Taking on COVID-19: Kao working to ‘drastically ramp up’ production of hygiene-related products

By Amanda Lim

- Last updated on GMT

Taking on COVID-19: Kao working to ‘drastically ramp up’ production of hygiene-related products

Related tags COVID-19 financial results

Personal care conglomerate Kao Corporation has said it will be boosting the production of products such as hand soap and hand sanitisers as demand outstrips supply.

The Japanese firm’s skin and hair care division saw sales increase by 3.1% on a like-for-like basis in the first quarter this year.

The company credited it to sales of Bioré hand soaps and sanitiser, which grew tremendously due to the heightened awareness of hygiene over the novel coronavirus (COVID-19) pandemic.

“The increased demand continues to exceed supply, so the Kao Group is working to drastically ramp up production,”​ said the company.

It added: “We are working to strengthen the sanitation- and hygiene-relation field of our business, coming together as on Kao and collaborating with the government, academia and industry association in order to provide products and information people need to live more hygiene lifestyles.”

This made up for a decrease in sales of items such as sun care products in Japan and the wider Asian region.

“Sales of hygiene-related products continue to increase, but new products and seasonal products such as UV care are not selling and face a difficult situation,”​ it said.

In the cosmetics business, which consists of brands such as Kanebo and Sensai, sales decreased 11.4% like-for-like.

Sales of its eleven global strategy brands (G11) and eight regional strategy brands (R8) decreased 2% and 13% respective year-on-year.

The company attributed this dip to a significant decline in inbound demand, as well as the wide-spread store closures in the Americas and Europe.

It also saw make-up sales fall due to stay-home measures in multiple markets and limited beauty consultation activities in stores.

Its professional division, which supplies products to salons are also suffering due to widespread closures of salons in the Americas and Europe.

On the other hand, the firm has observed the beginnings of a recovery for the China market in March.

“Recovery will take time”

The company said it expected the situation to remain difficult for the foreseeable future.

“In the second quarter, we expect not only a significant shortfall to our original plan, but also extremely challenging financial results in terms of sales and profits compared to the previous year,” ​said Kao.

It believes the recovery process will continue even after the pandemic subsides.

“We cannot predict when the pandemic will subside, nor can we predict conditions in each country and region. But we assume that, even when the pandemic appears to be subsiding, economic recovery will take time.”

The company said it did not have an optimistic view of the market for the second half of the year.

“Meeting the previous year’s sales figure will be a high bar for us to clear in the third quarter. We expect the business situation to be difficult and the market environment to remain highly unpredictable.”

It added: “At this point, we are leaving our consolidated operating result forecast as it stands and will assess the situation at the end of the second quarter. If we do become aware of any potential major impacts, we will make timely disclosures.”

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