Milbon Co., Ltd. · TSE:4919
Milbon — FY2023 Earnings Presentation
58 slides from Milbon's earnings presentation, Feb 15, 2024
Slide 1: FY2023 Financial Results Presentation Materials
Milbon Co., Ltd. FY2023 Financial Results Presentation Materials February 15, 2024 © 2024 Milbon Co., Ltd. 0
Slide 2: Table of Contents
Table of Contents P2 Words of Gratitude P7 Consolidated Operating Results P9 Factors in YoY Changes in Consolidated Operating Income P10 Consolidated Sales by Product Category P22 Consolidated Trends in Capital Expenditures and R&D Expenses P23 Trends in Fieldpersons (FPs) P24 Consolidated Net Sales
Slide 3: Words of Gratitude
Milbon Group Words of Gratitude Ryuji Sato, Chairperson © 2024 Milbon Co., Ltd. 2
Slide 4: Thank you for all your support throughout my 16 years of service
Preface Thank you for all your support throughout my 16 years of service as President and CEO © MILBON Co., Ltd. © 2024 Milbon Co., Ltd. 3
Slide 5: 2008-2023: 15 Years of Growth
2008-2023: 15 Years of Growth 2022 (million Consolidated net sales 2020 Beauty Platform Plan: yen) Overseas sales Launch of milbon:iD, our Smart Salon Strategy official online stores Lifetime Beauty Care Strategy 2010 2016 2019 2022 Launch Launch Launch Global Strategy: of “Aujua” of “milbon” of “iM
Slide 6: Succession Planning
Succession Planning Topics at the first course of each batch “Succession to happen in approximately 10 years, around 2023” “After stepping down from the role of Preparation for Milbon Corporate University President, I will renounce the authority of 2014 (MCU) Leadership Development Project represent
Slide 7: Message
Message Milbon's commitment to creating the future of the beauty market along with salons and stylists remain unchanged. We will steadily implement the initiatives of the Medium-Term Management Plan 2026. Milbon will keep following THE MILBON WAY to achieve sustainable growth. © 2024 Milbon Co., Ltd
Slide 8: Financial Results for FY2023 (64th Term)
Milbon Group Financial Results for FY2023 (64 th Term) Masahiro Murai, Managing Executive Director © 2024 Milbon Co., Ltd. 7
Slide 9: Consolidated Operating Results
Consolidated Operating Results Net sales reached a record high thanks to strong performance of haircare products in Japan and overseas, but fell short of the target revenue due to a slowdown in growth of hair coloring products. Profit fell short of projections due to deteriorating manufacturing
Slide 10: Factors in YoY Changes in Consolidated Operating Income
Factors in YoY Changes in Consolidated Operating Income • The gross profit margin declined due to the persistent high cost of raw materials and the product mix effect of lower sales of hair coloring products. • A write-down of 900 million yen was recorded due to the lowering of the sales forecast fo
Slide 11: Sales by Product Category: Hair Care Products (1)
Consolidated Sales by Product Category [Hair Care Products (1)] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ Vs. plan ratio FY2022 FY2023 Decrease ratio Decrease (%) (%) 26,312 28,355 2,042 7.8 0.9 • Sales in Japan rose 4.9% YoY. Sales increased due to the launch of Aujua’s new pro
Slide 12: Hair Care Products (2): New Products FY2023
Consolidated Sales by Product Category [Hair Care Products (2)] New Products FY 2023 Aujua Hair Care Series Inmmetry Line A new line that corrects distortion*1 in the hair and frees from the habit of blow drying and ironing to condition hair, leading to lustrous and manageable hair with just a dry.
