 Q3 － Recording of extraordinary loss associated with the business transfer of Jiangsu Kobayashi Transfer of all equity interests in Jiangsu Kobayashi Pharmaceutical Co., Ltd. held by Kobayashi Pharmaceutical (China) Co., Ltd., a consolidated subsidiary of the Company, to Venturepharma Pharmaceutical (Xiamen) Co., Ltd. Under examination (Estimated at approx. -0.5 to -1.0) Q4 （Planned） Regarding Extraordinary Income and Loss
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 14/30 （Unit: billion yen） FY 2025 results FY 2026 forecast Amount Amount YoY change Margin Net sales 165.7 173.0 +4.4% ー Operating income 14.9 12.5 -16.2% 7.2% Ordinary income 16.9 13.0 -23.5% 7.5% Net income 3.6 10.0 +173.5% 5.8% EBITDA 23.6 22.0 -6.9% 12.7% EPS 49.19 yen 134.52 yen +173.5% ー ROE 1.7% 4.8% ー ー Dividend 104 yen (Interim 44 yen, Year-end 60 yen) 106 yen (Interim 45 yen, Year-end 61 yen) ー ー Domestic business 118.0 123.0 +4.2% ー International business 46.9 49.4 +5.1% ー There are no revisions to the full-year outlook. Forecast of Consolidated Results for the Year Ending December 31, 2026
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. Progress of Measures to Prevent Recurrence of the Red Yeast Rice Incident and Progress of the Medium-term Management Plan
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 16/30 Overview of the Measures to Prevent Recurrence of the Red Yeast Rice Incident (Three Pillars) [Re-presented] (1) Awareness raising and structural enhancement regarding quality and safety - Thoroughly implement "quality and safety first" to change the awareness of our executives and employees regarding quality and safety. - Clarify roles and responsibilities and strengthen quality assurance and management systems. (2) Fundamental reform of corporate governance - Revamp the composition of the Board of Directors, which oversees the management of the new Kobayashi Pharmaceutical. - To regain the trust of our stakeholders and realize a new Kobayashi Pharmaceutical, establish determination and the mechanisms to become a company that does the right thing in the right way. (3) "New Kobayashi Pharmaceutical" to be created by all of us - To enhance our risk sensitivity and our ability to create new value, implement measures to eliminate the homogeneity that exists within our company and ensure diversity. - All executives and employees will work together as one to create a new Kobayashi Pharmaceutical.
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 17/30 【作成メモ】 ‧ 2026-2028 Medium-term Management Plan [Re-presented] Theme of the New Medium-term Management Plan - To achieve sustainable growth in the future - Building a foundation for the future Strategic Pillar 1: Enhancement of management foundation to restore "trust" Strategic Pillar 2: Corporate transformation to achieve "sustainable growth" again Strategic Pillar 3: Sustainable growth of "Domestic Business" Strategic Pillar 4: Acceleration of "Global" expansion and establishment of foundation Strategic Pillar 5: Management emphasizing capital efficiency to "improve corporate value"
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 18/30 (1) Began operation of a system for education and permeation of the Quality Management System (QMS) and for frontline-driven continuous improvement Standardize Implement EvaluateImprove Improvement cycle Medium-term Management Plan KGI: "Zero major quality incidents" Prepared documents for all 39 QMS processes. Implement education for the frontline to instill the system. × The "QMS Management Committee" is held regularly to firmly establish a continuous improvement cycle. (2) As stated in the measures to prevent recurrence, verified the company's organizational design, proposed to the General Meeting of Shareholders, and implemented the change Regarding the organizational design, transitioned from a "Company with an Audit & Supervisory Board" to a "Company with an Audit and Supervisory Committee" following approval at the Annual General Meeting of Shareholders in March 2026. Change in organizational design Strategic Pillar 1: Restoring Trust x Progress of Measures to Prevent Recurrence (1) Awareness raising and structural enhancement regarding quality and safety (2) Fundamental reform of corporate governance (3) "New Kobayashi Pharmaceutical" to be created by all of us
