Lion Corporation

Lion reported Q2 FY2026 December net sales up 8.7% year-on-year and core operating income up 21.3% year-on-year. EBITDA margin reached 11.8%, improving by 1.1 percentage points year-on-year. Management said first-half core operating income increased by JPY 2.7 billion YoY, with about JPY 1 billion of first-half negative impact from higher raw-material costs already offset. Full-year earnings guidance was unchanged from the start of the year. The company now assumes a negative JPY 7 billion raw-material impact for the year versus negative JPY 1 billion initially, with about JPY 5 billion of that falling in the second half; it expects to offset around 80% of that through gross profit actions, including price increases, high-value-added mix, and cost reductions. Management also said the JPY 3 billion benefit from domestic price increases should carry into next year, while next year’s core operating income target was discussed as JPY 40 billion versus JPY 35 billion this year.

Takemori’s message was that the company is seeing real traction in its second-stage strategy: shifting to higher-value products, improving overseas profitability, and building a more resilient earnings base. He framed the first half as evidence that Lion can grow even as the environment worsens, and repeatedly emphasized that the company is not merely defending the forecast but aiming to execute the original plan. His tone was confident, but he also stressed that price pass-through and profit recovery still require careful execution, especially in October when retail shelf prices are expected to change.

The CFO commentary focused on the mechanics of offsetting the raw-material shock and on the quality of earnings. Management said the raw-material assumption for the year moved to negative JPY 7 billion, with JPY 1 billion already realized in the first half and JPY 5 billion expected in the second half, and that roughly JPY 4 billion of the second-half impact should be offset through gross profit. They also said roughly JPY 3 billion would come from domestic price increases, about JPY 0.5 billion in Q3 and JPY 2.5 billion in Q4, and that a little over JPY 1 billion would come from high-value-added products. On capital allocation, they reiterated continued investment in growth areas while improving SG&A efficiency; they also noted an 11th straight annual dividend increase remains a goal.

Analysts focused heavily on the credibility of the price increases and whether the company could really offset the higher raw-material burden. Management said the pricing action is broader than past years because it involves category-wide shipment price increases, and confidence comes from careful preparation with wholesalers, distributors, and retailers ahead of the October implementation. Questions also probed whether domestic oral care can keep growing after a very strong first half; management said growth should not simply continue at the same pace because of price-related volume pressure and tougher comparisons, but the business has momentum and profitability is improving. Another theme was overseas margins, where management said Southeast Asia’s lower margin in Q2 partly reflected deliberate upfront investment in Thailand oral care, while China recovered sharply and overall overseas sales momentum improved.