H1 Results for the Fiscal Year

TSE Code: 5938

Ending March 31, 2024 (IFRS)

(From April 1, 2023 to September 30, 2023)

LIXIL Corporation

October 31, 2023

Copyright © LIXIL Corporation. All rights reserved.

LIXIL TRANSITIONED TO IFRS FROM FYE2016

CHANGE IN PROFIT LEVEL STRUCTURE IS AS SHOWN

JGAAPBELOW

IFRS (LIXIL Financial Reporting)

Continuing operations

Net sales

Revenue

Cost of sales

Cost of sales

Gross profit

Gross profit

SG&A

SG&A

Operating profit

Core earnings (CE)

Non-operating income/expenses

Other income/expenses

Ordinary income

Operating profit

Extraordinary income/loss

Finance income/costs

Share of profit (loss) of investments accounted for using equity method

Profit before income taxes

Profit before tax

Profit from continuing operations

Discontinued operations

Profit for discontinued operations

Net profit attributable to

Profit attributable to

Non-controlling interests

Owners of the parent

Owners of the parent

Non-controlling interests

"Core earnings" in IFRS is equivalent to JGAAP's "Operating profit"

1

KEY HIGHLIGHTS

Summary of results for H1 FYE2024

Revenue was flat while Core Earnings increased year-on-year for H1 (6 months) FYE2024

  • Revenue was flat year-on-year. Core earnings increased by JPY2.7 billion to JPY8.8 billion
  • For international businesses, the biggest challenge was weak demand in Europe
  • Despite the headwind of higher procurement costs due to JPY depreciation for the Japan business, the gross margin gradually improved due to stabilization of variable costs such as raw material prices, component prices, and the transfer of cost increases to selling prices
  • Higher fixed costs due to a decline in sales and production volume continues to be a challenge for profitability recovery. Structural reforms are underway to improve management resilience, particularly in international businesses
  • Full-yeardividend forecast remains unchanged. Resolved interim dividend of JPY45

2

KEY HIGHLIGHTS

Summary of results for H1 FYE2024 (continued) and business outlook

H1 (6 months) FYE2024 results (overview by region)

  • Japan
    Although demand for new construction remained sluggish, the penetration of price optimizations and increased profits due to higher renovation demand for home insulation products contributed significantly to profitability improvement
  • International
    Earnings mainly affected by continued sluggish demand in Europe

H2 (6 months) FYE2024 outlook

  • Japan
    Although the recovery of demand for new construction needs to be monitored closely, renovation demand for insulation products continues to be strong, and continuing solid demand is expected from next year onward. We are implementing additional sales measures to raise our market share with the normalization of the competitive environment
  • International
    Despite the continued difficult business environment, mainly in Europe, positive effects of structural reforms underway are expected to be realized from Q4

3

H1 FYE2024 PERFORMANCE HIGHLIGHTS

Core Earnings increased year-on-year

  • Revenue: JPY732.2 billion, down JPY0.4 billion year-on-year
    • Q2 (3 months) YoY: +1% in Japan and -2% in international markets (-9% excluding foreign exchange impact)
    • H1 (6 months) YoY: +1% in Japan and -4% in international markets (-11% excluding foreign exchange impact)
  • Core earnings: JPY8.8 billion, up JPY2.7 billion year-on-year
    • Q2 (3 months) breakdown: JPY2.8 billion in LWT Japan, JPY0.7 billion in LWT International, JPY10.3 billion in LHT, and -JPY8.7 billion for consolidation adjustment/other factors
    • H1 (6 months) breakdown: JPY8.2 billion in LWT Japan, -JPY0.8 billion in LWT International, JPY18.6 billion in LHT, and -JPY17.1 billion for consolidation adjustment/other factors
  • Profit for the quarter(1): JPY0.5 billion, down JPY3.2 billion year-on-year
    • Profit before tax decreased JPY7.4 billion primarily due to the absence of last year's gain on the transfer of land and other assets, and an increase in finance costs

(1) Profit for the quarter = Profit for the quarter attributable to owners of the parent

4

H1 FYE2024 CONSOLIDATED BUSINESS RESULTS

(1)

(2)

(3)

  • Gross profit margin: Increased by 0.7pp YoY
  • SG&A expenses: Despite a decrease in logistics cost due to lower sales volume, increased by JPY2.2 billion YoY (Japan JPY4.7 billion decrease, International JPY1.3 billion increase, forex effect JPY5.6 billion increase) mainly due to personnel expenses for the international business, including forex impact. SG&A ratio increased by 0.3pp
  • CE margin: Increased by 0.4pp YoY

