Interim report
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Note : This document has been translated from the Japanese original for reference purposes only . In the event of any discrepancy between this translated document and the Japanese original , the original shall prevail . SUMITOMO FORESTRY Summary of Financial Results for the Six Months of the Fiscal Year Ending December 2026 [ Japanese GAAP ] ( Consolidated ) FASF MEMBERSHIP August 7 , 2026 Name of Company : Securities Code : Representative : Inquiries : Sumitomo Forestry Co. , Ltd. 1911 Title : President / Representative Director Title : General Manager , Corporate Communications Dept. Phone : + 81-3-3214-2270 Scheduled date to file Semi - annual Securities Report : Scheduled Date to commence Dividend Payments : Supplementary Documents on Financial Results : Financial Results Briefing : 1 . August 13 , 2026 September 7 , 2026 Yes Stock Exchange Listing : Tokyo URL : https://sfc.jp/english/ Name : Toshiro Mitsuyoshi Name : Takashi Mizuno Yes ( for analysts and institutional investors , in Japanese ) ( Note : Amounts are rounded to nearest million Yen . ) Consolidated financial results for the six months of the FY ending December 2026 ( January 1 , 2026 – June 30 , 2026 ) ( 1 ) Consolidated results of operations ( Cumulative total ) Net sales ( % : change from the same period of the previous year ) Net income attributable to shareholders of Operating income Recurring income parent Million yen 1,263,248 1,074,750 % 17.5 9.5 Million yen 59,921 83,718 % ( 28.4 ) ( 8.1 ) Million yen 49,769 88,221 % ( 43.6 ) ( 5.1 ) Million yen % 26,885 49,320 ( 45.5 ) ( 8.9 ) Six months ended June 30 , 2026 Six months ended June 30 , 2025 ( Note ) Comprehensive income Six months ended June 30 , 2026 Six months ended June 30 , 2025 127,877 Million yen [ - % ] ( 10,263 ) Million yen [ - % ] Net income per share Yen Net income per share fully diluted Six months ended June 30 , 2026 Six months ended June 30 , 2025 43.85 80.38 Yen 43.83 80.36 ( Notes ) 1. Due to the finalization of the provisional accounting treatment for business combination , the figures reflect a significant revision to the initial allocation of acquisition cost . 2. The Company conducted a stock split in a ratio of three shares for every one common share on July 1 , 2025 . Accordingly , the net income per share and the net income per share fully diluted were calculated on the assumption that the stock split was conducted at the beginning of the previous consolidated fiscal year . ( 2 ) Consolidated financial position As of June 30 , 2026 As of December 31 , 2025 ( Reference ) Shareholders ' equity Total assets Net assets Million yen 3,590,048 2,572,032 Million yen 1,240,832 1,136,786 As of June 30 , 2026 As of December 31 , 2025 1,094,600 Million yen 1,003,973 Million yen 1 Equity ratio % 30.5 39.0
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2 2. Cash Dividends Cash dividend per share End of 1Q End of 2Q End of 3Q End of FY Total Yen Yen Yen Yen Yen FY ended December 31, 2025 – 25.00 – 28.00 53.00 FY ending December 31, 2026 – 25.00 FY ending December 31, 2026 (Forecast) – 25.00 50.00 (Note) Revisions to the forecast of cash dividends most recently announced: None * The Company conducted a stock split in a ratio of three shares for every one common share on July 1, 2025. The amounts after the stock split are stated above. 3. Forecast of the consolidated financial results for the FY ending December 31, 2026 (January 1, 2026 - December 31, 2026) (%: change from the previous year) Net sales Operating income Recurring income Net income attributable to shareholders of parent Net income per share Million yen % Million yen % Million yen % Million yen % Yen Full year 2,950,000 30.1 143,000 (15.2) 115,000 (34.2) 60,000 (43.7) 97.85 (Note) Revisions to the forecast of consolidated results most recently announced: Yes * Notice (1) Significant changes in the scope of consolidation during the period: Yes Newly included : 4 companies (Company name) : Tri Pointe Homes, Inc. Tri Pointe Homes IE-SD, Inc. Tri Pointe Homes Texas, Inc. Tri