Milbon Co., Ltd. · TSE:4919
Milbon — Q2 FY2024 Earnings Presentation
59 slides from Milbon's earnings presentation, Aug 9, 2024
Slide 1: Financial Results for Q2 of FY2024
Financial Results for Q2 of FY2024 (Ending December 31,2024) Milbon Co., Ltd. (TSE code ： 4919) August 9, 2024 © Milbon Co., Ltd. All right reserved.
Slide 2: Agenda
1. Consolidated Financial Results P2 2. Financial Results by Region P7 Agenda 3. Progress in FY2024 P14 4. Appendix P31 5. Outline of Milbon P42 This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
Slide 3: Today's Message
Today’s Message • Both sales and profits increased, surpassing the initial plan. Domestic haircare products and South Korean business drove growth. We are making steady progress toward achieving our full-year forecast. • The gross profit margin is showing a recovery trend from the first to the secon
Slide 4: Consolidated Statement of Earnings
Consolidated Statement of Earnings Both sales and profits surpassed the plan. Gross profit margin has improved from 63.0% in 1Q to 64.2% in 2Q, due to the mitigation of rising raw material costs. FY2023 % FY2024 % Gap FY2024 Vs. Plan Gap (Unit: million yen) 2Q YTD Total 2Q YTD Total (%) 2Q YTD Plan
Slide 5: Factors in YoY Changes in Consolidated Operating Income
Factors in YoY Changes in Consolidated Operating Income Operating income increased. The higher-than-expected revenue growth has offset the decrease in the gross profit margin due to higher raw material cost, etc., and higher Increase in Decrease in expenses. gross profit due to gross profit higher s
Slide 6: Factors in Vs. Plan Changes in Consolidated Operating Income
Factors in Vs. Plan Changes in Consolidated Operating Income Operating profit exceeded the plan due to favorable sales and some cost deferrals. Deferral of (million yen) R&D Logistics Deferral of expenses expenses Other marketing expenses Cost expenses +115 3,178 Increase in Decrease in containment
Slide 7: Agenda
1. Consolidated Financial Results P2 2. Financial Results by Region P7 Agenda 3. Progress in FY2024 P14 4. Appendix P31 5. Outline of Milbon P42 © Milbon Co., Ltd. All right reserved. 7
Slide 8: Net Sales and Operating Income by Region
Net Sales and Operating Income by Region Both domestic and overseas sales and profits exceeded the plan. The weak yen boosted overseas sales growth. Exchange Exchange FY2023 FY2024 Actual gap FY2024 Gap Gap (%) Rate Rate 2Q YTD 2Q YTD Rate*1 (%) 2Q YTD Plan (Unit: million yen) FY23 2Q FY24 2Q Net Sa
Slide 9: Financial Results by Region: Japan
Financial Results by Region: Japan Growth in haircare and cosmetics products led to increased sales and profits, compensating for the slower progress in hair coloring products. YoY Growth Rate of Sales by Quarterly Net Sales (mil. yen) Quarterly Operating Income (mil. yen) Product Category* Domestic
Slide 10: Financial Results by Region: Japan / Progress of Key Strategies
Financial Results by Region: Japan / Progress of Key Strategies Key Strategies Progress up to 2Q Results and Outlook FY’23 FY’24 2Q YTD FY’24 Plan Promoting Smart Salon Members 670,000 761,000 870,000 milbon:iD Salons 5,930 6,292 6,500 EC Sales 1,640 mil. yen 780 mil. Yen 1,950 mil. yen FY’23 FY’24
Slide 11: Financial Results by Region: South Korea
Financial Results by Region: South Korea Sales have been robust, driven by strengthened haircare and perm sales initiatives. Operating income surpassed the plan due to sales growth and cost containment. YoY Growth Rate of Sales by Quarterly Net Sales (mil. yen) Quarterly Operating Income mil. yen) P
Slide 12: Financial Results by Region: China
Financial Results by Region: China We have been impacted by the deteriorating market environment, including declining consumer confidence. In the second half of the fiscal year, we plan to recover by reassessing the salons on which we will focus our activities. YoY Growth Rate of Sales by Quarterly
Slide 13: Financial Results by Region: USA
Financial Results by Region: USA Sales remained steady due to the stable growth of mainstay haircare products. Following our debut at one of the largest U.S. beauty trade fairs in June, we anticipate further growth in the second half of the year. YoY Growth Rate of Sales by Quarterly Net Sales (mil.
