First Quarter of Fiscal 2024

Supplementary Material

POLA ORBIS HOLDINGS INC.

Corporate Officer

PR, IR, CSR and Sustainability

Naotaka Hashi

  • This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections resulting from changes in the economic environment and other risks and uncertainties.
  • POLA ORBIS HOLDINGS INC. has applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from fiscal 2022. The results for fiscal 2021 in this presentation have been calculated using the same accounting standards as those in fiscal 2022, and are shown as reference information (unaudited) for the purpose of comparison.
  1. Highlights of Consolidated Performance
  2. Segment Analysis
  3. Initiatives Going Forward
  4. Forecasts for Fiscal 2024
  5. Appendices

1

Q1 Key Topics

Cosmetics Market

  • The scale of the Japanese cosmetics market as a whole showed steady growth.
  • The cosmetics market in mainland China showed weak cosmetics consumption trends due to uncertainty concerning economic conditions.

Source: Ministry of Economy, Trade and Industry, Ministry of Internal Affairs and Communications, Japan Tourism Agency, Japan Department Stores Association, Intage SLI, and National Bureau of Statistics of China

Our Group

  • Due to the impact of POLA's performance, consolidated net sales decreased (down 0% YoY in Japan, down 17% YoY in overseas), as did consolidated operating income.
  • Despite growth in department stores and e-commerce, POLA's revenue from consignment sales channel declined in Japan. Revenue in mainland China fell due to a deterioration in business sentiment and hurdles from the previous year.
  • ORBIS recorded double-digit growth in revenue and income with results outperforming plans. The direct selling channel grew in terms of the number of both new and existing customers.
  • Jurlique saw increased revenues, with growth centered on mainland China and Australia.
  • Losses from brands under development were ameliorated.

60,000

Quarterly Consolidated Sales

Quarterly Operating Income

6,000

4,549

40,000

20,000

37,662

42,13640,886

4,000

3,357

2,000

1,912

0

(mil. yen)

2022

2023

2024

(mil. yen)

2022

2023

2024

2

Consolidated P&L Changes Analysis

Net Sales to Operating Income

FY2023

FY2024

YoY Change

(mil. yen)

Q1 Results

Q1 Results

Amount

%

Consolidated net sales

42,136

40,886

(1,249)

(3.0%)

Cost of sales

7,748

7,360

(387)

(5.0%)

Gross profit

34,387

33,525

(862)

(2.5%)

SG&A expenses

29,838

30,168

329

1.1%

Operating income

4,549

3,357

(1,191)

(26.2%)

Key Factors

Revenue decreased, mainly due to lower revenue at POLA.

■ Consol. net sales

Excluding the impact of the liquidation of the H2O PLUS, Amplitude, and ITRIM

brand businesses in FY2023, net sales were in line with the previous year.

■ Cost of sales

Cost of sales ratio 2023Q1: 18.4% ⇒ 2024Q1: 18.0%

■ SG&A expenses

Labor expenses: up ¥62 mil. YoY

Sales commissions: down ¥421 mil. YoY

Sales related expenses: up ¥101 mil. YoY

Administrative expenses, etc.: up ¥588 mil. YoY

■ Operating income

Operating margin 2023Q1: 10.8% ⇒ 2024Q1: 8.2%

3

Consolidated P&L Changes Analysis

Operating Income to Profit Attributable to Owners of Parent

(mil. yen)

Operating income

Non-operating income

Non-operating expenses

Ordinary income

Extraordinary income

Extraordinary losses

Profit before income taxes

Income taxes etc.

Profit attributable to non- controlling interests

Profit attributable to owners of parent

FY2023

FY2024

YoY Change

Q1 Results

Q1 Results

Amount

%

4,549

3,357

(1,191)

(26.2%)

385

1,423

1,037

269.2%

103

105

2

2.5%

4,832

4,675

(156)

(3.2%)

-

-

-

-

620

112

(507)

(81.8%)

4,211

4,562

350

8.3%

1,454

1,426

(28)

(1.9%)

13

9

(4)

(32.0%)

2,743

3,126

383

14.0%

Key Factors

  • Non-operatingincome: Foreign exchange gain of ¥1,220 mil.
  • Extraordinary losses: Recorded ¥399 mil. in extraordinary losses in the same period of FY2023 due to the liquidation of Amplitude and ITRIM.

