Pola Orbis Holdings Inc., owners of brands including H2O Plus and Jurlique, released a summary of its financial results for the half year ended June 30, 2013. Net sales for the time period were ¥91,415 million, versus ¥86,407 million in the same time period for 2012. This represents a 5.8% increase. Operating income for the first half of 2013 was ¥6,305 million, while net income was ¥3,402 million, an increase of 22.2%.
During the first half of fiscal 2013 (January 1–June 30, 2013), in the Japanese economy, the weakening yen and rising stock prices resulting from domestic economic and monetary policies had a positive impact on consumer sentiment. Thus, with personal spending remaining firm, the economy has steadily picked up since its deceleration precipitated by the European fiscal crisis. In the future, although there remains a downside risk of an economic slump overseas, the Japanese economy will stand to further recover in a steadily improving export climate owing to a weaker yen and the effectiveness of various domestic policies.
As for the domestic cosmetics market, due to the recovery momentum in the Japanese economy as a whole, the overall market remains strong. In the overseas cosmetics market, while slowdowns in personal spending are apparent in China and India, the whole Asian region continues to grow slowly.
Within this market environment, in the current fiscal year, which is the final year of its three-year, medium-term management plan that started in 2011, the Pola Orbis Group will continue to improve the profitability of its domestic flagship brands and to expand its brands under development. In addition, the company will also continue to pursue its overseas market expansion, whose linchpins are the two overseas companies that it acquired. As a result of the factors noted above, the company achieved the following consolidated operating results for the first half of fiscal 2013.
Consolidated net sales for the first half of fiscal 2013 increased 5.8% year on year to ¥91,415 million. This was due to the consolidation of Jurlique in January of this year, after joining the company in February of last year. In addition, Jurlique and H2O Plus enjoyed steady growth in Asia, and exchange rate movements were favorable. Due to elimination of one-time expenses arising from the acquisition of Jurlique, and to the streamlining of selling, general and administrative expenses, operating income increased 11.6% year on year to ¥6,305 million. Ordinary income rose 22.1% year on year to ¥7,335 million, on foreign exchange gains stemming from a weak yen. Net income was up 22.2% year on year to ¥3,402 million. This was due to the company's posting of lower tax expenses following a loss on business liquidation arising from Pola's withdrawal from business in the United States and incurred business structure improvement expenses associated with the integration of the Shizuoka Plant.
Pola Orbis' beauty care segment saw net sales of ¥85,336 million for the first half of 2013, a 5.8% increase over the first half of 2012's ¥80,691 million. The beauty care segment consists of the flagship brands Pola and Orbis, and its brands under development—PDC, Future Labo, Orlane, Decencia and Three—as well as the overseas brands Jurlique and H2O Plus.
Pola is making concerted efforts to boost customer satisfaction. These include aggressively developing sales channels through Pola the Beauty stores, which integrate cosmetics, consulting and esthetic treatments, and through department stores; increasing customer contact points through expansion of the door-to-door sales organization; and further enhancing Pola’s sales process quality and consulting skills. In the domestic market, the company pressed ahead with product launches and sales promotions tailored to specific seasons. In the overseas markets, Pola continued to steadily ramp up the number of stores handling its offerings in the key Russian market. As a result, the company recorded an increase in net sales over the corresponding period of the previous year.
Orbis is striving to boost profitability by rebuilding its brand, through such efforts as increasing the repeat purchase rate, enhancing its skin care products, and increasing online sales. In the domestic market, the Live Rich anti-aging series, which was launched in February and is only available online and by catalog, performed well, driving a year-on-year increase in amount spent per customer. With the shift to a two-point logistics structure in the second half of last year, the effectiveness of the Orbis’ streamlining of costs has been apparent. In overseas markets, Orbis has continued to work to increase brand awareness. As a result, the brand recorded net sales in line with sales in the corresponding period of the previous year.
Meanwhile, due to strong sales of Three, PDC and Decencia, the brands under development recorded an increase in net sales over the corresponding period of the previous year.
Furthermore, the company's overseas brands saw a substantial increase in net sales over the corresponding period of the previous year. A contributing factor was the consolidation of Jurlique in January of this year, after joining Pola Orbis in February of last year. Another factor was the establishment of a joint venture in April to accelerate business for the H2O Plus brand in China. Jurlique and H2O Plus enjoyed steady growth in Asia, while exchange rate movements were favorable.
As a result of the factors noted above, operating income was ¥5,703 million, up 16.7% year on year.