Hit by weak consumption and heavy pension costs, Shiseido Co. reported Wednesday its net profit in the fiscal first half dropped by more than a third from a year earlier to 6.56 billion yen.
Revenue for the April-September period was virtually flat at 309.33 billion yen, down 0.3 percent from the same period last year.
Meanwhile, group operating profit at the largest cosmetics maker in Japan declined 22.6 percent to 19.14 billion yen.
Sales from its cosmetics business, which accounts for nearly 80 percent of total revenue, edged down 0.5 percent to 241.61 billion yen, hit by weak consumer spending and the unusually cool summer.
While sales of high-end products were relatively solid, midrange items and men's products were fragile, the company said.
Growth in its overseas cosmetics business was also slower than expected due to the SARS epidemic and the Iraq war.
Company officials said an increase in pension costs and expenses related to the relocation of its main office, which totaled 5.5 billion yen, also ate into profit.
Shiseido, which is implementing a business reorganization program, has said it will consolidate its cosmetics brands from more than 100 at present to around 35 in fiscal 2004.
President Morio Ikeda said one of the company's priorities is to emphasize sales of its products via drugstore chains, the importance of which has grown rapidly in recent years.