Despite higher first-half revenue, profit progress is extremely slow, making FY2026-Q3 critical for assessing the likelihood of meeting the full-year targets.

First-half consolidated revenue was ¥2,636 million, up 9.3% year on year. However, operating profit was just ¥17 million, down ¥29 million, or 63.4%, from ¥46 million in the same period of the previous year. Ordinary profit rose 101.4% year on year to ¥41 million, partly because the foreign exchange loss recorded in the same period of the previous year did not recur and interest income and foreign exchange gains were recorded. Accordingly, the key indicator to monitor in FY2026-Q3 is the recovery of core operating profit excluding non-operating factors.

The full-year forecasts remain unchanged at revenue of ¥7,200 million, operating profit of ¥500 million, ordinary profit of ¥520 million and net income attributable to owners of the parent of ¥550 million. A simple calculation based on the first-half results indicates that meeting the full-year forecasts requires second-half revenue of ¥4,564 million and operating profit of ¥483 million. The remaining revenue required represents 63.4% of the full-year forecast, while the remaining operating profit required represents 96.6%, indicating extremely high reliance on the second half for profit generation. The company’s presentation materials generally describe performance as broadly in line with plan, but the assumptions for second-half volumes, prices, costs and advertising expenses underpinning that assessment should be reassessed in FY2026-Q3.

In terms of margins, the first-half gross profit margin was 50.8%, down 3.9 percentage points from the same period of the previous year. Although revenue increased, operating profit declined because the ¥91 million benefit from higher revenue in the pharmaceutical business and the ¥36 million impact of price revisions were more than offset by a ¥48 million decline in revenue from the infection control business, a ¥134 million cost impact and a ¥47 million foreign exchange impact. Selling, general and administrative expenses were ¥1,321 million, representing 50.1% of revenue; the company also disclosed advertising expenses of ¥190 million, personnel expenses of ¥613 million and R&D expenses of ¥80 million.

In FY2026-Q3, we will monitor not only cumulative revenue but also whether the gross profit margin remains at or above 50.8% and approaches the level recorded in the same period of the previous year, and whether the negative ¥134 million cost impact narrows. Other key issues are how much operating profit accumulates against the ¥500 million full-year forecast, whether the assumption of recording substantial profit in the remaining quarter remains unchanged, and whether the company revises its forecasts or explains its expense allocation.