[Company analysis] Kao Corporation (花王)

「Kao Corporation (花王)」is a chemical company headquartered in Tokyo that manufactures household and commercial detergents, cosmetics, and food products. It owns the same cosmetics industry, ｐ「Kanebo(カネボウ)」, as a wholly owned subsidiary. In Cosmetics market, the sales including their subsidiaries, is ranks second in Japan after「Shiseido Co., Ltd.,(資生堂)」and it its No.8 in  the global market. The number of consolidated employees is about 33,664.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Kao Corporation
Company name (Japanese)	花王
Date of establishment	May 1887
Headquarters location	東京都中央区日本橋茅場町一丁目14番10号
Capital	85,400
Consolidated sales	1,508,007
Consolidated operating profit	207,703
Consolidated total assets	1,460,986
Consolidated capital	835,509
Capital adequacy ratio	57.2%
Consolidated number of employees	33,664

 

 

 

2. Summary and Features

 
「Kao Corporation」was established in 1887 as a household soap manufacturer. In the 1960s and 1970s, the company expanded its business domain by launching industrial products, in addition to household and laundry products. In the 1980s, they entered the cosmetics business. Nowadays, Kao has become Japan's leading household goods manufacturer. In particular, the market share in the laundry detergent market is overwhelming. In recent years, this company have begun to work on food and pet supplies such as "Healthia", which is set to burn body fat with energy, and by this, their company profits have also been improved. 

In the cosmetics business,「Kao Corporation」have own brands such as "SOFINA", "est", and "Kanebo". Among them, especially in the case of "Kanebo", 「Kao Corporation」incorporated them and made them a subsidiary in 2006. Owing to this purchase, market share of Kao's cosmetics which was only 7th in the past, now become No.2 in Japan. The sales of the Cosmetics Division alone is around 570.2 billion yen and, of course, this is inferior to 770 billion yen sales from「Shiseido」.

Basically, 「Kao Corporation」is famous for its B2C business, but they can also handle B2B business such as industrial chemicals. And this chemical division accounts for about 20% of total sales. It's a bit hard to imagine with the current image, but in the past they have also entered the recording media business, such as floppy disks, DAT tapes, and MDs. In addition, this company sell their cosmetics via internet.

As for global business, however, they are sllower than their competitors. Considering that the overseas sales ratios of 「P&G」and「Unilever」, who have similar product lineup with「Kao Corporation」, are respectively 61% and 70%. Kao's overseas sales ratio of 35% is clearly smaller than them. From now on, Japan's aging population is expected to progress further, and it is a fact that the domestic market is shrinking due to the declining population.

So expanding business to the global market is not an option for「Kao Corporation」. Now they have subsidiaries in China, Hong Kong, Taiwan, Indonesia, Malaysia, Singapore, Vietnam, Australia, etc. in Asia, but its sales scale and brand recognition remain weak compared with its competitors. It is said that future of「Kao Corporation」might depends on the Asian market.

 

 

3. Major Business

 

 ■ Cosmetics business

■ Skin care and hair care business

■ Human Healthcare Business

■ Fabric & Home Care Business

■ Chemical business

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		1,457,610	1,489,421	1,508,007
Consolidated operating profit		185,571	204,791	207,703
Consolidated total assets		1,338,309	1,427,375	1,460,986
Consolidated net assets		691,463	819,364	835,509
Breakdown of sales	Beauty care business	601,620	585,995	621,054
	Beauty healthcare business	273,067	294,292	267,702
	Fabric & Home care business	345,163	335,709	344,105
	Chemical business	237,760	273,425	275,146