Consolidated Financial Results
for the Fiscal Year Ended December 31, 2023 (Japanese GAAP)
February 13, 2024
Company name:
Stock code: 4985

Earth Corporation

Representative:

Katsunori Kawabata, President and Representative Director, Chairman of the Board of Directors of each groupcompany
Tsuyoshi Mitsuzuka, Senior Executive Officer, Director General, Group Management Headquarters+81-3-5207-7458

Contact:
Tel:

Listing Stock Exchange: Tokyo
URL: https://corp.earth.jp/en/index.html

Ordinary annual general meeting of shareholders:
Scheduled date for dividend payment:
Scheduled date to file securities report:
Preparation of supplemental explanatory materials:
Results briefing to be held:

March 22, 2024
March 8, 2024
March 25, 2024
Yes
Yes (For securities analysts and institutional investors)(Amounts of less than one million yen are rounded down.)

1.

Consolidated Financial Results for the Fiscal Year Ended December 31, 2023
(January 1, 2023 to December 31, 2023)(1) Consolidated operating results
Sales
Million yen

Operating income%

Million yen(Percentages indicate YoY change)
Net income attributable
Ordinary income
to owners of parent
Million yen% Million yen%%
Fiscal year ended
158,3443.9
6,370(14.3)
6,791(16.5)
4,102(22.6)
December 31, 2023
Fiscal year ended
152,339
7,434
8,133
5,303
－
－
－
－
December 31, 2022
Note: Comprehensive income for the fiscal year ended December 31, 2023 was 6,531 million yen (1.1%), and comprehensive income
for the fiscal year ended December 31, 2022 was 6,457 million yen (－%).
Ratio of net
Ratio of ordinary
Net income per Diluted net income
Operating income
income to equity
income to total
share
per sharemargincapitalassets
Yen
Yen
%
%
%
Fiscal year ended
185.57
6.3
5.3
4.0
－
December 31, 2023
Fiscal year ended
240.47
8.6
6.6
4.9
－
December 31, 2022
Reference: Equity in
Fiscal year ended-326 million yen
Fiscal year ended－million yen
earnings of affiliates
December 31, 2023
December 31, 2022
Note: The Company adopted the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan, Statement No.
29) from the beginning of the fiscal year ended December 31, 2022. Figures for the fiscal year ended December 31, 2022 arebased on the new accounting standard, and no year-on-year comparatives have been provided.
(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Million yen
Million yen
Million yen%
Fiscal year ended
132,407
72,00050.3
3,007.52
December 31, 2023
Fiscal year ended
124,489
68,01850.4
2,846.07
December 31, 2022
Reference: Equity capital amounted to 66,546 million yen as of December 31, 2023 and 62,794 million as of December 31, 2022.

(3) Consolidated cash flows

Million yen

Million yen

Million yen

Cash and cash
equivalents at end of
periodMillion yen

7,524(10,135)

4,893

17,505

3,901(6,266)(4,464)

14,772

Cash flows fromoperating activities
Fiscal year ended
December 31, 2023
Fiscal year ended
December 31, 2022

2.

Cash flows frominvesting activities

Dividends
Dividend per share
End of Q1 End of Q2 End of Q3 Year-end
Fiscal year ended
December 31, 2022
Fiscal year ended
December 31, 2023
Fiscal year ending
December 31, 2024
(forecast)3.

Cash flows fromfinancing activities

Ratio of
Total
Payout ratio dividends todividends (consolidated)
net assets
Total(consolidated)
Million
%
%
Yen
yen

Yen

Yen

Yen

Yen

－

0.00

－

118.00118.00

2,603

49.1

4.2

－

0.00

－

118.00118.00

2,610

63.6

4.0

－

0.00

－

118.00118.00145.9

Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2024
(January 1, 2024 to December 31, 2024)

Sales
Million yen(Percentages indicate rates of YoY change)
Net income
Net income
Operating income
Ordinary income attributable to owners
per shareof parent% Million yen% Million yen% Million yen%
Yen

Six months ending
June 30, 2024

94,7004.8

7,900(20.4)

8,200(21.3)

5,450(22.6)

246.31

Full-year

165,000

4.2

3,000

(52.9)

3,560(47.6)

1,790(56.4)

80.90

*Notes(1) Changes in significant subsidiaries during the period under review:
None(Transfers of specified subsidiaries associated with changes in the Company’s scope of consolidation)
Newly subsidiaries added:
None
Subsidiaries excluded:
None(2) Changes in accounting policies and accounting estimates and retrospective restatements
1. Accounting policy changes due to accounting standard revisions, etc.:Yes
2. Other accounting policy changes:
None
3. Changes in accounting estimates:
None
4. Retrospective restatements:
None(3) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury stock)

As of December
31, 2023

22,141,100

As of December
31, 2022

22,077,500

2. Treasury shares outstanding

As of December
31, 2023

14,296

As of December
31, 2022

13,782

3. Average number of shares
outstanding

Fiscal year ended
December 31, 2023

22,107,916

Fiscal year ended
December 31, 2022

22,055,509*Summaries of financial statements are not subject to audit through certified public accountants or auditing corporations.
*Appropriate use of earnings forecast and other special notes
The earnings forecasts and other forward-looking statements contained in this document are based on information currently available
to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve.
Actual results may vary materially from forecasts due to a variety of factors. For more information regarding assumptions made when
formulating earnings projections and matters to note when using these projections, please see “1. Overview of Business Results, (4)Future outlook” on page 6 of the accompanying materials.
(Method of obtaining earnings briefing materials and briefing details)
The Company plans to hold an earnings briefing session on Wednesday, February 14, 2024, for institutional investors and analysts. We
will upload earnings briefing materials to be used during the briefing session to the TDnet and our official website on Wednesday,
February 14. Further, we will promptly post the details of the briefing session on our website after it is held.

