Japanese hair care and cosmetics brand Shiseido says net income for the first half dropped 44.8 per cent to 5 billion yen (US$62.6 million).

The decline was due to the decrease in operating income of 61.2 per cent, reflecting poor domestic sales, increased investments in sales counters and advertisements overseas, especially in China, and marketing outlays for a new business model in Japan.

Domestic sales declined 3.2 per cent to 186.6 billion yen (US$2.3 billion). Sales for the second quarter grew, but this did not compensate for the decline in the first quarter. Overseas sales rose 7.1 per cent to 147 billion yen (US$1.8 billion), led by China and other markets in Asia.

Due to the losses, Shiseido’s consolidated net sales forecast for the full year have been revised down to 700 billion yen (US$8.7 billion), which is 10 billion yen less than the figure announced in July.

Despite an expected decrease in margins, operating income is expected to rise to 40 billion yen (US$501.3 million) due to cost-cutting reforms being completed ahead of schedule.

“We are determined to achieve operating income of 40 billion yen in the current fiscal year and an operating margin of eight per cent next year, despite conditions adverse to sales growth,” said the company.

GB