Milbon Co., Ltd. · TSE:4919

Milbon — FY2018 Earnings Presentation

59 slides from Milbon's earnings presentation, Feb 13, 2019

  1. Slide 1: FY2018 Financial Results Presentation Materials

    Milbon Co., Ltd. FY2018 Financial Results Presentation Materials February 13, 2019 Copyright © 2019 Milbon. All rights reserved.

  2. Slide 2: Table of Contents

    Table of Contents P3 Consolidated Operating Results P4 Consolidated Sales by Product Category P10 Consolidated Statement of Earnings P11 Consolidated Trends in Capital Expenditures and R&D Expenses P12 Trends in Market Related Data, Trends in FPs P13 Outlook of Milbon Group P14 Outlook of Overseas S

  3. Slide 3: Change in fiscal year end and notation of periods

    Starting in the previous fiscal year, the Company changed its fiscal year end from December 20 to December 31. Additionally, the Company’s consolidated subsidiaries changed their fiscal year end from September 30 to December 31. While the fiscal year under review covers the 12 months from January 1,

  4. Slide 4: Consolidated Operating Results

    Consolidated Operating Results Strong performance of hair care products, and premium brands in particular, drove overall sales. The fashion color Addicthy also performed strongly, and both sales and profit recorded double-digit growth. (Unit: million yen) FY2017 * Increase/ Increase/ (Adjusted to 12

  5. Slide 5: Consolidated Sales by Product Category [Hair Care Product]

    Consolidated Sales by Product Category [Hair Care Product] Strong performance of premium brands drove sales in hair care product category (Unit: million yen) FY2017 * FY2018 * ※） Increase/Decrease Increase/Decrease ratio (%) (Adjusted to 12-month period) 18,688 21,124 2,436 13.0 • The upgrade of the

  6. Slide 6: A Premium Brand, Aujua

    A Premium Brand, Aujua Upgraded products launched in November 2017 performed well Number of salons (Unit: salons) Increase/ Increase/ FY2017 year-end FY2018 *1 Decrease ratio Decrease (%) 3,166 3,271 105 3.3 Sales (Unit: million yen) FY2017 *2 Increase/ Increase/ (Adjusted to 12-month FY2018 *2 Decr

  7. Slide 7: A Premium Brand, milbon

    A Premium Brand, “milbon” Strong performance with progress in salons both in Japan and overseas Number of salons *1 (Unit: salons) Increase/ Increase/ FY2017 year-end FY2018 year-end Decrease ratio Decrease (%) 3,966 5,571 1,605 40.5 Sales (Unit: million yen) FY2017 *2 Increase/ (Adjusted to 12-mont

  8. Slide 8: Consolidated Sales by Product Category [Hair Coloring Product]

    Consolidated Sales by Product Category [Hair Coloring Product] With additional color, Addicthy, launched last year, led steady sales Sales (Unit: million yen) FY2017 * FY2018 * Increase/Decrease YoY change (%) (Adjusted to 12-month period) 11,264 12,202 938 8.3 • Ordeve Addicthy, launched in Februar

  9. Slide 9: A Premium Organic Brand, Villa Lodola (1)

    A Premium Organic Brand, Villa Lodola (1) Villa Lodola Color contributes to growth in brand sales Number of salons (Unit: salons) Increase/ Increase/ FY2017 year-end FY2018 year-end Decrease ratio Decrease (%) 6,895 8,085 1,190 17.3 Sales (Unit: million yen) FY2017 * Increase/ Increase/ (Adjusted to

  10. Slide 10: 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. Sales (Unit: million

  11. Slide 11: Consolidated Statement of Earnings

    Consolidated Statement of Earnings <Consolidated Statement of Earnings> (Unit: million yen) <Breakdown of net sales by product category> (Unit: million yen) % FY2017 * Increase/ FY2017 * % total (Adjusted to 12- FY2018 * % total Increase/ Decrease (Adjusted to 12- total FY2018* month period) sales D

