First-half revenue flat, but operating profit down 22.2%; tire profitability in focus

FY2026-H1 consolidated revenue was ¥284,190 million, up ¥779 million, or 0.3%, from ¥283,410 million in the same period of the previous year. Operating profit, however, fell ¥10,678 million, or 22.2%, to ¥37,497 million from ¥48,176 million. Based on the reported figures, the operating margin was approximately 13.2%, down approximately 3.8 percentage points from approximately 17.0% a year earlier. Profit is declining despite revenue remaining broadly stable, making margin stabilization more important than a simple recovery in demand in the next results announcement.

The core tire business reported revenue of ¥260,058 million and operating profit of ¥36,425 million. Revenue was down 0.1% year on year, while operating profit fell 22.6%, resulting in an operating margin of approximately 14.0%. The margin calculated from the previous year's revenue of ¥260,409 million and operating profit of ¥47,084 million was approximately 18.1%, representing a decline of about 4 percentage points. The automotive parts business remained relatively solid, with revenue up 4.9% year on year to ¥24,132 million, but operating profit was ¥1,075 million, down 0.6%. Since the tire business accounts for most of consolidated profit, improving tire profitability is essential in Q3.

The year-on-year bridge in the earnings presentation showed profit declines of ¥5.5 billion from sales factors, ¥1.4 billion from manufacturing costs, ¥1.5 billion from SG&A expenses, ¥1.3 billion from higher ocean freight and other costs, and ¥8.5 billion from tariff impacts. These were partly offset by profit increases of ¥3.7 billion from raw-material factors and ¥3.9 billion from foreign exchange. In addition, domestic system issues reduced operating profit by ¥4.2 billion, indicating that internal operations, as well as the external environment, are weighing on margins.

In the next results announcement, the key items to reassess, at a minimum on a year-on-year basis, are tire unit sales, the impact of price increases, product mix, and the contributions from raw materials, tariffs and logistics costs. Unit economics combining prices and volumes, as well as cumulative amounts by factor, have not yet been fully disclosed. Whether the operating margin can recover from the 13% range and whether the company will remain dependent on price and mix to offset lower volumes will be central to FY2026-Q3.