Strong start on an upward revision to the interim forecast, but full-year plan calls for lower operating profit in H2 year on year

FY2026-H1 revenue was ¥1,332,390 million, up 12.8% year on year, while operating profit was ¥278,544 million, up 15.0%. The full-year forecasts are revenue of ¥2,725,000 million and operating profit of ¥469,000 million, implying progress rates of 48.9% and 59.4%, respectively, on a simple calculation. Revenue was close to 50% of the full-year forecast at the interim stage, while operating profit was well ahead of that level, indicating strong profit progress in H1.

However, subtracting the H1 results from the full-year forecasts gives required FY2026-H2 revenue of ¥1,392,610 million and operating profit of ¥190,456 million. Subtracting FY2025-H1 revenue of ¥1,180,766 million and operating profit of ¥242,118 million from FY2025 full-year results of ¥2,468,892 million and ¥479,375 million gives H2 revenue of ¥1,288,126 million and operating profit of ¥237,257 million in the previous year. The current full-year plan therefore assumes H2 revenue growth of 8.1% year on year, while planning for a 19.7% decline in H2 operating profit. In Q3, it should be confirmed which factors the company has incorporated for H2, including research and development expenses, selling expenses, acquisition-related costs and foreign exchange.

The upward revision was attributed to category growth in key products in the healthcare business, royalty income, the US infusion business and the nutraceuticals-related business, as well as higher gross profit and a lower selling, general and administrative expense ratio. However, an impairment loss of ¥4,052 million was also recognized in the interim period. Because IFRS income statements do not have a separate extraordinary items section, changes in operating profit alone make it difficult to assess underlying earnings power. In Q3, it will be necessary to distinguish whether the earnings benefit from the upward revision reflects continued growth in products and categories, or royalty income and temporary expense differences.

The annual dividend forecast was also raised by ¥60, or 42.9%, from ¥140 to ¥200. The interim dividend is ¥100, meaning that half of the annual dividend has already been paid, but the earnings release does not disclose the payout ratio or a specific shareholder return policy. In Q3, it will be necessary to check the consistency between the planned slowdown in H2 operating profit and the ¥200 annual dividend, the payout ratio, the remaining authorization for share repurchases, and whether the full-year forecast is maintained or revised again.