Accompanying Materials ― Contents

1. Overview of Business Results, etc. .................................................................................................................................................... 2(1) Overview of business results for the fiscal year under review ......................................................................................................... 2(2) Overview of financial position for the fiscal year under review ....................................................................................................... 5(3) Overview of cash flows for the fiscal year under review ................................................................................................................. 5(4) Future outlook .................................................................................................................................................................................. 6(5) Basic Policy concerning the Allocation of Profits and Dividends for for the Current and Next Periods .......................................... 7
2. Basic Views on Selection of Accounting Standards ........................................................................................................................... 8
3. Consolidated Financial Statements and Primary Notes ...................................................................................................................... 9(1) Consolidated Balance Sheet ............................................................................................................................................................. 9(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income......................................................... 11
Consolidated Statement of Income .................................................................................................................................................. 11
Consolidated Statement of Comprehensive Income......................................................................................................................... 13(3) Consolidated Statement of Changes in Equity ............................................................................................................................... 14(4) Consolidated Statement of Cash Flows .......................................................................................................................................... 17(5) Notes to Consolidated Financial Statements .................................................................................................................................. 19(Notes to going concern assumptions) ............................................................................................................................................. 19(Changes to accounting policies) ..................................................................................................................................................... 19(Segment information, etc.) ............................................................................................................................................................. 19(Per share information) .................................................................................................................................................................... 24(Significant subsequent events) ....................................................................................................................................................... 24(6) Other .............................................................................................................................................................................................. 24―1―

1. Overview of Business Results, etc.
(1) Overview of business results for the fiscal year under review
In the fiscal year ended December 31, 2023, the Japanese economy saw social and economic activities returning to normal against
a backdrop of the easing of travel and activity restrictions following the downgrading of COVID-19 to a Class 5 infectious disease
and an increase in inbound demand propelled by the lifting of border restrictions. The outlook, however, remains clouded due torapid changes in the foreign exchange rate, soaring resource prices driven by heightening geopolitical risks, and cooling consumer
sentiment due to rising prices.
Looking at Asia, the key region for the Earth Group’s overseas operations, economic recovery slowed in China despite thescrapping of the country’s stringent zero-COVID policy, due to a stagnation in the local real estate market. In ASEAN, although
there were concerns over an economic slowdown due to the impact of economic conditions in Europe, America, and China,
performance in the region overall held firm, albeit some variations between countries, backed by robust domestic demand.
Under these economic conditions, with the corporate philosophy of “We act to live in harmony with the Earth,” in February 2021
the Group announced the medium-term management plan dubbed Act for SMILE–COMPASS 2023– for the three year period
through the fiscal year ended December 31, 2023. We pushed forward with business management under the four fundamental
policies of “corporate compass & infrastructure reform,” “expansion of profit foundation in Asia,” “ESG/open innovation,” and“generation of cost synergies” set forth in the medium-term plan, but due to drastic changes in the external environment, we had torevise the plan’s numerical targets. That being said, measures we implemented under the abovementioned policies began to bear
fruit, and without revising the direction or strategies initially set forth in the plan, we diligently worked on these measures in the
final year of the plan as well.
In the fiscal year ended December 31, 2023, sales amounted to 158,344 million yen (+3.9% year-on-year). Sales of bath salts andmasks declined in the Household Products Business due to changing market conditions, and sales were sluggish in China. However,in Japan, owing to higher-than-usual temperatures year around, sales of household insecticides and repellents grew and productreturns decreased. Further, sales grew in ASEAN as did sales in the General Environment and Sanitation Business, the latter driven
by an increase in the number of annual contracts on increased demand for sanitation management services. Profits were affected bya year-on-year increase in the cost of sales caused by the surge in raw material prices, foreign exchange rate fluctuations, andchanges in the sales mix, as well as higher SG&A expenses. As a result, operating income for the year came to 6,370 million yen (14.3% year-on-year), ordinary income to 6,791 million yen (-16.5% year-on-year), and net income attributable to owners of parent
to 4,102 million yen (-22.6% year-on-year).
Results by segment are as follows.
[Household Products Business]
In the Household Products Business, the Company improved product value by updating exiting products, launched high-valueadded products, and caried out effective promotions using social media. Further, the Company strove to improve profitability byrevising selling prices to better reflect soaring raw material prices and by reducing product and sales costs. Overseas, the Company
actively and effectively invested its management resources, mainly in the ASEAN region, including in Thailand and Vietnam, androlled out initiatives to expand the scale of its operations.
In the fiscal year ended December 31, 2023, sales amounted to 139,007 million yen (+1.8% year-on-year). Sales of household
insecticides and repellents increased backed by the emerging effects of price revisions and an extended demand period on lingeringsummer heat, and sales of pet products and others also grew thanks to strong sales of premium pet foods. Meanwhile, sales of bathsalts and masks declined year-on-year due to changes in the market environment. On the profit front, segment income (operating
income) came to 4,420 million yen (-25.2% year-on-year), due to a year-on-year increase in the cost of sales ratio attributed tosoaring raw material prices, foreign exchange rate fluctuations, and product mix changes. Also behind the decline in segment income
were increases in logistics costs and personnel expenses, the increase in the latter resulting from personnel investment.

