Milbon Co., Ltd. · TSE:4919
Milbon — FY2020 Earnings Presentation
69 slides from Milbon's earnings presentation, Feb 12, 2021
Slide 1: FY2020 Financial Results Presentation Materials
Milbon Co., Ltd. FY2020 Financial Results Presentation Materials February 12, 2021 Copyright © 2021 Milbon. All rights reserved. 0
Slide 2: Table of Contents
Table of Contents P2 Consolidated Operating Results P3 Consolidated Net Sales by Product Category P14 Consolidated Statement of Earnings P15 Consolidated Trends in Capital Expenditures and R&D Expenses P16 Trends in FPs, Market Related Data P17 Consolidated Net Sales in Japan and Overseas P18 Consol
Slide 3: Consolidated Operating Results
Consolidated Operating Results Although sales for the full year were lower than the year before due to COVID-19, the revised sales figures for both domestic and overseas were achieved. Sales in China and South Korea were positive year-on-year. Profits declined due to a decrease in sales volume a
Slide 4: Net Sales by Product Category: Hair Care Products (1)
Consolidated Net Sales by Product Category [Hair Care Products (1)] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ FY2019 FY2020 Decrease Decrease ratio (%) 21,328 21,135 (192) (0.9) • Even in COVID-19 crisis, sales of hair care products remained almost unchanged, down 0.9% YoY, supp
Slide 5: Hair Care Products (2) New Products
Consolidated Net Sales by Product Category [Hair Care Products (2)] New Products FY2020 Aujua Scalpcare Series Fortice Line A scalp care series that approaches Ageing Bacteria present on the scalp to curb complex aging damage of the hair and scalp. (Unit: million yen) FY2020 target * FY2020 * Progre
Slide 6: Hair Care Products (3) New Products
Consolidated Net Sales by Product Category [Hair Care Products (3)] New Products FY2020 Door A new hair styling brand that meets the desire of the social media native*1 (Gen Z) to express themselves freely that they want at that time. (Unit: million yen) FY2020 target *2 FY2020 *2 Progress rate (%)
Slide 7: A Premium Brand, Aujua
A Premium Brand, Aujua Steady growth due to continuing popularity even in the Covid crisis Number of salons (Unit: salons) Increase/ Increase/ FY2019 *1 FY2020 *1 Decrease Decrease ratio (%) 3,698 4,222 524 14.2 Consolidated gross sales (Unit: million yen) Increase/ Increase/ FY2019 *2 FY2020 *2 Dec
Slide 8: A Premium Brand, Global Milbon
A Premium Brand, Global Milbon Sales grew along with the expansion of the number of salons in each country. Number of salons (Unit: salons) Increase/ Increase/ FY2019 *1 FY2020 *1 Decrease Decrease ratio (%) 7,674 9,916 2,242 29.2 Consolidated gross sales (Unit: million yen) Increase/ Increase/ FY20
Slide 9: Net Sales by Product Category: Hair Coloring Products (1)
Consolidated Net Sales by Product Category [Hair Coloring Products (1)] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ FY2019 FY2020 Decrease Decrease ratio (%) 12,994 12,594 (400) (3.1) • The fashion color product “Ordeve Addicthy”, which has been growing since its launch in 2017, c
Slide 10: Hair Coloring Product (2) Core Product
Consolidated Net Sales by Product Category [Hair Coloring Product (2)] Core Product FY2020 Ordeve Addicthy Erases red-tinged brown with high saturation blue. With clear and transparent color expression, it lets customers freely realize individual hair color designs. (Unit: million yen) Increase/ Inc
Slide 11: A Premium Organic Brand, Villa Lodola (1)
A Premium Organic Brand, Villa Lodola (1) While steady growth in the number of salons, sales declined Number of salons (Unit: salons) Increase/ Increase/ FY2019 FY2020 Decrease Decrease ratio (%) 9,015 10,128 1,113 12.3 Consolidated gross sales (FY2020 9 months) (Unit: million yen) Increase/ Increas
Slide 12: A Premium Organic Brand, Villa Lodola (2)
