Pola Orbis Holdings Inc. · TSE:4927
Pola Orbis — FY2019 Earnings Presentation
36 slides from Pola Orbis's earnings presentation, 2020
Slide 1: Fiscal 2019 Supplementary Material
Fiscal 2019 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 2020 5. Appendices 1
Slide 3: FY2019 Key Topics
FY2019 Key Topics Cosmetics Market The Japanese cosmetics market including exports showed steady growth. Inbound demand trended downward on impact of China’s e-commerce law and foreign currency despite increase in foreign visitors to Japan. Over the full year, the net domestic market benefitte
Slide 4: Consolidated P&L Changes Analysis: Net Sales to Operating Income
Consolidated P&L Changes Analysis Net Sales to Operating Income FY2018 FY2019 YoY Change (mil. yen) Results Results Amount % Consolidated net sales 248,574 219,920 (28,654) (11.5%) Cost of sales 41,521 35,925 (5,596) (13.5%) Gross profit 207,052 183,995 (23,057) (11.1%) SG&A* expenses 167,556 152,85
Slide 5: Consolidated P&L Changes Analysis: Operating Income to Profit
Consolidated P&L Changes Analysis Operating Income to Profit Attributable to Owners of Parent FY2018 FY2019 YoY (mil. yen) Results Results Amount % Operating income 39,496 31,137 (8,358) (21.2%) Non-operating income 476 394 (81) (17.0%) Non-operating expenses 1,017 901 (115) (11.4%) Ordinary income
Slide 6: Factors Impacting Profit Attributable to Owners of Parent
Factors Impacting Profit Attributable to Owners of Parent Net income attributable to owners of parent was +134.8% YoY on impact of having recorded extraordinary losses in FY2018 (mil. yen) Positive Negative impact impact 24,000 19,694 20,000 POLA sales decreased 2,442 16,000 Transferred pharmaceutic
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 2020 5. Appendices 6
Slide 8: Segment Results
Segment Results FY2018 FY2019 YoY (mil yen) Results Results Amount % Consolidated net sales 248,574 219,920 (28,654) (11.5%) Beauty care 231,207 214,886 (16,321) (7.1%) Real estate 2,707 2,619 (87) (3.2%) Others 14,659 2,415 (12,244) (83.5%) Operating income 39,496 31,137 (8,358) (21.2%) Beauty care
Slide 9: Beauty Care Business Results by Brands
Beauty Care Business Results by Brands FY2018 FY2019 YoY Change (mil. yen) Results Results Amount % Beauty care net sales 231,207 214,886 (16,321) (7.1%) POLA 150,183 135,502 (14,681) (9.8%) ORBIS 51,051 50,726 (324) (0.6%) Jurlique 10,386 7,765 (2,620) (25.2%) H2O PLUS 2,041 1,470 (571) (28.0%) Bra
Slide 10: Brand Analysis (1)
Brand Analysis (1) FY2019 Result Topics Inbound and buyers decreased, particularly for beauty health foods B.A Grandluxe III launch (November) Domestic business struggle to capture and maintain new demand Won best cosmetics awards from Demand decreased on adverse effects of last-minute deman
Slide 11: Brand Analysis (1): Analysis of Change in POLA Net Sales
Brand Analysis (1) Analysis of Change in POLA Net Sales Analysis of change by channel/product About inbound and buyer demand Channel structure 00 150.1 POLA net sales decline of 00 Used sales data to estimate and ¥14.6 bil. Past peak in revenue decrease but categorize the impact that domestic 00 buy
Slide 12: Brand Analysis (2)
Brand Analysis (2) FY2019 Result Topics Shifted to highly profitable online sales Opening duty-free store in Korea to Flagship products comprise approx. 30% of sales, improve brand recognition in Asia contributing to improved customer structure （ORBIS U and (December) DEFENCERA） Shilla Seoul s
Slide 13: Brand Analysis (3)
Brand Analysis (3) FY2019 Result Topics Jurlique closed unprofitable stores in China to Selecting and reducing Jurlique shops in China optimize channels and downsized main office - Stores in China (end of FY2019): 52 shops (YoY change -37) functions - Shift from dealer licensing to directly-owne
Slide 14: Brand Analysis (4) Brands Under Development
Brand Analysis (4) Brands Under Development FY2019 Result Topics ACRO income decreased on up-front investments Won best in new brands cosmetics awards THREE overseas channels drove growth (up approx. 25%) DECENCIA new products (anti-wrinkle for sensitive skin) and department store skin diagn
Slide 15: 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 2020 5. Appendices 14
Slide 16: Progress of 2017-2020 Medium-term Management Plan
Progress of 2017–2020 Medium-term Management Plan 【Management Indicators for 2020】 300,000 FY2019 250,000 200,000 * * 150,000 Net ¥250.0 bil. or higher ¥219.9 bil. 100,000 50,000 sales CAGR 3-4% 2017-19 CAGR 0.2 ％ 0 FY2015 FY2016 FY2017 FY2018 FY2019 (mil. yen) FY2015 FY2016 FY2017 FY2018 FY2019 *In
Slide 17: Progress of Medium-term Plan: Growth Strategies
Progress of 2017–2020 Medium-term Management Plan 【Growth Strategies】 Strategies Evaluation - POLA inbound & buyers decreased, rebuild customer base Sustain stable growth of flagship 1 brands to lead Group earnings Behind - Capture new demand for ORBIS, increase per-customer spending - Maintain stro
Slide 18: Forecasts and Initiatives for Fiscal 2020
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2020 5. Appendices 17
Slide 19: Forecasts for Fiscal 2020