  12. Slide 12: Consolidated Trends in Capital Expenditures and R&D Expenses

    Consolidated Trends in Capital Expenditures and R&D Expenses (Unit: million yen) Category FY2014 FY2015 FY2016 FY2017 FY2018 Capital expenditures 1,028 2,779 4,262 1,570 1,149 Depreciation and 1,004 1,033 1,077 1,272 1,370 amortization Amount 1,168 1,214 1,232 1,422 1,479 R&D exp. % to sales 4.6 4.4

  13. Slide 13: Trends in Market Related Data, Trends in Fieldpersons (FPs)

    Trends in Market Related Data, Trends in Fieldpersons (FPs) Market trends (Japan) 2013 2014 2015 2016 2017 2018 Remarks Number of salons 247,578 ― 234,089 237,525 240,299 243,360 Ministry of Health, Labour and Welfare, Report on (salons) Public Health Administration and Services Number of beauty sal

  14. Slide 14: Outlook of Milbon Group

    Outlook of Milbon Group Japan continues to be steady (comparison periods differ for overseas subsidiaries due to change to fiscal year end; see next page) (Unit: million yen) Increase/ Start Forex rates Forex rates FY2017 *1 FY2018 *1 Decrease operations FY2017 (Yen) FY2018 (Yen) ratio (%) Japan Mil

  15. Slide 15: Outlook of Overseas Subsidiaries (1)

    Outlook of Overseas Subsidiaries (1)  For the outlook of overseas subsidiaries, comments are based on year-on-year comparisons for the period of January through December (12 months), with figures in local currencies. Increase/ Currencies FY2017 FY2018 Decrease ratio (unit) (%) USA US dollar 5,256 5

  16. Slide 16: Outlook of Overseas Subsidiaries (2)

    Outlook of Overseas Subsidiaries (2) CHINA (Milbon Trading (Shanghai) Co., Ltd.) The direct sales and distributor categories grew by more than 20% and 30%, respectively. By product, the fashion color Ordeve is progressing steadily, partly due to the results of holding seminars for color specialists

  17. Slide 17: Milbon Group 2019-2023 Medium-Term Management Plan

    Milbon Group 2019-2023 Medium-Term Management Plan Ryuji Sato, President & CEO Copyright © 2019 Milbon. All rights reserved. 16

  18. Slide 18: Summary of the Previous Medium-Term Management Plan and Looking Toward the New Plan

    Summary of the Previous Medium-Term Management Plan and Looking Toward the New Medium-Term Management Plan Copyright © 2019 Milbon. All rights reserved. 17

  19. Slide 19: Summary of the Previous Medium-Term Management Plan (2015-2018)

    I. Summary of the Previous Medium-Term Management Plan (2015-2018)  Performance in Japan exceeded the plan, with net sales growing approximately 10,000 million yen and operating income growing approximately 1,800 million yen from the previous medium-term end, achieving the FY2019 target a year ahea

  20. Slide 20: Review of the Previous Medium-Term Management Plan

    I. Summary of the Previous Medium-Term Management Plan (2015-2018) Review of the Previous Medium-Term Management Plan Copyright © 2019 Milbon. All rights reserved. 19

  21. Slide 21: Global market environment

    II. Looking Toward the New Medium-Term Management Plan 1. Global market environment [Global Trends] - Four Impacts - 1) Movement and diversification of economic center of gravity 2) Increased flows and complexity of global markets 3) Aging demographics on a global scale 4) Accelerating technological

  22. Slide 22: Status of domestic beauty market

    II. Looking Toward the New Medium-Term Management Plan 2. Status of domestic beauty market 1) Average length of employment ⇨ Difficult to retain hair dressers 2) Trends in numbers of hair designers Acquirers of national certification Trends in numbers of employees (per year) ⇨ Remains difficult to h

  23. Slide 23: Increasingly diverse work styles

    II. Looking Toward the New Medium-Term Management Plan 3) Increasingly diverse work styles Emergence of freelance work and outsourced salons, entry by other business types ⇨ Slow to respond to broader selection 4) Higher personnel expenses due to labor, higher starting salaries, etc. ⇨ Increase in m

