MILBON REPORT 2023
Integrated Report

Finding Beauty Across the Globe to Pioneer an Innovative Beauty Industry
Decoding Milbon’s present and future strategies as a global professional haircare manufacturer

The desire for beauty is eternal.
Milbon strives to fill that desire,harnessing the power of the salon’s
physical presence,
combined with novel experiences
engendered by the digital realm.

Our hearts possess a single wish:
that people, cities, and the world alike,would bloom more brilliantly andgrow richer in spirit.
Unveil your beauty
with us as your guideas we illuminate beauty’s hidden joys.
The future of beauty starts here.

TOP MESSAGE

Food, clothing, shelter…and now beauty—an oft overlooked necessity for enriching our lives
Thank you for taking the time to read ourhave a presence in 14 countries andof emergency, consolidated net sales

integrated report.

regions, including Japan. Our com-

topped 40 billion yen for the first time

Milbon is a global professional hair-prehensive global strategy, the Seven

in FY2021. We improved on that again incare manufacturer based in Japan.

Ragions, aligned with notions of beauty

FY2022 with 45.2 billion yen.

Since the company’s founding in 1960,

in each of those countries and regions,

we have manufactured and distributed

is making steady progress.

Factors

underlying

thissustainablegrowth include both the perseverance ofa product range centered on salon-ex-

To remain essential to society, we musteach of our more than 1,000 employees

clusive hair cosmetics. Hair salons are

keep pace with society’s rapidly chang-ubiquitous across the globe—Japan ising demands. We have increased ourin their thorough implementation of The
Milbon Way — Milbon’s clearly definedhome to more than 200,000—and con-revenue in every term since our listingvision and set of action guidelines—and

sistently focusing on them as a busi-

on the stock market (excepting FY2020,

the fact that people everywhere, in every

ness domain has allowed us to deliver

the first year of the COVID-19 pandem-

age, wish to be beautiful. If food, cloth-

unique value. Through beauty, we haveic) because we have continuously anding, and shelter are the basic necessities

continued to provide spiritual richness

successfully innovated to address thosefor life, beauty has become an ever more

to individual consumers and, in turn,societal shifts. As a result, our growth

important factor for enriching it. And I

society as a whole. Milbon is now a

curve has outperformed pre-pandemic

believe Milbon, a beauty provider, canleader in the domestic salon-use hairexpectations. Following a slight con-fulfill the instinctive human desire to becosmetics market, while globally wetraction in FY2020 due to Japan’s statebeautiful.

The time for preparing is over—this year, our future becomes a reality
Hair salons, our most important partners,

To embody our commitment to building

already in motion.

not only fulfill people’s desire for beauty,

The theme for the current medi-“a solid company that won’t collapse,”but they remain physical spaces regular-

um-term management plan is “Stage

we must persist with our endeavors toly frequented by customers. In fact, wefor the Future.” Following a period of

fulfill people’s desire to be beautiful.

expect the value of hair salons to increase

preparation in FY2022, in FY2023, theas personal relationships become ever

future envisaged by Milbon for the

more tenuous in our modern day. As abeauty industry now begins to takemanufacturer of products supplied exclu-

shape. For Milbon, this truly is the start-

sively to hair salons, Milbon will continue

ing point for our goal of harnessing theto maximize the value that salons provide

power of beauty so people around theso we may continue to grow alongsideworld can shine.

them.
Meanwhile, the new future of beauty
that Milbon envisages in partnershipwith hair salons is clearly beginning totake shape. Details of the plan and its
progress can be found in the STRATEGY
section of this integrated report. There
are two pillars to the Beauty Platform
Plan within the Salon-based Social Innovation, our domestic market strategy(included in the current medium-term
management plan). The first pillar is our
Smart Salon Strategy, which proposes

Continuously Shaping the Future of Beauty
to Pioneer an Industry
Making an industry out of beauty… Founded in 1960, Milbon has consistently enjoyed sustainablegrowth by using hair salons to inspire beauty in people’s lives. Over that time, we have been driven byan enduring commitment to building “a solid company that won’t collapse”—one that is sustainable andremains essential to society—and in doing so have helped shape the ever-evolving future of beauty. A
New Stage for the Future envisaged in our current medium-term management plan, launched in 2022, isbeginning to take shape. Representative Director, President & CEO Ryuji Sato comments.

MILBON INTEGRATED REPORT 2023

6

a new format for salons that fuses thephysical and digital realms. This initiative is already underway. The second
pillar is our Lifetime Beauty Care Strategy, where we have commenced exploring approaches to beauty-related fields
beyond hair in collaboration with companies that possess their own unique
technologies. In addition, milbon:iD,
our official online stores that werelaunched during the 2020 pandemic
to connect hair salons with customers,
now have close to 500,000 registeredmembers. Milbon’s future of beauty is

7

Ryuji Sato

Representative Director, President & CEO,
Milbon Co., Ltd.

000

Editorial Policy

INDEX

This integrated report follows the International Integrated Reporting Framework proposed by the Value Reporting Foundation (VRF). FY2023 is the second year in the fiveyear medium-term management plan Milbon announced in 2022. With various strategies
now underway in Japan and overseas, this report primarily covers initiatives undertaken
in FY2022. However, we also strive to communicate clearly to stakeholders about thesources of our sustainable growth, management strategy, and our medium-to-long-term
outlook for sustainability promotion and other such matters. As was the case in 2022, theoverall design of this report follows “global” and “borderless” themes, giving expression
to our goal of becoming a Japan-based (Japan-first) world-leading professional haircare
manufacturer. Additionally, we have attempted to create a flat design utilizing squares and

001

P10

M

002

ABOUT MILBON

P26SSTRATEGY

a one-tone color scheme to enhance readability for a wider audience. This marks Milbon’s
fourth integrated report.
Our editorial policy for the first report in FY2019 included an emphasis on employee
understanding to facilitate their communication with stakeholders. The FY2020 report, inthe first year of the COVID-19 pandemic, was written like a letter to employees’ families,
providing an explanation of COVID-19’s impact on the business. The previous report, in
FY2021, aimed to promote a greater understanding of our company among a broader
range of stakeholders. For this year’s report, we sought to communicate our company’svalue from a more objective standpoint, enlisting the help of such outside parties as collaborating partners and institutional investors. Feel free to contact us with any questions,recommendations, or other feedback you may have about the contents of the report.

003

P42

E

SUSTAINABILITY & ESG

Department in Charge: Corporate Communications Department

Click to jump to the relevant page

004

P64

P

PERFORMANCE

001

P12

P14

What We Offer/
Our History

Three Interlinked Value-Creating
Sources for Sustainable Growth

Discover the values of Milbon, a global professional haircare manufacturer dedicated toIntroducing

enriching society through collaboration withhaircare professionals

growth: The Milbon Way, our unique businessmodel, and the five-year medium-term man-

the

three

interlinked

sourcescreating new value in support of sustainableagement plan

P16

P18

Milbon in the Eyes of aCompetitive Strategy Expert

ABOUT MILBON

Value Creation Model

Ken Kusunoki
Hitotsubashi University Business School’s specially appointed professor Ken Kusunoki discusses Milbon from his standpoint as a memberof the selection committee for the Porter Prize,
which recognizes businesses maintaining highprofitability with unique and superior businessmodels and competitive strategies

P20
President & CEO Dialogue: Discussion
with an Institutional Investor

Shinichiro Hyogo
Shinichiro Hyogo, Chief Analyst/Chief FundManager of the Asset Management Division at
Mitsubishi UFJ Trust and Banking Corporation,
engages in a dialogue with Milbon’s President& CEO

Click to jump to the relevant page

Explore our value creation model aiming toachieve an enriched society by inspiring beauty

001

WHO WE ARE

Milbon is a Japan-based global professional
haircare manufacturer working with the haircare

What We Offer

ABOUT MILBON

industry to inspire beautiful living worldwide

Corporate Slogan

Inspiring people to live beautifully through hair salons
Milbon is a global professional haircare

sionals.” This approach has earned us

for enabling the ongoing provision andmanufacturer based in Japan working

solid trust, allowing Milbon to becomeenhancement of beauty services that arewith the haircare industry worldwide to

the leader in Japan’s salon-exclusive hair

truly needed, even encompassing train-

inspire beautiful living by people every-

cosmetics market. In the global market,

ing and digital transformation support

where under the corporate slogan, “Find

Milbon has grown steadily, with its sales,

for salons.

Your Beauty.” Our aim is to enrich society

production, and development presence

Though Milbon is a manufacturer in-

as a whole.

now extending to 14 countries and re-volved in the production and sale of hairgions, including Japan.

cosmetics, we offer more than just phys-Ever since our founding in 1960, weMilbon × Salons

To live your life radiantly

To be beautiful

People living beautifully and radiantly are capable of creating a peaceful and enriched society

Milbon history
Yutaka Beauty Chemicals Co., Ltd. established in Osaka City to
manufacture and sell cosmetics

1965 January

Company renamed Milbon Co., Ltd.

1970 MayTokyo Branch opened

1984 March

Training Center opened in Osaka City

1984 April

Field Person (FP) System introduced

1987

TAC Product Development System introduced

1993 April

Our customers are haircare profession-ical products. We provide beauty, craft

focus on haircare professionals and sa-

als and salons, as well as those people

individuality, enrich people’s spirits, andlons, with the central strategy of increas-

who visit salons. Consequently, we strive

brighten their lives. To us, the world’s

ing salon sales and profits. This drive is

to always adopt two viewpoints: a cus-hair salons are vital partners for supply-

based on the firm belief that hair salonstomer (haircare professional and salon)

ing these benefits. Milbon will continue

are essential for enriching society andperspective, and the perspective of thosepursuing sustainable growth, working

realizing individual beauty, and in keep-

who visit hair salons (a consumer/societal

with haircare professionals worldwide to

ing with the philosophy that “Everythingview). Putting this into practice, we haveshape a future where people can lead

we do, we do for and with hair profes-

developed our own unique framework

beautifully enriched lives.

Toward a new goal

Consolidated Net Sales (100 million yen)Great East Japan Earthquake

Consolidated Operating Income (100 million yen)
1960 July

have consistently limited our market to2008 Financial Crisis

334

191

197

Nigelle, for creating natural-looking hairstyles, launched*Milbon’s first product marketed outside Japan

32.7

Central Research Institute opened in Osaka City

1998 October

Liscio hair straightening system based on ironing technology
launched

COVID-19
Medium-term targets for 2015–2019
achieved one year ahead of schedule

Recorded revenue growth in every fiscal year since our
IPO in 1996 (excepting FY2020, when COVID-19 struck).
Operating income has also been steadily increasing.

1997 April

Surpassed 45 billion yen
for the first time

35.7

205

37.9

218

39.8

238

43.0

252

273

338

78.1

1st Medium-Term Management Plan
(2010–2014)

47.2

51.1

67.5

452.3

108

357

291
62.6

44.5

362

415

580

63.9

75.5
2022–2026
Medium-Term Management Plan

53.4

“Change the Stage—18-Month Missions!”
implemented in response to COVID-19(July 2020 to December 2021)

2nd Medium-Term Management Plan
(2015–2018)

3rd Medium-Term
Management Plan
(2019–June 2020)

2015

2019

*Became a major hit in the United States

2001 June

Company listed on First Section of the Tokyo Stock Exchange (TSE)2004 March

Milbon USA, Inc. established in New York, the United States ofAmerica*Milbon’s first overseas subsidiary

2008

2014

2016

2017

2018

2020

2021

2022

2023

2024

2025

2026

2017 November

Head Office relocated to Tokyo

2020 June

Official online stores, milbon:iD, launched2018 September

Milbon Malaysia Sdn. Bhd. established in Kuala Lumpur, Malaysia

2021 April*Topped annual sales of 10 billion yen in FY2022

2018 September

Milbon Vietnam Co., Ltd. established in Ho Chi Minh City,
Socialist Republic of Viet Nam

The education:iD, an online learning service for haircare
professionals, launched2021 June

Milbon Digital Arena, a virtual event space, launched2019 April

A salon-exclusive premium cosmetics brand, iMPREA, launched2021 November

2019 July

Sophistone, a hair color brand for Europe and North America,
launched

Milbon (Zhejiang) Cosmetic Co., Ltd. opened in Zhejiang,
People’s Republic of China

2022 April

2019 October

Milbon Singapore Pte. Ltd. established in Republic of Singapore

Milbon Europe GmbH opened in Düsseldorf,
Federal Republic of Germany

2020 January

Milbon (Zhejiang) Cosmetics Co., Ltd. established in Zhejiang
Province, People’s Republic of China

2023 April

Elmista, a hairdryer that atomizes and sprays fine mist of beauty
serum jointly developed with Living Appliances and Solutions
Company of Panasonic Corporation, launched2012 May

Milbon (Thailand) Co., Ltd. established in Rayong Province,
Kingdom of Thailand

2007 November

Milbon Trading (Shanghai) Co., Ltd. established in Shanghai,
People’s Republic of China

2013 December

Milbon (Thailand) Factory established in Rayong Province,
Kingdom of Thailand*Milbon’s first overseas production facility

Milbon Trading (Shanghai) Studio opened in Shanghai,
People’s Republic of China

2016 June

Manufacturing Technology Development Center established at
Yumegaoka Factory

A premium haircare brand for the 360 Degree Beautiful Hair,"milbon," launched2017 January

Capital and business alliance with Kosé Corporation announced

12

2013

Aujua, a premium haircare brand reflecting Japan’s social climate,culture, and hair characteristics, launched

Ordeve hair coloring compatible with foiling launched

MILBON INTEGRATED REPORT 2023

2012

Milbon Korea Co., Ltd. established in Seoul, the Republic of Korea

2007 April

2009 July

2011

2010 April

Yumegaoka Factory established in Mie Prefecture

2008 December

2010

2009 July

2005 July*Watched for symbolizing the shift from perming to coloring

2009

13

WHO WE ARE

SourceMilbon and Sustainable Growth — Three Interlinked Value-Creating Sources

Realizing sustainable growth throughthree interlinked sources with thoroughness as acommon thread
SourceOur Philosophy

The Milbon Way
Structure for disseminating Milbon-isms
as our corporate philosophy

Products and beauty techniques

Our Approach

Uniquebusiness models

Field Person System

TAC Product Development System

Delivering products
and beauty techniques

Successful techniques

Hair salon

Embracing change and continuously
evolving: the structure of our uniquebusiness model

Field Person System
A unique sales and education support system for hair salonsembodying the phrase, “Don’t sell products, sell concepts.” Thissystem is a three-way collaborative effort specializing in identifying
salon issues and providing educational support, both of which
contribute to greater sales and profits for hair salons.

