02 16-13 kao results-q3-1

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  • 1. Annual Financial ReviewFrom April 1, 2012 to December 31, 2012 Kao CorporationFebruary 5, 2013This is a translation of materials used for the analyst meeting held in Japan on February 5, 2013.
  • 2. These presentation materials are available on ourwebsite in PDF format:http://www.kao.com/jp/en/corp_ir/presentations.html Forward-looking statements such as earnings forecasts and other projections contained in this release are based on information available at this time and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may differ materially from those expectations due to various factors.Note: The yen amounts in these presentation materials, which were previouslytruncated to their respective units for presentation, are rounded to the nearestunit from FY2012, ended December 31, 2012. Figures for FY2011, endedMarch 31, 2012, and prior fiscal years have also been restated for ease ofcomparison.2
  • 3. 1. Business Environment April 1, 2012 – December 31, 2012 3
  • 4. Consumer Products1 Market in Japan(%)2 79 major household and personal care categories (all manufacturers)110 FY2012 Semiannually Monthly105100 95 90 2H/FY10 1H/FY11 2H/FY11 3 4/12 5/126/12 7/12 8/12 9/12 10/12 11/12 12/12 1 Consumer products do not include prestige cosmetics. (Source: SRI POS data by INTAGE Inc.) 2 Year-on-year growth rate of market size in value (yen) 3. The data of 2H/FY10 includes hoarding due to the earthquake in March 2011. 4
  • 5. Consumer Purchase Prices in Japan15 major household and personal care categories (all manufactures)Index105 100 100 99100 97 9797 96959594 95 Comparison with Oct-Dec 2011Body cleansers ShampooHair styling agentsConditioner 90 Toothpaste Hair colorToothbrushes Sanitary napkinsFabric softenerAdult incontinence productsDishwashing detergents Facial cleansers 85Makeup remover Baby diapers Laundry detergents 801H/FY08 2H/FY081H/FY09 2H/FY091H/FY102H/FY101H/FY11 2H/FY11 1H/FY12Oct-Dec 2012 (Source: SRI POS data by INTAGE Inc.)5
  • 6. 2. Consolidated Business ResultsApril 1, 2012 – December 31, 2012Fiscal year end is December 31 from FY2012Term of consolidation for FY2012 as a transitional period Group companies whose fiscal year end was previously March 31 *: April-December 2012 Group companies whose fiscal year end is already December 31: January-December 2012Restated FY2011Figures for the nine-month period from April 1 to December 31, 2011 for groupcompanies whose fiscal year end was previously March 31.Adjusted growthComparison with the nine-month period from April 1 to December 31, 2011 for groupcompanies that previously had a fiscal year end in March * Kao Corporation and certain consolidated subsidiaries with the same fiscal year end 6
  • 7. Key Points in FY2012Japan sales related1. Consumer purchase price of 15 major household and personal care categories market in Japan1:1: 1. Consumer purchase price of 15 major household and personal care categories market in Japan st 11st half: -1 point year-on-year half: -1 point year-on-year Oct.-Dec.: FlatOct.-Dec.: Flat2. Growth of household and personal care market in Japan2 2 (Apr.-Dec.):+1% 2. Growth of household and personal care market in Japan (Apr.-Dec.): +1%3. Growth of the cosmetics market in Japan3 3 (Apr.-Dec.):-0.2% 3. Growth of the cosmetics market in Japan (Apr.-Dec.): -0.2%Income statements related Adjusted growth41. Net sales: 1. Net sales: ¥1,012.6 billion¥1,012.6 billion +0.4% +0.4%Effect of currency translation: Effect of currency translation:-¥7.3 billion -¥7.3 billion-0.7% -0.7%Sales growth excluding effect of Sales growth excluding effect ofcurrency translation: currency translation:+¥11.6 billion +¥11.6 billion+1.1%+1.1%2. Increase/decrease in operating income5:5: 2. Increase/decrease in operating income+¥3.1 billion+¥3.1 billionCash flow related1. Free cash flow6 6 1. Free cash flow ¥52.7 billion¥52.7 billion2. Payments of cash dividends7:7: 2. Payments of cash dividends ¥33.5 billion¥33.5 billion1 Index with the 1st half of FY2008 as 100 (Source: SRI POS data by INTAGE Inc.)2 Source: SRI POS data by INTAGE Inc.3 Source: SLI data by INTAGE Inc.4 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)5 Please refer to slide 12 for details.6 Free cash flow = Net cash provided by operating activities + Net cash used in investing activities7 Includes payments of cash dividends to minority shareholders. 7
  • 8. FY2012 Consolidated Results RestatedAdjusted Billion yen FY11FY11 1 FY12 growth 1Net Sales 1,216.1 1,008.3 1,012.6+0.4%EBITA 2 142.2 124.2 125.7+1.2% EBITA* Margin11.7% 12.3%12.4%Operating Income108.6 98.5 101.6 +3.2% Operating Margin8.9% 9.8% 10.0%Ordinary Income 110.0100.2 104.2 +4.0%Net Income 52.4 51.862.4 +20.5%EBITDA188.4160.6161.4+0.4%ROE 3 9.8%-0 11.0%EPS (yen)100.4699.16 119.55+20.6%1 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2 Operating income before amortization of goodwill and intellectual property rights related to M&A.3 ROE of FY2012 is for the transitional period connected with the change in fiscal year end. 8
  • 9. Consolidated Net Sales [1] 1 Restated FY2011FY2012 % GrowthBillion yenBillion yen1 2 Adjusted Like-for-likeBeauty Care Business 311.9 312.6 +0.2+0.2Human Health Care Business 125.8 131.6 +4.6+4.6Fabric and Home Care Business204.5 208.9 +2.1+2.1Japan total642.3 653.1 +1.7+1.7Asia 381.5 87.2+7.0+7.8 3Americas55.1 56.6+2.7+2.1Europe61.5 57.3-6.9 -1.8Eliminations-21.4-21.0- -Consumer Products Business 819.0 833.2 +1.7+2.11: Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2: Excludes the effect of currency translation and the impact of the change in financial term.(Please refer to slide 6 for details.)3: Australia and New Zealand, which had been included in Asia until FY2011, have been reclassified toAmericas from FY2012. The results of FY2011 have been restated for the purpose of comparison.9
