Pola Orbis Holdings released its summary of consolidated financial results for the fiscal year ended December 31, 2013. Net sales for the year were ¥191.3 billion, a 5.8% increase over 2012 results. Operating income was ¥16 billion (+18.5%), ordinary income was ¥17.8 billion (+22.1%) and net income was ¥7.3 billion (+9.5%).
In the time period discussed, the Japanese economy experienced a mild recovery from a deceleration precipitated by the European financial crisis, as Abenomics-fueled expectations contributed to consumer sentiment, helping personal spending to pick up. The domestic (Japanese) cosmetics market improved overall as a result of the recovery momentum in the Japanese economy. In the overseas cosmetics market, while slowdowns in personal spending are apparent in China, the whole Asian region continues to grow slowly. With this market environment, in the current fiscal year, which is the final year of its three-year medium-term management plant that it started in 2011, the Pola Orbis Group continued to improve the profitability of domestic flagship brands and to expand its brands under development. In addition, the company continued to pursue its overseas market expansion, whose linchpins are two overseas companies it acquired.
As stated, consolidated net sales for fiscal 2013 increased 5.8% year on year to ¥191.355 billion. This was due partly to the consolidation of Jurlique in January 2013 after joining Pola Orbis the previous February. Other factors were growth in Asia and favorable exchange rate movements.
For its beauty care business segment, Pola Orbis recorded net sales of ¥178.3 billion for 2013, a 5.6% increase, and operating income rose 25.1% from 2012 to ¥14.78 billion for 2013. The company’s Pola brand is making a concerted effort to boost consumer satisfaction. This includes aggressively developing sales channels through Pola the Beauty stores, which integrate sales of cosmetics, consulting and esthetic treatments, and through department stores; increasing customer contact points through expansion of the door-to-door sales organization; and further increasing Pola’s sales process quality and consulting skills. In overseas markets, department store business generated steady growth in the key Chinese market while Pola also continued to ramp up the number of stores handling its offerings in Russia, another important market.
The Orbis brand is striving to boost profitability by rebuilding its brand through such efforts as increasing the repeat purchase rate, enhancing skin care products and increasing online sales. In the domestic market, the number of items purchased along with the purchase price per customer rose on favorable demand for UV protection and other seasonal products and on the success of cleansing product promotions, offsetting a temporary decline in the number of new customers own to price reduction constraints. In overseas markets, Orbis has continued to work to increase brand awareness. In July, the company set up a subsidiary in Singapore as a strategic hub for accelerating growth in the ASEAN. As a result, Orbis recorded an increase in net sales over sales in the corresponding period in the previous year.
Meanwhile, due to strong sales of Three, PDC and Decencia, the brands under development recorded an increase in net sales in 2013 over 2013, as well.
Among the company’s overseas brands, noteworthy developments included the contribution to consolidated results from January 2013 of Jurlique and its expansion of business in China. In April 2013, Pola Orbis established a Chinese joint venture for H2O Plus. These factors and favorable exchange rate movements led to an increase in overseas sales from the previous corresponding fiscal period, although earnings were less than anticipated because of forward investments in China.