Slide 13: Hair Care Products (3): New Products
Consolidated Sales by Product Category [Hair Care Products (3)] Miincurl Iron Keep Primer A pre-ironing primer oil that protects hair from the heat of the iron and keeps the ironed hair design soft and hydrated for a long time. (Unit: million yen) FY2023 target FY2023 Progress rate (%) 150 172 114.9
Slide 14: Premium Brand: Aujua
Premium Brand: Aujua New products “Inmmetry Line” led the growth. Sales are expected to further increase with the launch of new scalp care products in February 2024. Number of Salons*1 (Unit: salons) Increase/ Increase/ FY2022 FY2023 Decrease Decrease ratio (%) 6,022 6,844 822 13.6 Consolidated Gros
Slide 15: Premium Brand: Global Milbon
Premium Brand: Global Milbon Steady growth continues overseas, mainly in the U.S., and in Japan. Further introduction to salons is expected onward. Number of Salons*1 (Unit: salons) Increase/ Increase/ FY2022 FY2023 Decrease Decrease ratio (%) 10,769 13,381 2,612 24.3 Consolidated Gross Sales (Unit:
Slide 16: Hair Coloring Products
Consolidated Sales by Product Category [Hair Coloring Products] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ Vs. plan ratio FY2022 FY2023 Decrease Decrease ratio (%) (%) 16,631 16,953 322 1.9 (1.3) • Hair coloring products sales in Japan decreased by 0.8% YoY. Inventory adjustment
Slide 17: Premium Organic Brand: Villa Lodola (1)
Premium Organic Brand: Villa Lodola (1) In 2024, we expect to further expand sales by significantly strengthening the sales force of “Villa Lodola Color” Number of Salons*1 (Unit: salons) Increase/ Increase/ FY2022 FY2023 Decrease Decrease ratio (%) 12,458 13,679 1,221 9.8 Consolidated Gross Sales (
Slide 18: Premium Organic Brand: Villa Lodola (2)
Premium Organic Brand: Villa Lodola (2) New Products FY 2023 Villa Lodola Renovo Tempus / Fulgens A series that extends hair color longevity with the reparative effects of nature's blessings, promoting healthy beauty in both the scalp and hair. Two types of shampoos and treatments to choose from, ea
Slide 19: Cosmetic Products (1)
Consolidated Sales by Product Category [Cosmetic Products (1)] Consolidated Net Sales (Unit: million yen) Increase/ Increase/ Vs. plan ratio FY2022 FY2023 Decrease ratio Decrease (%) (%) 572 571 △0 △0.1 △10.0 • Sales of iMPREA, the brand shipped directly to salons*1, decreased due to a reactionary d
Slide 20: Cosmetic Products (2): New Products FY2023
Consolidated Sales by Product Category [Cosmetic Products (2)] New Products FY 2023 iMPREA Milky Soufflé UV An airy, soufflé-textured sunscreen cream that blocks powerful ultraviolet rays and protects the skin from damage caused by dryness and other factors to the stratum corneum. (Unit: million yen
Slide 21: Premium Brand: iMPREA
Premium Brand: iMPREA New products are performing well, but due to the slower growth of existing products, sales decreased compared to the previous year. Number of Salons*1 (Unit: salons) Increase/ Increase/ FY2022 FY2023 Decrease Decrease ratio (%) 1,601 1,970 369 23.0 Consolidated Gross Sales (Uni
Slide 22: Sales by Product Category: Other
Consolidated Sales by Product Category [Other] New Products FY 2023 Elmista（Results for dryer unit only） A hair dryer, jointly developed with Panasonic, that micronizes and atomizes beauty serum. Five types of serums are available to choose from according to hair concerns and desired texture. (Unit:
Slide 23: Trends in Capital Expenditures and R&D Expenses
Consolidated Trends in Capital Expenditures and R&D Expenses (Unit: million yen) Category FY2019 FY2020 FY2021 FY2022 FY2023 Capital expenditures 1,605 1,917 4,644 4,097 3,151 Depreciation and amortization 1,453 1,562 1,777 2,026 2,213 Amount 1,534 1,581 1,741 2,074 2,334 R&D exp. % to sales 4.2 4.4
Slide 24: Trends in Fieldpersons (FPs)
Trends in Fieldpersons (FPs) Fieldpersons Trends (by Country) (Average number of FPs during the period) Upper column: Average number of FPs during FY2021 FY2022 FY2023 the period (persons) 328.2 335.4 350.2 Lower column: Net sales per FP (million yen) Japan 102 105 104 (As of December 31, 2023) -28
