LIXIL H1 FY2023

Please see below some highlights of today’s announcement of the financial results for the second quarter of fiscal year 2023 (1st April 22-31st March 23) from LIXIL, a manufacturer of pioneering water technologies and housing products whose brand portfolio also includes the GROHE brand. The full press release in English can be found here.

• Revenue increases on measures to ensure product deliveries in a challenging business environment, while profits decrease due to the rapid fall of yen beyond the forecasted range, soaring component prices and increased logistics costs

• Guidance lowered to reflect the impact of the sharp fall of the yen, surging component prices, higher logistics costs, and weakening economic outlook in the Americas and China

Revenue

Revenue for the first half increased 5.2% year over year to ¥732.7 billion (EUR 5.28bn) due to the efforts to ensure product deliveries in a challenging business environment. Revenue in Japan rose 1.2% to ¥481.6 billion (EUR 3.47bn). Renovation related sales ratio increased 0.9pp year over year to 41%. International revenue increased 12.6% year over year to ¥257.7 billion (EUR 1.86bn), rising 0.4% excluding forex impact.

Core Earnings

Core earnings for the first half decreased ¥31.1 billion (EUR 224m) year over year to ¥6.2 billion (EUR 45m) due to the rapid depreciation of the yen beyond anticipation and surging component and energy prices. It was also impacted by inventory adjustments made by the customers in the Americas as the region’s consumer demand softened, following interest rates hikes. In addition, a slowdown in China’s real estate market contributed to the lower core earnings. Core earnings margin decreased 4.5pp to 0.8%.

LIXIL Water Technology & EMEA

LWT’s International markets revenue for the first half increased 10.8% year over year to ¥244.5 billion (EUR 1.76bn) on the back of the depreciation of the yen. Excluding the impact of currency exchange, revenue declined 2% year over year. Core earnings decreased 62.3% to ¥9.8 billion (EUR 71m) due to the impact of supply chain challenges and increased costs, including higher energy prices. Core earnings margin declined 7.8pp to 4.0%.

In the EMEA region, revenue for the first half was flat year over year in local currency but increased on a yen basis. The region’s second quarter revenue slightly increased from the previous quarter in local currency and yen. Two distribution centers established in the region in the first quarter started operating, making steady progress on resolving supply constraints that affected some products in the first half. LIXIL aims to resolve the issue in the second half.

Jonas Brennwald, Leader LIXIL EMENA, commented: “We continue to operate in a very uncertain environment. The consolidation of an agile and resilient supply chain remains our top priority in the second half of the year so that we can continue to be a strong partner to our customers in these times. The fact that we, as an EMENA region, can rely on the strong network of LIXIL is a great advantage for the GROHE brand.”

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