Kao Posts 4.6% Profit Growth in 2003, a 23rd Consecutive Record

Kao Corp, Tokyo, scored its sixth straight year of record net profit thanks to strong sales of new products and forecast group net profit would rise 10% to 72 billion yen next year, according to executives for the year ended March 31.

Solid demand for its products such as Healthya diet green tea and Asience shampoos plus contributions from its overseas unit helped offset falling prices in its mainstay toiletry products at home, president Takuya Goto said. “We faced intense competition in our key toiletry market at home, but we were able to meet our financial targets by staying on the offensive with new products like Asience,” he said.

Group net profit for the year rose 4.6% to $598 million. Recurring profit increased 4.4% to 123 billion yen, marking a 23rd straight year of record results and underscoring Kao’s status as one of the most resilient of Japanese companies. The healthy growth picture led Kao to lift its dividend projection, marking the 15th successive year it has boosted its dividend, to 38 yen from 32 yen.

Partially behind the steady growth were the company’s aggressive acquisitions in the U.S. and Europe, notably the purchase of the John Frieda hair care business in 2002. “Sales of John Frieda brand products have been very strong, exceeding our original forecast,” Kao’s Mr. Goto said. But Goto said Kao saw difficulties in China due to rivalries, however Asia only accounts for approximately 10% of group sales.

The household products maker also said it would buy back up to 10 million of its own shares or 25 billion yen worth by the end of June and seek permission from shareholders to buy back up to 20 million shares, or 3.7% of its outstanding stock, in July. Over the past five years, the company has bought back shares equivalent to 14.2% of its outstanding stock as of March 1999 to boost its return on equity. It will also cancel 25 million shares of its 53 million treasury stock this business year while using other shares to convert some of its convertible bonds into stock and to make its sales unit, Kao Hanbai, a wholly-owned subsidiary.