“Everything we do, we do with and for haircare professionals.” Etched into The Milbon Way, this corporate philosophy is embodied in our unique business models thatconsistently focuses on hair professionals and salons. It
has allowed us to continue delivering value that leads to

TAC ProductDevelopment System

greater sales and profits for salons, and to continue enjoying their trust and support.

Milbon’s unique product development system that seeks to fusescience and sensibility. In aiming to provide enhanced beauty to abroader audience, we seek to incorporate the technical skills andother expertise possessed by top-class hairstylists into our products
and services. Importantly, we seek to do so from the perspectives ofboth hairstylists and consumers within a BtoBtoC context.

The Milbon Way is not only a handbook that defines the ideal Milbon employee, or “Milbon-ism,” but it is an important method of disseminating ourcorporate philosophy. First compiled in 2012 under the leadership of president Ryuji Sato, it has been continually revised in tune with the changing

Sourcetimes based on the theme of Continuity and Change. From the moment ouremployees join, the philosophies at the heart of our business strategy—afocus on hair professionals and salons, our goal to achieve sustainability bybuilding “a solid company that won’t collapse”—are covered in structured,ongoing educational programs provided both in Japan and overseas andcontinuing throughout each employee’s career. Even in our employee awareness surveys, we consistently maintain a high level of understanding andresonance among employees, aiming for thorough permeation.

Building “a solid company that won’t collapse”
Begun by founder Ichiro Konoike, Milbon’s company-wide belief in sustainability persists to this day.
We limit the business domain and continuously generate business that will keep growing.

"Be in the field” “Pay attention” “Be independent”

Our VisionFive-year mediumterm management plan

Annual market strategy andannual business plans

Structure for formulating mediumto long-term visions and mediumterm management plans that deliver
continuous innovation

Specific activities are planned for each year based on the mediumterm management plan. Briefings for management personnel are
given each business year. Briefings on annual market strategy forrealizing annual plans are provided to salon partners and distributors,
and efforts are made to implement medium-term management plans.

A Milbon-ism that all Milbon employees embrace and strive to implement. Whether employed in sales or
product development, each employee must spend time in the field, listen attentively and absorb customer
feedback, and learn to act independently.

Since 2010, Milbon has been formulating a medium-term
management plan every five years to reflect the latest

Micro and macro perspectives

trends and anticipate societal changes in the next 10 years.
Doing so allows us to deliver continuous innovation to re-Continuing education and diffusion of core principles

alize the ideal and desired state of the beauty market in

To survey market trends, the president personally visits more than
400 salons each year in various countries and regions. His researchis reflected in the formulation of plans and strategies that align withgeneral economic and other trends of this global age.

keeping with The Milbon Way.

We provide new employees with post-entry training for a total of nine months, including trainings during
their onboarding period, annual trainings in the second and fifth years, and promotion-related trainings.
Additionally, we regularly organize study sessions at each business location to ensure continuous learning of
The Milbon Way.

MILBON INTEGRATED REPORT 2023

We achieve sustainable growth by thoroughly implementing these three structures.

14

15

WHO WE ARE

Milbon’s unique strategic narrative centered on increasing salon sales and profits

Milbon in the Eyes ofa Competitive Strategy Expert

Business model(format)

Interview withKen Kusunoki, Business Scholar

Apply

Salon-exclusive sales

Business scholar
Specially Appointed Professor, PDS Endowed Course –Competitive Strategy, Hitotsubashi University Business School

Educational support and proposals toenhance sales through the FP System

Competitive
strategy

Sell tools for increasing salon sales and profits(Clear point ofdifference fromcompetitors)

Normalization of techniques of leading
haircare professionals through the
TAC Product Development System

Solid trust-based
relationships withhair salons

Tools for realizing both higher sales and profits for salons andsolid trust-based relationships

Milbon received the Porter Award (organized by Hitotsubashi ICS) in 2020, which is presented to businesses
that have a unique and outstanding business model, competitive strategy, and sustainably high profitability.

Here, we invited Professor Ken Kusunoki, a renowned business scholar and the specially appointed professor
for competitive strategy at Hitotsubashi Business School, who also serves as a member of the award selection

committee. He provided further explanation of the importance of business models and competitive strategies,
and he further elaborated on our company's uniqueness and future prospects.

A business model as a format and competitive strategy as a clear point of difference

Milbon also has very efficient mecha-

ment System. This system involves join-

attract a reputation, leading to higher

nisms among its tools for increasing sa-

ing forces with top-class haircare profes-

sales and profit from their business.

lon sales and profits. One is the Field

sionals to develop products drawing on

Furthermore, satisfied customers would

Person (FP) System, an original sales sys-

their skills.

buy related products, and salons would

tem for supporting skills training by hair

Techniques used by leading haircare

earn more retail sales as a result, lifting

salons. It involves the deployment of FPs

professionals are often based on theirproductivity. Such increased productivity

who are well-acquainted with the beauty

personal sensitivities and are thus notwould be repaid to Milbon in the form

field after extended training. Together

easily replicated by other practitioners in

of increased sales. The company has

with distributors, they visit salons on a

the field. Additionally, these leading pro-realized quite an ideal cycle here. I am

regular basis to make recommendations

fessionals rarely share their techniques

also aware that salons share business andthat will result in higher salon revenue.

with others. Milbon, however, has spentother data with Milbon so the latter can

But as we all know, haircare profession-

many years building its R&D capabilities

help resolve their issues. That is extreme-

als are inevitably very busy people. With-and has established solid trust-based re-ly unusual. I find this the most obvious

As a competitive strategy specialist, I

starters, a business model, in my view, isGenerally speaking, it would be difficultin such an environment, it is vital to belationships with hair salons. If techniques

example demonstrating the robust trust

keep an eye on the strategies of numer-

a format for doing business that a compa-

to call this a strategy because the relative

able to produce worthwhile proposals.

based on the sensitivities of leading pro-

Milbon has earned.

ous corporations on a daily basis. How-ny adopts within their particular domain.

superiority of a product’s performance

Milbon has a very attractive mechanism

fessionals were to be normalized, more

ever, there are some wonderful strate-

While there are various ways to classify

ultimately only comes to bear on compe-

for this, too—the TAC Product Develop-

salons would be better at their craft andgies out there waiting to be discovered. I

them, there are in fact only around 30 dif-

tition in product development. A differ-

was reminded of that when I first encoun-ferent types. In other words, a businessence in positioning, on the other hand,

tered Milbon while serving as judge formodel may be important, but it alone

is a clear strategic difference. Or, to use

the Porter Prize. That is how fabulous I

will not be the fundamental factor in the

Milbon’s own wording, it is a narrowing

found Milbon’s competitive strategy andability to maintain profitability over theof focus. By delimiting the scope of one’s

Though the domestic market is said to beble in countries where Milbon can faith-

on-one. They stay in one place and com-it did not surprise me at all to learn thatlong term.

focus, one develops criteria for passing

maturing as the population decline gath-fully replicate its competitive strategy.

municate over an extended period, even

Global demand exists, awaiting Milbon

Milbon was on a growth trajectory overSo, what is needed? Competitive strat-

judgment—not on what will be done,

ers speed, Milbon is a company that has

Of course, there are bound to be plac-

partaking in small talk. There are very few

and above what they had projected prioregy—a clear point of difference with

but on what will not be done. That is agrown on the back of an excellent com-es where the strategy would be unsuc-

places quite like that in any other indus-

to the COVID-19 pandemic.

other companies. There are basically twoclear point of difference. What impressed

petitive strategy, as opposed to external

cessful due to varying hair types and thetries. To me, the world’s hair salons offeronways of looking at this difference. One isme about Milbon was not the businessfactors. Indeed, a scenario where there

different functions performed by local

a most-favorable setting for engaging

Milbon’s competitive strategy, let me go

to view it as variation along a yardstick,model—the format—but the competitive

are no tailwinds is precisely the time for ahair salons. But at the same time, therewith customers. Not only that, but theover the difference between a business

in which, for example, company A pos-

strategy of creating original value.

competitive strategy, which leads me toare definitely countries and regions out

world is also already full of hair salonsmodel and a competitive strategy. For

sesses better products than company B.

believe that now might be the time for athere that require a competitive strategy

that could become partners of Milbon.

company like Milbon, possessing a supe-like Milbon’s.

In other words, there is ample demand—

BeforeIprovidecommentary

A tightly delimited domain and thorough approach define Milbon’s originality

Each country and region will undoubt-

demand that is yet to be fully tapped.

One domestic Milbon initiative that I

edly have its own local manufacturers,

That is why I eagerly look forward toam watching with particular interest is

but although Milbon is also a manufac-

watching Milbon transform the world
with its excellent competitive strategy.

rior competitive strategy, to shine.

That is not all that is original about

Milbon’s case, it is higher sales and profit

users, and it is more than just an e-com-

Smart Salons. These are spaces provid-

turer, it is competing under completely

Milbon’s competitive strategy. I see thefor hair salons. And what is more, Milbon’s

merce service. Milbon has realized a

ing a new kind of buying experience thatdifferent concepts. For that very reason,

idea of increasing the sales and profit

consistent stance in following this strate-

system that both upholds the existingcombine digital and real-world elements.

the future that awaits cannot be definedof hair salons as central to the strategy’s

gy has been crucial to its success.

profit structure, whereby sales revenue is

It stands on the milbon:iD platform,

solely in terms of a supply of shampoo

originality. It is true that as a manufac-

A lot of companies talk about concen-

shared with hair salons and distributors,

which I have already noted shows solidfor professional use, for example. I be-

turer Milbon generates profit by selling

trating on the intangible rather than theand improves convenience for generalpotential. If the Smart Salon Strategy,

lieve Milbon’s competitive strategy has

products, but embodied in the compa-

tangible, yet so few manage to pull it off.

consumers. All manner of strategic de-launched in January of this year, showsa much better chance of pulling in big

ny’s motto of “Don’t sell products, sell

Milbon, though, embodies this concept

cision-making at Milbon takes place inrepeated success, I sense the potential

business opportunities in overseas mar-concepts,” Milbon is essentially sellingthrough and through, which explains

this way, originating with a concept. And

for its development into a sales platformkets than in Japan.

an effective means for hair salons to in-what the company was able to do with

I get the sense that the thoroughness offor not just haircare products, but all

crease profit. A competitive strategy is amilbon:iD, their official online stores.

Milbon’s approach, in contrast to otherkinds of beauty products.

narrative that stems from the question,

Officially launched in 2020, milbon:iDcompanies, reaches a whole new level.

“What are we really selling?” and inalready has close to 500,000 registered

MILBON INTEGRATED REPORT 2023

16

Hair salons will be around as long as
human hair continues to grow. And mostIn the global market, too, growth andof the time, haircare professionals andadvancement are by no means improba-

customers encounter each other one-17

WHO WE ARE

Value Creation Model
Business Model and
Growth Strategy

Main Management Resources

Financial
Capital

Net assets:

Most Recent
Accomplishments and Goals

3

43.99 83.4
billion yen%

in Japan（GMP-compliant
cosmetics）, Thailand, and
China

bases

*Fiscal year ending December 31, 2022

FY2026 Target

45.23

58.0

Operatingincome

7.55
billion yen

10.8

ROE

13.2
%

13.9

12.5
%

13.6

50.2

50.0

Net sales

Our Philosophy

billion yen*Fiscal year ending December 31, 2022

Number of
consolidated employees:

Three
Sources

Education and training
expenses:

1,097 120,458

Our Approachyen(per person in FY2022)

Uniquebusiness model*Fiscal year ending December 31, 2022

Five-year mediun-term
management plan

ROIC

Japan, Thailand, China, USA

2.07
233

4.6

28

Number of users on milbon:iD,
our official online store:*As ofMarch 2022

Number of users on milbon:iD,
our official online stores:*As ofDecember31, 2022

Number of users on education:iD, our online
learning tool for haircare professionals:

23,069*As ofDecember31, 2022

Energyconsumption:

Five-year medium-term
management Plan

Water
consumption:

CO 2
emissions:

2,383

Salon-based Social Innovation×
Sustainability Commitment

2,888

milbon:iD / education:iD

t-CO 2

Digital Arena / Field Activities DX

%

OUT
COME

Fostering sustainable cities andcommunities through our dedicationand contribution to
fulfill beautiful living

Achieving both sustainable business growthand solving social issues

2

Promote recycling in
manufacturing andconsumption activities

Promotion of DX

㎥

%

%

KL

50,261%The Five Key Challenges forAchieving a Sustainable Society

overseas

Efficient use of resources tomeet sustainability commitmentsbillion yen

Social Value*Fiscal year ending December 31, 2022

NaturalCapitalConnection with society
through beauty

448,000

in Japan

Dividend
payout ratio

Strategy to Create Continuous Value%

Number of patent applications:SocialCapitalINPUT

R&D intensity:

billion yen

12,965OUT
PUT

R&D bases in

R&D expenses:

billion yen

Our Vision

R&D that integrates sensibility and science

Intellectual
Capital13Practice peoplefriendly procurement

Enrich the spirit
through beauty

4Construct a fair andflexible management
structure

5

Realize work
environments withenhanced job satisfaction

Foundation for the Company’s sustainablebusiness growth*Fiscal year ending December 31, 2022
(only water consumption is based on
actual results at our production factories)

Return of Management Resources

MILBON INTEGRATED REPORT 2023

Realize Enriched Spirit andSociety through Beauty

Creating a beauty industry thatenriches beauty and the spirit throughour collaboration withhaircare professionals

The Milbon Way

The Milbon Way, specialized beauty experts

Human
CapitalFY2022

Production bases worldwide

Equity ratio:

VALUE

Economic Value

Manufacturing
CapitalSound and stablefinancial structure

Based on the management philosophy of “focus” and “deciding what not to do,” we have consistently positioned theprovision of products and services through salons as our business domain since our foundation. With focused capital investment, a five-year medium-term management plan, and digital transformation (DX) promotion as driving forces, we are
creating continuous value and contributing to enriching spirit and society through beauty.

