Asics Corporation reported its results for the fiscal first half ended June 30, recording a gross margin of 55.5 percent, operating profit of ¥58.9 billion, and operating margin of 17.2 percent, all of which were said to have reached a record high, driven in part by the positive effect of yen depreciation on non-Japan sales.
The Japanese yen weakened to fresh 38-year lows at the end of June, crossing the 161 mark against the dollar at one point for the first time since 1986 and reaching a high of 161.27, according to LSEG data and CNBC. The last time the currency was at that level was in December 1986.
CNBC said the yen has been steadily depreciating since the Bank of Japan ended its negative interest rate policy and scrapped its yield curve control policy in March.
The Japan-based athletic footwear and apparel company said net sales of SportStyle and Onitsuka Tiger “increased significantly” in all regions, growing over 50 percent year-over-year. SportStyle and Onitsuka Tiger reportedly drove the energy of the entire company as category profit margins came in at 27.9 percent and 38.0 percent, respectively. In Greater China where economic conditions were said to be “far from favorable,” the performance was reportedly “good,” with net sales increasing by more than 30 percent year-over-year and operating margin standing at 22.5 percent.
Asics also said strong momentum continued in April and thereafter, and on July 12, the company issued an upward revision of its consolidated business results forecast for the fiscal year ending December 31, 2024 (see SGB Media coverage at bottom), to coincide with the resolution on and disclosure of secondary offering of shares and sale of all cross-shareholdings held by the Asics Group within the year.
Given the gross margin from the fourth quarter of the previous year and the current rise in operating margin, the company said it recognizes that the reinforced brand strength of Asics is beginning to show up in its results. Due to the revised upward guidance revision, numerical targets called for in the Mid-Term Plan 2026 are now expected to be achieved in 2024. Asics said it would be adjusting the numerical targets of the Mid-Term Plan 2026 “at the right timing.”
“Meanwhile, under the policy of Transformation into a Global Integrated Enterprise, we will continue to work on the strategic priorities of making global growth, enhancing brand experience value, pursuing operational excellence, and strengthening the business foundation,” the company said in a media release accompanying its first half report.
First Half Sales Summary
Net sales for the 2024 first half ended June 30 (H1) increased 18.0 percent to ¥342.2 billion, compared to ¥290.0 billion in H1 2023, said to be due to strong sales in all categories, but the effects of foreign exchange (FX) fluctuations and the impact of the weaker yen currency had a major positive impact of the first half. Excluding FX currency fluctuations (xcc), sales would have increased just 8.7 percent. Currency fluctuation was responsible for ¥27.0 billion of the ¥52.1 billion first half year-over-year increase.
Performance Running net sales increased 15.6 percent (+4.7 percent xcc to ¥170.9 billion in the first half, reportedly due to the strong sales in all regions. The company said the xcc growth included sales growth of 27.9 percent xcc in the North America run specialty channel. Category profit increased 40.3 percent to ¥41.1 billion, said to be mainly due to the impact of the increase in net sales.
SportStyle (SPS) net sales increased 63.8 percent to ¥46.0 billion in the first half with “strong sales in all regions” reported. The company called out the continued growth of the Vintage Tech product in North America, noting that sales more than doubled in six-month period (see SGB Media coverage at bottom). Greater China was also a key contributor with net sales more than doubling for the period. Category profit increased 136.8 percent to ¥12.8 billion due to the impact of the increase in net sales.
Onitsuka Tiger net sales increased 55.1 percent to ¥43.9 billion due to the strong sales in all regions, but the company called out Greater China, South and Southeast Asia and Japan, where “sales to inbound tourists reached a record high.” Category profit increased significantly 112.8 percent to ¥16,654 million, mainly due to the impact of the increase in net sales.
Core Performance Sports net sales increased 4.1 percent to ¥42.1 billion, reportedly due to the strong sales in regions other than the Japan region. Category profit decreased 7.7 percent to ¥8,028 million due to the increase in selling, general and administrative expenses, despite the increase in net sales.
Apparel and Equipment net sales increased 3.5 percent to ¥18.7 billion mainly due to strong sales in the Europe region, and despite weak sales in Japan region. Category profit increased 60.1 percent to ¥2.1 billion, said to be mainly due to an improvement in gross profit, as well as due to the impact of the increase in net sales.
Region Summary
Japan region net sales increased 15.6 percent to ¥79.9 billion due to the strong sales in the Performance Running and Onitsuka Tiger categories. Segment profit increased 62.5 percent to ¥13.0 billion mainly due to an improvement in gross profit, as well as due to the impact of the increase in net sales.
