Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — FY2020 Earnings Presentation
40 slides from Pola Orbis's earnings presentation, 2021
Slide 1: Financial Results of 2020 / 2021-2023 Medium-term Management Plan
Financial Results of 2020 2021 – 2023 Medium-term Management Plan POLA ORBIS HOLDINGS INC. Representative Director and President Satoshi Suzuki This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonab
Slide 2: Agenda
Part I Fiscal 2020 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2021 Part II 2021 – 2023 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2021 – 2023 Medium-term Management Plan 3. Appendix 1
Slide 3: Part I Fiscal 2020 Consolidated Performance
Part I Fiscal 2020 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2021 2
Slide 4: Q4 Key Topics
Q4 Key Topics Cosmetics Market The overall size of the Japanese cosmetics market, including exports, shrank due to the impact of COVID-19 Inbound demand continued to drop significantly due to a decrease in foreign visitors to Japan As a new way of life continues to take root, the shift to e-co
Slide 5: Impact of COVID-19
Impact of COVID-19 Our Group’s Business Situation in 2020 Consignment Shutdowns and shortened opening hours were introduced at some stores with the declaration of Sales a state of emergency in April-May Department Conditions remained difficult for new customer acquisition, with consumers continu
Slide 6: Planned Variance Analysis
Planned Variance Analysis FY2019 FY2020 YoY change Oct 30, 2020 vs. Plan (Oct 30, 2020) (mil. yen) Results Results Amount % Plan Amount % Consol. net sales 219,920 176,311 (43,609) (19.8%) 175,000 1,311 0.7% Operating income 31,137 13,752 (17,384) (55.8%) 10,000 3,752 37.5% Ordinary income 30,630 12
Slide 7: Consolidated P&L Changes Analysis: Net Sales to Operating Income
Consolidated P&L Changes Analysis Net Sales to Operating Income FY2019 FY2020 YoY Change (mil. yen) Results Results Amount % Consolidated net sales 219,920 176,311 (43,609) (19.8%) Cost of sales 35,925 29,979 (5,945) (16.6%) Gross profit 183,995 146,331 (37,663) (20.5%) SG&A expenses 152,857 132,578
Slide 8: Consolidated P&L Changes Analysis: Operating Income to Profit
Consolidated P&L Changes Analysis Operating Income to Profit Attributable to Owners of Parent FY2019 FY2020 YoY Change (mil. yen) Results Results Amount % Operating income 31,137 13,752 (17,384) (55.8%) Non-operating income 394 344 (50) (12.9%) Non-operating expenses 901 1,517 615 68.2% Ordinary inc
Slide 9: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent A decline in gross profit, resulting from decreased revenue, pushed down profit attributable to owners of parent by -76.5% YoY (mil. yen) Positive impact Negative impact 20,000 19,694 16,000 12,000 8,000 Decrease due to POLA revenue decline 4
Slide 10: Part I Fiscal 2020 Consolidated Performance
Part I Fiscal 2020 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2021 9
Slide 11: Segment Results
Segment Results FY2019 FY2020 YoY Change (mil yen) Results Results Amount % Consolidated net sales 219,920 176,311 (43,609) (19.8%) Beauty care 214,886 171,658 (43,228) (20.1%) Real estate 2,619 2,291 (327) (12.5%) Others 2,415 2,361 (53) (2.2%) Operating income 31,137 13,752 (17,384) (55.8%) Beauty
Slide 12: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2019 FY2020 YoY Change (mil. yen) Results Results Amount % Beauty care net sales 214,886 171,658 (43,228) (20.1%) POLA 135,502 102,888 (32,613) (24.1%) ORBIS 50,726 45,415 (5,310) (10.5%) Jurlique 7,765 6,444 (1,320) (17.0%) H2O PLUS 1,470 722 (747) (50.9%) B
Slide 13: Brand Analysis (1)
Brand Analysis (1) FY2020 Results Topics Struggled to acquire new customers at domestic storefront operations Full renewal of the POLA top series Domestic e-commerce performed strongly; acquired purely new customers B.A (September-October) Initial sales of the renewed B.A series were strong,
Slide 14: Brand Analysis (2)
Brand Analysis (2) FY2020 Results Topics New mail-order (online and catalog) customer acquisition progressed well (+40% YoY) New series Online revenue recorded double-digit growth for the three Launched ORBIS A (October) months of Q4 The newly-released ORBIS U. performed well, and structural