Value Creation
P ro c e ss

18

19WHO WE AREPresident & CEO Dialogue: Discussion with an Investor

Achieving balanced expansion in both Japan and worldwide
Accurately capture social changes and seize the opportunities for further growth

Realizing medium- to long-term ambitions andbuilding further trust through tireless businessand system innovation
Milbon invited Shinichiro Hyogo of Mitsubishi UFJ Trust and Banking Corporation—Chief Analyst and Chief Fund

Hyogo: First and foremost, I would likeinconveniences caused by restrictions

on haircare products, rather than solely

to ask you about your reflections onsuch as stay-at-home advisories duringemphasizing hair coloring products, has

Milbon’s growth since your appoint-

those 18 months, we accelerated the dig-

become the driving force for growth.

ment as President & CEO in 2008?

ital transformation (DX) we had been qui-However, if we focused only on hair,

Sato: I have a strong sense that we have

etly preparing for, laying key foundations

we cannot expect significant growth inbeen steadily progressing toward thethat would manifest as the Salon-based

the future domestic market. That is why

future we envisioned. In particular, sinceSocial Innovation concept in our current

Milbon has started to expand into thethe transition from rolling medium-term

medium-term management plan, whichcosmetics business in collaboration withmanagement plans to five-year com-commenced in 2022. This progress is ev-

Kosé Corporation and is venturing into

mitments starting in 2010, that sense

ident in our consolidated net sales top-

the beauty healthcare domain in part-has become even stronger. On the oth-ping 40 billion yen for the first time innership with Kao Corporation. We haveer hand, it is also a fact that we faced

FY2021 and exceeding 45 billion yen inalso jointly developed beauty appliances

challenges posed by the difficulties of

FY2022, surpassing the growth trajectorywith Panasonic Corporation. Although

the COVID-19 pandemic in 2020, a year

we had envisaged prior to the pandemic.

our cosmetics business is still in the ear-and half into the implementation of the

From this, too, we take pride in our abil-ly stages of development, we believe it

3rd Medium-Term Management Plan. In-

ity to effectively grasp social changes,

will take about 10 years to see substan-stead of fixating on our initial plan at that

including the pandemic, and turn themtial returns, just like our organic businesspoint, we introduced a new metric called

into opportunities for further growth.

and our operations in South Korea, which

the “Change the Stage—18-Month Mis-

Hyogo: What do you perceive to be thecurrently leads our global business. We

sions!” This enabled us to adapt flexibly

key factors for business expansion?

consider ourselves in the process of lay-to the rapidly changing behavioral pat-

Sato: Speaking about our domestic

ing the foundation for that future growth.

terns and values of people. Despite thebusiness, the strengthening of our focus

2010–20142015–20182019–June 2020

1st Medium-Term
Management Plan

2nd Medium-Term
Management Plan

3rd Medium-Term
Management Plan

Beyond Japan(Global operations)

Beyond hair
(Lifetime Beauty Care)

Beyond an industry-perspective(Perspectives of society and customers)

Respond flexibly to changing behavioral patterns and values as a result of the COVID-19 pandemic

July 2020–December 2021

2022–2026

Carried out Change the Stage—18-Month Missions!

Accelerated DX based on preparations already madeCurrent medium-term management plan
(Salon-based Social Innovation)

Make DX progress a foundation for growthManager of the Asset Management Division—to join Representative Director, President & CEO Ryuji Sato for a
dialogue. Presenting views and questions from an investor’s perspective, Mr. Hyogo provided the cues for a discussion about Milbon’s strategy for realizing a desired future supported by the additional trust of stakeholders.

A system of local production for local consumption is taking shape in the beauty domain
Hyogo: How would you look back on the

improvement compared to FY2021.

R&D base. Could you please elaborate

Hyogo: Indeed, your overseas businessfurther on Milbon’s future vision forhas grown steadily, particularly led by

global operations?

2010, and by FY2022, overseas sales

South Korea. It appears that your plans

Sato: Milbon divides areas of the world

had grown to account for 21.9% of con-in China did not unfold as envisaged

where we operate, including Japan, into

solidated net sales. While it is true that

due to the country’s zero-COVID policy

seven regions to drive our initiatives. This

the overseas sales ratio increases whenin 2022. Nonetheless, I understand thatis because the definition of beauty, as adomestic sales remain stagnant, Milbon’s

efforts have been made to establish acultural element, varies in different

domestic sales also experienced a 5%

solid foundation, such as setting up an

countries and regions, despite it being

overseas operations?

Ryuji Sato

Shinichiro Hyogo

Representative Director, President & CEO,
Milbon Co., Ltd.

Chief Analyst and Chief Fund Manager of the AssetManagement Division
Mitsubishi UFJ Trust and Banking Corporation

MILBON INTEGRATED REPORT 2023

20

Sato: Overseas operations started in

21

a universal concept. Like food, it needs

contributes to sustainability by eliminatingple. We have put in place manufacturing

implementing condensed versions ofduring the COVID-19 pandemic, is set

Training Center in Osaka is scheduled toto be attuned to that region. Having said

the need for long-distance transportation,

and R&D bases in China that will now be

training programs conducted in Japan.

to resume soon and the program is tobegin in Odawara, Kanagawa Prefecture.

that, there are limits to how far we canleading to a reduction in CO2 emissions.

able to carry out research, development,

At smaller bases, trainings are still

be enhanced. Additionally, in July 2023,

It should allow us to enhance training

subdivide the products we manufacture

Hyogo: I find that to be a sensible ap-

and manufacturing functions for the Great-administered by personnel in charge atconstruction of a new Human Resources

for global human resources and all otherfor each area. That is why we divide

proach—aligning with the culture of eacher China region. In the future, if we set

the locality, though training in Japan for

Development Center with around threekinds of training programs.

areas into regions and pursue a vision ofregion, preparing for geopolitical risks,

up a factory in the United States, it could

locally recruited employees, suspended

times more space than the current

local production for local consumption inand committing to sustainability initiatives.

also provide manufacturing for Europe, inthe beauty domain whereby each region

Meanwhile, from an investor’s perspective,

which case the Thailand Factory would beundertakes all processes, including re-

I would like to closely monitor how Milbon

repositioned as a manufacturing facility

search and development, manufacturing,handles this in the next one to two years.

for the ASEAN region. In this way, we arelogistics, sales, and human resources.

Sato: While these are medium- to long-seeing the beginnings of a system of local

Hyogo: We must not overlook the policy

years after joining. We address this througheach respective country or region. As forThis approach not only enhances our pre-term plans, they are already taking shape.

production for local consumption that alsoof talent acquisition, which is a prereq-

ongoing efforts during recruitment and by

mid-career hires, we continuously hireparedness for geopolitical risks but also

Take manufacturing functions, for exam-helps us hedge risks.

uisite for development. From a compet-

following up with employees after they join

people with the necessary skills to address

itive advantage perspective, I would say

the company, as well as through training

areas requiring improvement. On the otheracquisition and development of DX per-for supervisors, to create an environment

hand, if we are able to train and develop

sonnel will hold the key.

where employees can carry on working,talent internally, including DX personnel,

Sato: At Milbon, digital transformation

feeling fulfilled.

we anticipate that the ratio of mid-career

truly demands our foremost attention

Hyogo: How do you analyze the factors

hires will naturally decrease.

and we are already making progress,

behind the low ratios for mid-career hires

Hyogo: I understand your viewpoint.

for example in the form of milbon:iD,and foreign nationals at your company?

However, there is a concern, especiallyour official online stores. And throughSato: To begin with, Milbon sees beauty

from a diversity perspective, that the low

initiatives like education:iD, a platform

as deeply rooted in the cultures of each

proportion of mid-career hires and othersupporting the training of haircare pro-country and region. Therefore, we believe

factors may be perceived as indicative

fessionals, and the Digital Arena virtual

local human resources should be recruit-of a closed organization. If the reasons

event space, we enable forging of rela-

ed in their respective regions. In Japan,

behind this situation are as you have ex-tionships unconstrained by time or place

this leads us to consider individuals who

plained, I believe it would be beneficial

to complement face-to-face communica-

were born and raised in Japan, includingfor Milbon to publicly disclose this infor-tion. Therefore, we are considering vari-those of foreign nationality, as suitablemation with sufficient explanation.

ous approaches for securing DX person-

candidates. As a result, the ratio of foreign

Sato: You are right. We should always benel, including mid-career recruitment,

nationals within Japan is low. At overseas

mindful of providing sufficient explana-

and we are also open to collaboratingbases, we primarily hire employees fromtions for what we do.

Beauty —a cultural element following a common concept worldwide with varying definitions in different countries and regions
Divide the world into regions for deploying measures

R&D

Each region

Manufacturing

Sales

Build a system of local production for
local consumption in the beauty domain

Logistics• Stay attuned to beauty as it is in each region• Enable readiness for geopolitical risks• Help reduce CO2 emissions by removing the need for long-distancetransportation

Human
resources

The key to sustainable growth is to disseminate and embody The Milbon Way

Digital transformation demands the foremost attention

with external partners when swift action
is required.

Generating uniqueness by strengthening basic researchHyogo: Considering all that, what methods do you use during recruitment, orHyogo: It is obvious that Milbon has ex-

why our R&D expenses accounted forestablish an innovation center in Haneda

after employees join the company, to re-cellent sales capabilities underpinned by

4.6% of consolidated net sales last year,by the end of 2023. This center will notduce employee turnover?

an original sales system, but I would likedemonstrating a higher investment com-only facilitate developments from a me-

Sato: During recruitment, our foremostto hear about your stance on the otherpared to others in the industry. Bolster-dium- to long-term perspective, but also

effort is to effectively communicate ouressential source of competitiveness—ing basic research, in particular, is in ourserve as a hub for promoting collabora-

vision, as we highly value employees res-research and development.

view, key to the future development oftion with other companies. It is expected

Sato: As a manufacturer, the success of

onating with our corporate philosophy andunique products. In fact, around one fifth

to become a base for innovative creation

culture. This effort has yielded positive

our products in the market is crucial forof our 100 or so researchers, or aroundover the long term, helping Milbon toresults, as we have managed to maintainour growth. Research and development

20 people, are engaged in basic re-grow sustainably.

a relatively low company-wide turnoverplay a fundamental role in this, which issearch. On top of that, we have plans torate of 5.1%. However, it is important toacknowledge that, like many other compa-

Fair rather than equal growth opportunities for human resources

nies, a certain number of employees will
opt to follow a separate path three or four

Hyogo: Deciding where to allocate yourhuman resources development, I believeon creating an environment and provid-

budget, including expenses for R&D

the ultimate goal is to enable the emer-

ing opportunities where such employees

activities you have just explained, is angence of people who can lead. The maincan envision the future and pursue theirimportant business decision. Investment

idea here is not about raising leaders,ambitions.

in human resources is especially crucial.

but rather allowing them to grow into

Hyogo: Providing opportunities for growth

What aspects does Milbon particularly

leaders. Previously, Milbon had a system

is indeed very important. I imagine that up

prioritize in terms of human resourcethat focused on providing equal training

ahead Milbon will also need to focus on

investment?

to all employees, but I introduced chang-developing the overseas workforce. Do

Hyogo: As someone who has observed

targets for return on equity (ROE) andyour financial strategy?

