Kao : 2022 Q2 Presentation

Consolidated Financial Results

for the Six Months Ended June 30, 2022 and FY2022 Forecast

Kao Corporation

August 3, 2022

These presentation materials are available on our website in PDF format:

www.kao.com/global/en/investor-relations/library/presentations/

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.

Notes:

1. Numbers in parentheses in charts are negative.
2. Year on year growth rates for net sales are all like-for-like, excluding the effect of translation of local currencies into Japanese yen.
3. Changes and comparisons are all with the same period a year earlier unless otherwise noted.

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Consumer Products Market in Japan

• H&PC Market: Market recovery in Q2 continued from Q1, with 1% growth year on year.
• Cosmetics Market: Q2 growth was 3% year on year. Base makeup, point makeup and UV care products drove a recovery trend due to an increase in people going out.

■Growth of H&PC1 Market (86 major categories)

(%)
160					SRI+(vs. 2021)		SRI+(vs. 2019)	2
140				125
						112				110	109
120	105	106	100	103	109	108	107	107	108
100
	99	78				101	100	101	100	99	102
80	99		97	98
60
	2021						2022

■Market Growth Rates of Major H&PC Categories

(vs. previous year)

(vs. 2019)

■Growth of Cosmetics Market (26 categories)

(%)
160						SLI(vs. 2021)		SLI(vs. 2019)3
140											106
120	97	94	101	108	99	101	102	96	103	102	103
100
			100	98
80	90		58	97	91	87	92	93	91	94
83
60
40
	2021						2022

■Market Growth Rates of Major Cosmetics Categories

(vs. previous year)

(vs. 2019)

	22 Q1		22 Q2				22 Q2
					22 Q1		22 Q2					22 Q2
			Apr.	May	Jun.
									Apr.	May	Jun.
H&PC total	101	101	100	99	102	109
Cosmetics total	101	103	102	106	103	93
Laundry detergents	104	103	101	103	105	113
Skin care products	100	101	100	103	100	99
Fabric softeners	105	102	102	101	102	114
Facial cleansers /	102	102	100	105	102	95
Bath cleaning products	108	105	105	103	106	122		Makeup remover
									Serum	98	100	98	102	100	101
Sanitary napkins	102	101	100	102	102	102
									Makeup products	104	110	107	109	114	78
Baby diapers	94	94	95	89	98	83
									Base makeup	100	109	105	107	116		73
Hand soap	94	95	95	94	95	132
									Point makeup	107	111	110	110	112	84
Hand sanitizers	61	57	59	52	63	557
									Other	97	107	103	117	102	98
Bath additives	104	97	97	96	99	125
									UV care	106	117	117	127	108	106
1. H&PC: Household and personal care
2. SRI+: Estimates based on POS data from approx. 6,000 retail outlets in Japan					(Source: INTAGE Inc. )	3
3. SLI: Estimates based on a panel survey of approx. 40,000 consumers in Japan

Kao's Main Markets in Asia, the Americas and Europe (Main Categories)

Main Markets in Asia

• China ：Sales in each category decreased year on year due to lockdowns in response to the COVID-19 pandemic.
• Indonesia ：The number of infections decreased, and the movement of people continued to increase from Q1.

The market also continued to expand.

• Thailand ：The number of infections decreased, and the movement of people recovered. The market continued a trend from recovery to expansion.

＜Market Growth Rate (%)＞
	China (including e-commerce)		Indonesia			Thailand
	21 Q2	21 Q3	21 Q4	22 Q1	22 Q2	21 Q2	21 Q3	21 Q4	22 Q1	22 Q2	21 Q2	21 Q3	21 Q4	22 Q1	22 Q2
Baby diapers	105	99	93	97	92	117	109	108	108	107	99	88	87	95	96
Sanitary napkins and panty liners	102	101	102	96	97	119	112	114	116	116	106	91	92	100	112
Laundry detergents						107	107	109	118	115	95	79	81	87	109
UV care	128	103	110	99	75						90	68	91	104	137
House cleaning products											102	113	95	105	106

Source: NielsenIQ. China includes e-commerce (UV care include business-to-consumer only.)

Main Markets in the Americas and Europe

The number of infections decreased from Q1, and in tandem the movement of people was in a recovery trend. Many categories grew year on year in the markets Kao has entered.

＜Market Growth Rate (%)＞
				U.S.						U.K.					Germany
		21 Q2	21 Q3	21 Q4	22 Q1	22 Q2		21 Q2	21 Q3	21 Q4	22 Q1	22 Q2		21 Q2	21 Q3	21 Q4	22 Q1	22 Q2
Hair care	105	108	109	103	104	110	103	105	106	106	108	110	106	108	109
Facial cleanser	100	102	101	99	101							103	101	90	89	94
Deodorant	115	112	110	111	115
Hand and body lotions	110	108	107	106	105

Source: NielsenIQ/IRI（Results for Germany up to June 19, 2022）

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Highlights of Consolidated Financial Results

Six months ended June 30

(Billion yen)		FY2021		FY2022		Growth %	Change
Net sales	675.2	733.9	+8.7	+58.7
		Effect of currency translation1	+4.5	+30.5
				Like-for-like growth	+4.2	+28.2
Operating income	70.6	53.7	(23.9)	(16.9)
Operating margin(%)	10.4	7.3	-	-
Income before income taxes	74.1	60.5	(18.4)	(13.7)
Net income	53.5	39.8	(25.6)	(13.7)
Net income attributable to owners of the parent	52.5	38.9	(26.0)	(13.7)
EBITDA (Operating income + Depr. & amort.)2		105.1		88.5		(15.8)	(16.6)
Basic earnings per share (yen)	110.12	82.17	(25.4)	(27.95)
Cash dividends per share (yen)	72.00	74.00	-	+2.00

Cash flow	Adjusted free cash flow3	(23.4) billion yen
Payments of cash dividends4	34.4 billion yen

1. Exchange rates: 123.05 yen/USD, 134.33 yen/Euro, 18.98 yen/Yuan
2. Excluding depreciation of right-of-use assets
3. Adjusted free cash flow is the sum of net cash flows from operating activities and net cash flows from investing activities less depreciation of right-of-use assets and other expenses.

4. Includes payments of cash dividends to non-controlling interests

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