Kao Gains 1125.9 Bn Yen Net Sales in the First 9 Months Down Slightly by 0.2% with Asia Facing Challenge

Kao, in its financial report for the nine months ended September 30, announced net sales of 1,125.9 billion yen ($7.47 billion), representing a slight decline of 0.2% compared to the previous year. The net income for the period was 34.5 billion yen ($228.9 million), showing a significant decrease of 41.9%. Kao attributed this decline to several factors, including a slowdown in the previously thriving Chinese market, geopolitical risks in Europe and the Middle East, and persistently high costs due to inflation.

In terms of specific segments, the Consumer Products Business achieved net sales of 883.5 billion yen ($5.86 billion), marking a 1.1% increase year-on-year. Kao acknowledged that global markets were gradually recovering from the impact of the COVID-19 pandemic. However, there was a market slowdown in China, which had previously been a major driver of growth. The consumer products business in China experienced net sales of 170.1 billion yen ($1.13 billion), representing a decline of 6.8% on a like-for-like basis.

Within the Consumer Products Business, the Cosmetics Business achieved net sales of 175.1 billion yen ($1.16 billion), down 1.7% on a like-for-like basis. Kao explained that while sales remained strong in Japan, with continued double-digit growth for its global strategy brands like KANEBO, KATE, and other prestige skincare and makeup brands under the “G11” umbrella, there were challenges in South Korea’s travel retail proxy purchasing and reduced sales promotion activities in China due to factors such as key opinion leaders refraining from activities.

The Health and Beauty Care Business saw net sales of 288.5 billion yen ($1.91 billion), reflecting a 3.1% increase on a like-for-like basis. Kao highlighted the growth in sales of skincare products, driven by UV care and other seasonal products in Japan’s Biore brand. The Americas and Europe also experienced strong sales of UV care products launched during the fiscal year, surpassing the company’s expectations. Hair care products, particularly in the Essential brand, performed steadily despite intense market competition in Japan. Additionally, the ORIBE brand for high-end hair salons in the United States demonstrated firm sales, primarily through e-commerce channels.

Geographically, business in Japan achieved net sales of 636.7 billion yen ($4.22 billion), representing a 1.9% increase on a like-for-like basis. However, business in Asia faced challenges, with net sales of 233.8 billion yen ($1.55 billion), down 9.4% on a like-for-like basis. The Americas and Europe also experienced declines, with net sales of 138 billion yen ($915.5 million) (down 7.2% like-for-like) and 117.4 billion yen ($778.8 million) (down 9.1% like-for-like), respectively.

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