Kao Corporation · TSE:4452
Kao — Kao Corp Ord — Q3 2024 Earnings Presentation
29 slides from Kao's earnings presentation, Nov 7, 2024
Slide 1: Consolidated Financial Results for the Nine Months Ended September 30, 2024
Consolidated Financial Results for the Nine Months Ended September 30, 2024 Kao Corporation November 7, 2024
Slide 2: Disclaimer
Disclaimer Forward-looking statements such as earnings forecasts and other projections contained in this release are based on information available at this time and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may diffe
Slide 3: Contents
Contents 01 Financial Results for the Nine Months Ended September 30, 2024 02 Appendix
Slide 4: Financial Results
01 Financial Results for the Nine Months Ended September 30, 2024
Slide 5: Key Highlights
Key Highlights • K27 has progressed as planned. The competitive advantages of core brands improved as the effects of structural reforms became clear. ✓ Restored profit through structural reforms - Entrenched earning power improvement by shifting to manufacturing that enhances value. - The effects of
Slide 6: Highlights of Consolidated Financial Results
Highlights of Consolidated Financial Results • The gross margin increased 2.3 pts and operating income increased 30.3 billion yen (+42.8%) to 101.1 billion yen due to contributions from H&PC products in Japan and the Chemicals Business, in addition to the effects of structural reforms. FY2023 FY2024
Slide 7: Highlights of Q3 Consolidated Financial Results (Jul. - Sep.)
Highlights of Q3 Consolidated Financial Results (Jul. - Sep.) • The operating margin increased 1.3 pts due to the effects of structural reforms and other factors. • Recorded a 6.3 billion yen gain on transfer of the beverage business upon the completion of the transfer. Billion yen FY2023 Q3 FY2024
Slide 8: Key Points of Q3 YTD Results
Key Points of Q3 YTD Results Net sales 1,119.0 billion yen Operating income 101.1 billion yen +2.1% on a like-for-like basis (+30.3 billion yen; +42.8%*); margin 8.5% FY2024 Q3 YTD Financial Results • Sales of Fabric and Home Care Business increased 7.2% and the operating margin increased to 17.8% d
Slide 9: Consolidated Net Sales by Segment/Geographic Region in Q3 YTD
Consolidated Net Sales by Segment/Geographic Region in Q3 YTD • Achieved higher-than-market growth in major categories as the consumer products market in Japan grew. • Net sales of the Consumer Products Business in Asia, excluding China decreased 2.7% due to a focus on improving profitability. Billi
Slide 10: Consolidated Results by Segment in Q3 YTD
Consolidated Results by Segment in Q3 YTD • Fabric & Home Care: Sales grew by both volume and price due to the introduction of new high-value-added products. • Chemical Business: Sales and profits increased due to expanded sales of high-value-added products, among other factors. Net sales Operating
Slide 11: Q3 Consolidated Net Sales by Segment/Geographic Region (Jul. – Sep.)
Q3 Consolidated Net Sales by Segment/Geographic Region (Jul. – Sep.) ・ Achieved higher-than-market growth in major categories as the consumer products market in Japan grew. ・ Chemical Business sales increased substantially in all regions due to expanded sales of high-value-added products, among othe
Slide 12: Q3 Consolidated Results by Segment (Jul. – Sep.)
Q3 Consolidated Results by Segment (Jul. – Sep.) • Fabric & Home Care: The operating margin increased 3.8 pts year on year to 20.5% • Life Care Business: 6.3 billion yen gain on transfer of beverage business Net sales Operating income Billion yen Like-for-like Operating Q3 Q3 Change3 % By Volume %2
Slide 13: Analysis of Change in Operating Income in Q3 YTD
Analysis of Change in Operating Income in Q3 YTD (Year-on-Year Change) • Adjusted selling prices while maintaining sales volume, mainly for household and personal care products in Japan. Recovery in the Chemical Business also contributed substantially. • Distribution inventory optimization in the Co
Slide 14: Improvement of Profit Margin through Progress of Earning Power Reforms
Improvement of Profit Margin through Progress of Earning Power Reforms • The gross margin improved 2.3 pts year on year. • Focus on achieving sustainable profit growth through structural reforms and the implementation of global growth strategies. • Increased ROIC by 4.9 pts, outperforming the plan,
Slide 15: Forecast of Factors in Operating Income in FY2024
Forecast of Factors in Operating Income in FY2024 (Year-on-Year Change) • Expecting the effect of structural reforms to be approximately 28.0 billion yen. • Sales volume is expected to decrease substantially due to the impact of distribution inventory optimization in the Cosmetics Business in China.