(1)

Equivalent to "Operating profit" of JGAAP

5

(2)

Profit for the quarter attributable to owners of the parent

(3)

EBITDA=Core earnings + Depreciation + Amortization

H1 FYE2024 BUSINESS RESULTS BY SEGMENT

LWT revenue and profits decreased due to sluggish demand in Europe and the Americas. Profitability for LHT improved due to price optimization and higher sales of renovation products for insulation

H1 impact from segment reclassification(1)

Forex impact(2)

LWT: Revenue JPY0.0 billion, CE -JPY1.6 billion

H1 6 months: Revenue +JPY18.9 billion, CE +JPY1.1 billion

LHT: Revenue -JPY3.6 billion, CE +JPY1.4 billion

Q2 3 months: Revenue +JPY10.1 billion, CE +JPY0.6 billion

Consolidation adj.: Revenue +JPY3.6 billion

CE +JPY0.2 billion

(1)

Reflects reclassification of a subsidiary from Q1 FYE2024 to encompass both LWT and LHT (originally classified only to LHT),

6

(2)

reflecting its P&L impact. The reporting segments changed to LWT and LHT

Forex translation effect gain(loss) from international subsidiaries

CONSOLIDATED FINANCIAL POSITION

The total assets increased slightly, due mainly to foreign currency translations. Interest-bearing debt increased due to an increase in working capital and fund-raising for bond redemptions. Equity ratio is 34.3%

JPY billion

Cash and Cash Equivalents

Mar-2023

Sep-2023

Mar-2023

Sep-2023

Interest-bearing debt

Mar-2023Sep-2023

7

CASH FLOW STATUS AND CASH BALANCE

Free Cash Flow (FCF) increased by JPY2.5 billion due to inventory reduction, partially offsetting a decrease primarily in trade payables in response to the "Declaration for Building Partnerships" initiative

(1)

(1)

(2)

(2)

(3)

(3)

(4)

(4)

(1)

(1)

(1)

Includes discontinued operations

Purchase of intangible assets (Excluding Right of use assets in IFRS16)

8

(2)

"FCF" = Operating CF + Investing CF

(4) "Others" = Effects of exchange rate changes + Net increase (decrease)

(3)

CAPEX = Purchase of property, plant and equipment +

in cash and cash equivalents included in assets held for sale

RESULTS BY BUSINESS SEGMENT

Water Technology Business (LWT)

Housing Technology Business (LHT)

9

WATER TECHNOLOGY

Revenue and profits decreased for both Japan and international businesses

FYE2024

YoY vs Results

FYE2024

JPY billion

H1 Results

Increase

%

Forecast

/decrease

Japan

Revenue

200.3

-1.4

-0.7%

429.5

CE

8.2

-2.7

-24.6%

25.5

CE margin

4.1%

-1.3pp

-

5.9%

International(1)

Revenue

235.8

-8.6

-3.5%

515.5

CE

-0.8

-10.7

-

27.5

CE margin

-

-

-

5.3%

Water

Revenue

436.1

-10.0

-2.2%

945.0

Technology

CE

7.3

-13.3

-64.5%

53.0

Total

CE margin

1.7%

-3.0pp

-

5.6%

Revenue

Core earnings

Japan: Despite price optimizations and strong sales for

Japan: CE declined YoY as efforts from price

renovation products that enhance people's lifestyles,

optimization and reduction of fixed cost were

revenue decreased due to lower sales in new housing

outweighed by a decrease in gross profit due to lower

Int'l(1): Revenue decreased in local currency/JPY terms due

sales for new housing related products

Int'l(1): CE declined YoY mainly due to a decrease in

to softening demand in all regions

revenue in Europe and the Americas, partly offset by

Int'l revenue distribution ratio: 54.1%, down by 0.7pp YoY

SG&A expense reduction

(1) YoY vs Results excluding forex impact: Revenue -JPY27.5 billion, -11%. Core earnings -JPY11.8 billion

10

INTERNATIONAL WATER TECHNOLOGY REVENUE BY REGION

By region: Management basis

FYE2024

YoY

FYE2024

YoY

Total: Statutory basis(1)

H1 Results

local currency

Forecast

local currency

JPY billion

basis

basis

Americas

88.9

-1%

+8%(2)

