Core operating profit deteriorated despite higher sales, while net profit was inflated by a one-off gain

Consolidated revenue for the six months from January through June 2026 was ¥19,867.496 million, up 12.3% from ¥17,696.723 million in the same period of the previous year. However, operating profit fell 60.8%, from ¥351.821 million to ¥137.742 million, and the operating margin declined from approximately 1.99% to approximately 0.69%. Sales growth did not translate directly into profit growth, as the decline in gross margin and higher cost burden outweighed the benefit of higher sales.

Ordinary profit also fell 37.3%, from ¥392.0 million in the same period of the previous year to ¥246.148 million. In contrast, interim net profit attributable to owners of the parent rose 65.1% year on year to ¥412.861 million. However, the ¥247.753 million gain on step acquisition accounted for most of the ¥266.460 million in extraordinary gains, so the increase in net profit is fundamentally different from an improvement in operating profitability. The extraordinary gains also included a ¥18.570 million gain on the sale of investment securities and a ¥0.136 million gain on the sale of property, plant and equipment, while extraordinary losses amounted to ¥16.174 million.

Accordingly, at the next third-quarter earnings release, operating profit and the operating margin should be prioritized over the year-on-year change in net profit. In particular, it will be important to see whether the company can explain, excluding extraordinary gains, the progress of price pass-through, the recovery in domestic segment profitability, the profit contribution from higher sales in Asia, and its ability to absorb increases in raw-material and labor costs. The key indicators will be how much operating profit accumulates through the third quarter and whether there are sustainable factors capable of supporting the second-half profit required to meet the full-year plan.