―2―

(Household Products segment results)(Millions of yen)

Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

YoY change(amount)

YoY change(percent)

Household insecticides and repellents

59,36862,031

2,663

4.5%

Household products

68,27567,199(1,075)(1.6%)

Oral hygiene products

8,191

8,364

172

2.1%

Bath salts

26,946

26,041(905)(3.4%)

Other household products

33,13732,793(343)(1.0%)Pet products and others
Total sales

8,843

9,776

933

10.6%

136,486

139,007

2,521

1.8%

Segment income (operating income)
5,909
4,420
(1,488)(25.2%)
Notes: Sales include internal sales and transfers made within and between segments, which amounted to 11,957 million yen
during the fiscal year ended December 31, 2022 and 9,577 million yen during the fiscal year ended December 31, 2023.
Results by product category are as follows.
Household insecticides and repellents
In Japan, the demand period for household insecticides and repellents was extended over the latter half of the usual sales season
due to prolonged summer heat waves that lasted longer compared with the previous year. Under such conditions, in addition tomeasures to curb product returns the Group has been working on as a management priority, the favorable weather conditions
helped reduce the total amount of product returns, which in turn contributed to earnings improvements. Sales were also buoyed
by increased sales of the mainstay products for cockroaches and other insect pests, and the launch of MAMO ROOM for
Cockroaches in the MAMO ROOM brand, which helped uncover new demand for the fall and winter season. Market share
increased to 56.9% (Company estimate, +0.6 points versus 2022), as the effects of price revisions began to materialize.
Overseas, sales were sluggish in China due to a slowing economic recovery, but sales continued to grow mainly in Thailand
and Vietnam.
As a result of the above, sales in this category totaled 62,031 million yen (+4.5% year-on-year).
Household products
In oral hygiene products, sales of Mondahmin Peppermint and other general-use products decreased year-on-year due tointensifying market competition caused by changes in consumer needs. Meanwhile, sales of the all-in-one mouthwash
Mondahmin Premium Care increased, and sales of Mondahmin Habit Pro mouthwash sold exclusively through dental clinics
also grew on the back of the Company’s progress in cultivating partner dental clinics. As a result, overall oral hygiene productsales amounted to 8,364 million yen (+2.1% year-on-year).
For bath salts, while the use of bath salts has become more widespread, the market shrank year-on-year due to consumers’
having greater opportunities to go out with the downgrading of COVID-19 to a Class 5 infectious disease and the impact of theweather, namely the summer heat waves and warmer winter temperatures. In line with such market trends, the Group’s
performance lagged, with bath salts sales amounting to 26,041 million yen (-3.4% year-on-year).
In other household products, sales of refrigerants and coolants grew as countermeasures for heat stroke during the summer.
Sales of the Sukki-ri! series of deodorizing air fresheners and Raku Hapi series of cleaning products also contributed, but salesof masks for household use and insect repellents for clothing fell year-on-year, resulting in other household products sales of
32,793 million yen (-1.0% year-on-year).
As a result of the above, sales in this category totaled 67,199 million yen (-1.6% year-on-year).
Pet products and others
In pet products, while the pandemic pet boom showed signs of winding down, the pet products market continued holding firm―3―

backed by heightened awareness for pet health among pet owners. Against this backdrop, sales of pet care products such as
premium food and cat litter increased, leading to sales in this category amounting to 9,776 million yen (+10.6% year-on-year).
[General Environment and Sanitation Business]
Companies are strengthening in-house hygiene management, prompted by the revisions of relevant laws and regulations in Japanand the trend toward the international harmonization of safety standards for food, pharmaceuticals, and healthcare. Against thisbackdrop, demand for the Company’s quality hygiene management services utilizing its specialized knowledge, technology, andexpertise continued holding firm, especially among its core customers—those involved in the operation of food, pharmaceutical,
and package material production facilities. Meanwhile, personnel expenses and material and equipment costs rose at an accelerated
pace due to the protracted Russia-Ukraine war.
Under these circumstances, the Company actively invested in the construction of an internal structure, including for the
installation and development of systems aimed at cultivating human resources and improving operational efficiency, to better
respond to customer needs. At the same time, we stepped up efforts in technology development, including by engaging in industryacademia-government collaborations, to provide sanitary management services that stand apart from competitors’ offerings, and indoing so maintained existing contracts while acquiring new ones and secured an appropriate level of profit. We implemented various
measures targeting the pharmaceutical and regenerative medicine industries in particular, and continued strengthening audit andconsulting operations related to food safety management. Further, we reviewed the prospects for business expansion and new
business development to tackle various environmental issues in a range of fields, including agriculture, with the aim of contributing
to creating an environment that will lead to a more prosperous future.
In the fiscal year ended December 31, 2023, while performance was affected by a higher cost ratio and an increase in personnel
expenses attributed to active investment in human resources, the number of annual contracts grew, boosting overall segment results.
Accordingly, sales in the General Environment and Sanitation Business amounted to 29,073 million yen (+3.9% year-on-year) andthe segment income (operating income) to 1,451 million yen (+1.5% year-on-year).

Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

YoY change(amount)(Millions of yen)
YoY change(percent)

Sales

27,97329,073

1,099

3.9%

Segment income (operating income)

1,430

1,451

20

1.5%

Notes: Sales include internal sales and transfers made within and between segments, which amounted to 163 million yen in thefiscal year ended December 31, 2022 and 158 million yen in the fiscal year ended December 31, 2023.