EMEA

84.0

-17%

+4%

China

22.7

-3%

0%

Asia Pacific

24.9

-2%

+10%

Adjustments

15.3

-

Water Technology

235.8

-4%

515.5

+4%

International Business Total

Americas

EMEA

Revenue declined in local currency terms due to weaker

Revenue declined in local currency/JPY terms due to

demand. Increased in JPY terms

softening demand

Revenue declined in local currency terms as soft demand

Revenue declined due mainly to softer demand, with

continued. However, improvements in sales in Q2

lower discretionary spending and lower investments in

brought a return to profitability in the quarter

housing/construction in most European markets amid a

Further improvement on profitability by shifting

higher cost of funding and uncertain business outlook

products and sales channel mix

Asia Pacific

China

Revenue declined in local currency terms due to

Revenue declined in local currency terms with mixed

ongoing challenges in consumer confidence in the real

performance within the region. Increased in JPY terms

estate sector. Increased in JPY terms

Core markets showed mixed performance with India

Signs of demand recovery in some projects

growing, Thailand flat, and Vietnam declining due to

Q2 sales unchanged from Q1 in local currency terms

continued softening of demand in real estate sector

(1)

Statutory basis currency: H1 FYE2024 Results 1USD=JPY141.31, 1EUR=JPY153.51

11

(2)

Management basis currency: FYE2024 1USD=JPY135.0, 1EUR=JPY137.7

Includes impact from M&A in FYE2023

HOUSING TECHNOLOGY

Revenue and core earnings increased in Japan due to strong renovation demand for insulation products, backed by government subsidies. Profitability for international business improved after strategy revision

FYE2024

YoY vs Results

FYE2024

JPY billion

H1 Results

Increase

%

Forecast

/decrease

Japan

Revenue

288.4

+8.4

+3.0%

583.0

CE

18.0

+12.4

+220.4%

32.5

CE margin

6.2%

+4.2pp

-

5.6%

International

Revenue

12.5

-0.8

-6.1%

23.5

CE

0.7

+0.3

+72.7%

0.5

CE margin

5.2%

+2.4pp

-

2.1%

Housing

Revenue

300.9

+7.6

+2.6%

606.5

Technology

CE

18.6

+12.6

+211.1%

33.0

Total(1)

CE margin

6.2%

+4.1pp

-

5.4%

Revenue

Core earnings

■ Revenue increased due to price optimization and high

■ Profitability recovered due to price optimization in

renovation demand to make homes more efficient and

response to increased costs, and strong sales of high-

enhance people's lifestyle

performance sashes for renovation led to a significant

increase in profits. Despite a continuing weak demand for

new housing, aim to improve CE margin by efforts for

fixed-cost reductions and sales measures

(1) FYE2024 H1 Results (Reference)

