TOKYO — Shiseido said Friday that its first-quarter net income jumped on one-time gains as an improved profit mix resulted in higher operating margins.
Japan’s largest cosmetics company said its net profit for the three months ended Mar. 31 grew more than seven times to 27.3 billion yen, or $236.44 million at average exchange rates for the period. The company said it clocked gains on the sale of intellectual property rights connected to the Jean Paul Gaultier fragrance business as well as the sale of land at a former factory site.
The company logged a net profit of 3.68 billion yen, or $30.3 million, for the first quarter ended June 30, 2015. The company recently changed its fiscal yearend from Mar. 31 to Dec. 31.
Operating income for the quarter grew 75.9 percent based on adjusted figures for the same January-to-March period in the previous year. It totaled 22.09 billion yen, or $191.29 million. Net sales grew 1.4 percent to 213.26 billion yen, or $1.85 billion.
“In addition to contributions from higher margins in line with the increase in net sales, improvements in the product mix through increased sales of prestige brands across each region worldwide and a decline in the cost of sales ratio attributable to cost structural reforms, this upswing in operating income was also due to the timing difference of marketing investments,” Shiseido said.
The company saw its sales grow in Japan and China, but decline in the Americas, the rest of Asia and the region including Europe, the Middle East and Africa. But its greatest sales growth came from its travel retail business, which was up 45.7 percent based on adjusted year-on-year figures.
“The Shiseido Group actively strengthened marketing investments including the opening of counters and increase of store personnel in the travel retail business,” the company said. “Through these and other initiatives, sales at major airport duty-free stores in Asia including China, South Korea and Thailand significantly surpassed the levels recorded in the previous year.”
Shiseido raised its net profit guidance for the fiscal year ending Dec. 31, but left unchanged its operating profit and sales projections. It now sees net profit coming in at 34.5 billion yen, or $316.99 million at current exchange rates. This is up from a previous forecast of 28 billion yen, or $257.27 million.
The company expects operating profit to total 38 billion yen, or $349.15 million.
It is predicting yearly net sales of 872 billion yen, or $8.01 billion.