LIXIL (5938): FY2025 Results Summary — Core Earnings Up 22.9% to JPY38.5 Billion, Beating the Initial Plan

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Note: LIXIL labels the fiscal year ended March 31, 2026 as “FYE2026” and the year ending March 31, 2027 as “FYE2027”; this article follows the company’s labels in the body and tables, while the site classifies the period as FY2025.

LIXIL Corporation reported revenue of JPY1,510.7 billion for FYE2026 (April 1, 2025 to March 31, 2026), up JPY6.0 billion (+0.4%) year on year, and core earnings of JPY38.5 billion, up JPY7.2 billion (+22.9%), exceeding the initial plan of JPY35 billion. EBITDA was JPY121.6 billion (+JPY7.1 billion) and profit attributable to owners of the parent was JPY8.1 billion (+JPY6.1 billion). All segments achieved year-on-year growth in core earnings, driven by strong renovation sales in Japan and a shift to value-added products in Europe and IMEA, despite a decline of over 10% in new housing demand in Japan. For FYE2027, the company forecasts revenue of JPY1,600.0 billion, core earnings of JPY45.0 billion, profit attributable to owners of the parent of JPY12.0 billion, and an annual dividend of JPY90 per share.

Consolidated Results (Full-Year Actual)

Gross profit rose JPY17.0 billion (+3.4%) to JPY515.2 billion and the gross profit margin improved 1.0pp to 34.1%. SG&A expenses increased JPY9.9 billion (+2.1%) to JPY476.7 billion (Japan JPY7.2 billion increase, International JPY2.3 billion decrease, forex effect JPY5.1 billion increase), due mainly to higher personnel costs in Japan and an increase in SG&A expenses for international businesses as a result of foreign exchange impacts; the SG&A ratio increased 0.5pp. The core earnings margin improved 0.5pp to 2.5%. Profit attributable to owners of the parent increased JPY6.1 billion year on year due to higher core earnings and lower corporate income tax expenses, despite increases in other expenses and finance costs. Against the initial FYE2026 plan, core earnings exceeded the plan by JPY3.5 billion, but other income and expenses (-JPY10.1 billion versus a planned -JPY5 billion) and finance costs (-JPY12.7 billion versus -JPY9 billion) were worse than planned, reflecting additional restructuring costs in the U.S., impairment losses on fixed assets in China and on IT systems, and foreign exchange losses. Tax expenses were JPY6.1 billion lower than planned due to a change in the corporate tax rate at a consolidated subsidiary, so profit attributable to owners of the parent (JPY8.1 billion) was in line with the planned JPY8 billion. The equity ratio was 35.3% as of March 31, 2026, and free cash flow remained positive although operating cash flow declined due to higher accounts receivable and inventories.

Item (JPY billion)	FYE2025	FYE2026	Increase/decrease (YoY)	%
Revenue	1,504.7	1,510.7	+6.0	+0.4%
Gross Profit	498.1	515.2	+17.0	+3.4%
Gross profit margin	33.1%	34.1%	+1.0pp	–
SG&A	466.8	476.7	+9.9	+2.1%
Core Earnings (CE)	31.3	38.5	+7.2	+22.9%
CE margin	2.1%	2.5%	+0.5pp	–
Profit for the year including discontinued operations (attributable to owners of the parent)	2.0	8.1	+6.1	+306.9%
EPS (JPY)	6.97	28.33	+21.36	+306.5%
EBITDA	114.5	121.6	+7.1	+6.2%
EBITDA margin	7.6%	8.0%	+0.4pp	–

Item (JPY billion)	FYE2026 Initial Plan	FYE2026 Actual	Difference
Core Earnings	35	38.5	+3.5
Other Income and Expenses	-5	-10.1	-5.1
Operating profit	30	28.4	-1.6
Finance Income and Costs	-9	-12.7	-3.7
Profit before Tax	21	15.7	-5.3
Tax Expenses	-13	-6.9	+6.1
Net Profit	8	8.8	+0.8
Profit (attributable to owners of the parent)	8	8.1	+0.1

