Shiseido slashed its full-year profit forecast on slower demand from Chinese consumers following the release of treated radioactive water from the Fukushima No. 1 nuclear plant.
The Japanese cosmetics company now expects core operating profit of ¥35 billion ($231 million) in the year ending Dec. 31, a 42% reduction from the previous estimate, it said in a statement Friday. It also cut its revenue forecast by 2% to ¥980 billion.
Sales in China and the travel market market both fell about 10% in the third quarter after Japan started releasing water from Fukushima into the Pacific Ocean in August, with the company curtailing marketing activities and suspending promotions. Shiseido expects the impact from the wastewater release to continue into the first quarter of 2024, Chief Operating Officer Kentaro Fujiwara said in a briefing Friday.
“The impact of the waste water is temporary and we anticipate it will return to normality by the end of first quarter in 2024,” said Fujiwara. “We’ll closely monitor future changes in the market and aim to respond quickly.”
While the Fukushima water release meets global safety standards, it’s drawn the ire of some of Japan’s top trading partners. Mainland China has said its neighbor is treating the ocean like its “private sewer” and suspended imports of all seafood products from Japan. Cosmetic products were also at the center of a viral campaign that spread unproven safety allegations on Chinese social media platforms.
Shiseido’s operating profit dropped 28% to ¥25.8 billion in the nine months ended Sept. 30 from a year earlier. Revenue fell 5.3% to ¥722 billion, it said.
The earnings were released after markets in Tokyo closed. The stock has plunged 25% this year, while the benchmark Topix Index has risen more than 20%.