LIXIL : Financial Results for the Fiscal Year Ended March 31, 2024(IFRS) (From April 1, 2023 to March 31, 2024)

Financial Results for the Fiscal Year	TSE Code: 5938
Ended March 31, 2024 (IFRS)
(From April 1, 2023 to March 31, 2024)

LIXIL Corporation

April 30, 2024

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 the fiscal year ended March 2024

Revenue and profits decreased year-on-year for Q4 (3 months) FYE2024

• Japan: Lower performance than expected due to the impact of LHT window renovation subsidies in a transitional period and a further decline in new housing starts
• International: Sluggish demand for LWT products has bottomed out, but performance concerns remain
• International structural reforms progressed more quickly than initially planned, resulting in an increase in "other expenses"

Revenue and profits declined for Q4 (12 months) FYE2024

• Japan: The number of new housing starts was significantly below LIXIL's forecast. In particular, owner-occupied and detached houses, areas of strong demand for LIXIL, both saw significant declines. At the same time, higher sales for window renovation supported results
• International: Weak performance throughout FYE2024 due to sluggish demand for housing-related products in Europe and the US due to high interest rates and prolonged inflation. Inventory levels on the customer side are decreasing, but demand has not yet recovered
• International: Have accelerated structural reforms in Europe and the US (Details to follow)

2

KEY HIGHLIGHTS

Outlook for the fiscal year ending March 2025

Full-year forecast for FYE2025

• Forecasting revenue of JPY1,570.0 billion and core earnings of JPY35.0 billion
• Forecasting annual dividend of JPY90 per share

Business environment and outlook

• New housing starts in Japan are expected to be weak for some time, but demand for renovation products to improve home insulation in LHT, due in part to higher subsidies, is expected to contribute to profits
• LWT Japan's intensified competitive environment is leveling off. We are accelerating our response to renovation demand and launch new, differentiated products
• Interest rates, the primary reason for LWT International's underperformance, are expected to improve during the year, but FYE2025 demand is expected to be flat from FYE2024. Earnings are expected to improve due to structural reforms implemented in FYE2024
• Some structural reforms in international businesses will continue in FYE2025, however, most measures are set to complete in FYE2025 (optimization in production facilities will continue in FYE2026 onwards)

3

KEY HIGHLIGHTS

Core earnings review of FYE2024 and outlook for FYE2025(1)

FYE2024

• Japan: Raw material prices remained stable. Component costs continued to rise, but were offset by price optimization
• International: Despite reductions in SG&A expenses, core earnings declined significantly due to the impact of lower sales (sales decrease and increase in the fixed cost burden from the decrease in production volume)

FYE2025

• Japan: Increased sales of window renovation will be a driver of profit growth. Component costs will continue to rise, but this will be offset by price optimization
• International: Economic recovery in Europe and the US will be delayed, but earnings will improve due to structural reforms
• Cost increases expected in all regions due to higher personnel and SG&A expenses

(JPY billion)

(JPY billion)

FYE2023				FYE2024	FYE2024				FYE2025
						Forecast
Result				Result	Result				35.0
25.7				23.2	23.2
Japan	Japan	Int'l	Other		Japan	Japan	Int'l	Other
Higher raw	Sales	Sales			Higher raw	Price	Effects of	Such as
Material	increase,	decrease due			Material	optimiza	structural	increased
prices,	price	to sluggish			prices,	tion,	reforms in	personnel
components,	optimiza	demand in			components,	renovati	Europe	costs in
logistics	tion	Europe and			logistics	on sales	and	Japan
costs(2)		the US			costs(2)		the US
(1) Please refer to p.29-30 and p.34 for analysis on changes of core earnings by segment for FYE2024 results and FYE2025	4
forecast respectively.
(2) Including forex impact

PROGRESS OF INITIATIVES IN THE LIXIL PLAYBOOK (1)

Management Direction(1)(2) - Focusing on the strategic initiatives of the

LIXIL Playbook

• Transform the management structure for sustainable growth and nurture an entrepreneurial culture
• Improve ROIC to 10% or more
• Improve core earnings margin aiming for 7.5%. Raise to 10% for mid-tolong-term
• Maintain Net debt/EBITDA at 3.5x or less, providing a stable foundation to support mid-tolong-term growth
• Aim for both sustainable corporate growth and creation of positive impact on society

