Slide 1: FY2017 Financial Results Presentation Materials
Milbon Co., Ltd. FY2017 Financial Results Presentation Materials February 14, 2018 Copyright © 2018 Milbon. All rights reserved.
Slide 2: Table of Contents
Table of Contents P4 Consolidated Operating Results P5 Consolidated Sales by Product Category P11 Consolidated Statement of Earnings P12 Consolidated Sales by Product Category, etc. P13 Consolidated Trends in Capital Expenditures and R&D Expenses P14 Trends in Market Related Data, Trends in FPs P15
Slide 3: Fiscal Year 2017 (58th term) Operating Results
Fiscal Year 2017 (58th term) Operating Results Masahiro Murai, Managing Director Copyright © 2018 Milbon. All rights reserved. 2
Slide 4: Change in accounting period note
Due to the change in the accounting period, the fiscal year under review is the 12 months plus 11 days from December 21, 2016 to December 31, 2017. For the consolidated accounting, financial results for overseas consolidated subsidiaries are their respective individual results for the 15-month perio
Slide 5: Consolidated Operating Results
Consolidated Operating Results Net sales and profit both grew steadily (Unit: million yen) Increase/ FY2017 FY2017 Increase/ FY2016 Decrease ratio (Irregular (12 months)* Decrease accounting period) (%) Net sales 29,134 31,708 2,574 8.8 33,456 Gross profit 20,100 21,661 1,560 7.8 22,797 SG&A expense
Slide 6: Consolidated Sales by Product Category [Hair Care Product]
Consolidated Sales by Product Category [Hair Care Product] Premium brands grew steadily (Unit: million yen) Increase/ FY2017 FY2017 Increase/ FY2016 Decrease ratio (Irregular accounting (12 months)* Decrease period) (%) 17,711 18,688 976 5.5 19,511 • In premium brands, the Aujua upgrade carried out
Slide 7: Aujua
Aujua Product replacement progressed faster than expected due to upgrade Number of Aujua salons Upgrade launched November 2017 Increase/ FY2016 year-end FY2017 year-end Decrease ratio (%) 2,779 salons 3,166 salons 13.9 Sales (Unit: million yen) Increase/ FY2017 FY2017 FY2016 Decrease (Irregular (12
Slide 8: A Premium Brand, milbon
A Premium Brand, “milbon” Overseas rollout also progressed steadily Brand concept A system hair care brand that cultivates the “unique beauty” of each individual, with 360°shiny hair What is “milbon”? We conducted an in-depth analysis of the inner structure of the hair of women from 20 countries aro
Slide 9: Consolidated Sales by Product Category [Hair Coloring Product]
Consolidated Sales by Product Category [Hair Coloring Product] New products aimed at the young demographic were well received, driving sales of hair color products (Unit: million yen) Increase/ FY2017 FY2017 FY2016 Increase/Decrease Decrease ratio (Irregular accounting (12 months)*1 (%) period) 9,89
Slide 10: A Premium Organic Brand, Villa Lodola (1)
A Premium Organic Brand, Villa Lodola (1) Villa Lodola Color continues to be well-received and to drive brand sales Number of Villa Lodola salons Increase/ FY2016 year-end FY2017 year-end Decrease ratio (%) 5,632 salons 6,895 salons 22.4 Sales (Unit: million yen) Increase/ FY2017 FY2017 Trends in sa
Slide 11: 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. (Unit: million yen)
Slide 12: Consolidated Statement of Earnings
Consolidated Statement of Earnings (Unit: million yen) FY2017 Increase/ Increase/ FY2017 FY2016 (12 months)* Decrease Decrease ratio (%) (Irregular accounting period) Sales 29,134 31,708 2,574 8.8 33,456 Cost of sales 9,034 10,047 1,013 11.2 10,659 *1 Gross profit 20,100 21,661 1,560 7.8 22,797 SG&A
Slide 13: Consolidated Sales by Product Category, etc.
