Shiseido hopes to bounce back after fiscal 2023 marred by China woes

Japanese cosmetics giant Shiseido is hoping fiscal 2024 will see sales growing again in China and in the travel retail channel, two problem areas that marred its 2023 results, which were published on Friday.

Specifically, Shiseido is expecting sales in China to bounce back and grow 5% in 2024. China is a crucial market for the group, but it posted an unprecedented revenue slump in H2 2023.

Last summer, waste water from the damaged Fukushima nuclear reactor in north-eastern Japan began to be discharged into the Pacific Ocean, a process that is set to last for several decades.

Although the Tokyo government and the International Atomic Energy Agency have claimed that the discharge will not harm the marine environment and human life, the decision outraged Beijing and triggered a boycott of Japanese products, especially cosmetics, by Chinese consumers.

Shiseido expects that this negative impact on its Chinese business will persist in Q1 2024, though less damagingly than in the latter part of 2023, and that its sales in China will begin to grow again in Q2.

For fiscal 2024, Shiseido has forecast its net income will grow by 1.1% to JPY22 billion (€136.7 million at current exchange rates), and that revenue will grow by 2.8% to JPY1 trillion (€6.2 billion).

In 2023, Shiseido’s net income fell by 36.4% to JPY21.7 billion, partly due to negative one-off effects related to the sale of two of its factories and the merger of two others in Osaka.

The group’s 2023 annual revenue posted an 8.8% downturn to JPY973 billion, as double-digit sales growth in Japan and in the Americas, EMEA and Asia-Pacific regions were not sufficient to offset the revenue shortfall recorded in China and in the travel retail channel.

Business in Asia’s travel retail sector has been weak since last year, following the introduction of tighter regulations in China and in South Korea, affecting the sale of products in duty-free stores like those on Hainan island, China’s duty-free paradise.