TOKYO—Kao Corp. said Wednesday its full-year 2014 net income jumped 22.9 percent on a low base caused by a major product recall the year before.
The company’s net profit for the year ended Dec. 31 totaled 79.59 billion yen, or $754.51 million at average exchange rates for the period. In July of 2013, Kao subsidiary Kanebo voluntarily recalled more than 50 different products in the Japanese market due to reports of unexpected side effects of active quasi-drug ingredient Rhododenol. The costly effects of the recall bit into fiscal 2014 numbers, generating an extraordinary loss of 8.9 billion yen, or $84.37 million
Kao said that it has been “wholeheartedly supporting the recovery and compensation of people who have experienced vitiligo-like symptoms and is working to prevent a recurrence.”
Kao said its full-year operating profit grew 6.9 percent to 133.27 billion yen, or $1.26 billion, “despite aggressively increased marketing and other expenses for new and improved products and the impact of higher prices for raw materials.”
The cosmetics and home care products company saw its net sales grow 6.6 percent to 1.4 trillion yen, or $13.29 billion.
Kao’s beauty care division, which includes brands such as Kanebo, Bioré, Jergens, and Molton Brown, posted yearly net sales growth of 3.4 percent to 589.9 billion yen, or $5.59 billion.
Geographically speaking, the company’s sales increased in all four regions in which it operates (Japan, Asia, the Americas, and Europe). Japan remains its largest market, but sales there only grew by 4 percent to 997.3 billion yen, or $9.45 billion. Elsewhere in Asia, however, sales jumped 22.7 percent to 244.9 billion yen, or $2.32 billion.
Kao also released its guidance for the current financial year, ending this Dec. 31. It expects net income to grow 9.3 percent to 87 billion yen, or $741.1 million at current exchange rates.
The company is predicting yearly operating income will increase by 12.6 percent to 150 billion yen, or $1.28 billion.
It forecasts net sales growth of 4.9 percent to 1.47 trillion yen, or $12.52 billion.