Earnings Jump at Shiseido, Annual Forecast Lowered

TOKYO — Shiseido Group saw rises in sales and profits on a consolidated basis for the nine months ending Dec. 31. However, the company projects a net decrease for the entire fiscal year due to extraordinary losses for a special early retirement plan the company has offered employees.

Net profits rose 16.1 percent to 13.73 billion yen, or $133 million at average exchange rates while operating profits dropped 16.1 percent to 24.46 billion yen, or $237 million, compared with the same nine-month period a year ago. Sales rose 2.7 percent to 472.17 billion yen, or $4.58 billion, from a year ago.

Sales from cosmetics rose 3 percent to 372.41 billion yen, or $3.61 billion, while sales of toiletries dropped 4.7 percent to 45.26 billion yen, or $438.6 million.

Sales from the Americas showed a decline of 1.2 percent to 33.14 billion yen, or $321.1 million, on the yen basis, while sales from Europe rose 11.4 percent to 53.27 billion yen, or $516.2 million. Sales from the Asia/Oceania region increased 16.3 percent to 40.2 billion yen, or $389.5 million.

For the entire fiscal year ending March 31, however, Shiseido projected net losses of 14 billion yen, or $134.7 million at current exchange rates, against its initial projection of net profits of 12 billion yen, or $115.4 million, on a consolidated basis. The revised expectations are due to about 30.1 billion yen, or $290 million, in extraordinary losses caused by expenses from retirement allowances for 1,364 applicants to a special Shiseido early retirement plan, according to the Japanese beauty giant.

Under the incentive plan, about 1,000 full-time employees working for Shiseido and its domestic group firms — who will be between 50 and 59 years old and in service for 15 years or more as of March 31 — sought early retirement from Dec. 13-24. There are about 25,000 employees in the whole group.

“The objective of this plan is to support and offer wider options to employees in advanced age groups to suit their individual life plans,” the group stated. “Reemployment support services also will be offered to applicants who desire to transfer to new fields.”Shiseido plans to close certain operations this year and next year and some of the early retirement applicants include workers in these areas. By September, Shiseido will close its Shiseido Beautech Co. Ltd. and Haramachi Paper Co. Ltd. divisions. Shiseido Beautech produces items such as sponges, puffs and hair brushes, while Haramachi Paper manufactures cosmetic-use tissue paper and other paper products.

Shiseido also will close two domestic cosmetics factories in Tokyo and Kyoto by June 2006. The products manufactured in Kyoto will be shifted to plants in Osaka and Kuki, while the products manufactured in Tokyo will be shifted to Kakegawa. The Kyoto location was chiefly used to make lotions, moisturizers, shampoos and men’s products, while the Tokyo location specialized in color cosmetics.

Shiseido said it decided to close the Kyoto location due to “the plant’s inability to make full use of its distinctive factory automation equipment stemming from market changes.” It decided to close the Tokyo facility because the growth of the surrounding suburbs was making nighttime and weekend operations difficult.

Shiseido projects full fiscal-year sales of 645 billion yen, or $6.21 billion, compared with 624.25 billion yen, or $6 billion, a year ago. — Koji Hirano

Sales at German Perfumeries Fall 1.8% in 2004

BERLIN — Despite a promising start, sales in Germany’s perfumeries declined a nominal 1.8 percent in 2004 to 2.47 billion euros, or $3.22 billion at current exchange rates. In terms of units, sales dropped 1.3 percent.

The German Perfumery Association said beauty turnover “collapsed” in summer and late fall, and that the Christmas business didn’t meet expectations. Holiday beauty purchases fell 3 percent.

Sales of women’s fragrances, which make up 30 percent of German perfumery sales, dropped 2.8 percent, largely due to aggressive discounting, the association said. Skin care turnover was down 1.5 percent, body care decreased 2.3 percent and men’s products slid 3.9 percent. Makeup was the clear winner of the year, with sales in this category rising 2 percent.

There are currently 2,850 perfumery doors in Germany. The Association expects a further reduction of points of sale in the coming year. As for the sales outlook in 2005, it said a positive development can only be expected if general economic conditions and the overall mood in Germany improve. — Melissa Drier

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