Slide 15: Brand Analysis (3) Overseas Brands
Brand Analysis (3) Overseas Brands FY2020 Results Topics Losses were ameliorated through structural reforms and fixed cost Jurlique reductions, despite a decline in revenue Jurlique experienced some store shutdowns due to lockdowns in Launch new body care (October) Australia; online sales in C
Slide 16: Brand Analysis (4) Brands Under Development
Brand Analysis (4) Brands Under Development FY2020 Results Topics Department store sales struggled with a slow recovery in traffic Won best THREE domestic e-commerce grew (YoY +90%) cosmetics awards DECENCIA achieved double-digit revenue and income growth, due to new customer acquisition and
Slide 17: Part I Fiscal 2020 Consolidated Performance
Part I Fiscal 2020 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2021 16
Slide 18: Forecasts for Fiscal 2021
Forecasts for Fiscal 2021 FY2020 YoY Change FY2021 YoY Change (mil. yen) Full-year Results Amount % Full-year Plan Amount % Consol. net sales 176,311 (43,609) (19.8%) 190,000 13,688 7.8% Beauty care 171,658 (43,228) (20.1%) 185,900 14,241 8.3% Real estate 2,291 (327) (12.5%) 2,000 (291) (12.7%) Othe
Slide 19: Part II 2021-2023 Medium-term Management Plan
Part II 2021 – 2023 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2021 – 2023 Medium-term Management Plan 3. Appendix 18
Slide 20: Overview of 2017-2020 Medium-term Management Plan
Overview of 2017-2020 Medium-term Management Plan 【Management Indicators】 FY2020 Results 300,000 250,000 200,000 150,000 Net sales ¥250.0 bil. ¥176.3 bil. 100,000 50,000 0 2015 2016 2017 2018 2019 * 2020 （mil. yen） *Including -¥12.3 bil. from the transfer of the pharmaceuticals business 50,000 20.0%
Slide 21: Overview of 2017-2020 Medium-term Management Plan: Growth Strategies
Overview of 2017-2020 Medium-term Management Plan 【Growth Strategies】 Strategies Evaluation - Could not cover the decrease in POLA inbound & buyers Sustain stable growth of flagship 1 brands to lead Group earnings Fell short - Acquired new customers and achieved unit price increases for ORBIS - Achi
Slide 22: Part II 2021-2023 Medium-term Management Plan
Part II 2021 – 2023 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2021 – 2023 Medium-term Management Plan 3. Appendix 21
Slide 23: Impact of COVID-19 and Our Response
Impact of COVID-19 and Our Response Changes in the External Environment and the Acceleration of Trends Due to COVID-19 Channel Shift Decrease in Inbound Diversification of Values Acceleration of DX Caused by New Normal Demand and New Needs Increasing speed of DX Pursuit of intrinsic quality Storefro
Slide 24: Trends in the Cosmetics Market
Trends in the Cosmetics Market Domestic cosmetics market Percentage by Route China Cosmetics Market (100 mil. yen) Cosmetic store Drugstore 14,000 Department store E-commerce (100 mil. yen) 100% 100,000 12,000 80% 80,000 10,000 8,000 60% 60,000 6,000 40% 40,000 4,000 20% 20,000 2,000 0% 0 0 Company
Slide 25: Positioning of the New Medium-term Management Plan
Positioning of the New Medium-term Management Plan (2021-2023) Position the period of the New Medium-term Management Plan (2021-2023) as a time to build a base for sustainable growth Build a base / Accelerate growth Stable growth Details to be announced in the Long-term Management Plan 250,000 Net 8
Slide 26: 2021-2023 Medium-term Management Plan
2021 – 2023 Medium-term Management Plan Management Indicators for 2023 Consolidated net sales ⇒ ¥215.0 to 225.0 bil. in FY2023 CAGR 7 to 9％ Overseas sales ratio ⇒ 20 to 25% in FY2023 Net Sales (15% in FY2020) CAGR 20 to 25％ Domestic e-commerce sales ratio ⇒ 30% in FY2023 (24% in FY2020) Oper
Slide 27: Strategy 1. Evolve Domestic Direct Selling: POLA
Strategy 1. Evolve Domestic Direct Selling: POLA Construct a digital platform spanning all sales channels Redesign communication for each channel, maximize value provided and enhance operational efficiency Sales CAGR 40% Sales CAGR 1 to 2% Domestic E-commerce in FY2021 to FY2023 Consignment Sales
Slide 28: Strategy 1. Evolve Domestic Direct Selling: ORBIS
