Shiseido Company (4911) Q3 2024 earnings summary

Executive summary

• Q3 2024 focused on profit improvement through efficiency and cost control amid challenging travel retail in China, while Japan delivered significant profit growth, supporting overall profitability.

• Net sales for the nine months ended September 30, 2024, were ¥722.8 billion, flat year-over-year, with like-for-like sales down 3.1% and FX-neutral sales down 5.2%.

• Core operating profit declined 25.6% to ¥27.4 billion, and profit attributable to owners of parent fell 96.3% to ¥754 million, mainly due to lower sales in Travel Retail, China, and Americas, and structural reform expenses.

• Full-year forecast revised downward due to continued headwinds in Travel Retail and China; year-end dividend forecast remains unchanged but under review.

• The company completed the acquisition of DDG Skincare Holdings LLC (Dr. Dennis Gross Skincare) in February 2024 to strengthen its prestige skincare portfolio.

Financial highlights

• Net sales: ¥722.8 billion (0.0% year-over-year); like-for-like sales down 3.1%.

• Core operating profit: ¥27.4 billion (down 25.6% year-over-year); margin 3.8%.

• Operating profit: ¥2.2 billion (down 91.5% year-over-year), impacted by ¥25.2 billion in non-recurring items, mainly from structural reform expenses.

• Profit attributable to owners of parent: ¥754 million (down 96.3% year-over-year); basic EPS: ¥1.89.

• EBITDA: ¥67.3 billion (down 10.4% year-over-year).

Outlook and guidance

• Full-year 2024 net sales forecast revised to ¥990 billion (up 1.7% year-over-year), with core operating profit expected at ¥35 billion (down 12.2%).

• Profit attributable to owners of parent forecast at ¥6 billion; basic EPS forecast at ¥15.01.

• Annual dividend forecast maintained at ¥60 per share, but under review.

• Segment sales outlook: Japan and Asia Pacific expected to see high single-digit growth; China and Americas low to mid-single digit growth; Travel Retail low teen to high teen % decline.

• FY2024 real growth outlook revised from +8% to -1%, with Q4 expected at +6% due to low prior-year comps.