Shiseido slightly in the red in the first quarter, but growth targets unchanged

Japanese high-end cosmetics giant Shiseido posted a small loss in the first quarter due to restructuring costs, but maintained its growth forecasts for 2024.

Its net loss for the January-March period was 3.3 billion yen (-19.6 million euros at the current exchange rate), compared with a profit of 8.7 billion yen a year earlier, according to a press release published on Friday.

The group also suffered a small quarterly operating loss of 8.7 billion yen, due to exceptional charges linked to its plan to transform its Japanese operations, announced at the end of February and involving almost 1,500 voluntary redundancies, or almost 4% of its global workforce.

However, sales rose by 3.9% over the period to 249.5 billion yen (nearly €1.5 billion).

On a like-for-like basis, quarterly sales rose by almost 20% in Japan, by almost 17% in the EMEA (Europe, Africa and Middle East) zone and by more than 9% in the Americas.

However, sales fell again slightly in China (-2.6%), the third consecutive quarter of decline in this market, which is crucial for the group.

Shiseido and other Japanese brands have been the victims of a boycott by Chinese consumers since last summer, following the release of treated water from the Fukushima nuclear power station in north-east Japan into the Pacific Ocean.

The Chinese government has been highly critical of the start of this process, even though Tokyo and the International Atomic Energy Agency (IAEA) claim that it is harmless to the environment and human health. Beijing has suspended all Chinese imports of Japanese seafood since last August.

However, Shiseido continues to expect a rebound in sales in China this year.

Its travel retail business (sales in airports and other duty-free outlets) remained sluggish in the first quarter, having continued to suffer the consequences of tighter regulations in this sector in China and South Korea.

For 2024, Shiseido is still forecasting a net profit of 22 billion yen (+1.1% year-on-year) and sales of 1,000 billion yen (+2.8%).

Its former consumer cosmetics business, now called FineToday, plans to list on the Tokyo Stock Exchange, Shiseido said in a separate statement on Friday.

The Japanese group had sold this business in 2021 to the investment fund CVC for the equivalent of around 1.3 billion euros, while retaining a 20% minority stake in the business.

According to sources close to the matter quoted by Bloomberg, CVC is targeting a market value of between 2 and 3 billion dollars for FineToday.

A sale of FineToday to another investment fund or another cosmetics group is not ruled out either, according to the same sources.