Sato: I believe our ability to sustain growth

es to pursue a style of human resourc-

you have any specific ideas or plans inyour company for many years, I believe

return on invested capital (ROIC) under

Sato: Regarding our financial strategy,

comes from the dissemination and thor-

es development that is fair rather thanmind for this?

that there are still challenges in yourthe current medium-term management

I am aware that there are challenges,

ough embodiment of The Milbon Way,equal. Instead of uniform training, we re-Sato: In South Korea and China, where

financial strategy. Specifically, I don’tplan, these targets are merely numericalparticularly in how we present our plans.

our set of action guidelines, among all

spect the will of employees with creden-

the number of employees has beensense that you are effectively utilizing

outcomes without clear visibility into the

Looking at the numbers alone, our ROE

employees. Regarding my approach totials and passion, and place importancesteadily increasing, we have started

your balance sheet. While you have set

underlying details. How do you perceiveis 13.2% and ROIC is 12.5%, which are

MILBON INTEGRATED REPORT 2023

22

Aiming to gain further trust through improved financial strategy
Providing transparency of processes alongside our targets

23

Successor development is starting to pay off

by no means low. However, as you point-solid foundation. We consider it a for-cient explanation regarding how we envi-

ed out, it is undeniable that these fig-

ward-looking endeavor.

sion and navigate through this process.

ures are merely outcomes. Nevertheless,

Hyogo: Whenever a company ventures

Hyogo: I look forward to seeing those im-

Hyogo: I understand that not all opin-

the course of four years, 42 people tooktakes the form of a company with an Au-

we are actively working on improving

into a new business, investors pay par-provements. However, there is a risk that anions from board directors are necessarily

part in the program—around 10 people

dit & Supervisory Board. Do you intend

in this aspect, as it will contribute to aticular attention to both the efficiency ofexcessive focus on cash flow conservatism

correct, which is precisely why I would

each year. Our current executive officers

to retain that system, or are there any

better understanding of our company’sthat business and its profitability over a

may result in missed opportunities for busi-

like to see more emphasis on securing

came from the pool of human resourc-

plans to transition to a committee-based

specific period. In addition to the five-ness expansion that could have been pos-talent through the utilization of the skills

es who completed the program. Two ofsystem in the future? How do you fore-

year financial targets, providing insights

sible through investments. Additionally, inmatrix to gain diverse and objective per-them were appointed board directors in

see this?

into the internal discussions that led toa global enterprise, you inevitably have tospectives. Another factor you will have2022, which demonstrates the positive

Sato: I do feel that we should consider

the determination of targets such as

pay attention to profitability in each region.

to consider is finding a successor to you,outcomes of the program.

the possibility of a committee-based

ROIC would enhance your credibility.

You will need to take action on this, too.

the Representive Director, President &structure when our overseas business

Sato: From a management perspective, as

Sato: Your feedback and expectations are

Hyogo: What qualities do you consider

CEO, given the extent to which business

important for the current and future se-

grows in the future. It is something we

I mentioned earlier, it takes around 10 years

greatly appreciated. I would be delighted if

has developed since you came to thenior management team to further growhave in mind, but I wouldn't say we areto launch and solidify a business. While I

you could continue to provide guidance onrole and the considerable influence you

the company?

rushing into it.

believe people understand this concept, I

those aspects in the future.

must have gained inside the company

Sato: I would seek for individuals with theas a result. Could you please share yourability to bring about transformation withthoughts on the succession plan?

confidence and conviction while also mak-Sato: We have been engaging in ongo-

ing it clear what should not be changed. It

ing discussions about successor devel-

is essential that they can take full respon-

opment, mainly involving board directors

sibility for carrying that through. Experi-

from inside the company. Progress thatence on the global stage is also important,

we have made includes the establish-

though you might argue it need not be ament of Milbon Corporate University, arequirement for the whole team.

training program launched in 2015. Over

Hyogo: Additionally, Milbon currently

recognize that there is still a lack of suffi-

Realizing a Board of Directors conducive to lively and multi-angled debate
Improving effectiveness through reform of director ratios
Hyogo: Regarding Milbon’s governancefor this choice is that food, like beauty, isis necessary for our company.

structure, could you please provide ana cultural element rooted in each coun-

Hyogo: Could you please share with me

explanation for the background and objec-

try and region. We believed that their

the atmosphere within Milbon’s Board oftives behind the addition of three external

knowledge and insights in the food in-Directors and any specific areas that you

board directors, including two women, as

dustry could be beneficial for our current

consider as challenges?

well as the increase in two internal board

global expansion.
Hyogo: While I can see the consisten-

Sato: The feedback from the Board of

directors, to your company’s governancestructure between 2021 and 2022?

cies with your company’s business, I alsouations regarding active discussions andSato: As a company listed on the TSE

sense some degree of imbalance. In that

progress. However, as you mentioned

Prime Market, there was a significant

regard, how do you envision the future?

earlier, there are challenges to address.

cultivating strong relationships of trust

Sato: We do not impose industry-specif-

Hyogo: Lastly, do you have a message

need to reform the ratio of executives.

Specifically, the measurement of returnfor the capital market?

with them, rather than solely focusing

greatly appreciate it if you could evalu-

Regarding female board directors, while

ic requirements even now. It is simply

on investment in our financial strategy has

Sato: As a business leader, I would likeon product sales. This model requires

ate Milbon from a medium- to long-term

considering the eventual appointment ofa matter of understanding that beauty,

been raised by outside board directors.

to emphasize the importance of not only

time to establish and solidify. However,perspective.

our internal employees who have gained

relatively speaking, is a cultural element.

The fact that such opinion are being

short-term performance but also how

it will prove to be a more resilient andHyogo: For that purpose, too, you will want

experience, we first decided to appoint

Overall, we consider appointments based

expressed indicates that the Board of

we envision the company in 5 years,

effective approach in the long run. The

to make improvements in areas such as dis-outside board directors. The selection

on a skill matrix perspective, taking into

Directors is functioning, but at the sameand even 10 years, and the measures

Salon-based Social Innovation concept

closure of financial figures. While there cancriteria for outside board directors main-

account individuals who have relevant ex-time, it does mean there is still room for

we are taking to achieve it. In particular,

we are striving for is not something thatbe no doubt about Milbon’s achievements,

ly focused on individuals with experience

periences as business leaders and possess

improvement regarding the quality ofour business model centers on provid-

can be achieved in just a few months.

the past is indeed the past, so if you canin the food-related industry. The reason

expertise in areas where we believe reform

discussions.

ing support for individual salons, andRather, it is a major vision that involves

disclose appropriate quantitative financial

Directors' survey indicates positive eval-

Challenges open up potential for enhanced evaluationfrom a medium- to long-term perspective
To build “a solid company that won’t collapse”
making an industry out of beauty. I would

information relevant to your future targets,

The importance of striking a balance between active listening and making executive decisions

it will surely provide different insight. And
if that happens to coincide with the com-

Hyogo: Have there been any instances

when, as the leader of a company, I have

I even visited banks to understand thepany’s achievements, it should bolster yourwhere you had to change your approachto take responsibility and make decisions.

situation and met with our local Milbon

credibility further.

or decision-making based on opposition

This relates to a time when I became

employees. I got a first-hand feel for thefrom other board directors?

President & CEO shortly after the glob-

great expectations that salons there had

Sato: When discussing the collaboration

al financial crisis when there was strong

for Milbon and I made up my mind: “Wewith Kosé, there were both consenting

opposition within the Board of Directors

absolutely have to do this.” I returned toand dissenting views. As a result, I de-regarding the continuation of our busi-

Japan and explained this to the Board of

cided to postpone the decision. Over theness in South Korea, which now propels

Directors. Sincerely listening to opinions

course of about a year, we engaged inour global business. Naturally, everyone’s

and making independent judgments are

discussions about the future possibilities

opinions should be respected, so I did not

not necessarily contradictory, but requireof collaboration, including scenarios with-make a decision at that moment. Instead,a balance. If, at that time, I had only lis-out collaboration. Ultimately, we reached

I immediately flew to South Korea to visit

tened to opposing views without visiting

a consensus to proceed with the collab-

commercial centers and hair salons andthe country, and had given up on continu-

oration. I recognize that it was an essen-

observe the South Korean market withing our business in South Korea, we would

tial time for dialogue. On the other hand,

my own eyes. South Korea was in the

not have achieved the global expansion

I also believe that there are moments

midst of a financial crisis at the time, so

we have today.

MILBON INTEGRATED REPORT 2023

24

Fulfilling our belief in building“a solid company that won’t collapse.”

Sato: Thank you. I would like to take steps

Further trust from all our stakeholders

process involved. I think that to build “ato ensure we can convey not only thechanges that realization of our plans willbring, but also a logical explanation of thesolid company that won’t collapse,” there isnaturally a need to go beyond continuous

Continuous innovation

innovation in business and to also transform our posture toward the capital market

Business

Implement and realize medium-term plans based on a long-term vision

Framework

Strengthen and enhance the organization to realize the plans

Strategy

Disclose quantitative financial information relevant to long-term targets

through our organizational framework andaccountability. This offers an area of vastpotential and I would like to continue withour business activities while coordinating
more closely with all our stakeholders.

25

002

P28

P30

2022–26
Overview of Medium-Term
Management Plan

Comprehensive Global
Seven Regions

Overview

five-year

Our comprehensive global strategy of the Sev-

medium-term management plan, launched
in FY2022 under the slogan “Stage for the
Future,” to make Milbon a truly global busi-

en Regions (based on 14 countries and regions

andprogressoftheness entity

Strategy:

we operate in) and promoting a local production for local consumption system in the beauty
industry, tailored to the specific beauty ofeach region

P36

P32

STRATEGY
Milbon’s Strategy

Domestic Market Strategy:
Salon-Based Social Innovation

Milbon in the Eyes of Our
Collaborating Partners

Our domestic market strategy for transforming
hair salons into a “beauty platform” centeredon Milbon’s Smart Salon Strategy and Lifetime
Beauty Care Strategy together with its Sustain-

Discussion about Milbon by collaborating
partners working together to create new value
through the Lifetime Beauty Care Strategy, acore domestic market strategy of Milbon

ability Commitment

P38

P40

R&D Strategy

Financial Strategy

Our research and development strategy forpromoting the development of products that
excite customers in Japan and overseas under
the slogan “fusion of science and sensibility”

Our financial strategy for driving change tofurther improve corporate value and realize
Milbon’s belief in building “a solid company
that won’t collapse”

Click to jump to the relevant page

002

STRATEGY

2022–26 Medium-Term Management Plan

Outline of comprehensive global strategy, the Seven Regions
Beauty is global; its specific form, however, is local.
With this fact in mind, we have developed a pres-

STRATEGY

Two strategies at the center of our efforts
to become a global company

ence in 14 countries and regions globally (including
Japan), which we have divided into seven regions:Japan, South Korea, Greater China, ASEAN, North
America, the EU, and the Middle East. Our Seven
Regions Strategy both responds to differences inregion through region-specific development of
R&D, production, logistics, sales, and HR systems.

have outlined our goal to become thenet sales and 10.8 billion yen in consoli-

agement plan every five years to help

leading manufacturer in Asia and top 5 in

dated operating income through the im-realize its long-term vision of “Enriching

the world by elevating the value of indus-

plementation of two strategies—the Sev-

the sprit and society through beauty.”

try professionals in the eyes of consum-

en Regions, our comprehensive global

Through these plans, it has achieved

ers and society at large.

strategy and the Salon-based Social In-

Hair salons are currently facing structural issues,novation, our domestic market strategy.

including a decreasing population and such pro-2022–26

Medium-Term

We aim to become a company deliver-

Promoting a local production for
local consumption system in the beauty industry* See pp. 30 –31 for details on our comprehensive global strategy, the Seven Regions

Milbon establishes a medium-term man-sustainable growth. Most recently, theDividing the global market into seven regions and region-specificdevelopment of R&D, production, logistics, sales, and HR systems

hair types, cultures, and values, and contributes
to the development of the beauty industry in each

Outline of 2022–26 Medium-Term Management Plan

Beauty: A regionally and country specific culture

Outline of domestic market strategy, the Salon-based Social Innovation

Management

ing beauty to the world by achieving ourductivity-related industrial problems. To address

Plan named “Stage for the Future,” wetargets of 58 billion yen in consolidated

both kinds of issues, this strategy aims to transform hair salons into a Beauty Platform by leveraging two key strategies: the Smart Salon Strategy,
which connects with consumers through the fusion

Long-term visionof physical and digital experiences at salon-based

Enriching the spirit and society through beauty

expands the business scope from hair care to in-

Smart Salon
Strategy

Lifetime Beauty Care
Strategy

Sustainability
Commitment

Salon-driven plan based on
the fusion of physical anddigital worlds

Expansion plan into thefields of skin care andbeauty health care

Initiatives to resolve
Five Key Challenges

locations, and the Beauty Life Care Strategy, which
clude skin care and beauty health care.
Furthermore, by placing our Sustainability Commitment at the core of this strategy, we aim to tackle

Implementing five-year plans

Transformation of hair salons into a beauty platform

important sustainability issues within our company

Enriching society andrealizing sustainability through beauty

and the beauty industry. Through this commitment,
we contribute to the realization of a rich and sus-

Five-year medium-term management plan

Stage for the Future2022–26 theme

Milbon‘s vision

tainable society, facilitated by hair salons.

* See pp. 32–35 for details on our domestic market strategy, the Salon-based Social Innovation.

