TOKYO — Shiseido said Tuesday that it expects its net and operating profits for its current fiscal year to fall due to increased investments as part of its overhaul under the direction of president and ceo Masahiko Uotani. It is predicting slight sales growth.
Shiseido recently changed its fiscal year-end from March 31 to Dec. 31, and its fiscal year ended Dec. 31, 2015 was a transitional nine-month period. Percentage growth and contraction numbers for the year ending Dec. 31, 2016 are calculated based on adjusted figures for the same period a year earlier.
Japan’s largest cosmetics company forecasts its net income for the 12 months ending Dec. 31 will drop by 5 percent to 28 billion yen, or $232.35 million at current exchange rates. It is expecting a 14.3 percent decline in operating profit to 38 million yen, or $315.33 million.
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Profits will drop on increased investments, particularly in the areas of marketing and product development, a spokesman said. While Shiseido’s last fiscal year focused on re-branding, this year will be about strengthening its new image among consumers.
“We would like to penetrate the brand image of Shiseido into the market,” the spokesman said.
The company is predicting a 1 percent increase in sales for its current financial year, totaling 872 billion yen, or $7.24 billion.
In terms of its nine-month fiscal year ending Dec. 31, Shiseido’s net income came in at 23.21 billion yen, or $190.32 million at average exchange rates for the period. This represents a decrease of 15.7 percent based on adjusted figures for the same period a year earlier.
The company’s operating profit grew 77.4 percent to 37.66 billion yen, or $308.81 million.
Sales were up 12.6 percent to 763.06 billion yen, or $6.26 billion, due to the company’s re-branding efforts.
Those numbers were in line with the figures Shiseido released just over a week ago when it raised its guidance.
“In addition to seeing results through innovation initiatives mainly targeting mid and high-priced brands, we also undertook successful steps to definitively capture inbound demand. As a result, domestic sales rose 11.7 percent, to 296.9 billion yen [$2.43 billion],” the company said. “Turning to operations overseas, sales were up year on year across all regions including China, Asia, the Americas and Europe.”
Shiseido said earlier this month it plans build a new global supply chain management base in Ibaraki, Osaka.