Shiseido reports doubled earnings over 9 months

The Japanese cosmetics group has reported net earnings of 32 billion yen (263 million euros) for 2016, in line with expectations, but saw a negative effect due to currency variations.

Shiseido, who have moved to a calendar-based accounting period, recalculated its revenue for last year and indicates ‘for reference’ that it has increased by 9% on a year-on-year basis.

The group has benefited from a one-off rise related to the transfer of rights of Jean-Paul Gaultier-branded perfumes and the sale of the site of a former factory, according to a statement.

In 2017, a similar increase will not be repeatable and net profit is expected to drop 19%.

On a purely operational basis, the operating profit stood at 36,78 billion yen, a decline of 17% over the year (according to the retrospective calculation), although Shiseido has claimed that it has tried to reduce its fixed costs while it benefits from the increased visibility of its prestige brands.

Due to unfavorable currency exchange, the total revenue nevertheless declined by 1.5% to 850.3 billion yen (again according to the results recalculated for 2015).

Sales in Japan, which comprise nearly half of total sales, increased by 2.9%. Shiseido is taking advantage of the Asian tourists rushing to the archipelago’s drugstores, while simultaneously noting the slowing down of this rather recent demand.

Abroad, the group has seen its profit decline by 4.2% in yen (but increase by 11.4% in local currency). Profits have fallen by 5.9% in the Asia-Pacific region due to negative developments in currency exchange, without which it would have seen growth of 7%.

Similarly, revenue has grown by 8% in local currency in the US, but fallen 3% once converted to yen, due to the downturn of the dollar.

In Europe, the exit of Jean-Paul Gaultier fragrances has brought about a drop of 18.2% in sales ( -8.1% without currency effects).

In duty-free boutiques, notably those in Asian airports (in China, South Korea and Thailand in particular), sales have leapt by 44%.

In 2017, Shiseido expects to see a net revenue of 26 billion yen (-19% year-on-year), and an operational increase to 45.5 billion (+24%), for an anticipated turnover of 940 billion yen (+10.5% year-on-year).