Consolidated Settlement of Accounts for the First Nine Months of the Fiscal Year Ending December 31, 2021 [Japanese Standards]

Shiseido Company, Limited (4911) Consolidated Settlement of Accounts for the First Nine Months of the Fiscal Year Ending December 31, 2021

The figures for these financial statements are prepared in accordance with the accounting principles based on Japanese law. Accordingly, they do not necessarily match the figures in the Annual Report issued by the Company, which presents the same statements in a form that is more familiar to foreign readers through certain reclassifications or summarization of accounts.

November 10, 2021

Consolidated Settlement of Accounts for the First Nine Months of the Fiscal Year Ending December 31, 2021

[Japanese Standards]

Shiseido Company, Limited

Listings:	Tokyo Stock Exchange, First Section (Code Number 4911)
URL:	https://corp.shiseido.com/en/
Representative:	Masahiko Uotani, Representative Director, President and CEO
Contact:	Harumoto Kitagawa, Vice President, Investor Relations Department
	Tel. [phone]

Filing date of quarterly securities report: November 11, 2021 (plan)

Start of cash dividend payments: ―

Supplementary quarterly materials prepared: Yes

Quarterly financial results information meeting held: Yes (Conference call for institutional investors, analysts, etc.)

1. Performance for the First Nine Months of the Fiscal Year Ending December 31, 2021 (From January 1 to September 30, 2021)

• Amounts under one million yen have been rounded down.

(1) Consolidated Operating Results

(Millions of yen; percentage increase (decrease) figures denote year-on-year change)

Net Profit

Net Sales

Operating Profit

Ordinary Profit

Attributable to

Owners of Parent

First Nine Months Ended

745,373

[14.0%]

26,253

[194.8%]

29,677

[433.0%]

36,757

[―%]

September 30, 2021

First Nine Months Ended

653,675

[(22.8)%]

8,906

[(91.4)%]

5,568

[(94.5)%]

(13,668)

[―%]

September 30, 2020

Note: Comprehensive income

First nine months ended September 30, 2021: ¥63,502 million [―%]

First nine months ended September 30, 2020: ¥(14,544) million [―%]

Net Profit per Share

Fully Diluted Net Profit per Share

(Yen)

(Yen)

First Nine Months Ended

92.01

91.93

September 30, 2021

First Nine Months Ended

(34.22)

―

September 30, 2020

(2) Consolidated Financial Position

											(Millions of yen)
			Total Assets			Net Assets			Equity Ratio
	As of September 30, 2021	1,182,114			550,309			44.7%
	As of December 31, 2020	1,204,229			506,593			40.2%
Reference: Equity: As of September 30, 2021:	¥528,773 million
	As of December 31, 2020:	¥484,289 million
2. Cash Dividends
					Cash Dividends per Share (Yen)
			Q1		Q2	Q3	Year-End		Full Year
	Fiscal Year 2020		―		20.00	―	20.00		40.00
	Fiscal Year 2021		―		20.00	―
	Fiscal Year 2021 (Forecast)							30.00		50.00

Note: Revision to the most recently disclosed dividend forecast: None

3. Forecast for the Fiscal Year Ending December 31, 2021 (From January 1 to December 31, 2021)

(Millions of yen; percentage figures denote year-on-year change)

				Net Profit	Net Profit
	Net Sales	Operating Profit	Ordinary Profit	Attributable to	per Share
				Owners of Parent	(Yen)
Fiscal Year 2021	1,044,000 [13.4%]	32,000 [113.9%]	33,500 [247.6%]	30,000	[―%]	75.10
Note: Revision to the most recently disclosed performance forecast: Yes

Notes

1. Changes in significant subsidiaries during the period (changes in specific subsidiaries causing a change in the scope of consolidation): None
2. Adoption of special accounting treatment in preparation of consolidated quarterly financial statements: None
3. Changes in accounting policies; changes in accounting estimates; restatements
4. 1. Changes in accounting policies due to amendments of accounting standards: None
   2. Other changes in accounting policies: None
   3. Changes in accounting estimates: None
   4. Restatements: None
5. Number of shares issued (common stock)
6. 1. Number of shares issued (including treasury shares)

As of September 30, 2021: 400,000,000

As of December 31, 2020: 400,000,000

2) Number of treasury shares
As of September 30, 2021:	512,291
As of December 31, 2020:	534,198

3) Average number of shares outstanding during the period

First nine months ended September 30, 2021: 399,477,665

First nine months ended September 30, 2020: 399,456,586

Implementation status of quarterly review procedures

This Consolidated Settlement of Accounts for the First Nine Months of the Fiscal Year Ending December 31, 2021 is not subject to quarterly review procedures by a certified public accountant or audit firm.

