Sales: $10.0 billion
Key Personnel: Michitaka Sawada, president and chief executive officer; Katsuhiko Yoshida, senior managing executive officer; Toshiaki Takeuchi, senior managing executive officer; Masumi Natsusaka, managing executive officer; Motohiro Morimura, managing executive officer; Yasushi Aoki, managing executive officer; Hideko Aoki, managing executive officer; Kozo Saito, managing executive officer; Yoshihiro Hasebe, managing executive officer.
Major Products: Beauty Care—Sofina, Kanebo, Molton Brown, Bioré, Jergens, Asience, John Frieda, Goldwell; Fabric and Home Care—Attack, Haiter, Magiclean; Human Health Care—Pyoura and Clear Clean oral care, Bub bath additives.
New Products: Beauty Care—Sofina iP; Home Care—Attack Antibacterial EX Super Clear Gel detergent and Deodorizing Strong institutional range.
Comments: The Japanese economy continues to struggle, so homegrown multinationals such as Kao are looking elsewhere for growth. The company said consumer product sales increased nearly 6% last year. By category, beauty care accounted for 41% of sales, followed by fabric and home care (23%) and human health care (19%). Kao’s other business is devoted to specialty chemicals.
CEO Michitaka Sawada said the company achieved all targets of its K15 strategy, with record net sales and profits. International markets accounted for 35% of sales—the target had been 30%. But not every issue was solved last year. According to Sawada, Kao is determined to improve the profitability of its cosmetics business and rebuild its beverage unit, which includes nutraceuticals such as Healthya functional drinks.
Last year, beauty care sales rose 3%, helped along by gains for Bioré UV skin care products and Curél for sensitive skin. Bioré results were good outside the home market, too. Hair care sales were up slightly, getting a boost from product launches in Japan. At the same time, the cosmetics business in Asia, including Kanebo Cosmetics and Kao Sofina, returned to profitability.
Fabric and home care sales increased 3.1%. Although sales in Japan were unchanged, Kao said demand for CuCute dishwashing detergent and Quickle household cleaning sheets was strong. Elsewhere, a growing middle class helped along category results, laundry product sales were strong in Indonesia.
Sales jumped nearly 17% in the human health care segment, which includes products such as toothpaste and personal cleansers. The company said strong demand for all things masks helped boost sales of MegRythm Steam Eye Masks.
By region, sales in Japan increased 2.6%; sales in Asia rose nearly 28%, sales in the Americas improved 12.4% and sales in Europe increased 6.7%.
For Q1 2016, corporate sales rose 1.7%. For the full year, the company expects corporate sales to increase 2.4%, which, if achieved, would represent the seventh consecutive year of gains for sales and profits. To get there, Kao executives say they are determined to reform the cosmetics business. This year, the focus is on Kanebo, and in 2017, Kao will shore up Sofina. Despite its efforts, Kao still expects overall beauty care sales to decline ever so slightly (-0.1%) in 2016, compared to a 1.4% gain in fabric and home care and an 8.7% increase in human health sales.