Slide 14: Agenda
1. Consolidated Financial Results P2 2. Financial Results by Region P7 Agenda 3. Progress in FY2024 P14 4. Appendix P31 5. Outline of Milbon P42 © Milbon Co., Ltd. All right reserved. 14
Slide 15: Our Sales Composition Ratio
Our Sales Composition Ratio Haircare products, accounting for over 60% of our consolidated net sales, are performing well both domestically and internationally. Others Haircare Products Hair Coloring Products (Approx. (Approx. 60%) (Approx. 35%) 5%) Japan (Approx. 75%) FY24H1 Net sales： ¥18,367 mil.
Slide 16: Domestic Market Environment
Domestic Market Environment The domestic hair salon market is estimated to be growing moderately and is showing a recovery trend from the slowdown caused by the COVID-19 reclassification in May last year. 2020 ~ April 2023 May 2023～ ～June 2024 The overall market was growing Market growth slowed due
Slide 17: Financial Results in the Domestic Market
Financial Results in the Domestic Market Haircare and cosmetics products drove sales growth, offsetting delays in hair coloring products sales. The company is making steady progress toward achieving full-year forecasts. Progress in Net Sales and Operating Profit FY2023 FY2024 Gap FY2024 Progress Gap
Slide 18: Status of Domestic Haircare Products
Status of Domestic Haircare Products Sales remain strong, centered on Aujua and Elujuda Aujua Elujuda FY24H1 Gross Sales in Japan +7.8% YoY FY24H1 Gross Sales in Japan +24.5% YoY The increase in the number of touchpoints and The new product “Elujuda Frizz Fixer,” launched the new product “Aujua Scal
Slide 19: Status of Domestic Haircare Products – Aiming for Mid- to Long-Term Profitability Improvement
Status of Domestic Haircare Products – Aiming for Mid- to Long-Term Profitability Improvement To address the deterioration of the product mix due to the lower sales composition of hair coloring products, we will implement measures to enhance the profitability of haircare products. Pricing Strategy P
Slide 20: Smart Salon Strategy – milbon:iD
Smart Salon Strategy – milbon:iD The milbon:iD membership is steadily advancing towards the milestone of 1 million members. To foster further growth, we are intensifying initiatives aimed at increasing the number of active purchasers. Progress of the milbon:iD Membership Initiatives to Increase the
Slide 21: Smart Salon Strategy – Brick-and-Mortar Smart Salons
Smart Salon Strategy – Brick-and-Mortar Smart Salons The expansion of Smart Salons in various regions is progressing steadily with the cooperation of salons that support our concept. A Success Story from One Salon 44 salons in Japan Acquiring first-time retail customers through “DAGASHI” (as of June
Slide 22: Status of Domestic Hair Coloring Products
Status of Domestic Hair Coloring Products The growth rate of hair coloring products is currently below expectations. Strengthening fashion color products is essential for recovery, and we will gradually work to improve the situation towards next year. Sales Composition Ratio of Domestic Hair Colorin
Slide 23: Current Status of Overseas Market
Current Status of Overseas Market Our overall overseas business is making solid progress towards achieving the full-year forecast, although we have been impacted by a deteriorating market environment in China. Progress Net sales ¥2,662 mil. rate +16.5% YoY 55.7% FY24H1 Net sales ¥1,211 mil. Progress
Slide 24: Long-Term Growth Story for Overseas Markets
Long-Term Growth Story for Overseas Markets Our mid- to long-term milestone is to achieve the No.1 position in Asia, excluding Japan, where black hair is predominant. Phased Growth in the U.S. and European Markets Expanding market presence through the prominence of hair color after establishing a No
Slide 25: Enhancement of ESG External Evaluation Agency's Ratings
Enhancement of ESG External Evaluation Agency’s Ratings Our enhanced sustainability efforts have improved our FTSE ESG score. We also aim to improve ratings from other agencies through appropriate initiatives and disclosures. 2021 2022 2023 2024 Future Outlook 2.3/5.0 FTSE Blossom 3.5/5.0 We will co
