TOKYO — Shiseido said Tuesday that its first-half net profit grew by more than four times on one-off gains linked to the sale of intellectual property rights in connection with the Jean Paul Gaultier fragrance business and the sale of land at a former factory.
The company did see an improvement on the operating profit level but sales were basically flat. Meanwhile, the company cut its full-year earnings and sales targets as a strong yen cut into its international performance.
The company’s net income for the six months ended June 30 totaled 24.5 billion yen, or $219.48 million at average exchange rates for the period. Last year, Shiseido changed its fiscal year-end from March 31 to Dec. 31, so it provided adjusted figures as comps. Net profit came in at 5.4 billion yen, or $44.20 million.
First-half operating income grew 32.1 percent year-on-year to 19.94 billion yen, or $178.68 million. The company said it saw higher margins thanks to a better product mix, higher sales of prestige products and cost-cutting.
Shiseido’s first-half net sales inched up just 0.4 percent to 412.28 billion yen, or $3.69 billion.
Japan’s largest cosmetics company saw its sales grow in Japan, China and the travel retail sector, but contract in other regions including Asia-Pacific, the Americas, and Europe and the Middle East. The travel retail business posted particularly strong growth, at 41.5 percent to total 12.02 billion yen, or $107.65 million. In both Japan and China, prestige brands such as Clé de Peau Beauté, Shiseido and Ipsa performed well, the company said.
Sales in the Americas rose 1.7 percent on a local currency basis but declined 5.8 percent year on year in yen terms to 72.4 billion yen, or $643.65 million.
Sales in Europe and the Middle East were substantially impacted by the loss of Jean Paul Gaultier sales after the termination of the licensing agreement last year. Sales in that segment declined 11 percent on a local currency basis, or 18.2 percent in yen terms. They totaled 39 billion yen, or $346.72 million.
Shiseido lowered both its profit and sales guidance for the year ending Dec. 31. It now sees net income growing 1.8 percent to 30 billion yen, or $266.71 million at current exchange rates. This is down from its previous forecast of 34.5 billion yen, or $306.71 million.
The company now expects its operating profit to contract by 32.3 percent based on adjusted figures, coming in to match net profit at 30 billion yen, or $266.71 million. The company previously forecasted a yearly operating profit of 38 billion yen, or $337.83 million.
It is projecting its yearly net sales will decline by 1.8 percent to 848 billion yen, or $7.54 billion. Its previous guidance saw sales coming in at 872 billion yen, or $7.75 billion.