TOKYO — Shiseido Co., Ltd. narrowed its losses in the first quarter as it warned that its first-half net profit will come in lower than originally forecast due to tax expenses.
This story first appeared in the August 1, 2011 issue of WWD. Subscribe Today.
The Japanese beauty company said Friday that net losses for the three months ended June 30 came in at 277 million yen, or $3.4 million, compared to a year-earlier loss of 666 million yen, or $7.2 million. All dollars are converted from the yen at average exchange rates for the period to which they refer.
Sales for the period grew 7.9 percent to 157.29 billion yen, or $1.93 billion. Once again, the company’s international business outperformed its domestic one. International revenue grew 15.8 percent to 67.7 billion, or $829.3 million, while that in Japan advanced 2.6 percent to 89.6 billion yen, or $1.1 billion.
First-quarter operating profit more than doubled to 9.06 billion yen, or $111 million.
Shiseido said the March 11 earthquake and the ensuing problems at the Fukushima nuclear plant hampered business in its home market of Japan but its distribution operations resumed their normal activity as early as April.
The cosmetics market in western countries maintained a “recovery tone” and sales in China and other emerging markets continued to climb.
Carsten Fischer, Shiseido’s corporate senior executive officer responsible for international business, has spearheaded the company’s global push, particularly in China and in the U.S. through the acquisition of Bare Escentuals. He is also shaping up to be one of the best-paid executives in Japan. Fischer made 443 million yen, or $5.2 million, for the fiscal year ended March 31 in terms of his salary, bonuses and stock options, according to Shiseido’s recently released annual report. He took home 141 million yen, or $1.52 million, the previous year.
The company trimmed its net profit forecast for the six months ending Sept. 30, stating that its tax expenses will be higher than originally expected. It now sees its first-half net profit coming in at 7 billion yen, or $89.9 million, compared to an earlier forecast of 10 billion yen, or $128.5 million. It also raised its sales forecast to 336 billion yen, or $4.32 billion, from 334 billion yen, or $4.29 billion, citing the depreciation of the yen against the company’s expectations.
Shiseido left its full-year forecasts untouched. It said it expects net profit to grow 64.2 percent to 21 billion yen, or $269.8 million, and net sales to advance 1.4 percent to 680 billion yen, or $8.74 billion.