Shiseido Company (4911) Q2 2024 earnings summary

Executive summary

• Net sales for 1H 2024 were ¥508.5 billion, up 2.9% year-over-year, but like-for-like sales declined 0.5% to 1% due to weakness in Travel Retail, China, and Americas, partially offset by strong growth in Japan and EMEA.

• Core operating profit was ¥19.3 billion, down ¥8.8 billion or 31.3% year-over-year, impacted by lower Travel Retail and China profit, despite gains in Japan, EMEA, and Asia Pacific.

• Non-recurring items totaled ¥22 billion, mainly from restructuring costs in Japan and China, leading to an operating loss of ¥2.7 billion.

• EBITDA margin for the first half was 8.9%.

• Profit attributable to owners dropped by ¥11.7 billion year-over-year, reaching ¥15 million.

Financial highlights

• Net sales: ¥508.5 billion (+2.9% YoY); like-for-like sales down 0.5% to 1%.

• Core operating profit: ¥19.3 billion (3.8% margin), down 31.3% YoY.

• EBITDA: ¥45.5 billion (8.9% margin), down 14.6% YoY.

• Profit attributable to owners: ¥0.0 billion to ¥15 million, down ¥11.7 billion YoY.

• Free cash flow: -¥27.5 billion; net D/E ratio increased to 0.12.

Outlook and guidance

• Full-year 2024 guidance maintained: net sales ¥1,000 billion (+4.7% YoY), core operating profit ¥55 billion (+38.0%), profit attributable to owners ¥32.5 billion.

• Focus on strengthening actions in China, maximizing Japan and EMEA sales, and global cost reduction.

• Strategic business transformation and capital allocation to be announced in November 2024.

• Management targets 9% core operating profit margin by 2025, with continued focus on structural reforms and cost optimization.