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 19/30 [Organizational culture reform] Transformation into a "new Kobayashi Pharmaceutical" where employees can work with pride and continue to provide "comfort" to society even more, without ever repeating the same mistakes Corporate Philosophy Guidebook (Cover) Corporate Philosophy Guidebook (Examples of content) Desired state and goals Aiming for a state where the new corporate philosophy is rooted in daily operations KGI: "Pride" in working for the Company at 70% or more Initiatives - Issued the "Corporate Philosophy Guidebook" to serve as a compass when in doubt. - Selected approx. 100 "frontline promotion leaders" from across the company who volunteered to promote permeation. - The management team leads by example in following the code of conduct and supports the initiatives of the frontline promotion leaders. - With the President as the leader, everyone works together as one to advance the transformation. Strategic Pillar 1: Restoring Trust x Progress of Measures to Prevent Recurrence (1) Awareness raising and structural enhancement regarding quality and safety (2) Fundamental reform of corporate governance (3) "New Kobayashi Pharmaceutical" to be created by all of us
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 20/30 [Preventing the incident from being forgotten] March 22, the date on which the incident was made public, was designated as "Quality and Safety Day, " and initiatives to foster and strengthen a culture of "quality and safety first" were implemented following the previous year. President's message Group discussion Major contents of "Quality and Safety Day (2026)" -President's message (direct message from top management) -Review of this incident and sharing of measures to prevent recurrence -Explanation of the progress of compensation -Lectures by external lecturers who have engaged in responding to quality issues in other industries -Group discussions by all employees Strategic Pillar 1: Restoring Trust x Progress of Measures to Prevent Recurrence (1) Awareness raising and structural enhancement regarding quality and safety (2) Fundamental reform of corporate governance (3) "New Kobayashi Pharmaceutical" to be created by all of us
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 21/30 Strategic Pillar 2: Corporate transformation to achieve sustainable growth: Optimization of the number of SKUs Against the plan to reduce 291 SKUs (equivalent to 26% of all SKUs) domestically and 292 SKUs (equivalent to 26% of all SKUs) internationally, the planned values are expected to be mostly achieved by the end of 2026, excluding those delayed due to strategic decisions. We will continue to hold SKU reduction meetings every three years (the next is scheduled for 2028). Reduction in number of changeovers Reduced by 375 times per year (4.4% of the total) Reduction in administrative workload Example: Fewer testing items when revising formulations due to factors such as discontinued raw materials Improvement of stockouts Example: Approx. 10% increase in production possible for major Liquid BLUELET products [Main expected effects] Creation of resources Predicted achievement rate against the SKU reduction plan （as of the end of 2026） Domestic 国 際 International
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 22/30 Released educational videos in June to stimulate new demand Steady recent sales expansion due to the resumption of advertising 【作成メモ】 ‧『私たち、⼤⼈の思春期じゃん！』飯島直⼦さん出演「命の⺟A」新TVCM‧啓発動画公開 | ニュースリリース | ⼩林製薬株式会社 ‧消化も好調 7/5, 直近4週前年⽐111.5％ In the pharmaceuticals category, which is a growth area, we have promoted a shift to Web advertising in recent years for our mainstay brand "Inochi-no-Haha" . We released Web educational videos in June, and sell-out in the 4 weeks after release performed strongly at +12% year-on-year. Sell-out in the 4 weeks after release grew by +12% year-on-year Net sales of "Inochi-no-Haha" (Q2 cumulative total) Promotion of a shift to Web advertising Educational video: Husband version Educational video: Son version Promoted "making it a personal issue" by depicting the complex feelings of menopause through realistic everyday scenes FY23 （Results） FY26 （Forecast） Strategically increasing the composition ratio of Web advertising in recent years Web advertising composition ratio for "Inochi-no-Haha" 30％ 47％ YoY +7% Revamped TV commercials Growth Stable Transform Strategic Pillar 3: Sustainable growth of "Domestic Business": Portfolio management Aggressively invest management resources to aim for significant business growth
