We will realize VISION 2020 and enhance our presence as a global beauty company.
Since 2015, Shiseido has been making efforts under the medium-to-long-term strategy VISION 2020 in order to “Be a Global Winner with Our Heritage.” In 2018, the Company embarked on the New Three-Year Plan of VISION 2020. With the New Three-Year Plan, which covers the period from 2018 to 2020, Shiseido has been promoting five key strategies, collectively referred to as “Building for the Future,” aimed at achieving further growth.
Record Highs for Net Sales, Operating Profit, and Net Profit
Regarding our consolidated business performance in 2018, net sales rose 8.9% year on year, to ¥1,094.8 billion. On an organic basis that excludes such factors as the impact of the sales of Zotos International, Inc. in the previous year, net sales were up 14%, marking the second consecutive year of double-digit sales growth. In addition, operating profit grew significantly, up 34.7%, surpassing ¥100 billion for the first time in company history. Net profit surged 169.9%, to a record-high ¥61.4 billion, due to the absence of the impact of an impairment loss on intangible assets and other assets of Bare Escentuals, Inc., which was recorded in the previous year.
2018 Executive Summary
Driving Growth with the Prestige First Strategy
We have been accelerating our investment in our prestige brands. Among these brands, eight core brands have been driving robust growth, including “Made in Japan” brands, ELIXIR and ANESSA, accounting for 90% of total incremental growth. Our selection and concentration in core brands has been greatly contributing to expanding sales growth.
Realizing Growth at All Regional Headquarters
We have continued significant sales increases in Japan, China, and Travel Retail. In addition, we have achieved growth at all of our regional headquarters on an actual basis that excludes the impact of such factors as the transfer of Zotos International Inc. and the conclusion of our distribution partnership with Burberry Group plc.
YoY Sales Growth (Local currency basis)
YoY changes and organic sales growth comparison on a local currency basis
YoY Organic basis excludes the impact of business transfers on 2017
Continuing to Realize Growth from 2019 Onward
In 2019, we aim for a net sales increase of 9% (local currency basis), to ¥1,172.0 billion, and an operating profit increase of 10.8%, to ¥120.0 billion.
The outlook for the global economy in 2019 remains unclear due to the trade friction between the United States and China, among other factors. Amid such circumstances, we will bolster investment so that we are able to deliver sustainable growth not just in 2019 but in 2020 and beyond as well. Furthermore, by accurately monitoring the market environment, we will evolve to an organization that can grasp market changes in a prompt and flexible manner. We will also make efforts to reinforce our business foundation over the long term through bold investments as well as strengthening our P/L management and promoting management with a sense of urgency.
At the same time as our forecast for 2019, we have made upward revisions to our original targets for 2020. By 2020, we now target net sales of ¥1,290.0 billion, operating profit of ¥150.0 billion, and an operating margin of 11.6%.