  24. Slide 24: Roundup of domestic beauty market

    II. Looking Toward the New Medium-Term Management Plan Roundup of domestic beauty market We now need the following with a new value system: Management Instead of “because it’s a beauty salon…,” (hiring) capability create the same environment as a top local enterprise Marketing (customer) Tackle not

  25. Slide 25: Trend of corporate social responsibility

    II. Looking Toward the New Medium-Term Management Plan 3. Trend of corporate social responsibility ⇨ The way of being an enterprise that contributes to SDGs is in concern Copyright © 2019 Milbon. All rights reserved. 24

  26. Slide 26: Toward a new era

    II. Looking Toward the New Medium-Term Management Plan Four global impacts Trends in Japan Status of domestic beauty market Toward a new era Trend of corporate social responsibility Copyright © 2019 Milbon. All rights reserved. 25

  27. Slide 27: New Medium-Term Management Plan 2019-2023

    2019-2023 New Medium-Term Management Plan Copyright © 2019 Milbon. All rights reserved. 26

  28. Slide 28: Medium-Term Vision & Global Vision Roadmap

    III. 2019-2023 New Medium-Term Management Plan 1. Milbon Group Medium-Term Vision & Global Vision Roadmap From taking the perspective of industry to truly taking the perspective of society and customers “Change the Stage!!” —To continuously create a new future— Convert to and pursue the creation of

  29. Slide 29: Global vision roadmap based on the MILBON WAY

    III. 2019-2023 New Medium-Term Management Plan ◆Create a global vision roadmap aiming to improve corporate value over the medium- to long-term, based on the MILBON WAY The MILBON WAY <Milbon Global Vision> Global Vision Roadmap From taking the perspective of industry to truly taking the perspective

  30. Slide 30: 2019-2023 New Medium-Term Management Plan

    III. 2019-2023 New Medium-Term Management Plan ■Toward a company that creates a ■Toward a company that contributes to chain of innovation from the SDGs = Toward a company that earns perspective of society and customers trust through sustainable growth and contributions to society Copyright © 2019 Mi

  31. Slide 31: Consolidated sales target: 48,500 million yen

    III. 2019-2023 New Medium-Term Management Plan 2. 2023 Medium-Term Management Plan sales targets Consolidated sales target: 48,500 million yen * The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the beginning of FY2019. Copyright © 2019 Milbon. All rights reserved. 30

  32. Slide 32: Global position

    III. 2019-2023 New Medium-Term Management Plan ◆Global position FY2018 FY2023 * Japan share calculated based on gross sales Copyright © 2019 Milbon. All rights reserved. 31

  33. Slide 33: Japan Market Strategy

    2019-2023 New Medium-Term Management Plan Japan Market Strategy Copyright © 2019 Milbon. All rights reserved. 32

  34. Slide 34: Japan market strategy

    III. 2019-2023 New Medium-Term Management Plan 3. Japan market strategy From an industry perspective toward truly taking the perspective of society and customers From “CHALLENGE 80”* to next stage “NEXT 100” LIFETIME BEAUTY INNOVATION for NEXT100 “NEXT 100” signifies employment and customer capabili

  35. Slide 35: Five measures for Japan market

    III. 2019-2023 New Medium-Term Management Plan 4. Five measures for Japan market [Measure 1] Enhance system to support salon productivity improvements (1) Product development • Practice R&D based on “R&D VISION 2028” • Enhance customer perspective, leading-edge technology ⇨ creating high value-added

  36. Slide 36: Measure 1: Create system - Continued

    III. 2019-2023 New Medium-Term Management Plan [Measure 1] Create system - Continued - (3) Build studio site network Planned for FY2019 ●New (Matsuyama) Study for FY2020 or later ●Expand areas of coverage (Niigata, Kagoshima, etc.) ●Enhance coverage area in Tokyo metropolitan area (Shibuya, Fujisawa