Become the leading manufacturer in Asia and top 5 in the world
by elevating the value of industry professionals in the eyes of consumers and society at large

Results for FY2022 (first year of current medium-term management plan) and managementtargets, etc. for FY2023

Two major strategies

Comprehensive global strategy: Seven Regions

Domestic market strategy:
Salon-based Social Innovation

Promoting a local production for local consumption system

Consolidated sales target

58

Consolidated operating income target

10.8

billion yen(CAGR 7.3%)

Product shipment value

64

billion yen

Operating margin

billion yen

18.6

％

● Domestic operating income target: 8.2 billion yen● Overseas sales target: 14.3 billion yen / Overseas sales ratio: 24.7%● Overseas operating income target: 2.6 billion yen

28

FY2023 target

FY2026 target

41.58 billion yen

45.23 billion yen

49.2 billion yen

58.0 billion yen

Domestic

33.64 billion yen

35.33 billion yen

38.02 billion yen

43.7 billion yen

Overseas7.93 billion yen

9.9 billion yen

11.17 billion yen

14.3 billion yen

Gross profit

27.49 billion yen

29.5 billion yen

32.16 billion yen

38.16 billion yen

Operating income

7.81 billion yen

7.55 billion yen

8.3 billion yen

10.8 billion yen

Operating margin

18.8%

16.7%

16.9%

18.6％

・Steady growth of hair coloring business due to popularity of such techniques as bleach-on-color and double-color
Main growth factors
in FY2022

・Increased haircare needs accompanying greater popularity of hair coloring
・Increased sales overseas, especially in South Korea, the United States, and Southeast Asia
・Increased use of milbon:iD (Milbon’s official online store), with 448,000 registered users as of the end of FY2022● Domestic sales target: 43.7 billion yen / Domestic market share: 19.2%

MILBON INTEGRATED REPORT 2023

FY2022 results

Consolidated net sales

Reforming the paradigm of hair salonsin the beauty industry

FY2021 results

・Launch of Smart Salons in Japan after preparatory stage in FY2022
Main expected
growth factors
in FY2023

・Launch of products developed jointly with collaborating partners as part of the Lifetime Beauty Care Strategy
・Strong growth in South Korea and United States markets
・The full-scale operation of research, development, and production bases in the Chinese market, along with the revitalization of themarket after the lifting of the Zero COVID-19 policy

29

STRATEGY

Global Strategy: Seven Regions

Global system for promoting local production for local consumption in the beauty industry

Beauty —a cultural element following a common concept worldwide with varying definitions in different countries and regions

Contributing to the expansion of local beauty industries through local production for local consumption

Divide the world into regions for deploying measures

R&D

Manufacturing

Each region
Sales

We aim to become the world’s No. 1 professional haircare manufacturer through ourdedication and educational support toward local beauty industry across the globe.

Global vision

Outline of Seven Regions Strategy

Build a local production for
local consumption system in the beauty domain

Logistics• Stay attuned to beauty as it is in each region• Enable readiness for geopolitical risks• Help reduce CO2 emissions by removing the need for long-distancetransportation

Human
resources

Global R&D

Global production

Milbon’s global R&D system promotes R&D in each region and

Milbon’s three factories are collaborating to strengthen local

creates the buds of new R&D that will lead to innovative prod-

production for local consumption in the beauty industry with theucts and services.

aim of developing trust through a “Made by Milbon” philosophy
instead of “Made in Japan.”

We have established the Seven Regions

illustrating the current state of affairs.

lated regulations. From the perspective ofin which we already have a presence

The future plan is to build capacity sosustainability as well, this system will also(based on 14 countries and regions, in-that everything from R&D to production,

reduce CO2 emissions as the need for

cluding Japan), and we are promoting alogistics, and sales can be conducted in-

long-distance transportation is eliminated.

local production for local consumption

dependently in each region. This will not

Furthermore, we anticipate using thesesystem in the beauty industry, tailored

only create beauty products tailored toregions to gain footholds in neighboring

to the individual beauty of each region.

the specific beauty of each region, whichcountries and regions where we do not

To realize this system, we are developing

varies according to culture, but will also

yet have a presence. We aim to realize

sales, R&D, and production bases within

guard against geopolitical risks and enable

our global vision through our comprehen-each region, with the following graphic

a flexible response to laws and trade-re-sive global strategy, the Seven Regions.

Long-term vision of expansion

Key themes in the current

medium-term management plan

Japan

South Korea

Aiming to acquire a 30% share

Aiming to acquire the status of
the true industry leader andmake an IPO

Aiming to become the top
foreign firm

Beauty Platform Plan
Smart Salon Strategy
Lifetime Beauty Care Strategy
Promotion of DX Strategy

Develop executive talent
Become the top foreign firm
(to reach 15% market share)

Improve production system
Accelerate growth
Become the No. 2 in the Greater
China (to reach 5% market share)

Greater China

Middle East

North AmericaEU

Aiming to expand to
India and Oceania

Aiming to expand to
Latin America and South America

Aiming to expand to major
areas in the EU and then to Africa

Aiming to expand to
the Middle East

Build relationships with distributors
Bolster growth and presence inthe market

Operate a distributor network
Accelerate growth (hair color & hair care)

Build raison d'etre through FP
activities (direct sales)

Bolster presence through growthin the market

ASEAN

Germany
TurkeyChina

VietnamThailand
Malaysia

South Korea

USA

Milbon Central Research InstituteUS
R&D

Thailand
R&D

China
R&D

Global R&D collaboration between
Japan base and three overseas bases
Product development tailoredto each region

Japan Factory

Haneda Innovation Center

Products forJapan and overseas(scheduled to be in operation at the end of 2023)

Thailand Factory

China Factory

Developing products and services
from a longer-term perspective

Products for
Thailand and overseas

Products forGreater China

A base for fostering partnerships withother companies

2022: Started manufacturing some haircare products2023 Summer: Scheduled to start manufacturing
hair coloring products

Utilization of world-leading
research technologies

Made inJapan

Made by
MilbonGlobal logistics

Global HR

Milbon is promoting mutual trade systems and logistics

As part of efforts to enhance its global HR development program,strategies in Japan and overseas to achieve a Global 2-Week

Milbon is building the Human Resources Development Center in

Delivery standard.

Odawara City, Kanagawa Prefecture, with the new center being about
three times larger than the current Training Center in Osaka City.

Domestic structure

Overseas structure

Reducing lead times foroverseas shipments

Developing an overseas
logistics base

● Trade Center
Establishment of a specialized export warehouse in Japan (Maishima, Osaka), securing
inventory for overseas utilization (scheduled
for Summer 2023).

● Netherlands Warehouse
Started operation in 2022 for distribution to
EU and Middle East regions.

● Digital transformation of trade work flow

Preparations for the launch of
the Human Resources Development Center in 2025
Further enhance employee training
1. Become an educational hub that will support the development of all employees
within the Group
2. Further develop Milbon Person/Field Person training, including a curriculum update
3. Cultivate global leaders● ASEAN Warehouse
Currently under consideration.

Transition of the order-to-shipment process
to an online workflow for enhanced efficiency (pilot operation scheduled from 2023).

2022
Land acquisition

2023
Start of construction

2025
Scheduled launch

Important progress made in 2022–23

Japan

1. Started operation at China Factory

Taiwanthe Thailand Factory, and started production of some haircare products for the China

We completed work on our China Factory, which is our second overseas factory after

Hong Kong

market. We are also currently gearing up to start production of hair coloring products,

Philippines

which will become mainstay products for us.

Indonesia

2. Expanded global R&D to four bases

Singapore

We established new R&D bases in Thailand and China. Through a global four-base system, including Japan and the United States, we aim to develop products tailored to thespecific beauty of each region.
3. Established subsidiary in Germany as the first Milbon subsidiary in Europe

S…… SalesMILBON INTEGRATED REPORT 2023

R…… R&DP…… Production

We established Milbon Europe GmbH in Germany as our first subsidiary in Europe. We will use this subsidiary to strengthen our development efforts in Europe.

30

31

STRATEGY

Domestic Market Strategy: Salon-Based Social Innovation

Transforming hair salons into Beauty Platforms

Smart Salon Strategy: Fusing physical and digital worlds
Domestic launch of Smart Salons: Expansion to 100 cities in Japan by FY2026
The Smart Salon Strategy will create a new hair salon experience that fuses physical and digital worlds. After a preparatory stage in FY2022,
we launched the strategy in January 2023 with the cooperation of participating hair salons. From the first salon in Shibuya, Tokyo, we haveopened a total of eight salons as of June 30, 2023, in Osaka, Fukuoka, Kyoto and other cities. The future of hair salons has become reality.

Salon-based Social Innovation Strategy outline
Hair salons today are facing significant,the format of hair salons. The first is thestrategy, we will work as one to address key

structural issues, including a decreasing

Smart Salon Strategy, a salon-driven plansustainability challenges for both Milbon

population and productivity-related indus-

to connect with consumers by fusing phys-and the beauty industry more broadly.

trial problems. To meet these problems,

ical and digital worlds. The second is theThrough these strategies and initiatives,

we have developed the Salon-based

Lifetime Beauty Care Strategy, a plan to

we aim to maximize the value of hair sa-

Social Innovation, our domestic market

expand from a haircare-centered businesslons, which enable frequent and extended

strategy, to transform hair salons into an

to one that includes the fields of skin carein-person visits, transform hair salons into

essential beauty platform to help people

and beauty health care.

beauty platforms, and further contribute tolive enriched lives.

With the addition of our central Sustain-

We have two specific strategies to reform

ability Commitment to this domestic market

enriching society and realizing sustainabili-

MINX shibuya smart salon (Tokyo)

GIEN Smart Salon by milbon NU Chayamachi+ty through hair salons.

Challenges to growing knowledge-based product sales according to a haircare awareness survey

Salon-based Social Innovation

Q. How do you feel about haircare products sold in salons?

*Knowledge-based product sales: A sales method in which product sales are accompanied byvaluable information based on the knowledge and insights of professional hairstylists.
*From Milbon’s 2022 Haircare Awareness Survey of 800 people who visit hair salons at least once
every three months

Beauty Platform Plan

Strategy Foundation

Two Major Strategies

Sustainability Commitment:
Five Key Challenges

Smart Salon
Strategylili by CieL Smart Salon (Kyoto)(Osaka)Lifetime Beauty Care

58.9

Difficult to purchase%

1

Strategy

Appealing

Reasons for difficulty purchasing

57.8%

Challenge: While people find them appealing, they find it difficult to purchase・Uncertainty about the price

34.3%

・Uncertainty about the suitability

31.2%

・Can only be purchased at hair salons

28.0%

Innovations by
milbon:iD and
Smart Salons

Value experience realized by Smart Salons

Milbon's digital transformation
pivotal in building a stronger
bond with customers

Evolving customer-oriented
TAC ProductDevelopment System for B2B2C

2

3

4

5

KAORIUM —letting your nose be the guide

DAGASHI —search and sample

AI-based expression and diagnosis of yourfragrance preferences. By transforming theJust like choosing candies in a penny candy

act of product selection from one based on

store, DAGASHI enables you to casually try

effect alone to one that includes scent, KAO-

products recommended by your hairstylists

RIUM not only engenders a more enjoyable

or items of your interest at special trial prices.

purchasing experience, but it also guarantees
encounters with novel products.
*KAORIUM is a registered trademark of SCENTMATIC Corporation.

*The Five Key Challenges include: 1) Enriching the spirit through beauty, 2) Promoting recycling in manufacturing and consumption activities, 3) Practicing people-friendly procurement, 4)Constructing a fair and flexible management structure, 5) Realizing work environments with enhanced job satisfaction. See P42-, SUSTAINABILITY & ESG for details.

Smart Salon Viewer —investigate and discover

Factors and initiatives underpinning the Beauty Platform Plan

STYLESTOCK —suggestions from haircare professionals for you

The tablet-based Smart Salon Viewer enables

This new milbon:iD service delivers informa-on-the-spot discovery of information abouttion on shampoos, cosmetics, styling tech-products used during treatments. People canniques, and other recommendations fromalso enjoy watching hair coloring simulations

Changing market needs

Supporting stylists’expertise development

Utilizing digital elements

Increasing haircare needs in line withincreasing in-salon hair-coloring needs

Creating a human resource training
program to improve expertiseamong hair professionals

Achieving seamless communication
with a focus on milbon:iD

Expo 2025 Osaka, Kansai: to Japan and the World
Overview of Expo 2025 Osaka, Kansai

2025 Osaka, Kansai. Many people will be

Theme : Designing Future Society for Our Lives

able to experience this innovative salon

Exhibition : OSAKA Healthcare Pavilion—Nest for Reborn

people, up from 170,000 for F Y2021. Number of hairmodel, providing broad exposure to

Venue : Yumeshima, Osakasalons using milbon:iD grew to 4,800

society and customers, both in Japan

Evolution of the Beauty Sommelier Training System

Number of registered users of milbon:iD as of theing treatment at salons grew to 74.8%, up from 70.6%

Number of registered hair professionals using theend of F Y2022 grew to approximately 448,000

in 2017

education:iD ser vice reached 23,0 0 0

MILBON INTEGRATED REPORT 2023

phone.

time spent in hair salons.

Smart Salon will be exhibited at Expo

Percentage of women aged 10–60 who receive color-(According to an NBBA survey in 2022; including people
who also use home coloring)hairstylists direct to the customer’s smart-and other content, which raises the value of

Period : April - October, 2025
No. of projected visitors : Approx. 28 million
Provided by Japan Association for the 2025 World Exposition

and abroad.

