Shiseido First-Half Profits Tumble

The company suffered on higher marketing expenses and slow sales in Japan.

TOKYO — Shiseido said Wednesday that first-half net profits fell by nearly 50 percent as sales in its home market of Japan remained slow, while marketing expenses increased.

This story first appeared in the November 1, 2012 issue of WWD.  Subscribe Today.


The Japanese cosmetics manufacturer’s net income for the six months ended Sept. 30 dropped 44.8 percent compared with the same period last year to 5.02 billion yen, or about $63.2 million at average exchange for the period.

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First-half operating income declined 61.2 percent to 8.34 billion yen, or $105.1 million.

Net sales for the period slipped 0.8 percent year-on-year to 333.17 billion yen, or $4.2 billion.

“In the two-quarter period under review, economic sentiment in Japan, despite signs of a moderate turnaround, was generally weak, characterized by such factors as concerns about worldwide economic slowdown and prolongation of the strong yen,” the company said, adding that “the cosmetics markets in Europe, the Americas and Asia reported positive year-on-year growth.”

The company issued a cautious forecast for its business in China, where there have been recent protests targeting Japanese products and businesses amid a diplomatic dispute between the two countries. Some of Shiseido’s sales counters in China were damaged in the violence.

“In China, the growth rate for the cosmetics market is on a downtrend for the time being, amid a slowdown in economic growth. In addition, the outlook is very unclear due to uncertainty about customer purchasing attitudes towards Japanese products. Elsewhere in Asia, we anticipate continued growth in the cosmetics market, thanks to moderate economic expansion,” the company said.

Shiseido’s first-half sales in Japan, which represents 55.9 percent of the company’s total revenue, fell 3.2 percent to 186.63 billion yen, or $2.35 billion. Overseas sales grew 2.6 percent to 147.01 billion yen, or $1.85 billion.

Shiseido cut its operating income and sales guidance for the fiscal year ending March 31. Operating income is now expected to grow by 2.2 percent to 40 billion yen, or $502.2 million. The company is predicting sales will increase 2.6 percent to 700 billion yen, or $8.79 billion.

The company left the full-year net income forecast unchanged at 22 billion yen, or $276.2 million at current exchange rates. This would represent a year-on-year increase of 51.6 percent.