Slide 1: Earnings briefing materials for 2Q of the fiscal year ending December 2023
Earnings briefing materials for 2Q of the fiscal year ending December 2023 08/08/2023 Representative Director, President & CEO Katsunori Kawabata
Slide 2: Executive Summary
Executive Summary Sales : 90.3 billion yen (vs. the forecast: -3.4%; -3.1 billion yen) Operating Income : 9.92 billion yen (vs. the forecast: -8.1%; -880 million yen) • While sales of insecticides and repellents increased thanks to an increase in market share, results nevertheless fell short of the
Slide 3: Financial Result Highlights of 2Q FY 12/2023
Financial Result Highlights of 2Q FY 12/2023
Slide 4: Financial Result Highlights
Financial Result Highlights (Unit: 0.1 billion JPY) n Increase in sales, decrease in operating income. While both sales and operating income fell short of the forecast, we believe this can be offset in 2H. n We registered year-on-year growth in insecticides and repellents, which saw its market share
Slide 5: Progress Toward The Operating Income Target
Progress Toward The Operating Income Target (Quarterly / Cumulative) (Unit: 0.1 billion JPY) n An operating income underperformance versus the forecast in 2Q (April – June) negatively impacted 1H results n We expect the impact from soaring raw material prices to be less pronounced in 2H and beyond Q
Slide 6: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) (Unit: 0.1 billion JPY) n We offset the negative impact from soaring raw material prices (-1.75 billion yen) through the execution of cost pass-throughs (+2.32 billion yen) n Sales volume fell by 15% YoY for products for which prices were revised, but this impac
Slide 7: Operating Income Change Factors (Vs. Forecast)
Operating Income Change Factors (Vs. Forecast) (Unit: 0.1 billion JPY) n Unit prices increased as expected, through the execution of cost pass-throughs. However, sales volume for the products that underwent this price revision fell 7% short of the forecast n A sales performance falling short of the
Slide 8: Sales By Segment
Sales By Segment *To outside customers (excludes internal eliminations) (Unit: 0.1 billion JPY) n Insecticides and Repellents: Domestic sales grew YoY, while overseas sales grew, particularly in ASEAN n Household products: Results were negatively impacted by a YoY decrease and underperformance versu
Slide 9: Status Of The Insecticides & Repellents Segment (Domestic)
Status Of The Insecticides & Repellents Segment (Domestic) *To outside customers (excludes internal eliminations) Market overview & Earth Corporation’s market share as of 06/30/2023 Sales change factors (vs. Forecast) 【Market YoY】 【Market share】 Contribution from new products -8.9 100.3% 57.3% ＋0.9p
Slide 10: Status Of Bath Salts (Domestic)
Status Of Bath Salts (Domestic) *To outside customers (excludes internal eliminations) Market overview & Earth Corporation’s market share as of 06/30/2023 Trends in core products 【Market YoY】 【Market share】 • Japan’s Famous Hot Spring product line 93.0% 45.1% -2.0pt vs. forecast 99% n While the extr
Slide 11: COGS - Status Overview
COGS - Status Overview (Unit: 0.1 billion JPY) n The impact amount as of the end of 2Q stood at 1.75 billion yen, out of a full year impact amount forecast of 2.5 billion yen n From its inception, the forecast expected the impact to be more pronounced in 1H, so we consider these results to be in lin
Slide 12: SG&A Expenses - Status Overview
SG&A Expenses - Status Overview (Unit: 0.1 billion JPY) n Overall, SG&A expenses were within the forecast range, even with advertising and R&D expenses being carried over into the third and fourth quarters. As of the end of 2Q, SG&A expenses stood at - 1.23 billion yen versus the forecast. 2Q FY12/2
Slide 13: Overseas Results
