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Kao FY Net Profit Jumps 22%

Earnings grew despite costs and lost profits on a Kanebo product recall in July.

TOKYO — Kao Corp. said Tuesday that its full-year net income grew at a double-digit pace despite costs and lost profits on a Kanebo product recall in July.

 

The company said its net income for the twelve months ended Dec. 31, increased 21.9 percent to 64.76 billion yen, or $664.48 million at average exchange rates for the period. It attributed the growth to higher sales and lower costs. The percentage growth is based on restated financial results for January through December 2012, as Kao has recently restructured its fiscal calendar.

 

Operating profit grew 11.5 percent to 124.66 billion yen, or $1.28 billion. Kao said it saw yearly sales growth of 7.8 percent to 1.32 trillion yen, or $13.49 billion. But like many Japanese companies, it was helped by a weaker yen. It said that, excluding the effect of currency translation, net sales would have increased 2.1 percent.

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The company’s international sales in Asia, the Americas and Europe jumped over 20 percent in each market, but in local currency terms its sales actually decreased in both the Americas and Europe. In Asia, sales were up 24.8 percent, but without the effect of currency translation this number drops to 3.5 percent.

 

In July, Kao unit Kanebo recalled more than 50 brightening products that contained the ingredient Rhododenol. Customers complained that the product produced white blotches on their skin. The company said the recall resulted in a total of 12.1 billion yen, or $124.15 million, in expenses and decreased profit.

 

Kao also released its guidance for the current fiscal year, ending Dec. 31. It expects net income to grow 15.8 percent to 75 billion yen, or $736.18 at current exchange rates. The company forecasts operating income will increase by 4.3 percent to 130 billion yen, or $1.28 billion. It is predicting sales growth of 4.2 percent, to 1.37 trillion yen, or $13.45 billion.