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Shiseido unveils new 3-year plan alongside FY'18 guidance

Japanese cosmetics company Shiseido Co. Ltd. on March 5 unveiled details of its new three-year strategy to achieve its business development goals, following a forecast of higher earnings for fiscal 2018.

For the fiscal year ending Dec. 31, Shiseido predicts attributable net income to jump 137.4% year over year to ¥54 billion from the ¥22.75 billion reported for full-year 2017. Net EPS guidance for fiscal 2018 is ¥135.16, compared to ¥56.95 in the prior year. The company also expects net sales of ¥1.033 trillion for the full year, a 2.8% increase from ¥1.005 trillion in 2017.

Shiseido expects to pay a dividend of ¥15 per share after the first half and at year-end, bringing the full-year 2018 dividend forecast to ¥30 per share, compared to ¥27.50 per share in the prior year.

The company is also commencing a new three-year plan aimed at the realization of Vision 2020, its six-year medium- to long-term strategy developed in 2014. By 2020, Shiseido intends to achieve sales exceeding ¥1.2 trillion, operating income of more than ¥120 billion and return on equity of more than 14%.

Following the first three-year plan that rebuilt Shiseido's business foundations, the new plan will focus on accelerating growth and expanding international market share.

In order to achieve these objectives, the company plans to adopt a "prestige first" strategy that positions high-end brands such as NARS and Clé de Peau Beauté as the core business. It will also bring four mainly Japanese brands — Elixir, Anessa, Senka and Integrate — to China and other Asian markets.

Shiseido's digital acceleration plans will include building on its e-commerce partnerships with major platforms worldwide, integrating in-store customer data at shops and building an integrated IT platform. It expects to invest about ¥27 billion over three years in this area.

For research and development, the company intends to increase the number of employees in this area to 1,500 while targeting an R&D investment-to-sales ratio of 3% by 2020.

Shiseido also noted that over the next three years, it will commit ¥120 billion in annual increments to additional marketing investment, ¥130 billion to capital expenditures for restructuring the supply system, and ¥14 billion to talent development. It also plans to conduct share buybacks, "taking the market environment into consideration."

As of March 2, US$1 was equivalent to 105.54 Japanese yen.