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Kao Corporation strengthens European production base

By Leah Armstrong , 26-Jun-2009
Last updated on 26-Jun-2009 at 15:36 GMT2009-06-26T15:36:46Z

The Japanese cosmetics company has acquired the plant-related assets of German hair care manufacturer Reichardt International in order to enhance its distribution in the European market.

Reichardt International AG produces hair products, specializing in hair colorants. Kao already has two subsidiaries in Europe which specialize in beauty and hair care: KPSS-Kao Professional Salon services based in Damstadt, Germany; and Kao Brands Europe based in London.

By operating through the Reichardt plant in Eberstadt, Germany, Kao will “establish a more efficient and stable supply chain”.

It will acquire the plant related assets of the company, which consists of the building and production facilities. Kao plans to commence production at the new plant, which currently employs 160 people, on July 1st.

At the beginning of the year, Kao cut its sales forecasts for the fiscal year by 3.4 percent, after posting a 0.4 percent increase in turnover for the nine months leading up to 31 Dec 08.

The company blamed rising raw material costs and a decline in operating profit for the low forecast of these figures.

Improving the production distribution efficiency of its hair care products in Europe may be a successful method of improving the company’s performance in Europe, in spite of the troubled economic climate.

Earlier this week the company also unveiled plans to build a ¥165bn Eco-Technology Research Centre (ETRC), in a bid to develop a spectrum of ‘green cosmetics’, suggesting that whilst it has lowered expectations for profit in 2009, it is also making some strategic investments for future development.

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