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Japan-Update

Toothbrush maker Lion seen shining fourth year of record profit

Japanese consumer goods maker enjoys brisk sales of high-margin products

Lion's new Nonio brand toothpaste and mouthwash proved popular among younger adults in Japan.

TOKYO -- Toiletries maker Lion likely will report a 12% jump in operating profit for the year ending Sunday, achieving a four-year streak of record profit on the popularity of oral care products among younger consumers.

The profit is expected to reach 27.5 billion yen ($243 million) on a 4% increase in sales to around 410 billion yen, slightly better than the 405 billion yen forecast. 

Lion's mainstay consumer products business in Japan drove the profit growth. The Nonio dental care products rolled out in August, touting a feature to prevent bad breath, caught on with people in their 20s and early 30s. Brand sales through November were 50% greater than planned. 

A toothbrush for children that received a product revamp in February performed better than expected.

Existing brands also performed well. The company's Hadakara moisturizing body soap launched in September 2016 have continued to report year-on-year sales growth thanks to constant efforts to boost consumer appeal, such as adding new fragrance varieties.

Stronger sales of pricier products touting specific functions helped improve the Japanese company's margins, absorbing higher costs for materials and sales promotion. Lion's operating margin for the domestic consumer product business likely topped the 2016 figure of 5.5%.

Overseas operations generate about 30% of Lion's overall revenue, and sales were brisk in China, Thailand, South Korea and elsewhere. The company's Clinica toothpaste is faring well in China via e-commerce. In South Korea, a lactoferrin health food touting a body-fat-reducing effect expanded Lion's customer base.

Lion is expected to enjoy sales and profit growth next year as well, by continuing its focus on pricier items marketed on special features. The company has boost capacity at a Hyogo Prefecture plant that makes oral care products to meet rising demand for mouthwash and other products both in Japan and abroad.

(Nikkei)

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