TOKYO—Kao Corp. said Thursday that its net profit for the three months ended Mar. 31 plummeted over 50 percent in large part due to a revision of Japan’s tax system.
Kao’s first-quarter net income fell 52.3 percent to 12.02 billion yen, or $100.93 million at average exchange rates for the period. A high comparative base thanks to a surge in sales in the period a year earlier, just before Japan’s consumption tax was raised by three percent, also contributed to the drop.
Operating profit dropped 40.9 percent to 23.41 billion yen, or $196.64 million.
The company’s sales for the quarter were down 3.6 percent on the year, totaling 328.78 billion yen, or $2.76 billion. Excluding the effect of currency conversion, sales would have decreased by 6.5 percent.
“In the consumer products business, sales decreased in Japan due to a tough year-on-year comparison given the significant growth in sales [in the run up to the April 2014 tax increase],” the company said.
Sales within the company’s beauty care business, which includes brands such as Kanebo, Molton Brown, Bioré, Jergens and John Frieda, fell 7.2 percent compared with the same period a year earlier. Sales in this segment totaled 134 billion yen, or $1.13 billion.
Outside of Japan, Kao saw sales growth in all of the markets in which it operates. The strongest growth came from elsewhere in Asia, where sales increased by 38.4 percent to 43.4 billion yen, or $364.56 million.
Kao also released its guidance for the twelve months ending Dec. 31. It expects net income to grow 9.3 percent to 87 billion yen, or $727.16 million at current exchange rates.
The company is predicts operating income will expand 12.6 percent to 150 billion yen, or $1.25 billion.
It is forecasting a net sales increase of 4.9 percent to 1.47 trillion yen, or $12.29 billion.