Forecasts for Fiscal 2020 FY2019 YoY Change FY2020 YoY Change (mil. yen) Full-year Results Amount % Full-year Plan Amount % Consol. net sales 219,920 (28,654) (11.5%) 217,000 (2,920) (1.3%) Beauty care 214,886 (16,321) (7.1%) 212,400 (2,486) (1.2%) Real estate 2,619 (87) (3.2%) 2,300 (319) (12.2%) O
Slide 20: Impact of novel coronavirus
Impact of novel coronavirus FY2019 YoY Change FY2020 YoY Change (mil. yen) Full-year Results Amount % Full-year Plan Amount % Consol. net sales 219,920 (28,654) (11.5%) 217,000 (2,920) (1.3%) OP income 31,137 (8,358) (21.2%) 31,200 62 0.2% Certain assumptions have been applied to reflect the downwar
Slide 21: Core themes from 2020 onward
Core themes from 2020 onward Resolve issues Growth opportunities Build channel structure Rebuild stable domestic growth platform to accelerate growth in Asia Link brick & mortar and online Shops styled after sales POLA THE BEAUTY Business structure reforms for increasing customers Increase cus
Slide 22: Initiatives Going Forward – Domestic Market
Initiatives Going Forward – Domestic Market Business structure reforms to rebuild domestic customer base 140,000 138,000 2020 net sales forecast Use recent trends to reflect impact of novel 136,000 Inbound & buyers coronavirus 134,000 132,000 130,000 Business structure reforms to rebuild customer Do
Slide 23: Initiatives Going Forward – Overseas
Initiatives Going Forward – Overseas Needs-based shop expansion with focus in China New store opening pace of 30 shops/year Net sales CAGR of 20％ or higher Department stores Shops styled after Overseas duty free stores (mainly sales) POLA THE BEAUTY (Brand presence) (counseling & aesthetic) End of 2
Slide 24: Initiatives Going Forward: ORBIS customer structure and China
Initiatives Going Forward Customer structure improvement, China market development for increased sales & profits Expand flagship products to strengthen product structure Brand value Functionality ORBIS U + DEFENCERA Product Product expansion Ratio of sales 30％ expansion New customer ratio 60％ (FY2
Slide 25: Initiatives Going Forward: Improve profitability, reduce fixed costs
Initiatives Going Forward Improve business profitability, reduce fixed costs, reduce losses Optimize 2018 Reduce channels, Downsize 2019 Increase Business one-off Gross profit Business main office Operating business Fixed cost losses cost decreased restructuring functions losses profitability reduct
Slide 26: Initiatives Going Forward: Expand brand value (THREE)
Initiatives Going Forward Expand brand value promotional content and increase customer touchpoints Develop brand together with core fans Enhance growth and profitability Promote brand value Accelerate expansion into Chinese consumer markets Accelerate Engage in New content duty-free Expand mainl
Slide 27: Initiatives Going Forward: Brands under development
Initiatives Going Forward Reform structure to capture customers, increase profits Review investment domain allocation, build structure to generate search-based sales Increase new customers likely to become repeat customers Enhance engagement strategies for existing customers Offline promotions
Slide 28: Research Strategy and New Business Strategy
Initiatives Going Forward Research Strategy and New Business Strategy ≪ Business expansion steps to achieve sustainability≫ Short-term Long-term New value creation in the Resolve current issues Expand commodities for beauty domain that １．(Overseas expansion / new ２． existing businesses ３． transcends
Slide 29: Further improvement in Capital Efficiency and Shareholder Returns
Further improvement in Capital Efficiency and Shareholder Returns About our policy on shareholder returns ≪ Basic Policy ≫ With a policy of consolidated payout ratio of 60% Purchases of treasury stock shall be considered or higher, enhance shareholder return by based on our investment strategies, as
Slide 30: Appendices
1. Highlights of Consolidated Performance 2. Segment Analysis 3. Progress of Mid-term Management Plan 4. Forecasts and Initiatives for Fiscal 2020 5. Appendices 29
Slide 31: (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 FY2019 Consol. Net Sales ¥219.9 bil. Overseas Flagship Brands under Brands Brands development ¥20,000 High Prestige Price Range ¥10,000 Prestige ¥5,
Slide 32: (Appendix) Beauty Care Business Brand Portfolio
(Appendix) Beauty Care Business Brand Portfolio Sales Brand Concept and products Price Main sales channel ratio* JP:Consignment sales through High-prestige skincare Approx. Beauty Directors, department store counters Leading-edge technology in 63% aging-care and skin-whitening ¥10,000 and onli
Slide 33: (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 34: (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% STAGE1 earnings structure and •Operating margin: 13-15% accelera
Slide 35: (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 36: (Appendix) Beauty Care Business Results for FY2017-FY2019 by Brands
(Appendix) Beauty Care Business Results for FY2017 – FY2019 by Brands FY2017 FY2018 FY2019 2018 vs 2019 YoY Change (mil. yen) Results Results Results Amount % Consolidated net sales 244,335 248,574 219,920 (28,654) (11.5%) Beauty care net sales 227,133 231,207 214,886 (16,321) (7.1%) POLA 144,012 15