―4―

(2) Overview of financial position for the fiscal year under review(Consolidated financial position)(Millions of yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

ChangeTotal assets

124,489

132,407

7,917

Liabilities

56,47060,406

3,935

Net assets

68,01872,000

3,982

50.4

50.3

(0.1 points)

2,846.07

3,007.52

161.45Equity ratio (%)
Net assets per share (yen)As of December 31, 2023, total assets amounted to 132,407 million yen, up 7,917 million yen compared to December 31, 2022.
This was mainly due to increases in cash and deposits, accounts receivable–trade, buildings and structures, machinery, equipment
and vehicles, trademark rights, goodwill, other intangible assets, and retirement benefit assets, offsetting decreases in inventories
and construction in progress.
Total liabilities amounted to 60,406 million yen, up 3,935 million yen compared to December 31, 2022. This was mainly
attributed to increases in refund liabilities, borrowings, and income taxes payable, only partially offset by decreases in accounts
payable–trade, electronically recorded obligations, and accounts payable–other.
Net assets rose to 72,000 million yen, up 3,982 million yen compared to December 31, 2022. This growth was chiefly due toincreases in retained earnings, foreign currency translation adjustments, and remeasurement of defined benefit plans.
Consequently, the Company's equity ratio rose to 50.3%, a decrease of 0.1 points compared to December 31, 2022.
Reference: Cash flow-related indicators
Fiscal year
Fiscal year
ended
ended
December 31, December 31,
2019
2020

Fiscal year
Fiscal year
ended
ended
December 31, December 31,
2021
2022

Fiscal year
ended
December 31,
2023

Equity ratio (%)

37.3

46.1

49.7

50.4

50.3

Equity ratio on a fair market value basis (%)

107.4

107.1

111.9

89.7

76.4

Interest-bearing debt to cash flow ratio(annual)

2.1

0.2

0.8

0.6

1.3

105.3

549.6

634.1

285.9

255.4

Interest coverage ratio(3) Overview of cash flows for the fiscal year under review(Consolidated cash flow)(Millions of yen)
Fiscal year ended
December 31, 2022

Fiscal year ended
December 31, 2023

ChangeCash flows from operating activities

3,901

7,524

3,622

Cash flows from investing activities(6,266)(10,135)(3,869)Cash flows from financing activities(4,464)

4,893

9,358

Effect of exchange rate change on cash
447
450
2
and cash equivalents
Net increase (decrease) in cash and cash
(6,381)
2,732
9,113
equivalents
Cash and cash equivalents at end of
14,772
17,505
2,732
periodAs of December 31, 2023, cash and cash equivalents (below, "cash") stood at 17,505 million yen, up 2,732 million yen compared
to December 31, 2022.
The status of each cash flow and their main factors in the fiscal year under review are as follows.
In the fiscal year ended December 31, 2023, net cash provided by operating activities amounted to 7,524 million yen (versus 3,901
million yen in the fiscal year ended December 31, 2022). This mainly reflected profit before income taxes of 6,563 million yen (8,057
million yen), depreciation of 4,118 million yen (3,852 million yen), an increase in trade receivables of 1,357 million yen (an increase―5―

of 1,338 million yen), a decrease in inventories of 4,648 million yen (an increase of 4,266 million yen), a decrease in trade payablesof 5,636 million yen (an increase of 2,997 million yen), and income taxes paid of 1,108 million yen (2,830 million yen).
Net cash used in investing activities was 10,135 million yen (6,266 million yen used in the fiscal year ended December 31, 2022).
This figure primarily consisted of 4,439 million yen (4,893 million yen) in purchase of property, plant and equipment, 1,604 million
yen (999 million yen) in purchase of intangible assets, and 3,718 million yen (none) in payments for acquisition of businesses.
Net cash provided by financing activities amounted to 4,893 million yen (4,464 million yen used in the fiscal year ended December
31, 2022). Cash provided consisted mainly of a net increase of 9,000 million yen (a decrease of 532 million yen) in short-termborrowings, repayment of long-term borrowings of 1,200 million yen (1,021 million yen), and dividend payments of 2,603 million
yen (2,600 million yen).
(4) Future outlook(Millions of yen)
Fiscal year ended
December 31, 2023
AmountPercent of total
Sales

Fiscal year ending
December 31, 2024
AmountPercent of total

ChangeAmountPercent of total

158,344

100.0%

165,000

100.0％

6,655

4.2%

Operating income

6,370

4.0%

3,000

1.8％

(3,370)(52.9%)

Ordinary income

6,791

4.3%

3,560

2.2％

(3,231)(47.6%)

4,102

2.6%

1,790

1.1％

(2,312)(56.4%)Net income attributable to ownersof parent

We expect the outlook for the global economy, including Japan, to remain uncertain due to soaring raw material prices caused byintensifying geopolitical tensions, changes in the financial market, and weak consumer sentiment due to rising prices.
Under such circumstances, with the motto of “Giving the Group’s full strength for the future of Earth Corporation,” the Groupestablished a new medium-term management plan, dubbed Act for SMILE COMPASS 2026, for the three-year period starting the
fiscal year ending December 31, 2024. We have positioned the three years under the new plan as a period for fundamental structuralreforms centered on restructuring of the Group. Even amid a rapidly changing business environment, we intend to firmly implement
reforms with the goal of maintaining sustainable growth.
In the new medium-term management plan, we have identified profit and cash flow generation (profitability improvement) as our
topmost priority, and toward achieving this goal, we will work to increase profitability through restructuring the domestic businessand boosting the brand power of our household products. At the same time, we will position the Asian market and exports to otherregions as growth drivers, and strive to expand the sales weighting of overseas operations.
The forecast by segment is as follows.
[Household Products Business]
In the Household Products Business, we will fundamentally reform the earnings structure.
In the fiscal year ended December 31, 2020, the household insecticides and repellents market, as well as the bath salts market,
expanded propelled by the pandemic-driven shelter-in-place demand, resulting in substantial year-on-year growth in operating income
and free cash flows in that fiscal year. Backed by such tailwinds in the financial front, we actively expanded the households products
category to cater to rapidly changing consumer behaviors, and churned out products designed to make time spent at home more
comfortable. However, performance sharply deteriorated as the pandemic-related travel and activity restrictions were lifted following
the downgrading of COVID-19 to a Class 5 infectious disease in 2023, consumer sentiment cooled due to a series of price hikes, andcosts of sales shot up driven by soaring raw material prices. To improve performance, we will fundamentally reassess the productcategories that underwent expansion during the pandemic years and streamline brands and SKUs based on profitability and future
prospects.
In 2023, the Group revised prices of some of its products. While price revisions for household insecticides and repellents had
anticipated results, owing in part to the Group’s high market share for these products, price revisions for bath salts and mouthwashes
led to rather insufficient results, with the price revisions resulting in a decline in market share due to intense price competition withcompetitors. To regain market share of bath salts and mouthwashes, our main product categories, we intend to increase spending on―6―

