Kao posts positive first-half 2017 results, confirms yearly forecasts

In the first six months of 2017, Japanese cosmetics group Kao has posted a net income increase of 12.9% on a yearly basis, thanks to rising sales in Asia and the adoption of cost-cutting policies.

After such a favourable first half of the year, the group is confident it will reach its annual targets. Between January and June, Kao generated a net income of JPY56.5 billion (about €460 million at the exchange rate adopted by Kao for the period in question), while EBIT grew 7.7% to JPY87.4 billion.

In a press release, the group highlighted "the significant increase" in the sales of its skincare and bodycare products in Japan and the rest of Asia, though their positive performance was dampened by adverse exchange rate effects. Altogether, revenue grew by 2.5%, reaching JPY717.3 billion.

Kao also stated that in Japan, which accounts for two thirds of its business, the revenue of mass-market products (beauty, household and health food) lost 0.7%.

The group lamented "a downturn in tourist demand" for cosmetics "within a highly competitive environment." On the other hand, results for the healthcare division (food, drinks, diapers) were positive.

Still in the mass-market segment, revenue grew by 5.2% in Asia, and by 18% in like-for-like terms (excluding exchange rate adjustments), with "strong growth in China and Indonesia" among others. Elsewhere, the results were mixed: +7.8% in America but -10.6% in Europe.

As for chemicals, despite marked fluctuations in raw material prices, the positive trend observed earlier in the year was confirmed by a 12.5% growth, as the Japanese infrastructure market is recovering and automotive production in China is picking up.

In terms of annual results, Kao has confirmed its initial estimates: sales are forecast to grow by 0.9 % to JPY1.470 trillion (€11.9 billion), with a net income of JPY138 billion (+9%) and EBIT of JPY200 billion (+7.8%).