Pointe Homes Holdings, Inc. Excluded : None (Company name) : (2) Application of accounting treatment specific to the preparation of the semi-annual consolidated financial statements: None (3) Changes in accounting policies, accounting estimates, and restatements (a) Changes in accounting policies due to revision of accounting standards and other regulations : None (b) Changes in accounting policies due to other reasons : None (c) Changes in accounting estimates : None (d) Restatements : None (4) Number of issued shares (common stock) (a) Total number of issued shares at the end of the period (including treasury stock) As of June 30, 2026 618,566,304 As of December 31, 2025 618,555,804 (b) Number of treasury stock at the end of the period As of June 30, 2026 5,384,484 As of December 31, 2025 7,121,943 (c) Average number of shares outstanding during the period (six months from the beginning of the fiscal year) As of June 30, 2026 613,165,021 As of June 30, 2025 613,611,342 (Notes) 1. The Company conducted a stock split in a ratio of three shares for every one common share on July 1, 2025. Accordingly, the average number of shares outstanding during the period (six months from the beginning of the fiscal year) was calculated on the assumption that the stock split was conducted at the beginning of the previous consolidated fiscal year. 2. The Company has introduced the Employee Stock Compensation Plan. The number of treasury stock at the end of the period includes the Company’s shares held by the Employee Stock Delivery Trust (as of June 30, 2026: 2,756,100 shares, as of December 31, 2025: 2,757,700 shares). The Company’s shares held by the said trust are included in treasury stock to be deducted in the calculation of the average number of shares outstanding during the period. * Semi-annual financial results report is exempt from interim review conducted by certified public accountants or an audit firm. * Proper use of earnings forecasts, and other special matters (Caution regarding forward-looking statements)
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3 Earnings forecasts and other forward-looking statements in this release are based on data currently available to the Company and certain assumptions that the Company believes are reasonable and are not intended as a promise by the Company to achieve those forecasts. Actual results may differ substantially due to various factors. (Obtain Supplemental Explanatory Material) The Financial Factbook which is supplementary documents on Financial Results is published on the website as below. https://sfc.jp/english/ir/ Additionally, the Company will hold a financial results briefing for securities analysts and institutional investors on Monday, August 10, 2026. The explanatory material on the financial results will be published on the website.
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4 〇 Contents of Accompanying Materials Semi-annual Consolidated Financial Statements and Main Notes 5 (1) Consolidated Balance Sheet 5 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income 7 Consolidated Statements of Income 7 Consolidated Statements of Comprehensive Income 8 (3) Consolidated Statements of Cash Flows 9 (4) Notes to the Semi-annual Consolidated Financial Statements 11 (Notes related to the Assumption of a Going Concern) 11 (Notes on Significant Changes in Shareholders’ Equity) 11 (Segment Information) 11 (Significant Subsequent Events) 13
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5 Semi-annual Consolidated Financial Statements and Main Notes (1) Consolidated Balance Sheet (million yen) Previous consolidated fiscal year (as of December 31, 2025) Second quarter cumulative period (as of June 30, 2026) Assets Current assets Cash and deposits 185,405 232,579 Notes and accounts receivable-trade 99,256 103,063 Electronically recorded monetary claims 47,865 49,162 Accounts receivable from completed construction contracts and contract assets 94,535 111,350 Merchandise and finished goods 25,246 26,518 Work in process 2,838 3,271 Raw materials and supplies 13,957 15,117 Costs on