Consolidated Financial Results
for the Six Months Ended June 30, 2023 (Japanese GAAP)
August 8, 2023
Company name:
Stock code:

Earth Corporation
4985

Representative:

Katsunori Kawabata, President and Representative Director, Chairman of the Board of Directors ofeach group company
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

Scheduled date for quarterly report submission:
Scheduled date for dividend payment:
Preparation of supplemental explanatory materials:
Results briefing to be held:
1.

August 10, 2023—
Yes
Yes (for institutional investors and analysts)

Consolidated Financial Results for the Six Months Ended June 30, 2023
(January 1, 2023 to June 30, 2023)(1) Consolidated operating results
Sales(Percentages indicate YoY change)
Net income attributable
Ordinary income
to owners of parent

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

Six months ended
90,3291.1
9,921(16.9)
10,422(18.0)
7,040(18.0)
June 30, 2023
Six months ended
89,305
11,941
12,714
8,587
－
－
－
－
June 30, 2022
Note: Comprehensive income for the six months ended June 30, 2023 was 8,277 million yen (-14.3%), and comprehensive income forthe six months ended June 30, 2022 was 9,658 yen (－%)
Net income per share

Diluted net income
per share

Yen

Yen

Six months ended
318.75－June 30, 2023
Six months ended
389.53－June 30, 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 Q2 of the fiscal year ended December 31, 2022
are based on the new accounting standard, and no year-on-year comparatives have been provided.

(2) Consolidated financial position
Total assets
Million yen

Net assets
Million yen

Equity ratio%

Six months ended
149,92273,75845.7
June 30, 2023
Fiscal year ended
124,489
68,01850.4
December 31, 2022
Reference: Equity capital amounted to 68,564 million yen as of June 30, 2023 and 62,794 million as of December 31, 2022.

2.

Dividends
Dividend per share
End of Q1

End of Q2

Yen

End of Q3

Yen

Year-end

Yen

Total
Yen

Yen

Fiscal year ended
0.00
118.00－－December 31, 2022
Fiscal year ending
0.00－
December 31, 2023
Fiscal year ending
December 31, 2023
118.00－(forecast)
Note: No revisions have been made to the Company’s most recently announced dividend forecast.

3.

118.00118.00Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2023
(January 1, 2023 to December 31, 2023)

Sales
Full-year

Operating income(Percentages indicate YoY change)
Net income
per share

Net income attributableto owners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen%

Yen

160,000

5.0

8,000

7.6

8,300

2.0

5,400

1.8

244.75

Note: No revisions have been made to the Company’s most recently announced dividend forecast.

*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)
New subsidiaries added:
None
Subsidiaries excluded:
None(2) Distinctive accounting methods applied when preparing quarterly consolidated financial statements: None
(3) 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(4) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury stock)

As of June 30,
2023

22,141,100

As of December
31, 2022

22,077,500

2. Treasury shares outstanding

As of June 30,
2023

14,086

As of December
31, 2022

13,782

3. Cumulative average number ofsharesSix months ended
June 30, 2023

22,088,569

Six months ended
June 30, 2022

22,047,142*The financial information in this quarterly report is not subject to review by certified public accountants or auditing firms.
*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. Qualitative Information on Quarterly
Financial Performance (3) Explanation of Consolidated Earnings Forecasts and Other Projections” on page five of the accompanying
materials.

(How to obtain supplementary materials on quarterly financial results)
Earth Corporation will hold a financial results briefing for institutional investors and analysts on August 8 (Tue.) and 9 (Wed.), 2023.
The supplemental explanatory materials to be used at this briefing will be posted on the Company’s website on Tuesday, August 8.

Accompanying Materials ― Contents
1. Qualitative Information on Quarterly Financial Performance ............................................................................................................ 2(1) Explanation of Operating Results..................................................................................................................................................... 2(2) Explanation of Financial Position .................................................................................................................................................... 5(3) Explanation of Consolidated Earnings Forecasts and Other Projections .......................................................................................... 5
2. Quarterly Consolidated Financial Statements and Primary Notes ..................................................................................................... 6(1) Consolidated Balance Sheet ............................................................................................................................................................. 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income........................................................... 8(3) Quarterly Statement of Cash Flows ................................................................................................................................................ 10(4) Notes to Quarterly Financial Statements ........................................................................................................................................ 11(Notes to going concern assumptions) ............................................................................................................................................. 11(Notes in the event of significant changes in shareholders’ equity) ................................................................................................. 11(Changes to accounting policies) ..................................................................................................................................................... 11―1―

