Today, Kao Corporation released its financial report for the first half of 2024. It reveals significant improvements compared to the same period last year. Net sales for the six months ended June 30, 2024, reached ¥788 billion (5.4 billion), marking a 6.7% increase year-on-year. Operating income surged by 123.7% to ¥57.939 billion ($397.3 million). Net income experienced a substantial rise of 152.8%, totaling ¥44.819 billion ($307.4 million).
Globally, the temporary inflation gradually subsided, and a trend toward consumer preference for low prices began to appear. 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 through upgraded marketing techniques using digital transformation (DX), offering high-value-added products, and adjusting selling prices to reflect that added value.
In the Consumer Products Business, sales increased by 5.6% compared with the same period a year earlier, reaching ¥609.4 billion ($4.18 billion). Currency translation accounted for a 3.7% increase, while sales increased by 1.9% on a like-for-like basis (breakdown of the increase: 0.8% decrease by volume, 2.7% increase by price).
Operating income in the Consumer Products Business increased by ¥28.1 billion ($192.7 million) compared to the same period a year earlier, reaching ¥42.3 billion ($290.1 million). This increase was driven by structural reforms that began in 2023.
For regions performance of Consumer Products Business, sales in Japan increased by 3.9% to ¥382.5 billion ($2.62 billion). Sales of Asia decreased by 2.0% to ¥111.1 billion ($761.9 million), with a like-for-like decrease of 9.3%. In the Americas, sales increased by 18.3% to ¥72.0 billion ($493.8 million), with a like-for-like increase of 5.1%. In Europe, sales increased by 26.7% to ¥43.8 billion ($300.4 million), with a like-for-like increase of 11.5%.
In specific segements, sales of Health and Beauty Care Business increased by 11.6% compared with the same period a year earlier to ¥210.6 billion ($1.44 billion). Currency translation accounted for a 6.2% increase, with a like-for-like sales increase of 5.4% (5.1% increase by volume, 0.2% increase by price). And operating income decreased by ¥1.0 billion ($6.9 million) to ¥15.0 billion ($102.9 million) due to structural reform expenses at subsidiaries in the Americas and Europe.
Sales of skin care products increased, particularly new sheet-related products and UV care products as part of the Global Sharp Top Strategy. The Bondi Sands brand, acquired in November 2023, also contributed to results. Hair care products saw strong performance, driven by the rebranding of Essential in Japan and the new JOHN FRIEDA products in the Americas and Europe. However, sales of personal health products decreased due to aggressive pricing by competitors.
In Cosmetics Business, the sales increased by 0.8% compared with the same period a year earlier to ¥116.7 billion ($800.3 million). Currency translation accounted for a 3.4% increase, with a like-for-like decrease of 2.6% (5.1% decrease by volume, 2.5% increase by price). Its operating income recorded a negative ¥6.1 billion ($41.8 million), a decrease of ¥3.6 billion ($24.7 million) from the same period a year earlier.
Kao said that despite a market recovery in Japan, brands such as KANEBO prestige skin care and makeup, ALLIE UV care, and SOFINA iP performed strongly. However, cross-border e-commerce sales to China slumped, and the decrease in sales of KATE affected overall sales. In China, intense competition and market slowdown impacted the Curél derma care brand. New SENSAI products in the Americas and Europe performed well.
For the fiscal year ending December 31, 2024, Kao forecasts continued growth, with expected net sales of ¥1.6 trillion ($11 billion), a 4.4% increase year-on-year. Operating income is projected to rise by 133.2% to ¥140 billion ($960.1 million). Net income attributable to owners of the parent is expected to grow by 137.1% to ¥104 billion ($713.2 million).