Slide 25: Consolidated Net Sales in Japan and Overseas
Consolidated Net Sales in Japan and Overseas (Unit: million yen) Increase/ Changes in local FY2022 FY2023 Increase/ Decrease currency base*1 Vs. plan ratio ratio Decrease Net sales % to sales Net sales % to sales (%) (%) (%) Consolidated net sales 45,238 100.0 47,762 100.0 2,524 5.6 4.5 (0.1) Japan
Slide 26: Consolidated Operating Income in Japan and Overseas
Consolidated Operating Income in Japan and Overseas (Unit: million yen) Increase/ FY2022 FY2023 Decrease ratio Vs. plan ratio Increase/ Operating Operating Operating Operating Decrease income income (%) (%) income income ratio(%) ratio(%) Consolidated operating income 7,551 16.7 5,525 11.6 (2,026) (
Slide 27: Outlook of Overseas Subsidiaries (1): USA
Outlook of Overseas Subsidiaries (1) USA (Milbon USA) • Sales declined in the 4Q of this year due to a backlash from the sales shift to the 4Q of last year, which was caused by a shipment problem in the 3Q of last year, and a temporary halt of shipments as some contract distributors were acquired. H
Slide 28: Outlook of Overseas Subsidiaries (2): China
Outlook of Overseas Subsidiaries (2) China (Milbon China) • The market environment is becoming increasingly challenging as salon customers are seeking more reasonable and high-quality services from salons, and the number of salon visits is declining. However, the Company has managed to build strong
Slide 29: Outlook of Overseas Subsidiaries (3): South Korea
Outlook of Overseas Subsidiaries (3) South Korea (Milbon Korea) • Sales of hair coloring products, which make up more than 70% of total sales, rose by 4.3% YoY. Gray color products performed well due to the aging population in Korea, despite the influence of changing color trends. • Sales of haircar
Slide 30: Initiatives for FY2024
Milbon Group Initiatives for FY2024 Hidenori Sakashita, President and CEO © 2024 Milbon Co., Ltd. 29
Slide 31: Domestic Beauty Market in 2023 and Current Status
Domestic Beauty Market in 2023 and Current Status In the first year of the COVID-19 pandemic, the beauty experienced a 2020 downturn, but the negative impact was less compared to other markets 2021・2022 The beauty market grew steadily with rebound demand COVID-19 was reclassified to Class 5 from Cla
Slide 32: Domestic Beauty Market: Hair Color and Haircare
Domestic Beauty Market in 2023 and Current Status Hair color Sales decreased by 0.8% YoY (calculated based on shipment results) Demand for hair color, which had grown during the COVID-19 pandemic, peaked in 2023 and then sales dropped. We will focus on creating value for in-salon hair color in FY202
Slide 33: Domestic Market Strategy 1: Higher-Value Hair Color
Domestic Market Strategy ① Promoting Higher-Value Hair Color ⅰ Acombining new color proposal unique to salons, hair color and eyebrows Hair Hair ＆ Face Promote a salon-exclusive total color service for hair and eyebrows, using Milbon’s hair color products © 2024 Milbon Co., Ltd. 32
Slide 34: Enhanced hair color options for mature individuals: Villa Lodola
Domestic Market Strategy ① Promoting Higher-Value Hair Color ⅱ Enhanced hair color options tailored for mature individuals featuring our organic brand, Villa Lodola The world’s first ICEA-certified hair color products Naturally derived ingredients that are gentle on t hair and scalp Used as a premiu
Slide 35: Domestic Market Strategy 2: Smart Salon Strategy
Domestic Market Strategy ② Increasing In-Salon Customer Purchases ⅰ Smart Salon Strategy Following the test marketing period, we will pursue our proposals more aggressively from this fiscal year Results in FY2023： 23 salons Target in FY2024 ：100 salons Overwhelmingly higher in-salon product sales Te
Slide 36: milbon:iD