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 23/30 Steady sales expansion of major brands Aggressive market introduction and contribution of new products In the oral care products category, which is a growth area, we promote the strengthening of existing brands and the aggressive rollout of new products. Overall category sales in the first half of 2026 performed well, up 10% year-on-year. Aggressively invest management resources to aim for significant business growth Spring 26Spring 26Autumn 25 Net sales of oral care products (Q2 cumulative total) YoY +10% YoY +22% YoY +13% YoY +8% Strong inbound tourism demand Advertising effect and standard product display improvement Advertising effect *Figures are YoY changes for the Q2 cumulative total of 2026 Growth Stable Transform Strategic Pillar 3: Sustainable growth of "Domestic Business": Portfolio management Strong overall category sales
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 24/30 New products also contribute to sales Strengthening information dissemination aimed at restoring trust In the food category, which is a transformation area, we strengthened information dissemination aimed at restoring trust. Driven by the resumption of advertising and the contribution of new products, the overall category grew by 11% in the first half of 2026. Releasing videos of the manufacturing process on the brand website Driving customers from in-store price cards to the brand website (planned) Spring 26Spring 26 Net sales of food category (Q2 cumulative total) YoY +11% In-store price card Brand website Growth Stable Transform Strategic Pillar 3: Sustainable growth of "Domestic Business": Portfolio management Aim for sustainable growth by improving profitability Strong overall category sales
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 25/30 Growth Stable Transform In the deodorizing air fresheners category, which is a transformation area, we implemented a value-added renewal to improve profitability on the occasion of the 30th anniversary of our mainstay product "Shoshugen" . By innovating functionality and product value, we achieved a unit price increase of approx. 20% compared to conventional products, promoting the strengthening of our earnings foundation. Aim for sustainable growth by improving profitability Strategic Pillar 3: Sustainable growth of "Domestic Business": Portfolio management The new wide deodorizing filter is "textured" , increasing its odor absorption power, and the deodorizing ingredients have also been improved. textured
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 26/30 The mainstay body warmer business is growing steadily. Going forward, we will focus on the supermarket channel, which has significant room for cultivation, and aim for further demand expansion by accelerating its penetration into daily use. With future growth potential in mind, we expanded the U.S. plant in 2025 and increased production capacity to approximately double. [Major sales channels] - Expanded the U.S. plant in 2025 to prepare for future demand expansion (Investment amount: approx. 8.0 billion yen) - Increased production capacity to approximately double Home centers Drugstores E-commerce Expansion of usage and sales channels Strengthening the supply system Expanded 14.0 billion yen Net sales trends of body warmer business in the U.S. [Purpose of use] - Conventionally, main use was for outdoors and watching sports, etc. - Going forward, accelerate penetration into "daily use" Grocery (large room for cultivation) U.S. plant (Georgia) Expanded Strategic Pillar 4: Acceleration of "Global" expansion and establishment of foundation: U.S.
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 27/30 - Forecast to grow by approx. 20% in FY2026. - Aim to steadily expand sales through advertising investment in existing products and introduction of new products. - Forecast to grow by approx. 15% in FY2026, breaking away from the overstock situation of the previous periods. - Will steadily grow through measures tailored to each region (expansion of shipments and advertising) and cultivation of heat countermeasure products. - Forecast to grow by approx. 50% in FY2026 due to expansion of shipments of pharmaceuticals and air fresheners. - Aim to expand sales by continuing to expand shipments and invest in advertising, as well as adding items to air fresheners. Mainland China, which was in a downtrend, hit bottom in 2025, and in 2026, it is progressing faster than expected due to successful expansion of shipments and advertising investment. We will continue to promote stable growth and profit improvement, aiming to achieve the 2028 sales target of 8.5 billion yen early and to add further to it. Initiatives for profit improvement - Maintain proper operation by thoroughly implementing inventory management standards linked to market sell-out trends. - Reduce fixed costs through optimization of organization, personnel, and bases, and transform to a lean profit structure. Strategic Pillar 4: Acceleration of "Global" expansion and establishment of foundation: Mainland China Approx. 30% growth (Forecast) Net sales trends in Mainland China Body warmers Cooling gel sheets Other