  37. Slide 37: Measure 2 and 3: BtoBtoC communication capability

    III. 2019-2023 New Medium-Term Management Plan [Measure 2] Support enhancement of BtoBtoC real communication capability  MCM (Milbon Counseling Method) ⇨Build total counseling techniques and education activities from hair care to skin care [Measure 3] Real contact BtoBtoC digital communication Face

  38. Slide 38: Measure 4: Challenge in cosmetic products business

    III. 2019-2023 New Medium-Term Management Plan [Measure 4] Challenge in cosmetic products business i. New partner KOSÉ Corporation ① Partnered with L’Oréal 1963-2001 = Commitment to beauty ② Shared value toward education activities ③ Insistence on high added value with focus on basic cosmetics = Pro

  39. Slide 39: Cosmetic products business - Why cosmetics?

    III. 2019-2023 New Medium-Term Management Plan [Measure 4] Cosmetic products business - Continued - ii. Why cosmetics? ① Dedicated salon sales after 1, 5, 10, 43 years ⇨ Difficult with just hair care ② Global vision in 2010 ③ Contact with changes in women through 20 years of change in Taiwan ④ 2002-

  40. Slide 40: Cosmetic products business - Sales target

    III. 2019-2023 New Medium-Term Management Plan [Measure 4] Cosmetic products business - Continued - iii. March 2019 product presentation ① 22-23 start items for dedicated salon cosmetics brand ② Education support system: Milbon (FCE) & distributors (ambassadors) iv. Medium-Term Vision First, aim for

  41. Slide 41: Measure 5: Online magazine/official SNS accounts

    III. 2019-2023 New Medium-Term Management Plan [Measure 5] Advance corporate and product branding with view toward creating salon take-home product business and cosmetic products business ① Online magazine/official SNS accounts Official SNS accounts - Twitter/Instagram - Milbon online magazine - Fin

  42. Slide 42: Measure 5: Video promotion

    III. 2019-2023 New Medium-Term Management Plan [Measure 5] Advance branding - Continued - ② Video promotion Get more than 3 million total views on YouTube and other social media Copyright © 2019 Milbon. All rights reserved. 41

  43. Slide 43: Measure 5: Exclusive advertising at Stations

    III. 2019-2023 New Medium-Term Management Plan [Measure 5] Advance branding - Continued - ③ Exclusive advertising at Stations Osaka Umeda Station From Feb. 18 NEW Fukuoka Hakata Station Yaesu, Tokyo Station From Feb. 4 From Feb.11 NEW Nagoya Sakae Station From Feb. 15 Copyright © 2019 Milbon. All ri

  44. Slide 44: FY2019 Japan Market Key Points of Strategy Activities

    2019-2023 New Medium-Term Management Plan FY2019 Japan Market Key Points of Strategy Activities Copyright © 2019 Milbon. All rights reserved. 43

  45. Slide 45: Initiatives in Japan in FY2019

    III. 2019-2023 New Medium-Term Management Plan 5. Initiatives in Japan in FY2019 ◆“Lifetime beauty partner” education for creation of “lifetime beauty salons” Three environments needed to enhance employment capability ① Environment for developing people (human resource development Three bands needed

  46. Slide 46: New products in FY2019

    III. 2019-2023 New Medium-Term Management Plan ◆New products in FY2019 (Unit: million yen) Launch Target Category Product name month amount Hair coloring ORDEVE Seedil June 800 products ORDEVE Seedil Interval Re:Care Gray-hair coloring ORDEVE Ledress March 700 products (create (Hair manicure) lifeti

  47. Slide 47: International Market Strategy

    2019-2023 New Medium-Term Management Plan International Market Strategy Copyright © 2019 Milbon. All rights reserved. 46

  48. Slide 48: International market strategy

    III. 2019-2023 New Medium-Term Management Plan 6. International market strategy [1] Advance region-specific growth strategies with sense of speed ① Launch International Planning Division responsible for global strategy (in Tokyo Head Office) ② “Quality” of education sales* with market activity human