LHT excl. building business Revenue

JPY254.4 billion, CE JPY18.2 billion, CE margin 7.2%

12

Building business

Revenue

JPY46.4 billion, CE JPY0.4 billion, CE margin 0.9%

APPENDIX: FINANCIAL DATA

13

REVENUE BY PRODUCT AND SERVICE

Government initiatives helped push sales of housing sashes higher, with

sales of subsidy-eligible window products tripling YoY. Demand is expected

to continue from next year onward

JPY billion

in %

Full-year

H1

H1

Quarterly YoY

Segments

Major products

FYE2023

FYE2023

FYE2024

FYE2023

FYE2024

Results

Results

Results

YoY

Q1

Q2

Q3

Q4

Q1

Q2

LWT

Sanitary ware**

106.5

51.4

49.8

-3.0%

+0.4

+6.7

+2.1

-2.1

-2.2

-3.7

Bathroom units

87.4

43.0

43.6

+1.6%

-2.4

+4.0

+1.3

+4.1

+3.0

+0.1

Washstand cabinet

38.7

18.6

18.4

-0.7%

+1.8

-1.0

-1.7

-2.7

+0.7

-1.9

units**

Kitchens

100.9

49.3

46.8

-5.1%

+0.3

-2.5

-2.1

+0.6

-5.2

-5.0

Tiles

31.9

15.2

15.1

-0.9%

-4.2

-1.2

-2.5

-2.7

-1.1

-0.8

LHT

Housing sashes and

165.5

81.3

96.5

+18.7%

-1.2

-2.1

-0.5

+7.8

+14.6

+22.8

related products

Exterior

101.5

51.3

47.8

-6.8%

0.0

+3.2

+1.8

-4.5

-6.6

-7.1

Wooden interior

62.7

31.3

28.7

-8.3%

+1.4

+7.8

+0.7

-6.7

-7.4

-9.2

furnishing materials

LHT Others

43.7

21.6

21.9

+1.1%

+17.0

+8.1

+2.8

+0.7

+1.8

+0.4

Building sashes

95.7

45.3

46.4

+2.5%

+9.3

+13.3

+5.0

+2.0

+12.1

-4.9

Housing and Services

27.0

13.7

12.7

-7.0%

-4.8

-11.9

-7.9

-17.8

-9.5

-4.6

Business

International(1)

523.3

257.7

248.3

-3.7%

+11.3

+13.9

+9.3

+13.7

-5.8

-1.6

Others/

111.1

52.9

56.2

-

consolidation & adj.

Total

1,496.0

732.7

732.2

-0.1%

+4.2

+6.3

+3.4

+5.1

-0.3

+0.2

(Reference)**Sales of Faucets included in "Sanitary ware" and "Washstand

cabinet

units"

LWT

Faucets

24.7

11.5

11.9

+3.2%

-0.3

+3.4

-6.1

+4.1

+7.3

-0.7

(1) Please refer to p.16 for the revenue of water-related products in international business

14

PROMOTE RENOVATION STRATEGY IN JAPAN

Renovation sales ratio increased by 3.3pp. Renovation sales in LHT increased by 19% YoY, led by window renovation for better heat-insulation

H1 (6 months)

Q2 (3 months)

JPY billion

FYE2023

FYE2024

Increase

YoY

FYE2024

YoY

Results(1)

Results

/decrease

Results

Sales of renovation-related products

161.2

178.2

+17.0

+10.5%

91.5

+10.8%

LWT-J

+3%

+2%

LHT

+19%

+21%

Excl. building

+22%

+26%

Building business

0%

-6%

41%

44%

+3.3pp

44%

Renovation sales ratio

+3.3pp

Renovation sales ratio by

business

Number of member

homebuilders

segment (YoY)

Increase

Stores

Mar

Mar

Sep

H1 FYE2023

H1 FYE2024 /decrease

2022

2023

2023

LIXIL Reform Shop

LWT

49%(1)

51%

+2.3pp

536

544

545

(Franchise)

LIXIL Reform Shop

11,264

11,224

11,190

LHT

35%

39%

+4.4pp

(Independent stores)

LIXIL PATTO Reform

Japan

41%

44%

+3.3pp

3,804

3,833

3,838

Total

Service Shop

(1) Sales of renovation product was restated for comparison on the same basis

15

GROWTH IN INTERNATIONAL WATER TECHNOLOGY BUSINESS

Leveraging our brands, manufacturing assets and advanced technologies, we are accelerating growth by bridging portfolio gaps globally(1)

H1 FYE2024 (6 months)

Q2 FYE2024 (3 months)

Intl.

Americas

EMEA

China

Asia

Intl.

Americas

EMEA

China

Asia

Total

Pacific

Total

Pacific

Sales distribution ratio

Bath faucets and showers

37%

11%

60%

49%

40%

37%

12%

60%

50%

38%

Toilets

42%

52%

26%

40%

57%

42%

53%

25%

39%

59%

Kitchen faucets and water

7%

4%

13%

5%

2%

7%

4%

13%

6%

2%

systems

Bathing and showering

10%

24%

0%

0%

1%

9%

23%

0%

1%

0%

systems

All others

4%

8%

1%

5%

0%

4%

8%

2%

5%

0%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Sales growth

Bath faucets and showers

-20%

-14%

-26%

-9%

+1%

-21%

-6%

-30%

-4%

+5%

Toilets

+2%

-1%

+10%

+2%

-0%

+7%

+1%

+30%

+7%

+3%

Kitchen faucets and water

-11%

-6%

-13%

-1%

-6%

-8%

+13%

-14%

-9%

+2%

systems

Bathing and showering

-12%

-12%

-32%

-4%

-23%

-10%

-11%

+5%

+42%

-14%

systems

(1) See also, p.33, 43-44 of our INTEGRATED REPORT 2023, "GROW GLOBAL WATER BUSINESS" in the LIXIL Playbook

16

https://ssl4.eir-parts.net/doc/5938/ir_material_for_fiscal_ym41/137633/00.pdf#page=34

