Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — FY2021 Earnings Presentation
45 slides from Pola Orbis's earnings presentation, 2022
Slide 1: Financial Results of 2021 / 2022-2029 Long-term Management Plan
Financial Results of 2021 2022 – 2029 Long-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 reasonable
Slide 2: Agenda
Part I Fiscal 2021 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis Part II 2022 – 2029 Long-term Management Plan 1. 2022 – 2029 Long-term Management Plan 2. 2029 Sustainability and ESG Policies Part III Forecasts for Fiscal 2022 and Initiatives Going Forward 1.
Slide 3: Part I Fiscal 2021 Consolidated Performance
Part I Fiscal 2021 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 2
Slide 4: FY2021 Key Topics
FY2021 Key Topics Cosmetics Market The overall size of the Japanese cosmetics market (including exports) continued to shrink The impact of COVID-19 persisted in the Japanese market. Despite a gradual recovery after restrictions such as the state of emergency were lifted at the end of September,
Slide 5: Actual vs Planned Variance Analysis
Actual vs Planned Variance Analysis FY2020 FY2021 YoY change Initial vs. Plan (mil. yen) Results Results Amount % Plan Amount % Consol. net sales 176,311 178,642 2,331 1.3% 190,000 (11,357) (6.0%) Operating income 13,752 16,888 3,135 22.8% 19,000 (2,111) (11.1%) Ordinary income 12,579 18,968 6,388 5
Slide 6: Consolidated P&L Changes Analysis: Net Sales to Operating Income
Consolidated P&L Changes Analysis Net Sales to Operating Income FY2020 FY2021 YoY Change (mil. yen) Results Results Amount % Consolidated net sales 176,311 178,642 2,331 1.3% Cost of sales 29,979 28,720 (1,258) (4.2%) Gross profit 146,331 149,921 3,590 2.5% SG&A expenses 132,578 133,033 454 0.3% Ope
Slide 7: Consolidated P&L Changes Analysis: Operating Income to Profit
Consolidated P&L Changes Analysis Operating Income to Profit Attributable to Owners of Parent FY2020 FY2021 YoY Change (mil. yen) Results Results Amount % Operating income 13,752 16,888 3,135 22.8% Non-operating income 344 2,297 1,953 567.9% Non-operating expenses 1,517 217 (1,299) (85.7%) Ordinary
Slide 8: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent An increase in gross profit, a change in the business structure, and the impact of the exchange rate boosted profit attributable to owners of parent by ¥7,102 million YoY (mil. yen) Positive impact Negative impact 14,000 1,340 11,734 12,000 2
Slide 9: Part I Fiscal 2021 Consolidated Performance
Part I Fiscal 2021 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 8
Slide 10: Segment Results
Segment Results FY2020 FY2021 YoY Change (mil yen) Results Results Amount % Consolidated net sales 176,311 178,642 2,331 1.3% Beauty care 171,658 174,150 2,492 1.5% Real estate 2,291 2,112 (179) (7.8%) Others 2,361 2,379 18 0.8% Operating income 13,752 16,888 3,135 22.8% Beauty care 12,965 17,060 4,
Slide 11: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2020 FY2021 YoY Change (mil. yen) Results Results Amount % Beauty care net sales 171,658 174,150 2,492 1.5% POLA 102,888 105,168 2,279 2.2% ORBIS 45,415 43,389 (2,026) (4.5%) Jurlique 6,444 7,838 1,393 21.6% H2O PLUS 722 1,116 394 54.6% Brands under developme
Slide 12: Brand Analysis (1)
Brand Analysis (1) FY2021 Results Topics Domestic consignment sales struggled, even after the state of emergency was lifted, while high growth continued in e-commerce sales Launched the new app Overseas revenue increased, and sales in Mainland China grew 38% PORTAL by POLA YoY despite the impa
Slide 13: Brand Analysis (2)
Brand Analysis (2) FY2021 Results Topics Sales grew of high-function special care with features such as The WRINKLE WHITE series of special care improving wrinkles and brightening the skin, and revenue for the items won numerous best cosmetics awards skincare category increased The number of e
Slide 14: Brand Analysis (3) Overseas Brands
Brand Analysis (3) Overseas Brands FY2021 Results Topics Losses were ameliorated in overseas brands as anticipated Jurlique Jurlique stores reopened in Australia, but struggled to attract Launched a limited edition body oil (October) customers due to COVID-19, while Mainland China saw e- comme
Slide 15: Brand Analysis (4) Brands Under Development
Brand Analysis (4) Brands Under Development FY2021 Results Topics THREE continued to struggle in the partial makeup category DECENCIA achieved a double-digit increase in income due to THREE launched the SQ series enhanced cost efficiency (October) Losses were ameliorated, excluding the recen
Slide 16: Part II 2022-2029 Long-term Management Plan
Part II 2022 – 2029 Long-term Management Plan 1. 2022 – 2029 Long-term Management Plan 2. 2029 Sustainability and ESG Policies 15
Slide 17: Performance Trends
Analysis of the Internal Environment (Review of the Past Ten Years) Net sales Performance Trends Operating (mil. yen) margin Net sales Operating margin 300,000 18.0% 16.0% 250,000 14.0% 200,000 12.0% 10.0% 150,000 8.0% 100,000 6.0% 4.0% 50,000 2.0% 0 0.0% 2010 2010 2011 2011 2012 2012 2013 2013 2014
Slide 18: Trends in the Cosmetics Market