North America region net sales increased 21.1 percent to ¥67.7 billion, attributable to strong sales of the Performance Running and SportStyle categories. Segment profit increased significantly to ¥6.7 billion mainly due to an improvement in gross profit, as well as due to the impact of the increase in net sales.
Europe region net sales increased 16.9 percent to ¥91.6 billion due to the strong sales in all categories. Segment profit increased 89.6 percent to ¥15.1 billion mainly due to an improvement in gross profit, as well as due to the impact of the increase in net sales.
Greater China region net sales increased 31.3 percent to ¥53.0 billion due to the strong sales in all categories. Segment profit increased 40.8 percent to ¥12.0 billion mainly due to the impact of the increase in net sales.
Oceania region net sales increased 9.4 percent to ¥20.7 billion due to the steady sales in all categories. Segment profit increased 18.6 percent to ¥3.7 billion mainly due to an improvement in gross profit and the increase in net sales.
Southeast and South Asia region net sales increased 31.1 percent to ¥17.6 billion due to the strong sales in all categories. Segment profit increased 33.2 percent to ¥4.0 billion mainly due to an improvement in gross profit, as well as due to the increase in net sales.
Other regions net sales increased 0.7 percent to ¥24.4 billion due to the strong sales in almost all categories, despite the impact of the sale of Haglöfs AB in December 2023 and its exclusion from the scope of consolidation. Segment profit increased 64.3 percent to ¥4.4 billion mainly due to an improvement in gross profit.
Income Statement Summary
Gross Profit for the first half increased 28.4 percent to ¥190.1 billion, reportedly due to the impact of the increase in net sales. Consolidated operating profit increased 75.5 percent to ¥59.0 billion in the first half, said to be due to the impact of the increase in net sales and profit.
Operating Profit increased 75.5 percent to ¥59.0 billion due to the impact of the increase in net sales and profit.
Ordinary Profit increased 71.0 percent to ¥57,8 billion mainly due to the impact of the increase in net sales and profit.
Profit attributable to Owners of Parent increased 70.3 percent to ¥42.2 billion mainly due to the impact of the increase in net sales and profit.
Balance Sheet and Cash Management
Total assets increased 11.4 percent from the end of the previous fiscal year to ¥517.0 billion at the end of the first half. Total liabilities increased 3.1 percent year-over-year to ¥265.2 billion at June 30. Total net assets increased 21.7 percent year-over-year to ¥251.8 billion at the end of the first half.
- Current assets increased 11.5 percent to ¥360.7 billion mainly due to an increase in notes and accounts receivable – trade.
- Non-current assets increased 11.2 percent to ¥156.3 billion mainly due to an increase in software.
- Current liabilities increased 8.0 percent to ¥155.2 billion, primarily due to an increase in notes and accounts payable – trade, despite redemption of current portion of bonds payable.
- Non-current liabilities decreased 3.2 percent to ¥110.0 billion at half-end, mainly driven by reclassification of long-term borrowings from non-current liabilities to current liabilities due to repayment date within one year.
- Net assets increased 21.7 percent to ¥251.8 billion at the end of June, said to be mainly due to an increase in retained earnings, despite a decrease due to the repurchase of treasury shares.
Cash and Cash Equivalents decreased ¥9.0 billion from the end of the previous fiscal year to ¥104.3 billion at June 30. The respective cash flow positions and main factors behind the changes are as follows:
- Net cash provided by operating activities was ¥43.2 billion, an increase of ¥13.9 billion compared with the previous fiscal year-end. Major sources of cash were ¥58.1 billion from profit before income taxes, ¥9.9 billion from depreciation and amortization and ¥7.4 billion for an increase in notes and accounts payable – trade, while major uses of cash were ¥24.7 billion for an increase in notes and accounts receivable – trade and ¥7.5 billion for income taxes paid.
- Net cash used in investing activities was ¥10.3 billion, an increase of ¥5.0 billion compared with the previous fiscal year-end. Major uses of cash were ¥4.6 billion for purchase of property, plant and equipment and ¥5.8 billion for purchase of intangible assets.
- Net cash used in financing activities was ¥46.2 billion, an increase of ¥23.4 billion compared with the previous fiscal year-end. Major uses of cash were ¥20.0 billion for redemption of bonds and ¥15.0 billion for the repurchase of treasury shares.
Image courtesy Asics Corporation
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See below for additional SGB Media coverage from the 2024 first half.
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