Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — FY2017 Earnings Presentation
36 slides from Pola Orbis's earnings presentation, 2018
Slide 1: Fiscal 2017 Supplementary Material
Fiscal 2017 Supplementary Material 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. Actual performance may diff
Slide 2: Agenda
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2018 5. Appendices 1
Slide 3: FY2017 Key Topics
FY2017 Key Topics Cosmetics Market Japanese cosmetics market overall showed steady growth. However, pure domestic market, excluding inbound demand seemed to be flat yoy.* By price range, high prestige remained steady. As for inbound market, high prestige skincare products have been enjoying th
Slide 4: Analysis of Consolidated P&L Changes: Net Sales to Operating Income
Analysis of Consolidated P&L Changes Net Sales to Operating Income FY2016 FY2017 YoY (mil. yen) Results Results Amount % Consolidated net sales 218,482 244,335 25,853 11.8% Cost of sales 40,940 41,632 692 1.7% Gross profit 177,542 202,703 25,161 14.2% SG&A* expenses 150,702 163,822 13,119 8.7% Opera
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 FY2016 FY2017 YoY (mil. yen) Results Results Amount % Operating income 26,839 38,881 12,041 44.9% Non-operating income 462 465 2 0.6% Non-operating expenses 180 96 (84) (46.8%) Ordinary income 27,121 39,
Slide 6: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent Profit attributable to owners of parent was up 66.2% yoy due to increase in gross margin and improvement in profit structure Positive impact Negative impact (mil. yen) Increase in sales at POLA brand Strengthened promotions 44,000 for next ye
Slide 7: Segment Analysis
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2018 5. Appendices 6
Slide 8: Segment Results
Segment Results FY2016 FY2017 YoY (mil yen) Results Results Amount % Consolidated net sales 218,482 244,335 25,853 11.8% Beauty care 202,446 227,133 24,686 12.2% Real estate 3,043 2,694 (349) (11.5%) Others 12,992 14,507 1,515 11.7% Operating income 26,839 38,881 12,041 44.9% Beauty care 25,904 38,1
Slide 9: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2016 FY2017 YoY (mil. yen) Results Results Amount % Beauty care net sales 202,446 227,133 24,686 12.2% POLA 116,126 144,012 27,886 24.0% ORBIS 55,857 53,066 (2,790) (5.0%) Jurlique 13,118 12,772 (346) (2.6%) H2O PLUS 2,547 2,303 (243) (9.6%) Brands under 1 de
Slide 10: Brand Analysis (1)
Brand Analysis (1) FY2017 Result Topics Both the number of customers and purchase price Launched “V Resonatinc Cream”, per customer highly grew. which features new value in cosmetics. Efficiency of sales offices improved along with (October) initiatives for professionalization of Beauty Direct
Slide 11: Sales Progress of POLA Wrinkle Shot Serum
Sales Progress of POLA Wrinkle Shot Serum Sales achieved and exceeded the revised target of ¥12.5bn, realized customer base expansion FY 2017 (Jan-Dec) Sales : Approximately 940,000 units, ¥13.0 billion (+4% compared to the revised target / +30% compared to the initial target) Sales progress Str
Slide 12: Brand Analysis (2)
Brand Analysis (2) FY2017 Result Topics Sales decreased due to decrease in skincare sales Promoted omnichannel (integration of as a result of weakening repeat ratio among existing points earned at mail-orders and customers, particularly among those who were physical stores) in order to enhance a
Slide 13: Brand Analysis (3)
Brand Analysis (3) FY2017 Result Topics Sales dropped by 9% yoy (on AUD basis). Introduced products that has made Australia and duty-free businesses struggled during use of the Group synergies year-end shopping season. Image : Sweet Violet & Grapefruit Hydrating Mist On the contrary, sales for
Slide 14: Brand Analysis (4)
Brand Analysis (4) FY2017 Result Topics Sales decreased in Russia and existing channels in Decided to withdraw from Kohl’s where the North America. brand cannot expect many customers. Operating income improved as planned, owing to the Seek new retailers which are suitable for the withdrawal fr
Slide 15: Brand Analysis (5) Brands Under Development
Brand Analysis (5) Brands Under Development FY2017 Result Topics Like-for-like sales grew by 28.2% excluding FL and Products from THREE and pdc brands which were sold in 2016. DECENCIA won several At THREE brand, operating income increased by around 35% if costs for launching new brands were b
Slide 16: Progress of Mid-term Management Plan
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2018 5. Appendices 15
Slide 17: Progress of 2017–2020 Medium-term Management Plan
Progress of 2017–2020 Medium-term Management Plan 【Management Indicators for 2020】 Net ¥250 bil. or higher OP OP margin 15% or higher Sales CAGR 3-4% income CAGR 10% ROE 12% or higher (¥ mil.) Sales / OP income & margin (%) ROE OP income & margin (right axes & line graph) 15.9% 16.0 300,000 60,000 1
Slide 18: Growth Strategies