Trends in the Cosmetics Market Domestic cosmetics market Percentage by Route China Cosmetics Market Cosmetic store Drugstore (100 mil. yen) (100 mil. yen) Department store E-commerce 14,000 120,000 100% 12,000 100,000 80% 10,000 80,000 8,000 60% 60,000 6,000 40% 40,000 4,000 20% 20,000 2,000 0 0% 0
Slide 19: VISION 2029
– VISION 2029 – Mission Sensitize the world to beauty. To maximize the unique character of each brand, and become a global corporate group that Vision enriches the lives of people around the world. Our Strengths Sustainability Policy Operations ■ QOL improvement through innovative technology service
Slide 20: Approach to the Business Portfolio for 2029
Approach to the Business Portfolio for 2029 VISION 2029 A collection of unique businesses that respond to diversifying values of “beauty” Approach to the Business Portfolio Expand into well-being and social domains Well-being Individual Social Current business domains Cosmetics 19
Slide 21: Roadmap to 2029
Roadmap to 2029 VISION 2029 A collection of unique businesses that respond to diversifying values of “beauty” Basic strategy 1 Develop the cosmetics business globally; reform and enhance the brand portfolio Basic strategy 2 Create new value and expand business domains Basic strategy 3 Strengthen res
Slide 22: Long-term Management Plan: Basic Strategy 1
Long-term Management Plan: Basic Strategy 1 Basic Strategy 1: Develop the cosmetics business globally; reform and enhance the brand portfolio Domestic: Improve profitability and achieve sustainable growth with profit Overseas: Emphasize the enhancement of brand value, and create growth drivers
Slide 23: Long-term Management Plan: Basic Strategy 2
Long-term Management Plan: Basic Strategy 2 Basic Strategy 2: Create new value and expand business domains Aim for a business portfolio that transcends the bounds of cosmetics to contribute to well-being and social value Past Centered around businesses that realize “individual beauty” through cosm
Slide 24: Long-term Management Plan: Basic Strategy 3
Long-term Management Plan: Basic Strategy 3 Basic Strategy 3: Strengthen research and technical strategy Expand new materials pipelines (world-first, industry-first) Extend new cosmetics domains (moonshot R&D pivoting on artificial skin research) Develop next-generation technologies and establ
Slide 25: Part II 2022-2029 Long-term Management Plan
Part II 2022 – 2029 Long-term Management Plan 1. 2022 – 2029 Long-term Management Plan 2. 2029 Sustainability and ESG Policies 24
Slide 26: Sustainability and ESG initiatives (5 Key Domains)
Sustainability and ESG initiatives (5 Key Domains) QOL improvement through Regional Culture, Arts, and All-inclusive Environment innovative technology services revitalization Design human resources QOL improvement through innovative technology services Accelerate new value creation through multipl
Slide 27: Sustainability and ESG initiatives (5 Key Domains)
Sustainability and ESG initiatives (5 Key Domains) All-inclusive human resources (Governance) Elected multiple independent Outside Directors to ensure the transparency of the Board of Directors, and aim to increase diversity further in the future Response and view to the revision of Japan's Corp
Slide 28: Part III Forecasts for Fiscal 2022 and Initiatives Going Forward
Part III Forecasts for Fiscal 2022 and Initiatives Going Forward 1. Progress on the Medium-term Management Plan 2. Forecasts for Fiscal 2022 3. Initiatives Going Forward & Appendices 27
Slide 29: Progress of 2021-2023 Medium-term Management Plan
Progress of 2021-2023 Medium-term Management Plan Strategies Evaluation Evolve domestic direct Slightly - POLA e-commerce grew, but the growth was insufficient to compensate for 1 selling behind struggling storefront channels - The downwards trend in ORBIS customer numbers continued - POLA grew in M
Slide 30: 2021-2023 Medium-term Management Plan: Management Indicators
2021-2023 Medium-term Management Plan: Management Indicators Updated to the current targets (moved back by one year) because of changes that have occurred in assumptions since the current Medium-term Management Plan was announced Changes in the assumed conditions and circumstances since the curren
Slide 31: Part III Forecasts for Fiscal 2022 and Initiatives Going Forward
Part III Forecasts for Fiscal 2022 and Initiatives Going Forward 1. Progress on the Medium-term Management Plan 2. Forecasts for Fiscal 2022 3. Initiatives Going Forward & Appendices 30
Slide 32: Impact of Revenue Recognition on P&L from FY2022 onwards
Impact of Revenue Recognition on P&L from FY2022 onwards Main Impact on the Group 1. Sales with the award Where points provided to customers with the sale of products of points (SG&A expenses ⇒ deducted from net sales) 2. Sales on Sales commissions to department stores consignment (Deducted from n
Slide 33: Forecasts for Fiscal 2022
Forecasts for Fiscal 2022 FY2021 FY2022 YoY Change FY2021 FY2022 YoY Change Full-year Results Full-year Results Full-yean (recalculated Full-yean (mil. yen) (previous Amount % under the 2022 Amount % standard) plan plan standard) Consol. net sales 178,642 186,000 7,357 4.1% 174,896 186,000 11,103 6.