  • 10. Consolidated Net Sales [2] 1Restated FY2011 FY2012 % GrowthBillion yenBillion yen1 2 Adjusted Like-for-likeJapan 95.6 92.0 -3.8-3.8Asia89.2 75.6-15.3-15.0Americas35.9 33.6 -6.5-5.2Europe55.7 53.5 -4.0 +3.6Eliminations-57.2-46.5- -Chemical Business219.2 208.1-5.1-3.1Eliminations-30.0-28.6- -Consolidated net sales1,008.3 1,012.6+0.4+1.11: Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2: Excludes the effect of currency translation and the impact of the change in financial term. (Please refer to slide 6 for details.)10
  • 11. Consolidated Income StatementsFY2011 FY2012Adjusted1 Billion yen% Billion yen %% growth Net Sales 1,216.1 100.0 1,012.6100.0+0.4 Cost of Sales 525.043.2 442.5 43.7 0.0 Gross Profit691.156.8 570.1 56.3 0.0 2 SG&A Expenses 582.547.9 468.5 46.3 0.0 Operating Income108.6 8.9 101.6 10.0+3.2 Non-operating Income/Expenses 1.4 0.1 2.60.3 0.0 Ordinary Income 110.0 9.0 104.2 10.3+4.0 Extraordinary Gain/Loss-4.8-0.4-1.9 -0.2 0.0 Income Before Income Taxes105.3 8.7102.310.10.0 and Minority InterestsIncome Taxes 50.8 4.238.53.80.0 Income Before Minority 54.5 4.563.86.30.0 Interests Minority Interests 2.1 0.2 1.40.10.0 Net Income52.4 4.362.46.2+20.51 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2 Amortization related to Kanebo CosmeticsFY2011: 27.4 billion yen, FY2012: 20.5 billion yen11
  • 12. FY2012 Consolidated Operating Income Analysis Comparison with restated FY2011 +3.1 billion yen Restated FY2011 +7.0 billion yenIncrease in sales volumeFY2012Operating Income* -7.5 billion yen Impact from change in raw material prices Operating Income +8.0 billion yenTotal Cost Reduction (TCR) 98.5 billion yen101.6 billion yen +0.0 billion yenIncrease (decrease) in SG&A expenses-4.4 billion yen Product mix and others * Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)12
  • 13. Consolidated Cost of Sales and SG&A to Net Sales %%55 40Cost of Sales ratio OperatingSG&A ratio SG&A ratio Margin (left scale) 50.450 49.3 49.249.148.6 47.930 SG&A ratio (left scale) 46.3 44.9Cost of Sales45 43.8 44.043.8 ratio (left scale)43.2 43.640.943.2 43.7 20 41.842.0 42.0 Cost of Sales 41.640 ratio (left scale) Operating Margin13.3 13.012.4(right scale) Operating Margin1035 (right scale) 9.810.08.88.8 8.97.97.630 0 FY0404 0506 0708 09 10 11 12* Structure has changed significantly since FY2006 due to the consolidation of Kanebo Cosmetics.The impact of the change in financial term is included in FY2012. (Please refer to slide 6 for details.) 13
  • 14. Breakdown of Major Consolidated SG&A Expenses(Billion yen)FY2011 FY2012* Total SG&A Expenses582.5468.5 Freight/Warehouse68.4 56.8 Advertising82.2 67.0 Sales Promotion63.0 52.1 Salaries and Bonuses121.8 97.7 R&D48.2 37.5 *Includes the impact of the change in financial term. (Please refer to slide 6 for details)14
  • 15. Consolidated Non-operating Income/Expensesand Extraordinary Gain/Loss (Billion yen)Non-operating Income/Expenses FY2011FY2012*Non-operating Income5.3 5.0Interest Income 0.9 0.8Dividend Income 0.2 0.2Equity in Earnings of NonconsolidatedSubsidiaries and Affiliates1.71.7Other 2.62.3Non-operating Expenses3.92.3Interest Expense2.21.2Foreign Currency Exchange Loss0.60.3Other 1.10.9Extraordinary Gain/Loss FY2011FY2012*Extraordinary Gain0.3 0.6Gain on Sales of Fixed Assets 0.2 0.1Gain on Sales of Stock of Subsidiary- 0.3Other 0.1 0.2Extraordinary Loss5.0 2.6Loss on Sales/Disposals of Fixed Assets 2.4 2.2Loss related to the Great East JapanEarthquake2.0-Other 0.60.3*Includes the impact of the change in financial term. (Please refer to slide 6 for details) 15
  • 16. Consolidated Results by Segment AdjustedAdjustedRestated FY2011 3 FY2012 changes 3 growth 3% of % of Billion yen Billion yen Billion yen%net salesnet sales Net Sales1 444.5- 444.4 - -0.1-0.0%Beauty CareBusiness EBITA242.6 9.6%45.9 10.3% +3.2+7.6% Operating Income17.0 3.8%21.8 4.9%+4.8 +28.0%Human Health Net Sales1 144.1- 152.0 - +7.9+5.5%Care BusinessOperating Income12.6 8.7%11.5 7.6%-1.0-8.3%Fabric and HomeNet Sales1 230.4- 236.7 - +6.3+2.8%Care BusinessOperating Income47.2 20.5% 51.4 21.7% +4.1+8.7% Net Sales1 219.2- 208.1 --11.2-5.1%ChemicalBusiness EBITA221.8 9.9%16.9 8.1%-4.9 -22.5% Operating Income21.7 9.9%16.8 8.1%-4.9 -22.6% Net Sales1,008.3- 1,012.6 - +4.3+0.4%Consolidated EBITA2 124.2 12.3%125.7 12.4% +1.6+1.2% Operating Income98.5 9.8% 101.6 10.0% +3.1+3.2%1 Before elimination of intersegment transfers2 Operating income before amortization of goodwill and intellectual property rights related to M&A3 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.) 16
  • 17. [Reference] Consolidated Results by Geographic Area AdjustedAdjustedRestated FY2011 4FY201244 changes growth% of % of Billion yenBillion yenBillion yen%net salesnet salesNet Sales1712.3 - 720.8- +8.4+1.2%Japan EBITA2101.3 14.2% 108.815.1% +7.5+7.4%Operating Income 77.6 10.9%86.512.0% +9.0 +11.5% 3Net Sales1167.6 - 159.9- -7.8-4.6%AsiaOperating Income9.4 5.6%6.33.9%-3.2 -33.7%Net Sales1 90.9 -90.0- -0.9-1.0%Americas 3EBITA24.4 4.8%3.43.7%-1.0 -23.4%Operating Income3.7 4.0%2.73.0%-0.9 -25.3%Net Sales1117.0 - 110.5- -6.5-5.5%EuropeEBITA29.3 7.9%7.46.7%-1.9 -20.7%Operating Income8.0 6.9%6.15.5%-1.9 -23.7%Net Sales 1,008.3 - 1,012.6- +4.3+0.4%ConsolidatedEBITA2124.2 12.3% 125.712.4% +1.6+1.2%Operating Income 98.5 9.8%101.610.0% +3.1+3.2%1 Before elimination of intersegment transfers2 Operating income before amortization of goodwill and intellectual property rights related to M&A3 Australia and New Zealand, which had been included in Asia until FY2011, have been reclassified toAmericas from FY2012. The results of FY2011 have been restated for the purpose of comparison.4 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.) 17