32

33

Collaborative innovation

Lifetime Beauty Care Strategy: Extending beauty to other fields

To implement our Lifetime Beauty Care

Developing innovative products and services in collaboration with companies possessing
their own unique technologies

The formula for creating innovation through collaboration

Strategy, we are collaborating withcompanies possessing their own unique

Hair salonstechnologies to develop skin care andIn-person

beauty health care products and beauThe Lifetime Beauty Care Strategy istablished in a capital and business al-

to discuss skin care and beauty healthour plan to expand from a haircare-cen-liance with Kosé Corporation. Throughcare in addition to haircare, hair salons

tered business to the fields of skin care

this alliance, we continue to launch newthemselves can become spaces for aand beauty health care. By collaborat-skin care products onto the market. To-

lifelong partnership in beauty.

ing with companies that possess their

day in 2023, we are jointly developing

At the same time, these knowl-

own unique technologies, we seek to

new beauty equipment with Panason-edge-based product sales can improve

promote the development of innova-

ic Corporation, and we are partnering

the productivity of hair salons where

tive products that expand the potential

with Kao Corporation to develop prod-technical services contribute to a largeof hair salons.

ucts in the beauty health care field.

portion of sales. They can also lead to

One of the pillars of this strategy is theHair salons are spaces that enable

sustainable growth of hair salons as acosmetics business that we launched infrequent and extended in-person visits.

beauty platform together with Milbon.

2019 through Kosé Milbon Cosmetics

If hair professionals use the trust theyCo., Ltd., a joint venture company es-

have developed with their customers

The need for repeated, periodic visitstions to create new business models,
products, and services for hair salons.

Extended visits

MilbonCollaboration partners

Hair-related knowledge
and unique technologies

Other field-related knowledge
and unique technologies

forward, we will use the technical inno-

Collaborative products launched and services provided beginning in 2023

Skin Care

Becoming Milbon’s second business pillar through synergies with Smart SalonsiMPREA, Milky Soufflé UV

Feb. 2023
LaunchCommunity characteristics unique to salons
The need for in-person service

jointly developed products, and goingvation resulting from these collabora-

Periodic

Trust-based relationshipty equipment. 2023 saw the launch of(Kosé Milbon Cosmetics)
iMPREA is brand of salon-exclusive cosmetics created by Milbon and Kosé

The need for an extended stayand combining the respective strengths of each company. Taking advantage of the ability of hair professionals to propose products that accurately

Average rate of use in the past 1 year

Women

Men

81.3
33.5

％

％

Average number of visits per year

Average time spent per visit

Women

Women

Men

4.15
5.37

times

times

Men

85
51

match the individuality and preferences of each customer, iMPREA currently
offers a range of skin care, foundation, blush, highlighter, contour, eyebrow
mascaras, and other products under the concept “Revolutionize Your Aurawith your Professional Stylist.”

minutesJul. 2023
LaunchNew brand: im (Kosé Milbon Cosmetics)

minutes(Source: Beauty Industry Census, First Half of FY2022 (Hair Salons), Recruit Co., Ltd.)

Beauty Equipment

Utilizing unique community characteristics to expand in the value of hair salons
Apr. 2023
LaunchHaircare broadly defined:
general haircare services

HaircareLifetime

Beauty Care
Strategy

Skin care

Skin care broadly defined,
including makeup

Beauty Health Care

Supplement-based health support for
beautiful living

First product: im Beauty Up Mist

widespread rollout through distributors

Working to expand the range of beauty products and services that customers
can experience in hair salons

ELMISTA, hair dryer with beauty serum atomizing function(Panasonic and Milbon)
ELMISTA is a next-generation hair dryer possessing a beauty serum atomizing function, a product that combines the beauty appliance technologies ofindustry leader Panasonic and the hair science knowledge of Milbon. ELMISTA not only dries hair to a silk-smooth finish, but it also replenishes eachstrand of hair from the root to the tip with beauty serums tailored to concerns and desired textures, creating beautiful, smooth, and shiny hair.

Beauty Health Care

Promoting supplement-based health support for beautiful living

Sep. 2023 Launch

Currently Under Development

Precision health care through sebum RNA monitoring

ALANOUS, beauty supplements

MILBON INTEGRATED REPORT 2023

Targeting the younger generation, with plans for

Hair salonsImproving productivity in hair salons, and transforming them into beauty platforms

Customers

Providing a one-stop shop for beauty, and creating communities of beauty and soul34

(Kao and Milbon)

ALANOUS is a beauty supplement that has emerged as a result of approximately 20 years of research and development in the field of hair growth utilizing
5-ALA (aminolevulinic acid = a natural amino acid found in the body). Throughthis extensive research, new benefits such as improved skin and enhanced immunity were discovered, giving birth to ALANOUS as a beauty supplement.

This collaboration aims to establish new, hair salon-based beauty health careservices by leveraging Kao’s advanced health care technologies and Milbon’s
extensive hair salon network. We are actively working to develop products andservices that utilize sebum RNA for monitoring lifestyle habits, aiming to provide cutting-edge solutions in beauty and health care domains.

35

STRATEGY

Milbon collaborates with other companies as part of a multifaceted approach to beauty, aiming to turn hair salons into platforms for

Milbon in the Eyes of Our Collaborating Partners

markets explain the story behind our collaboration and the value beginning to emerge as a result.

lifelong beauty that encompass more than just hair. Here, two companies with whom we formed partnerships with to explore new

Toward the creation of a beauty consortiumfor Japan that resonates with the world

Innovative products born fromrugged enthusiasm

Koichi Shibusawa

Masaharu Nakamura

Executive Director, Kosé Corporation

A partnership stemming from likeminded philosophies

Director of Beauty Business Unit, Beauty and Personal Care Business Division,
Living Appliances and Solutions Company, Panasonic Corporation

Milbon: the ideal business partner

The origins of the joint venture Kosé

via hair salons emerged as a promising

We had long been aware of Milbon as a lead-proactive in seeking out collaborative busi-

Milbon Cosmetics date back to 2007 andbusiness strategy, and Milbon was the firsting brand of salon-exclusive hair cosmetics.

ness opportunities. I personally began toa dialogue between Reijiro Kobayashi,

name put forward as an ideal partner.

Many Panasonic employees are regular us-

recognize the value of collaboration whenthen Kosé chairman, and Ichiro Konoike,

We knew that if we teamed up withers of Milbon products, and they believed inassigned to our factory in China, where I wit-

then president of Milbon, for a magazine.

Milbon, the domestic leader in selling ex-

the value of Milbon’s products. For example,

nessed the active use of external resources

During the discussion, Kobayashi spoke ofclusively to hair salons, we could create

during the prototype stage of our hair dry-by local companies.

Milbon’s corporate philosophy and how

an immensely unique and novel business.

ers, some members of our staff damaged

However, beginning a collaboration with

it resonated strongly with him. Following

Kosé, too, had a special attachment to sa-

their hair by repeatedly testing the dryers on

another business is no small decision. Within

the global financial crisis and the Greatlons, having previously collaborated withthemselves, but one would often hear themour company, we place the utmost impor-

East Japan Earthquake which demanded

other companies in that industry. Milbon’s

saying, “It’s okay—I use Milbon’s products.”

tance on whether the collaborative partnera response to continuing societal changes,

integrity as a corporation also fit well withIn that sense, it would not be an exaggera-

develops products backed by solid tech-

Kosé reached a point where we needed tous, and we had a clear sense that we could

tion to say that Milbon’s contribution to our

nology. Both Milbon’s track record and ourconsider new avenues of business. While

keep pace with one another, working side-product development was indispensable

own employees’ positive experiences with

dustries. In that aspect as well, collaborating

mulling our options, the sale of cosmetics

by-side to build a robust future.

even before our collaboration began.

Milbon’s products assured us that they werewith Milbon, a professional in hair cosmetics,

Given the accelerated changes in consum-

the right partner. And to achieve significant

was ideal. Now, having engaged in joint de-

Systems and ambitions generating a comprehensive, hands-on approacher needs—and thus the demand for rapid

synergy, another obvious requirement is thevelopment, I am confident that our collab-

product development—Panasonic has beencombination of expertise from different in-oration with Milbon was the right decision.

During the process of developing our firstents. What made it even more impressive

less items available render it difficult forjoint product, iMPREA, we had a variety

was that their hair research is unparalleledcustomers to choose the product that is

Air that hair professionals demand—a revolutionary ideaof realizations. Milbon’s comprehensive,in the domestic market.

right for them, a fact we at Kosé are wellhands-on approach was particularly strik-

Milbon has crafted a system based on its

aware of. With more than 200,000 hair

The joint development of ELMISTA withidea, a humbling experience for our employ-

their typical area of expertise, they spareding. One example is the role of Milbon

attitude of engaging seriously with hair sa-

salons nationwide, we recognize Milbon’s

Milbon has brought our company previous-

ees who prided themselves as “experts inno efforts in attempting to understand its

employees under the Field Person (FP)lons, and you can sense that the company

enormous potential as a new sales chan-ly unimaginable value and experience. For

airflow,” could only be born out of the trust-mechanisms. Furthermore, in keeping with

System, the company’s original sales sys-

is endeavoring to take full advantage ofnel, and we recognize the appeal within

example, the long-standing issue we had

based relationships Milbon had established

the attitude of “anything for the customer,”tem. As FPs, they are responsible for pro-those benefits. Milbon has long possessed

the cosmetics world of a space that can

within our company regarding the relation-with salons.

they willingly redesigned the product fromviding technical instruction and even busi-

a reputation for its superb training, and weuphold the universal consumer mentality

ship between the method of use and the op-

Furthermore, we were greatly inspired byscratch when the decision was made to doness assistance to haircare professionals.

came away feeling we had witnessed pre-of wanting to buy items recommended

timal air was resolved within a few years withthe unwavering attitude of each and every

so. We know we can trust Milbon, for in

Additionally, we were surprised to learn

cisely that. The entire workforce embod-

by trusted professionals. From Milbon’s

the introduction of the concept of the “airindividual at Milbon. It is evident that eachsearch of the best outcome, their employees

that, as a part of the TAC Product Devel-ies this set of corporate philosophies sopoint of view, too, sincerely engaging withthat hair professionals demand” proposed

person at Milbon carries a strong sense of

were always willing to express their opinions,

opment System which combines scientif-

consistently. This undoubtedly stems fromhaircare professionals equates to a similar

by Milbon. By combining it with the novel

responsibility, and they are driven by theeven when they clashed with our own. Rest-

ic expertise with the sensitivities and thetheir employees’ deep-seated belief in theengagement with the end consumer, andmethod of mixing air with Milbon’s beauty

understanding that the products they de-ing beneath the sleek image they project tostylistic techniques of hairstylists to create

power of hair salons.

they manage to do this compellingly withserum mist, we were able to produce newvelop impact the trust relationship between

consumers, in other words, we discovered aease. Such philosophy resonates with ourvalue for our company. The significance of

hairstylists and customers. Even for hairdry-

passion for excellence, leaving us with theown at Kosé.

this collaboration cannot be overstated. Thisers, a consumer electronic device outside

sense that Milbon is an invaluable partner.

new products, Milbon’s researchers were

Furthermore, when it comes to haircare,personally visiting salons to interview cli-

skincare and other cosmetics, the count-

Changing the mindset of salons to open up new channels

Choosing salons as a sales channel to communicate the real value of products

The number of items in the iMPREA line

salons face limitations in securing revenueand Milbon envision a future in which a

Because Panasonic primarily targets mass

to those salons. For a product with a new

as a one-off and hope to continue working

and the number of outlets stocking thesolely through the provision of services.

large number of domestic corporations

retailers, ELMISTA is the first product wefeature such as ELMISTA, it was essential towith Milbon to create value. We also wantbrand are steadily increasing. At the sameThat is why it is crucial for us to establish acome together to form a globally rec-have sold solely via hair salons. This was ancommunicate both the product’s value andto extend a hand toward other Japanesetime, the attempt to establish hair salonsretail sales strategy going forward. We rec-ognized, Japanese beauty consortium.

undertaking only made possible due to ourits proper methods of use to haircare pro-

corporations in the beauty domain andas a new retail channel for cosmetics is

ognize that it is our mission to ensure hair

Through this collaboration, Kosé hopes topartnership with Milbon, which has built ro-

fessionals, and it was equally vital that they

help Japanese beauty products take off ingoing to necessitate changes in the long-salons can operate with peace of mind andestablish a set of best practices and pro-bust, trust-based relationships with salons,communicated the same information to

the global market. This has been a strong

held habits and mindset of salons, andpursue their aspirations, while also provid-

ceed to collaborate with Milbon to further

and one we settled on precisely because

consumers to fully tap the ELMISTA’s poten-

ambition of mine since my time in China.

many challenges still remain. In Japan,

ing customers with a fulfilling lifestyle.

develop a beauty industry centered on

Milbon had systems in place for effective-

tial and to help people shine with beauty.

Naturally, though, I believe Milbon will playhair salons.

lywhere population decline continues, hair

MILBON INTEGRATED REPORT 2023

In entering our business alliance, Kosé

36

communicatingproduct

information

We do not want to see this collaboration37

a central role within such a circle.

STRATEGY

R&D Strategy

Promoting a global R&D system in collaboration with overseas R&D bases
We are advancing the development ofContinuing to sow the seeds of the future throughinheritance, evolution, and external partnerships

Supporting global beauty needs

ious beauty needs by focusing on ourCentral Research Institute in Japan andUS
R&D

collaborating with R&D bases in the United States, Thailand, and China. ThroughThailand
R&D

China
R&D

Localized products
Supporting the beauty needs of each region

Global R&D collaboration between
Japan and three overseas bases

this collaboration, we aim to create global products that capture beauty needs

Basic policies for R&D strategy

Global products

Milbon Central Research Institutea global R&D system that caters to var-

To become a globally acclaimed
and indispensable company

shared worldwide, as well as localized

With the slogan “fusion of science andop unique products in collaboration withlong-term perspectives. Especially now,

sensibility” as our guiding aim, Milbon

hair professionals. As the foundation ofwith our full-scale global expansion un-

works to develop products that leave aour product development, this systemderway, we are driving the development

lasting impression on our customers by

will lead to sustainable growth forof both global products based on glob-

fusing beauty techniques based on the

our company.

products tailored to specific countries

climate, local customs, and regulatory re-diverse beauty needs through a global

and regions considering factors such asquirements. This enables us to meet the

R&D framework.

