SARS and Iraq take their toll on Shiseido

JAPAN. Leading Japanese cosmetics house Shiseido saw sales and profits suffer in the first half, thanks to the effects of SARS and the Iraq war. Consolidated net profit for the period was ¥6.56 billion, down -33.6% from last year. Recurring profit declined -23.2%, to ¥17.89 billion (US$163 million) while sales dropped marginally, by -0.3% to ¥309.33 billion (US$2,812 million).

Overseas sales, which account for around a quarter of Shiseido’s group sales, were particularly hard hit by the Iraq conflict, increasing by just +1.4% on a local currency basis.

“As the number of travellers decreased, revenue from duty free shops and inflight sales fell,” a Shiseido spokesman commented. “The SARS outbreak in Asia alone reduced our sales by Â¥1.5 billion from the previous estimate,” he added.

In a statement Shiseido commented: “Domestic sales slipped -1.0% – due to weak personal consumption and the effects of a cool summer [in Japan] as well as our inability to launch new, high-impact products – in the first quarter [to June]. Income from operations fell – 22.6% due to sluggish revenues, increased pension costs and higher expenses associated with our head office reorganisation.

“Looking ahead, we believe the market environment surrounding the company, both at home and overseas, will remain uncertain. Overseas we expect continued stagnation in consumption in the US and Europe.”

For the full year to March 2004, Shiseido cut its net profit forecast to ¥23 billion (US$209 million) down from the ¥25 billion (US$227 million)projected in May. The company has also revised down its sales forecast, to ¥632 billion (US$5,75 million) from ¥640 billion (US$5,818 million).

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