| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥265.1B | ¥245.5B | +8.0% |
| Operating Income | ¥18.7B | ¥16.4B | +14.3% |
| Ordinary Income | ¥17.1B | ¥11.7B | +45.8% |
| Net Income | ¥8.9B | ¥1.3B | +567.7% |
| ROE | 2.8% | 0.5% | - |
Euglena’s 1H FY2026 recorded increases in revenue and profit, although net income attributable to owners of the parent remained limited due to allocations to non-controlling interests and a high tax burden. Revenue was ¥265.1B (+8.0% YoY), Operating Income was ¥18.7B (+14.3%), and Ordinary Income was ¥17.1B (+45.8%), with all three securing year-on-year growth. Consolidated Net Income increased substantially to ¥8.9B (+567.7% from ¥1.3B in the previous year), but ¥8.1B of this amount was attributable to non-controlling interests, leaving Net Income attributable to owners of the parent at only ¥0.7B. The primary drivers of profit growth were increased revenue in the HealthCare Business and improved margins resulting from SG&A expense control. The Operating Income margin improved year on year to 7.1%.
【Revenue】Revenue was ¥265.1B (+8.0% YoY), with the HealthCare Business, which accounts for 91.7% of revenue, growing to ¥243.2B (+7.3%) and driving company-wide growth. Biofuel posted strong growth of ¥7.6B (+67.2%), although its scale remains small. Others was ¥14.3B (-0.3%), essentially flat.
【Profit and Loss】Operating Income was ¥18.7B (+14.3%). While maintaining a high gross margin of 69.2%, the Company absorbed the increase in the SG&A expense ratio, improving the Operating Income margin to 7.1%. Ordinary Income was ¥17.1B (+45.8%), supported not only by higher Operating Income but also by the reduction of non-operating expenses. Consolidated Net Income was ¥8.9B (+567.7%), but the burdens of income taxes and other taxes of ¥8.2B and profit attributable to non-controlling interests of ¥8.1B were substantial, limiting Net Income attributable to owners of the parent to ¥0.7B. Extraordinary items were negligible (extraordinary income of ¥0.01B and no extraordinary loss), indicating a limited impact from temporary factors. Overall, the Company recorded increases in revenue and profit.
The HealthCare Business is the substantive pillar of company-wide earnings, with revenue of ¥243.2B (+7.3%), Operating Income of ¥30.4B (+10.1%), and a profit margin of 12.5%. Direct sales, distribution, OEM/raw materials, and overseas channels all expanded, while an improved sales mix contributed to higher margins. The Biofuel Business continued to achieve high growth, with revenue of ¥7.6B (+67.2%), but recorded an Operating Loss of ¥1.6B (a wider loss year on year and profit YoY of -40.4%), indicating that monetization remains a work in progress. Others recorded revenue of ¥14.3B (-0.3%) and an Operating Loss of ¥2.0B, remaining slightly loss-making. The substantial difference in profit margins among segments clearly demonstrates that the high-margin HealthCare Business supports company-wide profitability.
【Profitability】The Operating Income margin remained high at 7.1%, while the gross margin was 69.2%, absorbing the increase in the SG&A expense ratio to 62.1%. ROE remained low at 2.8%, primarily due to the low Net Income margin (3.4% even on a consolidated Net Income basis). 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥10.8B, exceeding consolidated Net Income of ¥8.9B and indicating earnings backed by cash, although it remained low relative to EBITDA. 【Investment Efficiency】Capital expenditures were ¥1.2B, small relative to depreciation and amortization of ¥12.1B, indicating restrained investment in the maintenance and renewal of existing assets. 【Financial Soundness】The Equity Ratio improved to 45.6% from 42.7% in the previous year. Total assets were ¥692.7B (¥723.3B in the previous year), while net assets were ¥315.7B (¥285.3B in the previous year), indicating a contraction in total assets despite the accumulation of net assets.
OCF was ¥10.8B, down -11.3% year on year, but remained above consolidated Net Income of ¥8.9B, indicating generally sound cash support for earnings. By component, the subtotal before changes in working capital was high at ¥26.3B. However, an increase in inventories (-¥2.8B), a decrease in accounts payable (-¥0.5B), payments of income taxes and other taxes (-¥14.5B), and interest payments (-¥3.2B) were sources of cash outflow and weighed on final OCF. Investing Cash Flow was -¥6.7B, of which capital expenditures were ¥1.2B, remaining at a restrained level. Financing Cash Flow was a significant outflow of -¥29.1B, primarily due to repayments of long-term borrowings (-¥24.1B). As a result, Free Cash Flow was secured at a surplus of ¥4.1B. However, given the scale of the financing cash outflow, changes in the financing structure—namely, the increased dependence on short-term borrowings—warrant monitoring from a liquidity management perspective.
