Kao : Consolidated Financial Results for the Three Months Ended March 31, 2021

Consolidated Financial Results for the Three Months Ended March 31, 2021 [IFRS]

			May 7, 2021
Company name:	Kao Corporation		Tokyo Stock Exchange in Japan
Stock code:	4452	(URL: www.kao.com/global/en/investor-relations/library/results/)
Representative:	Yoshihiro Hasebe, President and CEO
Contact person:	Mitsuhiro Watanabe, Vice President, Investor Relations	E-mail: [e-mail]

Scheduled starting date of the dividend payments: -

Supplementary documents of the financial results: Yes

Financial results information meeting: Yes (for institutional investors and analysts)

(Millions of yen, except per share amounts) (Amounts less than one million yen are rounded)

1. Consolidated financial results for the three months ended March 31, 2021 (from January 1, 2021 to March 31, 2021)

(1)	Consolidated operating results
									(Percentages indicate year-on-year changes)
						Three months ended				Three months ended
						March 31, 2021		%			March 31, 2020		%
	Net sales	320,558	(5.1)			337,767	(2.6)
	Operating income	30,937	(21.2)			39,279	2.8
	Income before income taxes	33,901	(9.1)			37,277	(3.4)
	Net income	26,228	(3.4)			27,159	0.6
	Net income attributable to owners of the parent	25,719	(3.5)			26,665	0.9
	Comprehensive income	50,480	263.0			13,908	(54.6)
	Basic earnings per share (Yen)	53.61					55.45
	Diluted earnings per share (Yen)	53.60					55.44
(2)	Consolidated financial position
						March 31, 2021				December 31, 2020
	Total assets	1,604,621					1,665,616
	Total equity	924,137					938,194
	Equity attributable to owners of the parent	908,792					923,687
	Ratio of equity attributable to owners
	of the parent to total assets	56.6%					55.5%
	Equity attributable to owners of the
	parent per share (Yen)	1,906.19					1,920.56
2.	Dividends
						Year ending		Year ending		Year ended
					December 31, 2021		December 31, 2021		December 31, 2020
						(Forecast)
	Annual cash dividends per share (Yen)
		1st quarter end				-			-
		2nd quarter end	72.00								70.00
		3rd quarter end	-								-
		Fiscal year end			72.00								70.00
		Total	144.00								140.00

Note: Revisions to the cash dividends forecast most recently announced: None

Notice regarding execution of quarterly review procedures

This quarterly financial results report is exempt from quarterly review by certified public accountants or accounting firms.

Explanation regarding the appropriate use of forecast of operating results and other special items

Forward-lookingstatements such as earnings forecasts and other projections contained in this release are based on information available at the time of disclosure and assumptions that management believes to be reasonable, and do not constitute guarantees of future performance. Actual results may differ materially from expectations due to various factors.

Please refer to page 7, "Qualitative Information on Financial Results for the Three Months Ended March 31, 2021 - 2. Description of Information on Outlook, Including Forecasts of Consolidated Results" for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use of earnings forecasts.

Three Months Ended March 31, 2021

3. Forecast of consolidated operating results for the year ending December 31, 2021 (from January 1, 2021 to December 31, 2021)

		(Millions of yen, except per share amounts)
		(Percentages indicate year-on-year changes)
					Year ending
			December 31, 2021		%
	Net sales				1,430,000	3.5
	Operating income				177,000	0.8
	Income before income taxes				177,000	1.7
	Net income attributable to owners of the parent				127,000	0.7
	Basic earnings per share (Yen)				267.02	-
	Note: Revisions to the consolidated operating results forecast most recently announced: None
4.	Others
(1)	Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in change in scope of
	consolidation): None
(2)	Changes in accounting policies and changes in accounting estimates
	1) Changes in accounting principles required by IFRS: None
	2) Changes in accounting principles due to reasons other than 1): None
	3) Changes in accounting estimates: None
(3)	Number of issued shares outstanding at the end of this period (ordinary shares)
		March 31, 2021			December 31, 2020
	Number of issued shares including treasury shares	482,000,000		482,000,000
	Number of treasury shares	5,242,913		1,054,019
		Three months ended		Three months ended
		March 31, 2021			March 31, 2020
	Weighted average number of shares outstanding	479,743,737		480,914,148
	during this period

Three Months Ended March 31, 2021

Qualitative Information on Financial Results for the Three Months Ended March 31, 2021

Note: Like-for-like growth rates below exclude the effect of translation of local currencies into Japanese yen.

