LIXIL Corporation

For Q1, LIXIL reported revenue of JPY 379.2 billion, core earnings of JPY 1.7 billion, and quarterly profit of minus JPY 3.5 billion. Management said revenue increased year over year while earnings declined, mainly because of higher aluminum prices, lower renovation activity, and foreign-exchange effects on SG&A. The equity ratio fell to 33.8% from about 35% last year, reflecting temporary use of surplus funds for short-term investment and a temporary increase in net interest-bearing debt; free cash flow was negative. Full-year fiscal 2027 guidance was unchanged, including the dividend forecast, and the company maintained its March 2027 core earnings forecast of JPY 45 billion. Management expects cost pressure to be strongest in Q1 and Q2, with price revisions from July, August, and October helping the second half recover.

CEO Kinya Seto emphasized that the company is actively responding to input-cost inflation through price revisions, cost reductions, hedging, and rationalization, rather than relying on a single lever. He highlighted that management sees the situation as manageable for the full year, but warned that new-housing demand and commodity prices, especially aluminum, need close monitoring. In Q&A, he sounded cautiously constructive on overseas markets and said the company expects better profitability later in the year as mix and pricing improve.

CFO Mariko Fujita said Q1 was marked by rising revenues but lower earnings, driven by higher LHT aluminum costs and a decline in the renovation ratio. She said cost inflation from petroleum-based materials, aluminum, and copper is substantial, but the company has already implemented price revisions, cost reductions, and hedging to preserve the full-year plan. She also noted that the equity ratio moved to 33.8% from about 35% due to short-term investment of surplus funds, while investing cash flow and free cash flow were temporarily worse and should improve in Q2. She repeated that the dividend forecast is unchanged and that the original full-year target remains achievable.

Analysts focused on whether the company can realistically hit full-year targets given low Q1 progress, and management replied that Q1/Q2 are expected to be weak because cost inflation hits before pricing fully flows through. Several questions probed the size and timing of price revisions versus peers; management said LIXIL’s timing varies by business, with some increases in July/August and LHT starting in October, and that the benefit is more visible in the second half and next fiscal year. Questions on the renovation slowdown and showroom traffic led management to say new-housing priority, labor shortages, and timing issues around window-renovation policy changes distorted demand, while the apparent weakness is partly a timing and inventory issue rather than a clear structural collapse. On the Americas, management said the business remains weak but headcount reduction and mix improvement should help it move toward breakeven later in the year.