POLA ORBIS HOLDINGS: H1 FY2026 Earnings Deep Dive Report

This report provides an analysis and commentary on the H1 FY2026 (Interim) financial results for POLA ORBIS HOLDINGS INC., covering key performance highlights, segment-specific trends, and strategic growth initiatives.

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1. Consolidated Financial Overview: Revenue Growth and Significant Operating Profit Surge

For the first half of the fiscal year ending December 2026, the group achieved year-on-year growth in consolidated net sales and a double-digit increase in operating profit.

• Net Sales : ¥84,349 million (+1.3% YoY, an increase of ¥1,096 million)
• Operating Profit : ¥9,954 million (+21.1% YoY, an increase of ¥1,737 million)
• Ordinary Profit : ¥12,135 million (+93.2% YoY, an increase of ¥5,852 million)
• Profit Attributable to Owners of Parent : ¥6,539 million (+40.8% YoY, an increase of ¥1,895 million)

On a consolidated basis, while the flagship POLA brand saw a decline in revenue, strong growth from ORBIS and the positive impact of foreign exchange (weak yen) boosted total sales. Profitability was significantly bolstered by ORBIS's profit growth and the improved earnings of the overseas brand, Jurlique.

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2. Analysis of Profit Structure: SG&A Control and Margin Improvement

The following section examines the changes in the cost structure and the background of margin improvement based on the interim Profit and Loss (P&L) statement.

As shown in the slide above, although the cost of sales ratio rose by 0.5 percentage points from 18.3% in the previous year to 18.8% , gross profit remained solid at ¥68,518 million (+0.7% YoY). Meanwhile, Selling, General and Administrative (SG&A) expenses decreased by ¥1,262 million (△2.1%) year-on-year to ¥58,564 million . The primary breakdowns are as follows:

• Personnel expenses: △¥128 million
• Sales commissions: △¥666 million
• Sales-related expenses: △¥250 million
• Administrative and other expenses: △¥216 million

Driven by enhanced cost efficiency, the operating profit margin improved by 1.9 percentage points, from 9.9% in the previous year to 11.8% .

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3. Non-Operating Income/Loss, Extraordinary Items, and Net Profit Trends

Regarding non-operating income/loss, the company recorded a foreign exchange gain of ¥1,960 million (compared to a loss of ¥2,061 million in the same period last year) due to currency fluctuations, which contributed to the doubling of ordinary profit to ¥12,135 million .

Extraordinary losses were recorded in relation to structural reform costs:

• Expenses related to the implementation of the voluntary retirement program at POLA Inc. : ¥1,605 million
• Jurlique structural reform costs : ¥477 million
• Total extraordinary losses : ¥2,241 million (+¥1,719 million YoY)

Despite the impact of structural reform costs and the absence of the previous year's tax benefit, the growth in operating profit and non-operating foreign exchange gains led to an interim net profit of ¥6,539 million , a +40.8% increase year-on-year.

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4. Segment Performance: Contribution of the Beauty Care Business

The group's overall performance is driven by the core Beauty Care business .

• Beauty Care Business : Net sales of ¥81,270 million (+1.3% YoY), operating profit of ¥9,949 million (+23.4% YoY)
• Real Estate Business : Net sales of ¥1,558 million (+4.7% YoY), operating profit of ¥425 million (△1.4% YoY)
• Others : Net sales of ¥1,520 million (△2.8% YoY), operating profit of ¥103 million (+48.0% YoY)

The Beauty Care business remains the core of growth in both sales and profit, while the Real Estate and other businesses (such as building maintenance) continue to contribute as a stable earnings base.

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5. Overview of Brand Performance

A comparison of brand performance within the Beauty Care segment highlights shifts in the group's growth drivers.

The slide above details the sales and operating profit for each brand.

• POLA Brand : Net sales of ¥43,592 million (△2.0%), operating profit of ¥5,574 million ( +7.1% )
• ORBIS Brand : Net sales of ¥26,163 million ( +5.6% ), operating profit of ¥5,214 million ( +24.3% )
• Jurlique Brand : Net sales of ¥3,887 million ( +5.1% ), operating profit of △¥451 million (loss narrowed by ¥475 million )
• Incubating Brands (DECENCIA, THREE, etc.) : Net sales of ¥7,627 million ( +5.6% ), operating profit of △¥388 million (profitability improved by ¥16 million )

It is evident that the significant profit growth of ORBIS and the improved earnings of Jurlique strongly supported the group's overall profit growth.

