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.

The group’s 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.

Shiseido also recorded a small quarterly operating loss of 8.7 billion yen, due to exceptional charges linked to its plan to transform its Japanese operations. The plan, which was announced at the end of February, includes about 1,500 voluntary redundancies, or nearly 4%. of its global workforce. However, the group’s sales increased by 3.9% over the period to 249.5 billion yen (nearly 1.5 billion euros).

Boycott by Chinese consumers

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 key market for the group.

Shiseido and other Japanese brands have been targeted by a boycott from 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.

Despite the context, Shiseido continues to expect a rebound in sales in China this year. "The consumer pullback on Japanese products is now coming to an end, and the Business is on a steady path towards recovery," the group stated.

For its part, the travel retail business (sales in airports and other duty-free outlets) remained sluggish in the first quarter. The sector continues to suffer the consequences of tighter regulations in China and South Korea.

Unchanged forecasts

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%).

"With respect to the outlook for our business environment, we expect positive impacts from several factors in the coming quarters, including a further acceleration of growth in the Japan, Americas, EMEA and Asia Pacific Businesses and favorable foreign exchange translation due to the weaker yen. On the contrary, however, there are still uncertainties surrounding the business such as the delayed recovery in demand from and changing purchase behavior of Chinese consumers," the group explained.

Plans to list FineToday on the stock market

In a separate statement, Shiseido also said its former consumer cosmetics business, which is now called FineToday, plans to list on the Tokyo Stock Exchange. 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 new entity.

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 the business to another investment fund or another cosmetics group is not ruled out either, according to the same sources.