Kao Corporation announced its consolidated results from the three months ended March 31, 2014. Net sales were ¥341.2 billion, up 18% from the same time period in 2013. Operating income increase 116.2% to ¥39.6 billion, and net income was ¥41.1 billion, representing a 110% increase over the same time period in 2013.
During the three months ended March 31, 2014, the global economy recovered moderately, although weakness was apparent in some sectors. The Japanese economy also recovered moderately, underpinned by the effects of various government measures, and personal consumption increased, due in part to last-minute demand associated with the consumption tax rate increase in April 2014. The household and personal care market in Japan, a key market for the Kao Group, grew 17% on a value basis compared with the same period a year earlier, and a sense has emerged that the decline in consumer purchase prices had bottomed out. In addition, the cosmetics market in Japan grew by 22%.
On the consumer products business side, which includes Kao’s beauty care business, sales of each business grew substantially in Japan due to significant market growth from the impact of last-minute demand. As for profits, mainly due to the effects of the consumer products business in Japan and lower SG&A expenses ratio, operating income increased and ordinary income increased. Net income also increased ¥14.7 billion compared with the same period a year earlier to ¥25.2 billion.
For the beauty care category, net sales were ¥144.4 billion, up 11.9% (+8.7% like-for-like). Sales of cosmetics increased 11.4% compared with the same period a year earlier to ¥64.7 billion. Excluding the effect of currency translation, sales would have increased 9.9%. In Japan, sales increased compared with the same period a year earlier, due in part to market growth from the impact of last-minute demand. Kao continued to work to reinforce focal brands, with growth in sales of counseling brands Sofina Primavista base makeup and Aube Couture makeup, as well as self-selection brands Allie UV care and renewed Kate makeup. Outside Japan, sales increase from the same period a year earlier, excluding the effect of currency translation.
Sales of skin care products increased compared to the same time period in 2013, and in Japan, sales increased with strong performance by Biore UV care products and improved facial cleanser, Biore U body cleanser and Curel derma care products. In Asia, Biore performed steadily and sales grew. In the Americas, sales of Jergens hand and body lotions were steady.
Sales of hair care products increased compared with the same period a year earlier. In Japan, although hair coloring products were impacted by market contraction, sales increased with strong performance by shampoos, conditioners and hair styling products, including the contribution from new products. In Asia, sales decreased compared with the same period in 2013 excluding the impact of currency translation amid severe competitive conditions. Sales grew in the Americas and Europe, due in part of the launch of a new styling product from John Frieda.
Operating income for the beauty care business increased ¥10.2 billion compared with the same period a year earlier to ¥9.8 billion, mainly due to the effect of increased sales and more efficient management of expenses.