LIXIL Core Earnings Up 27% in Q3

- Profitability driven by strong demand for renovation products in Japan and stabilization of variable costs
- Amid sluggish global demand impacting international business, structural reforms continue to enhance management resilience 

Tokyo – LIXIL Corporation (“LIXIL”, TSE Code: 5938), maker of pioneering water and housing products, today announced its three and nine-month results for the third-quarter period of the fiscal year ending March 31, 2024.

CEO Comment:
“Despite the macroeconomic climate remaining challenging, marked by high interest rates and inflation in key markets such as the U.S. and Europe, our business in Japan performed well, leading to a 27% increase in core earnings over the nine-month period. In addition to the positive impact of  price optimization measures, sales of high-insulation renovation products and a rebound in market share within the water technology sector contributed to our enhanced profitability in Japan.

Recovery of demand in Europe and the U.S. has been delayed by expectations of interest rate cuts, which remain high. We have implemented measures aimed at restoring the profitability of our international business, which includes optimizing personnel allocation. We expect to see the effects of our ongoing efforts in the fourth quarter and will continue advancing structural reforms including  shifting resources to growth markets.

We anticipate the current uncertain business environment to continue in the fourth quarter, with the slowdown in the new housing construction market and a temporary cooling of demand due to seasonal factors in Japan expected to impact profitability. We will continue to execute on the strategic priorities set out in the LIXIL Playbook. By responding to demand for home renovation and increased environmental interest, and by expanding our environmentally friendly product lineup, we will continue to innovate and differentiate LIXIL in order to achieve sustainable growth.”

- Kinya Seto, CEO, LIXIL 

Financial Highlights (9-month period): 
Revenue
Revenue remained generally flat at ¥1,122.9 billion. The Japanese business recorded revenue of  ¥759.4 billion, a 1% year-on-year increase, as price optimization measures fully took effect and strong sales of high insulation renovation products such as windows offset lower demand for new housing construction. The international business recorded revenue of ¥371.6 billion, a 11% decrease year-on-year after factoring out the impact of foreign exchange, as a result of the delayed recovery in demand in Europe and the U.S. 

Core Earnings
Core earnings increased to ¥26.6 billion, a 27% increase year-on-year. Increased demand in the renovation sector in Japan, in addition to the stabilization of variable costs such as raw material prices and component prices, contributed to higher core earnings. Core earnings margin increased by 0.5pp year-on-year to 2.4%. 

Net profit attributable to owners of the parent   
Net profit decreased by ¥4.2 billion year-on-year to  ¥6.8 billion, primarily reflecting a loss for the quarter for discontinued operations related to the sale of Permasteelisa. 

Performance by Business Segment and Region (9-month period):
Revenue from LIXIL Water Technology’s (LWT) business in Japan increased  to ¥315.7, reflecting a recovery of market share following the normalization of the competitive environment and an increase in demand in the renovation sector. However, core earnings decreased by 17.9% to ¥18.4 billion, reflecting lower gross profit due to the impact of stagnating demand for new housing construction, despite the positive impact of LIXIL’s price optimization initiative and lower fixed costs. Core earnings margin decreased by 1.3pp year-on-year to 5.8%.

Revenue from LWT’s international business decreased by 4.1% year-on-year to ¥352.7 billion, reflecting sluggish demand due to high interest rates and inflation. The Americas, EMENA, APAC and Greater China regions all recorded lower revenue on a local currency basis. Core earnings decreased by ¥12.3 billion year-on-year to ¥1.3 billion, reflecting lower revenue in the Americas and EMENA and despite the positive impact of lower SG&A expenses.  

Revenue from LIXIL Housing Technology increased by 1.8% year-on-year to ¥462.5 billion, reflecting favorable sales of high insulation windows and other products in the renovation sector. Government subsidies supporting the upgrade to high performance windows helped boost demand. Core earnings increased by 112.4% year-on-year to ¥32.9 billion, while core earnings margin increased by 3.7pp year-on-year to 7.1%.

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