1. Description of Operating Results

(Billions of yen, except operating margin and per share amounts)

Three months ended March 31	2021	2020	Growth
Net sales	320.6	337.8	(5.1%)
Like-for-like: (5.7%)
Operating income	30.9	39.3	(21.2%)
Operating margin (%)	9.7	11.6	-
Income before income taxes	33.9	37.3	(9.1%)
Net income	26.2	27.2	(3.4%)
Net income attributable to owners of the parent	25.7	26.7	(3.5%)
Basic earnings per share (Yen)	53.61	55.45	(3.3%)

The novel coronavirus (COVID-19) pandemic continued to have a major impact on social and economic activities and the lives of people around the world. Expectations for vaccines are growing, but conditions in the global economy remained unclear, with delays in the recovery of consumption due to border controls, restrictions on going outside, mandated temporary store closures and other factors in each country and region as the number of new infections repeatedly rises and falls.

According to retail sales and consumer purchasing survey data, the consumer products (cosmetics and household and personal care products) market in Japan, which is the Kao Group's key market, shrank year-on-year during the period from January to March 2021, reflecting the absence of the increase in demand, mainly for hygiene-related products, that occurred in the same period a year earlier when the pandemic began in Japan. Average unit prices for household and personal care products increased by 7 points compared with the same period a year earlier due to a shift to larger-volume product sizes.

Amid these circumstances, net sales decreased 5.1% compared with the same period a year earlier to 320.6 billion yen. On a like-for-like basis, net sales decreased 5.7%. Operating income was 30.9 billion yen, a decrease of 8.3 billion yen compared with the same period a year earlier, and income before income taxes was 33.9 billion yen, a decrease of 3.4 billion yen. Net income was 26.2 billion yen, a decrease of 0.9 billion yen.

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Three Months Ended March 31, 2021

The main exchange rates used for translating the financial statement items (income and expenses) of foreign consolidated subsidiaries and associates were as shown below.

	First quarter
	Jan. - Mar.
U.S. dollar	105.96 (108.95)
Euro	127.74 (120.18)
Chinese yuan	16.35 (15.61)

Note: Figures in parentheses represent the exchange rates for the same period a year earlier.

Summary of Segment Information

The following is an overview of changes in reportable segments implemented as of the three months ended March 31, 2021 (Reference: Page 14, "1. Segment Information" in "Notes to Condensed Consolidated Financial Statements").

1. The Hygiene and Living Care Business has been newly established and incorporates sanitary products from the former Human Health Care Business in addition to fabric care products and home care products, which were previously classified in the Fabric and Home Care Business.
2. The Health and Beauty Care Business has been newly established and incorporates personal health products, which were previously classified in the Human Health Care Business, in addition to skin care products and hair care products, which were previously classified in the Skin Care and Hair Care Business.
3. The Life Care Business has been newly established and incorporates health drinks, which were previously classified in the Human Health Care Business, in addition to commercial-use hygiene products, which were previously classified in the Fabric and Home Care Business.
4. Due to the reorganization of segments described in 1 to 3 above, sales and operating income for the same period a year earlier have been restated.

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Three Months Ended March 31, 2021

Consolidated Results by Segment

																			(Billions of yen)
									Net sales			Operating income			Operating margin (%)
										Growth	Like-for-
Three months ended March 31		2021	2020	%	like %		2021	2020			Change		2021	2020
	Hygiene and Living Care	112.3	119.6	(6.1)	(6.5)	13.2	17.9			(4.8)	11.7	15.0
	Business
	Health and Beauty Care	81.5	86.7	(6.0)	(6.3)	11.3	13.4			(2.1)	13.8	15.5
	Business
	Life Care Business	11.8	11.5	3.0	3.4	0.8	0.3			0.4	6.4	3.0
	Cosmetics	51.0	59.1	(13.7)	(14.7)	(3.0)	0.1			(3.1)	(5.9)	0.2
	Business
Consumer Products Business	256.6	276.9	(7.3)	(7.8)	22.2	31.8			(9.6)	8.7	11.5
Chemical Business	73.1	69.8	4.7	3.6	8.8	7.8			1.0	12.0	11.1
Total	329.7	346.7	(4.9)	(5.5)	31.0	39.6			(8.6)	-	-
	Elimination and Reconciliation	(9.1)	(8.9)	-	-	(0.0)	(0.3)			0.3	-	-
Consolidated	320.6	337.8	(5.1)	(5.7)	30.9	39.3			(8.3)	9.7	11.6

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