Nippon Paint (4612) Q2 2024 earnings summary

Executive summary

• Revenue for Q2 FY2024 rose 19.3% year-over-year to JPY 432.8 billion, with operating profit up 6.1% to JPY 51.8 billion, reflecting strong growth in both revenue and income, driven by volume growth, FX gains, and new consolidations.

• Non-GAAP revenue increased 5.4% and operating profit rose 7.5%, excluding recent acquisitions in Italy and Kazakhstan.

• 1H FY2024 revenue reached JPY 817.1 billion (+17.9% YoY), operating profit JPY 94.5 billion (+12.8%), and profit attributable to owners JPY 66.3 billion (+8.9%).

• NIPSEA China achieved 5.6% revenue growth and a 30.2% increase in operating profit (non-GAAP), with margin improvements despite a challenging market.

• Decorative segment revenue increased in all regions except Europe; automotive revenue declined in Japan and China but rose in the Americas.

Financial highlights

• Revenue: JPY 432.8 billion, up 19.3% year-over-year (IFRS); non-GAAP revenue up 5.4%.

• Operating profit: JPY 51.8 billion, up 6.1% year-over-year (IFRS); non-GAAP operating profit up 7.5%.

• 1H gross profit was JPY 330.7 billion, with a gross margin of 40.5%.

• EPS as of June 30, 2024, was JPY 28.25; equity attributable to owners/total assets at 51.7%.

• Net debt as of June 30, 2024, stood at JPY 572.7 billion.

Outlook and guidance

• Full-year guidance maintained; revenue and OP margin expected to be in line or slightly above previous guidance.

• FY2024 revenue forecast is JPY 1,600,000 million (+10.9% YoY), with operating profit projected at JPY 184,000 million (+9.0%).

• Earnings from India businesses to be incorporated from FY2025, not 2H FY2024.

• Raw material market expected to remain stable; FX volatility and currency trends remain key risks.

• Second half expected to be more positive than the first half on a constant currency basis.