Current-period earnings were generated primarily through recurring business activities, as extraordinary items were essentially zero (extraordinary income of ¥0.01B and no extraordinary loss). Non-operating income, including interest income of ¥0.7B, remained below 1% of revenue, indicating a high degree of dependence on Operating Income from the core business. Meanwhile, a substantial divergence arose between Ordinary Income of ¥17.1B, consolidated Net Income of ¥8.9B, and Net Income attributable to owners of the parent of ¥0.7B. The primary causes were the burden of income taxes and other taxes of ¥8.2B and the presence of profit attributable to non-controlling interests of ¥8.1B. Because failure to distinguish between the portion attributable to owners of the parent and the consolidated total may lead to a misinterpretation of the actual situation, the two should be assessed separately. The fact that OCF exceeded consolidated Net Income indicates soundness from an accrual perspective. However, the structure in which the tax burden and allocation to non-controlling interests significantly constrain earnings attributable to owners of the parent is an important observation when evaluating earnings quality.
The full-year forecast is revenue of ¥530.0B (+5.2% YoY), Operating Income of ¥32.0B (+2.5%), and Ordinary Income of ¥28.0B (+18.4%). The 1H progress rates were 50.0% for revenue, 58.5% for Operating Income, and 61.0% for Ordinary Income, indicating progress ahead of the full-year plan on the profit front. In 2H, investment-led costs, such as brand investments and expenses related to the Biofuel business rollout, are anticipated. Accordingly, the pace of margin improvement observed in 1H may not continue unchanged in 2H, which warrants attention. During the current quarter, the earnings forecast was revised, while the dividend forecast was not revised.
The dividend for 1H was ¥0, with the Company continuing to pay no dividend. The Payout Ratio is not applicable because no dividend was paid. Although Free Cash Flow secured a surplus of ¥4.1B, Financing Cash Flow was a significant outflow of -¥29.1B, suggesting that the use of funds is primarily directed toward adjusting the financial structure through the repayment of borrowings.
Business concentration risk: The HealthCare Business accounts for 91.7% of revenue, creating a structure in which fluctuations in demand for this business have a direct impact on company-wide performance.
Changes in financial leverage and financing structure: While short-term borrowings increased sharply to ¥170.6B (¥39.4B in the previous year), long-term borrowings declined substantially to ¥21.8B (¥179.2B in the previous year), indicating a shift toward shorter-term liabilities. Financing Cash Flow was a significant outflow of -¥29.1B, and future financing trends warrant close monitoring.
Risk related to the attribution structure of earnings: Of consolidated Net Income of ¥8.9B, ¥8.1B was attributable to non-controlling interests, leaving Net Income attributable to owners of the parent at a limited ¥0.7B. Fluctuations in the performance of subsidiaries therefore have a significant impact on the earnings effectively attributable to owners of the parent.
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Income margin | 7.1% | – | – |
| Net Income margin | 3.4% | – | – |
Because comparative data against the industry median has not been obtained for the Company’s Operating Income margin and Net Income margin, the assessment is limited to their absolute values.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue growth rate (YoY) | 8.0% | – | – |
Because comparative data against the industry median has not been obtained for the Company’s revenue growth rate of +8.0%, the assessment is limited to its absolute value.
※Source: Compiled by the Company
The core HealthCare Business, with its high margin of 12.5%, drove company-wide earnings, and the 1H Operating Income margin improved to 7.1%. The fact that progress toward the full-year plan was ahead of schedule, at 58.5% for Operating Income and 61.0% for Ordinary Income, is an important observation when evaluating business quality.
Of consolidated Net Income of ¥8.9B, only ¥0.7B was attributable to owners of the parent. Profit attributable to non-controlling interests of ¥8.1B and the burden of income taxes and other taxes significantly determined the attribution structure of earnings. When reviewing the earnings figures, it is necessary to distinguish between consolidated Net Income and Net Income attributable to owners of the parent.
Short-term borrowings increased sharply to ¥170.6B, while long-term borrowings declined to ¥21.8B, indicating an ongoing shift toward shorter-term liabilities. Together with the Financing Cash Flow outflow of -¥29.1B, the evolution of the future financing structure is a key point of focus in the earnings data.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.
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