Shiseido's annual results to greatly exceed earlier forecasts

On Wednesday, Japanese cosmetics group Shiseido announced it will generate annual profits greatly in excess of expectations, thanks to the US fiscal reform and a robust commercial performance in Asia.

The group had closed the first nine months of 2017 in the red, due mainly to asset depreciation by its troubled US subsidiary Bare Escentuals, specialised in mineral-based natural cosmetics. As a result, in November Shiseido slashed its net income forecast, estimating a modest profit in the region of JPY5 billion. The new forecast is that net income will instead reach JPY22.5 billion (€167 million) - which, if confirmed, would be a 30% shortfall compared to 2016 - according to new estimates published on Wednesday, on the eve of the publication of the group's annual results.

This upward revision was explained by "lower tax charges" following the new fiscal policy introduced by US President Donald Trump, with the corporate taxation rate falling from 35% to 21%. Shiseido will also be paying a lower amount of tax on the proceeds from the sale to German group Henkel of its share in North American haircare company Zotos International.

As for Shiseido's core business, the group stated that EBIT too will "greatly exceed previous forecasts," reaching the record figure of JPY80.5 billion (instead of the former forecast of JPY65 billion), more than double the amount of a year ago. Among the factors affecting this result, the group indicated its renewed focus on "medium-range and high-end products" and beneficial "marketing investment."

"Revenue is expected to top the JPY1 trillion mark (€7.4 billion) for the first time since the company was created" in 1872, enthused Shiseido, anticipating a revenue of JPY1.005 trillion (+18% on a yearly basis), instead of the earlier forecast of JPY985 billion.

Shiseido hailed "the fast growth of its prestige brands worldwide" and, across all product categories, the growth of its business in Japan and China, as well as the positive contribution of overseas tourists, who flocked to Japan to stock up on local skincare and other cosmetics products.