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Kao Reports 2011 Fiscal Results With 2.5% Uptick in Sales
Posted: April 24, 2012
Kao Corporation announced its consolidated business results for the fiscal year ending March 31, 2012, with net sales for 2012 coming in at ¥1,216,095 million (approximately $14,796 million), which represents an increase of 2.5% over 2011. For the company’s beauty care division, 2012 sales rose 0.8% to ¥537.9 billion (approximately $6,545 million), which represents a like-for-like increase of 2.4% over 2011.
In its growth for the fiscal year, the company cited a slowly growing economy, as well as signs of gradual recovery in the Japanese market still coming back from the earthquake and tsunami in March 2011. However, the company did see the household and personal care market in Japan contract 1% on a value basis as consumer purchase prices fell, and the Japanese cosmetic market continuing to contract due to a shift in consumer preference to lower-priced products.
Despite this, in its beauty care division, Kao recorded sales growth for prestige cosmetics in Japan, and the company’s premium hair care products sold well outside of Japan. Sales of prestige cosmetics, which consist of self-selection and counseling cosmetics, increased 2.2% to ¥259.9 billion, with the launch of new products, and Kao carried out reform of sales methods, including optimization of marketing activities and counseling in response to changes in consumer needs and increased its share in a contracting market.
Sales of premium skin care products grew in Japan on the strength of its Biore brand, as did sales in Asia, with product improvements contributing to the performance of Biore in Hong Kong, Taiwan and Indonesia. In North America, the Jergens brand performed well in the hand and body lotion category.
Sales of premium hair care products did decrease in Japan, but Asian sales in this category increased, with the Liese foam hair color brand strong in Hong Kong, Taiwan and Thailand. In North America and Europe, strong sales of foam hair color, hairstyling products and other John Frieda brand products drove substantial sales growth
Operating income for the beauty care division increased ¥9.8 billion to ¥15.4 billion due to ongoing efforts to rebuild the prestige cosmetics business in Japan and other factors, including Kao’s aggressive investment in advertising spending for new products in North America and Europe.
For the consumer products business segment, which encompasses the company’s beauty care division, sales increased 1.7% over the previous year. In Japan, sales increased 1.8% to ¥832.2 billion, and although sales were affected by the earthquake, increased market competition and deflation, Kao took measures to maintain and grow its presence with environmentally conscious products, launching new options in response to changing consumer lifestyles and enhancing proposal-based sales and in-store merchandising activities. In Asia and Oceania, sales increased 6.6% to ¥87.4 billion, and European sales for the segment increased 1.3% to ¥61.5 billion. In North America, sales decreased 2.7% to ¥49.6 billion, primarily impacted by the appreciation of the yen.