Segment Results

Effective from Q1 FYE2026, LIXIL established a new “Living Business” segment by integrating the kitchen and vanity business from Water Technology (LWT) and the wooden interior materials business from Housing Technology (LHT), and changed its international disclosure regions to Americas, Europe, IMEA (India, Middle East & Africa), Asia Pacific, and China. LWT revenue rose JPY6.2 billion to JPY811.1 billion and core earnings rose JPY8.6 billion to JPY45.4 billion: in Japan, core earnings increased on higher renovation sales and price optimization, while international core earnings increased on profitable growth in Europe and IMEA and a favorable product mix from strong sales of color products; international revenue was flat due to continued soft demand in the U.S. and China and the previous year’s divestment of the U.S. bathing business. LHT revenue declined JPY1.5 billion to JPY525.7 billion as strong renovation sales offset lower sales for new housing, while core earnings rose JPY0.7 billion to JPY26.7 billion on strong remodeling sales, price optimization, and inventory valuation gains; the building business recorded revenue of JPY97.8 billion and core earnings of JPY9.7 billion (CE margin 9.9%). Living revenue rose JPY2.1 billion to JPY207.6 billion and core earnings rose JPY0.6 billion to JPY7.8 billion on strong renovation sales. The forex translation effect for the full year was +JPY15.1 billion on revenue and +JPY1.5 billion on core earnings.

Segment	Metric (JPY billion)	FYE2025	FYE2026	Increase/decrease (YoY)
LWT	Revenue	804.9	811.1	+6.2
LWT	CE	36.9	45.4	+8.6
LHT	Revenue	527.1	525.7	-1.5
LHT	CE	26.0	26.7	+0.7
Living	Revenue	205.5	207.6	+2.1
Living	CE	7.2	7.8	+0.6
Consolidation, Adj. & Other	Revenue	-32.8	-33.6	-0.8
Consolidation, Adj. & Other	CE	-38.8	-41.5	-2.7
LIXIL	Revenue	1,504.7	1,510.7	+6.0
LIXIL	CE	31.3	38.5	+7.2

In the international Water Technology business (statutory basis), revenue was JPY492.5 billion (0% YoY) and core earnings were JPY21.8 billion (+31%), with a CE margin of 4.4%. By region (management basis), Europe revenue was JPY176.6 billion (+4%) with core earnings of JPY21.5 billion (+15%), IMEA revenue was JPY72.1 billion (+15%) with core earnings of JPY5.0 billion (+339%), Asia Pacific revenue was JPY44.4 billion (0%) with core earnings of JPY2.0 billion (+11%), the Americas recorded revenue of JPY150.4 billion (-4%) and core earnings of -JPY7.5 billion, and China recorded revenue of JPY37.5 billion (-10%) and core earnings of -JPY0.3 billion. The company states that the Americas business turned profitable in core earnings in the month of March, reflecting the benefits of structural reforms, and that the international core earnings distribution ratio in LWT was 48.0%, up 2.9pp year on year. Among major subsidiaries, Grohe Group revenue was EUR1,660 million (+4%) with core earnings of EUR185 million (+23%), while ASB (ASD Holdings) revenue was USD979 million (-13%) with core earnings of -USD55 million.

Region (management basis)	FYE2026 Revenue (JPY billion, YoY)	FYE2026 CE (JPY billion, YoY)	CE Margin	FYE2027 Revenue Forecast (JPY billion, YoY)
Americas	150.4 (-4%)	-7.5 (-)	–	170.0 (+13%)
Europe	176.6 (+4%)	21.5 (+15%)	12%	190.0 (+8%)
IMEA (India, Middle East, Africa)	72.1 (+15%)	5.0 (+339%)	7%	81.0 (+12%)
Asia Pacific	44.4 (0%)	2.0 (+11%)	5%	50.0 (+13%)
China	37.5 (-10%)	-0.3 (-)	–	39.0 (+4%)
Adjustments	11.4	1.1	–	20.0
Water Technology International Business Total (statutory basis)	492.5 (0%)	21.8 (+31%)	4.4%	550.0 (+12%)

FYE2027 Forecast

For FYE2027, LIXIL forecasts revenue of JPY1,600.0 billion (+JPY89.3 billion, +5.9%), core earnings of JPY45.0 billion (+JPY6.5 billion, +16.9%), operating profit of JPY37.5 billion, profit before tax of JPY25.0 billion, and net profit attributable to owners of the parent of JPY12.0 billion (+JPY3.9 billion). EPS is forecast at JPY41.75, ROE at 1.8%, ROIC at 2.0%, EBITDA at JPY126.4 billion, and net debt/EBITDA at 4.3x. By segment, the company forecasts LWT revenue of JPY875.0 billion and core earnings of JPY52.0 billion, LHT revenue of JPY537.0 billion and core earnings of JPY29.0 billion, and Living revenue of JPY215.0 billion and core earnings of JPY10.0 billion. The international Water Technology business is forecast to post revenue of JPY550.0 billion (+12%). The impact of the situation in the Middle East is excluded from the annual forecasts as it is difficult to reasonably factor in at this time; the company notes that market prices for crude oil and aluminum ingots are soaring and that it is assessing the cost impact and mitigation measures, including global production optimization and price revisions. Forecast assumptions include FX rates of JPY155.0/USD and JPY186.0/EUR, an aluminum purchasing price of JPY470,000 per tonne (FYE2026: JPY413,000), and Japanese housing starts of 719,000 units (-1%). In Japan, the company expects to offset the decline in new construction demand by promoting renovation sales; in the Americas, the effects of SG&A reductions through structural reforms and restructuring of sales organizations are expected to materialize during the year. Under the medium-term roadmap, the FYE2027 core earnings plan has been revised from the initial JPY65.0 billion to JPY45.0 billion, with a CE margin target of 2.8%; negative factors cited include continued economic deterioration and housing market stagnation in the U.S., delayed recovery in the European housing market, and soaring commodity prices.