  • 18. Consumer Products Business by Geographic AreaSales (Billion yen)JapanOperating IncomeAsia (Billion yen)1,000 150 200158001501010060010054005050 0200 000 -5FY2010 FY2011FY2012 FY2010FY2011FY2012 Americas & Europe20015 Net Sales150 10 Operating Income100 5 * Australia and New Zealand, which had been50 included in Asia until FY2011, have been reclassified to Americas from FY2012. The results of FY2011 have been restated for the purpose of comparison. 0 0FY2010FY2011FY2012 The results of Japan in FY2012 include the impact of the change in financial term. (Please refer to slide 6 for details.) 18
  • 19. Chemical Business by Geographic AreaSales (Billion yen)Japan Operating IncomeAsia(Billion yen)150 20 150 2015 1510010010 1050 5055 00 00FY2010 FY2011FY2012FY2010 FY2011FY2012Americas & Europe 150 20 Net Sales 15 Operating Income100 10 50 * The results of Japan in FY2012 include the impact of5 the change in financial term. (Please refer to slide 6 for details.)00 FY2010 FY2011FY201219
  • 20. Consolidated Balance Sheets(Billion yen)Mar/12Dec/12Changes Mar/12 Dec/12ChangesCurrent Assets 432.9 493.4+60.5 Current Liabilities274.9315.9 +41.0Notes and Accounts Cash and Time Deposits85.599.3 +13.9 Payable - Trade 110.7105.5-5.2 Notes and Accounts Bonds/Short-term Loans Receivable - Trade 142.9 164.3+21.4(incl. Current Portion of 2.1 53.1+51.1 Short-term Investments 46.857.4+10.6 Bonds/Long-term Loans) Inventories 120.7 122.2 +1.5 Accounts Payable - Other48.5 52.5 +4.0 Other37.150.2+13.1 Accrued Expenses73.5 74.4 +0.9Accrued Income Taxes18.3 11.7 -6.6Liability for loss related to theGreat East Japan Earthquake0.0- -0.0Other 21.8 18.7 -3.1Fixed Assets 558.3 546.6-11.8 Long-term Liabilities166.7118.4-48.3 Property, Plant and Equipment 240.6 252.3+11.8Bonds/Long-term Loans100.050.1 -50.0 Intangible Assets 237.5 215.9-21.5 Other66.6 68.3+1.7 Investments and Other Assets 80.378.3-2.0 Total Liabilities441.6434.3-7.3Shareholders equity 633.5663.6 +30.1-Common Stock85.4 85.4 --Capital Surplus109.6109.6 --Retained Earnings447.6477.6+30.0-Treasury Stock, at Cost -9.1 -9.0 +0.1Accumulated othercomprehensive income-95.5-71.3+24.2- Unrealized Gain on Available-for-sale Securities2.32.4 +0.2- Deferred Gain (Loss) on Derivatives under Hedges Accounting-0.0 0.0 +0.0- Foreign CurrencyTranslation Adjustments -96.1-71.9 +24.2- Post retirement adjustments forforeign consolidated subsidiaries-1.7 -1.9 -0.2Stock Acquisition Rights 1.21.3+0.1Minority Interests10.4 12.1+1.7Total Net Assets 549.7605.7 +56.0 Total Liabilities and Total Assets991.3 1,040.0+48.7991.3 1,040.0+48.7Total Net Assets20
  • 21. Consolidated Statements of Cash Flows (Billion yen)FY2011FY2012 1 Net Cash Provided by Operating Activities 125.097.4 Net Cash Used in Investing Activities-49.0-44.6 Net Cash Used in Financing Activities-86.2-32.0 Translation Adjustments on Cash and Cash Equivalents-3.39.7 Net Increase (Decrease) in Cash and Cash Equivalents -13.4 30.4 Cash and Cash Equivalents, Beginning of Period143.1129.7 Cash and Cash Equivalents from Newly Consolidated Subsidiary, Increase-0.3 Cash and Cash Equivalents, End of Period129.7160.4 Total Debt at End of Period 102.1103.22 Free Cash Flow76.1 52.7 <Net cash used in investing activities> Capital expenditures: - Construction of new plants in China and Indonesia - Production capacity enhancement of fatty alcohols in the Philippines - Production facilities for new products - Production capacity expansion - Optimization of distribution bases - IT related, etc. <Net cash used in financing activities> Payments of cash dividends (Includes payments of cash dividends to minority shareholders) : 33.5 billion yen1 Includes impact of change in financial term. (Please refer to slide 6 for details.)2 Free cash flow = Net cash provided by operating activities + Net cash used in investing activities21
  • 22. Share Repurchase(Million Shares) 35 Aggregate to December 2012 29.1 137.6 MM shares 3027.3 363.8 Billion yen 25 19.9 20 16.0 13.9 1510.0 10.0 9.3 10 5 2.0- ---- 0 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06FY 07 FY 08 FY 09FY 10 FY 11FY 12Billion yen 29.5 28.656.877.236.770.0 5.0 - 30.0-- 30.0 -- * Share repurchase from the market 22
  • 23. 3. Forecast for FY 2013Fiscal year end is December 31 from FY2012Term of consolidation for FY2012 as a transitional period Group companies whose fiscal year end was previously March 31 *: April-December 2012 Group companies whose fiscal year end is already December 31: January-December 2012Restated FY2012Figures for the twelve-month period from January 1 to December 31, 2012 for groupcompanies whose fiscal year end was previously March 31.Adjusted growthFY2012 actualComparison with the nine-month period from April 1 to December 31, 2011 for groupcompanies that previously had a fiscal year end in MarchFY2013 forecastComparison with the twelve-month period from January 1 to December 31, 2012 for groupcompanies whose fiscal years ended in March before the fiscal year end change * Kao Corporation and certain consolidated subsidiaries with the same fiscal year end23
  • 24. Major Assumptions for FY2013 Forecast Year-on-year growth rate of market size in value (yen) for the Consumer Products Business1 in Japan: 0 to +1% year-on-year Year-on-year growth rate of cosmetics market size in value (yen) in Japan: FlatAdjusted growth2 Net sales: ¥1,270.0 billion+4.1%Effect of currency translation:+¥30.0 billion +2.5%Sales growth excluding effect ofcurrency translation: +¥19.6 billion+1.6%Estimated impact on income Impact from change in raw material prices: Gross impact: +¥4 billion Net impact: -¥3 billion Total Cost Reduction (TCR) activities: +¥5 billion Capital expenditures/depreciation and amortizationCapital expenditures: ¥60 billionDepreciation and amortization: ¥76 billion Share repurchases: Up to ¥30 billion or up to 12.5 million shares plannedExchange rate assumptions90 yen/USD (FY2012 actual exchange rate [average]: 80.12 yen/USD)115 yen/Euro (FY2012 actual exchange rate [average]: 103.46 yen/Euro) 1 Excludes prestige cosmetics. 2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 24