1. Qualitative Information on Quarterly Financial Performance(1) Explanation of Operating Results
During the first six months of the fiscal year ending December 31, 2023, although the Japanese economy was showing signs
indicating that economic activities are returning to a normal pace following the easing of behavioral restrictions related to COVID19, the outlook remains uncertain due to soaring resource prices, price rises, and exchange rate fluctuations against the backdrop ofheightened geopolitical risks.
Meanwhile, in the Asian region, where the Group is focusing on business expansion, China's economic recovery has shown
weakness after the lifting of its zero-COVID policy, while in ASEAN there are concerns about an economic slowdown due to thesluggish global economy.
Under these economic conditions, the Company has been operating in line with the strategies set out in our medium-term
management plan, Act For SMILE–COMPASS 2023–. In accordance with the Company’s corporate philosophy, living in harmony
with the Earth, the plan includes four fundamental policies: Reform Corporate Compass & Infrastructure, Expand Profit Foundationin Asia, ESG/Open Innovation, and Generate Cost Synergies. Due to the impact of significant changes in the external environment,
we had flagged a review of the plan’s numerical targets, but solid results from our initiatives are starting to flow through, so we
intend to maintain our stated direction and strategies, and will continue with our efforts in the current fiscal year.
Sales generated during the first half of the fiscal year ending December 31, 2023 amounted to 90,329 million yen (+1.1% yearon-year). This owed to the effects of price revisions and growth in the General Environment and Sanitation Business and overseas
business, despite sluggish growth in bath salts and other products in the Household Products Business due to changes in the postCOVID environment. On the profit front, operating income was 9,921 million yen (-16.9% year-on-year), ordinary income was
10,422 million yen (-18.0% year-on-year), and net income attributable to owners of parent was 7,040 million yen (-18.0% year-onyear), on a higher cost of sales and higher distribution costs due to such factors as surging raw material prices and changes in thesales mix.
Results by segment are as follows.
[Household Products Business]
In the Household Products Business, the Company discovered latent needs by introducing high value-added products, improved
product value by updating existing products, and carried out effective promotion using social media. The Company strived to
improve profitability by selling products at commensurate prices and reducing product and sales costs in response to the soaring
raw material prices. Overseas, the Company actively and effectively invested management resources mainly in Southeast Asia,
including Thailand and Vietnam, and carried out initiatives to expand the scale of operations.
In the first six months of the fiscal year ending December 31, 2023, the Company saw steady growth in insecticides and repellents,
backed by the materialization of the effect of price revisions and favorable weather conditions, while the overseas business also
expanded, particularly in Vietnam. However, due to changes in the post-COVID environment, sales of bath salts and householdmasks decreased year-on-year, resulting in sales of 82,032 million yen (-0.6% year-on-year). On the profit front, segment income(operating income) was 9,061 million yen (-18.8% year-on-year) due to an increase in the cost of sales ratio resulting from theimpact of surging raw material prices and changes in the sales mix, which has continued since the previous fiscal year, as well as
higher infrastructure and logistics costs resulting from higher energy prices.

―2―

(Household Products segment results)(Millions of yen)

Consolidated Q2 results
for the fiscal year ended
December 31, 2022

Consolidated Q2 results
for the fiscal year ending
December 31, 2023

Household insecticides and repellents

44,08644,435349

0.8%Household products

33,75732,612(1,145)(3.4%)

3,950

3,992

42

1.1%

Oral hygiene products

YoY change(amount)

YoY change(percent)

Bath salts

11,865

11,605(259)(2.2%)

Other household products

17,941

17,013(928)(5.2%)Pet products and others

4,709

4,984

275

5.8%

Total sales

82,55382,032(520)(0.6%)

