Kao Consolidated Financial Results for the Six Months Ended 30 June, 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 exchange rate fluctuations, a slowdown in the Chinese economy and geopolitical risks in Europe and the Middle East.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 June 2024 compared with the same period a year earlier.To successfully carry out its Mid-term Plan 2027 (“K27”), the Kao Group has been steadily 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 6.7% compared with the same period a year earlier to 788.0 billion yen. Currency translation accounted for a 4.8% increase and net sales increased 1.9% on a like-for-like basis (breakdown of the increase: 0.9% increase by volume, 1.1% increase by price). Operating income was 57.9 billion yen, an increase of 32.0 billion yen, and income before income taxes was 64.4 billion yen, an increase of 35.8 billion yen. Net income was 44.8 billion yen, an increase of 27.1 billion yen.
 
Consumer Products Business
Sales increased 5.6% compared with the same period a year earlier to 609.4 billion yen. Currency translation accounted for a 3.7% increase and sales increased 1.9% on a like-for-like basis (breakdown of the increase: 0.8% decrease by volume, 2.7% increase by price).Globally, the temporary inflation gradually subsided, and a trend toward consumer preference for low prices began to appear. 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 the economic slowdown and other factors. Under these circumstances, the Kao Group increased profitability in ways including upgrading its marketing techniques using digital transformation (DX), offering high-value-added products and adjusting selling prices to reflect that added value.In Japan, sales increased 3.9% to 382.5 billion yen.In Asia, sales decreased 2.0% to 111.1 billion yen. On a like-for-like basis, sales decreased 9.3%.In the Americas, sales increased 18.3% to 72.0 billion yen. On a like-for-like basis, sales increased 5.1%.In Europe, sales increased 26.7% to 43.8 billion yen. On a like-for-like basis, sales increased 11.5%.Operating income increased 28.1 billion yen compared with the same period a year earlier to 42.3 billion yen, benefitting from factors including the effects of structural reforms that began in 2023.
 
Health and Beauty Care Business
Sales increased 11.6% compared with the same period a year earlier to 210.6 billion yen. Currency translation accounted for a 6.2% increase and sales increased 5.4% on a like-for-like basis (breakdown of the increase: 5.1% increase by volume, 0.2% increase by price).Sales of skin care products increased. In Japan, in addition to UV care products, new sheet-related products, in particular, performed strongly. The skin protection business, including UV care products, which the Kao Group is developing as part of its Global Sharp Top Strategy, progressed as planned. 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 Japan, a rebranding of Essential contributed to strong sales. In addition, the Kao Group steadily carried out its new premium strategy. In the Americas and Europe, new JOHN FRIEDA products performed strongly, and sales increased. Sales of products for hair salons in the Americas and Europe increased.Sales of personal health products decreased. Sales of MegRhythm thermo products were strong, but sales of bath additives were affected by aggressive pricing by competitors.Operating income decreased 1.0 billion yen compared with the same period a year earlier to 15.0 billion yen due to structural reform expenses at subsidiaries in the Americas and Europe, and other factors.
 
Cosmetics Business
Sales increased 0.8% compared with the same period a year earlier to 116.7 billion yen. Currency translation accounted for a 3.4% increase and sales decreased 2.6% on a like-for-like basis (breakdown of the decrease: 5.1% decrease by volume, 2.5% increase by price).
Amid market recovery in Japan, KANEBO prestige skin care and makeup, ALLIE UV care, SOFINA iP skin care brand and other brands performed strongly, but a slump in market conditions for cross-border ecommerce sales to China, and the decrease in sales of KATE, which has the number-one share of the makeup market, following hit products in the previous year, resulted in only a slight increase in overall sales in Japan. In China, sales decreased as the Curél derma care brand struggled in an intensely competitive environment, in addition to the slowdown of market growth. In the Americas and  Europe, new SENSAI products performed strongly, and sales increased. Operating income was negative 6.1 billion yen, a decrease of 3.6 billion yen from the same period a year earlier.
 
For the full report, click here.