Revenue growth has been accompanied by a decline in margins, making the likelihood of achieving full-year operating profit of ¥9,000 million the key focus.

Revenue in the first half of the fiscal year ending December 2026 was ¥109,055 million, up 6.2% from ¥102,669 million in the year-earlier period. However, operating profit was ¥13,219 million, 2.5% below the year-earlier figure of ¥13,554 million, and the operating margin declined by approximately 1.1 percentage points, from approximately 13.2% to approximately 12.1%. Revenue growth did not translate directly into profit growth, making a recovery in profitability the next focus.

On the profit front, gross profit increased with revenue, but selling, general and administrative expenses, led by logistics and advertising expenses, also increased. Segment profit in the Household Products business was ¥12,257 million, down 1.8% year on year, consistent with the decline in the consolidated margin. The Comprehensive Environmental Hygiene business remained solid, with segment profit of ¥968 million, up 9.1% year on year, but its scale is limited as a contributor to consolidated profit growth.

First-half operating profit has already exceeded the full-year forecast of ¥9,000 million. However, the company has a seasonal pattern in which demand for insect-control products is concentrated from spring through summer and returns arise from early autumn onward. It is therefore inappropriate to judge the likelihood of an upside to full-year results solely because first-half results have exceeded the full-year forecast. Cumulative operating profit through the third quarter of the fiscal year ended December 2025 was ¥13,272 million, making whether the company can exceed this level in the current third quarter one benchmark for assessing the credibility of the full-year plan.

In the next earnings release, we will assess third-quarter standalone operating profit, as well as year-on-year and plan variances in the cost of sales ratio, logistics expenses, advertising expenses and sales promotion expenses. In particular, it will be important to determine whether gross-margin improvements from price revisions and higher-value-added products are absorbing the increases in logistics and advertising expenses. We will also assess whether the company revises its forecasts of full-year operating profit of ¥9,000 million, ordinary profit of ¥9,550 million, net profit of ¥6,200 million and annual dividends of ¥130, or instead provides specific assumptions for second-half expenses.