A Premium Organic Brand, Villa Lodola (2) Core Product Villa Lodola Color With 92% natural ingredients, the product’s formulation utilizes the power of plants. It brings comfort of an organic product across all aspects, including during application, the finish and continued use. Consolidated gross s
Slide 13: Net Sales by Product Category: Cosmetic Products
Consolidated Net Sales by Product Category [Cosmetic Products] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ FY2019 FY2020 Decrease Decrease ratio (%) 165 360 195 - • Due to limitations on activities, such as the inability to carry out large-scale events, sales promotion activities
Slide 14: A Cosmetics Brand, Imprea
A Cosmetics Brand, Imprea Progress in creating new channels while activities were restricted Number of salons (Unit: salons) Increase/ Increase/ FY2019 *1 FY2020 *1 Decrease Decrease ratio (%) 200 645 445 222.5 Consolidated gross sales (Unit: million yen) Increase/ Increase/ FY2019 *2 FY2020 *2 Decr
Slide 15: Consolidated Statement of Earnings (FY2020)
Consolidated Statement of Earnings (FY2020) <Consolidated Statement of Earnings> (Unit: million yen) <Breakdown of net sales by product category> (Unit: million yen) Increase/ Increase/ % to % to FY2019 FY2020 % to sales Decrease Decrease FY2019 FY2020 ratio (%) sales sales Hair care products 21,328
Slide 16: Trends in Capital Expenditures and R&D Expenses
Consolidated Trends in Capital Expenditures and R&D Expenses (Unit: million yen) Category FY2016 FY2017 FY2018 FY2019 FY2020 Capital expenditures 4,262 1,570 1,149 1,605 1,917 Depreciation and amortization 1,077 1,272 1,370 1,453 1,562 Amount 1,232 1,422 1,479 1,534 1,581 R&D exp. % to sales 4.2 4.3
Slide 17: Trends in Fieldpersons (FPs), Market Related Data
Trends in Fieldpersons (FPs), Market Related Data (Number of FPs / As of January 1, the beginning of the Fieldpersons trends (by country) fiscal year (As of December 21 for 2017 and before)) 2016 2017 *1 2018 2019 2020 JAPAN 249 258 269 279 297 Upper column: Number of FPs (persons) Lower column: Sal
Slide 18: Consolidated Net Sales in Japan and Overseas
Consolidated Net Sales in Japan and Overseas FY2020 (Unit: million yen) Increase/ Changes in Local FY2019 FY2020 *1 Increase/ Decrease ratio currency base Decrease Net Sales % to sales Net Sales % to sales (%) (%) Consolidated Net Sales 36,266 100.0 35,725 100.0 (541) (1.5) (1.1) JAPAN 30,409 83.8 2
Slide 19: Consolidated Operating Income in Japan and Overseas
Consolidated Operating Income in Japan and Overseas FY2020 (Unit: million yen) Increase/ FY2019 FY2020 Increase/ Decrease ratio Operating Operating Operating Operating Decrease (%) Income income ratio(%) Income income ratio(%) Consolidated Operating Income 6,751 18.6 6,394 17.9 (357) (5.3) JAPAN 6,1
Slide 20: Outlook of Overseas Subsidiaries (1)
Outlook of Overseas Subsidiaries (1) Figures in the text are based on local currency. USA (MILBON USA) • Although economic activity resumed around June, several regions conduct lockdown again in the fourth quarter (October to December). As a result, annual sales decreased 27.8% YoY. • “Global Milbon
Slide 21: Outlook of Overseas Subsidiaries (2)
Outlook of Overseas Subsidiaries (2) Figures in the text are based on local currency. CHINA (Milbon China) • In China, the impact of COVID-19 began in January, earlier than in other countries. In February, sales declined by more than 80% YoY, but recovered rapidly, achieving a 5.2% YoY increase in s
Slide 22: Outlook of Overseas Subsidiaries (3)
Outlook of Overseas Subsidiaries (3) Figures in the text are based on local currency. KOREA (Milbon Korea) • Sales of the hair coloring products, which account for more than 70% of sales in Milbon Korea, continued to be strong, rising 13.7% YoY. In addition, sales of hair care products also grew str
Slide 23: Appendix: Hair Care Brand Positioning Map