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6. POLA Brand: Domestic Channel Adjustments and Overseas Recovery

Key topics for the core POLA brand are as follows:

1. Domestic Channel Status :

   • Salon Channel : Net sales decreased by △5.8% YoY. However, excluding the impact of measures to curb secondary distribution, the underlying decline rate has improved, and high-growth stores remain strong.
   • Department Store Channel : Sales declined by △8.5% YoY, primarily due to a decrease in inbound tourism sales.
   • EC Channel / Hotel Amenities : EC grew by +7.4% and hotel amenities by +6.3% .
   • Domestic Purchase Unit Price : Increased by +2.8% YoY, driven by successful cross-selling centered on the premium "B.A" series.

2. Overseas Business Status :

   • Overseas sales increased by +10.6% YoY (accounting for 16.6% of total sales).
   • The business is undergoing restructuring in China, with existing stores and EC channels driving growth.

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7. ORBIS Brand: Premiumization and Expansion of External Channels

The strong performance of the high-growth ORBIS brand is attributed to the following factors:

• Direct Sales Channel (Own E-commerce/Direct Stores) : Net sales increased by +1.3% YoY. Due to increased sales of high-function, high-price products (such as cleansing oil), the average customer unit price for direct sales rose by +2.8% .
• External Channels (Third-party E-commerce/Wholesale, etc.) : Recorded significant growth of +32.4% YoY, driven by expanded customer touchpoints and increased awareness of popular products.
• Profitability : As a result of efficient marketing investments focused on cost-effectiveness, the operating profit margin rose from 16.9% in the previous year to 19.9% .

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8. Structural Reform and Progress of Overseas and Incubating Brands

• Jurlique :

  • Following store consolidation, local sales in AUD terms declined, but sales in JPY terms reached ¥3,887 million (+5.1%).
  • Through continuous structural reform and cost control, the operating loss significantly improved from ¥926 million in the previous year to △¥451 million .

• Incubating Brands (DECENCIA / THREE / Others) :

  • DECENCIA : Net sales of ¥2,787 million (±0.0%), operating profit of ¥325 million (+0.6%). The new whitening series contributed steadily.
  • THREE : Net sales of ¥2,300 million (+2.7%), operating profit of △¥484 million (loss expanded from △¥307 million in the previous year). The brand aims to capture the domestic holistic care market through initiatives like the renewal of its flagship cleansing oil.
  • New Businesses : The heat-stroke prevention AI camera "Kaokara" and medical cosmetic line "Dive" are growing steadily and beginning to contribute to earnings.

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9. Strategic Initiatives for the Second Half

Each brand has planned initiatives to expand its customer base and improve Lifetime Value (LTV).

• POLA : Strengthening proposals for the premium "B.A" line and introducing new salon esthetic menus linked to new products (e.g., B.A Eye Zone Cream) scheduled for September-October. Promoting cross-selling centered on "B.A" in the Chinese market.
• ORBIS : Promoting cross-selling of skincare and base makeup products to customers acquired through cleansing oil, expanding the product lineup in external channels, and strengthening initiatives for active seniors aged 60 and over.
• Jurlique : Thorough reduction of fixed costs through structural reform and the renewal of the star "Rose" series (September).
• THREE / DECENCIA : Full renewal of the core skincare series for THREE (September) and the launch of an eye cream for sensitive skin for DECENCIA (October).

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10. Full-Year FY2026 Earnings Forecast and Shareholder Returns

There are no changes to the full-year earnings plan, and the initial projections remain in place.

As shown in the slide above, the full-year plan figures are as follows:

• Net Sales : ¥173,000 million (+1.6% YoY)
• Operating Profit : ¥17,300 million (+10.2% YoY)
• Ordinary Profit : ¥17,300 million (+1.6% YoY)
• Profit Attributable to Owners of Parent : ¥9,000 million (△5.0% YoY)

The progress rate of operating profit at the interim stage has reached 57.5% , indicating a generally steady pace.

Shareholder Return Policy

• Annual Dividend Forecast : Maintained at ¥52 per share (Interim: ¥21 , Year-end: ¥31 ).
• Forecasted Consolidated Payout Ratio : 127.8% .
• The basic policy is to maintain a consolidated payout ratio of 60% or higher , while promoting the reorganization and optimization of unprofitable businesses to improve capital efficiency (targeting an ROE of 14% or higher under the long-term management plan "VISION 2029").