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Kao Net Income Up 3.2% for Q1 2012

Posted: July 26, 2012

Kao Corporation announced its consolidated results for the three months ending June 30, 2012, the first quarter of its fiscal year ending December 31, 2012. The company reported net sales of ¥294,530 million, a decrease of 0.1% from the same period in 2011. However, net income rose 3.2% over last year's numbers for the same period (¥15,676 million in 2012 versus ¥15,183 million in 2011) and comprehensive income increased 29.1% to ¥31,198 million (up from ¥24,160 million in Q1 2011).

Kao's beauty care division recorded net sales of ¥128.6 billion yen for the quarter, dropping from 2011's Q1 results of ¥130.7 billion. However, growth in the company's human health care (up 7.4%) and fabric and home care (up 1.1%) divisions buoyed the results. The company's consumer products business division—which is comprised of the beauty care, human health care and fabric and home care business—saw sales increase 1.1% to ¥241.9 billion. In Japan, sales increased 2.7% to ¥199.9 billion, and Asian sales were up 3.1% to ¥20.6 billion. In North America, sales decreased 11.9% to ¥13.6 billion, and Europe saw sales decrease 11.4% to ¥13.7 billion.

Specifically in its beauty business, Kao saw sales of prestige cosmetics, which consist of self-selection and counseling cosmetics, increase 0.3% to ¥61 billion amid a continuing shift toward self-selection products in Japan's cosmetic market. In Japan, sales of self-selection brands Kate makeup and Ururi skin care increased, as did sales of counseling brands Sofina Primavista base makeup, Aube Couture makeup and Coffret d'Or makeup. Sales outside Japan decreased compared with the same quarter last year with the impact of concerns about an economic slowdown.

In premium skin care products, sales in Japan increased, reflecting the steady performance of Biore skin care products and Curel sensitive skin care products. Sales in Asia increased, with strong performance by Biore in Taiwan, Hong Kong and Indonesia. In North America, sales of Jergens hand and body lotions increased as well.

Sales of premium hair care products decreased in Japan as intensified competition weakened sales of shampoos, conditioners and hair color products. In Asia, sales of Liese foam hair color were steady in Hong Kong and sales of Essential hair care products increased in Taiwan and Hong Kong. In North America and Europe, ales decreased in the absence of the effect of the launch of John Frieda foam hair color in North America in the same quarter a year earlier. However, the product steadily continued to gain consumer support.

Operating income for the beauty division decreased ¥3.8 billion to ¥1.4 billion due to investment in advertising and sales promotion for premium skin care and hair care products, although Kao made ongoing efforts to rebuild the prestige cosmetics business in Japan.

Find more detailed information on Kao's Q1 2012 financial report here.