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 28/30 Southeast Asia is a market where further growth is expected by expanding the usage and lineup of the global brand Cooling gel sheets. We aim for 12.0 billion yen in sales in 2028 by executing strategies tailored to the growth phase of each country and promoting the global brand system. Strategic Pillar 4: Acceleration of "Global" expansion and establishment of foundation: Southeast Asia Malaysia TaiwanFever Heat Children × Fever (Conventionally main) Adults × fever （Expanding） Heat relief (Growth potential) Users Purpose of use Advertising promoting heat countermeasure in Malaysia Adults Children Lineup expansion Expansion of Cooling gel sheets usage There is large room for growth considering users x purposes of use Expanding into peripheral categories (eye care, etc.) leveraging the strong brand foundation
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 29/30 To improve capital efficiency, steadily implement the sale of non-business assets, including the reduction of cross-shareholdings, and the creation of resources. While steadily executing foundation investments to enhance the competitive advantage of existing businesses, flexibly promote the consideration of M&A with an eye on discontinuous growth and shareholder returns. Strategic Pillar 5: Capital-efficient management for increasing corporate value Sale of nonbusiness assets (strategically held shares, etc.) 15 billion yen Optimization of cash and deposit levels (approx. 3-4 months of monthly sales) 25 billion yen Funds Borrowing for large-scale M&A deals (Implement flexibly within the scope of financial rules) +α Strategic allocation Operating cash flow (before advertising expenses and R&D expenses deductions) 140 billion yen Fundamental business investment (Establishing competitive advantage in existing businesses) 110 billion yen - Advertising expenses: 50 billion yen (Marketing investment) - R&D expenses: 30 billion yen (New product development, quality enhancement) - Capital investment: 30 billion yen (Quality enhancement, maintenance and update) Strategic value creation category (Maximize TSR through transformational growth and returns) 70 billion yen +α - M&A: up to 100 billion yen For large-scale deals, utilize also borrowing to achieve profit growth - Shareholder returns: from 30 billion yen In addition to consecutive dividend increases, funds not allocated to M&A will be used for flexible share buybacks to enhance TSR. * Total for 3 years * Total for 3 years
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© Kobayashi Pharmaceutical Co., Ltd. All Rights Reserved. 30/30 Topic: Start of operation of "Saito R&D and Manufacturing Lab" "Saito R&D and Manufacturing Lab" , a new core base for manufacturing, started operation in April 2026 - Accelerating reliable "quality and safety" and the creation of "it would be nice if this existed" - Name Saito R&D and Manufacturing Lab Location 4-1-66 Saito-Aokita, Minoh City, Osaka Prefecture Building overview Total floor area: 33,323㎡ Building area: 6,360㎡ Floors: 5 floors above ground, 1 floor below ground Investment scale 17.5 billion yen Start of operation Sequentially from April 2026 Number of occupants Approx. 800 (planned) ■ Main features 1. Structure that generates cross-departmental communication Desks for all departments are placed on the 3rd floor, which is the center of the facility, and a large general experiment area that can be used cross-departmentally is set up on other floors. 2. Co-creation laboratory to accelerate open innovation Newly established "Tsuku-room" , a co-creation laboratory where we can make prototypes together with diverse external partners such as companies, universities, and research institutions. 3. Creating an environment that considers ease of working for employees Realizes a work style where employees can freely select the space to work, such as box seats, phone booths, and meeting spaces.
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<Note> Of the Company’s current business performance, plans, and strategies included in this material, items that are not historical facts are outlooks on future performance, which are based on the judgment of the Company’s management according to currently available information. Therefore, please note that actual performance may differ significantly from the future outlook described in this material due to changes in various factors.