R&D at Haneda Innovation Center to help realize medium- to long-term plans

al beauty needs and localized products

To realize our Beauty Platform Plan, we

is essential to acquire knowledge fromat the end of 2023 and conduct highly

sensitivities of hair professionals with our

We have also established our R&D Vi-

based on the needs of each region. To

have to not only deepen our involvement

other fields and collaborate with uniqueconfidential medium- to long-term re-own scientific development technolo-sion 2026, which is based on our current

develop necessary and beloved, we arein the hair domain, but expand our busi-

companies when needed. To this end, wesearches that will produce the seeds ofgies. To realize this goal, we have spentmedium-term management plan, andusing our Central Research Institute inness into other fields as well. In R&D, it

will open the Haneda Innovation Center

our future businesses.

years developing the TAC Product De-

we are also developing an R&D system

Japan as a hub while simultaneously

velopment System, which seeks to devel-with both short-term and medium- tostrengthening collaborations with ourthree R&D bases overseas.

R&D slogan

Fusion of science and sensibility

Beauty techniques based on
the sensitivities of hair professionals

Milbon’s scientific development
technologies

Furthermore, to promote our Beauty
Platform Plan, we are building a system

HanedaInnovation Center

Developing products and services from a longer-term perspective

End of2023

A base for fostering partnerships with other companies

Utilization of leading research technologies

Conducting research to produce the needs of new businesses in the future

to continually sow the seeds of new development, while actively supporting the
expansion of R&D systems to accompany
an expansion in our fields of business.

Evolution of the TAC Product Development System incorporating consumer perspectives

Internal research system and external collaboration
With a strong recognition that research andscale synchrotron radiation facility calledwith public institutions and multiple univer-development shape the future of our com-SPring-8, and we possess top-class technol-

sities to foster collaboration between indus-

pany, we allocate over 4.0% of consolidated

ogy in fundamental hair research in Japan.

try, government, and academia. In FY2022,

net sales annually to R&D expenses. Among

The research outcomes we have obtained

we established a Pharmaco-physiology &Because it incorporates hair salon and hair

Against this backdrop, we are current-

tive. This structure includes not only thethese, we place particular importance onare not only utilized in the development

kinetics Collaborative Research Division in

professional perspectives, our unique TAC

ly advancing customer-oriented productthorough implementation of a field-ori-

fundamental research and have secured aof new products but are actively shared

the Graduate School of Medicine at Osaka

Product Development System has tradi-development by thoroughly incorporat-

ented approach, where our research andteam of around 20 researchers, accounting

through external publications.

Metropolitan University, and we plan to fur-tionally enjoyed the support of hair salonsing not only the traditional hair profes-

development staff regularly visit salons, as

for one-fifth of our approximately 100 R&D

Furthermore, in addition to collaboration

ther accelerate such collaborations throughand their customers (consumers).

sional perspectives but also the consum-

well as verification by hairstylists, but also

staff. Since 2012, we have been conduct-with companies possessing unique tech-the establishment of the aforementioned

At the same time, the most common ser-er perspectives. By doing so, we aim to

the increased frequency of customer sur-ing unique hair research utilizing the large-

nologies, we have established partnerships

Haneda Innovation Center.

vice conducted in hair salons has shiftedcreate products that will resonate withveys, group interviews, and other meth-from perms to hair coloring. Amidst this in-both hairstylists and consumers, andods of gathering feedback. By incorporat-creasing need for haircare, it is not hair col-leave a lasting impression.

ing insights from both perspectives, weoring and other professional-use products,

To achieve that, we have evolved ourbut rather, haircare and knowledge-based

development structure to be based on

products sold for home use that are central

evidence from both the hair professional

to our sales revenues.

perspective and the consumer perspec-

Consumers

B toB to C
Hair professional
perspectives(all customers, including hair professionals)
Communication

Hair professionals

are enhancing our development system

Japanese societies

to be more evidence-based.
*Knowledge-based product sales: A sales method where products
are sold alongside valuable information based on the knowledge
and insights of hairstylists.

B to Bto C

International societies

Performance indicators
R&D
expenses

78
60
18

Awardsreceived● Outstanding Paper Incentive Award (23rd Journal of the Society of Cosmetic Chemists of Japan) ● Best Presentation Award (30th Annual
Meeting of the Japanese Society for Pigment Cell Research) ● Hiroshi Itagaki Student Encouragement Award (33rd Annual Meeting of the Japanese Society for Alternatives to Animal Experiments) ● Young Scientist Support Scheme Award (14th Conference of the Asian Societies of Cosmetic Scientists, 2019) ● IFSCC Poster Award (30th Congress of the International Federation of Societies of Cosmetic Chemists, Munich, Germany, 2018) ● Award for the Outstanding Paper in JFST (43rd Annual Meeting of the Society of Fiber Science and Technology, Japan, 2016)● Award for the Outstanding Paper in JFST (42nd Annual Meeting of the Society of Fiber Science and Technology, Japan, 2015)

FY2018 result

FY2019 result

FY2020 result

FY2021 result

FY2022 result

FY2023 planTotalamount1.47 billion yen

1.53 billion yen

1.58 billion yen

1.74 billion yen

2.07 billion yen

2.37 billion yen

Percentage
of sales

4.2

4.2

4.4

4.2

4.6

4.8

Consumerperspectives

Beautytechniques

Products

Evolution into a customer-oriented product development system that incorporates both consumer perspectives and hair salon perspectives

The values instilled in Milbon’s products

Hair professional perspectives

Safety and function

Scientifically unraveling the beauty techniques based on
the sensitivities of hair professionals to create products
and services

Creating products that prioritize safety and are based onevidence to deliver tangible and effective results

Research on new technologies

MILBON INTEGRATED REPORT 2023

Research achievements
Number of presentations at academic conferences

Consumer perspectives
Meeting the existing and potential needs of consumers
to create value that enriches both beauty and soulPioneering the unknown to create the future of beauty

38Intellectual property rights strategy
At our company, our mission is to protect

Furthermore, in addition to promoting

Milbon and Milbon’s products, with our vi-

our global R&D framework, we are alsosion being to ensure the ability to provide

implementing a patent strategy that

products to the market with confidence.

takes advantage of digital transforma-

In line with this, we actively engage intion, including AI-based patent searches

activities such as patent applications forand patent mapping software. Our aim

new technologies and investigations into

is to incorporate intellectual property inpatents held by other companies.

diversifying R&D, including collaborative

39

researchwithindustry,

government,

and academia.

Patents

Registered
Applications

225
83

As of the end of April 2023

STRATEGY

Financial Strategy

Strategies and plans in the 2022–26 Medium-Term Management Plan

Visualizing financial indicators centered on ROIC,
and improving long-term corporate value
Basic philosophy of the financial strategy

With these things in mind, we have estab-(1) creating growth investments and a strong

stand unexpected events through financial

lished implementation of stakeholder capi-

company through emphasis on investment

management, we aim to improve long-term

talism and creation of long-term corporate

efficiency, (2) achieving sustainable growthvalue for the company based on people (Hu-value as the basic policy of our current medi-

through optimization of profit sharing, andman Capital), things (Manufacturing Capital),um-term management plan. By focusing on(3) building a financial base that can with-and finances (Financial Capital).

Basic policy of the current
medium-term management plan

Implementation of stakeholder capitalism and creation of long-term corporate value(1) Emphasis on investment efficiency(2) Optimization of profit sharing(3) Financial management

Creating growth investments and a strong company

Achieving sustainable growth

Building a financial base that canwithstand unexpected events

According to our belief that “we will build

our efforts is to maintain an equity ratio

we established the “at least 70%” standard

a solid company that won’t collapse,” weof at least 70%. We have established thisto achieve sustainable management thathave established a sustainable financial

goal not only to realize our belief tomaintains an optimum balance of readinessstrategy for the five-year medium-term“build a solid company that won’t col-and growth allowing for unexpected events

We are promoting the utilization of ROIC

functions and facilities; and 1.7 billion yenof 2.9 billion yen in FY2023 as well. While

management plan, that works backward

lapse,” but also taking into account re-and ensures that overly focusing on main-as previously explained, and implementa-

on promoting digital technologies.

enhancing production systems through ex-from our stated path of becoming thesearch that found companies with an eq-

taining a high ratio over 80% does not hin-tion of appropriate investment strategies

Of this investment, we are spending

penditure on machines and equipment atworld’s No. 1 professional haircare manu-uity ratio between 60% and 80% have

der growth. In this way, we are implement-

through visualization of investment efficien-

about 4.1 billion yen on capital expen-

our Thailand Factory, and continuing ourfacturer based (and first) in Japan.

the highest profit growth potential.

ing a financial strategy that contributes to

cy to achieve our target indicator of ROIC

diture in FY2022, with this plan currently

program of investing in digital technolo-

improved corporate value.

of at least 13.6% in FY2026. As specific17.8% complete. Our main investments in

gies, we are also funding development ofplans in our current medium-term manage-

FY2022 are detailed in the following chart.

our Haneda Innovation Center, which isment plan, we plan to invest 9.8 billion yen

This includes 80 million yen in digital trans-scheduled to open at the end of FY2023,

on enhancing production systems in Japan

formation in addition to 1.44 billion yen in

as a base for long-term R&D.

and overseas, including expanding pro-land acquisition for the Human Resourc-

Throughout implementation of theseduction capacity of the Yumegaoka Factoryes Development Center in Odawara City,

plans, we will continually refine theproduction base in Japan; 4.5 billion yen

which is scheduled to begin construction in

effect and efficiency (profitability) of ouron improving training and other education

July 2023. We are planning to invest a total

investments.

The financial philosophy at the core of

Financial philosophy

While our current equity ratio is 83.4%,

Maintain an equity ratio of at least 70%
FY2021 results

FY2022 results

FY2026 target

Cash position

13.3 billion yen

12.2 billion yen

18.3 billion yen

Equity ratio

83.33%

83.38%

85.5%

ROE

13.4%

13.2%

13.9%

ROIC

12.9%

12.5%

13.6%

Dividend payout ratio

43.3%

50.2%

50.0%

Investment amount

4.64 billion yen

4.09 billion yen

5-year total: 23 billion yen(1) Creating growth investments and a strong company through emphasis on investment efficiency

FY2021 results
Sales and studio bases
・Aoyama Sales Office establishment
Production system
・Thailand Factory building expansion
・China Factory building development

Main
investments

Digital・Milbon Digital Arena (virtual space system)・education:iD(Educational video platform for hair salons)

Shifting from a cash-flow focus to utilization of ROIC, which emphasizes the balance sheet
Until now, we have followed a growthsuring the effect of growth investments,

strategy that sustainably achieves great-and labor productivity.

Furthermore, we aim to generate positive action toward improved productivity

er sales, profits, and dividends. Howev-

Accordingly, we are shifting from ourand efficiency on a department level, noter, considering potential future changes

previous cash flow-focused approach tojust for management. We will do this by

and the discontinuous nature of the so-

an approach that utilizes ROIC, whichchanging our perception of ROIC indica-cial and economic environment, we haveemphasizes the balance sheet as well.

tors, treating net sales as “the number

realized that a change in mindset fromIn this way, we are trying to visualize in-of Milbon customers multiplied by thethe financial perspective is also required.

vestment efficiency; health and growth ofamount they spend,” operating income

Considering future turning points we face

the balance sheet, profit and loss state-

as “the added value for customers,”

as well, we also recognize an increasing

ment, and other indicators; and depart-and capital invested as “everything fromneed to anticipate changes in our prof-

ment-level initiative outcomes.

things to finances to time.”

it and loss structure, and balance sheet
structure, resulting from large growth investments and new business entries.
From financial analyses we have con-

Visualization of three indicators centered on ROIC
Health and growth of the balance sheet, profit andloss statement, and other indicatorsand cost of sales ratio. Therefore, a major change in mindset is essential going
forward in terms of efficiency and mea-

MILBON INTEGRATED REPORT 2023

Production system

Production system

・Yumegaoka Factory machine and equipment
cyclical investment
・Thailand Factory machines and equipment
Training

・Yumegaoka Factory production system expansion
・Yumegaoka Factory machine and equipment cyclicalinvestment
Training・education:iD, milbon:iD, and Smart Salon(digital marketing) related
Other・Haneda Innovation Center related

・Milbon Digital Arena, education:iD, andmilbon:iD related

4.64 billion yen

Production system

・Yumegaoka Factory machine and equipment
cyclical investment
・Thailand Factory machines and equipment
Digital・Human Resources Development Center landacquisition
DigitalInvestment
amountThrough to FY2026 plan
Sales and studio bases
・Domestic base development ( new and relocation)・Overseas base development ( new and expansion)

・Human Resources Development Center related
Digital・Milbon Digital Arena, education:iD, and milbon:iD related
・Smart Salon ( knowledge-based product sales softwaredevelopment ) related

2.93 billion yen

4.09 billion yen

5-year total: 23.0 billion yen(2) Achieving sustainable growth through optimization of profit sharing
In terms of profit sharing, we will review

In terms of shareholder and dividend

ing an increase of 18 yen from the previ-

the labor participation rate, improvepolicy, on the other hand, we are trying

ous year and a dividend payout ratio of

productivity,and give back to ourto improve shareholder returns by lift-

50.2%, which was our target. We expect

employees. To achieve this, we areing the dividend payout ratio from 40%

to pay 88 yen as annual dividends per

currently

appropriate

to 50% from the current medium-term

share in FY2023, as a yearly increase of

distribution levels while reviewing ourmanagement plan. Annual dividends per

2 yen, which we expect to be a dividend

remuneration policy.

share for FY2022 were 86 yen, represent-

payout ratio of 49.3%.

investigating(3) Building a financial base that can withstand unexpected events through financial management
long-term growth investment fund and in

medium-term management plan, we will

phy of maintaining an equity ratio of atanticipation of unexpected events. With

continue striving to achieve an appropri-

Our perceptions

least 70%, as previously explained, wean expected cash position in FY2026 ofate cash balance.

