Shiseido Company,limited · TSE:4911
Shiseido Company,limited — Shiseido Co Ltd Ord — Q1 2024 Earnings Presentation
28 slides from Shiseido Company,limited's earnings presentation, May 10, 2024
Slide 1: Progress on Business Transformation and Key Highlights in 2024 First Quarter
Progress on Business Transformation and Key Highlights in 2024 First Quarter May 10, 2024 Shiseido Company, Limited Kentaro Fujiwara President and COO SHISEIDO
Slide 2: Forward-looking statements
In this document, statements other than historical facts are forward-looking statements that reflect our plans and expectations. These forward-looking statements involve risks, uncertainties, and other factors that may cause actual results and achievements to differ from those anticipated in these s
Slide 3: Key Highlights in 2024 Q1
Key Highlights in 2024 Q1 Net Sales YoY (LfL’): +3%, Core Operating Profit: ¥11.3 bn Solid start to 2024 amid steady market recovery; structural reforms on track The full-year forecast remains unchanged Delivered robust growth in Japan, Americas and EMEA, bolstered by innovations and new product lau
Slide 4: Japan: Growth Momentum Continues to Accelerate
Japan: Growth Momentum Continues to Accelerate Growth continues to accelerate QoQ since 2023 Q1 Expanding market share by significantly outperforming the market Core brands driving strong growth overall by selection and concentration of brands @ Consumer Purchases" (Local): Q1 +high teen% YoY Growth
Slide 5: Japan: Progress on Mirai Shift NIPPON 2025
Japan: Progress on “Mirai Shift NIPPON 2025” Accelerated growth by strategic investment allocation in key focus areas Achieved steady results in new market creation through strategic marketing ®@ Brand Strategy > Selection and concentration of brands BS REM LOD AE * Strengthening investments in core
Slide 6: Japan: Progress on Mirai Shift NIPPON 2025
Japan: Progress on “Mirai Shift NIPPON 2025” Sustainable growth, building a profitable foundation, and human capital transformation Early retirement incentive plan implemented in Q1 2024, accelerated business transformation @ Human Capital Transformation & Productivity Enhancement > Early retirement
Slide 7: Travel Retail: Progress on Strategic Actions
Travel Retail: Progress on Strategic Actions Normalized inventory levels as planned Shifting back towards a growth model with focus on tourists ® Retailer Inventory Adjustments Progressed on Track > South Korea: normalized in Q4 2023 > Hainan Island: normalized in Q1 2024 @ Expand Tourist Sales Cont
Slide 8: China: Progress on Strategic Actions
China: Progress on Strategic Actions Building a sustainable profit delivery business model in a moderately growing environment to emphasize quality growth ® Growth Strategy > Delivering steady results by strategic investments in key focus areas * Q1 Consumer Purchases: high-prestige brands” +high si
Slide 9: Making Steady Progress in Global Cost Reduction and Profit Boosting
Making Steady Progress in Global Cost Reduction and Profit Boosting The Global Transformation Committee enhanced execution monitoring Accelerating initiatives to realize the effects of ¥15.0 bn+ in 2024; Contributing to profitability from Q1 onwards ®@ Q1 Key Actions >» Japan: COGS reduction by focu
Slide 10: 2024 First Quarter Results
2024 First Quarter Results (January—March) May 10, 2024 Shiseido Company, Limited Ayako Hirofuji Deputy Chief Financial Officer SHISEIDO
Slide 11: 2024 Q1 (January-March): Executive Summary
2024 Q1 (January-March): Executive Summary (Billion yen) 2023 Net Sales 2024 Net Sales Change Change % FXNeutral % ne Net Sales 240.0 100% 249.5 100% +9.4 +3.9% —2.7% +3.2% Core Operating Profit 12.5 5.2% 11.3 4.5% 1.2 —9.6% Non-recurring items -2.0 -0.8% -20.1 -8.0% -18.1 - Operating Profit 10.5 44
Slide 12: Clé de Peau Beauté, Drunk Elephant and Fragrances Delivered Robust Growth
Clé de Peau Beauté, Drunk Elephant and Fragrances Delivered Robust Growth Net sales by brand Like-for-like* (Billion yen) FX, etc. Transferred, Dr. Dennis brands aa Gross Skincare F brand | ragrances Drunk ig) brands Cie de Elephant ELIXIR +21 Peau +30% #3% Beauté wes || anessA — +7% ° -0% IPSA rans
Slide 13: Japan: Delivered Robust Growth Led by Core Brands
Japan: Delivered Robust Growth Led by Core Brands China and Travel Retail: Negative Growth Steadily Narrowing Americas and EMEA: Continued Strong Momentum Like-for-like* 2023 (vs. 2022) Q!1 Q2 Q3 Q4 FY Japan +8% +9% +6% +17% +10% China -3% +20% -9% -21% -5% Asia Pacific +16% +12% +15% +8% +13% +5% A
