Shiseido: annual forecast unchanged, net loss expected in fourth quarter

Japan's number one cosmetics company, Shiseido, on Thursday maintained its 2022 forecast, which it had drastically lowered this summer due to the difficulties linked to the pandemic in its two main markets, Japan and China.

In the first nine months of its calendar year, Shiseido generated a net profit of 29 billion yen (just under 200 million euros), down 38.2% year-on-year, according to a statement.

However, the group did not raise its annual forecast of 25.5 billion yen because it expects to make a net loss in the fourth quarter, due to exceptional costs associated with its structural reforms.

Its operating profit for the first nine months of the year amounted to 35.7 billion yen (-62.7% year-on-year) and here again, its target of 40 billion yen excluding exceptional items has not been changed.

Its sales for the same period increased by 4.7% year-on-year to 762.7 billion yen (5.2 billion euros at the current rate). But excluding positive currency effects related to the fall of the yen, sales fell by 4.1%.

In the Japanese market, "although price increases in many sectors are weighing on cosmetics purchases, a gradual recovery" has been underway since September, thanks to the launch of new products and consumers more inclined to go out of their homes with the pandemic easing off," Shiseido said in its statement.

In China, the group saw improvements in its business in the third quarter but continues to be affected by inventory issues due to local confinements and uncertainties about the future.

Its sales have thus fallen by about 10% in Japan and China in the first nine months of 2022, while they have increased elsewhere in Asia-Pacific, in its Americas and EMEA (Europe, Middle East and Africa) zones and especially in its important "travel retail" business (airport stores), which has jumped by 35.5%.

Shiseido still expects annual sales of 1,070 billion yen (7.3 billion euros), an increase of 5.9% compared to 2021.

In a separate statement, Shiseido warned that the current head of its China operations, Kentaro Fujiwara, would become the group's chief operating officer as of January 1 next year, to directly support CEO Masahiko Uotani.