60%+ returns in 2025: Here’s how AI-powered stock investing has changed the game
Introduction & Market Context
LIXIL Corporation (TSE:5938) presented its H1 FYE2026 financial results on October 31, 2025, revealing a significant improvement in profitability despite a slight decline in revenue. The presentation, covering the period from April 1 to September 30, 2025, highlighted the company's success in navigating challenging housing markets through its strategic focus on renovation sales and operational improvements.
The results come amid a mixed global housing market environment, with Japan experiencing low new housing starts, while international markets showed varied performance with strength in Europe, the Middle East, and India offsetting weakness in the Americas and China.
As shown in the following key highlights slide, LIXIL achieved growth in core earnings and EBITDA despite the revenue decrease:
Quarterly Performance Highlights
LIXIL reported H1 FYE2026 revenue of JPY735.9 billion, a slight decrease of 0.5% year-on-year, while core earnings surged by 60.4% to JPY16.9 billion. The company's EBITDA increased by 10.5% to JPY57.8 billion, and profit for the period improved significantly to JPY3.4 billion from a loss of JPY3.9 billion in the previous year.
The following slide details these financial highlights, showing the substantial improvement in profitability metrics despite the revenue challenges:
The consolidated business results table below provides a comprehensive view of LIXIL's financial performance, including the improvement in gross profit to JPY251.9 billion (+4.4%) and earnings per share to JPY11.67 from negative JPY13.69 in the previous year:
These results align with the earnings report released earlier, which showed LIXIL's Q2 2025 EPS beat expectations at 14.84 yen compared to the forecasted 10.04 yen, though revenue fell short of projections. The market reacted with a 3.41% decrease in LIXIL's stock price, reflecting concerns over the revenue miss despite the strong earnings performance.
Segment Performance Analysis
LIXIL's business performance varied significantly across its three main segments: Water Technology (LWT), Housing Technology (LHT), and Living.
The Water Technology segment saw its core earnings increase substantially to JPY20.6 billion from JPY14.0 billion in the previous year, with the core earnings margin improving to 5.2% from 3.5%. This improvement came despite a slight revenue decrease to JPY392.9 billion.
International Water Technology business performance showed significant regional variations, as illustrated in the following breakdown:
Europe (+5% YoY) and IMEA (India, Middle East, Africa, +16% YoY) showed strong performance, while the Americas (-5% YoY) and China (-7% YoY) continued to face challenges due to sluggish housing markets.
The Housing Technology segment maintained relatively stable performance with revenue of JPY259.2 billion and core earnings of JPY12.3 billion, nearly flat year-on-year. The Living segment showed improvement with revenue increasing to JPY100.3 billion and core earnings rising to JPY3.4 billion from JPY2.7 billion.
The following waterfall chart clearly illustrates the factors contributing to the changes in revenue and core earnings:
Strategic Initiatives
LIXIL's strategic focus on renovation sales has been a key driver of its improved performance. The company reported that its renovation sales ratio increased by 1.6 percentage points year-on-year, with all segments seeing growth in this area.
As shown in the following slide, renovation sales increased from JPY184.7 billion in H1 FYE2025 to JPY193.6 billion in H1 FYE2026:
The company is also advancing its ESG initiatives, including the standardization of PremiAL, a recycled low-carbon aluminum, across its product lines with no additional cost to customers. LIXIL has also launched premium models of various products to improve profitability.
These strategic initiatives are highlighted in the following slide:
Additionally, LIXIL is focusing on meeting diverse lifestyle needs through new product launches and participating in global sanitation and hygiene initiatives:
Forward-Looking Statements
LIXIL maintained its full-year earnings forecast despite the mixed H1 results, indicating confidence in its strategic direction. The company expects renovation sales to remain strong in Japan, particularly from September onwards, and anticipates continued profitability improvements in its international operations.
For the Americas market, which continues to face challenges, LIXIL expects positive impacts from price optimization and structural reforms as the region enters an interest rate cut phase. The company also sees continued strong performance in Europe, the Middle East, and India offsetting weakness in other markets.
According to the earnings call transcript, CEO Kinya Seto emphasized the company's strategic shift towards high-end product segments, stating, "We are not going after market share at the lower end. We want to increase the average price." This aligns with the presentation's focus on premium products and renovation sales to drive profitability despite challenging market conditions.
The company also announced an interim dividend of JPY45 per share, reflecting its improved financial position and confidence in future performance.
Despite maintaining a positive outlook, LIXIL faces ongoing challenges, including the slow recovery of housing markets in the Americas and China, as well as potential impacts from government instability affecting housing construction policies in Europe. The company's ability to continue executing its renovation-focused strategy and operational improvements will be crucial to sustaining its profitability momentum through the second half of the fiscal year.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.