Sales Dip, Income Soars at Shiseido

Sometimes, extraordinary gains are quite extraordinary! Shiseido said Wednesday that extraordinary gains and lower taxes led to a 74% surge in full-year net profit and compensated for lower sales in both its home market of Japan and abroad.

Net profit for the year ended March 31 rose 73.8% to $363 million (33.67 billion yen at average exchange rates for the period). However, sales slid 6.7% to $6.94 billion (644.2 billion yen).

Sales in Japan were lower due to continued weak consumer sentiment. International revenues, which represent about 37% of the company’s business, increased in local-currency terms but fell on a reported basis due to the appreciation of the yen. The company noted the particular strength of the Chinese market.

Operating profit for the period inched up 0.9% to $542.8 million (50.35 billion yen).

Looking ahead to the fiscal year, ending March 31, 2011, Shiseido said it expects its net profit to fall 7.9% to $331.3 million (31 billion yen at current exchange), and its operating profit to increase 5.3% to $566.5 million (53 billion yen). It sees its sales rising 2.5% to $7.05 billion (660 billion yen).

“This forecast takes into account various factors, including [the] expected bottoming out of the domestic market in the second half of the year, [recovering] sentiment in European and North American markets, and sales growth in Asian markets centering on China,” Shiseido said.

The Japanese company said its net profit will decline as it won’t enjoy the same tax benefit it did for the fiscal year ending March 31.