TOKYO — First-half profits at Shiseido Co. Ltd. jumped 37.9 percent year-on-year to 12.9 billion yen, or $108.2 million at average exchange, on sales that increased 4.5 percent to 362.87 billion yen, or $3.04 billion.
Results were driven by a 19.2 percent increase in Shiseido’s international business, which was attributed to strength in the Chinese market and the effects of a weaker yen. Overseas operations accounted for 35 percent of revenues during the half ended Sept. 30. In the domestic market, sales slid by 1.7 percent.
Operating income increased 24.2 percent to 32.1 billion yen, or $269.3 million, as a result of sales growth overseas, an improved cost-of-sales ratio and a shift of some expenses to the second half. Domestically, operating income rose 19.6 percent.
Extraordinary income of 3.4 billion yen, or $28.5 million, came on the sale of shares in Shiseido Logistics Company Ltd. and the firm recorded extraordinary losses of 3 billion yen, or $25.2 million, as it posted an impairment loss and restructuring expenses.
In China, Urara, a one-year-old brand designed for chain stores, performed well, Shiseido noted. “In the Chinese department store channel, we continued strengthening Aupres, as well as Supreme Aupres, an upper prestige line launched [last] November,” the group added. Outside of China, Shiseido focused on reinforcing and promoting its mainstay brands, “while actively advancing our activities in the travel retail business, centering on airport duty free shops.”
Professional division sales to salons also increased, driven by U.S.-based Zotos International Inc., which enjoyed healthy demand for its Joico hair care brand.
Shiseido anticipates second-half increases in sales, profits and operating income. For the full year, Shiseido forecasts a 5.1 percent increase in sales, to 730 billion yen, or $6.41 billion at current exchange; a 20 percent rise in operating income, to 60 billion yen, or $526.3 million, and a 34 percent gain in net income, to 34 billion yen, or $298.2 million.
In other news, Shiseido has gone solar at its U.S. manufacturing plant, which is located in East Windsor, N.J.
The company, which installed a 69,000-square-foot array of solar energy panels atop the production facility in the spring, christened the $4.3 million system Tuesday with a noon ceremony attended by state and local officials, media and its own top executives.
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The rooftop solar array generates 699 kilowatts of electricity, or 25 percent of the power consumed by the 211,000-square-foot manufacturing, filling and assembly plant.
The cost of the two-year project has been partially offset by a $2 million credit from the State of New Jersey’s Clean Energy Program, Joseph L. Fiordaliso, commissioner of the State of New Jersey Board of Public Utilities, noted in a speech during the event.
Additionally, executives from California-based SunPower Corp., which installed the 3,464 rooftop panels, and assisted Shiseido with energy-efficient lighting upgrades at the plant, estimated that between the solar panels and new lighting, Shiseido will cut its electric utility costs at the site by 40 percent, saving $100,000 annually.
“The payback period is expected to be less than six years,” Ed Houlihan, vice president of Shiseido America Inc., said in a statement. He characterized the adoption of solar power at the site as a “solid return on investment” and added that the equipment is designed to last more than 25 years.
“It’s an historic moment for us at Shiseido,” declared Heidi Manheimer, chief executive officer of Shiseido Cosmetics (America) Ltd.
Joining Fiordaliso, Houlihan and Manheimer in throwing a ceremonial switch Tuesday were Tamaki Shimamoto, president of Shiseido America Inc. (the firm’s U.S. manufacturing arm); Felix Aguayo, senior project development manager for SunPower, and Janice S. Mironov, mayor of East Windsor, a semirural township home to corporate centers, farms and housing developments.
Fiordaliso said the energy produced by the facility’s solar panels will save 600 tons of carbon dioxide from entering the atmosphere from power plants annually. Officials noted such a reduction is equal to removing 59 cars from the road, or planting 85 acres of trees.
“The use of solar power is an important part of our energy future,” said Fiordaliso, who added that solar energy cuts electricity demand and prices, and reduces dependency on fossil fuels.
Thomas Leyden, managing director of East Operations for SunPower, said the solar panels feed electricity directly into the plant’s power system rather than storing energy for later use. At slow times, like on weekends, the plant could potentially generate more electricity than it is using, resulting in credits from the local utility, he noted.
Leyden called Shiseido a “leader” in the use of solar power and said the firm is “adding to the movement of this industry.” The system Shiseido installed is similar to ones at Tiffany & Co.’s distribution centers in Whippany and Parsippany, N.J. Also, SunPower is working with Macy’s Inc. to install solar power systems at 28 of the retailer’s California stores.