Shiseido Company (4911) Q2 2025 earnings summary

Executive summary

• Core operating profit for H1 2025 rose 21.3% year-over-year to ¥23.4 billion, exceeding expectations and driven by global cost management and structural reforms, despite net sales declining 6–7.6% due to weakness in China, Travel Retail, and Drunk Elephant.

• Over 60% of full-year core operating profit guidance (¥36.5 billion) already achieved in H1, with full-year forecasts maintained.

• Free cash flow turned positive at ¥17.5 billion, a significant improvement from the previous year.

• Profit attributable to owners of parent increased by ¥9.5 billion to ¥9.5 billion, reflecting improved core profit and absence of prior-year restructuring costs.

• Comprehensive income turned negative at ¥(15.7) billion, mainly due to adverse foreign exchange impacts from yen appreciation.

Financial highlights

• Net sales for H1 were ¥469.8 billion, with an underlying decline of 6–7.6% year-over-year, mainly due to weakness in China, Travel Retail, and Drunk Elephant.

• Operating profit improved to ¥18.1 billion from a loss of ¥2.7 billion in the prior year.

• EBITDA rose 6.7% year-over-year to ¥48.5 billion, with EBITDA margin at 10.3%.

• Basic earnings per share rose to ¥23.87 from ¥0.04 year-over-year.

• Non-recurring items, mainly structural reform expenses, totaled ¥4.8–5.3 billion YTD.

Outlook and guidance

• Full-year 2025 net sales forecast at ¥995.0 billion, up 0.4% year-over-year; core operating profit forecast at ¥36.5 billion, with cost management and transformation to offset sales risks.

• Downside risks to sales targets expected due to market volatility, especially in inbound Japan, China, and Drunk Elephant.

• Tariff impact for FY2025 expected to shrink to ¥3.0 billion from previously estimated ¥7.0 billion.

• Structural reform expenses expected in the second half, with full-year profit forecasts unchanged.

• Double-digit operating profit margin remains a medium-term target.