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Kao 6-Month Profit Grows on Tax Benefits

Sales and operating profit slid for the period.

TOKYO — Kao Corp. saw its six-month net profit grow on tax benefits as its sales and operating profit slid.

The company said Tuesday that its net income for the six months ended September 30 grew 16.6 percent to 35.86 billion yen, or $462.1 million according to conversions provided by the company.

The cosmetics and home care product manufacturer said deferred tax assets accounted for part of the profit growth. Kao is currently in the process of shifting its financial year, which previously went from April through March, to run from January through December.

Operating income dropped 7.2 percent to 53.38 billion yen, or $687.8 million. Kao said net sales for the period slipped 1 percent year-on-year to 608.98 billion yen, or $7.85 billion.

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Kao said its operating profits last year were exceptionally high, creating a high base for comparison but it was still in line with the initial forecast. Kao said its profits last year benefitted as it scaled back its investments after the March 11 earthquake and rose the prices of its chemical products due to higher raw material prices.

Sales in the company’s beauty care business, which includes brands such as Kanebo, Jergens, Bioré and Molton Brown, fell 1.7 percent to 267.2 billion yen, or $3.44 billion, for the period.

“In premium skin care products, sales in Japan increased, reflecting the steady performance of Bioré skin care products and Curél sensitive skin care products,” the company said. “In Asia, Bioré performed strongly with the effect of product improvements. In North America, sales of Jergens hand and body lotions increased.”

Kao also saw its international sales decrease by between 5.9 and 11 percent, depending on the region. However, the company noted that the international sales decreases would have been considerably less had it not been for the effect of currency translation to the yen, which remains strong in comparison with other world currencies.

Kao revised upward its earnings forecasts for the nine-month transitional period ending December 31, which will serve as the end of its current fiscal year. It now expects net income to increase 16.1 percent to 60 billion yen, or $773.2 million. This is up from a previous forecast of 33 billion yen, or $416.1 million.

The company is now forecasting operating income will gain 1.6 percent to 100 billion yen, or $1.29 billion. It expects sales growth of 1.2 percent, for a total of 1.02 trillion yen, or $13.14 billion.