Euglena Posts Its First First-Half Profit in Nine Years as Healthcare Lifts Sales 8% and Ordinary Profit 46%

euglena Co., Ltd. (TSE: 2931), the Tokyo-based microalgae company led by President Mitsuru Izumo and Co-CEO and CFO Tomohiro Wakahara, reported consolidated first-half results for the six months from January 1 to June 30, 2026 under Japanese GAAP. Net sales rose 8.0% to ¥26,507 million, adjusted EBITDA 8.5% to ¥3,804 million, operating profit 14.3% to ¥1,871 million and ordinary profit 45.8% to ¥1,709 million. Net profit attributable to owners of the parent came in at ¥73 million, against a loss of ¥559 million in the same period a year earlier, and basic earnings per share was ¥0.53 after a loss per share of ¥4.10.

The first black first half in nine fiscal years

The ¥73 million figure is modest in absolute terms but is the headline of the disclosure: it is euglena's first positive first half in nine fiscal years — the first since the half ended September 2017. Management frames the result as evidence that the "shift to a profitable structure" medium-term policy it has pursued since FY12/2024 has taken hold. Comprehensive income swung to ¥1,189 million from negative ¥507 million, and diluted EPS of ¥0.52 was disclosed for the first time in years, the prior-year period having been loss-making.

The improvement came from several directions at once. Healthcare sales grew; gross margin improved on last year's price revisions to core products and on factory productivity measures; advertising efficiency picked up; a group-wide cost restructuring cut the logistics, sales-promotion and sales-commission ratios; and personnel costs fell after a voluntary-retirement programme. Below the operating line, interest expense rose following last year's financing, but subsidy income was booked while the prior year's foreign-exchange losses and financing fees did not recur — which is why ordinary profit rose 45.8% against a 14.3% gain at the operating line. At the net level, non-controlling interests in the Q'SAI group increased, but the extraordinary loss booked a year earlier for the voluntary-retirement programme did not repeat. Adjusted EBITDA is the company's own disclosed measure — EBITDA (operating profit plus goodwill amortisation and depreciation) plus subsidy income and share-based compensation — published as an indicator of cash-generating power under a cash-flow-focused management stance.

The quarterly progression shows the momentum building rather than spiking. Net sales, adjusted EBITDA and operating profit ran at ¥12,618 million / ¥1,961 million / ¥1,018 million in the prior-year second quarter, ¥12,532 million / ¥1,950 million / ¥982 million in the third and ¥13,283 million / ¥1,480 million / ¥504 million in the fourth. This year's first quarter delivered ¥13,197 million / ¥1,821 million / ¥837 million and the second ¥13,310 million / ¥1,982 million / ¥1,033 million — the strongest quarter on all three measures in the sequence disclosed.

Healthcare: channels, brands and a ¥1,261 million amortisation drag

Healthcare, which supplies more than nine-tenths of group revenue, lifted sales 7.3% to ¥24,319 million and segment profit 10.1% to ¥3,039 million — after absorbing ¥1,261 million of amortisation of intangible assets and goodwill arising from past M&A, principally the Q'SAI group and the Satis Pharma group. By channel, direct sales accounted for ¥17,652 million, distribution ¥2,035 million, OEM, ingredients and overseas ¥4,604 million, and other ¥25 million.

The flagship "Karada ni Euglena" brand kept growing, led by its family-oriented series, while Q'SAI's "Hiza Support Collagen" and Epora's "Naisiwa" and "epo" were solid. Group subscription customers and direct-sales revenue both expanded, Q'SAI widened its retail distribution, and Satis Pharma group orders together with the microalgae OEM, ingredient and overseas business grew. In May 2026 euglena acquired the business related to "Gold Euglena" — the microalgae Euglena strain EOD-1, used as a functional-claim ingredient for immunity — to widen its functional-claim line-up.

Biofuel: a Malaysian plant with Petronas and Enilive, and the first HVO deliveries

Biofuel sales jumped 67.0% to ¥764 million, but the segment loss widened to ¥160 million from ¥114 million: subsidy income was booked, yet a bad-debt allowance was recognised on product and feedstock trading. The segment's significance lies ahead of the numbers. With Petroliam Nasional Berhad (Petronas) and Enilive S.p.A., euglena is building and will operate a commercial-scale biofuel plant in Malaysia with feedstock processing capacity of about 650,000 tonnes a year and production capacity of up to 12,500 barrels a day — roughly 725,000 kL a year. The joint venture was established in December 2024 and euglena holds 15% through its overseas special-purpose company Euglena Sustainable Investment Limited (ESIL). Start-up is targeted by the second half of 2028 and construction is on plan.