Overseas Results (Unit: 0.1 billion JPY) n Registered strong growth, centered primarily around Thailand (+10% YoY) and Vietnam (+14% YoY) n Results in China (-28% YoY) were negatively impacted by a weak sales performance on third-party e-commerce sales channels n While the impact from soaring raw ma
Slide 14: Detailed Results By Country: Thailand
Detailed Results By Country: Thailand Local subsidiary results Effective YoY sales on a local currency basis: -4% (0.1 B JPY) Sales Includes internal sales 50 OI Margin transactions 1H in review Future measures • Strong market share expansion • FY 2023 market share for 40 through the categories of i
Slide 15: Detailed Results By Country: Vietnam
Detailed Results By Country: Vietnam Local subsidiary results Effective YoY sales on a local currency basis: +10% (0.1 B JPY) Includes internal sales 40 Sales transactions 1H in review Future measures OI Margin • Strong sales performance in the • Aim to further grow our market share 29.8 categories
Slide 16: Detailed Results By Country: China
Detailed Results By Country: China Local subsidiary results Effective YoY sales on a local currency basis: -28% (0.1 B JPY) 20 Sales OI Margin 1H in review Future measures 15.4 • Some of our product categories did • Review the products in the 15 better than other during this year’s categories offere
Slide 17: Detailed Results By Country: Malaysia / Philippines
Detailed Results By Country: Malaysia / Philippines Local subsidiary results Effective YoY sales on a local currency basis: -16% (0.1 B JPY) 3 Sales OI Margin 1H in review Future measures 2 0.9 0.8 • We were unable to carry out sales activities as planned due to a shortage in sales personnel • Incre
Slide 18: Initiatives Going Forward / Full Year Results Forecast
Initiatives Going Forward / Full Year Results Forecast
Slide 19: Additional Cost Pass-throughs
Additional Cost Pass-troughs n Execute additional cost pass-throughs for some products in the categories of bath salts and mouthwash, starting in September (Outside the initial forecast) n Unit price revisions of between 5% and 7% Target products (Selected examples) Target products 45SKU “Onpo” seri
Slide 20: Release New Fall Season Products / Execute Product Renewals
Release New Fall Season Products / Execute Product Renewals n The release of new fall products does not feature in the initial forecast, so we expect this to make a positive sales and profit contribution n Unlock demand for insecticides & repellents in the fall and winter months, launching new ambit
Slide 21: Toward Achieving The Full Fiscal Year Forecasts
Toward Achieving The Full Fiscal Year Forecasts (Unit: 0.1 billion JPY) n As of the end of 2Q, operating income stood at 9.92 billion yen (vs. forecast: -880 million yen). However, taking into account recent result trends and initiatives going forward, we expect to be able to stage a recovery in 2H.
Slide 22: FY 12/2023 Forecast Highlights
FY 12/2023 Forecast Highlights No changes from the previous results announcement (Unit: 0.1 billion JPY) n The plan remains as announced in February 2023, in light of initiatives to be carried out in 2H and measures to secure a recovery 2023 2022 Topics Forecast Realized • Sales volume increase; lau
Slide 23: Shareholder Returns
Shareholder Returns 【Shareholder Returns Policy】 n Adopt an agile approach and, should our performance and retained earnings levels allow it, consider raising dividends and/or executing share buybacks n KPI: DOE (Dividend on Equity Ratio) 4〜5% Dividend-related KPIs Ordinary Dividend Per Share - Tren
Slide 24: ESG Related
ESG Related Social ESG Investment n Certified as a “Health & n Selected for the first time as a Productivity Management component of the SOMPO Outstanding Organization – White Sustainability Index 500” Company for the third consecutive year Earth Corporation certified as a “Health & Productivity Man
