Shiseido Company, Ltd. reported its financial results for the first quarter of 2026 on Tuesday. Supported by ongoing structural reforms and cost-reduction initiatives, the company's profitability improved markedly, with core operating profit surging nearly 58% year-over-year and net profit significantly surpassing market expectations.
All Key Profit Metrics Beat Expectations The financial report shows the company's Q1 net sales were 231.96 billion yen, a slight increase of 1.6% year-over-year, slightly below the market expectation of 233.12 billion yen. However, performance on the profit side was robust: core operating profit reached 13.03 billion yen, a sharp increase of 57.9% year-over-year, substantially exceeding analyst expectations of 10.4 billion yen; operating profit was 12.33 billion yen, up approximately 31% year-over-year; net profit attributable to owners of the parent company was 8.37 billion yen, more than doubling year-over-year and far exceeding the market expectation of 7.12 billion yen.
Excluding one-off factors, the company emphasized that the improvement in its "underlying profitability" was even more pronounced. Management highlights core operating profit and margin as key operational indicators that exclude non-recurring items such as structural reform costs and asset impairment.
Regional Market Performance Diverges, Americas Leads Growth In detail, the Americas market delivered the strongest performance, with sales growing 5.1% year-over-year and successfully turning a profit. The domestic Japanese market saw sales decline by 4%, impacted by a decrease in tourists from China. In the China market, comparable sales declined by 1.4% due to inventory adjustments and weaker tourist consumption, although premium brands such as Clé de Peau Beauté and Nars demonstrated stable performance.
Geopolitical Conflict Poses Supply Chain Challenges The company warned that the Middle East conflict has impacted the global cosmetics supply chain, with a shortage of the petroleum derivative naphthalene potentially affecting the production of products like moisturizers and cosmetics. The company is exploring expanding its supplier network and using plant-based alternatives. Shiseido has incorporated an impact of approximately 5 billion yen on core operating profit into its profit forecast for this fiscal year, primarily stemming from regional sales declines and rising raw material and logistics costs.
Full-Year Guidance Confirmed Despite facing geopolitical risks, Shiseido confirmed its full-year performance guidance for fiscal year 2026: a net sales target of 990 billion yen and a core operating profit target of 69 billion yen, representing 55% growth year-over-year. The company plans to raise its annual dividend to 60 yen per share, a significant increase from the previous fiscal year's 40 yen per share.
Furthermore, Shiseido announced it will close its factory in Hsinchu, Taiwan in the second half of 2027. This move is expected to generate annual fixed cost savings of approximately 1 billion yen.
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