Jan 29, 2009
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Japanese cosmetics makers cut forecasts

Jan 29, 2009

TOKYO, Jan 29, 2009 (AFP) - Japanese cosmetics makers Shiseido Co. and Kao Corp. on Thursday cut their earnings forecasts for the year, saying that fewer people were buying beauty products during the recession.

"The environment surrounding the market for consumer goods has become severe. In Japan, consumer sentiment has cooled and the cosmetics market is shrinking," Shiseido said in a statement.

Japan's leading maker of beauty care products predicted net profit of 30 billion yen (333 million dollars) for the year to March, down from a previous projection of 36 billion yen.

The company said its net profit fell 18.7 percent in the first nine months of the financial year to 21.30 billion yen.

However, Shiseido said that while sales of beauty products were struggling in developed nations, the cosmetics market in China continued to grow and demand remains stable in other emerging economies.

Kao, which produces cosmetics as well as hygiene and home care products, also revised its earnings forecast downwards.

It said it expected 60 billion yen in net profit, down from an earlier forecast of 69 billion yen, which would mark a fall of 9.8 percent from the previous year.

Like its rival Shiseido, sales of Kao products remained robust in Asian markets, growing 10 percent from a year earlier.

But Kao sales fell 5.2 percent in the United States. Revenue in Japan and Europe managed to grow but by less than one percent.

Both companies also suffered from a stronger yen, which hit 13-year highs against the dollar and a seven-year high versus the euro in recent weeks as the global downturn prompted a flight to the safety of the currency.

A stronger yen eats into corporate profitability when overseas takings are converted back into the home currency.

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