First-half progress is on track, but the focus is on second-half performance after the full-year profit forecast cut

Revenue for the first half of FY2026, from January through June, was ¥1,023,683 million, operating profit was ¥152,315 million and interim profit attributable to owners of the parent was ¥105,150 million. As of the second quarter, the full-year forecasts were revenue of ¥2,000,000 million, operating profit of ¥283,000 million and profit attributable to owners of the parent of ¥189,000 million, with first-half progress of 51.2%, 53.8% and 55.6%, respectively. Progress exceeded the simple half-year run rate, leaving ¥976,317 million in revenue and ¥130,685 million in operating profit to be generated in the second half, at least for revenue and operating profit.

However, the treatment of the profit forecast requires attention. As of the first quarter, the full-year forecasts were revenue of ¥1,920,000 million, operating profit of ¥283,000 million and profit attributable to owners of the parent of ¥198,000 million. As of the second quarter, the revenue forecast was raised to ¥2,000,000 million, while the profit forecast was cut by ¥9.0 billion to ¥189,000 million. The operating profit forecast was unchanged at ¥283,000 million, so the next results announcement should clarify how the outlook for financial income and expenses, the tax burden and non-operating items below operating profit affected the profit forecast cut.

For the third quarter, applying a simple 75% benchmark gives reference levels of ¥1,500,000 million in revenue, ¥212,250 million in operating profit and ¥141,750 million in profit attributable to owners of the parent. Quarterly profit allocation will naturally fluctuate with paint demand, foreign exchange and the seasonality of acquired subsidiaries. However, if cumulative third-quarter results fall materially below these levels, the strong first half may not have provided sufficient support for achieving the full-year profit target.

At the next results announcement, it will be important to review not only whether the full-year forecasts are revised, but also the breakdown of revenue into volume, price, foreign exchange and acquisition effects, the factors behind changes in operating profit, and the financial costs and tax rate affecting profit attributable to owners of the parent. In particular, the annual dividend forecast remains unchanged at ¥17, so cash flow should be reviewed alongside whether the progressive dividend policy and capacity to return capital to shareholders remain sustainable after the profit forecast cut.