marketing to strengthen our brands, and in doing so contribute to the expansion of the market for those products.
Regarding returns of household insecticides and repellents, which have been an issue from before, we have set a goal to bring themdown to zero by 2028 to reduce waste (unsold products), and we will proactively work toward achieving that goal, led by our Marketingand SCM Divisions in particular. We not only expect to reduce our environmental footprint through these measures, but also anticipate
profitability improvements arising from curtailed waste-related expenses.
The core system built under the previous medium-term management plan will make significant contributions to the earnings
structure reform. Using a system that centrally gathers and links data from production to sales management, we intend to upgrade thesupply-demand adjustment function, prevent stock outs and control inventory, increase throughput, and improve cash flows. Moreover,the management accounting system put in place under the previous medium-term plan has enabled us to visualize monthly profitability
trends, and we intend to build a system to monitor our progress toward achieving our goals, which will help us to identify issues at an
early stage and change courses if necessary.
Overseas, led by Thailand where we aim to maintain No. 1 share in the household insecticides and repellents market in 2025, in
addition to supporting active business development of local subsidiaries, we will work to expand exports to the Middle East and North
America. Along with efforts to grow overseas operations, we intend to reinforce governance to enhance our management function andestablish an earnings management structure. To support the overseas business expansion, we will readily invest in hiring and nurturingof global talent and work to further increase the sales weighting of the overseas business.
[General Environment and Sanitation Business]
The core customers of our General Environment and Sanitation Business (primarily companies in the food, pharmaceutical, andpackaging material industries) are facing stringent requirements for the establishment of hygiene management measures to prevent
food poisoning and foreign material contamination. Accordingly, they are exhibiting growing needs for the quality hygiene
management services that Earth Corporation provides using its specialized knowledge, technology, and expertise. Further, companies,
particularly major corporations, are strengthening measures to ensure sustainable procurement.
Under these circumstances, with the existing sanitation management services as the pillar of the segment, we will take flexible andproactive measures to tackle various environmental issues, including those relating to the natural environment, in the aim ofcontributing to creating an environment that will lead to a more prosperous future. Specifically, we will utilize the Saito General
Research Institute as a base for promoting research, technological development, and the training of human resources. At the same time,
we will provide services utilizing digital technologies such as IoT and AI, expand auditing activities related to food safety, and stepup expansion in the life science field as we aim to achieve stable earnings growth through an increase in annual contracts. Further, we
will launch new projects, for instance in the agriculture field, with an eye to developing new businesses, and formulate and assessbusiness plans.
For the fiscal year ending December 31, 2024, the first year under the new medium-term management plan, we expect sales to growbut profits to decline due to one-time expenses required for the abovementioned reforms, active investment in strengthening brands
of mainstay categories, and higher fixed costs resulting from personnel investment among others. Specifically, the consolidated
earnings forecast for the fiscal year calls for sales of 165,000 million yen (+4.2% year-on-year), operating income of 3,000 million
yen (-52.9% year-on-year), ordinary income of 3,560 million yen (-47.6% year-on-year), and net income attributable to owners ofparent of 1,790 million yen (-56.4% year-on-year).
(5) Basic Policy concerning the Allocation of Profits and Dividends for the Current and Next Periods
We view the return of profits to our shareholders as an important management issue, and accordingly strive to ensure stabledividends while securing internal reserves in pursuit of sustainable growth and the maintenance of a sound management structure.
As set forth in the medium-term management plan starting in the fiscal year ending December 31, 2024, the Company will primarily
use internal reserves for strategic investments and M&A aimed at overseas business expansion, R&D and personnel investments toenhance non-financial value, the overhaul of various systems to streamline operations, capital investments with an eye to productivity
improvements, and structural reforms to achieve sustainable growth. Further, we will continue to consider implementing flexible sharebuyback programs based on cash flow conditions and stock price trends.
In terms of dividends of surplus, we target a dividend on equity ratio (DOE) in the 4% range in the aim of paying stable, continuous―7―

dividends.
Based on these policies, the Board of Directors of the Company has resolved to pay 118 yen per share for the fiscal year ended
December 31, 2023, taking into account earnings performance for the year and funds necessary for future growth. As a result,, we
now project a DOE ratio of 4.0% and a consolidated dividend payout ratio of 63.6%.
2. Basic Views on Selection of Accounting Standards
Over the near term, the Company will prepare its financial statements based on Japanese generally accepted accounting principles(GAAP), taking into account the inter-period comparability of financial statements and comparability across companies.
In terms of the application of International Financial Reporting Standards (IFRS), the Company will take appropriate measuresin light of the existing circumstances in Japan and overseas.