<Appendix> Hair Care Brand Positioning Map Premium brand Professional brand Copyright © 2021 Milbon. All rights reserved. 22
Slide 24: Milbon Group Initiatives for FY2021
Milbon Group Initiatives for FY2021 (62st term) Ryuji Sato, President and CEO I. Last year's review and market environment II. 3 perspectives and market policy III. Measure for Fiscal Year 2021 IV. Consolidated target for Fiscal Year 2021 Copyright © 2021 Milbon. All rights reserved. 23
Slide 25: I. Last year's review and market environment
👉 I. Last year's review and market environment II. 3 perspectives and market policy III. Measures for Fiscal Year 2021 IV. Consolidated target for Fiscal Year 2021 Copyright © 2021 Milbon. All rights reserved. 24
Slide 26: Looking back at the 2020 COVID-19 crisis – Monthly changes in sales YoY
Looking back at the 2020 COVID-19 crisis –Monthly changes in sales YoY U.S. (dollars) 180% 160% 140% China (yuan) Korea (won) 120% JAPAN 100% 80% 60% 40% 20% 0% Copyright © 2021 Milbon. All rights reserved. 25
Slide 27: Looking back on the 2020 COVID-19 crisis
Looking back on the 2020 COVID-19 crisis Practicing the Milbon ISM, Milbon Way, strong 1 point of the organizational climate that supports beauticians and beauty salons Cosmetics industry and beauty industry are 2 similar but different, that is considered to be our advantage Already taken the initia
Slide 28: Market economy environment - Crises and trials are opportunities
Market economy environment - Crises and trials are opportunities - In making crises and trials opportunities for transformation Overwhelmingly large By COVID-19 Surfacing and accelerating By COVID-19 structural issues New changes existing in industry before COVID-19 It is impor tan t to co ncen trat
Slide 29: Market economic environment - Japan's top priority issues
Market economic environment - Japan‘s top priority issues - Total Assuming that women aged 25 Declining population to 39 are mothers of the future Percentage of ※100% in 2015 birthrate the elderly 1400 *2 29% in 2040: 75% in 2060: 50% Decrease/day To 35% in2040 = Cities with populations of Percentag
Slide 30: Market economy environment - The wave of digitization
Market economy environment - The wave of digitization (Business model reform) - To lower industry barriers Accelerating Accelerating and ambiguous boundaries technological diffusion innovation Importance of Digital Transformation (DX) Emergence of new competitors who destroy existing rules and set W
Slide 31: Market economy environment - Transformation period
Market economy environment - Transformation period - Transformation period with K-shaped recovery or shakeout Recovery and rise Starting point of Above K-shaped recovery with our 18-Month Mission COVID- 19 Shakeout We co ntin ue to recover an d gro w by a dva ncing o ur 18-Mo nth M iss io n. Copyrig
Slide 32: Medium-term business plan: Toward a new stage with an 18-Month Mission
Medium-term business plan: Toward a new stage with an 18-Month Mission 18-Month Mission Track for a new stage Initially anticipated medium-term stage evolution and sales track New sales trajectory driven by the new stage trajectory 2019 > 2020.1 > 2020.7 > 2022.1 > 2023.12 Ta r g e t i n g f o r t h
Slide 33: Efforts for 18-Month Mission
Efforts for 18-Month Mission The company is promoting efforts for 25 missions in 4 stages: store sales, education, products, and in-house measures. Copyright © 2021 Milbon. All rights reserved. 32
Slide 34: Termination of medium-term business plan (2019-2023)
Termination of medium-term business plan (2019-2023) The current medium-term business plan(2019-2023) was t e r m i n a t e d i n F i s c a l Ye a r 2 0 2 0 . I n F i s c a l Ye a r 2 0 2 1 , w e w i l l c o n c e n t r a t e o n o u r 1 8 - M o n t h Mission to lay the foundation, and schedule to f
Slide 35: II. 3 perspectives and market policy