Segment income (operating income)
11,154
9,061(2,093)(18.8%)
Notes: Sales include internal sales and transfers made within and between segments, which amounted to 6,969 million yen during
Q2 of the fiscal year ended December 31, 2022 and 5,963 million yen during Q2 of the fiscal year ending December 31,
2023.
Results by product category are as follows.
Insecticides and repellents
In Japan, in addition to the mild winter throughout the country from the beginning of the year, there were favorable weather
conditions even during the peak shipping period from May to June, and products for cockroaches and unpleasant insect pests
grew. Sales were also boosted by making sales at commensurate prices, including price revisions, and continued sales growth,particularly in Thailand and Vietnam.
As a result, sales for this category were 44,435 million yen (+0.8% year-on-year).
Household products
In oral hygiene products, sales of all-in-one mouthwash Mondahmin Premium Care increased by 1.1% year-on-year to 3,992
million yen due to an increase in awareness of bad breath caused by fewer opportunities to wear masks.
As for bath salts, the increase in demand due to the spread of COVID-19 has calmed down and the market trends continued to
decline from the previous year, especially for major formulations such as powders and divided packets. The Group also performed
poorly proportionately to the market trends, resulting in sales of 11,605 million yen (-2.2% year-on-year).
In other household goods, sales of products in the Sukki-ri! series of deodorizing air fresheners and the Bubloon series ofhousehold cleaning products were strong. In addition, coolants and refrigerants as products to combat heat also sold well. On theother hand, sales of household masks remained sluggish, resulting in sales of 17,013 million yen (-5.2% year-on-year).
Sales in this category amounted to 32,612 million yen (-3.4% year-on-year).
Pet products and others
In pet products, sales of care products such as cat litter and deodorant sprays, as well as premium foods, increased to 4,984
million yen (+5.8% year-on-year).
[General Environment and Sanitation Business]
The core customers of our General Environment and Sanitation Business (primarily companies involved in the food,
pharmaceutical, and packaging material industries) face stringent hygiene management requirements to prevent food poisoning andcontamination with foreign substances. They thus have growing needs for Earth Corporation’s high-quality hygiene management
services that leverage our specialized knowledge, technologies, and expertise.
In these circumstances, we stepped up our investment in building an internal framework that can serve customer needs byinstalling and developing systems geared toward human resources development and business process streamlining. At the same―3―

time, we worked to maintain and expand our contract numbers by providing hygiene management systems distinguished bystrengthened technological capabilities, including through collaborative industry, academia, and public-sector research. We targeted
the pharmaceutical and regenerative medicine industries in particular, and continued strengthening audit and consulting operations
related to food safety management.
Sales in the General Environment and Sanitation Business came to 14,343 million yen (+3.9% year-on-year) during the first six
months of the fiscal year ending December 31, 2023, while segment income (operating income) was 773 million yen (-2.2% yearon-year) due to increased costs in annual contracts, which are the main format for the Company.
(Millions of yen)

Consolidated Q2 results
for the fiscal year ended
December 31, 2022

Consolidated Q2 results
for the fiscal year ending
December 31, 2023

YoY change(amount)

YoY change(percent)

Sales

13,80014,343543

3.9%

Segment income (operating income)

790

773

(17)

(2.2%)

Notes: Sales include internal sales and transfers made within and between segments, which amounted to 78 million yen in Q2 ofthe fiscal year ended December 31, 2022 and 83 million yen in Q2 of the fiscal year ending December 31, 2023.