Domestic Market Strategy ② Increasing In-Salon Customer Purchases ⅱ milbon:iD The number of members is growing steadily. We will add new features to further enhance the appeal and value of Milbon’s unique e-commerce platform. （Persons） Number of milbon:iD members 1,200,000 1,000,000 1,000,000 870,00
Slide 37: Our Pricing Strategy
Our Pricing Strategy We have been mitigating the risk of raw material price fluctuations by setting the prices of new products based on customer value and accelerating the turnover of new products Example of pricing：change in MSRP (excluding tax) for 250ml Aujua shampoo Inmmetry Diorum Shipment valu
Slide 38: Our Pricing Strategy: Price Revisions
Our Pricing Strategy In order to cope with the higher-than-expected cost increases, we plan to improve profitability by revising the prices of existing products whose cost ratio has been rising. Price revisions for existing products overseas have already been implemented in line with market conditio
Slide 39: Situation and Initiatives of Each Overseas Country
Situation and Initiatives of Each Overseas Country (Growth Rate Target of Local Currency Basis) China South Korea U.S. Sales target in FY2024: Sales target in FY2024: Sales target in FY2024: 120M RMB (+9.2% YoY) 47.8B KRW (+9.1%YoY) 12.93M USD(+12.4%YoY) ・ Despite the deteriorating market conditions
Slide 40: Situation in China
Situation in China Steady growth continues with sales up 3.8% (on a local currency Sales basis) year-on-year in FY 2023, amid economic downturn The Company built strong relationships through tailored activities for individual salons and helped create services that cater to the changing needs of cust
Slide 41: Scenarios for Our MTMP (2022-2026)
Scenarios for Our MTMP (2022-2026) Sales are progressing steadily, but there are delays in the progress of profits Sales Consolidated net sales for 2023 are on track toward our 2026 goal of 58 billion yen, in line with our MTMP forecast Operating income Even leaving aside the fact that there is the
Slide 42: Scenarios for Our MTMP (2022-2026): Cost Measures
Scenarios for Our MTMP (2022-2026) We aim to improve the effectiveness of our measures to address cost issues and work to enhance our current operating profit margin. *The specific numbers of our MTMP will be reannounced after review. Cost issues to address Measures for 2024 and beyond ・ Spike and s
Slide 43: FY2024 Assumptions Underlying Earnings Forecasts
FY2024 Assumptions Underlying Earnings Forecasts Assumptions Sales Japan • Despite the lack of strength in the market growth, we anticipate an increase in sales due to introducing new haircare products, boosting our efforts for hair coloring products, and selling cosmetics based on hair coloring pro
Slide 44: Target for FY2024: Consolidated Statement of Earnings
Target for FY2024: Consolidated Statement of Earnings FY2023 FY2024 FY2024 Increase / Increase / FY2023 % total % total Decrease Target Decrease (Unit: million yen) sales sales ratio(%) Net sales 47,762 100.0 50,620 100.0 2,857 6.0 Japan 36,502 76.4 38,620 76.3 2,117 5.8 Overseas 11,260 23.6 12,000
Slide 45: Target for FY2024: Factors in YoY Changes in Operating Income
Target for FY2024：Factors in YoY Changes in Consolidated Operating Income (Million yen) +152 (833) +956 (315) (211) ・ Launch of new high (208) value-added products (233) 6,600 +1,767 ・ Efforts to reduce raw material procurement costs ・ Manufacturing cost reduction 5,525 at China Factory Increase in
Slide 46: Target for FY2024: Sales by Product Category
Target for FY2024: Sales by Product Category • Hair care products: Sales are expected to increase in Japan and overseas due to the introduction of new products, centered on Aujua and Global Milbon, and the rollout of educational initiatives. • Hair coloring products：In Japan, sales are expected to i
Slide 47: Target for FY2024: Net Sales and Operating Income in Japan and Overseas