I. Last year's review and market environment 👉 II. 3 perspectives and market policy III. Measures for Fiscal Year 2021 IV. Consolidated target for Fiscal Year 2021 Copyright © 2021 Milbon. All rights reserved. 34
Slide 36: FY2021 Market policy concept: Lengthening of the salon visit cycle
Fiscal Year 2021 Market policy concept Respond to surfaced and accelerated changes/issues from social perspectives/customer perspectives L i f e T i m e B e a u t y I n n o va t i o n fo r N E X T 1 0 0 Perspective 1 Lengthening of the salon visit cycle Q:How many times do you go to a beauty salon i
Slide 37: FY2021 Market policy concept: Acceleration of neighborhood consumption
Fiscal Year 2021 Market policy concept Perspective 2 Acceleration of neighborhood consumption * Comparison between [Trends in the number of visitors] [Rate of recovery by residence] 2019 and 2020 Metropolitan 15-20% Recovery rate (%)* % total (%) areas reduction [Ginza Station] Jul. Oct. Jul. Jul. O
Slide 38: FY2021 Market policy concept: Value of buying-place
Fiscal Year 2021 Market policy concept Perspective 3 Increased the value & expectations for buying-place Needs for buying-place Needs for 1-stop shopping Cosmetics shopping areas in COVID-19 crisis Buying-place stress Q:What is the change in the importance in shopping? Unit price Unit price Total 5,
Slide 39: Lifetime Beauty Salon 1.5
Line of market policy Link to lifetime beauty salon 1.5, a community of beauty and mind, through lifelong beauty Initiatives for 18-Month Mission Promoting the 3 keywords with optimal balance between real and digital Beauty Somlier plan = Education: iD 365 days Digital DA = DA Inspire & Award Total
Slide 40: Accelerate digitization / milbon: iD
①Accelerate digitization/milbon: iD FY2021 FY2021 Milbon:iD Imprea Registration Contact Targets Targets End of 2020 3000 salons End of 2020 1800 salons 1300 600 salons salons Copyright © 2021 Milbon. All rights reserved. 39
Slide 41: Education: iD / Beauty Sommelier plan
②Education: iD/Beauty Sommelier plan Progress Education:iD Digital learning content check Share/Collaborate Support Setting up a new platform that enables self- learning without being constrained by time Hair designer Salon and location Milbon Beauty Sommelier Training System Using Education: iD to
Slide 42: Milbon Digital Arena / Digital DA
③Milbon Digital Arena/Digital DA Digital virtual space "Milbon Digital Arena" Planning to open near-future platforms where design data can be experienced in 3DCG spaces at any time, anywhere, such as various seminars, hair shows, and photo galleries Digital education event "Digital DA" Planning to d
Slide 43: Digital marketing
④Digital marketing Marketing support Milbon FP Salon Traditional marketing data New digital marketing data Introduction of a tool that can estimate the visitor population based on GPS information on mobile phone handsets ⇒ Information on current Public Statistics (Census, etc.) visiting/staying popu
Slide 44: Find Your Beauty PJ: Strengthen awareness of milbon:iD
⑤Find Your Beauty PJ 【Strengthen awareness of milbon:iD] You SNS Advertising Tube Media Copyright © 2021 Milbon. All rights reserved. 43
Slide 45: Find Your Beauty PJ: Why we go to a salon
⑤Find Your Beauty PJ 【Why we go to a salon】 Pr ov ide p rofe ssi onal beau ty val ue an d var iou s in fo rma tio n Copyright © 2021 Milbon. All rights reserved. 44
Slide 46: Toward the Lifetime Beauty Salon Next Plan
Toward the Lifetime Beauty Salon Next Plan Early 2000 Transforming of the salon management, from perm- centred to hair color-centred And now New transformation happens = K-shaped starting point Changing from technique sales-centred to balance between technique sales and knowledge sales becomes the f
Slide 47: Transition period of Lifetime Beauty Salon 1.5
