Pola Orbis Holdings (4927) Q2 2024 earnings summary

Executive summary

• Consolidated net sales for H1 FY2024 decreased by 2.3% year-over-year to ¥83,836 million, mainly due to lower revenue at POLA, despite growth at ORBIS and Jurlique.

• Operating income declined by 18.4% year-over-year to ¥7,316 million, with the operating margin dropping from 10.4% to 8.7%.

• Interim profit attributable to owners of parent increased by 1.3% year-over-year to ¥7,500 million, supported by foreign exchange gains and the absence of prior-year extraordinary losses.

• Comprehensive income decreased 9.1% year-over-year to ¥5,882 million.

Financial highlights

• Gross profit fell by 2.7% year-over-year to ¥68,778 million, with a slight deterioration in the cost of sales ratio (18.0% vs. 17.7%).

• SG&A expenses remained stable, with labor expenses up ¥140 million and sales commissions down ¥1,038 million year-over-year.

• Non-operating income rose 55.4% year-over-year, mainly from foreign exchange gains.

• Total assets as of June 30, 2024, were ¥200,044 million, a 0.6% decrease from December 31, 2023.

• Interim EPS was ¥33.90, up from ¥33.47 in the prior year.

Outlook and guidance

• Full-year FY2024 consolidated net sales are forecast at ¥173,500 million, a slight increase year-over-year but down 3.1% from previous forecast, with operating income projected at ¥14,500 million.

• POLA's forecast was revised downward due to weak domestic consignment sales and continued challenges in China, while ORBIS's forecast was revised upward on strong performance.

• Profit attributable to owners of parent is expected to rise 20% year-over-year to ¥11,600 million, with full-year EPS projected at ¥52.43.

• Dividend forecast remains unchanged at ¥52 per share (payout ratio 99.2%).