Strategy 1. Evolve Domestic Direct Selling: ORBIS “Establish a presence as a skincare brand” and “use the app as the core communication method” Maximize LTV, achieve a swift return to a growth trajectory and build a stable earnings structure Operating margin: 20% Percentage of net sales through
Slide 29: Strategy 2. Grow Overseas Businesses Profitably: POLA
Strategy 2. Grow Overseas Businesses Profitably: POLA China and travel retail will drive growth Sales CAGR 20 to 25% Overseas Net Sales Trend in FY2021 to FY2023 China ■ China sales 30.0 bil. Develop loyal customers, enhance LTV and achieve profitable ■ Travel retail sales growth through the approac
Slide 30: Strategy 2. Grow Overseas Businesses Profitably: Overseas Brands
Strategy 2. Grow Overseas Businesses Profitably: Overseas Brands Cost structure reforms aimed at returning to profit have generally concluded, and measures to enhance cost efficiency will continue to be implemented Expand the top line to achieve a profit for Jurlique in 2022, and H2O PLUS in 202
Slide 31: Strategy 3. Profit Contribution From Brands Under Development
Strategy 3. Profit Contribution From Brands Under Development Regrow businesses and improve profitability 2023: turn a profit across ACRO (embark on radical structural reforms) Channel shift Clarify the role of customer touchpoints Selection and concentration on “convenient e-commerce” and T
Slide 32: Strategy 4. Strengthen Operations: R&D
Strategy 4. Strengthen Operations: R&D Direction of Research and Development Strengthen “basic research” and “research of new dosage forms” that creates new value Establish a TDC (Technical Development Center) to strengthen research of new dosage forms and take on the production function for high va
Slide 33: Strategy 4. Strengthen Operations: Sustainability
Strategy 4. Strengthen Operations: Sustainability The Sustainability Policy that Supports Our Medium-term Management Plan Our Group philosophy “Sensitize the world to beauty” We will respond to dramatic social change and renew our commitment to sustainability to realize our philosophy Establish five
Slide 34: Strategy 5. Expand New Brands and Domains of Beauty
Strategy 5. Expand New Brands and Domains of “Beauty” Strengthen our portfolio through initiatives including new brand creation and M&A, which utilized CVC and alliances Begin consideration of business expansion into new domains, for medium- to long-term growth Beauty Domain Business Expansion t
Slide 35: Share Acquisition of tricot, Inc. as a Wholly-owned Subsidiary
Share Acquisition of tricot, Inc. as a Wholly-owned Subsidiary Conclusion of a share transfer agreement to acquire all the shares of tricot, Inc., a CVC investee Acquire the brand and its products that accurately capture Strengthen portfolio changing values of beauty, the ability to respond to Accel
Slide 36: Improvement in Capital Efficiency and Shareholder Returns
Improvement in Capital Efficiency and Shareholder Returns Initiatives to Improve Capital Efficiency ROE movement (％) Operating income CAGR30% 16.0 14.2 Achieve net income growth EPS which is higher than operating Target for 2023 (Earnings per share) income growth by decreasing 12.0 10.4 9.0 ROE
Slide 37: Part II 2021-2023 Medium-term Management Plan
Part II 2021 – 2023 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2021 – 2023 Medium-term Management Plan 3. Appendix 36
Slide 38: (Appendix) 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 FY2020 Consol. Net Sales ¥176.3 bil. Overseas Flagship Brands under Brands Brands development ¥20,000 High Prestige Price Range ¥10,000 Prestige ¥5,
Slide 39: (Appendix) Beauty Care Business Brand Portfolio
(Appendix) Beauty Care Business Brand Portfolio Sales Brand Concept and products Price Main sales channel ratio* High-prestige skincare JP: Consignment sales through Beauty Directors, Approx. 60% Leading-edge technology ¥10,000 department stores and e-commerce in aging-care and skin- Oversea
Slide 40: (Appendix) Beauty Care Business Results for FY2018-FY2020 by Brands
(Appendix) Beauty Care Business Results for FY2018 – FY2020 by Brands FY2018 FY2019 FY2020 2019 vs 2020 YoY change (mil. yen) Results Results Results Amount % Consolidated net sales 248,574 219,920 176,311 (43,609) (19.8%) Beauty care net sales 231,207 214,886 171,658 (43,228) (20.1%) POLA 150,183 1