construction contracts in progress 22,663 23,908 Real estate for sale 227,668 316,940 Real estate for sale in process 756,634 1,318,766 Short-term loans receivable 38,367 18,646 Accounts receivable-other 103,635 123,851 Other 79,039 96,580 Allowance for doubtful account (3,361) (3,606) Total current assets 1,693,747 2,436,145 Non-current assets Property, plant and equipment Buildings and structures 163,502 163,103 Accumulated depreciation (70,698) (71,659) Buildings and structures, net 92,803 91,444 Machinery, equipment and vehicles 119,506 130,036 Accumulated depreciation (82,002) (86,307) Machinery, equipment and vehicles, net 37,503 43,730 Land 68,202 65,665 Timber 44,575 45,301 Leased assets 47,821 68,255 Accumulated depreciation (24,892) (29,182) Leased assets, net 22,929 39,073 Construction in process 46,644 43,312 Other 30,577 49,974 Accumulated depreciation (20,576) (31,636) Other, net 10,002 18,338 Total property, plant and equipment 322,658 346,862 Intangible assets Goodwill 35,499 199,446 Other 40,622 42,626 Total intangible assets 76,121 242,072 Investments and other assets Investment securities 377,339 450,039 Long-term loans receivable 37,548 36,383 Retirement benefit assets 17,629 18,120 Deferred tax assets 9,344 16,708 Other 38,365 44,371 Allowance for doubtful account (719) (653) Total investments and other assets 479,506 564,968 Total non-current assets 878,285 1,153,903 Total assets 2,572,032 3,590,048
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6 (million yen) Previous consolidated fiscal year (as of December 31, 2025) Second quarter cumulative period (as of June 30, 2026) Liabilities Current liabilities Notes and accounts payable-trade 87,380 78,675 Electronically recorded obligations 45,456 41,402 Accounts payable for construction contracts 159,748 213,736 Short-term borrowings 140,788 822,314 Current portion of bonds payable 20,047 48,688 Lease obligations 6,622 9,262 Income taxes payable 10,846 13,112 Contract liabilities 98,970 121,094 Provision for bonuses 24,222 25,167 Provision for bonuses for directors (and other officers) 129 - Provision for warranties for completed construction 15,824 36,408 Asset retirement obligations 414 430 Other 119,175 123,338 Total current liabilities 729,620 1,533,625 Long-term liabilities Bonds payable 50,284 106,870 Long-term borrowings 532,159 578,854 Lease obligations 19,565 32,963 Deferred tax liabilities 52,036 54,819 Provision for retirement benefits for directors (and other officers) 141 140 Retirement benefits liability 9,446 9,309 Provision for share awards for employees 163 197 Asset retirement obligations 2,597 2,622 Other 39,236 29,817 Total long-term liabilities 705,626 815,591 Total liabilities 1,435,246 2,349,216 Net assets Shareholders’ equity Common stock 55,332 55,340 Capital surplus 25,520 25,768 Retained earnings 688,527 698,117 Treasury shares (6,557) (5,414) Total shareholders’ equity 762,822 773,810 Accumulated other comprehensive income Valuation difference on available-for-sale securities 55,824 66,729 Deferred gains (losses) on hedges 9,554 10,770 Foreign currency translation adjustment 175,710 243,033 Remeasurements of defined benefit plans 63 257 Total accumulated other comprehensive income 241,151 320,790 Share acquisition rights 51 51 Non-controlling interests 132,762 146,180 Total net assets 1,136,786 1,240,832 Total liabilities and net assets 2,572,032 3,590,048
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7 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income For the second quarter cumulative period (consolidated) (million yen) Previous second quarter cumulative period (January 1, 2025 – June 30, 2025) Current second quarter cumulative period (January 1, 2026 – June 30, 2026) Net sales 1,074,750 1,263,248 Cost of sales 820,136 985,597 Gross profit 254,615 277,651 Selling, general and administrative expenses 170,897 217,730 Operating income 83,718 59,921 Non-operating income Interest income 2,472 4,359 Purchase discount 235 220 Dividend income 1,585 1,596 Share of profit of entities accounted for using equity method 5,149 - Foreign