  • 25. Consolidated Sales and Profit Forecast[Reference]41FY2012 Restated2 FY2013(F) 5FY2012 AdjustedAdjustedBillion yen Billion yen Billion yen % growth2 % growth 2Net Sales1,012.6+0.41,220.4 1,270.0 +4.1Operating Income101.6 +3.2 111.8116.0 +3.8[% of Sales] 10.0% 9.2% 9.1%Ordinary Income 104.2 +4.0 114.1117.0 +2.5[% of Sales] 10.3% 9.4% 9.2%Net Income 62.4 +20.5 62.7 73.0 +16.4[% of Sales]6.2% 5.1% 5.7%Net Income per Share (yen)119.55+20.6120.21 142.60+18.63ROE 11.0% -11.1%12.2%-EBITDA161.4 +0.4 189.2192.0 +1.5(Operating Income + Depr. & Amort.)Cash Dividends per Share (yen)62.0+3.362.064.0+3.21 Exchange rate assumptions: 90 yen/USD,115 yen/Euro2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.)3 ROE forecast of FY2012 is for the transitional period connected with the change in fiscal year end.4 Kanebo Cosmetics (Apr. -Dec. 2012) : Net sales = approximately ¥150 billion / operating margin before deduction of royalties =slightly more than 7%; amortization related to Kanebo Cosmetics: ¥20.5 billion5 Kanebo Cosmetics (Jan. -Dec. 2013) : Net sales = slightly more than ¥190 billion / operating margin before deduction of royalties= approximately 8%; amortization related to Kanebo Cosmetics: ¥26.5 billion25
  • 26. Sales Outlook by Segment – FY2013Adjusted<Billion yen> growth2Consolidated Net Sales 1,270 +4.1% Reference:BySegment1 By Geographic Area1AdjustedAdjustedgrowth2 growth2Beauty Care560+4.1% Japan956 +2.4%HumanHealth Care197+3.9% Asia 181 +13.1%Fabric andHome Care305+4.5% Americas99 +10.0%Chemical 242+2.3% Europe 117 +5.9% 1 Sales are before elimination of transactions between segments or geographic areas. 2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 26
  • 27. Sales Outlook – FY2013 - Consumer Products Business in Japan -<Billion yen>1st Half Full Year FY2012 FY2013FY2012FY2013 Adjusted Adjusted ActualForecast growth*ActualForecastgrowth*(9 months)(12 months)Beauty Care 203.6 197.0+1.8%312.6 413.0 +1.2%Human Health Care 84.981.0 +0.5%131.6 173.0 +1.6%Fabric and Home Care132.6 120.0+3.6%208.9 273.0 +3.2%Consumer Products Business421.1 398.0+2.1%653.1 859.0 +1.9%*Excludes the impact of the change in financial term. (Please refer to slide 23 for details.)27
  • 28. FY2013 Outlook by Segment/Geographic Area Decrease in operating incomeIncrease in operating income Increase in net sales CP1 – Asia CP1 – Americas CP1 – Japan Chemical – JapanCP1 – Europe Chemical – Asia Chemical – Americas Chemical – Europe Decrease in net sales 1: CP = Consumer Products 2: Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 28
  • 29. Consolidated Net Sales/EBITA1/Operating Income [Full Year] Sales ProfitBillion yen Billion yen 1,400240 1,276.3 1,270.0 1,184.41,216.1 220 1,186.8 1,2002001,012.6Net Sales180 1,000160139.1142.2144.4 800134.7 129.5 140125.7 116.0108.6 120EBITA 104.6 101.696.8 94.0 60012.4% 10011.7% 11.7% 11.4%10.6% 10.9%80Operating 400 Income6010.0% 9.1% 7.9% 8.8%8.9%40 200 7.6%20EBITA Margin Operating Margin 002 FY08 0910 111213(F) 1 Operating income before amortization of goodwill and intellectual property rights related to M&A 2 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.)29
  • 30. EBITDADepretiation & AmortizationBillion yenOperating Income250 Total200188.4192.0 184.3186.0 178.8 161.415079.8 76.0 87.581.4 84.859.8100108.6 116.050 96.894.0 104.6 101.60 FY08 091011 12 * 13(F)*Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.)30
  • 31. ROE & ROA (%)20 14.91513.112.211.711.510.9 11.0 12.89.91011.68.6 10.3 9.7 9.29.8 8.08.57.3 5ROE ROA 0 FY05060708 091011 12 1,2 13(F)ROA: Ordinary Income / Total assets 1 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 2 ROE and ROA of FY2012 are for the transitional period connected with the change in fiscal year end. 31
  • 32. Net Income per ShareNet Income Net Income(Billion yen)Weighted Average per Share Number of Shares (yen) Outstanding (MM) 90Net Income200 Net Income per Share 80 73.0 180 71.1 70.5 66.6160 70 64.5 62.4 140 60 52.4 142.6130.6129.446.7 120 50 122.5 120.3 40.5119.6 100 40 100.5 80 87.7 30 75.660 2040 544544 543536 536533522 522511 1020 0 0FY050607 08 0910 11 12 * 13(F) * Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 32
  • 33. Cash Dividends per Share (Yen)70 Dividend increase for the 23rd64.0062.00 consecutive year in FY201260.00 58.0060 56.00 57.0054.00 52.0050.00504038.00 32.0030.003026.00 24.0020.002016.0014.0015.0011.5012.50 9.09 10.0010.508.8710 7.10 7.10 0 )89909192 93949596 9798 9900 0102 0304 05 0607 0809 1011 1288(FFY13*Impacts of share splits are retroactively reflected.33
  • 34. Capital Expenditures(Billion yen) 100 Parent Subsidiaries 60.0 49.1 47.25044.6 44.941.927.0 14.7 17.319.617.5 22.5 34.433.027.4 29.925.0 19.40FY08 091011 12 2 13(F) 1 Includes long-term prepaid expenses. 2 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 34
  • 35. FY2013 Quarterly Consolidated Sales and Profit Forecast Net SalesOperating Income(Billion yen)(Billion yen)1,270.0Net Sales 20121,220.4Operating Income 2012Net Sales 2013 Operating Income 2013 116.0 111.8 890.169.4578.7 600.034.9 284.7 32.014.43 months6 months9 monthsFiscal year3 months6 months 9 months Fiscal year* Fiscal year end is December 31 from FY2012. Figures for the twelve-month period fromJanuary 1 to December 31, 2012 for Kao Corporation and its subsidiaries whose fiscal year endwas previously March 31. (Please refer to slide 23 for details.)35
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    • 1. Annual Financial ReviewFrom April 1, 2012 to December 31, 2012 Kao CorporationFebruary 5, 2013This is a translation of materials used for the analyst meeting held in Japan on February 5, 2013.