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Reference
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List of New Products for Autumn With the launch of 3 items, we aim for first-year sales of 0.19 billion yen. New items Renewals & Item Additions 1
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Factors behind Changes in Consolidated Operating Income (Q2 non-consolidated) Sales price hike +0.4 -0.3 -0.3 -0.5 -0.2 ±0 -0.4 -2.0 FY25 Q2 non-consolidated operating income 4.1 0.8 +0.4 Change in gross profit due to sales Raw material prices Fixed costs Other production costs Advertising expenses Personnel costs Depreciation and amortization Other SGA expenses FY26 Q2 non-consolidated operating income Unit: billion yen (+ indicates increase and - indicates decrease) Manufacturing personnel costs-0.2 Depreciation-0.1 Factors for changes in operating income Impact of production costs - 0.6 Impact of SGA -2.7 2
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Consolidated Income Statement (1) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change Amount YoY change Net sales 33.6 37.0 +1.8％ 70.7 +2.5％ Gross profit 17.4 18.8 -2.9％ 36.3 +0.5％ Margin 51.8％ 50.9％ － 51.4％ － Operating income 1.3 0.8 -80.3％ 2.1 -67.5％ Margin 4.0％ 2.2％ － 3.1％ － Ordinary income 1.6 1.3 -62.4％ 3.0 -58.5％ Margin 5.0％ 3.6％ － 4.2％ － Net income 1.0 0.1 -93.5％ 1.1 -64.1％ Margin 3.1％ 0.3％ － 1.6％ － 3
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Consolidated Income Statement (2) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change Amount YoY change Advertising expenses 3.0 3.7 +116.5％ 6.7 +142.7％ Margin 8.9％ 10.2％ － 9.6% － Sales promotion expenses 0.7 0.8 +3.8％ 1.5 +2.7％ Margin 2.2％ 2.2％ － 2.2％ － 4
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Consolidated Balance Sheet (1) (Unit: billion yen) FY 25 End of Jun. FY 25 End of Sep. FY 25 End of Dec. FY 26 End of Mar. FY 26 End of Jun. Current assets 135.9 132.0 148.8 127.5 124.8 Cash and deposits 56.2 45.2 62.3 56.7 47.0 Notes and accounts receivable-trade 32.9 40.3 52.1 33.4 34.1 Short-term investment securities 13.3 12.6 8.3 8.3 10.3 Inventories 30.6 30.6 22.7 26.4 29.9 Non-current assets 124.7 129.4 126.5 127.2 127.0 Property, plant and equipment 73.4 74.6 67.3 68.3 69.6 Intangible assets 17.8 17.6 17.4 16.9 16.5 Investments and other assets 33.4 37.0 41.7 42.0 40.8 Total assets 260.7 261.4 275.3 254.8 251.8 5
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Consolidated Balance Sheet (2) (Unit: billion yen) FY 25 End of Jun. FY 25 End of Sep. FY 25 End of Dec. FY 26 End of Mar. FY 26 End of Jun. Current liabilities 46.5 42.3 60.1 41.9 38.0 Notes and accounts payable-trade 9.1 8.5 8.4 7.6 7.8 Accounts payable-other 15.7 13.9 30.9 16.1 16.4 Non-current liabilities 5.9 7.0 4.1 4.0 4.1 Total net assets 208.2 212.0 211.0 208.9 209.6 Capital surplus 0.5 0.5 0.5 0.5 0.5 Retained earnings 207.0 207.3 204.2 200.8 200.9 Treasury stock - 24.7 -24.7 -24.7 -24.7 -24.7 Total liabilities and net assets 260.7 261.4 275.3 254.8 251.8 6
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Foreign Exchange (Unit: yen) FY 25 Jan. to Dec. FY 26 Jan. to Mar. FY 26 Jan. to Jun. FY 26 Jan. to Dec. (Planned) US dollar 149.7 156.8 158.1 148.0 Chinese yuan 20.8 23.0 23.0 21.0 7
