Kanebo delisted from Japanese stock exchange
maker Kanebo be delisted following company executives' attempts to
inflate last year's sales figures, reports Simon Pitman.
The maker of pharmaceutical, textile and cosmetics products to both the Japanese and international markets was struck off for 'deliberately and seriously misreporting its financial statements,' in a move that is likely to hit a company that had been successfully struggling against poor results in recent years.
The company had reported losses over the past nine years, but, following extensive investigation by Japan's Financial Services Agency, it was found that the company's results had been overstated for the past five years.
In April of this year, the company conceded that it had overstated earnings by JPY150 billion (€1.1 bn) over a four year period, an admission that has caused share values to plummet by nearly 300 per cent.
The investigation formed part of a big push to crack down on financial fraud by other major blue chip companies listed on the Tokyo Stock Exchange. As a result of the investigations it was found that one in ten listed companies had deceived investors.
Kanebo's delisting will take place on June 13. The bourse said that it had taken the action in an effort to maintain the credibility of the stock market in Japan and to ensure sound operations.
As part of efforts to win back investors' confidence, Kanebo opted into the government organised Industrial Revitalisation Corporation of Japan, which has installed its own managing director at the company to ensure that future financial reporting is accurate.
The IRC has reported that its rehabilitation process has been successful and described the delisting as 'regrettable' but added that a revival was still a 'high probability'.
However, the fact that Kanebo has been under IRC guidance for the past several months is likely to be favourable for the company when it reapplies for listing on the stock exchange in the fiscal 2006. One of the requirements for this is that it achieves profits of JPY 400 million in 2005.
Kanebo, which was once a leading name in the Japanese cosmetics and personal care market, has focused growth and investment in its other division in recent years. Nevertheless it is still one of the countries leading players in the hair care, skin care, and bath products categories.
On an international level the company has a significant presence in the China, European and North American markets, where its cosmetic products are sold as premium products.