  • 2. These presentation materials are available on ourwebsite in PDF format:http://www.kao.com/jp/en/corp_ir/presentations.html Forward-looking statements such as earnings forecasts and other projections contained in this release are based on information available at this time and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may differ materially from those expectations due to various factors.Note: The yen amounts in these presentation materials, which were previouslytruncated to their respective units for presentation, are rounded to the nearestunit from FY2012, ended December 31, 2012. Figures for FY2011, endedMarch 31, 2012, and prior fiscal years have also been restated for ease ofcomparison.2
  • 3. 1. Business Environment April 1, 2012 – December 31, 2012 3
  • 4. Consumer Products1 Market in Japan(%)2 79 major household and personal care categories (all manufacturers)110 FY2012 Semiannually Monthly105100 95 90 2H/FY10 1H/FY11 2H/FY11 3 4/12 5/126/12 7/12 8/12 9/12 10/12 11/12 12/12 1 Consumer products do not include prestige cosmetics. (Source: SRI POS data by INTAGE Inc.) 2 Year-on-year growth rate of market size in value (yen) 3. The data of 2H/FY10 includes hoarding due to the earthquake in March 2011. 4
  • 5. Consumer Purchase Prices in Japan15 major household and personal care categories (all manufactures)Index105 100 100 99100 97 9797 96959594 95 Comparison with Oct-Dec 2011Body cleansers ShampooHair styling agentsConditioner 90 Toothpaste Hair colorToothbrushes Sanitary napkinsFabric softenerAdult incontinence productsDishwashing detergents Facial cleansers 85Makeup remover Baby diapers Laundry detergents 801H/FY08 2H/FY081H/FY09 2H/FY091H/FY102H/FY101H/FY11 2H/FY11 1H/FY12Oct-Dec 2012 (Source: SRI POS data by INTAGE Inc.)5
  • 6. 2. Consolidated Business ResultsApril 1, 2012 – December 31, 2012Fiscal year end is December 31 from FY2012Term of consolidation for FY2012 as a transitional period Group companies whose fiscal year end was previously March 31 *: April-December 2012 Group companies whose fiscal year end is already December 31: January-December 2012Restated FY2011Figures for the nine-month period from April 1 to December 31, 2011 for groupcompanies whose fiscal year end was previously March 31.Adjusted growthComparison with the nine-month period from April 1 to December 31, 2011 for groupcompanies that previously had a fiscal year end in March * Kao Corporation and certain consolidated subsidiaries with the same fiscal year end 6
  • 7. Key Points in FY2012Japan sales related1. Consumer purchase price of 15 major household and personal care categories market in Japan1:1: 1. Consumer purchase price of 15 major household and personal care categories market in Japan st 11st half: -1 point year-on-year half: -1 point year-on-year Oct.-Dec.: FlatOct.-Dec.: Flat2. Growth of household and personal care market in Japan2 2 (Apr.-Dec.):+1% 2. Growth of household and personal care market in Japan (Apr.-Dec.): +1%3. Growth of the cosmetics market in Japan3 3 (Apr.-Dec.):-0.2% 3. Growth of the cosmetics market in Japan (Apr.-Dec.): -0.2%Income statements related Adjusted growth41. Net sales: 1. Net sales: ¥1,012.6 billion¥1,012.6 billion +0.4% +0.4%Effect of currency translation: Effect of currency translation:-¥7.3 billion -¥7.3 billion-0.7% -0.7%Sales growth excluding effect of Sales growth excluding effect ofcurrency translation: currency translation:+¥11.6 billion +¥11.6 billion+1.1%+1.1%2. Increase/decrease in operating income5:5: 2. Increase/decrease in operating income+¥3.1 billion+¥3.1 billionCash flow related1. Free cash flow6 6 1. Free cash flow ¥52.7 billion¥52.7 billion2. Payments of cash dividends7:7: 2. Payments of cash dividends ¥33.5 billion¥33.5 billion1 Index with the 1st half of FY2008 as 100 (Source: SRI POS data by INTAGE Inc.)2 Source: SRI POS data by INTAGE Inc.3 Source: SLI data by INTAGE Inc.4 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)5 Please refer to slide 12 for details.6 Free cash flow = Net cash provided by operating activities + Net cash used in investing activities7 Includes payments of cash dividends to minority shareholders. 7
  • 8. FY2012 Consolidated Results RestatedAdjusted Billion yen FY11FY11 1 FY12 growth 1Net Sales 1,216.1 1,008.3 1,012.6+0.4%EBITA 2 142.2 124.2 125.7+1.2% EBITA* Margin11.7% 12.3%12.4%Operating Income108.6 98.5 101.6 +3.2% Operating Margin8.9% 9.8% 10.0%Ordinary Income 110.0100.2 104.2 +4.0%Net Income 52.4 51.862.4 +20.5%EBITDA188.4160.6161.4+0.4%ROE 3 9.8%-0 11.0%EPS (yen)100.4699.16 119.55+20.6%1 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2 Operating income before amortization of goodwill and intellectual property rights related to M&A.3 ROE of FY2012 is for the transitional period connected with the change in fiscal year end. 8
  • 9. Consolidated Net Sales [1] 1 Restated FY2011FY2012 % GrowthBillion yenBillion yen1 2 Adjusted Like-for-likeBeauty Care Business 311.9 312.6 +0.2+0.2Human Health Care Business 125.8 131.6 +4.6+4.6Fabric and Home Care Business204.5 208.9 +2.1+2.1Japan total642.3 653.1 +1.7+1.7Asia 381.5 87.2+7.0+7.8 3Americas55.1 56.6+2.7+2.1Europe61.5 57.3-6.9 -1.8Eliminations-21.4-21.0- -Consumer Products Business 819.0 833.2 +1.7+2.11: Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2: Excludes the effect of currency translation and the impact of the change in financial term.(Please refer to slide 6 for details.)3: Australia and New Zealand, which had been included in Asia until FY2011, have been reclassified toAmericas from FY2012. The results of FY2011 have been restated for the purpose of comparison.9
