Kao Corporation · TSE:4452
Kao — Kao Corp Ord — Q3 2023 Earnings Presentation
35 slides from Kao's earnings presentation, Nov 8, 2023
Slide 1: Consolidated Financial Results for the Nine Months Ended September 30, 2023
Consolidated Financial Results for the Nine Months Ended September 30, 2023 Kao Corporation November 8, 2023
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, 2023 02 Progress of Structural Reforms 03 FY2023 Forecast
Slide 4: Financial Results for the Nine Months Ended September 30, 2023
01 Financial Results for the Nine Months Ended September 30, 2023
Slide 5: 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 (%) Year-on-year growth due to price increases and intense heat. (%) Increase in makeup sales as people redu
Slide 6: Kao's Main Markets outside Japan
Kao’s Main Markets outside Japan • China : Amid a tendency toward gradual recovery in consumption, some market segments remained Asia unchanged, while others continued on a downward trend. trend. • Indonesia: Despite growth as the market remained firm, the rate of growth has slowed due to rising sel
Slide 7: Highlights of Q3 YTD Consolidated Financial Results
Highlights of Q3 YTD Consolidated Financial Results FY2022 FY2023 Billion yen Growth % Change Q3 YTD Q3 YTD Net sales 1,127.7 1,125.9 (0.2) (1.8) Effect of currency translation +2.7 * +30.4 Like-for-like growth (2.9) (32.2) Core operating income 76.9 70.8 (8.0) (6.1) Core operating margin 6.8% 6.3%
Slide 8: Highlights of Q3 Consolidated Financial Results (Jul.-Sep.)
Highlights of Q3 Consolidated Financial Results (Jul.-Sep.) • Core operating income +13.1 billion yen. Operating income +1.5 billion yen. Billion yen FY2022 Q3 FY2023 Q3 Growth % Change Net sales 393.8 387.4 (1.6) (6.5) Effect of currency translation* +2.2 +8.7 Like-for-like growth (3.9) (15.2) Core
Slide 9: Key Points of Q3 YTD Results
Key Points of Q3 YTD Results Net sales 1,125.9 billion yen Core operating income 70.8 billion yen -2.9% on a like-for-like basis (-6.1 billion yen); margin 6.3% Household and Personal Care Business • Amid market growth in Japan, sales remained strong since Q2, driven by laundry detergents and UV car
Slide 10: Consolidated Net Sales by Segment/Geographic Region in Q3 YTD
Consolidated Net Sales by Segment/Geographic Region in Q3 YTD Billion yen Japan Asia Americas Europe Consolidated Q3 YTD 211.8 33.7 2.9 - 248.4 Fabric & Home Care Like-for-like % +1.8 (3.3) +5.2 - +1.2 Q3 YTD 60.6 70.1 0.0 - 130.7 Sanitary Like-for-like % +9.7 (5.8) (46.1) - +0.9 Hygiene and Living
Slide 11: Consolidated Results by Segment in Q3 YTD
Consolidated Results by Segment in Q3 YTD Net sales Core operating income Billion yen Like-for-like % Core Q3 YTD Q3 YTD Change operating By Volume % By Price % margin % Hygiene and Living 379.2 +1.1 (3.5) +4.6 23.9 +4.9 6.3 Care Business Health and Beauty Care Business 288.5 +3.1 +0.9 +2.2 30.6 +3.
Slide 12: Q3 Consolidated Net Sales by Segment/Geographic Region (Jul.-Sep.)
Q3 Consolidated Net Sales by Segment/Geographic Region (Jul.-Sep.) Billion yen Japan Asia Americas Europe Consolidated Q3 77.3 11.6 0.9 - 89.9 Fabric & Home Care Like-for-like % +2.6 (7.6) (9.3) - +1.1 Q3 20.6 23.0 0.0 - 43.6 Sanitary Like-for-like % +13.3 (11.9) (78.4) - (1.5) Hygiene and Living Ca
Slide 13: Q3 Consolidated Results by Segment (Jul.-Sep.)