Item (JPY billion)	FYE2026 Results	FYE2027 Forecast	Increase/decrease
Revenue	1,510.7	1,600.0	+89.3
Core Earnings (CE)	38.5	45.0	+6.5
Operating Profit (OP)	28.4	37.5	+9.1
Profit before Tax	15.7	25.0	+9.3
Tax expenses	-6.9	-13.0	-6.1
Net profit attributable to non-controlling interests	0.6	0.0	-0.6
Net profit attributable to owners of the parent	8.1	12.0	+3.9
EPS (JPY)	28.33	41.75	+13.42
ROE (%)	1.3	1.8	+0.5pp
ROA (%)	0.4	0.6	+0.2pp
ROIC (%)	1.5	2.0	+0.5pp
EBITDA	121.6	126.4	+4.8
Adj. EBITDA	98.4	103.3	+4.9
Net debt/EBITDA	4.4x	4.3x	-0.1
Dividend (JPY per share)	90	90	–
Dividend to adj. EBITDA ratio	26%	25%	–

Shareholder Returns

LIXIL’s basic policy is to pay stable dividends to shareholders over the long term, to determine the amount of annual dividends based on the medium-term EBITDA level, and to buy back shares when appropriate; the company states this policy remains unchanged. The FYE2026 dividend was JPY90 per share, equivalent to 26% of adjusted EBITDA of JPY98.4 billion. For FYE2027, the dividend forecast is JPY90 per share, unchanged from the previous year, equivalent to 25% of the adjusted EBITDA of JPY103.3 billion forecast for FYE2027. The capital allocation chart shows FYE26 CAPEX of JPY42.8 billion and dividends of JPY25.9 billion. The company plans to continue capital investments including new product development, rationalization, and IT investments to strengthen competitiveness, and to consider improving its financial position based on the business environment, financial condition, and cash flow status.

Item	FYE2026	FYE2027 Forecast
Dividend (JPY per share)	90	90
Dividend to adj. EBITDA ratio	26%	25%
Adj. EBITDA (JPY billion)	98.4	103.3

Medium-Term Plan / Topics

Under its management direction, the LIXIL Playbook, the company’s corporate purpose is “To Make Better Homes a Reality for Everyone, Everywhere,” with strategic initiatives including growing the global water business, optimizing Japan and driving new growth, tackling inflation and supply chain challenges, and divesting non-core businesses. The CE margin improved from 2.1% in FYE2025 to 2.5% in FYE2026, with a FYE2027 plan of 2.8% and a long-term target of 10%; ROIC was 1.5% in FYE2026 (FYE2027 plan: 2.0%, long-term target: 10%). As of March 31, 2026, ROE was 1.3%, PER 57.2x, and PBR 0.7x; the company states that the key to improving ROE lies in enhancing the core earnings margin (by improving profitability of international businesses) and the net profit margin (by optimizing the tax rate and reducing other expenses as structural reforms run their course). In the Americas, additional structural reforms implemented in anticipation of the conclusion of the Transition Service Agreement for the bathing business reduced headcount 10% year on year, and the business turned profitable in March. Japan renovation-related product sales rose JPY20.0 billion (+5.3%) to JPY397.6 billion, lifting the renovation sales ratio by 1.9pp to 47%. On ESG topics, LIXIL reached a cumulative 103 million people with improved sanitation and hygiene, achieving its 2025 Impact Strategy target, and set a new goal to improve sanitation and hygiene for an additional 100 million people by the fiscal year ending March 2031; the company also received the Circular Economy Award at the 7th ESG Finance Awards Japan for its aluminum recycling initiatives, including the PremiAL series of circular low-carbon aluminum that reduces CO2 emissions by 50% compared to primary aluminum ingots.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.