H1 (6 MONTHS) FYE2024 CHANGE IN REVENUE AND CORE EARNINGS

Revenue

JPY billion

YoY

-2%

+3%

Renovation

+3%

Renovation

+19%

732.7

Others

-4%

Others

-5%

732.2

Japan

-1%

Japan

+3%

International

-4%

International

-6%

-0.4(-0.1％)

earnings

H1 FYE2023

LWT

JPY billion

LWT +6.7

LHT +14.5

LWT -0.5

LHT +2.3

LHT

Material price -9.8 LWT -6.2 LHT -3.6

Cost reduction -5.5 LWT -3.2

LHT -2.3

Consolidation

H1 FYE2024

adjustment/

other

LWT Intl. -10.7

Activity costs, logistics

LHT Intl.

+0.3

(Reference)

costs, and other costs

GROHE

-9.0

LWT +0.5

ASB

+1.5

LHT +1.4

Others

-2.9

Core

6.2

CE

Margin

0.8%

8.8

CE

+2.7 (+43.6%)Margin

1.2%

H1 FYE2023

Sales in Japan Mix/pricing

Cost

SG&A

International

Consolidation

H1 FYE2024

business

adjustment/

Japan +9.7(+59%)

Int'l -10.4(-)

others

17

Q2 (3 MONTHS) FYE2024 CHANGE IN REVENUE AND CORE EARNINGS

Revenue

JPY billion

YoY

-1%

+2%

Renovation

+2%

Renovation

+21%

372.4

Others

-4%

Others

-6%

373.1

Japan

-1%

Japan

+2%

International

-2%

International

-3%

0

+0.7 (+0.2％)

Core earnings

Q2 FYE2023

LWT

JPY billion

LWT +3.6

LHT +6.5

-0.8

LWT -0.4

CE

LHT +0.9

Margin

LHT

Material price -4.3 LWT -2.5 LHT -1.8

Cost reduction -0.4 LWT -1.2

LHT +0.8

+5.9 (-)

Consolidation

Q2 FYE2024

adjustment/

other

Activity costs, logistics

LWT Intl. -3.2

LHT Intl.

+0.2

costs, and other costs

(Reference)

LWT

-0.1

GROHE

-4.4

LHT

+0.7

ASB

+2.7

Others

-1.3

5.1

CE

Margin

1.4%

Q2 FYE2023

Sales in Japan Mix/pricing

Cost

SG&A

International

Consolidation

Q2 FYE2024

business

adjustment/

Japan +6.5(+106%)

Int'l -3.0(-73%)

others

18

H1 FYE2024 OTHER INCOME AND EXPENSES, FINANCE INCOME AND COSTS

H1 FYE2023

H1 FYE2024

Increase/

JPY billion

Results

Results

decrease

Profit on disposal of assets held for sale

5.3

-

-5.3

Other expenses include

Others

2.7

2.5

-0.1

asset securitization

Other income

7.9

2.5

-5.4

business transfer(1)-related

expenses

Loss on sale and disposal of property, plant and

0.9

0.8

-0.1

Finance costs increased due

equipment

to impacts such as interest

Impairment losses

0.7

0.5

-0.2

rate hikes

Loss recognized on the measurement to fair value

-

1.1

+1.1

less costs to sell the disposal group held for sale

Others

2.5

2.4

-0.1

Other expenses

4.1

4.7

+0.7

(A) Exchange difference losses are

paired with gain on valuation of

Interest income

0.5

0.7

+0.2

derivatives

Dividend income

0.9

0.6

-0.3

H1

Gains on valuation of derivatives

0.2

0.4

+0.2

(A)

FYE2024

Gains on exchange differences

0.7

-

-0.7

Gains on valuation

Results

Others

0.2

0.2

0.0

0.4

of derivatives

Finance income

2.5

1.8

-0.6

Losses on exchange

-0.6

Interest expense

2.4

4.8

+2.4

differences

Losses on valuation of derivatives

-

0.6

+0.6

(A)

Net

-0.2

loss

Others

0.3

0.4

+0.1

Finance costs

2.6

5.8

+3.2

(1) News release on June 26, 2023 "Transfer of the asset securitization business of LIXIL REALTY, Corp. to Tosei Corporation"

19

https://newsroom.lixil.com/ja/20230626_01(Japanese only)

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LIXIL Group Corporation published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 06:41:07 UTC.