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Results by Segment (Domestic Business) (1) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change Amount YoY change Net sales 23.2 28.7 -0.9% 51.9 +0.5% Gross profit 11.9 14.9 -5.1% 26.9 -0.1% Margin 51.4％ 52.0% ー 51.7% ー Operating income 1.6 2.6 -53.9% 4.2 -47.6% Margin 7.2％ 9.1% ー 8.3% ー Advertising expenses 1.9 2.8 +245.0％ 4.7 +361.0％ Margin 8.2％ 9.8％ ー 9.1％ ー Sales promotion expenses 0.2 0.3 -6.2％ 0.6 -4.7％ Margin 1.2％ 1.3％ ー 1.2％ ー 8
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Results by Segment (Domestic Business) (2) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change Amount YoY change Healthcare products 13.7 15.4 +2.2% 29.2 +2.0% Pharmaceuticals 7.2 7.5 +2.6% 14.7 +4.2% Food 1.2 1.6 +14.4% 2.9 +13.0% Oral care products 3.7 4.6 +9.5% 8.4 +9.9% Skin care products 1.3 1.6 +12.6% 3.0 +8.0% Former direct marketing products 0.06 0.08 -88.5% 0.14 -90.3% Household products 8.9 13.0 -3.4% 22.0 -0.4% Sanitary products 2.1 2.9 -5.0% 5.0 -5.0% Deodorizing air fresheners 5.8 8.9 -4.3% 14.8 +0.0% Household articles 0.9 1.1 +7.8% 2.1 +8.5% Body warmers 0.5 0.1 -44.3% 0.7 -23.7% 9
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Results by Segment (International Business) (1) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change Amount YoY change Net sales 10.2 8.2 +12.2% 18.4 +8.2% Gross profit 5.3 3.8 +4.3% 9.2 +1.4% Margin 52.9％ 47.1% ー 50.3% ー Operating income -0.3 -1.8 ー -2.1 ー Margin ー ー ー ー ー Advertising expenses 1.0 0.9 +2.6％ 2.0 +16.2％ Margin 10.7％ 11.9％ ー 11.2％ ー Sales promotion expenses 0.4 0.4 +16.2％ 0.9 +9.4％ Margin 4.5％ 5.6％ ー 5.0％ ー 10
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Results by Segment (International Business) (2) (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change YoY change (Excluding effect of foreign currency translation) Amount YoY change YoY change (Excluding effect of foreign currency translation) U.S. 4.40 2.81 -7.8% -18.2% 7.21 -8.5% -14.0% China 2.66 2.29 +34.4% +18.9% 4.95 +34.0% +22.9% Mainland China 1.95 1.56 +49.1% +30.0% 3.51 +43.9% +30.4% Hong Kong 0.70 0.73 +11.3% +1.7% 1.43 +14.7% +8.2% Southeast Asia 2.01 1.98 +30.6% +15.8% 3.99 +12.4% +1.5% Singapore 0.17 0.08 -18.6% -28.0% 0.26 +19.3% +8.5% Malaysia 0.56 0.67 +20.4% +1.8% 1.24 +7.8% -7.9% Thailand 0.36 0.52 +1.7% -9.5% 0.88 -11.6% -20.8% Indonesia 0.36 0.29 +115.4% +107.3% 0.65 +23.5% +22.2% Philippines 0.36 0.27 +48.1% +50.0% 0.63 +49.9% +48.2% Taiwan 0.18 0.12 +694.0% +637.5% 0.31 +38.3% +28.9% Other 1.12 1.10 +7.4% -6.6% 2.23 +19.3% +6.2% U.K. 0.69 0.59 +0.7% -9.2% 1.28 +9.5% -0.9% Australia 0.30 0.49 +27.8% +5.5% 0.80 +31.7% +11.6% 11
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By Country/Region and Item (Unit: billion yen) FY 26 Q1 (Jan. to Mar.) FY 26 Q2 (Apr. to Jun.) FY 26 Q2 cumulative (Jan. to Jun.) Amount Amount YoY change YoY change Excluding effect of foreign currency translation Amount YoY change YoY change Excluding effect of foreign currency translation U.S. 4.40 2.81 -7.8% -18.2% 7.21 -8.5% -14.0% Body warmers 2.10 0.51 -11.7% -17.1% 2.61 -3.6% -9.5% Pharmaceuticals 1.50 1.38 -13.9% -19.1% 2.88 -10.0% -15.4% Other 0.80 0.91 +6.3% -0.2% 1.71 -12.9% -18.1% Mainland China 1.95 1.56 +49.1% +30.0% 3.51 +43.9% +30.4% Body warmers 0.56 -0.04 ー ー 0.51 +38.3% +22.8% Cooling gel sheets 0.63 0.56 +38.4% +22.9% 1.20 +32.5% +17.7% Other 0.76 1.03 +68.6% +49.7% 1.79 +54.7% +37.4% Southeast Asia 2.01 1.98 +30.6% +15.8% 3.99 +12.4% +1.5% Pharmaceuticals 0.43 0.51 +43.7% +26.8% 0.95 +3.9% -8.4% Cooling gel sheets 1.23 1.15 +22.4% +14.0% 2.38 +12.1% +5.2% Other 0.34 0.32 +45.0% +22.4% 0.66 +28.6% +14.4% 12