Shiseido operating income for the first half of 2016 increases by 32.1%

Japanese cosmetics group Shiseido said operating income for the first half of 2016 rose by 32.1% year-on-year to ¥19.9 billion ($178.68 million), underpinned by an increase in sales across regions, particularly of prestige brands, the positive effects of cost structural reforms and one-off gains.

The company’s net sales were however severely impacted by movements in foreign currency exchange rates and the appreciation of the yen. Consolidated net sales for the period grew by 5.5% on a local currency basis, but grew only 0.4% after converting into Japanese Jen.

Sales in Japan and China grew by 5.5% and 3.1% respectively as the prestige and cosmetics category including clé de peau BEAUTÉ, SHISEIDO, IPSA and ANESSA reported upswings in sales.

Shiseido’s Travel Retail Business saw sales jump by 41.5% after converting to Japanese yen, thanks to initiatives such as the opening of new duty-free store counters, the introduction of designated Travel Retail products and the increase of the number of beauty consultants.

Meanwhile sales across the Asia Pacific and Americas business reported growth on a local currency basis by 9.1% and 1.7%, respectively, but fell by 4.5% and 5.8% due to negative currency exchange rates.

The EMEA business reported the worse performance as sales declined by 11% on a local currency bases and 18.2% after converting to Japanese yen impacted by the loss of Jean Paul Gaultier sales.

Net income for the period ending 30 of June totalled ¥24.5 billion, or $219.48 million.

As a result of this performance, Shiseido said it now expected full year net sales to reach ¥848 billion ($7.54 billion), versus the ¥872 billion it had previously forecasted. Operating income is expected to stand at ¥30 billion ($266.71 million), down from ¥38 billion, while net income will probably be ¥30 billion ($266.71 million at current exchange rates) compared with a previous target of ¥34.5 billion.

Laura Mercier (Shiseido Group)