  • 10. Consolidated Net Sales [2] 1Restated FY2011 FY2012 % GrowthBillion yenBillion yen1 2 Adjusted Like-for-likeJapan 95.6 92.0 -3.8-3.8Asia89.2 75.6-15.3-15.0Americas35.9 33.6 -6.5-5.2Europe55.7 53.5 -4.0 +3.6Eliminations-57.2-46.5- -Chemical Business219.2 208.1-5.1-3.1Eliminations-30.0-28.6- -Consolidated net sales1,008.3 1,012.6+0.4+1.11: Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2: Excludes the effect of currency translation and the impact of the change in financial term. (Please refer to slide 6 for details.)10
  • 11. Consolidated Income StatementsFY2011 FY2012Adjusted1 Billion yen% Billion yen %% growth Net Sales 1,216.1 100.0 1,012.6100.0+0.4 Cost of Sales 525.043.2 442.5 43.7 0.0 Gross Profit691.156.8 570.1 56.3 0.0 2 SG&A Expenses 582.547.9 468.5 46.3 0.0 Operating Income108.6 8.9 101.6 10.0+3.2 Non-operating Income/Expenses 1.4 0.1 2.60.3 0.0 Ordinary Income 110.0 9.0 104.2 10.3+4.0 Extraordinary Gain/Loss-4.8-0.4-1.9 -0.2 0.0 Income Before Income Taxes105.3 8.7102.310.10.0 and Minority InterestsIncome Taxes 50.8 4.238.53.80.0 Income Before Minority 54.5 4.563.86.30.0 Interests Minority Interests 2.1 0.2 1.40.10.0 Net Income52.4 4.362.46.2+20.51 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)2 Amortization related to Kanebo CosmeticsFY2011: 27.4 billion yen, FY2012: 20.5 billion yen11
  • 12. FY2012 Consolidated Operating Income Analysis Comparison with restated FY2011 +3.1 billion yen Restated FY2011 +7.0 billion yenIncrease in sales volumeFY2012Operating Income* -7.5 billion yen Impact from change in raw material prices Operating Income +8.0 billion yenTotal Cost Reduction (TCR) 98.5 billion yen101.6 billion yen +0.0 billion yenIncrease (decrease) in SG&A expenses-4.4 billion yen Product mix and others * Excludes the impact of the change in financial term. (Please refer to slide 6 for details.)12
  • 13. Consolidated Cost of Sales and SG&A to Net Sales %%55 40Cost of Sales ratio OperatingSG&A ratio SG&A ratio Margin (left scale) 50.450 49.3 49.249.148.6 47.930 SG&A ratio (left scale) 46.3 44.9Cost of Sales45 43.8 44.043.8 ratio (left scale)43.2 43.640.943.2 43.7 20 41.842.0 42.0 Cost of Sales 41.640 ratio (left scale) Operating Margin13.3 13.012.4(right scale) Operating Margin1035 (right scale) 9.810.08.88.8 8.97.97.630 0 FY0404 0506 0708 09 10 11 12* Structure has changed significantly since FY2006 due to the consolidation of Kanebo Cosmetics.The impact of the change in financial term is included in FY2012. (Please refer to slide 6 for details.) 13
  • 14. Breakdown of Major Consolidated SG&A Expenses(Billion yen)FY2011 FY2012* Total SG&A Expenses582.5468.5 Freight/Warehouse68.4 56.8 Advertising82.2 67.0 Sales Promotion63.0 52.1 Salaries and Bonuses121.8 97.7 R&D48.2 37.5 *Includes the impact of the change in financial term. (Please refer to slide 6 for details)14
  • 15. Consolidated Non-operating Income/Expensesand Extraordinary Gain/Loss (Billion yen)Non-operating Income/Expenses FY2011FY2012*Non-operating Income5.3 5.0Interest Income 0.9 0.8Dividend Income 0.2 0.2Equity in Earnings of NonconsolidatedSubsidiaries and Affiliates1.71.7Other 2.62.3Non-operating Expenses3.92.3Interest Expense2.21.2Foreign Currency Exchange Loss0.60.3Other 1.10.9Extraordinary Gain/Loss FY2011FY2012*Extraordinary Gain0.3 0.6Gain on Sales of Fixed Assets 0.2 0.1Gain on Sales of Stock of Subsidiary- 0.3Other 0.1 0.2Extraordinary Loss5.0 2.6Loss on Sales/Disposals of Fixed Assets 2.4 2.2Loss related to the Great East JapanEarthquake2.0-Other 0.60.3*Includes the impact of the change in financial term. (Please refer to slide 6 for details) 15
  • 16. Consolidated Results by Segment AdjustedAdjustedRestated FY2011 3 FY2012 changes 3 growth 3% of % of Billion yen Billion yen Billion yen%net salesnet sales Net Sales1 444.5- 444.4 - -0.1-0.0%Beauty CareBusiness EBITA242.6 9.6%45.9 10.3% +3.2+7.6% Operating Income17.0 3.8%21.8 4.9%+4.8 +28.0%Human Health Net Sales1 144.1- 152.0 - +7.9+5.5%Care BusinessOperating Income12.6 8.7%11.5 7.6%-1.0-8.3%Fabric and HomeNet Sales1 230.4- 236.7 - +6.3+2.8%Care BusinessOperating Income47.2 20.5% 51.4 21.7% +4.1+8.7% Net Sales1 219.2- 208.1 --11.2-5.1%ChemicalBusiness EBITA221.8 9.9%16.9 8.1%-4.9 -22.5% Operating Income21.7 9.9%16.8 8.1%-4.9 -22.6% Net Sales1,008.3- 1,012.6 - +4.3+0.4%Consolidated EBITA2 124.2 12.3%125.7 12.4% +1.6+1.2% Operating Income98.5 9.8% 101.6 10.0% +3.1+3.2%1 Before elimination of intersegment transfers2 Operating income before amortization of goodwill and intellectual property rights related to M&A3 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.) 16
  • 17. [Reference] Consolidated Results by Geographic Area AdjustedAdjustedRestated FY2011 4FY201244 changes growth% of % of Billion yenBillion yenBillion yen%net salesnet salesNet Sales1712.3 - 720.8- +8.4+1.2%Japan EBITA2101.3 14.2% 108.815.1% +7.5+7.4%Operating Income 77.6 10.9%86.512.0% +9.0 +11.5% 3Net Sales1167.6 - 159.9- -7.8-4.6%AsiaOperating Income9.4 5.6%6.33.9%-3.2 -33.7%Net Sales1 90.9 -90.0- -0.9-1.0%Americas 3EBITA24.4 4.8%3.43.7%-1.0 -23.4%Operating Income3.7 4.0%2.73.0%-0.9 -25.3%Net Sales1117.0 - 110.5- -6.5-5.5%EuropeEBITA29.3 7.9%7.46.7%-1.9 -20.7%Operating Income8.0 6.9%6.15.5%-1.9 -23.7%Net Sales 1,008.3 - 1,012.6- +4.3+0.4%ConsolidatedEBITA2124.2 12.3% 125.712.4% +1.6+1.2%Operating Income 98.5 9.8%101.610.0% +3.1+3.2%1 Before elimination of intersegment transfers2 Operating income before amortization of goodwill and intellectual property rights related to M&A3 Australia and New Zealand, which had been included in Asia until FY2011, have been reclassified toAmericas from FY2012. The results of FY2011 have been restated for the purpose of comparison.4 Excludes the impact of the change in financial term. (Please refer to slide 6 for details.) 17