Consolidated Sales by Product Category, etc. (Unit: million yen) FY2017 FY2017 Increase/ Increase/ FY2016 (Irregular accounting (12 months)* Decrease Decrease ratio (%) period) Hair care products 17,711 18,688 976 5.5 19,511 Hair coloring products 9,892 11,264 1,372 13.9 12,095 Permanent wave produc
Slide 14: Consolidated Trends in Capital Expenditures and R&D Expenses
Consolidated Trends in Capital Expenditures and R&D Expenses (Unit: million yen) Category FY2013 FY2014 FY2015 FY2016 FY2017 Capital expenditures 1,680 1,028 2,779 4,262 1,570 Depreciation and amortization 878 1,004 1,033 1,077 1,272 Amount 969 1,168 1,214 1,232 1,422 R&D exp. % to sales 4.1% 4.6% 4
Slide 15: Trends in Market Related Data, Trends in Fieldpersons
Trends in Market Related Data, Trends in Fieldpersons (FPs) Market trends (Japan) 2012 2013 2014 2015 2016 2017 Remarks Number of salons (salons) 231,134 234,089 237,525 240,299 243,360 ― Ministry of Health, Labour and Welfare, Report on Public Health Administration and Services Number of beauty sal
Slide 16: Outlook of Milbon Group
Outlook of Milbon Group East Asia region continues to drive growth Sales (million yen) Forex rates Sales (million yen) Forex rates Increase/ Start FY2017 Decrease ratio FY2017 FY2017 operations FY2017 (Irregular FY2016 (%) FY2016 (Irregular accounting (12 months)*1 (12 months)*1 accounting period) p
Slide 17: Outlook of Overseas Subsidiaries (1)
Outlook of Overseas Subsidiaries (1) USA (MILBON USA, Inc.) Sales did not grow as expected owing to a series of closures and consolidations of major salons due to soaring rents in Manhattan and other factors, and a hike in the distributor margin in the distributor category offsetting steady growth i
Slide 18: Outlook of Overseas Subsidiaries (2)
Outlook of Overseas Subsidiaries (2) KOREA (Milbon Korea Co., Ltd.) Regionally based market activities were further strengthened through the opening of the Daejeon Branch, following the branches in Seoul and Pusan. These moves are producing results. In hair color products, ORDEVE has grown considera
Slide 19: 2015-2019 Medium-Term Management Plan & Initiatives for FY2018
Milbon Group 2015-2019 Medium-Term Management Plan & Progress Initiatives for FY2018 (59th term) Ryuji Sato, President & CEO Copyright © 2018 Milbon. All rights reserved. 18
Slide 20: 2015-2019 Medium-Term Management Plan: Progress at end of FY2017
2015-2019 Medium-Term Management Plan ~Progress at the end of FY2017~ * With regard to the progress of the Medium-Term Management Plan, in order to compare the values for the final year FY2019 with those for a similar 12-month period, we used the values for the 12 months prior to the change in the a
Slide 21: 2015-2019 Medium-Term Management Plan
2015-2019 Medium-Term Management Plan ~Progress at the end of FY2017~ The net sales targets of the Medium-Term Management Plan are within reach, even though SG&A expenses piled up due to forward investment (Unit: million yen) FY2017 target FY2017 results Growth FY2019 target (12 months)*1 (12 months
Slide 22: Medium-Term Plan: Progress in net sales by country
2015-2019 Medium-Term Management Plan ~Progress in net sales by country~ Extremely favorable performance in Japan, China and Korea (Unit: million yen) Growth rate Exchange rate from FY2019 target FY2017 target FY2017 results Achievements previous (medium-term FY2017 FY2019 (12 months)*1 (12 months)*
Slide 23: Medium-Term Plan: CAPEX FY2017
2015-2019 Medium-Term Management Plan ~CAPEX FY2017~ Aggressive investment in cosmetic products business and overseas business Use FY2015-FY2017 FY2019 Investment in future growth 8,610 million yen 10,000 million yen • Construction of new Yumegaoka Plant • Establishment and expansion of new domestic
Slide 24: Initiatives for FY2018 (59th term)