exchange gains - 600 Other 3,955 6,210 Total non-operating income 13,396 12,986 Non-operating expenses Interest expense 5,539 9,242 Share of loss of entities accounted for using equity method - 11,278 Foreign exchange losses 806 - Other 2,547 2,618 Total non-operating expenses 8,893 23,138 Recurring income 88,221 49,769 Extraordinary income Gain on sale of investment securities - 2,578 Gain on sale of shares of subsidiaries and associates - 6,973 Total extraordinary income - 9,551 Profit before income taxes 88,221 59,320 Income taxes-current 21,797 19,233 Income taxes-deferred 1,501 (473) Total income taxes 23,298 18,760 Net income 64,922 40,560 Net income attributable to non-controlling interests 15,603 13,675 Net income attributable to shareholders of parent 49,320 26,885
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8 Consolidated Statements of Comprehensive Income For the second quarter cumulative period (consolidated) (million yen) Previous second quarter cumulative period (January 1, 2025 – June 30, 2025) Current second quarter cumulative period (January 1, 2026 – June 30, 2026) Net income 64,922 40,560 Other comprehensive income Valuation difference on available-for-sale securities 937 10,980 Deferred gains (losses) on hedges (737) 525 Foreign currency translation adjustment (64,781) 75,191 Share of other comprehensive income of entities accounted for using equity method (10,604) 621 Total other comprehensive income (75,185) 87,317 Comprehensive income (10,263) 127,877 (Breakdown) Comprehensive income attributable to shareholders of parent (18,312) 106,524 Comprehensive income attributable to non-controlling interests 8,050 21,353
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9 (3) Consolidated Statements of Cash Flows (million yen) Previous second quarter cumulative period (January 1, 2025 – June 30, 2025) Current second quarter cumulative period (January 1, 2026 – June 30, 2026) Net cash provided by (used in) operating activities Income before income taxes 88,221 59,320 Depreciation and amortization 14,485 15,505 Amortization of goodwill 2,339 6,774 Provision for (reversal of) doubtful accounts (103) (37) Provision for (reversal of) employees’ bonuses (2,007) (569) Provision for (reversal of) directors’ bonuses (168) (129) Provision for (reversal of) warranties for completed construction (1,317) (330) Provision for (reversal of) directors’ retirement benefits (39) 8 Net defined benefit liability (decrease) (638) (609) Increase (decrease) in provision for share awards for employees 53 34 Interest and dividends income (4,057) (5,955) Interest expenses 5,539 9,242 Equity in (earnings) losses of affiliates (5,149) 11,278 Losses (gains) on sale of marketable securities and investment securities - (2,578) Loss (gain) on sale of shares of subsidiaries and associates - (6,973) Decrease (increase) in notes and accounts receivable- trade and contract assets 13,232 (16,350) Decrease (increase) in inventories (74,994) (73,516) Decrease (increase) in other current assets 1,587 4,643 Increase (decrease) in notes and accounts payable-trade (17,961) 1,200 Increase (decrease) in advances received (1,230) 333 Increase (decrease) in contract liabilities 4,006 14,012 Increase (decrease) in accrued consumption taxes (100) (1,482) Increase (decrease) in other current liabilities 1,561 (35,328) Other 1,464 (2,000) Subtotal 24,725 (23,507) Interest and dividends income received 11,647 6,988 Interest paid (5,201) (10,537) Income taxes paid (22,699) (18,274) Net cash provided by (used in) operating activities 8,473 (45,329)