  • 18. Consumer Products Business by Geographic AreaSales (Billion yen)JapanOperating IncomeAsia (Billion yen)1,000 150 200158001501010060010054005050 0200 000 -5FY2010 FY2011FY2012 FY2010FY2011FY2012 Americas & Europe20015 Net Sales150 10 Operating Income100 5 * Australia and New Zealand, which had been50 included in Asia until FY2011, have been reclassified to Americas from FY2012. The results of FY2011 have been restated for the purpose of comparison. 0 0FY2010FY2011FY2012 The results of Japan in FY2012 include the impact of the change in financial term. (Please refer to slide 6 for details.) 18
  • 19. Chemical Business by Geographic AreaSales (Billion yen)Japan Operating IncomeAsia(Billion yen)150 20 150 2015 1510010010 1050 5055 00 00FY2010 FY2011FY2012FY2010 FY2011FY2012Americas & Europe 150 20 Net Sales 15 Operating Income100 10 50 * The results of Japan in FY2012 include the impact of5 the change in financial term. (Please refer to slide 6 for details.)00 FY2010 FY2011FY201219
  • 20. Consolidated Balance Sheets(Billion yen)Mar/12Dec/12Changes Mar/12 Dec/12ChangesCurrent Assets 432.9 493.4+60.5 Current Liabilities274.9315.9 +41.0Notes and Accounts Cash and Time Deposits85.599.3 +13.9 Payable - Trade 110.7105.5-5.2 Notes and Accounts Bonds/Short-term Loans Receivable - Trade 142.9 164.3+21.4(incl. Current Portion of 2.1 53.1+51.1 Short-term Investments 46.857.4+10.6 Bonds/Long-term Loans) Inventories 120.7 122.2 +1.5 Accounts Payable - Other48.5 52.5 +4.0 Other37.150.2+13.1 Accrued Expenses73.5 74.4 +0.9Accrued Income Taxes18.3 11.7 -6.6Liability for loss related to theGreat East Japan Earthquake0.0- -0.0Other 21.8 18.7 -3.1Fixed Assets 558.3 546.6-11.8 Long-term Liabilities166.7118.4-48.3 Property, Plant and Equipment 240.6 252.3+11.8Bonds/Long-term Loans100.050.1 -50.0 Intangible Assets 237.5 215.9-21.5 Other66.6 68.3+1.7 Investments and Other Assets 80.378.3-2.0 Total Liabilities441.6434.3-7.3Shareholders equity 633.5663.6 +30.1-Common Stock85.4 85.4 --Capital Surplus109.6109.6 --Retained Earnings447.6477.6+30.0-Treasury Stock, at Cost -9.1 -9.0 +0.1Accumulated othercomprehensive income-95.5-71.3+24.2- Unrealized Gain on Available-for-sale Securities2.32.4 +0.2- Deferred Gain (Loss) on Derivatives under Hedges Accounting-0.0 0.0 +0.0- Foreign CurrencyTranslation Adjustments -96.1-71.9 +24.2- Post retirement adjustments forforeign consolidated subsidiaries-1.7 -1.9 -0.2Stock Acquisition Rights 1.21.3+0.1Minority Interests10.4 12.1+1.7Total Net Assets 549.7605.7 +56.0 Total Liabilities and Total Assets991.3 1,040.0+48.7991.3 1,040.0+48.7Total Net Assets20
  • 21. Consolidated Statements of Cash Flows (Billion yen)FY2011FY2012 1 Net Cash Provided by Operating Activities 125.097.4 Net Cash Used in Investing Activities-49.0-44.6 Net Cash Used in Financing Activities-86.2-32.0 Translation Adjustments on Cash and Cash Equivalents-3.39.7 Net Increase (Decrease) in Cash and Cash Equivalents -13.4 30.4 Cash and Cash Equivalents, Beginning of Period143.1129.7 Cash and Cash Equivalents from Newly Consolidated Subsidiary, Increase-0.3 Cash and Cash Equivalents, End of Period129.7160.4 Total Debt at End of Period 102.1103.22 Free Cash Flow76.1 52.7 <Net cash used in investing activities> Capital expenditures: - Construction of new plants in China and Indonesia - Production capacity enhancement of fatty alcohols in the Philippines - Production facilities for new products - Production capacity expansion - Optimization of distribution bases - IT related, etc. <Net cash used in financing activities> Payments of cash dividends (Includes payments of cash dividends to minority shareholders) : 33.5 billion yen1 Includes impact of change in financial term. (Please refer to slide 6 for details.)2 Free cash flow = Net cash provided by operating activities + Net cash used in investing activities21
  • 22. Share Repurchase(Million Shares) 35 Aggregate to December 2012 29.1 137.6 MM shares 3027.3 363.8 Billion yen 25 19.9 20 16.0 13.9 1510.0 10.0 9.3 10 5 2.0- ---- 0 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06FY 07 FY 08 FY 09FY 10 FY 11FY 12Billion yen 29.5 28.656.877.236.770.0 5.0 - 30.0-- 30.0 -- * Share repurchase from the market 22
  • 23. 3. Forecast for FY 2013Fiscal year end is December 31 from FY2012Term of consolidation for FY2012 as a transitional period Group companies whose fiscal year end was previously March 31 *: April-December 2012 Group companies whose fiscal year end is already December 31: January-December 2012Restated FY2012Figures for the twelve-month period from January 1 to December 31, 2012 for groupcompanies whose fiscal year end was previously March 31.Adjusted growthFY2012 actualComparison with the nine-month period from April 1 to December 31, 2011 for groupcompanies that previously had a fiscal year end in MarchFY2013 forecastComparison with the twelve-month period from January 1 to December 31, 2012 for groupcompanies whose fiscal years ended in March before the fiscal year end change * Kao Corporation and certain consolidated subsidiaries with the same fiscal year end23
  • 24. Major Assumptions for FY2013 Forecast Year-on-year growth rate of market size in value (yen) for the Consumer Products Business1 in Japan: 0 to +1% year-on-year Year-on-year growth rate of cosmetics market size in value (yen) in Japan: FlatAdjusted growth2 Net sales: ¥1,270.0 billion+4.1%Effect of currency translation:+¥30.0 billion +2.5%Sales growth excluding effect ofcurrency translation: +¥19.6 billion+1.6%Estimated impact on income Impact from change in raw material prices: Gross impact: +¥4 billion Net impact: -¥3 billion Total Cost Reduction (TCR) activities: +¥5 billion Capital expenditures/depreciation and amortizationCapital expenditures: ¥60 billionDepreciation and amortization: ¥76 billion Share repurchases: Up to ¥30 billion or up to 12.5 million shares plannedExchange rate assumptions90 yen/USD (FY2012 actual exchange rate [average]: 80.12 yen/USD)115 yen/Euro (FY2012 actual exchange rate [average]: 103.46 yen/Euro) 1 Excludes prestige cosmetics. 2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 24
