Japan’s Siseid says annual profits will rise by 73% amid slowing sales in China

TOKYO (Reuters) – Japanese cosmetics giant Cisaid said on Monday that full-year profits fell to 73%.

Shiseido said its operating profit was 7.589 billion yen ($49.9 million) for the 12 months ended December 31st, comparing it to 28.1 billion yen the previous year.

Cisaid, a retailer of high-end personal products, is considered a barometer of consumer trust in China. This is a market where the company and its peers have become dependent on sales growth.

“Chinese cosmetics market has suffered a long-term slump, overwhelmed by declining consumer spending and increased household savings amid aggravated by worsening economic sentiment,” Japanese companies said in a statement.

Shiseido said sales in China fell 4.6% year-on-year on a similar basis, excluding the impact of foreign exchange and business transfers, and also forecasts a decline in sales in 2025.

“We believe things will hit bottom this year and we believe we can achieve mature growth from then on,” said President Seida Kentaro Fujiwara, president of China in a post-revenue briefing with reporters. He talked about the market.

On the positive side, the company has seen a 10% increase in net sales in Japan, with similar growth expected this year, supported by purchases from tourists.

The inadequate results in China reduced provisional revenue reported last week by cosmetic competitors L’Oreal and Estee Lauder.

China’s once-surged economy has been hampered by the property crisis, increasing local government debt and increasing the unemployment rate among young people. The misuse for global luxury manufacturers has been the shift towards domestic brands among Chinese consumers.

Shares of Chinese beauty brand Mao Geping debuted on the Hong Kong stock market on December 10th and rose 85% since then when it rose further.

In November, Shiseido launched a two-year action plan to restore profitability and focus on core brands.

Shiseido shares have sunk 42% over the past 12 months, compared to a 5.1% increase in the Nikkei average over the same period.

($1 = 151.8300 yen)

(Reporting by Rocky Swift; Editing by Tom Hogue, Jamie Freed, and Sherry Jacob-Phillips)