―4―

(2) Explanation of Financial Position(1) Assets, Liabilities and Net Assets
As of June 30, 2023, total assets amounted to 149,922 million yen, up 25,433 million yen from December 31, 2022. This was
mainly due to an increase in cash and deposits, trade receivables, inventories, construction in progress, goodwill, and deferred tax
assets.
As of June 30, 2023, liabilities increased by 19,693 million yen from December 31, 2022 to 76,164 million yen. This was mainly
due to increases in trade payables, short-term borrowings, income taxes payable, refund liabilities, and other current liabilities,
despite a decrease in accounts payable-other and deferred tax liabilities.
Net assets amounted to 73,758 million yen as of June 30, 2023, rising 5,739 million yen from December 31, 2022, mainly becauseof the booking of net income attributable to owners of parent, despite a decrease in retained earnings due to dividend payouts.
Consequently, the Company’s equity ratio was 45.7% as of June 30, 2023, down 4.7 points from December 31, 2022.
(2) Cash Flows
As of June 30, 2023, cash and cash equivalents (below, “cash”) stood at 18,724 million yen, up 3,951 million yen compared to
December 31, 2022.
The status of each cash flow and their factors during the six months ended June 30, 2023 are as follows.
Net cash provided by operating activities amounted to 4,336 million yen (versus net cash of 6,686 million yen provided during
the six months ended June 30, 2022). The primary sources of this net cash were 10,364 million yen in net income before income
taxes (12,668 million yen during the six months ended June 30, 2022), 1,934 million yen in depreciation (1,846 million yen), an
increase of 13,834 million yen in trade receivables (increase of 14,353 million yen during the six months ended June 30, 2022),
growth of 917 million yen in inventories (998 million yen), an increase of 2,646 million yen in trade payables (increase of 6,237
million yen during the six months ended June 30, 2022), and an increase of 2,980 million yen in other liabilities (increase of 1,697
million yen).
Net cash used in investing activities during the same period was 6,415 million yen (versus 3,173 million yen used during the six
months ended June 30, 2022). This figure primarily consisted of 2,290 million yen for the acquisition of property, plant andequipment (1,908 million yen in the same period of the previous year) and 3,500 million yen for business transfer (zero in the same
period of the previous year).
As a result of financing activities, funds increased by 5,651 million yen (versus a decrease of 3,642 million yen in the six months
ended June 30, 2022). This figure mainly consisted of a net increase in short-term borrowings of 9,000 million yen (a decrease of
224 million yen in the same period of the previous year), repayment of long-term borrowings of 480 million yen (versus 532 million
yen in the same period of the previous year), and payment of dividends of 2,603 million yen (2,600 million yen in the same periodof the previous year).

(3) Explanation of Consolidated Earnings Forecasts and Other Projections
The Company has made no changes to its full-year earnings forecast for the fiscal year ending December 31, 2023, which wasannounced on February 13, 2023.
This forecast is based on information available to the Company at the time of its formulation. Actual results may differ
substantially from the projections included within due to potential changes affecting a variety of factors.

―5―

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet
Fiscal year ended
December 31, 2022
(as of December 31, 2022)(Millions of yen)Six months ended
June 30, 2023
(as of June 30, 2023)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary
operatingMerchandise and finished goods

14,772
22,321

18,72434,003

1,842

4,110

25,61727,557Work in process
Raw materials and supplies

1,435
5,200

1,521
4,566

Other
Allowance for doubtful accounts

2,795
(22)

2,658
(37)

Total current assets

73,962

93,10530,174(16,336)

31,436(16,970)

Buildings and structures, net

13,837

14,466

Machinery, equipment and vehicles

16,77017,303

Accumulated depreciation and impairment(12,785)(13,388)

Machinery, equipment and vehicles, net

claims-Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation and impairment

3,985

3,914

Land

7,787

7,822

Leased assets
Accumulated depreciation and impairment

320
(131)

360
(156)

Leased assets, net

188

204

Construction in progress
Other

2,114
9,499

3,080
9,895

Accumulated depreciation and impairment(7,927)(8,234)

Other, net

1,571

1,660

29,48331,148Intangible assets
Trademark right

Total property, plant and equipment

1,233

1,220

Software
Goodwill

1,432
105

1,288
2,312

Customer-related intangible assets
Other

1,643
940

1,698
1,538

Total intangible assets

5,355

8,059

Investment securities
Retirement benefit asset

5,261
7,336

5,481
7,528

Deferred tax assets
Other

1,001
2,105

2,383
2,232

Allowance for doubtful accounts

(16)

(17)

Total investments and other assets

15,68817,60950,52756,817

124,489

149,922

Investments and other assets

Total non-current assets
Total assets―6―

Fiscal year ended
December 31, 2022
(as of December 31, 2022)(Millions of yen)Six months ended
June 30, 2023
(as of June 30, 2023)

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

24,236
11,28822,566
15,737

Short-term borrowings
Current portion of long-term borrowings

1,000
1,200

10,000720

Accounts payable - other
Income taxes payable

7,477
426

5,269
4,509

Accrued consumption taxes
Provision for bonuses

612
240

1,153
384

Refund liabilities
Other

1,010
5,849

2,109
11,295

Total current liabilities

53,34173,746

Deferred tax liabilities
Retirement benefit liability

1,815
314

1,134
290

Asset retirement obligations
Other

479
520

481
511

Non-current liabilities

Total non-current liabilities

3,129

2,418

56,47076,164

Shareholders' equity
Share capital

9,895

10,043

Capital surplus
Retained earnings

9,917
39,897

10,06644,335

Treasury shares

(79)