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10 (million yen) Previous second quarter cumulative period (January 1, 2025 – June 30, 2025) Current second quarter cumulative period (January 1, 2026 – June 30, 2026) Net cash provided by (used in) investment activities Payments into time deposits (63) (4,344) Proceeds from withdrawal of time deposits 72 430 Decrease (increase) in short-term loans receivable 604 2,977 Proceeds from sales and redemption of securities 62 - Payments for purchases of property, plant and equipment (35,624) (25,415) Proceeds from sales of property, plant and equipment 2,416 4,989 Payments for purchases of intangible assets (2,924) (3,684) Payments for purchase of investment securities (20,512) (33,956) Proceeds from sales and redemption of investment Securities 2,989 26,265 Payments for purchase of subsidiary shares resulting in change in scope of consolidation (2,964) (478,162) Proceeds from sale of shares of subsidiaries resulting in change in scope of consolidation - 3,344 Payments in long-term loans payable (4,687) (3,934) Repayments of long-term loans receivable 33 33 Other payments (5,243) (4,048) Other proceeds 361 1,333 Net cash provided by (used in) investment activities (65,481) (514,173) Net cash provided by (used in) financing activities Net increase (decrease) in short-term debt 11,663 633,284 Repayments of finance lease obligations (3,798) (4,374) Proceeds from long-term debt 105,257 32,366 Repayment of long-term debt (43,619) (34,635) Redemption of bonds (10,022) (20,024) Purchase of treasury shares (4,001) (0) Proceeds from stock issuance to non-controlling interests 8,809 3,155 Cash dividends paid (16,462) (17,295) Cash dividends paid to non-controlling interests (17,393) (10,945) Proceeds from sale of subsidiary shares not resulting in change of scope of consolidation 380 - Payments for purchase of subsidiary shares not resulting in change of scope of consolidation (3,063) (119) Net decrease (increase) in deposits with withdrawal and usage restrictions (982) 628 Other proceeds 0 395 Other payments (28) (7) Net cash provided by (used in) financing activities 26,740 582,430 Effect of exchange rate change on cash and cash equivalents (4,456) 3,576 Net increase (decrease) in cash and cash equivalents (34,725) 26,505 Cash and cash equivalents at the beginning of period 206,297 208,577 Cash and cash equivalents at the end of period 171,572 235,082
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11 (4) Notes to the Semi-annual Consolidated Financial Statements (Notes related to the Assumption of a Going Concern) Not applicable. (Notes on Significant Changes in Shareholders’ Equity) Not applicable. (Segment Information) Previous Second Quarter Cumulative Period (Consolidated) (January 1, 2025 to June 30, 2025) 1. Information regarding sales and income (loss) for each reporting segment (million yen) Reporting segment Other (Note 1) Total Adjustment (Note 2) Total shown in the semi- annual consolidated fiscal statement (Note 3) Timber and Building Materials Housing Overseas Housing Real Estate Environment and Resources Total Net sales (1) Unaffiliated customers 111,454 260,855 571,016 111,483 11,717 1,066,525 7,923 1,074,448 302 1,074,750 (2) Intersegment sales/transfer 10,199 361 1,778 88 966 13,393 5,940 19,332 (19,332) － Total 121,653 261,216 572,794 111,571 12,684 1,079,918 13,862 1,093,780 (19,030) 1,074,750 Segment income (loss) 2,983 18,019 74,471 (6,310) (763) 88,400 2,455 90,856 (2,635) 88,221 Notes 1. “Other” is business segments not included in the reporting segments. Such segments include private nursing home/private elderly care facilities with nursing care business, insurance agency business, and civil engineering/construction work. 2. The adjusted segment loss of ¥2,635 million includes ¥(705) million in eliminated intersegment transactions and ¥1,930 million in corporate losses which are not allocated to any of the reporting segments. Corporate income (loss) is primarily selling, general and administrative expenses, non-operating income or non-operating expenses not belonging to any reporting segments. 3. Total segment income (loss) is adjusted against recurring income in the semi-annual consolidated statements of income. 4. Due to the finalization of the provisional accounting treatment for business combination, the figures in Segment income (loss) reflect a significant revision to the initial allocation of acquisition cost. 2. Information on Impairment Losses on Noncurrent Assets, Goodwill, etc. for Each Reporting Segment This information has little significance and has therefore been omitted.
