Shiseido, in midst of reorganization, has reported mixed annual results

On Monday, the Japanese cosmetics maker announced a mixed performance for its 2014-2015 fiscal year, with sales slightly up and profitability falling, but it hopes to get back on track through reorganization.

Between April 1, 2014 and March 31, 2015, the company’s sales increased by 2.1% to 777 billion yen (5.9 billion dollars), in line with estimates. 

In Japan, sales decreased by 3.1%, to 365 billion yen, due to the repercussions of a consumption tax that was raised one year ago, hurting the world’s third largest economy. 

Abroad, they rose slightly by 0.9%, calculated in local currencies, but when converted to yen, the increase was by 7.1% due to the weakening of the Japanese currency. 

Its operating profit, meanwhile, declined by 44.4% to 27.6 billion yen (212 million euros). 

The group cites bonuses paid to staff in Japan, higher marketing spending abroad, costs related to inventory optimization in China and logistical problems in the United States. 

Its net profit, however, appreciated by 28.8%, to 33.7 billion yen (260 million euros), a performance that can be explained by a non-recurring gain from the sale of its brands Decleor and Carita to French group L'Oreal. 

In the absence of the sale, its net profit from April to December 2015 should plunge by 63.7% year-on-year, warned Shiseido. 

The make-up and beauty cream specialist is changing the dates for its fiscal year - no longer to be calculated from April to March but instead mirroring the calendar year. The current year will be shortened to nine months. 

Apart from its net profit, its other results are expected to improve: revenues should increase by 7.8% to 730 billion yen (5.6 billion euros at the currency rate chosen by the group) and operating profit should jump 31.9% to 28 billion. 

Shiseido anticipates an upturn in Japan following difficulties in recent months, particularly in terms of its online business. 

Beyond Japan, conditions should remain favorable in the United States and especially in China, which the company is prioritizing.

Shiseido intends to accelerate reforms to generate annual revenues of 900 billion yen and an operating profit of 50 to 60 billion yen in 2017.

The company explained that it intends to focus on certain key brands and has announced "a new organization by brand and by region", as well as increased efforts made in terms of research and development.

1 CNY = $0.16/£0.11