―8―

3. Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet
Fiscal year ended
December 31, 2022
(as of December 31, 2022)(Millions of yen)
Fiscal year ended
December 31, 2023
(as of December 31, 2023)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade

14,772
22,321

17,50523,573

Electronically recorded obligations – operating
Merchandise and finished goods

1,842
25,617

2,066
21,313Work in process
Raw materials and supplies

1,435
5,200

820
6,133

Other
Allowance for doubtful accounts

2,795
(22)

2,859
(100)

Total current assets

73,962

74,170Non-current assets
Property, plant and equipment
Buildings and structures

30,17432,977

Accumulated depreciation and impairment(16,336)(17,484)

Buildings and structures, net

13,837

15,492

Machinery, equipment and vehicles

16,77018,798

Accumulated depreciation and impairment(12,785)(13,617)

Machinery, equipment and vehicles, net

3,985

5,181

Land

7,787

7,838

Leased assets
Accumulated depreciation and impairment

320
(131)

379
(188)

188

191

Leased assets, net
Construction in progress
Other
Accumulated depreciation and impairment
Other, net

2,114

926

9,499
(7,927)

10,025(8,272)

1,571

1,753

29,48331,383

Trademark right

1,233

2,411

Software
Goodwill

1,432
105

1,399
1,261

Customer-related assets
Other

1,643
940

1,523
2,178

Total intangible assets

5,355

8,774

Investments and other assets
Investment securities

5,261

5,162

Retirement benefit asset
Deferred tax assets

7,336
1,001

9,844
753

Other
Allowance for doubtful accounts

2,105
(16)

2,320
(1)

Total investments and other assets

15,68818,079Total property, plant and equipment
Intangible assets

Total non-current assets
Total assets―9―50,52758,237

124,489

132,407

Fiscal year ended
December 31, 2022
(as of December 31, 2022)(Millions of yen)
Fiscal year ended
December 31, 2023
(as of December 31, 2023)

Liabilities
Current liabilities
Notes and accounts payable – trade
Electronically recorded obligations – operating

24,236
11,28821,484
8,520

Short-term borrowings
Current portion of long-term borrowings

1,000
1,200

10,000Accounts payable – other
Income taxes payable

7,477
426

－
6,608
1,608

Accrued consumption taxes
Provision for bonuses

612
240

713
283

Refund liabilities
Other

1,010
5,849

1,226
7,047

Total current liabilities

53,34157,493

Deferred tax liabilities
Retirement benefit liability

1,815
314

1,550
382

Asset retirement obligations
Other

479
520

486
494

Non-current liabilities

Total non-current liabilities

3,129

2,912

56,47060,406

Shareholders’ equity
Share capital

9,895

10,043

Capital surplus
Retained earnings

9,917
39,897

10,066
41,385

Treasury shares

(79)

(79)

Total liabilities
Net assets

59,631

61,415

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment

Total shareholders’ equity

1,109

1,383

698

1,363

Remeasurements of defined benefit plans

1,354

2,383

Total accumulated other comprehensive income

3,163

5,130

5,224

5,453

Non-controlling interests
Total net assets
Total liabilities and net assets―10―

68,01872,000124,489

132,407(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income

Sales
Cost of sales
Gross profit

Fiscal year ended
December 31, 2022
(from January 1, 2022
to December 31, 2022)
152,339
89,87062,468(Millions of yen)
Fiscal year ended
December 31, 2023
(from January 1, 2023
to December 31, 2023)
158,344
94,71963,624

7,067
7,393
1,029
2
17,591
189
1,317
1,475
429
1,488
3,217
13,83155,034

7,560
7,319
1,045
64
18,291
235
1,521
1,728
119
1,503
3,301
14,56257,254

7,434

6,370

121
77
226
28
45
247

201
78
118
28
42
347

747

818

23

33

－

326

24
47

35
396

8,133

6,791

29
10
40

3
8
12

8
107
－
0

7
226
7
－
240

Selling, general and administrative expenses
Transportation and storage costs
Advertising expenses
Promotion expenses
Provision of allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Travel and transportation expenses
Depreciation
Amortization of goodwill
Rent expenses on land and buildings
Research and development expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Commission income
Rental income from buildings
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Loss on sale of investment securities
Loss on valuation of investment securities
Total extraordinary losses

116

―11―

Fiscal year ended
December 31, 2022
(from January 1, 2022
to December 31, 2022)
8,057(Millions of yen)
Fiscal year ended
December 31, 2023
(from January 1, 2023
to December 31, 2023)
6,563

Income taxes – current
Income taxes – deferred

1,742
674

2,281
(128)

Total income taxes
Net income

2,417
5,639

2,153
4,410

Net income attributable to non-controlling interests
Net income attributable to owners of parent

336
5,303

307
4,102

Net income before income taxes―12―Consolidated Statement of Comprehensive Income

Fiscal year ended
December 31, 2022
(from January 1, 2022
to December 31, 2022)
5,639(Millions of yen)
Fiscal year ended
December 31, 2023
(from January 1, 2023
to December 31, 2023)
4,410

Other comprehensive income
Valuation difference on available-for-sale securities

(184)

287

Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax

716
285

673
1,160

Total other comprehensive income

817

2,121

6,457

6,531

6,045

6,070

412

461

Net income

Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests―13―

(3) Consolidated Statement of Changes in Equity
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)(Millions of yen)
Shareholders’ equity
Share capital
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance
Changes of items during
periodDividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Disposal of treasury shares
Change in scope of equity
methodChange in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period9,895

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity9,928

37,929(215)

57,537

(542)
9,895

9,928

37,387

(542)
(215)

56,995(2,600)(2,600)

5,303

5,303

(12)

(99)

(99)

236

224

(192)

(192)

1

1

－

(10)

2,510

136

2,636

9,895

9,917

39,897(79)

59,631(Millions of yen)
Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

1,297

1,297

(22)

