Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — Q3 2019 Earnings Presentation
25 slides from Pola Orbis's earnings presentation, 2019
Slide 1: Third Quarter of Fiscal 2019 Supplementary Material
Third Quarter of Fiscal 2019 Supplementary Material POLA ORBIS HOLDINGS INC. Director and Vice President Management Planning, IT, HR and Group International Business Naoki Kume This report contains projections of performance and other projections based on information currently available and certain
Slide 2: Agenda
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2019 4. Initiatives Going Forward & Appendices 1
Slide 3: Q3 Key Topics
Q3 Key Topics Cosmetics Market The Japanese cosmetics market including exports showed steady growth. Chinese inbound traffic, a key target audience for cosmetics, continued to increase but the growth rate for inbound demand slowed due to the impact of China’s e-commerce law and Chinese yuan depr
Slide 4: Analysis of Consolidated P&L Changes: Net Sales to Operating Income
Analysis of Consolidated P&L Changes Net Sales to Operating Income FY2018 FY2019 YoY Change (mil. yen) Q3 Results(YTD) Q3 Results(YTD) Amount % Consolidated net sales 184,807 165,530 (19,277) (10.4%) Cost of sales 29,948 25,686 (4,261) (14.2%) Gross profit 154,859 139,843 (15,015) (9.7%) SG&A* expen
Slide 5: Analysis of Consolidated P&L Changes: Operating Income to Profit
Analysis of Consolidated P&L Changes Operating Income to Profit Attributable to Owners of Parent FY2018 FY2019 YoY Change (mil. yen) Q3 Results(YTD) Q3 Results(YTD) Amount % Operating income 32,335 25,411 (6,924) (21.4%) Non-operating income 383 304 (79) (20.7%) Non-operating expenses 529 1,345 815
Slide 6: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent Profit attributable to owners of parent decreased 29.0% YoY due to decrease in gross profit resulting from lower sales (mil. yen) POLA sales decreased Positive Negative Transferred pharmaceutical business impact impact 24,000 22,393 22,000 20
Slide 7: Agenda
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2019 4. Initiatives Going Forward & Appendices 6
Slide 8: Segment Results
Segment Results FY2018 FY2019 YoY Change (mil yen) Q3 Results(YTD) Q3 Results(YTD) Amount % Consolidated net sales 184,807 165,530 (19,277) (10.4%) Beauty care 172,024 161,794 (10,229) (5.9%) Real estate 2,031 1,979 (51) (2.5%) Others 10,752 1,756 (8,996) (83.7%) Operating income 32,335 25,411 (6,92
Slide 9: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2018 FY2019 YoY Change (mil. yen) Q3 Results(YTD) Q3 Results(YTD) Amount % Beauty care net sales 172,024 161,794 (10,229) (5.9%) POLA 112,350 102,305 (10,044) (8.9%) ORBIS 38,056 39,125 1,068 2.8% Jurlique 7,453 5,157 (2,295) (30.8%) H2O PLUS 1,416 1,047 (368
Slide 10: Brand Analysis (1)
Brand Analysis (1) Q3 Result Sales decreased mainly for health foods Topics Inbound and buyer demand declined in part due to the Advanced overseas impact of China yuan depreciation store openings Domestic business struggled to capture new demand Overseas business was favorable when excluding
Slide 11: Brand Analysis (2)
Brand Analysis (2) Q3 Result Shifted to highly profitable online sales as planned Topics Continued favorable sales of ORBIS U and Launched WRINKLE WHITE ESSENCE DEFENCERA (September) September last-minute demand drove increase in Sales off to favorable start purchasing amounts among existing
Slide 12: Brand Analysis (3) Overseas Brands
Brand Analysis (3) Overseas Brands Q3 Result Topics Jurlique continuously launched new products to Launched increase brand presence. Organizational new products downsizing conducted as planned H2O PLUS shifted from wholesale to EC Jurlique H2O PLUS channels. Moisture Plus Rare Rose Collection
Slide 13: Brand Analysis (4) Brands Under Development
