Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — FY2016 Earnings Presentation
39 slides from Pola Orbis's earnings presentation, 2017
Slide 1: Financial Results of 2016 and 2017-2020 Medium-term Management Plan
Financial Results of 2016 2017 – 2020 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: Part I and Part II Agenda
Part I Fiscal 2016 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2017 Part II 2017 – 2020 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2017 – 2020 Medium-term Management Plan 3. Topics and Appen
Slide 3: Part I Fiscal 2016 Consolidated Performance
Part I Fiscal 2016 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2017 2
Slide 4: Q4 Key Topics
Q4 Key Topics Cosmetic Market Japanese cosmetic market overall exceeded the previous year however, pure domestic demand seemed to be flat compared to last year.* Skincare market grew better than overall market and kept favorable trend especially in urban department stores. As for overseas, dep
Slide 5: Results of FY2016 and Actual vs Planned Variance Analysis
Results of FY2016 and Actual vs Planned Variance Analysis FY2015 FY2016 YoY change vs. Plan (Oct 31, 2016) (mil. yen) Results Results Amount % Amount % Consol. net sales 214,788 218,482 3,693 1.7% (4,517) (2.0%) Operating income 22,511 26,909 4,397 19.5% 909 3.5% Ordinary income 22,359 27,191 4,832
Slide 6: Analysis of Consolidated P&L Changes: Net Sales to Operating Income
Analysis of Consolidated P&L Changes Net Sales to Operating Income FY2015 FY2016 YoY (mil. yen) Results Results Amount % Consolidated net sales 214,788 218,482 3,693 1.7% Cost of sales 41,800 40,940 (859) (2.1%) Gross profit 172,988 177,542 4,553 2.6% SG&A* expenses 150,477 150,633 155 0.1% Operatin
Slide 7: 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 FY2015 FY2016 YoY (mil. yen) Results Results Amount % Operating income 22,511 26,909 4,397 19.5% Non-operating income 585 462 (122) (20.9%) Non-operating expenses 737 180 (556) (75.5%) Ordinary income 22
Slide 8: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent Profit attributable to owners of parent was up 23.8% yoy. Increases in gross profit and extraordinary income covered extraordinary loss incurred. POLA: Classification changes in commission system Positive impact Negative impact (mil. yen) Jur
Slide 9: Part I Fiscal 2016 Consolidated Performance
Part I Fiscal 2016 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2017 8
Slide 10: Segment Results
Segment Results FY2015 FY2016 YoY (mil yen) Results Results Amount % Consolidated net sales 214,788 218,482 3,693 1.7% Beauty care 200,570 202,446 1,875 0.9% Real estate 2,951 3,043 91 3.1% Others 11,266 12,992 1,726 15.3% Operating income 22,511 26,909 4,397 19.5% Beauty care 21,290 25,974 4,683 22
Slide 11: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2015 FY2016 YoY (mil. yen) Results Results Amount % Beauty care net sales 200,570 202,446 1,875 0.9% POLA 109,352 116,126 6,773 6.2% ORBIS 56,354 55,857 (497) (0.9%) Jurlique 18,390 13,118 (5,271) (28.7%) H2O PLUS 3,944 2,547 (1,397) (35.4%) Brands under deve
Slide 12: Brand Analysis (1)
Brand Analysis (1) FY2016 Topics Inbound ratio was approximately 11%. (+1.5 pt YoY) The whitening “WHITE SHOT” Whitening and aging-care products maintained strong. series and aging-care “B.A” series Both the number of customers and average purchase were sold well throughout the year. price gre
Slide 13: Brand Analysis (2)
Brand Analysis (2) FY2016 Topics Average purchase price showed some improvements supported by new product launches. However, sales Introduced new items decreased because customer acquisition was less than to drive the average expected due to restraints on advertising expenses. purchase price per
Slide 14: Brand Analysis (3)
Brand Analysis (3) FY2016 Topics Sales decreased by 20% (AUD basis). Launched various gift kits Sales in China decreased yoy because of the which consist of best seller change to agency model, however, in retail sales and limited products for basis it remained at the same level as last year. y
