Kao Corporation's 2023 sales slide amid sluggish China recovery

By Alessandro Carrara | Published: 7-Feb-2024

Kao was also impacted a ¥54.7bn charge relating to changes its business structure reforms

Japanese beauty owner Kao Corporation has reported a sales slump in 2023.

The business, which owns Molton Brown, saw sales decrease by 1.2% to ¥1.53bn due to a sluggish recovery of the Chinese market post Covid.

Kao said growing geopolitical risks in Europe and the Middle East, as well as rising costs due to inflation, also impacted sales. 

A ¥54.7bn charge relating to Kao’s business structure reforms also led operating income to decrease to ¥60bn, down from ¥110bn in 2023.

Kao Corporation created a new pan-regional organisation structure for its Functions and Operations business in April last year.

The move was part of the Japanese beauty company’s plans to “further strengthen'' its business growth in the Americas, Europe, Middle East and Africa regions (AEMEA).

“Although the Covid-19 pandemic has subsided around the world, the business environment is forecast to remain severe and the outlook unclear due to factors such as rising geopolitical risks and further slowdown in China’s economy,” Kao said in a statement.

Sales for Kao’s cosmetics division also decreased by 5.1% to ¥238.6bn. 

Make-up sales decreased in Japan due to an increase in products being returned in relation to business’ structural reform changes.

Restraints on travel retail sales in South Korea also impacted Kao’s overall cosmetics performance.

This was partially offset by a “steady” performance from Molton Brown and new product launches from its Sensai brand.

Kao’s Health and Beauty Care arm saw a stronger performance, however, with sales up 6.3% to ¥392.9bn.

This was led by a spike in sales for hair care products, with sales of Essential products in Japan also contributing to the increases.

Kao said it remains optimistic for the new financial year, and has forecast a 3.1% year-on-year increase in net sales to ¥1,580bn.

Japanese beauty giant Kao Corporation acquired Australia's Bondi Sands for an estimated US$450m in August 2023. 

Founded in 2012, Bondi Sands is available in 32 markets and has a strong presence in Australia, the UK and US.

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