Our

To Make Better Homes a Reality for Everyone, Everywhere

Corporate

Purpose

FOCUS

TRANSFORM

GROW

INNOVATE

Our

Divest Non-core

Tackle Inflation

Optimize

Grow Global

Embed

Develop

Strategic

Businesses and

and

Japan and

Water

Robust

New

Initiatives

Simplify

✔

Supply Chain

Drive New

Business

Environment

Core

Organization

Challenges

Growth

Strategy

	Impact	Global	Water Conservation &	Diversity &
Our	Strategy	Sanitation	Environmental	Inclusion
& Hygiene	Sustainability
Foundation	Empower People to Deliver on Our Strategies and Create Value

(1) Page 30-40of LIXIL Integrated Report 2023 "Management Direction"https://ssl4.eir-parts.net/doc/5938/ir_material_for_fiscal_ym41/137633/00.pdf#page=31

(2) Page 6-8 of ESG Briefing Material in 2023 "ACHIEVING OUR PURPOSE THROUGH VALUE CREATION"5https://ssl4.eir-parts.net/doc/5938/ir_material_for_fiscal_ym33/153293/00.pdf#page=6

PROGRESS OF INITIATIVES IN THE LIXIL PLAYBOOK (2)

Management Direction - Focusing on the strategic initiatives of our Playbook

Our			TRANSFORM
		Tackle Inflation
Strategic		✔	and
Initiatives		Supply Chain
			Challenges

• International business structural reforms are expected for the most part in FYE2025
	(Primarily regarding restructuring of the supply chain)
• The effects of the initiatives implemented in FYE2024 are planned to materialize from FYE2025
	onwards
	FYE2024	FYE2025	FYE2025
	Structural reforms
(JPY billion)	Costs(1)	Effects	Costs
 Optimize personnel	allocation
	Already implemented, primarily in Europe and		Optimize personnel allocation
	the US		Optimize personnel allocation	4.0	3.0
 Restructuring supply chain
Restructuring supply chain
	Reorganized some factories in Asia
Consolidation of Int'l plants	2.5	1.0	6.5
	Continued implementation planned for FYE2025
		Optimize business portfolio
 Optimize business portfolio
	Dissolution of DPI and others	5.5	2.0
	Already implemented, mainly in unprofitable
	businesses and businesses where synergies are		Total	12.0	6.0
	not expected				（Plan）

(1) Items that were accounted for as other expenses and other income within structural reform costs	6

PROGRESS OF INITIATIVES IN THE LIXIL PLAYBOOK (3)

Management Direction - Focusing on the strategic initiatives of our Playbook

Our					GROW
			Optimize	Grow Global
Strategic		✔		Japan and	Water
Initiatives			Drive New	Business
				Growth

• Japan: Advance our digital transformation, including embedding AI. Leveraging the expertise and technology from Japan to support growth of international markets
• International: Focus on faucets (especially US sales expansion) and flushing systems (Middle East)
• Stabilize our business portfolio by approaching potential markets and capturing demand in growth markets

Pursue growth in Japan water business

• Capitalize on the 100th anniversary(1) of our Japan water and tile business, accelerating development of new products
• New SATIS X launched in 2024, based on innovative technologies and expertise(2)

Details on Topics p.40

Accelerate growth in international businesses

• Full-scalerollout of GROHE's premium sub- brand GROHE SPA
• Highlight brand value with unique, custom- made designs, premium materials, and the latest colors

(1)	News release https://newsroom.lixil.com/ja/2024010904(Japanese only)	7
(2)	News release https://newsroom.lixil.com/ja/2024030601(Japanese only)

EXPAND SALES OF NEW PRODUCTS WITH SOCIAL AND ENVIRONMENTAL IMPACT

• Aiming to achieve sustainable growth through the expansion of differentiated products and to create an impact on society at the same time

• The development of the following products has already been completed. The key is how far we can penetrate the market with differentiated prices

Contribute to reducing CO2 emissions

Promote circular economy

Expand sales of PremiAL(1),

a low-carbon building material using

recycled aluminum

Mid- to

long-term

sales target:

JPY 300 billion

Contribute to reducing CO2 emissions

Promote circular economy

Expand sales of revia(4), a sustainable

material developed by combining

waste plastic and wood

Mid- to

long-term

sales target:

JPY 100 billion

Creating new value through core technologies

Rollout of KINUAMI(2), a foam shower

Japan: For caregivers,

International: For public

Mid- to

long-term

sales target: JPY tens of billions

Creating new value through core technologies

All shower toilets are equipped with two nozzles. Contribute to reducing health issues unique to women

Mid- to

long-term

sales target:

JPY 50 billion

Creating new value through core technologies

Provide new value through Greentap(3) and GROHE Blue. Contribute to the environment by reducing plastics use and logistics costs

Mid- to

long-term

sales target: JPY tens of billions

Contribute to reducing CO2 emissions

Contribute to CO2 emissions through increased sales of renovation products for better heat-insulation, such as sashes, doors, and exterior walls

Mid- to

long-term

sales target:

JPY 80 billion

Plan to launch Everstream Shower, trivalent chromium compatible faucets, Re-invented

Toilet(5), and environmentally friendly bathtub products going forward

(1)	News releasehttps://newsroom.lixil.com/20231010_01	(4)	News releasehttps://newsroom.lixil.com/2022101802	8
(2)	News releasehttps://newsroom.lixil.com/ja/20230915_01(Japanese only) (5)	News releasehttps://newsroom.lixil.com/20240321_g2rt
(3)	News releasehttps://newsroom.lixil.com/ja/2024032801(Japanese only)

FYE2024 PERFORMANCE HIGHLIGHTS

Revenue and profits decreased year-on-year

 Revenue: JPY1,483.2 billion, down JPY12.8 billion year-on-year

• Q4 (3 months) YoY: -4% in Japan and -4% in international markets (-14% excluding foreign exchange impact)

• Q4 (12 months) YoY: Flat in Japan and -4% in international markets (-12% excluding foreign exchange impact)

 Core earnings: JPY23.2 billion, down JPY2.6 billion year-on-year

• Q4 (3 months) breakdown: JPY2.5 billion in LWT Japan, JPY0.5 billion in LWT International, JPY3.0 billion in LHT, and -JPY9.5 billion for consolidation adjustment/other factors

• Q4 (12 months) breakdown: JPY20.9 billion in LWT Japan, JPY1.8 billion in LWT International, JPY35.9 billion in LHT, and -JPY35.4 billion for consolidation adjustment/other factors

 Profit for the year(1): -JPY13.9 billion, down JPY29.9 billion year-on-year

• Decreased by JPY29.9 billion YoY primarily due to an increase in costs associated with structural reforms, an increase in financial expenses due to rising interest rates, and an increase in tax expenses due to a temporary decline in profitability

(1) Profit for the year = Profit for the year attributable to owners of the parent	9

FYE2024 CONSOLIDATED BUSINESS RESULTS

(1)

(2)

(3)

• Gross profit margin: Increased by 0.5pp YoY
• SG&A expenses: Increased by JPY6.7 billion YoY (Japan JPY2.4 billion decrease, International JPY3.4 billion decrease, forex effect JPY12.5 billion increase) due mainly to foreign exchange impact. SG&A ratio increased by 0.7pp
• CE margin: Decreased by 0.2pp YoY

(1)	Equivalent to "Operating profit" of JGAAP	10
(2)	Profit for the year attributable to owners of the parent
(3)	EBITDA=Core earnings + Depreciation + Amortization

FYE2024 BUSINESS RESULTS BY SEGMENT

Revenue was flat YoY in the Japan business, but declined due to sluggish demand in the int'l businesses. Core earnings increased in LHT due to price optimizations and subsidies for window renovation, but decreased in LWT due to the significant impact of sluggish demand in int'l markets

Q4 (12 months) impact from segment reclassification(1)	Forex impact(2)
LWT: Revenue JPY0.0 billion, CE -JPY2.2 billion	Q4	12 months: Revenue +JPY42.7 billion, CE +JPY2.6 billion
LHT: Revenue -JPY7.4 billion, CE +JPY2.2 billion	Q4	3 months: Revenue +JPY14.7 billion, CE +JPY0.9 billion
Consolidation adj.: Revenue +JPY7.4 billion
CE JPY0.0 billion

(1)	Reflects reclassification of a subsidiary from Q1 FYE2024 to encompass both LWT and LHT (originally classified only to LHT),	11
(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

Total assets increased slightly, due to foreign currency translation(1). Net interest-bearing debt increased from FYE2023 due to an increase in working capital but decreased by JPY18.5 billion from Q3.

