LIXIL (5938) Q2 2026 earnings summary

Executive summary

• First-half revenue for FY2026 was ¥735.9 billion, a slight year-on-year decrease, but core earnings rose 60.4% to ¥16.9 billion and EBITDA increased, driven by strong renovation sales in Japan and profit recovery in Europe and the Middle East.

• Profit attributable to owners improved to ¥3.4 billion, supported by higher core earnings and lower tax expenses.

• Japanese renovation sales remained robust, offsetting weak new housing demand, while international profitability improved, especially in Europe and IMEA.

• U.S. and China markets remained sluggish, but structural reforms and product focus are expected to yield results in the second half.

• Interim dividend of ¥45 per share was resolved, with full-year earnings and dividend forecasts unchanged.

Financial highlights

• Gross profit margin increased by 1.6 percentage points year-on-year to 34.2%, with gross profit rising to ¥251.9 billion.

• Core earnings margin rose to 2.3% from 1.4% year-on-year; EBITDA margin improved to 7.9%.

• EPS turned positive at ¥11.67, up ¥25.36 year-on-year.

• Free cash flow remained positive at ¥13.3 billion, though operating cash flow declined due to higher inventories.

• Cash and cash equivalents at period end were ¥118,916 million, up from ¥107,088 million year-over-year.

Outlook and guidance

• Full-year revenue is forecast at ¥1,540,000 million, up 2.3% year-on-year, with core earnings expected to rise 11.7% to ¥35,000 million and profit projected at ¥8,000 million.

• Full-year earnings and dividend forecasts remain unchanged, with interim dividend set at ¥45 per share and annual dividend forecast at ¥90 per share.

• Japanese renovation sales are expected to drive second-half performance, supported by promotional efforts and government subsidies.

• U.S. market is expected to gradually improve from structural reforms and price optimization, with profitability targeted around Q4 next year.

• European market recovery anticipated from next year, with color products driving growth.