(22)

Changes of items during
periodDividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Disposal of treasury shares
Change in scope of equity
method

1,146

1,146

Non-controllinginterests

Total net assets

4,638

64,596

(66)

(608)

4,572

63,988(2,600)
5,303
(99)
224
(192)

―14―

Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period

1

(188)

721

208

651

1,393

(188)

721

208

651

4,030

1,109

698

1,354

5,224

68,018―15―

Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity

9,895

9,917

39,897(79)

59,631

148

148

Share capital
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Change in scope of
consolidation
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period(2,603)296(2,603)

4,102

4,102
(0)

(11)

(0)
(11)

0

0

148

149

1,487

(0)

1,784

10,043

10,066

41,385(79)

61,415(Millions of yen)
Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Change in scope of
consolidation
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period

1,109

698

1,354

Non-controllinginterests

Total net assets

5,224

68,018296(2,603)
4,102
(0)
(11)

0

274

664

1,029

229

2,197

274

664

1,029

229

3,982

1,383

1,363

2,383

5,453

72,000―16―

(4) Consolidated Statement of Cash Flows
Fiscal year ended December 31,
2022 (from January 1, 2022 to
December 31, 2022)(Millions of yen)
Fiscal year ended December 31,
2023 (from January 1, 2023 to
December 31, 2023)

8,057
3,852

6,563
4,118

429

119

(882)

(773)

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Increase (decrease) in retirement benefit assets andliabilities
Increase (decrease) in allowance for doubtful accounts

062Interest and dividend income
Interest expenses

(198)
23

(280)
33

Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on sale of investment securities

(217)

(260)

－

326

(10)

(1)

Loss (gain) on valuation of investment securities
Decrease (increase) in trade receivables

0(1,338)－(1,357)

Decrease (increase) in inventories
Decrease (increase) in other assets(4,266)
(367)
2,997

4,648
335
(5,636)(2,165)
645

2
486

6,557

8,386

198

280

Interest paid
Income taxes paid

(23)
(2,830)(33)(1,108)Net cash provided by (used in) operating activities

3,901

7,524

(4,893)175(4,439)12Purchase of intangible assets
Purchase of investment securities

(999)
(20)

(1,604)(215)

Proceeds from sale of investment securities
Purchase of shares of subsidiaries and associates

539
(163)
－

224
(53)

－

(3,718)

(722)

－

(307)
126

(612)
61

(6,266)(10,135)(532)(1,021)9,000(1,200)Purchase of treasury shares
Purchase of treasury shares of subsidiaries

(99)
(3)

0
(53)

Dividends paid
Dividends paid to non-controlling interests(2,600)(155)(2,603)
(176)

(51)

(72)

Increase (decrease) in trade payables
Increase (decrease) in other liabilities
Other
SubtotalInterest and dividends received

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment

Proceeds from sale of shares of subsidiaries andassociates
Payments for acquisition of businesses
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Other payments
Other proceeds
Net cash provided by (used in) investing activities

211

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings

Other

―17―

Net cash provided by (used in) financing activities(Millions of yen)
Fiscal year ended December 31, Fiscal year ended December 31,
2022 (from January 1, 2022 to2023 (from January 1, 2023 to
December 31, 2022)
December 31, 2023)(4,464)4,893

Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from
inclusion of subsidiaries in consolidation
Cash and cash equivalents at end of period

―18―

447

450

(6,381)
21,027

2,732
14,772

126－

14,772

17,505(5) Notes to Consolidated Financial Statements(Notes to going concern assumptions)None to be reported.
(Changes to accounting policies)
From the start of the consolidate fiscal year ended December 31, 2023, the Group has adopted the Implementation Guidanceon Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, June 17, 2021), and in accordance with thetransitional treatment provided in Paragraph 27-2 of the said Guidance, the Group will prospectively apply the new
accounting standards stipulated by the said Guidance. This change has no impact on the consolidated balance sheet.
(Segment information, etc.)
a. Segment information
1. Overview of reportable segments
Earth Corporation's reportable segments represent constituent units of the Company’s corporate group for which separate financial
information is available. These segments are subject to periodic reviews conducted by the Company’s Board of Directors with theaim of evaluating business performance and facilitating decisions regarding the allocation of management resources.
Earth Corporation maintains a Household Products Business and a General Environment and Sanitation Business, and these twobusinesses constitute the Company's reportable segments.
Through its Household Products Business, the Company produces, sells, purchases, imports, and exports a variety of products,
including household insecticides and repellents; gardening supplies; household products (mouthwash, denture-related supplies,
toothpaste and associated products, bath salts, deodorizing air fresheners, etc.); pet products; chemical agents used for communicabledisease control and in the fields of agriculture, forestry, and animal husbandry; and raw materials for overseas markets.
Through its General Environment and Sanitation Business, the Company provides hygiene management services for facilities suchas factories and hospitals.
2. Method for calculating sales, income or loss, assets, liabilities and other items for each reportable segment
We apply the same accounting methods for all reportable segments as the ones we use to prepare consolidated financial statements.
The income figures of our reportable segments indicate operating income generated through these segments.
Intersegment sales and transfers are based on prevailing market prices.