Equity ratio is 34.1%

Mar-2023

Mar-2024

Mar-2023

Mar-2024

Mar-2023

Mar-2024

(1) Excluding the forex translation impact, the total assets decreased by JPY69.2 billion, of which JPY44.0 billion was for lower inventories12

CASH FLOW STATUS AND CASH BALANCE

Free Cash Flow (FCF) turned positive and increased by 32.4 billion yen compared to the same period last year as progress in inventory reduction contributed to a significant improvement in operating cash flow

FYE2023(1)	(1)	FYE2024(1)	(1)

(2)(2)

(3)	(3)

(4)

(4)

(1)	(1)

(1)	Includes discontinued operations	(3)	CAPEX = Purchase of property, plant and equipment +	13
(2)	"FCF" = Operating CF + Investing CF	(4)	Purchase of intangible assets (Excluding Right of use assets in IFRS16)
		"Others" = Effects of exchange rate

CHANGE IN DIVIDEND POLICY

Shareholder return policy

The LIXIL Corporation policy on profit allocation is to make decisions based on a comprehensive assessment of all management factors, including periodic earnings, cash flows, retained earnings, and financial strength. With regard to retained earnings, the company will prioritize investments for growth, such as capital investments (including new product development, rationalization, and IT investments) to strengthen its competitiveness, in addition to strengthening its financial position, taking into consideration the cash flow situation at that point in time. The company policy on shareholder returns is to pay stable dividends to shareholders over the long term, and to determine the amount of annual dividends based on the medium-term EBITDA level, as well as to buy back shares in a flexible manner.

Dividend forecast for FYE2025

Forecast for the DPS is JPY90, unchanged from the previous year (27% of adj. EBITDA(1) forecasted for FYE2025)

Adj. EBITDA				Dividend (% against adj. EBITDA)︔		Inv. For future growth and strengthening financial basis
(JPY billion)
140
120
100
80
60
40
20
	16%	18%		20%	30%	31%	27%
0
	FYE2020	FYE2021	FYE2022	FYE2023	FYE2024 (plan)	FYE2025 (plan)

1. Adj. EBITDA (Earnings before interest, taxes, depreciation, and amortization): Core earnings + Depreciation (adjusted for the amount 14 of depreciation recorded as a cash outflow due to the application of lease accounting under IFRS)

ACTIONS TO BETTER FOCUS ON COST OF CAPITAL AND SHARE PRICE

	Current situation	Core earnings 1		2			3			4
	PBR		ROE	Net profit(1)	Revenue	Total assets
		-2.2%	Revenue	Core earnings		Total assets	Equity(2)
	0.8x		PER	-	1.6%	-60.0%		0.8 times		2.9x
	As of March 31, 2024	Net profit margin					Financial leverage
	Understanding of issues		5.0	4.2	4.2%	4.5%			5.0%
① Core earnings: Profit margins have deteriorated primarily	4.0		3.2					4.0%
	due to sluggish demand in the international markets	3.0	3.5%		2.9	3.0	2.9	3.0%
② Net profit to Core earnings ratio(3): Deteriorated due to the				1.7%
2.0					1.6%	2.0%
	recording of other expenses from structural reforms	0.7	0.7
③ Total asset turnover: No significant change		1.0					1.0%
				0.8	0.8	0.8
④ Financial leverage: Recently generally stable		0.0				0.0%
	2020	2021	2022	2023	2024
	Countermeasures
				Total asset turnover (times)	Financial leverage (times)
			CE margin
① Improve Core earnings margin: Price optimization, asset-light strategy, and profitability improvement in
	international businesses
② Promote structural reform: Maximize effects after the execution of structural reforms, appropriate tax
	management
③ Improve asset efficiency: Reduce inventory assets, optimize the business portfolio
④	Appropriate financial leverage: Maintain appropriate financial leverage
	(1)	Profit for the year attributable to owners of the parent							15
	(2)	Ratio of equity attributable to owners of the parent to total assets
	(3)	Net profit/Core earnings

PROGRESS OF MANAGEMENT STRATEGY &

FORECAST FOR FYE2025

16

FINANCIAL INDICATORS, FYE2025 FORECAST

Progress in strengthening balance sheet and improving profitability

Core earnings margin

(%)