Appropriate use of business forecasts; other special items

In this report, statements other than historical facts are forward-looking statements that reflect the Company's plans and expectations. These forward-looking statements involve risks, uncertainties, and other factors that may cause actual results and achievements to differ from those anticipated in these statements. Please refer to "1. Analysis of Operating Results (3) Consolidated Forecast and Other Forward-Looking Information" on page 8 for information on preconditions underlying the above outlook and other related information.

Contents
1.Analysis of Operating Results .....................................................................................................................	2
(1)	Consolidated Performance......................................................................................................................	2
(2)	Financial Position ...................................................................................................................................	7
(3)	Consolidated Forecast and Other Forward-Looking Information ..........................................................	8
2.Quarterly Consolidated Financial Statements.........................................................................................	10
(1) Quarterly Consolidated Balance Sheets ................................................................................................	10
(2) Quarterly Consolidated Statements of Income
	and Quarterly Consolidated Statements of Comprehensive Income.....................................................	12
(3)	Notes to Quarterly Consolidated Financial Statements ........................................................................	14
	(Note on Assumptions of a Going Concern) .........................................................................................	14
	(Additional Information) .......................................................................................................................	14
	(Quarterly Consolidated Statements of Income) ...................................................................................	15
	(Note in the Event of Major Changes in Shareholders' Equity)............................................................	16
	(Business Combinations and Other Related Events) .............................................................................	17

1

1. Analysis of Operating Results

1. Consolidated Performance

					(Millions of yen)
				Net Profit
		Operating	Ordinary	(Loss)
	Net Sales	Attributable to	EBITDA
	Profit	Profit
		Owners of
				Parent
First Nine Months Ended	745,373	26,253	29,677	36,757	142,576
September 30, 2021
First Nine Months Ended	653,675	8,906	5,568	(13,668)	43,400
September 30, 2020
Year-on-Year	14.0%	194.8%	433.0%	―	228.5%
Increase (Decrease)
FX-Neutral	10.2%
Like-for-Like	13.4%

Notes:

1. EBITDA incorporates "Impairment Loss" and depreciation included in "Loss on COVID-19," recorded under "Extraordinary Losses."
2. Like-for-likeincrease (decrease) in net sales excludes the impact from the Personal Care business transfer in the third quarter.

In the first nine months of the fiscal year 2021, global economic conditions remained challenging, as economic activity was stagnant due to the COVID-19 pandemic, and consumer sentiment was low due to worsening corporate earnings and employment. In the Japan cosmetics market, consumer traffic decreased as a result of consumers staying at home and shortened operating hours in the retail sector under the declared states of emergency. Other factors included a drop in visitors to Japan, which affected inbound demand. Globally, although the impact of the pandemic continued overall, progress in vaccination rollout drove recovery across all cosmetic categories, even makeup, which had struggled, particularly in Europe and the United States.

In 2021, the Shiseido Group (hereafter, the "Group") launched its medium-to-long-term strategy WIN 2023 and Beyond and is currently implementing a global transformation, positioning premium skin beauty as its core business. Amid rapid changes in the external environment, we are building a solid foundation as a skin beauty company, and to that end, shifting from a focus on topline growth to a strategic emphasis on profitability and cash flow management.

We have positioned 2021 as a year of "Groundwork" to realize WIN 2023 and are moving forward with structural reforms centering on streamlining our business portfolio and solidifying the financial base, while ensuring business continuity and evolution during and post the COVID-19 pandemic.

In the first nine months of the fiscal year 2021, net sales grew in all regions except Japan, up 10.2% year on year on an FX-neutral basis. Based on reported figures, net sales increased 14.0% year on year to ¥745.4 billion. Like-for-like1 sales grew 13.4%, driven by our skin beauty brands-an area of focused investment- and continued growth of e-commerce, particularly in the prestige category.

Operating profit surged 194.8% year on year to ¥26.3 billion due to improved margins resulting from stronger sales and effective cost management.

Net profit attributable to owners of parent reached ¥36.8 billion, up ¥50.4 billion year on year, mainly thanks to increased operating profit and extraordinary income recorded as a result of the Personal Care business transfer. These impacts outweighed the extraordinary losses, namely impairment losses on trademark rights due to the partial termination of a license agreement for Dolce&Gabbana and on goodwill due to the business transfer of three makeup brands-bareMinerals,BUXOM, and Laura Mercier.

The EBITDA margin was 19.1%.

1 Excluding the impact from the transfer of the Personal Care business

2