By  on January 31, 2014

TOKYO — Shiseido said Friday that its nine-month net income more than tripled on a low comparative base as a weaker yen significantly boosted the company's top line.
Net profit for the nine months ended Dec. 31 totaled 16.75 billion yen, or $168.65 million at average exchange rates for the period. This was in comparison with just 4.56 billion yen, or $45.93 million, for the same period in the previous year. Shiseido said cost reductions also boosted profits.
Operating income also grew by more than three times, to 33.34 billion yen, or $335.77 million, from 9.15 billion yen, or $92.15 million.
Japan's largest cosmetics manufacturer saw net sales grow 10.4 percent to 535.4 billion yen, or $5.39 billion.
The deprecation of the yen over the past year propped up international sales that were nearly flat in local currency terms. Sales from the company's global cosmetics business grew 22.7 percent to 276.82 billion yen, or $2.79 billion. They advanced just 0.3 percent in local currency. Shiseido said its business in China saw lower sales, dragging down the overall revenue figure, but there were other bright spots.
"The global business segment benefited from solid performances by the global brand Shiseido and the makeup artist brand Nars, as well as an expanding fragrance business in Europe," the company said.
The company's global business now accounts for 51.7 percent of total sales, while its domestic cosmetics business accounts for 46.9 percent.
Shiseido's cosmetics sales in its domestic market of Japan slipped 0.4 percent to 251.16 billion yen, or $2.53 billion. The company said the Japanese beauty market showed indications of a turnaround but expressed concern that an upcoming sales tax increase will dampen consumer sentiment, "leaving no room for complacency." Japan's sales tax will jump from 5 percent to 8 percent in April.
"Despite healthy performances by Maquillage and Elixir — which are core lines in the mid-priced range — sales in the domestic cosmetics business segment edged down… due to recovery of inventories aimed at optimizing store-level inventories," the company said.
In light of its nine-month performance, Shiseido increased its guidance for the fiscal year ending Mar. 31. It now expects net profit to grow 26.7 percent to 19 billion yen, or $185.44 million at current exchange rates. This is up from a previous forecast of 15 billion yen, or $146.4 million.
Shiseido expects full-year net sales to grow 1.4 percent to 750 billion yen, or $7.32 billion. Its previous sales guidance was for 740 billion yen, or $7.22 billion.

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