Toward the Lifetime Beauty Salon Next Plan Changing from technique sales-centred to balance between technique sales and product sales becomes the foundation of salon management ～Toward a New Way of Becoming a Salon～ Community of beauty and mind, and the platforms of the cities Transition period of L
Slide 48: III. Measures for Fiscal Year 2021
I. Last year's review and market environment II. 3 perspectives and market policy 👉 III. Measures for Fiscal Year 2021 IV. Consolidated target for Fiscal Year 2021 Copyright © 2021 Milbon. All rights reserved. 47
Slide 49: Posture of Domestic FP
Posture of Domestic FP To s t r e n g t h e n s t u d i o e d u c a t i o n t h r o u g h the establishment of new bases Candidates for new establishment New Aoyama Sales Office and Studio Chiba Sales Office and Studio Scheduled in July 2021 Transfer extension candidates Osaka 3F Studio Renovation S
Slide 50: Strengthening Education Strategy (Real × Digital)
Posture of Domestic FP Strengthening Education Strategy (Real × Digital) Education Software Establishment of Education Promotion Office 7 branches nationwide Studio Digital Copyright © 2021 Milbon. All rights reserved. 49
Slide 51: New mainstay products in the first half of 2021
New mainstay products in the first half of 2021 (Unit: million yen) Launch Target Category Product name month amount Aujua Hair Care Series Repairlity Line February 800 Premium Villa Lodola Color Interval Re:Care January 50 Brand Global Milbon Premium Positions June 400 Grand Linkage February 1,200
Slide 52: Posture of International FP: Distribution bases in Western Markets
Posture of International FP, Specific measures C o n s i d e r d i s t r i b u t i o n b a s e s i n We s t e r n M a r k e t s US EU Establishment of import and EU Establishment of a logistics logistics system system in the US (Under consideration in the Netherlands) Copyright © 2021 Milbon. All ri
Slide 53: Establishment of new bases and studios in Asian markets
Posture of International FP, Specific measures Establishment of new bases and studios in Asian markets KOREA Seoul (Gangnam) Seoul (Gangbuk) Daejeon Busan Gwangju Gwangju Shanghai Beijing Chengdu [Full-scale launch in 2021] Hong Kong Taipei Hanoi Ho Chi Minh Kuala Lumpur VIETNAM Singapore Bangkok Ma
Slide 54: Doubling the number of sales reps of distributors
Posture of International FP, Specific measures Doubling the number of sales reps of distributors Increase the quality and quantity of human resources for market activities centered on the Milbonway 489 700 840 1000 2018 2020 2021 2023 Copyright © 2021 Milbon. All rights reserved. 53
Slide 55: Development of localized brands
Posture of International FP, Specific measures Development of localized brands Europe Launch of permanent color and the US Creation of 1800 Sophistone fans Digital Permanent Brand "Aqua Curl" Asia Expansion from South Korea to Asian markets Copyright © 2021 Milbon. All rights reserved. 54
Slide 56: Posture of R&D and Production: Central × Regional R&D system
Posture of R&D and Production, Specific measures Establishment of a Central × Regional R&D system Evolve as Central Research Laboratory Response to gobal (regional) needs Platform, U.S. R&D (completed in April), Prescriptions, human resources and China (completed at the end of October), information
Slide 57: Establishment of a global production system
Posture of R&D and Production, Specific measures Establishment of a global production system Expansion of the Thai factory Establish a plant in China ➣ system for 100 employees, ➣ building scheduled [October 2021] 1.5~2.0 crew shifts ➣ hair care operation scheduled [2022] ➣ expansion scheduled [Dece
Slide 58: Establishment of the Innovation Center
Establishment of the Innovation Center Establishment of the Innovation Center that will lead to the creation of the future I N N O VAT I O N E D U C AT I O N MPFP * Training center Creating the future, through Relocation of MPFP* training t o To k y o m e t r o p o l i t a n a r e a , a n d M a n a