Slide 26: Status of ESG Index Inclusion
Status of ESG Index Inclusion We have been designated as a constituent of several ESG indices by the GPIF. We are included in the FTSE Blossom Japan Index from this fiscal year. ESG Indices We Are Included in Since 2023 Since 2024 THE INCLUSION OF Milbon Co., Ltd. IN ANY MSCI INDEX, AND THE USE OF F
Slide 27: Outlook for After 3Q
Outlook for After 3Q Outlook for After 3Q • Haircare products are expected to grow steadily due to consistent demand. • The efforts regarding hair coloring products are expected to have some positive effects, but sales are not Japan anticipated to meet our expectations. • Strong performance in hairc
Slide 28: Outlook for Full-year Forecasts
Outlook for Full-year Forecasts Full-year forecasts remain unchanged. We have made solid progress toward achieving them. Progress FY2024 Gap FY2024 FY2023 Gap Rate Plan (%) 2Q YTD （unit: million yen） （％） Net Sales 47,762 50,620 2,857 6.0% 24,526 48.5% Gross Profit 29,525 32,400 2,874 9.7% 15,755 48.
Slide 29: Revision of the Medium-Term Management Plan (2022-2026)
Revision of the Medium-Term Management Plan (2022-2026) Sales are progressing well, but profit growth is delayed. We will disclose specific figures on the full-year financial results announcement next February. Progress of Sales and Profits Cost Issues to Address (million yen) 原材料 価格高 騰 Manufacturin
Slide 30: Return to Shareholders: Dividend
Return to Shareholders: Dividend The interim dividend for FY2024 is set at 40 yen per share, with a projected year-end dividend of 48 yen. During the current Medium-Term Management Plan period, we will adhere to the policy of maintaining an annual dividend of at least 88 yen and will not reduce divi
Slide 31: Agenda
1. Consolidated Financial Results P2 2. Financial Results by Region P7 3. Progress in FY2024 P14 Agenda 4. Appendix Factors in YoY Changes in Consolidated Operating Income (Quarterly Basis) Factors in vs. Plan Changes in Consolidated Operating Income (Quarterly Basis) P31 P32 P33 Consolidated Net Sa
Slide 32: Factors in YoY Changes in Consolidated Operating Income (Quarterly Basis)
Factors in YoY Changes in Consolidated Operating Income (Quarterly Basis) The gross profit margin is improving on a QoQ basis due to cost reduction initiatives. Increase in Increase in gross profit gross profit Personnel due to margin expenses higher sales （百万円） +23 (242) Logistics expenses +427 IT
Slide 33: Factors in Vs. Plan Changes in Consolidated Operating Income (Quarterly Basis)
Factors in Vs. Plan Changes in Consolidated Operating Income (Quarterly Basis) Although a decrease in operating income was anticipated due to the soaring costs of raw materials, the actual results exceeded expectations with an increase in sales and deferral of expenses. (million yen) Deferral of mar
Slide 34: Consolidated Net Sales and Sales Ratio by Product Category
(Appendix) Consolidated Net Sales and Sales Ratio by Product Category FY2023 FY2024 (Unit: million yen) 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q 4Q YTD Net Sales 10,340 12,362 11,446 13,612 47,762 11,508 13,017 24,526 Haircare 5,969 7,370 6,593 8,421 28,355 6,670 8,012 14,682 Hair Coloring 3,922 4,315 4,193 4,522 1
Slide 35: Status of Haircare Products by Main Brands
(Appendix) Status of Haircare Products by Main Brands Haircare - Aujua Haircare – Global Milbon Robust sales centered on new scalp care product “Presedia”. Sales growth for the brand is being propelled by strong performance Touchpoints continued to expand in Japan and South Korea. in overseas market
Slide 36: Status of Hair Coloring Products by Main Brands
(Appendix) Status of Hair Coloring Products by Main Brands Hair coloring – Ordeve Addicthy Hair coloring – Villa Lodola Color In Japan, despite proposals linked with eyebrow mascara, shipment The rollout in Hong Kong began in April. In Japan, sales and volumes decreased due to intensified competitio