Slide 16: Raw Material Prices Outlook
Raw Material Prices Outlook (Consumer Products Business; vs. FY2023) • Expecting increases in personnel and logistics costs, in addition to fluctuations in prices for crude oil and natural fats and oils. • To achieve profit targets, cost increases will be offset through selling price adjustments and
Slide 17: Progress of Global Sharp Top Strategy
Progress of Global Sharp Top Strategy Aiming to Contribute as Global No.1 with Leading-edge Solutions and Brands UV Care Global expansion driven by the products Creation of luxury hair care products Global expansion with purpose-driven centered on unique Kao technologies rooted in a salon heritage b
Slide 18: Progress of Hair Care Business Growth Strategy
Progress of Hair Care Business Growth Strategy - Shift from the “Business Transformation” to the “Growth Driver” Advanced Product Development and Marketing through DX for a Full-scale Entry into the Premium Care Market Japan: Enter the in-bath premium care market ● melt, first new brand launch, expa
Slide 19: Chemical Business - Global Sharp Top Progress
Chemical Business - Global Sharp Top Progress Deepened the Global Sharp Top Strategy for Expanded Rollouts and Growth in Each Business Sector Oleo chemicals Performance chemicals Information materials Tertiary amines Highly durable asphalt modifiers Semiconductor chemicals ● 15% increase by volume ●
Slide 20: Key Highlights
Key Highlights • K27 has progressed as planned. The competitive advantages of core brands improved as the effects of structural reforms became clear. ✓ Restored profit through structural reforms - Entrenched earning power improvement by shifting to manufacturing that enhances value. - The effects of
Slide 21: Appendix
02 | Appendix
Slide 22: Consumer Products Market in Japan
Consumer Products Market in Japan 87 categories, SRI+1 26 categories, SLI2 Growth of H&PC Market Market growth rate in value terms Growth of Cosmetics Market Market growth rate in value terms (%) Continuing year-on-year growth from last year due to promotion of (%) Increases in nearly all categories
Slide 23: Kao’s Main Markets outside Japan
Kao’s Main Markets outside Japan • China: Year-on-year growth continued amid a gradual recovery in consumption. Asia • Indonesia: The market continued its growth trend due to rising product prices. • Thailand: The market continued its growth trend, although at a slower rate. China (including e-comme
Slide 24: Hygiene and Living Care Business in Q3 YTD
Hygiene and Living Care Business in Q3 YTD • Sales: 393.0 billion yen (+2.1%) Operating income: 54.2 billion yen (+30.3 billion yen*) Operating margin: 13.8% • Due to promotion of high-value-added products and effective deployment of marketing expenses, the brand power of Attack, CuCute, Magiclean a
Slide 25: Health and Beauty Care Business in Q3 YTD
Health and Beauty Care Business in Q3 YTD • Sales: 314.7 billion yen (+4.4%) Operating income: 25.6 billion yen (-4.9 billion yen*) Operating margin: 8.1% • New high-value-added Bioré products sold strongly due to effective deployment of marketing expenses. Ramped up rollout of UV care products outs
Slide 26: Life Care Business in Q3 YTD
Life Care Business in Q3 YTD • Sales: 40.6 billion yen (-2.8%) Operating income: 5.6 billion yen ( +6.8 billion yen*) Operating margin: 13.8% • The operating margin increased 16.8 pts to 13.8% due to a 6.3 billion yen gain on the transfer of the beverage business. • Sales of commercial-use hygiene p
Slide 27: Cosmetics Business in Q3 YTD
Cosmetics Business in Q3 YTD • Sales: 173.2 billion yen (-3.7%) Operating income: -7.9 billion yen (-6.3 billion yen*) Operating margin: -4.6% • Unable to compensate for the sales decline in China despite high-single digit sales in Asia, excluding China, and steady sales in Japan and Europe. • Profi
Slide 28: Chemical Business in Q3 YTD
Chemical Business in Q3 YTD • Sales: 301.6 billion yen (+3.8%) Operating income: 25.1 billion yen (+6.6 billion yen*) Operating margin: 8.3% • Profits increased due to increased sales in sectors that grew by capturing recovering demand, as well as to improved profit margins, mainly for oleo chemical
Slide 29: KAO
KAO Kirei-Making Life Beautiful