6

• 4.5%

4
3	1.7%	1.6%	2.2%
2

1

FYE2022 FYE2023 FYE2024 FYE2025

Revenue(JPY)

(trn)			1.57
1.6		1.50
1.5	1.43	1.48

ROE (1)

(%)

10 8.3%

5	2.6%		1.3%
	-2.2%
0

-5

-10 FYE2022 FYE2023 FYE2024 FYE2025

Net debt/EBITDA

(times)

65.3x

5

4.8x

4.6x

ROIC (2)

(%)

8

• 4.5%

4	1.5%		1.4%
2	0.9%

• FYE2022 FYE2023 FYE2024 FYE2025

Equity ratio (3)
(%)	34.3%	33.7%	34.1%	34.0%
35

30

1.4

1.3

4

3

2.9x

25

20

1.2 FYE2022 FYE2023 FYE2024 FYE2025

2

FYE2022 FYE2023 FYE2024 FYE2025

15

FYE2022 FYE2023 FYE2024 FYE2025

(1)Figures before the effect of issuance of new shares announced on April 30, 2024

(2) Calculation: Operating profit x (1-Effective tax rate) ÷ (Working capital + Fixed assets)17

(3) Ratio of equity attributable to owners of the parent

FYE2025 FORECAST

Projecting an increase in Revenue and Profits(1) compared to the previous year. Forecasting annual dividend of JPY90 per share

	JPY billion	FYE2024	FYE2025			Increase
	Results		Forecast			/decrease
Revenue			1,483.2	1,570.0			+86.8
Core Earnings (CE)			23.2	35.0			+11.8
Operating Profit (OP)			16.4	25.0			+8.6
Profit before Tax			6.7	15.0			+8.3
Tax expenses			-16.1	-7.0			+9.1
Profit (loss) from discontinued operations		-5.2	0.0			+5.2
Net profit attributable to			-0.7	0.0			+0.7
non-controlling interests
Net profit attributable to			-13.9	8.0			+21.9
owners of the parent
EPS (JPY)			-48.43	27.86	(2)	+76.29
ROE (%)			-2.2	1.3	(2)	+3.5pp
ROA (%)			-0.7	0.4			+1.1pp
ROIC (%)			0.9	1.4			+0.5pp
EBITDA(3)			104.5	118.5			+14.0
Adj. EBITDA(4)			82.4	96.5			+14.1
Net debt/EBITDA(3)			5.3x	4.6x			-0.7
Dividend（JPY per share）		90	90	(2)	-
Dividend to adj. EBITDA(4)	ratio		31%	27%			-

(1) In Core earnings basis

(2) Calculated using the number of shares outstanding as of March 31, 2024 (excl. treasury stocks)

(3) EBITDA=Core earnings + Depreciation

(4) Adj. EBITDA = Core earnings + Depreciation (adjusted for the amount of depreciation recorded as a cash outflow due to the application of lease 18 accounting under IFRS)

FYE2025 FORECAST - MARKET OUTLOOK & ASSUMPTIONS

Market outlook and market indicators Interest rates in Europe and the US(3)

		FYE2024	FYE2025
		Results	Forecasts
Housing starts	Total	808,000(1)	808,000/0%
(Units/YoY)	Renovation	+1.5%(1)	-1%
FX rate	JPY/USD	144.4	150.0
(Average rate)	JPY/EUR	156.8	162.0
Raw material	Aluminum	335,000	400,000
prices (JPY/ton)	Copper alloy	1,009,000	1,096,000

Number of new housing starts in Japan(2) (YoY)

(%)

10.0	Total new housing starts	Owner‐occupied house

5.0

0.0

‐5.0

‐10.0

‐15.0

‐20.0

(%)

Europe

US

6.0

5.0

4.0

3.0

2.0

1.0

0.0

The US existing home market(4)	(USD)
(thousand)
4,500	450,000
4,100	430,000
3,700	410,000
3,300	390,000
2,900	370,000
No. of existing home sales	Selling price
2,500	350,000

1. Company estimate as of February 2024
2. Created by LIXIL based on housing starts data from the Ministry of Land, Infrastructure, Transport and Tourism

(3)	Created by LIXIL based on data from	19
(4)	Federal Reserve Board and European Central Bank
Created by LIXIL based on data from National Association of Realtors