Slide 15: Brand Analysis (4)
Brand Analysis (4) FY2016 Topics Rebranded products receives favorable reviews H2O PLUS decided to withdraw from China in 1H. however, the number of retailers did not increase One-time cost due to the withdrawal amounted to as planned. approximately 500 million yen. Decreased operating income
Slide 16: Brand Analysis (5) Brands Under Development
Brand Analysis (5) Brands Under Development FY2016 Topics At THREE, new products caught on, both new stores THREE : Multiple products and existing stores performed very well, overseas won best cosmetic awards at stores progressed well and overall sales were up magazines such as VoCE, approximate
Slide 17: Development of Professional Beauty Directors and Inbound Sales at POLA
Development of Professional Beauty Directors and Updates on Inbound Sales at POLA Brand Progress of development of professional Beauty Directors ■Forming the organization centralized in professional Beauty Directors (BDs). - In order to improve “Quality of Sales", development of professional BDs has
Slide 18: Impairment Loss on Sales License of Duac Gel
Impairment Loss on Sales License of Duac® Gel Recorded impairment loss at pharmaceutical business for 2016 4Q Launched Duac® Gel, a combination drug In order to seek untapped market, for the treatment of acne vulgaris in POLA PHARMA has undertaken 2015 Japanese market under sales alliance with Infor
Slide 19: Part I Fiscal 2016 Consolidated Performance
Part I Fiscal 2016 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecast for Fiscal 2017 18
Slide 20: Forecasts for FY2017
Forecasts for FY2017 FY2017 YoY Change FY2016 YoY Change Full-year (mil. yen) Full-year Plan Amount % Results Amount % Consol. net sales 227,000 8,517 3.9% 218,482 3,693 1.7% Beauty care 210,500 8,053 4.0% 202,446 1,875 0.9% Real estate 2,500 (543) (17.9%) 3,043 91 3.1% Others 14,000 1,007 7.8% 12,9
Slide 21: Part II 2017-2020 Medium-term Management Plan
Part II 2017 – 2020 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2017 – 2020 Medium-term Management Plan 3. Topics and Appendix 20
Slide 22: Overview of the Previous Mid-term Management Plan
Overview of the Previous Mid-term Management Plan 【Management Indicators】 【Growth Strategies】 Goals Results Evaluation Strategies Evaluation CAGR Consolidated CAGR* Sustain stable growth of flagship Excelled 1 Achieved net sales 3 - 4% 4.5% brands to lead Group earnings Overseas FY2016 FY2016 Sales
Slide 23: Overview of the Previous Mid-term Consolidated Performance
Overview of the Previous Mid-term Consolidated Performance Net sales Operating 営業利益額income (mil. ¥) 250,000 40,000 12.3% 10.5% 200,000 8.9% 30,000 8.4% 150,000 7.4% 7.7% 7.5% 20,000 100,000 10,000 50,000 0 0 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 【2011-2013 Mid-term 【2
Slide 24: Part II 2017-2020 Medium-term Management Plan
Part II 2017 – 2020 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2017 – 2020 Medium-term Management Plan 3. Topics and Appendix 23
Slide 25: Long-term Vision for 2020
Long-term Vision for 2020 The 2017-2020 new medium-term management plan is positioned as the final stage for realizing the long-term vision for 2020 and also outlined for solidifying the foundation for the next phase STAGE3 Become a highly profitable global enterprise Consolidated STAGE2 Goals for F
Slide 26: 2017-2020 Medium-term Management Plan: Progress and Goals
2017 – 2020 Medium-term Management Plan Progress for 2020 Long-term Vision Consolidated net sales Operating margin Overseas sales ratio ¥250.0 bil. or higher 13% - 15% 20％ Progressing better than plan Progressing less than halfway against 20% Progressing in line with plan Profit structure improvemen
Slide 27: Cosmetic Market
Cosmetic Market 【Domestic Market】 ■ In 2016, domestic cosmetic market showed 1-2% growth however, pure domestic seemed flat excluding inbound. ■ Market ratio increased in whitening and aging-care fields, and high prestige products priced higher that ¥10,000 where the Group puts efforts in. ■ The Gro
