Shiseido : Consolidated Settlement of Accounts for the First Quarter of the Fiscal Year Ending December 31, 2021

Shiseido Company, Limited (4911) Consolidated Settlement of Accounts for the First Quarter 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.

May 12, 2021

Consolidated Settlement of Accounts for

the First Quarter 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: May 14, 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 Quarter of the Fiscal Year Ending December 31, 2021 (From January 1 to March 31, 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 Quarter Ended

244,011

[7.5%]

10,884

[67.6%]

13,854

[128.9%]

(1,527)

[―%]

March 31, 2021

First Quarter Ended

226,893

[(17.1)%]

6,496

[(83.3)%]

6,052

[(84.7)%]

1,402

[(95.8)%]

March 31, 2020

Note: Comprehensive income

First quarter ended March 31, 2021: ¥20,057 million [―%]

First quarter ended March 31, 2020: ¥(1,862) million [―%]

Net Profit per Share

Fully Diluted Net Profit per Share

(Yen)

(Yen)

First Quarter Ended

(3.82)

―

March 31, 2021

First Quarter Ended

3.51

3.51

March 31, 2020

(2) Consolidated Financial Position

				(Millions of yen)
	Total Assets		Net Assets	Equity Ratio
As of March 31, 2021	1,212,040		518,667	40.8%
As of December 31, 2020	1,204,229		506,593	40.2%
Reference: Equity: As of March 31, 2021:	¥494,307 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	―
Fiscal Year 2021 (Forecast)		20.00		―	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
	Net Sales	Operating Profit	Ordinary Profit	Attributable to	Profit per
				Owners of Parent	Share (Yen)
Fiscal Year 2021	1,067,000 [15.9%]	27,000 [80.4%]	27,000 [180.1%]	35,500	[―%]	88.87
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 March 31, 2021:	400,000,000
As of December 31, 2020: 400,000,000
2) Number of treasury shares
As of March 31, 2021:	527,000
As of December 31, 2020:	534,198

3) Average number of shares outstanding during the period First quarter ended March 31, 2021: 399,469,982 First quarter ended March 31, 2020: 399,450,760

Implementation status of quarterly review procedures

This Consolidated Settlement of Accounts for the First Quarter 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 our 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 and Notes.......................................................................	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) ...................................................................................	14
(Note in the Event of Major Changes in Shareholders' Equity) ............................................................	14
(Significant Subsequent Events)............................................................................................................	15

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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 Quarter Ended	244,011	10,884	13,854	(1,527)	31,538
March 31, 2021
First Quarter Ended	226,893	6,496	6,052	1,402	24,005
March 31, 2020
Year-on-Year	7.5%	67.6%	128.9%	―	31.4%
Increase (Decrease)
FX-Neutral	6.0%

Note: EBITDA incorporates "Impairment Loss" and depreciation included in "Loss on COVID-19," recorded under "Extraordinary Losses."

In the first quarter of the fiscal year 2021, global economic conditions remained challenging, as economic activity stagnated due to the COVID-19 outbreak, and consumer sentiment declined 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 declared state of emergency. Other factors included a sharp drop in visitors to Japan, which significantly decreased inbound demand. Globally, although some countries and regions showed signs of recovery, the impact of the outbreak continued overall, particularly affecting the makeup market. Meanwhile, China's economy largely recovered, with the cosmetics market maintaining growth.

In 2021, the Shiseido Group (hereafter, the "Group") has launched its medium-to-long-term strategy WIN 2023 and Beyond, reflecting market changes caused by the COVID-19 pandemic. We are currently implementing a global transformation, positioning Skin Beauty as our core business. Amid rapid changes in the external environment, we are building a foundation as a Skin Beauty company and to that end, we are shifting from a focus on topline growth to a strategy that emphasizes 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 our business portfolio, digital transformation, and solidifying the financial base through inventory reductions and other initiatives.

In the first quarter of the fiscal year 2021, net sales grew in all regions except Japan, up 6.0% year on year on an FX-neutral basis. Based on reported figures, net sales increased 7.5% year on year to ¥244.0 billion, driven by our skin beauty brands, an area of focused investment, and continued growth of e- commerce, particularly in the prestige category.

Operating profit increased 67.6% year on year to ¥10.9 billion due to improved margins resulting from stronger sales and appropriate resource allocation in line with market changes, particularly for marketing investments and other SG&A.

Net profit attributable to owners of parent posted a loss of ¥1.5 billion mainly due to an impairment loss on trademark rights recorded as a result of partial termination of a license agreement with DOLCE&GABBANA S.R.L. Excluding such global transformation impacts, the net profit from existing businesses was positive at ¥13.8 billion.

The EBITDA margin was maintained at double digits, reaching 12.9%.

Major foreign currency exchange rates applicable to income and expense accounting line items in the Company's financial statements for the period under review are JPY106.6/USD, JPY127.9/EUR, and JPY16.4/CNY.

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