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12 Current Second Quarter Cumulative Period (Consolidated) (January 1, 2026 to June 30, 2026) 1. Information regarding sales and income (loss) for each reporting segment (million yen) Reporting segment Other (Note 1) Total Adjustment (Note 2) Total shown in the semi- annual consolidated fiscal statement (Note 3) Timber and Building Materials Housing Overseas Housing Real Estate Environme nt and Resources Total Net sales (1) Unaffiliated customers 112,121 276,687 722,533 130,482 12,711 1,254,534 8,414 1,262,948 300 1,263,248 (2) Intersegment sales/transfer 10,097 693 3,042 1,078 1,128 16,038 6,293 22,331 (22,331) － Total 122,217 277,380 725,575 131,560 13,839 1,270,572 14,708 1,285,279 (22,031) 1,263,248 Segment income (loss) 616 16,872 45,701 (12,926) (1,214) 49,048 1,419 50,466 (697) 49,769 Notes 1. “Other” is business segments not included in the reporting segments. Such segments include private nursing home/private elderly care facilities with nursing care business, insurance agency business, and civil engineering/construction work. 2. The adjusted segment loss of ¥697 million includes ¥1,392 million in eliminated intersegment transactions and ¥2,089 million in corporate losses which are not allocated to any of the reporting segments. Corporate income (loss) is primarily selling, general and administrative expenses, non-operating income or non-operating expenses not belonging to any reporting segments. 3. Total segment income (loss) is adjusted against recurring income in the semi-annual consolidated statements of income. 2. Matters regarding Changes in Reporting Segments, etc. With the organizational restructuring in January 2026, the Company has changed the reporting segments to five categories, “Timber and Building Materials,” “Housing,” “Overseas Housing,” “Real Estate,” and “Environment and Resources”, from previous four categories, “Timber and Building Materials,” “Housing,” “Global Construction and Real Estate,” and “Environment and Resources,” effective from the second quarter cumulative period of the fiscal year ending December 31, 2026. Segment Information for the previous second quarter cumulative period was prepared based on the revised categories of reporting segments. 3. Information on Impairment Losses on Noncurrent Assets, Goodwill, etc. for Each Reporting Segment (Important Change in the Amount of Goodwill) In the Overseas Housing, Tri Pointe Homes Group (Tri Pointe Homes, Inc. and other 40 companies) has become our consolidated subsidiary. Due to this event, goodwill increased by ¥140,425 million for the current second quarter cumulative period. The above amount is provisional, as the allocation of the acquisition cost had not been completed as of the end of the current second quarter cumulative period. 4. Information on Assets for Each Reporting Segment (Significant Increase in Assets due to Acquisition of Subsidiaries) Assets for the “Overseas Housing” segment have increased compared to the end of the previous consolidated fiscal year due to the addition of the Tri Pointe Homes Group (Tri Pointe Homes, Inc. and 40 other companies) as a consolidated subsidiary.
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13 (Significant Subsequent Events) (Issuance of Corporate Bonds) At the meeting of the Board of Directors held on August 7, 2026, the Company made a comprehensive resolution regarding the issuance of corporate bonds as follows. 1. Type: Unsecured subordinated bonds with optional interest payment deferral and early redemption provisions 2. Scheduled period of issuance: From August 7, 2026 to July 9, 2027 3. Total amount of issuance: Within ¥300 billion However, not preclude multiple issuances within this limit. 4. Interest rate: <From the day following payment date until first optional redemption date> Interest rate of Japanese government bonds with the same term of maturity as the corporate bonds to be issued + 3.0% or less (fixed rate) <On and after the day following first optional redemption date> Interest rate of 1-year Japanese government bonds + 4.0% or less (annually- revised interest rate) 5. Amount to be paid in: Not less than ¥100 per ¥100 of the principal amount of each series of the bonds for subscription 6. Maturity period: Within 40 years 7. Method of redemption: Bullet redemption at maturity However, early redemption is available (1) on each interest payment date on and after the first optional redemption date, (2) for tax reasons, or (3) upon the occurrence of an equity credit change event 8. Use of proceeds: To be applied to funds for investment and loans, equipment, investment and loans to affiliates, repayment of borrowings, redemption of corporate bonds, operating capital, and redemption of commercial papers