Progress of 2017–2020 Medium-term Management Plan 【Growth Strategies】 Strategies Evaluation Sustain stable growth of flagship Fell - POLA successfully strengthened customer base. 1 brands to lead Group earnings - ORBIS identified its underlying problems. short - Both Jurlique and H2O PLUS improved o
Slide 19: Forecasts and Initiatives for Fiscal 2018
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2018 5. Appendices 18
Slide 20: Forecasts for FY2018
Forecasts for FY2018 FY2017 YoY Change FY2018 YoY Change (mil. yen) Full-year Results Amount % Full-year Plan Amount % Consol. net sales 244,335 25,853 11.8% 253,000 8,664 3.5% Beauty care 227,133 24,686 12.2% 235,800 8,666 3.8% Real estate 2,694 (349) (11.5%) 2,600 (94) (3.5%) Others 14,507 1,515 1
Slide 21: Cosmetics Market
Cosmetics Market 【Domestic Market】 ■ In 2017, domestic cosmetic market showed 6% growth however, pure domestic seemed flat excluding inbound. ■ By product function, market composition ratio increased in categories where the Group puts efforts in. ■ The Group estimates this trend to continue until 20
Slide 22: Initiatives for 2018 onward: Touch & Talk
Initiatives for 2018 onward Sustain stable growth of flagship brands to lead Group earnings Expanding brand presence as a foothold; bring the business foundation to further level ■ Introduce and develop aging-care and whitening products with high functionality that will follow Wrinkle Shot Serum ■ D
Slide 23: Initiatives for 2018 onward: Global Strategy
Initiatives for 2018 onward Global Strategy Expansion of the store network < Tripling the number of stores to 90 by 2020 > Primary 《China》 《Japan (inc. inbound)》 Department stores, malls, PB, department stores, local e-commerce, and cross- and new store format border e-commerce (Touch & Talk) Offer
Slide 24: Initiatives for 2018 onward: ORBIS
Initiatives for 2018 onward Sustain stable growth of flagship brands to lead Group earnings Create brand & product differentiation and return to highly profitable business ■ Implementing measures for regrowth Product Price Reform and abolish products Review price range Improve basic quality and text
Slide 25: Initiatives for 2018 onward: Overseas operations
Initiatives for 2018 onward Bring overseas operations solidly into the black overall Get back on growth trajectory by completing brand restaging ■ Priority channels are Australia, China and travel retail ■ Establish a solid presence as a premium natural skincare brand “Rose Hand Cream Limited Editio
Slide 26: Initiatives for 2018 onward: Brands under development
Initiatives for 2018 onward Expand brands under development, create new brands, pursue M&A activity Aim for CAGR 10%+ of sales and 20% increase in operating income ■ Back to skincare-focused and develop holistic care products ■ Accelerate overseas expansion ■ Open a store with new format that offers
Slide 27: Latest Update on POLA Brand
Latest Update on POLA Brand In spite of the high performance in January 2017 when Wrinkle Shot was launched, January sales of 2018 marked higher than that of 2017 and has made a good start at POLA. ■ POLA brand total ■ Sales progress of Wrinkle Shot Serum <Sales of POLA brand in January 2018 > <Sale
Slide 28: Group's New Research and Development System
Group’s New Research and Development System The Group has reformed R&D system for the creation of new value that will be a growth engine for the Group, following Wrinkle Shot Serum POLA ORBIS GROUP Goes beyond the Focuses on existing borders of cosmetics cosmetics Multiple Intelligence Research Cent
Slide 29: Appendices
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2018 5. Appendices 28
Slide 30: (Appendix) IR Activities during FY2017
(Appendix) IR Activities during FY2017 IR “Prime Business Award 2017” (from Japan Investor Relations Association) POLA ORBIS HOLDINGS INC. received “Prime Business Award 2017”. This is the second time for the Company to receive the award, following 2015. Award for Excellence in the “NIKKEI Annual Re
Slide 31: (Appendix) 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 32: (Appendix) 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 33: (Appendix) 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% or higher STAGE1 earnings structure and •Operating margin: 13-15
Slide 34: (Appendix) About POLA ORBIS Group
(Appendix) About POLA ORBIS Group Beauty care is the core business of the Group, and 7 different cosmetics brands are operated under the Group umbrella FY2017 Consol. Net Sales ¥244.3 bil. Overseas Flagship Brands under Brands Brands development ¥20,000 High Prestige Price Range ¥10,000 Prestige ¥5,
Slide 35: (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 Beauty Directors: Approx. POLA THE BEAUTY (PB), Leading-edge technology in 63% anti-aging and skin-whitening ¥10,000 Esthe-inn and conven
Slide 36: (Appendix) Beauty Care Business Results for FY2015–FY2017 by Brands
(Appendix) Beauty Care Business Results for FY2015 – FY2017 by Brands FY2015 FY2016 FY2017 2016 vs 2017 YoY Change (mil. yen) Results Results Results Amount % Consolidated net sales 214,788 218,482 244,335 25,853 11.8% Beauty care net sales 200,570 202,446 227,133 24,686 12.2% POLA 109,352 116,126 1