Can the strong first-half progress be converted into full-year target achievement?

FY2026-H1 revenue was ¥32,849 million, up 7.1% year on year, operating profit was ¥4,184 million, up 14.4%, ordinary profit was ¥4,657 million, up 17.6%, and net profit attributable to owners of the parent was ¥3,380 million, up 20.7%. From Q1 through the cumulative Q2 period, revenue increased from ¥16,243 million to ¥32,849 million, while operating profit rose from ¥2,286 million to ¥4,184 million.

Progress against the full-year forecasts was 63.2% for revenue, 80.5% for operating profit, 76.3% for ordinary profit and 75.8% for net profit attributable to owners of the parent. Against the revenue forecast of ¥52,000 million, a further ¥19,151 million is required. The corresponding amounts are ¥1,016 million against the ¥5,200 million operating profit forecast, ¥1,443 million against the ¥6,100 million ordinary profit forecast, and ¥1,080 million against the ¥4,460 million net profit forecast.

The main reason profit progress is substantially ahead of revenue progress is higher revenue and improved margins in the agrochemicals business. H1 operating profit in that business was ¥2,673 million, up 56.1% year on year. The company has also identified a lower fixed-cost ratio resulting from higher production volumes as a factor behind past margin improvements. Ordinary profit included a ¥27 million foreign exchange gain, while interim net profit included a ¥237 million gain on the sale of investment securities. The sustainability of earnings excluding the uplift from non-operating and extraordinary items therefore also needs to be assessed.

In Q3, cumulative revenue of at least ¥39,000 million will be checked as a simple benchmark for quarterly progress. However, agrochemicals sales include the impact of orders brought forward, so it is necessary to assess not only the headline progress rate but also how much of the domestic rice-paddy and horticultural products and overseas sales reflected temporary pull-forward, and whether margin improvement toward the full-year operating profit forecast of ¥5,200 million is continuing.