Kao Consolidated Financial Results for the Three Months Ended March 31, 2024

Although the global economy has been trending steadily toward recovery, the pace has varied by country and region. The Japanese economy is on a gradual recovery track. However, the outlook is unclear due to factors including a slowdown in the Chinese economy, geopolitical risks in Europe and the Middle East, and rising raw material prices.

According to retail sales and consumer purchasing survey data, the consumer products (household and personal care products and cosmetics) market in Japan, which is the Kao Group’s key market, grew during the period from January to March 2024 compared with the same period a year earlier. 

The Kao Group started its Mid-term Plan 2027 (“K27”), which it had announced on August 3, 2023, and has been conducting a “Global Sharp Top Strategy” to contribute as global No. 1 with leading-edge solutions that address the critical needs of customers. 

As a result, net sales increased 5.2% compared with the same period a year earlier to 365.8 billion yen. Currency translation accounted for a 4.8% increase and net sales increased 0.4% on a like-for-like basis (breakdown of the increase: 0.2% increase by volume, 0.2% increase by price). Operating income was 22.0 billion yen, an increase of 14.7 billion yen, and income before income taxes was 24.8 billion yen, an increase of 16.3 billion yen. Net income was 17.3 billion yen, an increase of 12.0 billion yen. 

Consumer Products Business

Sales increased 6.0% compared with the same period a year earlier to 281.2 billion yen. Currency translation accounted for a 3.8% increase and net sales increased 2.2% on a like-for-like basis (breakdown of the increase: 0.5% decrease by volume, 2.6% increase by price). 

Globally, consumer spending trended toward recovery amid ongoing inflation. In the market in Japan, signs of a rally in consumption and recovery in inbound demand were apparent. However, the market in China was affected by worsening business sentiment and the impact of factors including local reaction to Japan’s discharge into the ocean of water treated using the Advanced Liquid Processing System (ALPS) from the Fukushima Daiichi Nuclear Power Station. Under these circumstances, the Kao Group increased profitability in ways including adjusting selling prices by offering high-value-added products and working to strengthen brand loyalty. 

In Japan, sales increased 6.2% to 173.1 billion yen. In Asia, sales decreased 2.8% to 54.1 billion yen. On a like-for-like basis, sales decreased 10.1%. In the Americas, sales increased 11.3% to 33.0 billion yen. On a like-for-like basis, sales decreased 0.4%. In Europe, sales increased 24.2% to 21.0 billion yen. On a like-for-like basis, sales increased 8.5%.

Operating income increased 11.4 billion yen compared with the same period a year earlier to 14.8 billion yen, benefitting from the effects of structural reforms, including adjusting selling prices. 

Health and Beauty Care Business 

Sales increased 9.1% compared with the same period a year earlier to 94.8 billion yen. Currency translation accounted for a 6.2% increase and net sales increased 2.9% on a like-for-like basis (breakdown of the increase: 3.2% increase by volume, 0.3% decrease by price). Sales of skin care products increased. In Japan, both sales and market share grew due to the contribution of high-value-added products. Sales of the Bondi Sands brand, which the Kao Group acquired in November 2023, also contributed to results. 

Sales of hair care products increased. In a severely competitive environment in Japan, the Kao Group made a full-fledged start of its new premium strategy with the launch of the new hair care brand melt. In the Americas, new JOHN FRIEDA products performed strongly, and sales increased. Sales of products for hair salons in the Americas and Europe decreased. 

Sales of personal health products decreased. Sales of MegRhythm thermo products were strong, but sales of bath additives were affected by market shrinkage.

Operating income increased 0.8 billion yen compared with the same period a year earlier to 6.6 billion yen. 

Cosmetics Business

Sales increased 5.4% compared with the same period a year earlier to 54.6 billion yen. Currency translation accounted for a 3.4% increase and net sales increased 2.0% on a like-for-like basis (breakdown of the increase: 0.1% increase by volume, 1.9% increase by price). 

Amid market recovery in Japan, KANEBO prestige skin care and make up, ALLIE UV care and other “G11” global strategy brands continued to perform strongly, and sales increased. Sales in China decreased as the Curél derma care brand faced tough conditions due to factors including local reaction to Japan’s discharge of ALPS-treated water. In Europe, new SENSAI products contributed to growth in market share. Sales also increased, with strong performance by the MOLTON BROWN brand. 
 
Operating income was negative 4.7 billion yen, a decrease of 0.1 billion yen from the same period a year earlier.

Please read the full press release here.