―19―

3. Sales, income or loss, assets, liabilities and other items for each reportable segment
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)(Millions of yen)
Reportable segments
General Environment
Household Products
and Sanitation
Business
Business

Adjustments*2

Amount recordedin consolidated
financialstatements*3

Total

Sales
Sales generated throughexternal customers
Intersegment sales andtransfers*1

124,529

27,809152,339－

152,339

11,957163

12,121(12,121)－

Total

136,486

27,973

164,460(12,121)

152,339

Segment income

5,909

1,430

7,339

94

7,434

Segment assets

130,579

17,748148,328(23,838)

124,489

3,430

421

3,852

－

3,852

－

429

－

429

259

5,997

－

5,997

Other items
Depreciation*4
Amortization of goodwill

429
Increases in tangible andintangible non-current
5,737
assets*4
Notes: 1. Includes internal sales within and among segments
2. Adjustments were as follows:(1) The 94 million yen adjustment to segment income comprises eliminations of intersegment transactions.
(2) The 23,838 million yen downward adjustment to segment assets comprises eliminations of intersegment transactions.
3. Segment income is adjusted according to the amount of operating income indicated on the consolidated statements of income.
4. "Depreciation" and "Increase in tangible and intangible non-current assets" include both amortization of, and increases in,long-term prepaid expenses.

―20―

Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)(Millions of yen)
Reportable segments
General Environment
Household Products
and Sanitation
Business
Business

Adjustments*2

Amount recordedin consolidated
financialstatements*3

Total

Sales
Sales generated throughexternal customers
Intersegment sales andtransfers*1

129,429

28,914

158,344－

158,344

9,577

158

9,736

(9,736)－

Total

139,007

29,073

168,081(9,736)

158,344

Segment income

4,420

1,451

5,871

498

6,370

Segment assets

137,610

19,078

156,688(24,281)

132,407

3,702

415

4,118

－

4,118

119

－

119

－

119

239

6,700

Other items
Depreciation*4
Amortization of goodwill

Increases in tangible andintangible non-current
6,461
assets*4
Notes: 1. Includes internal sales within and among segments

－

6,700

2. Adjustments were as follows:(1) The 498 million yen adjustment to segment income comprises eliminations of intersegment transactions.
(2) The 24,281 million yen downward adjustment to segment assets comprises eliminations of intersegment transactions.
3. Segment income is adjusted according to the amount of operating income indicated on the consolidated statements of income.
4. "Depreciation" and "Increase in tangible and intangible non-current assets" include both amortization of, and increases in,long-term prepaid expenses.
b. Related information
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)
1. Information by product and service(Millions of yen)
Householdinsecticides
and repellents
Sales generated throughexternal customers

53,099Household products
63,205

Pet products
and others
8,224

General Environment
and Sanitation
27,809Total
152,339

2. Information about geographical areas(1) Sales
Sales by geographical area have been omitted because sales generated through external customers in Japan accounted for morethan 90% of sales reported on the Company's consolidated statement of income.

―21―

(2) Property, plant and equipment(Millions of yen)
Japan

China
26,844Thailand
964

Other
1,513

Total
161

29,483

3. Information by the major customer(Millions of yen)
Customer name or title

Sales

Name of related segment

PALTAC Corporation

39,209Household Products Business

ARATA Corporation

37,414

Household Products BusinessAlfresa Healthcare Corporation

19,422

Household Products Business

Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)
1. Information by product and service(Millions of yen)
Householdinsecticides
and repellents
Sales generated throughexternal customers

Household products

57,249General Environment
and Sanitation

Pet products
and others

63,206

8,974

Total

28,914

158,344

2. Information about geographical areas(1) Sales
Sales by geographical area have been omitted because sales generated through external customers in Japan accounted for morethan 90% of sales reported on the Company's consolidated statement of income.
(2) Property, plant and equipment(Millions of yen)
Japan

China
28,809Thailand
877

Other
1,535

Total
160

31,383

3. Information by the major customer(Millions of yen)
Customer name or title

Sales

Name of related segment

ARATA Corporation

39,890Household Products Business

PALTAC Corporation

37,831

Household Products BusinessAlfresa Healthcare Corporation

20,608Household Products BusinessOhki Co., Ltd.

16,471

Household Products Business―22―

c. Information about impairment loss on non-current assets by reportable segment
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)
None to be reported.
Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)
None to be reported.

d. Amortization of goodwill and unamortized goodwill by reportable segment
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness

Adjustments

Total

Total

Amortizationof goodwill

429

－

429

－

429

Unamortized
goodwill

105

－

105

－

105

Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness

Adjustments

Total

Total

Amortizationof goodwill

119

－

119

－

119

Unamortized
goodwill

1,261

－

1,261

－

1,261

e. Gain on bargain purchase by reportable segment
Fiscal year ended December 31, 2022 (from January 1, 2022 to December 31, 2022)
None to be reported.
Fiscal year ended December 31, 2023 (from January 1, 2023 to December 31, 2023)
None to be reported.

―23―

(Per share information)

Fiscal year ended December 31, 2022
Fiscal year ended December 31, 2023
(from January 1, 2022 to December 31, 2022) (from January 1, 2023 to December 31, 2023)
Net assets per share

2,846.07 yen

3,007.52 yen

Net income per share

240.47 yen

185.57 yen

Notes: 1. Due to a lack of dilutive shares, diluted net income per share for the fiscal years ended December 31, 2022 and 2023 havebeen omitted.
2. The basis for calculating net income per share is as follows:
Fiscal year ended December 31,
2022(from January 1, 2022 to
December 31, 2022)

Fiscal year ended December 31,
2023(from January 1, 2023 to
December 31, 2023)(millions of yen)

5,303

4,102

Amount not attributable to common(millions of yen)shareholders
Net income attributable to ownersof parent attributable to common (millions of yen)
stock

－

－

5,303

4,102

22,055

22,107Item

Net income attributable to ownersof parent

Average number of common stock (thousands ofoutstanding during the fiscal year
shares)(Significant subsequent events)
None to be reported.

(6) Other
For further details, please refer to the announcement entitled "Notice of Change of Directors" released on February 13, 2024.

―24―