Lion Q2 FY2026: Operating profit jumps 55% on overseas growth

Lion’s revenue for the first half rose 8.7% to ¥216,836 million, while operating profit soared 54.7% to ¥20,703 million, benefiting from a one-time gain of roughly ¥7 billion from the sale of chemical subsidiaries. Net income attributable to owners of the parent increased 12.9% to ¥10,844 million. Business profit, which excludes the gain, grew 21.3% to ¥15,334 million. Overseas operations expanded strongly, lifted by currency effects, though domestic consumer goods saw only marginal growth and industrial products revenue declined. The company is accelerating portfolio restructuring to strengthen earnings resilience under its Vision 2030 2nd STAGE mid-term plan.

Consumer Products revenue grew 1.6% to ¥123,646 million with business profit up 7.1% to ¥9,787 million. Oral care jumped 9.6% to ¥40,535 million, led by ‘Clinica Advantage’ and the relaunched ‘Systema Haguki Plus Premium’. Beauty care edged up 0.2%, while fabric care fell 2.2% and living care slumped 17.0% due to brand divestitures. Pharmaceuticals rose 4.0% on acne care and foot-care products.

Industrial Products revenue fell 3.9% to ¥27,579 million, with business profit nearly flat at ¥1,459 million. Higher sales of rubber anti-stick agents and conductive carbon for batteries were offset by lower industrial cleaning-agent sales.

Overseas Operations revenue surged 19.7% (real 9.0%) to ¥100,859 million, and business profit jumped 66.1% to ¥5,276 million. Southeast & South Asia / Oceania climbed 25.9% (real 13.4%), while Northeast Asia rose 10.1% (real 2.1%). By country, Malaysia grew 28.2%, China 8.4%, Thailand 7.1%, and South Korea 6.3%. The consolidation of Australia’s PNB Consolidated, acquired in January, also contributed.

Total assets stood at ¥532,799 million (up ¥4.2 billion from year-end) and equity at ¥358,565 million (up ¥10.1 billion), with a parent equity ratio of 62.5%. Goodwill increased due to the PNB acquisition. Operating cash flow improved to ¥9,539 million. Investing cash flow turned positive partly from the subsidiary sale, though acquisition-related spending rose. Financing cash flow was negative ¥11,209 million due to dividend payments. The interim dividend was raised to ¥17 (from ¥15), with the full-year forecast at ¥34 (from ¥30), underscoring enhanced shareholder returns.

Full-year forecasts are unchanged: revenue ¥430,000 million (+1.9%), operating profit ¥40,000 million (+10.0%), and net income ¥25,000 million (-9.4% versus the prior year’s ¥27,583 million). Foreign exchange assumptions were revised to USD/JPY 160 (previously 155) and THB/JPY 4.9 (from 4.7), with limited impact expected. First-half progress is on track, but second-half performance faces uncertainties from raw material costs and geopolitics.

As part of portfolio restructuring under the Vision 2030 2nd STAGE plan, Lion acquired Australian natural beauty care company PNB Consolidated in January, accelerating a shift toward high-value overseas segments. In June, it completed the sale of two domestic chemical subsidiaries (Lion Specialty Chemicals and PT. Ipposha Indonesia), exiting underperforming businesses. This sharpens the focus on oral care and overseas consumer operations.

Persistently high raw material prices and currency volatility could weigh on earnings. Middle East tensions pose procurement cost risks. Domestically, population decline and intensifying competition are structurally shrinking living care and fabric care. Overseas, China’s inventory adjustments and geopolitical risks may affect sales. Additionally, goodwill impairment from M&A and the impact of revised forex assumptions warrant close attention.