Slide 28: Initiatives for 2017 Onward: Strategy 1
Initiatives for 2017 Onward Strategy 1. Sustain stable growth of flagship brands to lead Group earnings Reinforce business platform for long-term stable growth ■Develop and launch next-generation products with high differentiation in aging-care and whitening field such as Wrinkle Shot Serum ■Aim for
Slide 29: Initiatives for 2017 Onward: Strategy 2
Initiatives for 2017 Onward Strategy 2. Bring overseas operations solidly into the black overall Recover and seek profitable business growth ■ Restructure supply chain across the Group ■ Strengthen brand strategy and review product portfolio ■ Contribute to profitability with sales growth at existin
Slide 30: Initiatives for 2017 Onward: Strategy 3
Initiatives for 2017 Onward Strategy 3. Expand brands under development, create new brands, pursue M&A activity Brands under development aim to achieve CAGR10% in sales* and 20% OP increase ■ Open around 10 stores annually and increase sales at existing stores 【Plan for 2020】 ■ Improve profitability
Slide 31: Initiatives for 2017 Onwards: Strategy 4
Initiatives for 2017 Onwards Strategy 4. Strengthen operations (reinforce R&D, human resources and governance) ■ Develop new ingredients for aging-care and skin-whitening products R&D ■ Develop new product pipeline following Wrinkle Shot Serum ■ Increase budget for R&D investments as the need arises
Slide 32: Initiatives for FY2017 Onwards: Strategy 5
Initiatives for FY2017 Onwards Strategy 5. Enhance capital efficiency and enrich shareholder returns Initiatives to Improve Capital Efficiency Operating income CAGR15% (％) ROE movement Achieve net income growth 10.0 9.5 10.0 EPS which is higher than operating Target for 2020 (Earnings per share)
Slide 33: Looking ahead to 2029: New Group Philosophy
Looking ahead to 2029 : New Group Philosophy Started consideration of a new long-term vision with an eye towards 2029, the 100th anniversary of the Group’s foundation. Re-establish group philosophy aiming for long-term growth <Clarification of the providing value> We would like to provide unique val
Slide 34: Part II 2017-2020 Medium-term Management Plan
Part II 2017 – 2020 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. 2017 – 2020 Medium-term Management Plan 3. Topics and Appendix 33
Slide 35: Topics (1) POLA Wrinkle Shot Serum
Topics (1) POLA Wrinkle Shot Serum Wrinkle Shot Serum was launched on January 1, 2017 Sales for the first month exceeded the initial plan The biggest growth driver at POLA brand for FY2017, A first-ever “quasi drug that improves wrinkles” “Wrinkle Shot Serum” has been launched 【Sales for January 201
Slide 36: Topics (2) Stock Split
Topics (2) Stock Split Four-for-one stock split is scheduled on April 1, 2017. Shareholders’ benefit program will be partially amended accordingly. Objective and outline ■ Provide the environment where investors can make investments Reason why Pola Orbis stock is more easily and increase stock liqui
Slide 37: Appendix: About POLA ORBIS Group
Appendix: About POLA ORBIS Group Beauty care is the core business of the Group, and 7 different cosmetic brands are operated under the Group umbrella FY2016 Consol. Net Sales ¥218.4 bil. Overseas Flagship Brands under Brands Brands development ¥20,000 High Prestige Price Range ¥10,000 Prestige ¥5,00
Slide 38: Appendix: Beauty Care Business Brand Portfolio
Appendix : Beauty Care Business Brand Portfolio Sales Brand Concept and products Price Sales channel ratio* Consignment sales through High-prestige skincare Approx. Beauty Directors： 57% Leading-edge technology in ¥10,000 POLA THE BEAUTY (PB), anti-aging and skin-whitening Esthe-inn and conven
Slide 39: Appendix: Beauty Care Business Results for FY2014-FY2016 by Brands
Appendix : Beauty Care Business Results for FY2014 – FY2016 by Brands FY2014 FY2015 FY2016 2015 vs 2016 YoY Change (mil. yen) Results Results Results Amount % Consolidated net sales 198,094 214,788 218,482 3,693 1.7% Beauty care net sales 184,475 200,570 202,446 1,875 0.9% POLA 99,571 109,352 116,12