China's Top Cosmetics Firm Saw First-Half Profit Dive 42% After Cutting Ties With Japanese Partner
Zhang Xia
DATE:  Aug 17 2017
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China's Top Cosmetics Firm Saw First-Half Profit Dive 42% After Cutting Ties With Japanese Partner China's Top Cosmetics Firm Saw First-Half Profit Dive 42% After Cutting Ties With Japanese Partner

(Yicai Global) Aug. 17 -- China's largest manufacturer of personal cosmetics, Shanghai Jahwa United Corp. [SHA:600315], saw first-half revenue fall 13.5 percent annually to CNY2.65 billion (USD390 million) and net profit slump 41.9 percent to CNY216 million.

Jahwa's decision not to continue as a sales agent for Japanese cosmetics giant Kao Corp. [TYO:4452] was a key factor in the downturn in performance.

Excluding the impact of the Kao-related loss, the firm's business revenue for the first six months was up 9.51 percent compared to the year-ago period.

Shanghai Jahwa also attributes the decrease to litigation damages for false statements made in 2013, increases in one-time costs such as the agency fee for the acquisition of the Cayman A2 project and increases in new workplace rentals and property management cost. The enterprise's sales costs grew 12.1 percent in the first six months while management costs rose 9.36 percent.

Shanghai Jahwa is unconcerned about the sales gap of nearly CNY1 billion (USD147 million) caused by the termination of business with Kao, and senior management is optimistic about British mother-and-child brand Tommee Tippee that it now represents.

Tommee Tippee, owned by Sangenic International Ltd., reported global revenues of about CNY1.4 billion last year, representing a 50 percent market share in the UK. Agency approval is expected in October.

"Shanghai Jahwa has a mother-and-child channel and we expect the brand to exert its advantages" said Zhang Dongfang, Shanghai Jahwa's president.

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