DUSKIN CO.,LTD. Q2 FY2026 earnings call

Core Financial Performance Overview

• All three segments delivered YoY revenue growth, with overall consolidated revenue rising. Consolidated operating profit grew 19.5% YoY (an increase of 0.8 billion yen YoY), beating consensus forecasts, driven by strong results from the Food Group. Extraordinary gains from increased equity method investment income also lifted net profit.
• Total consolidated assets decreased 2.128 billion yen from the end of the prior fiscal period, while consolidated net assets increased 2.131 billion yen, driven by changes in securities holdings.

Mid-Century Management Policy 2028 Strategic Priorities

• The policy's Phase 1 focuses on three core priorities: "Newization" for new business development, "Evolution" for expanding adjacent businesses, and "Deepening" for strengthening existing businesses, alongside ongoing work to improve the corporate management foundation. The goal is to deliver on the company's purpose of creating a safe, joyful, and prosperous future for people and society.

Newization: New Business Initiatives

• In July 2025, Duskin entered into a capital and business alliance with Nosh Inc., operator of the frozen meal delivery service Nosh. The partnership combines Duskin's strengths in physical customer touchpoints (especially among senior customer bases) with Nosh's strengths in digital-first customer acquisition among younger demographics to expand overall customer reach. Joint projects have been launched to explore new value creation.

Evolution: Adjacent Business Expansion (Door-to-Door Group)

• The group is expanding from its core three existing domains (hygiene, work-life support, senior support) into the new house maintenance domain, to deliver greater convenience and safer living environments for customers. New services in development include emergency troubleshooting, vacant property management, restoration, and housing equipment replacement. This builds on existing partnerships with Classian Corporation (emergency response) and JP Holdings (childcare support) to build a one-stop home support offering.
• Locally, the franchise recruitment for Duskin Rescue (key replacement/repair) has launched in select regions, with service launch imminent, and demand for key replacement (driven by relocations and higher security awareness) is already stronger than expected demand for emergency lockout service. Test operations for water heater replacement and maintenance are already underway, leveraging Duskin's existing 4 million regular household customer base from its core mop rental business.

Deepening: Existing Business Strengthening

• For the Door-to-Door Group, Rentall has expanded an integrated disaster prevention support service that combines rental of evacuation center equipment (beds, partitions) with on-site hygiene management. The service already has contracts with 97 local governments across Japan. A new disaster mitigation training package is now in development, in partnership with Disaster Mitigation Solutions Co., Ltd., to deliver community-led co-rescue training that complements public emergency response, leveraging the company's local franchise network to improve community safety.
• For the Food Group, franchise expansion is underway for two existing sub-brands: the cutlet restaurant Katsu & Katsu and the Italian restaurant chain Napoli no Shokutaku, with new franchise packages under development to target new locations and customer segments. For core Mister Donut, the 55th anniversary promotional campaign (led by the hit limited-edition product Mocchurin) drove strong demand, with follow-up campaigns (a renewed legacy product and special anniversary lucky bag) planned. The business is also prioritizing expansion of small-format kitchenless stores supplied by central kitchens to enter currently underserved commercial areas.

Management Foundation Strengthening

• A talent management system is being rolled out to optimize personnel placement and development, leveraging DiSC personality assessment to better understand employee characteristics and improve internal communication. A proof-of-concept program has been launched to accelerate the adoption of new digital technologies and DX initiatives. Off-site board meetings with external directors are now held to facilitate open strategy discussion and update the company's succession plan.

1. Hanhangai (Door-to-Door Sales) Group: Revenue of 55.609 billion yen, +3.5% YoY, 57.4% of total consolidated revenue; operating profit of 2.572 billion yen, -16.3% YoY. The segment missed profit forecasts by 22% due to front-loaded cost recognition for a new product. 2. Food Group: Revenue of 32.42 billion yen, +4% YoY, 33.5% of total consolidated revenue; operating profit of 5.229 billion yen, +39.3% YoY. The segment beat forecasts by 16.2% driven by price adjustments and strong product demand. 3. Other Segments: Revenue of 8.42 billion yen, +2.2% YoY, 9.1% of total consolidated revenue; operating profit of 0.368 billion yen, +17.6% YoY. The segment missed forecasts by 7.9% due to weakness in overseas operations.

• Full-year consolidated and individual earnings guidance for the 2026 March fiscal year remains unchanged from the May 2025 announcement. Only segment-level forecasts have been revised to reflect first half performance.
• The Door-to-Door Group full-year revenue and operating profit forecasts are revised downward, as front-loaded cost recognition for the new Case-equipped Mop Cleaner is expected to continue outperforming initial shipment forecasts in the second half. Management notes that this front-loading will support incremental profit recognition in future periods as rental revenue is collected over time.
• The Food Group full-year revenue and operating profit forecasts are revised upward, to reflect stronger-than-expected first half performance that is expected to continue through the second half.
• Full-year company-wide overhead forecasts are revised upward due to lower-than-expected DX-related expense utilization in the first half.
• The dividend forecast remains unchanged: full-year dividend per share is 115 yen (up 3 yen from the prior fiscal year), for a total expected dividend payout of 5.4 billion yen. The updated dividend policy targets the higher of 60% payout ratio or 3% return on equity.

• Higher raw material costs could require future price adjustments in the Food Group, though management intends to avoid abrupt large-scale price changes.
• The new Case-equipped Mop Cleaner's front-loaded accounting structure creates near-term pressure on Door-to-Door Group profitability, even with long-term profit upside.
• Unfinished RFID tag installation for rental products continues to create minor operational inefficiencies, though workarounds have reduced major disruptions.
• The JP Holdings collaboration in the childcare space is still in early testing, with no concrete commercial results yet achieved 2 years after the initial investment.
• Weakness in overseas operations (specifically Duskin Shanghai, following a large client cancellation) creates downward pressure on the Other segment's profitability.

Q: What is the current progress of the collaboration with JP Holdings, two years after Duskin's 9 billion yen investment? No public tangible results have been seen to date, especially for this new childcare support field. / A: Practical working-level projects have been launched to test two core initiatives. First, JP Holdings' parent-focused website is being used to test sales of Duskin products, with multiple outreach approaches being tested for effectiveness. Second, hygiene management services for nursery schools are being tested for scalability, which the company believes can improve facility productivity and hygiene outcomes. The company is also testing broader support offerings for households with children, and is prioritizing safety, moving cautiously before committing to full commercialization.

Q: One and a half years after the completion of initial RFID installation for rental products, has the issue of remaining untagged products been resolved, and what operational efficiency gains have been seen? / A: Untagged products are still returned occasionally, but new processes to detect untagged items after counting have been implemented, so this no longer creates major operational disruptions. Additional system development is ongoing to further improve detection. While full 100% tagging has not yet been achieved, substantial progress has been made. Where tags are deployed, RFID allows counting of ~100 mats in just 2-3 seconds, a major efficiency improvement over manual counting.

Q: What is Duskin's price adjustment policy for the Food Group? With three consecutive years of record profit driven by two recent rounds of price hikes, do you need to keep raising prices, or are you doing preemptive hikes for future risk? Is it automatic to hike when raw material costs rise? / A: Duskin does not do preemptive price hikes for future risk; all price adjustments are directly tied to current raw material cost increases. When adjusting prices, the company conducts thorough market research to only adjust prices within a range that does not hurt customer demand, referencing broader consumer price trends across other retail products. Price increases for seasonal and co-developed products are tied to added value for customers, and the company aligns price reviews with these product changes. If raw material costs rise further in the future, the company will conduct additional reviews, but will avoid abrupt large price changes as much as possible.