Slide 59: Selection of most important sustainability issues
Selection of 5 most important sustainability issues Co-creation of value with stakeholders: "Creation of a community of beauty and mind" Top priority in the beauty market Essential problem 1 to combine solving social Essential problem related issues and sustainable Realization of spiritual to the in
Slide 60: Priority initiatives in SDGs priority issues
Priority initiatives in SDGs's priority issues Essential problem Priority Initiatives Indicators Ambitious targets Co-creation of value with stakeholders: "Creation of a community of beauty and mind“ Top priority in the beauty market 1 Development of Lifetime Beauty Partner Fostering beauticians wit
Slide 61: Structural reform themes: Enhance resilience to uncertain business environment
4 Structural reform themes for sustainable growth 1 ➣ Reducing fixed costs Enhance resilience to ➣ Improve cash positions uncertain business environment ➣ Sustainability of the supply chain 2 ➣ Collaboration among companies ・Beauty Sommelier plan Digital utilization = Education: iD (including intern
Slide 62: Structural reform themes: To evolve customer relationships
4 Structural reform themes for sustainable growth 3 ➣ Beauty Sommelier plan = Education: iD To evolve customer ➣ Evolving milbon: iD relationships How to support consumers, from experience to repeat, and how to increase points of contact with customers 4 Realization of social ➣ Lifetime Beauty Salon
Slide 63: IV. Consolidated target for Fiscal Year 2021
I. Last year's review and market environment II. 3 perspectives and market policy III. Measures for Fiscal Year 2021 👉 IV. Consolidated target for Fiscal Year 2021 Copyright © 2021 Milbon. All rights reserved. 62
Slide 64: Target setting for Fiscal Year 2021
Target setting for Fiscal Year 2021 Record-high sales Forward-looking investment +6.9 for future growth Net sales % ■18-Month Mission: Cost for new growth stage (Million yen) (1.5) 38,200 % Digitalization cost = 300 million yen 36,266 35,725 ・ Digital DA held (+150 million yen) ・ Increase in depreci
Slide 65: Consolidated Targets for FY2021: Statement of Earnings
Consolidated Targets for Fiscal Year 2021 ■Statement of Earnings (Unit: million yen) FY 2020 FY 2020 FY 2021 FY 2021 Increase/ Increase/ Decrease Results % total sales Target % total sales Decrease ratio (%) Net sales 35,725 100.0 38,200 100.0 2,474 6.9 Domestic 29,880 83.6 31,318 82.0 1,437 4.8 Ove
Slide 66: Consolidated Targets for Fiscal Year 2021
Consolidated Targets for Fiscal Year 2021 ■Net Sales by Product Category (Consolidated Net Sales) (Unit: million yen) Increase/ Decrease FY 2020 FY 2021 target Increase/ Decrease ratio (%) Hair care products 21,135 22,768 1,632 7.7 Hair coloring products 12,594 13,112 517 4.1 Permanent wave products
Slide 67: Consolidated Targets for FY2021: Capex, Depreciation and R&D
Consolidated Targets for Fiscal Year 2021 ■Capital expenditures, Depreciation and R&D expenses (Unit: million yen) FY 2021 Classification FY 2020 Planned Capital expenditures 1,917 7,488 Depreciation and amortization 1,562 1,819 Amount 1,581 1,765 R&D exp. % to sales 4.4% 4.6% FY 2021 CAPEX Main Ite
Slide 68: Return to shareholders
Return to shareholders ■Shareholder Return <Dividend Forecast> (Unit: yen) FY2019 FY 2020 FY 2021 Forecast End of 2Q 27 27 28 End of FY 29 29 28 Total 56 56 56 Copyright © 2021 Milbon. All rights reserved. 67
Slide 69: Statements concerning the future such as the earnings forecasts
Statements concerning the future such as the earnings forecasts given in this document are based on information currently in the possession of the Company and on assumptions that the Company considers reasonable. Copyright © 2021 Milbon. All rights reserved. 68