Shiseido dragged down by American subsidiary in Q3

The Japanese cosmetics giant Shiseido published a net loss in Q3 2017 on Thursday, due to depreciation of its US assets, but reported notable growth in its operations over the first nine months of the year, led mainly by Asia.
 

While it maintains its predictions of an increased annual turnover and operating profit, the group has again lowered its net profit forecast for the year, for the second time in under ten days.  

Shiseido is now predicting a modest annual net improvement of 5 billion yen (38 million euros). On November 1st, the brand had already lowered its forecast to 10 billion yen, from the 32.5 billion it had been targeting beforehand. 

The cause: depreciation of assets related to its struggling American subsidiary Bare Escentuals, specialized in natural mineral-based cosmetics, amounting to 70.7 billion yen, 5 billion more than had been announced on November 1st. 

This depreciation has pushed Shiseido into the red, with a net loss of 17 billion yen over nine months, compared to a net profit of 37.2 billion yen the year before, according to a release. 

However, the group's actual operations have been largely profitable and are currently in expansion: operating profit has jumped 82.4% to 70.7 billion yen over nine months (567 million euros). 

And the group's combined turnover over nine months has risen 17.4% to 731.2 billion yen, close to 6 billion euros. Sales and operating profit should reach record levels in 2017, at 985 billion yen and 65 billion respectively, as announced on November 1st.

In the first three quarters, the group's activity has remained focused on its principal market, Japan, which accounts for 44% of its sales. Japanese consumers have benefited from "a positive evolution in consumer expenditure, supported by improvements in employment and revenues", while the number of foreign tourists looking to make purchases in Japan has also increased. 

In terms of sales, China (14.4% of total turnover) "and the rest of Asia have continued to grow at a constant rate." Conversely, "in Europe, growth has remained weak and unequal from one country to another" and has "slowed down" in the Americas (13.5% of total turnover).