Initiatives for FY2018 (59th term) * In order to compare FY2018 targets with a similar period, we used the “FY2017 results (12 months)” values before the change in the accounting period for comparison. (For details, please see page 3.) Copyright © 2018 Milbon. All rights reserved. 23
Slide 25: Domestic Market Environment: Background
Domestic Market Environment Background Demographic trends, declining birthrate and aging population Difficulties in attracting customers and recruitment Wave of labor and workstyle reforms Copyright © 2018 Milbon. All rights reserved. 24
Slide 26: Domestic Market Environment: Changes in salon environment
Domestic Market Environment Changes in salon environment Polarization of average customer spend Average customer spend at regular salons nationwide* High-end salons (¥8,000 and above) Low-end salons (under ¥4,000) (%) (%) 18.6 19.3 20 20 15.5 15 15 10.2 10 10 5 5 0 0 2000 2010 (Year) 2000 2010 (Ye
Slide 27: Breakdown of average customer spend
Domestic Market Environment Breakdown of average customer spend Average customer spend at Milbon introduced salons +6% +50% (yen) Average spend on techniques (yen) Average spend on take-home products 8,000 700 7,000 600 6,000 500 5,000 400 4,000 3,000 6,719 7,181 300 573 2,000 200 383 1,000 100 0
Slide 28: Market Strategy: Lifetime beauty salon
Market Strategy “Lifetime customers” are created by “Lifetime hair designers” Lifetime relationship of trust Lifetime Lifetime customers hair designers Lifetime beauty salon Supporting the creation of lifetime beauty salons that nurture lifetime hair designers (Creating an organization built aro
Slide 29: Market Strategy: Changing times
Market Strategy Changing times Up to the 1980s The era of selling techniques 1990s The era of selling hairstyles Now The era of selling beauty Copyright © 2018 Milbon. All rights reserved. 28
Slide 30: Capturing lifetime customers
Market Strategy Capturing lifetime customers From anti-aging To aging beauty From aging beauty To lifetime beauty What is lifetime beauty? Allowing a woman’s beauty to continue shining throughout her life, with the help of a hair designer who looks at the customer’s entire lifetime. Copyright © 20
Slide 31: Initiatives for FY2018 (1): Relocating and expanding studio sites
Initiatives for FY2018 (1) Relocating and expanding studio sites With a 16-site system in Japan ● Existing sites (14 locations) Sapporo ● Relocation and expansion (2 locations) Kanazawa Sendai Okayama Kyoto Hiroshima Saitama Ginza, Tokyo Fukuoka Shizuoka Aoyama, Tokyo Kobe Kumamoto Osaka Yokohama Na
Slide 32: Initiatives for FY2018 (1): Overseas markets
Initiatives for FY2018 (1) Overseas markets Initiatives in countries overseas where results are emerging (1) Thoroughly implementing the MILBON WAY (study groups including distributors as well as employees) (2) Creating contact points for hair color products Strengthen in all areas overseas Copy
Slide 33: Overseas bases in 17 locations in 13 countries
Initiatives for FY2018 (1) Overseas bases in 17 locations in 13 countries ● FY2017 establishment (3 location) Korea Germany (Daejeon Branch) Turkey USA China Japan Taiwan Hong Kong Vietnam The Philippines Thailand Malaysia Singapore Indonesia Copyright © 2017 Milbon. All rights reserved. Copyright
Slide 34: Initiatives for FY2018 (2): Designer education support
Initiatives for FY2018 (2) Enhancing support for designer education • DA (Designer’s Ability) Held in eight blocks in Japan and four countries overseas • Photo Revolution Grand Prix Copyright © 2018 Milbon. All rights reserved. 33
Slide 35: Initiatives for FY2018 (3): Find Your Beauty Project