On the demand side, euglena was selected in March 2025 as lead company for a Tokyo Metropolitan Government new-energy technology development programme alongside eight partners. HVO supply began in April 2026 to route buses operated by Tokyu Bus and in June 2026 to construction machinery at works for GREEN×EXPO 2027, the 2027 International Horticultural Expo. The company is also developing large-scale, low-cost heterotrophic tank cultivation of microalgae to produce algae oil as a biofuel feedstock, and is researching Malaysian palm agricultural residue biomass as a low-carbon sugar source under a METI Global South subsidy awarded in 2025.

The Other segment held sales roughly flat at ¥1,428 million, down 0.3%, and narrowed its loss to ¥202 million from ¥218 million. Agriculture did well: Daikyo Hiryo's microalgae-blended fertiliser sales grew, Euglena Taketomi Shrimp Farm benefited from better market conditions, the "Ikimono-tachi ni Euglena" fertiliser and feed brand expanded into home gardening and regional distribution, and sales began of "Euglena-raised" kuruma prawns from Taketomi Island. Bioinformatics revenue fell as advertising spend was cut. A corporate and unallocated adjustment of negative ¥805 million bridges total segment profit of ¥2,676 million to the reported operating profit of ¥1,871 million.

Balance sheet: a bond converts, borrowings reclassify, equity ratio to 47.8%

Total assets fell ¥3,059 million to ¥69,272 million at June 30, 2026 from the end of December 2025. Other current assets rose ¥1,393 million, investment securities ¥570 million and inventories ¥258 million, while cash and deposits fell ¥3,988 million, customer-related assets ¥819 million and goodwill ¥283 million. Liabilities dropped ¥6,102 million to ¥37,703 million: short-term borrowings rose ¥13,120 million and long-term borrowings fell ¥15,738 million — a reclassification as maturities approached rather than fresh borrowing — while convertible bonds with share options fell ¥2,000 million on conversion into shares, income taxes payable ¥592 million, the bonus provision ¥328 million and accounts payable ¥209 million.

Net assets rose to ¥31,569 million from ¥28,526 million, helped by that ¥2,000 million of convertible bonds converting into equity. Shareholders' equity reached ¥33,115 million from ¥30,919 million, and the equity ratio firmed to 47.8% from 42.7% — the combined effect of a smaller balance sheet and a larger equity base.

Guidance: sales raised, profit lines deliberately held

euglena revised its FY12/2026 forecast on August 7, 2026 from the plan published on February 13, 2026, but in one direction only. Net sales guidance was lifted ¥1,000 million, or 1.9%, to ¥53,000 million — up 5.2% on FY12/2025's ¥50,370 million. Adjusted EBITDA guidance was left at ¥7,000 million (+0.9%), operating profit at ¥3,200 million (+2.5%) and ordinary profit at ¥2,800 million (+18.4%).

The restraint is deliberate rather than defensive. The first half had already delivered 51.0% of the previous full-year sales plan, 54.3% of adjusted EBITDA, 58.5% of operating profit and 61.0% of ordinary profit — a run-rate that would ordinarily support raising the profit lines too. Management instead intends to step up advertising in healthcare and to make forward investments in R&D and organisational infrastructure from the third quarter, and it points to seasonality in agriculture and an uncertain external environment. The medium-term ambition is unchanged: net sales of around ¥100 billion and adjusted EBITDA of about ¥16 billion in FY2030.

No net-profit forecast is given. The company declines to publish a figure because one-off gains and losses from a portfolio review, tax expense and non-controlling interests are hard to estimate reliably — though it says a full-year return to profit remains in view, against FY12/2025's ¥805 million net loss. The dividend forecast for FY12/2026 stays at ¥0.00, unchanged; the ¥2.00 paid for FY12/2025 was a special year-end dividend. euglena says it cannot yet set a concrete shareholder-return policy and will consider one as earnings and the balance sheet improve.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.