(79)

Total liabilities
Net assets

59,63164,365

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

Total shareholders' equity

1,109

1,398

698

1,547

Remeasurements of defined benefit plans

1,354

1,251

Total accumulated other comprehensive income

3,163

4,198

5,224

5,194

Non-controlling interests
Total net assets
Total liabilities and net assets―7―

68,01873,758124,489

149,922

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)
89,30549,37239,933(Millions of yen)Six months ended
June 30, 2023
(from January 1, 2023
to June 30, 2023)
90,32951,34638,982

3,629
4,276
594
14
8,487
270
590
715
423
733
1,426
6,828
27,991

3,856
4,204
551
15
8,899
313
723
796
83
743
1,553
7,319
29,060Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Commission income
Rental income from buildings
Other11,941

9,921

54
36
529
9
23
143

85
41
213
13
22
165

Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses

796

543

17
6
23

22
19
42

12,714

10,422

23
－
23

1
3

3
65
－
0

Sales
Cost of sales
Gross profit
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

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

5

Total extraordinary losses
Net income before income taxes

69
12,668056
7－64
10,364

Income taxes - current
Income taxes - deferred

4,771
(900)

4,339
(1,203)

Total income taxes
Net income

3,870
8,797

3,136
7,227

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

209
8,587

187
7,040

―8―

Consolidated Statement of Comprehensive Income
Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)
8,797(Millions of yen)Six months ended
June 30, 2023
(from January 1, 2023
to June 30, 2023)
7,227

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

(206)
1,215

299
860

Remeasurements of defined benefit plans, net of tax

(147)

(110)

Total other comprehensive income

861

1,049

Comprehensive income

9,658

8,277

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

9,456

8,075

202

201

Net income
Other comprehensive income―9―(3) Quarterly Statement of Cash Flows(Millions of yen)Six months ended
June 30, 2023
(from January 1, 2023
to June 30, 2023)

Six months ended
June 30, 2022
(from January 1, 2022
to June 30, 2022)
Cash flows from operating activities
Net income before income taxes

12,66810,364

Depreciation
Amortization of goodwill

1,846
423

1,934
83

Increase (decrease) in provision for sales returns
Increase (decrease) in refund liabilities
Increase in retirement benefit assets (increase inretirement benefit liabilities)
Decrease (increase) in trade receivables

(434)
1,834

－
1,091

(429)

(382)

(14,353)(13,834)

Decrease (increase) in inventories
Decrease (increase) in other assets

(998)
(522)

(917)
458

Increase (decrease) in trade payables
Increase (decrease) in other liabilities

6,237
1,697

2,646
2,980

Other

(171)

37

Subtotal

7,796

4,462

91

127

Interest paid
Income taxes paid

(17)
(1,184)

(22)
(230)

Net cash provided by (used in) operating activities

6,686

4,336

(1,908)(436)(2,290)
(645)

(9)
(163)

(9)

(722)

－

－
(187)

(3,500)(213)

Interest and dividends received

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Purchase of shares of subsidiaries and associates
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Payments for acquisition of businesses
Other payments
Other proceeds

－

254

244

Net cash provided by (used in) investing activities(3,173)(6,415)

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

(224)

9,000

(532)
(99)

(480)
(0)

Purchase of treasury shares of subsidiaries
Dividends paid

(3)(2,600)(53)(2,603)

Dividends paid to non-controlling interests
Other

(155)
(26)

(176)
(33)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(3,642)

5,651

713

378

584

3,951

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

21,027

14,772

126－

21,73918,724

Repayments of long-term borrowings
Purchase of treasury shares―10―(4) Notes to Quarterly Financial Statements(Notes to going concern assumptions)None to be reported.

(Notes in the event of significant changes in shareholders’ equity)
None to be reported.

(Changes to accounting policies)(Changes to accounting policies)
Effective from the beginning of the first quarter of the year ending December 31, 2023, the Group has adopted the
Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Statement No. 31; June 17, 2021). In
accordance with the transitional treatment stipulated in Paragraph 27-2 of Implementation Guidance on Accounting Standard
for Fair Value Measurement, the Group has decided to prospectively apply the new accounting policy prescribed in the
Accounting Standard for Fair Value Measurement. Please note that this has no impact on the Group’s quarterly consolidated
financial statements.

―11―