Q3 Consolidated Results by Segment (Jul.-Sep.) Net sales Core operating income Billion yen Like-for-like % Core Q3 Q3 Change operating By Volume % By Price % margin % Hygiene and Living 133.5 +0.2 (5.8) +6.0 14.0 +8.2 5.4 10.5 Care Business 7.1 Health and Beauty Care Business 99.7 +3.2 +0.4 +2.8 14.
Slide 14: Breakdown of Year-on-Year Changes in Operating Income during H1 and Q3
Breakdown of Year-on-Year Changes in Operating Income during H1 (Jan.-Jun.) and Q3 (Jul.-Sep.) (Billion yen) H1 FY2022 Operating FY2023 Raw material Price increases Volume Income Including Total Core FY2023 H&PC (9.5) +13.0 (4.0) Operating Operating Cost Reduction Cosmetics (0.5) (1.5) +0.5 (TCR) +4
Slide 15: Analysis of Change in Operating Income in Q3 YTD
Analysis of Change in Operating Income in Q3 YTD (Year-on-Year Change) Including Total Cost Reduction (TCR) +9.0 (Billion yen) FY2022 Operating FY2023 Income Core Raw material Price increases Volume FY2023 Operating Operating H&PC (7.0) +24.0 (5.5) Income Income Cosmetics (1.0) (1.0) (0.5) Raw mater
Slide 16: Hygiene and Living Care Business in Q3 YTD
Hygiene and Living Care Business in Q3 YTD • Sales: 379.2 billion yen (+1.1%) Core operating income: 23.9 billion yen (+4.9 billion yen) Core operating margin: 6.3% • Decisive investment increased sales and market share of laundry detergents and dishwashing detergents. • Implemented price increases
Slide 17: Health and Beauty Care Business in Q3 YTD
Health and Beauty Care Business in Q3 YTD • Sales: 288.5 billion yen (+3.1%) Core operating income: 30.6 billion yen (+3.3 billion yen) Core operating margin: 10.6% • Conducted strategic price increases for UV care products when launching new and improved high-performance products, while achieving s
Slide 18: Life Care Business in Q3 YTD
Life Care Business in Q3 YTD • Sales: 40.8 billion yen (-0.5%) Core operating income: -1.2 billion yen (-1.3 billion yen) Core operating margin: -3.1% • Although commercial-use hygiene products were affected by the shrinkage of the sanitizer market in Japan, the market in the Americas recovered and
Slide 19: Cosmetics Business in Q3 YTD
Cosmetics Business in Q3 YTD • Sales: 175.1 billion yen (-1.7%) Core operating income: -1.6 billion yen (-5.0 billion yen) Core operating margin: -0.9% • Sales and profits decreased as the market in China slowed down substantially year on year due to the impact of restraints on sales promotion activ
Slide 20: Cosmetics Business in Q3 YTD
Cosmetics Business in Q3 YTD Major New Products in Q3 Year-on-Year Growth/Share of Sales FY2022 Q3 YTD FY2023 Q3 YTD Share of Share of Growth Growth Sales Sales G11 +4% 70% +2%* 73% R8 (0)% 20% (4)% 19% Other (13)% 10％ (22)% 8% Global Shipments by Price * +11% for Japan MELLOW OFF VEIL Hirameki Coll
Slide 21: Chemical Business in Q3 YTD
Chemical Business in Q3 YTD • Sales: 275.0 billion yen (-14.0%) Core operating income: 18.5 billion yen (-8.3 billion yen) Core operating margin: 6.7% • Both sales and profits decreased due to a decline in demand caused by delayed economic recovery and shrinking profit margins, mainly for oleo chemi
Slide 22: Progress of Structural Reforms
02 Progress of Structural Reforms
Slide 23: Implementation as Planned of Structural Reforms for K27
Implementation as Planned of Structural Reforms for “K27” (Billion yen) Q2 Q3 Q4* Composition 1. Conduct a drastic strategic review and reorganization of inefficient businesses • Baby diaper business ✓ Termination of production in China 8.0 0.3 Approx. 5.0 Approx. 40% ✓ Optimize production system in
Slide 24: FY2023 Forecast
03 | FY2023 Forecast
Slide 25: Analysis of Change in Operating Income (Year-on-Year Change)
Analysis of Change in Operating Income (Year-on-Year Change) (Billion yen) FY2023 Core FY2022 Operating Q4 Operating Raw material Price increases Volume Including Total Income Cost Reduction Income H&PC +3.5 +9.0 0.0 (TCR) +3.0 FY2023 Cosmetics (0.5) +2.0 (5.0) Operating Income Full FY2022 Raw mater
Slide 26: Changes in Raw Material Prices and Effects of Price Increases
Changes in Raw Material Prices and Effects of Price Increases (Consumer Products Business) • Plan to cover approximately 90% of the cumulative increase in raw material prices starting from 2021 through 2022-2023. • Shift to profit increase (vs. 2022) starting in 2023 Q2 from ongoing price increases.