Slide 34: Part III Forecasts for Fiscal 2022 and Initiatives Going Forward
Part III Forecasts for Fiscal 2022 and Initiatives Going Forward 1. Progress on the Medium-term Management Plan 2. Forecasts for Fiscal 2022 3. Initiatives Going Forward & Appendices 33
Slide 35: Initiatives Going Forward: POLA domestic direct selling
Initiatives Going Forward POLA: Evolve domestic direct selling Leverage direct selling to build unique OMO and enhance customer experience Design diverse channels for customers to choose, and enhance Seamless cross-channel customer experience convenience Provide personalized communication at a
Slide 36: Initiatives Going Forward: ORBIS
Initiatives Going Forward ORBIS: Evolve domestic direct selling Increase the frequency of contact with the brand through unique CRM to enhance LTV, and return to a growth trend Expand contribution from the target demographics acquired since rebranding, and stop the decline in customer numbers
Slide 37: Initiatives Going Forward: POLA overseas
Initiatives Going Forward POLA: Grow overseas businesses profitably 2022-2023 CAGR 20-25 % Overseas sales ■ Mainland China net sales Basic Strategy (Including Mainland China travel retail) 30.0 bil. ■ Other (Korea, Hong Kong, Taiwan, Thailand, etc.) Accelerate growth to achieve a 50:50 spread of 2
Slide 38: Initiatives Going Forward: Grow overseas businesses profitably
Initiatives Going Forward Grow overseas businesses profitably Accelerate growth in key markets, and expand the top line Focus on skincare in Mainland China, and expand online sales Strengthen CRM in Australia to promote repeat purchases Develop a new brand strategy in Australia, where Jurlique
Slide 39: Initiatives Going Forward: Brands under development
Initiatives Going Forward Profit contribution from brands under development Continue structural reforms aimed at making ACRO profitable as a whole by 2024 Reduce fixed costs ・ Cut down on stores and increase the proportion of e-commerce sales ・ Restructure headquarters functions to be more compa
Slide 40: Improvement in Capital Efficiency and Shareholder Returns
Improvement in Capital Efficiency and Shareholder Returns Initiatives to Improve Capital Efficiency ROE movement (％) Operating income CAGR 25% Achieve net income growth 16.0 14.2 Target for 2023 EPS which is higher than operating ROE 9% (Earnings per share) income growth by decreasing 12.0 10.4
Slide 41: (Appendix) 2021-2023 Medium-term Management Plan (Revised)
(Appendix) 2021 – 2023 Medium-term Management Plan (Revised) Management Indicators for 2023 Original plan (Feb. 12, 2021) Revised Consolidated net sales ⇒ ¥215.0 to 225.0 bil. in FY2023 ¥205.0 to 215.0 bil. in FY2023 CAGR 7 to 9％ CAGR 6％ or higher Net Sales Overseas sales ratio ⇒ 20 to 25% in FY
Slide 42: (Appendix) The Commitment to Sustainability
(Appendix) The Commitment to Sustainability Establish five key domains to realize a sustainable society, ensuring effectiveness by linking some KPIs with compensation for corporate executives Corresponding Five Domains SDGs KPIs Targets for 2029 • Number of new businesses created • 10 in total (20
Slide 43: (Appendix) Beauty Care Business Results for FY2019-FY2021 by Brands
(Appendix) Beauty Care Business Results for FY2019 – FY2021 by Brands FY2019 FY2020 FY2021 FY2021 Results (mil. yen) Results Results Results (recalculated under the 2022 standard) Consolidated net sales 219,920 176,311 178,642 174,896 Beauty care net sales 214,886 171,658 174,150 170,403 POLA 135,50
Slide 44: (Appendix) About POLA ORBIS Group
(Appendix) About POLA ORBIS Group Beauty care is the core business of the Group, and 10 different cosmetics brands are operated under the Group umbrella FY2021 Consol. Net Sales ¥178.6 bil. Overseas Flagship Brands under Brands Brands development ¥20,000 High Prestige Price Range ¥10,000 Prestige ¥5
Slide 45: (Appendix) Beauty Care Business Brand Portfolio
(Appendix) Beauty Care Business Brand Portfolio Sales ratio* Brand Concept and products Price Main sales channel High-prestige skincare Approx. JP: Consignment sales, department stores and e-commerce 60% Leading-edge technology in aging- ¥10,000 Overseas: Department stores, directly-operated