Shiseido Company (4911) Q2 2025 earnings summary

Executive summary

• Core operating profit rose 21.3% year-over-year to JPY 23.4 billion in H1 2025, exceeding expectations and driven by structural reforms and cost reductions, despite a 6% decline in net sales mainly due to weakness in China, Travel Retail, and Drunk Elephant.

• Free cash flow turned positive at JPY 17.5 billion, reversing a negative Q1 and improving by JPY 44.9 billion from the previous year.

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

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

• Full-year forecasts remain unchanged, with a focus on delivering the JPY 36.5 billion core operating profit target despite downside sales risks.

Financial highlights

• Net sales for H1 2025 were JPY 469.8 billion, down 6–7.6% year-over-year, with underlying growth rate of -6%.

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

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

• Basic earnings per share increased to JPY 23.87 from JPY 0.04 year-over-year.

• Gross margin increased to 77.4% from 75.8% year-over-year.

Outlook and guidance

• Full-year 2025 net sales forecast at JPY 995.0 billion, up 0.4% year-over-year; core operating profit forecast at JPY 36.5 billion, with over 60% already achieved in H1.

• Cost reduction target for 2025 raised from JPY 20 billion to JPY 25 billion, and two-year target for 2025-2026 increased from JPY 45 billion to JPY 50 billion.

• Risks to net sales remain, especially in Japan inbound, Americas, and Drunk Elephant recovery, but cost management and structural reforms are expected to offset these.

• Tariff impact for 2025 expected to shrink to JPY 3 billion from a previous maximum of JPY 7 billion.

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