LIXIL posts ¥4.6 billion net loss in first half despite 3.6% revenue growth
Key Facts
On October 30, LIXIL announced results for the first half of its fiscal year ending in March 2027, recording a net loss attributable to owners of the parent company of ¥4.6 billion for the period from April to September 2026. Consolidated revenue rose 3.6% year on year to ¥762.5 billion, but business profit fell to ¥5.5 billion, down ¥11.4 billion from the same period a year earlier. The net result deteriorated by ¥7.9 billion year on year, reflecting the decline in business profit and the reversal of a lower tax expense that had supported the previous period. The results show a widening gap between sales growth and falling profits, with performance differing between domestic operations and overseas markets. Revenue from domestic operations fell 1%, while overseas revenue grew 12%.
Revenue from domestic operations was ¥495.7 billion, as higher prices for materials and supplies weighed on costs alongside a decline in housing-sector sales. By contrast, overseas revenue reached ¥282.8 billion, posting strong year-on-year growth. But overseas expansion did not prevent a decline in overall business profit, reflecting the impact of costs and weakness in some domestic operations. CEO Kenya Sato said, "Higher prices for materials and supplies, together with the impact of costs related to conditions in the Middle East, limited the recovery in profit." Management added that pressures from rising costs are expected to continue in the second half of the fiscal year. According to the company’s guidance, improved profitability depends on price adjustments taking effect in the coming months.
In the company’s Water Technology business, overseas revenue rose 11.1% to ¥265.4 billion in the first half. Revenue grew 2% in Europe and 14% in the India, Middle East and Africa region. On the other hand, revenue in China fell 16% as weakness in the property market there continued. This divergence highlights differences in demand across the markets served by the company, with growth in Europe and the India, Middle East and Africa region offsetting part of the contraction in China. Continued weakness in China’s property market constrains the performance of the overseas business despite its overall growth.
Housing Technology revenue fell 2.6% to ¥252.3 billion. The segment’s business profit declined ¥11.2 billion from the same period a year earlier to ¥1.1 billion, affected by weak renovation sales and higher material costs. This segment helps explain the decline in domestic business profitability, alongside lower housing sales and more expensive inputs. In the first half of the previous fiscal year, the company said growth in renovation sales in Japan, particularly in water products and highly insulated windows, offset weak demand for new homes. In the current period, domestic revenue fell 1%, reflecting a change in the performance of the domestic market between the two periods.
The current results follow a comparison period in which LIXIL recorded consolidated revenue of ¥735.9 billion in the first half of the fiscal year ending in March 2026. Business profit rose 60% to ¥16.9 billion at the time, and net profit attributable to owners of the parent company was ¥3.4 billion. The company therefore moved from a net profit in the year-earlier period to a loss in the current period, alongside a decline in business profit. For the fiscal year ending in March 2027, the company is targeting revenue of ¥1.6 trillion and business profit of ¥45 billion, representing targeted year-on-year growth of 5.9% and 16.9%, respectively. It also expects to pay a dividend of ¥90 per share for the year, split equally between the interim and year-end dividends, at ¥45 per share each.
Management expects the negative impact of higher costs to continue in the second half, but said the effects of price adjustments will become clearer from the third quarter, particularly in Japan as the demand season begins. The ability of price adjustments to limit pressure from materials and costs related to conditions in the Middle East is therefore among the factors the market will monitor in the second half. LIXIL is scheduled to announce its third-quarter results in late January, according to its investor-relations calendar. Those results will provide an indication of the trajectory of sales and profitability after the effects of price adjustments begin to emerge in the Japanese market.