  • 25. Consolidated Sales and Profit Forecast[Reference]41FY2012 Restated2 FY2013(F) 5FY2012 AdjustedAdjustedBillion yen Billion yen Billion yen % growth2 % growth 2Net Sales1,012.6+0.41,220.4 1,270.0 +4.1Operating Income101.6 +3.2 111.8116.0 +3.8[% of Sales] 10.0% 9.2% 9.1%Ordinary Income 104.2 +4.0 114.1117.0 +2.5[% of Sales] 10.3% 9.4% 9.2%Net Income 62.4 +20.5 62.7 73.0 +16.4[% of Sales]6.2% 5.1% 5.7%Net Income per Share (yen)119.55+20.6120.21 142.60+18.63ROE 11.0% -11.1%12.2%-EBITDA161.4 +0.4 189.2192.0 +1.5(Operating Income + Depr. & Amort.)Cash Dividends per Share (yen)62.0+3.362.064.0+3.21 Exchange rate assumptions: 90 yen/USD,115 yen/Euro2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.)3 ROE forecast of FY2012 is for the transitional period connected with the change in fiscal year end.4 Kanebo Cosmetics (Apr. -Dec. 2012) : Net sales = approximately ¥150 billion / operating margin before deduction of royalties =slightly more than 7%; amortization related to Kanebo Cosmetics: ¥20.5 billion5 Kanebo Cosmetics (Jan. -Dec. 2013) : Net sales = slightly more than ¥190 billion / operating margin before deduction of royalties= approximately 8%; amortization related to Kanebo Cosmetics: ¥26.5 billion25
  • 26. Sales Outlook by Segment – FY2013Adjusted<Billion yen> growth2Consolidated Net Sales 1,270 +4.1% Reference:BySegment1 By Geographic Area1AdjustedAdjustedgrowth2 growth2Beauty Care560+4.1% Japan956 +2.4%HumanHealth Care197+3.9% Asia 181 +13.1%Fabric andHome Care305+4.5% Americas99 +10.0%Chemical 242+2.3% Europe 117 +5.9% 1 Sales are before elimination of transactions between segments or geographic areas. 2 Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 26
  • 27. Sales Outlook – FY2013 - Consumer Products Business in Japan -<Billion yen>1st Half Full Year FY2012 FY2013FY2012FY2013 Adjusted Adjusted ActualForecast growth*ActualForecastgrowth*(9 months)(12 months)Beauty Care 203.6 197.0+1.8%312.6 413.0 +1.2%Human Health Care 84.981.0 +0.5%131.6 173.0 +1.6%Fabric and Home Care132.6 120.0+3.6%208.9 273.0 +3.2%Consumer Products Business421.1 398.0+2.1%653.1 859.0 +1.9%*Excludes the impact of the change in financial term. (Please refer to slide 23 for details.)27
  • 28. FY2013 Outlook by Segment/Geographic Area Decrease in operating incomeIncrease in operating income Increase in net sales CP1 – Asia CP1 – Americas CP1 – Japan Chemical – JapanCP1 – Europe Chemical – Asia Chemical – Americas Chemical – Europe Decrease in net sales 1: CP = Consumer Products 2: Excludes the impact of the change in financial term. (Please refer to slide 23 for details.) 28
  • 29. Consolidated Net Sales/EBITA1/Operating Income [Full Year] Sales ProfitBillion yen Billion yen 1,400240 1,276.3 1,270.0 1,184.41,216.1 220 1,186.8 1,2002001,012.6Net Sales180 1,000160139.1142.2144.4 800134.7 129.5 140125.7 116.0108.6 120EBITA 104.6 101.696.8 94.0 60012.4% 10011.7% 11.7% 11.4%10.6% 10.9%80Operating 400 Income6010.0% 9.1% 7.9% 8.8%8.9%40 200 7.6%20EBITA Margin Operating Margin 002 FY08 0910 111213(F) 1 Operating income before amortization of goodwill and intellectual property rights related to M&A 2 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.)29
  • 30. EBITDADepretiation & AmortizationBillion yenOperating Income250 Total200188.4192.0 184.3186.0 178.8 161.415079.8 76.0 87.581.4 84.859.8100108.6 116.050 96.894.0 104.6 101.60 FY08 091011 12 * 13(F)*Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.)30
  • 31. ROE & ROA (%)20 14.91513.112.211.711.510.9 11.0 12.89.91011.68.6 10.3 9.7 9.29.8 8.08.57.3 5ROE ROA 0 FY05060708 091011 12 1,2 13(F)ROA: Ordinary Income / Total assets 1 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 2 ROE and ROA of FY2012 are for the transitional period connected with the change in fiscal year end. 31
  • 32. Net Income per ShareNet Income Net Income(Billion yen)Weighted Average per Share Number of Shares (yen) Outstanding (MM) 90Net Income200 Net Income per Share 80 73.0 180 71.1 70.5 66.6160 70 64.5 62.4 140 60 52.4 142.6130.6129.446.7 120 50 122.5 120.3 40.5119.6 100 40 100.5 80 87.7 30 75.660 2040 544544 543536 536533522 522511 1020 0 0FY050607 08 0910 11 12 * 13(F) * Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 32
  • 33. Cash Dividends per Share (Yen)70 Dividend increase for the 23rd64.0062.00 consecutive year in FY201260.00 58.0060 56.00 57.0054.00 52.0050.00504038.00 32.0030.003026.00 24.0020.002016.0014.0015.0011.5012.50 9.09 10.0010.508.8710 7.10 7.10 0 )89909192 93949596 9798 9900 0102 0304 05 0607 0809 1011 1288(FFY13*Impacts of share splits are retroactively reflected.33
  • 34. Capital Expenditures(Billion yen) 100 Parent Subsidiaries 60.0 49.1 47.25044.6 44.941.927.0 14.7 17.319.617.5 22.5 34.433.027.4 29.925.0 19.40FY08 091011 12 2 13(F) 1 Includes long-term prepaid expenses. 2 Fiscal year end is December 31 from FY2012. (Please refer to slide 23 for details.) 34
  • 35. FY2013 Quarterly Consolidated Sales and Profit Forecast Net SalesOperating Income(Billion yen)(Billion yen)1,270.0Net Sales 20121,220.4Operating Income 2012Net Sales 2013 Operating Income 2013 116.0 111.8 890.169.4578.7 600.034.9 284.7 32.014.43 months6 months9 monthsFiscal year3 months6 months 9 months Fiscal year* Fiscal year end is December 31 from FY2012. Figures for the twelve-month period fromJanuary 1 to December 31, 2012 for Kao Corporation and its subsidiaries whose fiscal year endwas previously March 31. (Please refer to slide 23 for details.)35
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