Initiatives for FY2018 (3) Find Your Beauty Project…Supporting salons’ customer attraction and recruitment ⇦ “Watashi Hiraku” (“Finding myself”), a special movie One woman’s story of encountering her new self at a beauty salon https://www.youtube.com/watch?v=HKrDtCCJmaU Find Your Beauty Magazine ⇨
Slide 36: Initiatives for FY2018 (4): Corporate & Product Branding
Initiatives for FY2018 (4) Corporate & Product Branding Copyright © 2018 Milbon. All rights reserved. 35
Slide 37: Corporate & Product Branding: Transit advertising
Initiatives for FY2018 (4) Corporate & Product Branding Transit advertising Tokyo: Yaesu area in Tokyo Station Feb. 12 – Feb. 18 Osaka: Hankyu Umeda Station Feb. 19 – Feb. 25 ▼ Tokyo Station, near Yaesu Central Gate ▲ Tokyo Station, near Yaesu North Gate Copyright © 2018 Milbon. All rights reser
Slide 38: Initiatives for FY2018 (5): Cosmetic products business
Initiatives for FY2018 (5) Taking on the challenge of the cosmetic products business Progress to date January 2017 Announced capital and business alliance July 2017 Established KOSÉ Milbon Cosmetics Co., Ltd. Currently examining product planning, research and development, sales strategy, and
Slide 39: Initiatives for FY2018 (5): Organization structure
Initiatives for FY2018 (5) Organization structure Newly established FCE FS (Field Cosmetics Educator) Autumn 2018 FP Training scheduled to start FE FCE Contributing to a new earnings structure for salons Copyright © 2018 Milbon. All rights reserved. 38
Slide 40: Relocation of head office to Tokyo
Initiatives for FY2018 Relocation of head office to Tokyo (1) Expanding research and development (2) Strengthening recruitment (3) Cosmetic products business + overseas expansion Copyright © 2018 Milbon. All rights reserved. 39
Slide 41: Workstyle reform: Frontline initiatives
Initiatives for FY2018 Workstyle reform Frontline initiatives For FPs, for example Nighttime seminars at salons In the past… Nighttime seminars Daytime salon visits at salons Use of studios Online video training Copyright © 2018 Milbon. All rights reserved. 40
Slide 42: The MILBON WAY
Initiatives for FY2018 Satisfied customers and salons are what give value to our existence Every employee thinks and acts The MILBON WAY: Creating a “company that will not fail” <Reforming awareness toward workstyles> Copyright © 2018 Milbon. All rights reserved. 41
Slide 43: Consolidated targets for FY2018: Sales by Product Category
Consolidated targets for FY2018 Consolidated Sales (Unit: million yen) by Product Category FY2017 results Increase/ Increase/ FY2018 target Decrease ratio (12 months)*1 Decrease (%) Hair care products 18,688 20,281 1,592 8.5 Hair coloring products 11,264 11,994 729 6.5 Permanent wave products 1,48
Slide 44: Sales and number of salons for premium brands
Consolidated targets for FY2018 Sales and number of salons for premium brands (Unit: million yen) Increase/ FY2017 results Increase/ FY2018 target Decrease ratio (12 months)* Decrease (%) Sales 5,339 6,079 739 13.8 Aujua Number of salons (salons) 3,166 3,400 234 7.4 Sales 1,635 2,221 586 35.9 Numb
Slide 45: Consolidated targets for FY2018: Statement of Earnings
Consolidated targets for FY2018 Full-fledged start of initiatives for cosmetic products business Statement of Earnings (Unit: million yen) Capital expenditures and others (Unit: million yen) Amount Amount Increase/ FY2017 FY2018 Increase/ Classification Decrease results plan FY2017 Decrease FY20
Slide 46: Consolidated targets for FY2018: Return to shareholders
Consolidated targets for FY2018 Return to shareholders <Dividend forecast> (Unit: yen) FY2016 FY2017 FY2018 forecast* End of 2Q 38 40 24 End of FY 40 52 24 Total 78 92 48 * Takes into consideration the impact of a stock split at a ratio of two for every one of the Company’s shares, conducted on Ja
Slide 47: Statements concerning the future
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.