Kanebo The Exceptional

TOKYO  Kao Corp.’s full-year 2018 profit increased by more than 4 percent, thanks to higher sales and more efficient use of marketing expenses, the company said Monday.

For the 12 months ended Dec. 31, 2018, Japan’s second-largest cosmetics and personal-care company posted a net profit of 153.7 billion yen, or $1.4 billion, an increase of 4.5 percent over the previous year.

The company’s operating income gained 1.4 percent year-on-year to total 207.7 billion yen. Sales for the year grew by 1.2 percent, coming in at 1.51 trillion yen.

“From January to December 2018, the markets for household and personal care products and cosmetics in Japan, which are key markets for the Kao Group, were in solid condition according to retail sales and consumer purchasing data,” the company said in a statement. “In every product category, the share of the e-commerce channel increased further, and average unit prices for household and personal care products increased by 1 percentage point compared with the same period a year earlier.”

Kao previously divided its business into four segments, but has now organized into five reportable areas, with what was formerly known as its beauty care business now categorized as two segments: the cosmetics business, and the skin care and hair care business. In the period under review, the company saw the greatest growth from its cosmetics business, where net sales were up by 5 percent to 279.6 billion yen. The skin-care and hair-care business reported a sales increase of 2.6 percent, to 341.4 billion yen.

The company’s cosmetics business includes brands such as Sofina, Kanebo, Curél, Kate Tokyo and Molton Brown. Looking at this segment alone, significant growth came from Asian markets other than Japan, where sales increased by 36.7 percent to 34.7 billion yen. In Europe, sales from the cosmetics business were up by 6.6 percent to 20.8 billion yen. Kao’s home market of Japan remains its largest by far, but even there sales grew by 1.3 percent to 217.7 billion yen.

“The Kao Group announced a new growth strategy in May 2018, and was able to achieve some success from optimizing the brand portfolio, enhancing markets and other measures,” the company said. “The Kao Group determined key strategic brands to promote selection and concentration, and enhanced digital marketing in response to changes in consumer purchasing behavior.”

Kao also released its guidance for the current financial year, ending Dec. 31. It expects net income to increase by 5.4 percent to 162 billion yen. The company predicts its operating profit will be up by 8.3 percent, totaling 225 billion yen. It is forecasting sales growth of 4.8 percent, coming in at 1.58 trillion yen.

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