Slide 37: Status of Cosmetics by Main Brands
(Appendix) Status of Cosmetics by Main Brands Cosmetics – Imprea Cosmetics – IM Sales decreased due to increased focus on cosmetics-related New color mascara products, promoted in conjunction with hair color, activities within “IM” brand. performed well and exceeded annual plan. FY2023 FY2024 FY2023
Slide 38: Sales Growth and Sales Ratio by Category in Japan and Overseas (Local Currency Basis)
(Appendix) Sales Growth and Sales Ratio by Category in Japan and Overseas (Local Currency Basis) FY2023 FY2024 Japan 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q 4Q YTD Net Sales +6.0% +0.7% +3.0% +3.1% +3.1% +9.3% +5.0% +6.9% Haircare +9.5% +2.9% +4.0% +4.6% +4.9% +9.1% +8.9% +9.0% Hair Coloring +1.9% (3.5%) (1.6%) +0
Slide 39: Sales Growth and Sales Ratio by Category in Japan and Overseas (Local Currency Basis)
(Appendix) Sales Growth and Sales Ratio by Category in Japan and Overseas (Local Currency Basis) FY2023 FY2024 China 1Q 2Q 3Q 4Q YTD 1Q 2Q 3Q 4Q YTD Net Sales (2.7%) +22.4% (6.1%) +5.8% +3.8% +4.3% (16.5%) (6.0%) Haircare +11.0% +35.7% (7.3%) +15.9% +12.0% +6.2% (3.3%) +1.6% Hair Coloring (14.0%) +8
Slide 40: Status of Capital Expenditures, etc.
(Appendix) Status of Capital Expenditures, etc. FY2024 FY2024 FY2020 FY2021 FY2022 FY2023 (Unit: million yen) 2Q YTD Plan Capital Expenditures 1,917 4,644 4,097 3,151 929 4,258 Depreciation and 1,562 1,777 2,026 2,213 1,117 2,404 Amortization Amount 1,581 1,741 2,074 2,334 1,139 2,649 R&D exp. % to
Slide 41: The number of Field Persons (FP)
(Appendix) The number of Field Persons (FP) The number of FPs increased moderately in each country. The Number of FPs by Country FP Recruitment and Training Status in Japan Upper column: Average number of FPs during the period (persons) Lower column: Net sales per FP (million yen) FY2021 FY2022 FY20
Slide 42: Agenda
1. Consolidated Financial Results P2 2. Financial Results by Region P7 Agenda 3. Progress in FY2024 P14 4. Appendix P31 5. Outline of Milbon P42 © Milbon Co., Ltd. All right reserved. 42
Slide 43: Outline Of Milbon
(Appendix) Outline Of Milbon Milbon is a cosmetics manufacturer that produces and sells haircare products including treatments and hair coloring products exclusively to hair salons. Cosmetics market Professional hair cosmetics market Domestic market size: Approx. 200 billion yen* Domestic market sha
Slide 44: Outline Of Milbon: Business Model
(Appendix) Outline Of Milbon: Business Model We have established solid trust with hair salons by offering our products and services that contribute to enhance their sales and profits. The distribution flow of Our sales personnel, Field Person, identifies salon tasks, provides educational support, an
Slide 45: Outline Of Milbon: Three Key Points of Our Business Model
(Appendix) Outline Of Milbon: Three Key Points of Our Business Model Consistent focus on hair salons and hair stylists Since our founding in 1960, we have sustained continuous growth by steadfastly narrowing our business focus to hair salons, with the strategy of increasing sales and profits of hair
Slide 46: Outline Of Milbon: Our Growth Trajectory
(Appendix) Outline Of Milbon: Our Growth Trajectory Steady growth through business expansion in Japan and overseas Net Sales and Operating Income Composition of Sales by (billion yen) Launched “Smart Salons” (billion yen) Country (FY2023) Launched “milbon:iD”, our official online stores Launched “Im
Slide 47: Outline Of Milbon: Our Main Products
(Appendix) Outline Of Milbon: Our Main Products Haircare and hair coloring products are the mainstay of our sales. In recent years, we have expanded our business to include cosmetics, etc. Composition of Sales by Product Category Cosmetics (only available in Japan) (FY2023) Haircare Products sold fo
Slide 48: Outline Of Milbon: Domestic Hair Salon Market Conditions
