CEO Who Courted Ronaldo Loses Billionaire Status as Stock Tanks
CEO Who Courted Ronaldo Loses Billionaire Status as Stock Tanks
(Bloomberg) -- Only a year ago he was one of corporate Japan’s most unlikely success stories -- an entrepreneur who shot to fame and wealth after persuading Cristiano Ronaldo and Madonna to endorse his products.
But now Tsuyoshi Matsushita’s fortunes are sinking fast as plummeting sales and an accounting scandal pummel his company’s stock. MTG Co., the maker of a muscle-training device endorsed by Ronaldo and a skincare line developed with Madonna, has lost 77% this year, stripping Matsushita of billionaire status.
Former MTG shareholders see little hope of a rebound anytime soon.
“Governance and compliance are emerging as problems as well as doubts over the business model,” said Masamitsu Ohki, the chief portfolio manager at Fivestar Asset Management Co., who said he sold the stock shortly after it listed on the Tokyo Stock Exchange last July. “It’s quite difficult to recover from these things.”
MTG’s market value has tumbled from a high of $2.7 billion after it listed to just $453 million. Matsushita’s 70% stake is now worth less than $320 million.
In March, MTG slashed its full-year profit forecast by about 90%, citing a slump in demand for its ReFa massage rollers, a key product line. It said sales to Chinese tourists overseas would decline due to a new Chinese e-commerce law that requires online resellers to register both in China and the country they shop in and pay the required taxes or face fines and criminal charges.
In May, the company said it had discovered potential improper accounting at a Shanghai unit. On July 12, it corrected earnings for the fiscal year ended September 2018 and for the six months through March, while saying it now projected a loss for the full year, after a probe into the matter quantified the impact.
All employees will work together to restore trust and improve earnings by taking steps to prevent recurrence of such issues, said Shoji Yamashita, a manager at MTG’s corporate strategy office. Matsushita declined to comment. Ronaldo and Madonna didn’t respond to requests for comment.
Fivestar Asset’s Ohki said he got out of the stock because he had doubts about the company.
“There are a lot of similar products and I’m not sure they work,” Ohki said. “The president’s talk also sounds too good to be true.”
Not everyone is abandoning Matsushita and his business. MTG’s shares rose 11% on July 19, trimming the week’s losses, after the company announced measures to prevent further accounting issues. They continued to climb this week.
But Kyoichiro Shigemura, a senior analyst at Nomura Securities Co., also voiced concerns. He put the stock under review earlier this month.
“It’s unclear how the company will narrow its loss and increase sales,” he said. “It’s difficult to foresee when the stock will hit bottom.”
--With assistance from Kurumi Mori.
To contact the reporters on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net;Komaki Ito in Tokyo at kito@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Tom Redmond, Ravil Shirodkar
©2019 Bloomberg L.P.