Cosmetics Giant Shiseido's Shares Jump on Plans to Replace President

Reuters

Japan's Shiseido Co Ltd is set to replace its president after an underwhelming reign that saw profits suffer, media reports said, sending shares in the cosmetics giant surging to a 10-month high.

Shiseido, which competes with France's L'Oreal and Estee Lauder in sales of high-end cosmetics, has seen its market share decline in Asian markets in recent years due to competition from lower-priced rivals.

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President Hisayuki Suekawa will be replaced by Chairman Shinzo Maeda, who relinquished his role as president in January 2011, the reports said.

"The current management has been very slow in changing their policy. It's been in structural decline for the last three years, so the fact the guy is quitting on his own is good," a director at a foreign hedge fund said.

The company, with a market capitalisation of $5.3 billion, said it had no comment at this time.

Shiseido shares climbed 6.1% to 1,356 yen and at one point traded as high as 1,361 yen on Monday morning. The benchmark Nikkei advanced 0.9 percent.

In January, the cosmetic maker slashed its operating profit forecast for the year ending March 31 by almost 40% to 24.5 billion yen ($255 million) as sales in China were hit by anti-Japanese sentiment due to a territorial dispute.

That would mark a 37% decrease on the year, compared to a 18.7% year-on-year fall in the previous year.

Shiseido, which competes with Kao Corp in the domestic market, maintained its annual dividend at 50 yen.

"The issue is now whether the new president will see reality and the dividend gets cut," a senior trader at a foreign bank said.

Shiseido shares are up 11.4% so far this year after suffering five consecutive years of losses.

Japan's Shiseido Co Ltd is set to replace its president after an underwhelming reign that saw profits suffer, media reports said, sending shares in the cosmetics giant surging to a 10-month high.

Shiseido, which competes with France's L'Oreal and Estee Lauder in sales of high-end cosmetics, has seen its market share decline in Asian markets in recent years due to competition from lower-priced rivals.

President Hisayuki Suekawa will be replaced by Chairman Shinzo Maeda, who relinquished his role as president in January 2011, the reports said.

"The current management has been very slow in changing their policy. It's been in structural decline for the last three years, so the fact the guy is quitting on his own is good," a director at a foreign hedge fund said.

The company, with a market capitalisation of $5.3 billion, said it had no comment at this time.

Shiseido shares climbed 6.1% to 1,356 yen and at one point traded as high as 1,361 yen on Monday morning. The benchmark Nikkei advanced 0.9 percent.

In January, the cosmetic maker slashed its operating profit forecast for the year ending March 31 by almost 40% to 24.5 billion yen ($255 million) as sales in China were hit by anti-Japanese sentiment due to a territorial dispute.

That would mark a 37% decrease on the year, compared to a 18.7% year-on-year fall in the previous year.

Shiseido, which competes with Kao Corp in the domestic market, maintained its annual dividend at 50 yen.

"The issue is now whether the new president will see reality and the dividend gets cut," a senior trader at a foreign bank said.

Shiseido shares are up 11.4% so far this year after suffering five consecutive years of losses.