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Kao Corp. Q1 Profits Rise 3.2%

In the nine months ending Dec. 31, net profits are expected to rise 7.3 percent to 33 billion yen, or $416.1 million.

TOKYO Kao Corp.’s net income increased 3.2 percent year-on-year in the three months ended June 30. The company attributed the growth partially to recognition of deferred tax assets at one of its consolidated subsidiaries.
 
Kao’s first-quarter net income totaled 15.68 billion yen, or $197.7 million at the exchange rate provided by the company.
 
Operating income fell 29.1 percent to 20.73 billion yen, or $261.4 million.

“During the period, the Kao Group proactively invested in sales promotion to nurture new and improved products. On the other hand, the profit level temporarily increased in the same quarter a year earlier due to restraints on investment in sales promotion for new and improved products after the March 11… earthquake and adjustments to selling prices in the chemical business outside Japan in response to higher raw material prices,” the company said. “Consequently, income decreased compared with the same quarter a year earlier, although it was in line with the initial forecast.”
 
Net sales over the three months edged up 0.1 percent to 294.53 billion yen, or $3.71 billion.
 
In Kao’s beauty care segment, which includes brands such as Molton Brown, Bioré, Kanebo and Jergens, net sales dropped 1.7 percent to 128.6 billion yen, or $1.62 billion.
 
“Sales of prestige cosmetics, which consist of self-selection and counseling cosmetics, increased 0.3 percent to 61 billion yen amid a continuing shift toward self-selection products in Japan’s cosmetics market,” the company stated. “Sales outside Japan decreased compared with the same quarter a year earlier with the impact of concerns about an economic slowdown.”
 
Kao, which is in the process of shifting its fiscal year to run from January through December, rather than April through March, also released its guidance for the nine-month transitional period ending Dec. 31. It expects net income to gain 7.3 percent to 33 billion yen, or $416.1 million. The percentage growth is calculated based on the previous fiscal year’s results, adjusted to the nine-month period from April to December.
 
The company forecasts operating income will fall 7.8 percent to 53 billion yen, or $668.3 million. It predicts net sales will remain flat at 615 billion yen, or $7.75 billion.