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Kao Six-Month Net Profit Grows 10.3 Percent

Sales inched up 0.4 percent for the period.

TOKYO — Consumer goods company Kao Corp. said Tuesday that its net profit for the six months ended September 30 rose 10.3 percent to 27.84 billion yen, or $332.1 million at an exchange rate provided by the company.

Operating profit jumped 27 percent to 57.87 billion yen, or $690.4 million, due to cost reduction activities, the rebuilding of Kao’s cosmetics business, and more efficient use of advertising expenses, the company said. Kao said deferred income taxes further boosted its bottom line.

Net sales for the period inched up 0.4 percent to 601.35 billion yen, or $7.17 billion.

Kao’s beauty care segment posted an operating income of 5.2 billion yen, or $62.6 million. Sales for the division, which includes Kanebo and Bioré, totaled 272.5 billion yen, or $3.25 billion. This is down 1.1 percent from the same period last year.

The company blamed the drop in sales to a contraction in the market in Japan, noting a shift in consumer preference to lower priced products. “Sales of prestige cosmetics, which consist of self-selection and counseling cosmetics, decreased…due to an ongoing downtrend with the continuing impact of the consumer preference for lower priced products, despite an emerging sense that Japan’s cosmetics market is bottoming out,” the company said in a release.

Kao also revised its guidance for the full year ending March 31, 2011. Net profit is now seen as coming in at 53 billion yen, or $632.3 million, up 30.8 percent from last year. This is an increase from an earlier forecast of 50 billion yen, or $537.4 million.

However, the company reduced its sales guidance to 1.185 trillion yen, or $14.14 billion, down from a previous forecast of 1.195 trillion yen, or $12.84 billion. The new sales figure  represents an increase of 0.9 percent over last year.