(Appendix) Outline Of Milbon: Domestic Hair Salon Market Conditions Hair salons have the potential for further growth despite the medium- to long term decrease in the number of customers due to declining birth rate and aging population. Challenges and Growth of Aging Population with Low Fertility Co
Slide 49: Outline Of Milbon: Our Recent Initiatives in Japan, milbon:iD
(Appendix) Outline Of Milbon: Our Recent Initiatives in Japan, milbon:iD We launched milbon:iD, an EC platform, in 2020 to support productivity enhancement of hair salons. This platform allows salon customers to purchase retail products online. How milbon:iD Works – Revenue is attributed to salons i
Slide 50: Outline Of Milbon: Our Recent Initiatives in Japan, Two Major Strategies
(Appendix) Outline Of Milbon: Our Recent Initiatives in Japan, Two Major Strategies We aim to maximize the inherent value of hair salons, which enables frequent and extended in-person visits, by enhancing our Smart Salon concept and broadening the range of products available for in-salon purchase. S
Slide 51: Outline Of Milbon: Status of Overseas Expansion
(Appendix) Outline Of Milbon: Status of Overseas Expansion We conduct business across 14 countries and regions, and have recently expanded our international bases for R&D as well as production. Milbon Europe Milbon Korea GmbH Co., Ltd. Milbon Trading(Shanghai) Istanbul Main Branch Co.,Ltd. Milbon Co
Slide 52: Outline Of Milbon: Our Three Major Overseas Countries
(Appendix) Outline Of Milbon: Our Three Major Overseas Countries Three major countries, South Korea, China, and the US account for nearly 80% of overseas sales South Korea China US Our educational initiatives focused on hair Subsequent to COVID-19, activities for hair We have enjoyed rapid growth tr
Slide 53: Outline Of Milbon: Other Countries and Regions
(Appendix) Outline Of Milbon: Other Countries and Regions Our sales are particularly significant in East Asia and ASEAN, and we have recently expanded into Europe. Europe and Middle East East Asia (Taiwan and Hong 8.4% Kong) 36.6% FY2023 Sales in Other Countries and Regions 2.68 billion yen ASEAN 55
Slide 54: Outline Of Milbon: Our Global R&D and Production
(Appendix) Outline Of Milbon: Our Global R&D and Production We aim to minimize geopolitical risks and to align ourselves with the diverse values of beauty unique to each locality, by establishing R&D and production systems in each region. R&D－ Production－ Collaboration Among our Four Global R&D Base
Slide 55: Outline Of Milbon: Shareholder Returns
(Appendix) Outline Of Milbon: Shareholder Returns We have set a dividend payout ratio target of 50% from FY2022, aiming for steady and continuous shareholder returns. (Yen) FY2024 Plan 88 yen © Milbon Co., Ltd. All right reserved. 55
Slide 56: Outline Of Milbon: Corporate Governance Structure
(Appendix) Outline Of Milbon: Corporate Governance Structure See our Integrated Report for more details ： https://www.milbon.com/en/ir/library/report.html © Milbon Co., Ltd. All right reserved. 56
Slide 57: Outline of Milbon: Compensation for Board Members
Appendix Outline of Milbon: Compensation for Board Members Compensation for board directors (excluding external board directors) shall consist of cash and stock-based compensation as an incentive to continuously increase corporate value, in order to encourage each board director to perform their dut
Slide 58: Outline Of Milbon: ESG Investment Index and External Assessments
(Appendix) Outline Of Milbon: ESG Investment Index and External Assessments ESG investment index to be selected THE INCLUSION OF Milbon Co., Ltd. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION O
Slide 59: Disclaimer
Disclaimer With respect to the business forecasts included in this document, any statement that is not historical fact is a forward-looking statement based on information available and certain premises that are judged to be rational at the time of the announcement. Please be aware that actual result