Slide 25: Supplementary Materials; FY12/2023 Q2 Results
Supplementary Materials; FY12/2023 Q2 Results
Slide 26: Consolidated: Statement of Income
Consolidated: Statement of Income （Unit：million JPY） Q2 FY12/22 Q2 FY12/23 Q2 FY12/23 FY12/23 Realized Forecast Realized YoY vs.FCT Forecast YoY Sales 89,305 93,500 90,329 101.1% 96.6% 160,000 56.5% Cost of sales 49,372 52,402 51,346 104.0% 98.0% 93,500 54.9% Gross profit 39,933 41,097 38,982 97.6%
Slide 27: Consolidated: Sales by Segment
Consolidated: Sales by Segment （Unit：million JPY） Q2 FY12/22 Q2 FY12/23 Q2 FY12/23 FY12/23 Realized Forecast Realized YoY vs.FCT Forecast Progress rate Insecticides & Repellents 44,086 45,633 44,435 100.8% 97.4% 61,713 72.0% Oral hygene products 3,950 4,083 3,992 101.1% 97.8% 8,442 47.3% Bath salts
Slide 28: Operating Income Change Factors (YoY)
Operating Income Change Factors (YoY) （Unit：million JPY） 11,941 FY12/22.Q2 (Realized) ＜Breakdown＞ Decrease in gross • Effect of revenue increase (excluding the -285 profit effect of price pass-through) -950 • Price shifting effect +2,323 • Change in sales mix -1,239 • Impact of raw material prices a
Slide 29: Operating Income Change Factors (vs. Forecast)
Operating Income Change Factors (vs. Forecast) （Unit：million JPY） 10,800 FY12/23.Q2 (Forecast) ＜Breakdown＞ Gross profit below • Sales plan achieved (excluding the impact -902 the forecast of price pass-through) -2,115 • Price shift effect -558 • Change in sales mix -654 • Impact of raw material pric
Slide 30: Consolidated: SG&A Expenses
Consolidated: SG&A Expenses （Unit：million JPY） Q2 FY12/22 Q2 FY12/23 Q2 FY12/23 FY12/23 Realized Forecast Realized YoY vs.FCT Forecast Progress rate Personal expenses 10,173 10,835 10,715 105.3% 98.9% 21,795 49.2% Shipping expenses 2,315 2,493 2,337 101.0% 93.7% 4,821 48.5% Strage expenses 1,314 1,4
Slide 31: Consolidated: Balance Sheet
Consolidated: Balance Sheet （Unit：million JPY） End of End of Q2 Final comparison End of Q2 vs.FY22 Q2 FY2022 FY2023 +/- FY2022 +/- Current Cash & deposits 14,772 18,724 3,951 21,739 ▲ 3,014 assets Trade receivable 24,163 38,114 13,951 37,223 891 Inventories 32,253 33,645 1,392 29,147 4,498 Others 2,
Slide 32: Consolidated: Statement of Cash Flows
Consolidated: statement of Cash flows （Unit：million JPY） End of Q2 End of Q2 vs. FY22 Q2 End of FY2022 FY2023 +/- FY2022 Cash flows from operating activities 6,686 4,336 ▲ 2,350 3,901 Cash flows from investing activities ▲ 3,173 ▲ 6,415 ▲ 3,242 ▲ 6,266 Cash flows from financing activities ▲ 3,642 5,
Slide 33: Consolidated: Capital Expenditure, Depreciation Expenses
Consolidated: Capital expenditure, Depreciation expenses （Unit：million JPY） FY2019 FY2020 FY2021 FY2022 FY2023 FY2019 FY2020 FY2021 FY2022 FY2023 Realized Realized Realized Realized Forecast Realized Realized Realized Realized Forecast Depreciation CAPEX 1,953 3,548 2,928 5,878 7,100 3,334 3,334 3,5
Slide 34: Overview of Group Companies' Business Performance
Overview of Group Companies' Business Performance （Unit：million JPY） Earth Corporation BATHCLIN Corporation Hakugen Earth Co., Ltd. Earth Pet Co., Ltd. FY22.Q2 FY23.Q2 FY23.Q2 FY22.Q2 FY23.Q2 FY23.Q2 FY22.Q2 FY23.Q2 FY23.Q2 FY22.Q2 FY23.Q2 FY23.Q2 Realized Forecast Realized Realized Forecast Realize
Slide 35: This presentation contains forward-looking statements and financial results forecasts. These forward-looking statemen…
This presentation contains forward-looking statements and financial results forecasts. These forward-looking statements and financial results forecasts were formulated on the basis of company assumptions based on the information available. These statements and forecasts are subject to risks and unce