  49. Slide 49: Create market base by becoming more local

    III. 2019-2023 New Medium-Term Management Plan [2] Create market base by becoming more local  Make human resources local ① Milbon Korea Co., Ltd. All employees are local hires ② Milbon Trading (Shanghai) Co., Ltd. All branch managers are local hires ③ Representative office in Turkey Representative

  50. Slide 50: Key points for New Medium-Term Management Plan

    III. 2019-2023 New Medium-Term Management Plan [3] Key points for New Medium-Term Management Plan ① Asia region  China (continuous growth and build multifaceted supply system)  Korea (build new growth strategy) ② Europe and US region  Hair coloring product for Europe and US markets: SOPHISTONE St

  51. Slide 51: New Medium-Term Financial Targets & Targets for FY2019

    New Medium-Term Financial Targets & Targets for FY2019 Copyright © 2019 Milbon. All rights reserved. 50

  52. Slide 52: Medium-term financial targets

    III. 2019-2023 New Medium-Term Management Plan 7. Medium-term financial targets (Unit: million yen) FY2023 target Increase/ FY2018 results* CAGR (New medium-term end)* Decrease 2018-2023 over medium- Amount % total sales Amount % total sales （%） term plan Net sales 33,882 100.0 48,500 100.0 14,617 7

  53. Slide 53: Sales targets by country

    III. 2019-2023 New Medium-Term Management Plan 9. Sales targets by country (Unit: million yen) CAGR Forex rates Forex rates 0 FY2018 results *1 FY2023 target *1 2018-2023 (%) FY2018 (Yen) FY2023 (Yen) Japan 28,569 40,000 7.0 - - Milbon Co., Ltd USA 1 dollar = 632 1,050 10.7 MILBON USA, INC. 110.4 10

  54. Slide 54: Financial strategy

    III. 2019-2023 New Medium-Term Management Plan 8. Financial strategy Cash flow from operating activities: Greater than 26,000 million yen 2015-2018 2019-2023 Use Previous Medium-Term Management Plan New Medium-Term Management Plan Investment in future 9,800 million yen 12,000 million yen growth ・Con

  55. Slide 55: FY2019 target

    III. 2019-2023 New Medium-Term Management Plan 10. FY2019 target ■ Capital expenditures and others ■ Statement of Earnings (Unit: million yen) (Unit: million yen) Amount Increase/ Classification FY2018 FY2019 Increase/ results* plan* Decrease FY2018 FY2019 Decrease ratio (%) Capital expenditures 1,1

  56. Slide 56: FY2019 Consolidated Sales by Product Category

    III. 2019-2023 New Medium-Term Management Plan ■FY2019 Consolidated Sales by Product Category (Unit: million yen) Increase/ FY2018 FY2019 Increase/ Decrease results* target* Decrease ratio (%) Hair care products 20,222 22,104 1,882 9.3 Hair coloring products 11,857 12,330 472 4.0 Permanent wave prod

  57. Slide 57: FY2019 Sales and number of salons for premium brands

    III. 2019-2023 New Medium-Term Management Plan ■FY2019 Sales (non-consolidated) and number of salons (consolidated) for premium brands (Unit: million yen) Increase/ Increase/ FY2018 results FY2019 target Decrease ratio Decrease (%) Sales 6,726 7,500 773 11.5 Aujua Number of salons* (salons) 3,271 3,

  58. Slide 58: Return to shareholders

    III. 2019-2023 New Medium-Term Management Plan ■Return to shareholders <Dividend forecast> (Unit: yen) FY2017 FY2018 FY2019 forecast End of 2Q 40 24 27 End of FY 52 30 27 Total 92 54 54 * On January 1, 2018, the Company conducted a stock split at a ratio of two shares for every one share of common s

  59. Slide 59: Forward-looking statements notice

    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.

Milbon — FY2018 Earnings Presentation on 6ix