Slide 27: Measures in Q4: Household and Personal Care Business
Measures in Q4: Household and Personal Care Business Market Japan • Continued growth of the market for UV care and other seasonal products is expected in H2 due to the effects of the lingering summer. Although unit prices have generally increased, volume is expected to remain unchanged year on year,
Slide 28: Measures in Q4: Cosmetics Business
Measures in Q4: Cosmetics Business Market • In Japan, brisk conditions are expected, mainly in the makeup market, due to recovery from the COVID-19 pandemic, including recovery in inbound demand and increased opportunities to go out. • In China, slow growth is expected. The future impact on Japanese
Slide 29: Measures in Q4: Chemical Business
Measures in Q4: Chemical Business Market Conditions • Economic recovery in Europe has been delayed and a slump in demand continues. • Recovery in demand is expected from Q1 2024 onward. • While demand for information materials remains weak, some oleo chemical-related sectors are on a recovery trend.
Slide 30: Laundry Detergent - Regaining the No. 1 Market Share in Japan
Laundry Detergent - Regaining the No. 1 Market Share in Japan ■ Aug. 5, 2023- Attack ZERO Perfect Stick Kao has maintained the No.1 market share since • A new stick-shaped detergent that will transform* doing September by promoting new products. laundry in Japan (%) SRI＋ • Total sales volume has sur
Slide 31: Post-Launch Status of Attack ZERO Perfect Stick in Taiwan and Hong Kong
Post-Launch Status of Attack ZERO Perfect Stick in Taiwan and Hong Kong A rollout to multiple locations since the launch has captured market share exceeding the target. Taiwan Hong Kong (Since August 24, 2023) (Since September 15, 2023) September results September results Market share*: 2.0％ Market
Slide 32: Post-Launch Status of Improved Humming Flair
Post-Launch Status of Improved Humming Flair (Since August 26, 2023) Year-on-year (YoY) increases in market share* of Humming Flair and total share of Kao products in the fabric softener market. YoY +0.4 YoY +0.5 (%) 13.0 12.3 YoY +0.2 YoY +0.5 11.9 12.0 11.6 11.6 Improved Humming Flair 10.9 11.0 10
Slide 33: Post-Launch Status of Toilet Magiclean Foam Pack
Post-Launch Status of Toilet Magiclean Foam Pack (Since October 7, 2023) Strong sales for the new product. Total share of Kao products in this market* exceeded 50%. Just cover with foam and wait 5 minutes (%) Foam adheres to dirt 50.7 51.7 Kao total Shiny and clean without scrubbing 50.0 By year By
Slide 34: Status of Prestige Brands/KATE
Status of Prestige Brands/KATE *Source: SLI, INTAGE Inc. Prestige Brands: Year-on-Year Change in Japan* KATE: Share of Point Makeup Market in Japan* Department store market By year Latest 12 months Kao prestige brands color & cover cushion CURL AWAKING LIP MONSTER MASCARA souffle matte 34
Slide 35: KAO
KAO Kirei-Making Life Beautiful