Kao Reports Financial Results From Nine Months Ending December 31

Kao Corporation announced its consolidated business results for the nine months ending Dec. 31, 2011, the third quarter of the fiscal year ending March 31, 2012 for the company. Net sales increased 2.2% compared with the same period a year earlier to ¥934.8 billion, or approximately $12 million, and excluding the effect of currency translation, net sales would have been 3.8%. In the company's beauty care business sector, new products performed well outside of Japan.

The report also notes that during the time period, the pace of recovery slowed in North America and Europe, and in addition uncertainty about the outlook for the global economy grew due to financial turmoil in Europe. In the Japanese economy, there were signs of recovery in some sectors although conditions remained severe due to the effects of the March 11, 2011 earthquake, as well as deflation and the appreciation of the yen. The household and beauty product markets in Japan, key markets for Kao, remained unchanged on a value basis compared with the same period of the previous fiscal year, although consumer purchase prices fell with the purchasing behavior of budget-strapped consumers. The cosmetics market in Japan continued to contract due to a shift in consumer preference to lower-priced products.

Under these circumstances, the company made all-out efforts to carry out a stable supply of products after the earthquake as the mission of a manufacturer of daily necessities, and worked to launch and nurture products with high added value. The Kao Group also continued to focus on rebuilding its prestige cosmetics business in Japan and promoting cost-reduction activities.

Broken down by segment, the company's consumer business products segment increased sales 1% compared to 2010, for ¥772.7 billion. In Japan, sales increased 0.9% to ¥642.1 billion. Although sales were impacted by the earthquake, intensified market competition and deflation, the Kao Group took measures that included proposing environmentally conscious products, launching new products in response to changing consumer lifestyles, and enhancing proposal-based sales and in-store merchandising activities.

In Asia and Oceania, consumer products business sales increased 5.6% to ¥65.1 billion. Excluding the effects of currency translation, sales would have increased 10.6%. Although intense market competition continued, the company carried out aggressive measures, including collaborations with retailers and the introduction of new products amid continued market growth.

In the company's North American consumer products business sector, sales decreased 2% to ¥38.3 billion. Excluding the effect of currency translation, sales would have increased 8.6%. The market recovered, albeit gradually, and new products contributed to sales, but currency translation exerted an impact on results.

In consumer products business in Europe, sales increase 4.4% to ¥45.8 billion. Excluding the effect of currency translation, sales would have increased 7.9%. In a market that remained flat, new products launched in 2010 performed well.

For the company's beauty care business, sales increased 0.3% compared to the same period a year earlier to ¥410.7 billion. Excluding the effect of currency translation, sales would have increased 1.9%. Sales of prestige cosmetics, which consist of self-selection and counseling cosmetics, increased 0.4% to ¥197.2 billion with the launch of new products, although the downtrend continued in Japan's cosmetics market with the impact of the earthquake in addition to the shift in consumer preference toward lower-priced products. In Japan, the Kao Group enhanced in-store merchandising for self-selection brands such as Kate makeup and Evita total cosmetics. in counseling cosmetics, the company nurtured and strengthened its mega brands with annual sales of more than ¥10 billion, including making improvements to the Blanchir Superior whitening skin care and Sofina Beaute skin care brands, and adding a new product line for Sofina Primavista base makeup. In addition, the Kao Group carried out a reform of sales methods, including optimization of counseling in response to changes in consumer needs and increased its share in a contracting market. Sales outside Japan also increase steadily.

Sales of premium skin care products grew in Japan as the company launched products that use new cleansing technology to wash away dirt with the least possible damage to the skin from the Biore facial cleanser and Biore U body cleanser brands, and continued to make proposals for dry and sensitive skin with the Curel brand. Sales in Asia increased, with strong performances by Biore in Hong Kong, Taiwan and Indonesia. In North America, Jergens performed well in the hand and body lotion category.

Sales of premium hair care products decreased in Japan. Sales of Merit shampoo and conditioner were steady, but sales of hair coloring products were weak due to market contraction and intensifying competition. Sales in Asia increased, with strong performances by hair color products in markets where Liese foam hair color is sold, including Taiwan and Thailand. In North America and Europe, strong sales of foam hair color, hair styling products and other new John Frieda products drove substantial sales growth.

Also, sales of personal health products such as toothpastes, Bub bath additives and Megurhythm steam thermo sheets and eye masks performed well in Japan.

Read more from this financial report here.

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