Brand Analysis (4) Brands Under Development Q3 Result Topics THREE continued strong sales growth overseas (up by Expanded channels for new brands approx. 30%) THREE brand recorded double-digit increase in sales in 3Q Opened duty-free pop-up store and ACRO profits decreased due to investments i
Slide 14: Agenda
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2019 4. Initiatives Going Forward & Appendices 13
Slide 15: Forecasts for Fiscal 2019 (Revised)
Forecasts for Fiscal 2019 (Revised) Downward revision reflects maximum risk potential and continued decline in demand from inbound tourists and buyers in POLA brand FY2019 YoY Change FY2019 vs July 30 YoY Change (mil. yen) H1 Results Amount % Full-year Plan Plan Amount % Consol. net sales (15,015) (
Slide 16: Revisions to Forecasts for Fiscal 2019
Revisions to Forecasts for Fiscal 2019 FY2019 YoY Change FY2019 vs July 30 YoY Change (mil. yen) H1 Results Amount % H2 Plan Plan Amount % Consol. net sales (15,015) (12.0%) (13,559) (11.0%) - ex. pharmaceuticals business 110,247 (9,235) (7.7%) 109,753 (9,000) (7,020) (6.0%) Beauty care 107,733 (9,2
Slide 17: Agenda
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2019 4. Initiatives Going Forward & Appendices 16
Slide 18: Initiatives for 2019 Q4
Initiatives for 2019 Q4 Flagship brands Redevelop Japanese customer base Launch B.A Grandluxe III from B.A (November) Use year-end strategy involving Christmas box sets (Wrinkle Shot, etc.) to capture new customers Launch additional gift products to stimulate existing customers B.A Grandluxe
Slide 19: Initiatives for 2019 Q4
Initiatives for 2019 Q4 Overseas brands In China, closures of unprofitable stores and fixed cost reduction progressing as planned. Will shift business model from dealer sales to direct sales as we aim to increase brand presence Launch revamped mainstay series Nutri-Define in January 2020 Strengt
Slide 20: Improvement in Capital Efficiency and Shareholder Returns
(Appendix) Improvement in Capital Efficiency and Shareholder Returns Initiatives to Improve Capital Efficiency Operating income CAGR10% (%) ROE movement Achieve net income growth EPS which is higher than operating 16.0 14.2 Target for 2020 (Earnings per share) income growth by decreasing ROE 12%
Slide 21: About POLA ORBIS Group
(Appendix) About POLA ORBIS Group Beauty care is the core business of the Group, and 9 different cosmetics brands are operated under the Group umbrella FY2018 Consol. Net Sales ¥248.5 bil. Overseas Flagship Brands under Launched in Brands Brands development September 2018 ¥20,000 High Prestige Price
Slide 22: Beauty Care Business Brand Portfolio
(Appendix) Beauty Care Business Brand Portfolio Sales Brand Concept and products Price Main sales channel ratio* JP:Consignment sales through High-prestige skincare Approx. Beauty Directors, department store counters Leading-edge technology in 65% aging-care and skin-whitening ¥10,000 and onli
Slide 23: Long-term Vision
(Appendix) Long-term Vision STAGE3 Become a highly profitable global enterprise Consolidated net sales STAGE2 Goals for FY2020: •Consol. net sales: ¥250.0 bil. or higher (bil. yen) Further strengthen domestic •Overseas sales ratio: 20% STAGE1 earnings structure and •Operating margin: 13-15% accelera
Slide 24: 2017 – 2020 Medium-term Management Plan
(Appendix) 2017 – 2020 Medium-term Management Plan The final stage of the long-term vision for 2020. Aim to improve profitability in Japan, promote a solid shift toward overall profitability from overseas operations and build a brand structure for next-generation growth. Consolidated net sales Capit
Slide 25: Beauty Care Business Results for FY2016 – FY2018 by Brands
(Appendix) Beauty Care Business Results for FY2016 – FY2018 by Brands FY2016 FY2017 FY2018 2017 vs 2018 YoY Change (mil. yen) Results Results Results Amount % Consolidated net sales 218,482 244,335 248,574 4,239 1.7% Beauty care net sales 202,446 227,133 231,207 4,074 1.8% POLA 116,126 144,012 150,1