NEW SHISEIDO FORECAST PROJECTS $42.7M LOSS
Byline: Koji Hirano
TOKYO — Shiseido Group drastically revised its forecast for the first half, calling for a loss against original expectations of net income, due to its decision to take back products with old labels because of the revision of the nation’s Pharmaceutical Affairs Law.
For the first half, the group now expects a net loss of $42.7 million instead of the $25.6 million in net income projected earlier. No change was made in the forecast of consolidated net sales of $2.47 billion. For the first half of the previous fiscal year, the group reported a net loss of $464 million. Dollar figures are converted from Japanese yen at current exchange rates.
Six months ago, ingredient labeling requirements for cosmetics were changed under a revision to the Pharmaceutical Affairs Law. Shiseido elected, in order to maintain its reputation and avoid confusing consumers, to take back, voluntarily and swiftly, its products with old labels. The company is now in a position to assess the cost of this move and to account for this amount as an extraordinary loss, it said in a statement.
For the entire fiscal year ending March 31, 2002, Shiseido Group forecast a net loss of $76.9 million, compared with the previously forecast net income of $85.5 million. The original forecasts were announced on May 8.
In the previous fiscal year, the group reported a net loss of $385 million, its first loss in 55 years, stemming from extraordinary losses, namely the complete elimination of the shortfall in its pension reserves associated with the introduction of retirement benefit accounting, as well as the devaluation of goodwill related to Zotos International Inc.
For the full year, the group forecast consolidated net sales of $5.13 billion, versus $5.09 billion last year.