4

Factors Impacting Profit Attributable to Owners of Parent

Despite a decrease in gross profit due to lower revenue, profit attributable to owners of

parent increased by ¥383 mil. YoY due to the impact of foreign exchange rates.

(mil. yen)

Positive impact

Negative impact

4,000

3,500

32 3,126

3,000

2,743

507

2,500

1,019

1,035

421

2,000

157

101

588

1,500

62

1,000

500

0

FY2023 Q1

Decrease

Improved

Labor

Sales

Sales-

Admin.

Non-

Extraordinary

Income

FY2024 Q1

Profit

in gross

cost of

expenses commissions

related

expenses,

operating

income

taxes,

Profit

attributable

profit

sales ratio

expenses

etc.

income

and loss

etc.

attributable

to owners

and loss

to owners

of parent

of parent

5

  1. Highlights of Consolidated Performance
  2. Segment Analysis
  3. Initiatives Going Forward
  4. Forecasts for Fiscal 2024
  5. Appendices

6

Segment Results

FY2023

FY2024

YoY Change

(mil. yen)

Q1 Results

Q1 Results

Amount

%

Consolidated net sales

42,136

40,886

(1,249)

(3.0%)

Beauty care

40,950

39,552

(1,398)

(3.4%)

Real estate

518

499

(18)

(3.7%)

Others

666

834

168

25.2%

Operating income

4,549

3,357

(1,191)

(26.2%)

Beauty care

4,359

3,575

(784)

(18.0%)

Real estate

161

52

(109)

(67.4%)

Others

2

51

49

-

Reconciliations

26

(322)

(348)

-

Segment Results Summary

  • Beauty care: Net sales decreased YoY, primarily due to a decrease in revenue from POLA, and operating income decreased, mainly due to a decrease in gross profit.

7

Beauty Care Business Results by Brands

(mil. yen)

Beauty care net sales

POLA

ORBIS

Jurlique

Brands under development

Beauty care operating income

POLA

ORBIS

Jurlique

Brands under development

FY2023

FY2024

YoY Change

Q1 Results

Q1 Results

Amount

%

40,950

39,552

(1,398)

(3.4%)

24,183

22,161

(2,022)

(8.4%)

9,977

11,446

1,468

14.7%

1,908

2,270

361

19.0%

4,217

3,673

(544)

(12.9%)

4,359

3,575

(784)

(18.0%)

3,501

2,305

(1,196)

(34.2%)

1,449

1,962

513

35.4%

(579)

(645)

(65)

-

(152)

(46)

105

-

Note: Consolidated operating income and loss for each brand are shown for reference purposes only (figures are unaudited).

注 Totals for the beauty care business in FY2023 include results for the H2O PLUS brand (liquidation completed in December 2023).

8

Brand Analysis (1)

Q1 Result

  • Department stores and e-commerce continued to perform strongly.
  • Revenue declined in Japan overall due to lower revenue in the consignment sales channel, but Online Merges with Offline (OMO) progressed as e-commerce customers also purchase through other channels.
  • Mainland China struggled with reduced store traffic.

Topics

  • Launch of renewed skin-brightening serum (February), strong initial sales performance

POLA WHITE SHOT FACIAL SERUM

Q1

Results (mil. yen)

YoY Change

Quarterly net sales (mil. yen)

Net sales

22,161

(8.4%)

30,000

Operating income

2,305

(34.2%)

24,183

Key indicators

21,229

22,161

Sales ratio

Domestic

83.7%

20,000

Consignment sales

60.1%

E-commerce

7.8%

10,000

Dept. store, B2B(1) etc.

15.8%

2022 1Q

2023 1Q

2024 1Q

Overseas

16.3%

Sales growth(2)

Domestic

down 7.1%

Quarterly operating income (mil. yen)

Consignment sales

down 12.2%

E-commerce

up 5.8%

4,000

3,501

Dept. store, B2B etc.

up 10.8%

2,305

Overseas

down 14.5%

2,000

1,611

Domestic business

Purchase per customer(2)/

down 5.2% /

# of customers(2)

down 3.6%

# of stores domestic(3)

2,647 (down 19)

0

# of stores overseas(3)

159 (down 3)

2022 1Q

2023 1Q

2024 1Q

(1) Hotel amenities business (2) YoY basis (3) vs Dec. 2023

9

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Disclaimer

POLA ORBIS Holdings Inc. published this content on 09 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 May 2024 06:04:07 UTC.