Slide 14: Japan: Delivered Robust Growth by Strategic Marketing
Japan: Delivered Robust Growth by Strategic Marketing Focused on New Market Creation, Driving Share Gains Fueled by Core Brands © Qt market: > Local: YoY * Recovery overall, approaching to pre-pandemic levels 0% * Recovery accelerated in middle-pricerange ten nnnnn ee --- vs. 2019% * Makeup category
Slide 15: China: Strengthening Strategic Investments in Growth Opportunities
China: Strengthening Strategic Investments in Growth Opportunities, Clé de Peau Beauté and NARS Contributed to Share Gains in Prestige © QI Market: Se __” fF >» Negative growth for two consecutive quarters - > International Women’s Day promotion: strong growth led by TikTok > Impact by treated water
Slide 16: Destocking on Track in TR, Continued Strong Momentum in Americas, EMEA
Destocking on Track in TR, Continued Strong Momentum in Americas, EMEA Americas Double-digit growth for SHISEIDO and Drunk Elephant Growth in all categories, steady market expansion @ Shiseido External Sales: Q1+9% incl. Dr. Dennis Gross Skincare : +22% >» SHISEIDO : thigh teen% > Drunk Elephant : t
Slide 17: COGS LfL Ratio: Increased Due to Higher Inventory Write-offs
COGS LfL Ratio: Increased Due to Higher Inventory Write-offs; Expect to Improve from Q2 Onwards with Recovery in China and TR 2023 2023 2024 Q! Full Year Q! COGS 29.8% 26.7% 24.8% COGS LfL" 22.1% 23.1% 24.1% coGs Q1 YoY COGS analysis 29.8% oeeee%* COGSLIL" (+) Decline of the impact from MSA® for bus
Slide 18: Impact of Sales Decline in Travel Retail Largely Offset by Higher Profit
Impact of Sales Decline in Travel Retail Largely Offset by Higher Profit Achieved in Japan and Other Regions Japan: Profit increased by higher gross profit from sales growth China: Lower gross profit from sales decline offset by strategic investment and cost management reflecting market dynamics Asi
Slide 19: 2024 Forecast
2024 Forecast The full-year forecast remains unchanged Stay committed to maximizing profit and minimizing risks @) Continued growth momentum of core brands in Japan @) Maximize sales from inbound tourists @) Growth acceleration in Americas, EMEA and Asia Pacific oS) Positive FX impact due to the wea
Slide 20: Be a Global Winner
S HLSEIDO, Be a Global Winner |
Slide 21: Supplemental Data: KPI Trends
Supplemental Data 1 KPI Trends mmm Net Sales Core Operating Profit ——Core Operating Profit Margin (Billion yen) 2022 2023 2024 21
Slide 22: Supplemental Data: Net Sales and Core OP by Reportable Segment
Supplemental Data 2 Q1 Net Sales and Core Operating Profit by Reportable Segment Top: Net Sales Bottom: Core OP 2023 % of Net Sales / 2024 % of Net Sales / YoY YoY YoY YoY, (Billion yen) Core OPM %! Core OPM %_" Change Change %___FX-Neutral % LAL % 2 Japan +19.3% +19.3% +19.6% China 55.5 +4.2% -3.2%
Slide 23: Supplemental Data: Q1 Net Sales by Category
Supplemental Data 3 Q1 Net Sales by Category (Billion yen) YoY Change % / Ja an 2023 Net sates 2024 Net sales change YoY 1 wee? Pp EX-Neutral % Prestige 18.1 29.3% 26.3 35.8% +8.3 +45.8% Premium 36.7 59.4% 38.8 52.8% +21 +5.9% Others 6.9 11.3% 8.4 1.4% +15 +21.3% Total 61.7 100% 73.6 +11.9 +19.3% +1
Slide 24: Supplemental Data: Q1 Cost Structure
Supplemental Data 4 Q1 Cost Structure (% of Net Sales based on Core Operating Profit ) SG&A" 66.9% 70.8% | _ @ Marketing investments Marketi 25.2% >» Strengthened investments for brand equity investments 23.0% +2.2 pts improvement >» Agile cost management Brand development/ +0.1 pts R&D @ Personnel
Slide 25: Supplemental Data: Q1 SG&A
Supplemental Data 5 Q1 SG&A YoY % of % of YoY YoY Change Bink 2023 Net Sales 2024 Net Sales Change Change % FX- Billion yen) Neutral % Marketing investments | 79.2 33.0% 87.4 35.0% +81 +10.3% +3.6% pnd development! 8.4 3.5% 94 3.6% $0.7 +8.0% +4.4% Personnel expenses 32.9 13.7% 36.9 14.8% +3.9 +11.9
Slide 26: Supplemental Data: Cash Flow Management
Supplemental Data 6 Cash Flow Management Free Cash Flow: -59.8 (Billion yen) . suns, 5 Operating CF: +3.6 Investing CF: -63.4 Inventories (Billion yen) 149.6 157.2 DSI (bays) 197 213 ays : Depreciation, (235) (235)* amortization and Increasein Provisions impairment losses inventories for Net D/E rat
Slide 27: Supplemental Data: Q1 Non-recurring Items
Supplemental Data 7 Q1 Non-recurring Items (Billion yen) 2023 2024 Qi Qi Gain / Loss ¢ on n Sale of Business — 0.9 - a” or Tec. Sale or Non “coven Assets es ee Sy | ; . CR ee bnpnees ee oy | - 68 Impairment Losses -1.8 -0.1 Government Grant Income o on n COVID 19 0.0 - - Ome . . . . smn ey Be Operat
Slide 28: SHI/SEIDO
SHI/SEIDO