Target for FY2024: Consolidated Net Sales and Operating Income in Japan and Overseas Domestic operating income is expected to increase. However, overseas profit is expected to decrease due to increased sales activities of hair coloring products in the U.S. as well as expansions of office and workfor
Slide 48: Target for FY2024: Capital Expenditures
Target for FY2024: Capital Expenditures FY2024 Classification FY2023 Target Capital expenditures 3,151 4,258 Depreciation and amortization 2,213 2,404 Amount 2,334 2,649 R&D exp. % to sales 4.9% 5.2% FY2024 CAPEX Main Items Sales Offices, ・Establishment and maintenance of business locations Studios
Slide 49: Return to Shareholders
Return to Shareholders The Year-end dividend for FY2023 is set at 48 yen, for a total annual dividend of 88 yen＊. Aiming for stable and continuous dividends while maintaining a dividend payout ratio of 50%. FY2024 FY2021 FY2022 FY2023 Forecast (Unit: yen) End of 2Q 30 40 40 40 End of FY 38 46 48 48
Slide 50: Appendix: Progress in Sustainability Initiatives
＜Appendix＞Progress in Sustainability Initiatives We were selected as a constituent of the ESG Investment Index, improving its reputation among external institutions. ESG investment index to be selected in 2023 Ecovadis "Gold" rating obtained Following the "Silver" rating in 2022, we earned a "Gold"
Slide 51: Appendix: Progress in Sustainability Initiatives
＜Appendix＞Progress in Sustainability Initiatives Progress on the Five Key Challenges is generally well underway toward achieving the 2026 target. KPI progress Priority themes KPI 2026 target 2030 target (as of Dec. 31,2023) 1 Enrich the spirit through beauty Establishment of ・ Number of registered k
Slide 52: Appendix: Progress in Sustainability Initiatives
＜Appendix＞Progress in Sustainability Initiatives KPI progress Priority themes KPI 2026 target 2030 target (as of Dec. 31,2023) 3 Practice people-friendly procurement Sustainable ・ RSPO certified palm oil ・ 9.5% ・ 50% ・ 100% procurement of palm adoption rate oil (MB+B&C) (MB+B＆C) (MB+B＆C) (MB+B＆C) ・
Slide 53: Appendix: Progress in Medium-term Financial Strategy
＜Appendix＞Progress in Medium-term Financial Strategy (2022-2026) FY2022 FY2023 Cash flows 5 billion yen 4.77 billion yen from operating activities Use： 4.1 billion yen 3.15 billion yen Capital Sales offices, Studios Sales offices, Studios 220 million yen Expenditure 150 million yen (Relocation of Fu
Slide 54: Appendix: 4 Target Indicators for Overseas Market
＜Appendix＞4 Target Indicators for Overseas Market *Reference figures complied from figures provided by distributors in each country. FY2021 FY2022 FY2023 FY2026 Increase / Increase / Progress Result Result Result Decrease Target Decrease rate ratio (%) ①Sell-out of distributors (million yen) ⇒ Sales
Slide 55: Appendix: Overseas Market Percentage Change in Sales in Local Currency
＜Appendix＞Overseas Market Percentage Change in Sales in Local Currency USA FY2022 FY2023 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Net sales +38.7% +22.8% (15.3%) +51.5% +22.6% +13.5% +19.3% +56.0% (15.9%) +13.9% Hair care +33.1% +31.7% (16.6%) +51.5% +23.5% +15.5% +18.1% +64.9% (15.2%) +15.7% Hair colori
Slide 56: Appendix: Overseas Market Percentage Change in Sales in Local Currency
＜Appendix＞Overseas Market Percentage Change in Sales in Local Currency South Korea FY2022 FY2023 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q 4Q Total Net sales +26.6% +20.7% +14.1% +6.9% +16.6% +10.9% +4.8% +1.2% +13.7% +7.4% Hair care +24.3% +15.4% +23.1% +9.9% +18.0% +14.4% +13.5% +1.1% +29.0% +13.9% Hair coloring
Slide 57: Appendix: Hair Care Brand Positioning Map
<Appendix> Hair Care Brand Positioning Map Premium Brands Professional Brands © 2024 Milbon Co., Ltd. 56
Slide 58: Forward-looking statements notice
With respect to the business forecasts included in this document, any statement that is not historical fact is a forward-looking statement based on information available and certain premises that are judged to be rational at the time of the announcement. Please be aware that actual results may diffe