Net sales

Operating income

Capital invested

are building a robust financial base as a

at least 13 billion yen under the current

The number of Milbon customers multiplied by the amount they spend

The added value for customers

Everything from things to finances to time

ward trend in our total asset turnover
general and administrative expense ratio

FY2023 plan
Sales and studio bases
・Base development(relocation of Fukuoka Sales Office, etc.)

While continuing to apply our philoso-

Investment efficiency

ducted in the past, there is a clear downratio and upward trends in our selling,

FY2022 results
Sales and studio bases
・Base development(relocation of Kobe Sales Office, etc.)

Department-level initiative outcomes

Promoting action toward improved productivity and efficiency on a department level40

Through implementation of these strategies, we aim to build positive relationships with every stakeholder
and improve the long-term corporate value of Milbon.

41

003

P44

P52

Overview of Sustainability
Promotion and Progress of
Initiatives

Disclosures Based on TCFD
Recommendations

Overview of the Five Key Challenges centered

Milbon’s climate change-related strategy, re-on beauty, chosen to realize a sustainable society, and KPI progress and future initiatives foreach challenge

sults of scenario analysis, and metrics and targets in line with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD)P54

SUSTAINABILITY & ESG
Milbon and Social Challenges / Management Structure

P56
Initiatives to Strengthen
Corporate Governance

Sustainability Highlights
Activities related to sustainability from 2022
to 2023 in four categories: Environment, Soci-

Milbon’s approach to strengthening corpo-

ety, Governance, and Education and Promotion

rate governance, and progress toward system
reform and other efforts to improve the effectiveness of the Board of Directors

P58

P60

A Discussion by
Outside Board Directors

社外取締役による対談

Taizo Hamaguchi and Etsuhiro Takato
A discussion on Milbon’s corporate governance initiatives, featuring Taizo Hamaguchi
and Etsuhiro Takato, two outside board directors possessing extensive management experience at leading Japanese companies

Click to jump to the relevant page

Governance Promotion
Framework, etc.
List of board members and executive officers,
and overview of the governance promotion
framework, etc.

003

COMMITMENT

Overview of Sustainability Promotion at Milbon

SUSTAINABIRITY & ESG

Enriching society and realizing sustainability through beauty

Approach and framework for promoting sustainability
Milbon encourages all its employees,

since included sustainability workshops

thermore, the Sustainability Committee,

including senior management, to con-in all new employee training efforts. We

chaired by the Managing Executive Di-

tribute to realizing a sustainable society.

also regularly publish an in-house web

rector, was created to provide regular

In an effort to enhance employee knowl-

magazine to share the latest develop-

reports to the Board of Directors, allow-

edge and awareness of the Sustainable

ments and company efforts related toing senior management to monitor andDevelopment Goals, Milbon held a com-

SDGs to continuously raise awareness

improve SDG-related activities.

pany-wide workshop on SDGs, and hasof the importance of sustainability. Fur-

New employee training

In-house web magazine

The Five Key Challenges for achieving a sustainable society

Board of Directors

Milbon views sustainability as central to its strategy and pursues sustainability throughout all its business operations. Among thoseManagement Meeting

activities, we have identified Five Key Challenges requiring particular focus, and we are actively prioritizing those areas.

Achieving both sustainablebusiness growth andsolving social issues

2

Promote recycling
in manufacturing
and consumption
activities

Foundation for theCompany’s sustainablebusiness growth4Construct a fairand flexible
management
structure

1
Enrich the sprit
through beauty

3

Practice
people-friendly
procurement

5

Realize work
environments withenhanced job
satisfaction

ReportSustainability
Committee

Key Performance Indicators for the Five Key Challenges
Priority themes

KPI [Medium- to long-term theme]

Challenge 1: Enrich the spirit through beauty
Establishment of knowledgebased product sales business
utilizing both the physicaland digital realms

Fostering lifetime beauty
partners

KPI progress (as of Dec. 31, 2022)
448,618
0 (started deploying nationwide from 2023)

1 million
100 cities in Japan① Total number of annual users of our studios,
events, and educational videos② Number of registered education:iD members

187,108

335,000

23,069100,000

Establishment of acarbon-neutral production
system

① Reduction rate of CO2 emissions at
Yumegaoka Factory

Sustainable container andpackaging design① Reduction rate of petroleum-derived virginplastic use (compared to 2020 levels, perunit sales)① RSPO certified palm oil adoption rate

① Number of cases of human rights violations
identified

59.7% reduction (compared to 2019 levels)

0.4% reduction (compared to 2020 levels)

Promoting diversity among
the Board of Directors

Improving the effectivenessof the Board of Directors

Progress in selecting and improving key
challenges though third-party evaluations

MILBON INTEGRATED REPORT 2023

① Turnover rate of junior employees(new graduates to 3rd year)② Paid leave utilization rate
③ Progress of engagement survey

15% reduction in use(compared to 2020 levels, per unit sales)

Keeping human rights violations as close
to zero as possible0

Achieve carbon neutrality

30% reduction in use(compared to 2020 levels,
per unit sales)

100% (MB+B&C)

Keeping human rights
violations as close to zero as
possible

To determine the Five Key Challenges, inquently, we reassessed those themesissue, labelled Key Challenge 1. Pro-

2019

that

within the matrix to identify those withviding beauty is not only integral to

Milbon should promote from three sep-high relevance to Milbon’s business ac-

Milbon’s business activities, but it also

arate perspectives—ISO 26000, the 17

tivities and those for which stakeholders

contributes to emotional well-being. We

Sustainable Development Goals (SDGs),

have high expectations. The Five Key

believe that a spiritually enriched soci-and environmental, social, and gover-

Challenges were then selected based

ety will engender a sustainable society.

nance (ESG) perspectives—and arrangedon three areas: solving societal issues,

If Key Challenges 4 and 5 ensure thatthem within an SDGs/ESG matrix. The

achieving sustainable business growth,

Milbon can continue to be sustainable,

Sustainability Committee played a cen-and establishing internal foundations.

Key Challenges 2 and 3 will ensure thatwedebatedtheissuestral role in this process, gathering input

In addition, we have designated “En-the entire supply chain encompassed byfrom various departments, outside ex-rich the spirit through beauty,”—one ofour business activity can continue to beperts, and senior management. Subse-

the Five Key Challenges—as our coresustainable.

Fair and flexible management structure
5 outside board directors (5 out of 11)
2 female board members (2 out of 14)
0 foreign board members (0 out of 14)

Continuously appoint over 1/3 outside board directors
Continuously appoint female board members
Ensure diverse skills, including internationality

Continuing

Continuous improvement activities forsetting annual challenges

ISO
26000
ESG

Challenge 5: Realize work environment with enhanced job satisfaction
Achieving systems andframework that encourage
employees to continue
working

75% reduction (compared to 2019 levels)

50% (MB+B&C)

4.47%

Departments

Process for determining the Five Key Challenges

Fair supply chain and responsible raw material procurement

Challenge 4: Construct a fair and flexible management structure① Appointment of outside board directors② Active appointment of female board members③ Securing diverse skills, including internationality

2030 target

Carbon neutrality as a response to the climate change crisis

Challenge 3: Practice people-friendly procurement

Respect for human rights inthe supply chain

2026 target

Coordinate

Web magazine forcontinuous learning

From cultivating emphathetic stylists to fostering sustainable cities and communities① Number of registered milbon:iD members② Number of cities in Japan where Milbon
deploys knowledge-based product sales

Challenge 2: Promote recycling in manufacturing and consumption activities

Sustainable procurementof palm oil

Awareness-raising
workshops

KPI progress information

Supervise

SDGs

SDGs/ESG
matrixFive Key
Challenges

Reflect opinions of experts,
departments, and management

Rearrange according to businessrelevance and stakeholder expectations

Establishment of an HR system that facilitates diverse working styles
10.0%

Turnover rate 9%

64.0%
System design completed and first survey
conducted

70% paid leave utilization rate
System design in 2022, target setting in 2023

44

Turnover rate 6%
80% paid leave utilization rate

Three perspectives

45

COMMITMENT

Initiatives for the Five Key Challenges

2. Promote recycling in manufacturing and consumption activities
Steadily address issues to minimize the environmental impact of production and consumption activities

KPI status and outlook for each of the Five Key
Challenges

Target 1: Establishment of a carbon neutral production system
Renewable energy use to allow attainment of the 75%

1. Enrich the spirit through beauty

reduction in 2023

Significant progress has been made in establishing platforms that aim to enrich people’s hearts throughbeauty, resonating with both consumers and haircare professionals

At Milbon’s core production facility, the Yumegaoka Factory, we have been adopting
renewable energy since April 2022. In relation to the target of achieving a 75.0% re-Target 1: Establishment of knowledge-based product sales business utilizing both thephysical and digital realms

duction in CO2 emissions (compared to 2019 levels) by 2026, a significant reduction of
59.7% was achieved in 2022. With the use of renewable energy throughout 2023, theprospect of achieving the 2026 target is in place. Meanwhile, in our pursuit of carbon
neutrality by 2050, we have initiated the calculation of CO2 emissions for all overseas
facilities in addition to domestic operations. We will continue to advance measures andExceeding expected progress toward achieving 1 million

efforts toward achieving carbon neutrality.

members in 2026
Since the official launch of milbon:iD, our official online stores in June 2020, this new

K PItool for communication between hair salons and consumers, fusing physical and digital

Reduction in CO2 emissions at Yumegaoka Factory*Compared to 2019 levels

worlds, has enjoyed a rapid rise in support. We are making steady progress towardachieving 1 million registered members by 2026.
FY2021 results

KPI

15.3

Number of registered milbon:iD members

reduction

44.4%
reduction%

FY2022 results

59.7

2026 target

75.0

%

169,000

Increase of
279,000
Over 2.6 times

FY2022 results

448,000

1%

reduction

reduction

FY2021 results

2050 target

Carbonneutrality*Group Scope
1&2 emissions

2026 target

millionTarget 2: Sustainable container and packaging design
While reduction in new products is progressing steadily,

Example)Improvements include eliminating caps

challenges remain for existing products

Target 2: Fostering lifetime beauty partners

Milbon aims for a 15% reduction in plastic use by 2026 through implementation of theEnhancing effectiveness and efficiency of learning by haircare

4Rs. While progress was slow in 2022, we expect to achieve a reduction of at least 10%

professionals using digital technology

from 2020 levels from 2023 onward in all new products through introduction of caplessproducts and aluminized plastic products. Issues remain, however, for existing products.

The education:iD, our online service for haircare professionals, enhances learning effec-

Alongside efforts targeting new products, we will make progress on specific measures

tiveness and efficiency through the utilization of digital technology, thereby supportingby gaining expertise from a variety of undertakings, such as the Kobe Plastic Next initia-

improvements in their work environment. We strive to foster Lifetime Beauty Partners

tive pursued in collaboration with Kobe City.

Old pouch

New pouch

who will provide lifelong support to customers.

KPI

FY2021 results

8,700

Number of registered education:iD members

Increase of
14,300Over 2.6 times

FY2022 results

2026 target

23,000100,000

K PI

Reduction rate of petroleum-derived virgin plastic usage *Compared to 2020 levels, per unit of sales

FY2021 results

3.7

%

3.3%
decrease

FY2022 results

0.4%

reduction

46

15.0

reduction

reduction

MILBON INTEGRATED REPORT 2023

2026 target

47%2030 target

30.0
reduction%

3. Practice people-friendly procurement

4. Construct a fair and flexible management structure

Progress made in establishing foundations for socially and environmentally friendly procurement throughout
the supply chain

Making steady progress on securing diversity to bolster internal foundations for sustainable business growthTarget 1: Sustainable procurement of palm oil

Target : Promoting diversity among the Board of Directors

Factory certification enables higher adoption rate

Look to maintain diversity by increasing ratios of outsideboard directors and female board members

In FY2022, Yumegaoka Factory successfully obtained RSPO Supply Chain Certification.
While the adoption rate itself saw a slight increase due to the need for preparations in

We are promoting the diversity of the Board of Directors by appointing outside boardpurchasing certified raw materials, we plan to further improve it from FY2023 by grad-

directors and female board members. We have already achieved our target of having

ually incorporating certified raw materials. Despite the challenges posed by the global

five outside board directors out of a total of eleven. In 2022, we appointed one newincrease in raw material costs, we will strengthen collaboration with our suppliers andfemale outside board director, bringing the number of female board members to two.

strive to achieve our goals.

To enhance the effectiveness of the Board of Directors, a system has been established
to review the board’s agenda in March every year. Through ongoing discussions, we willclearly define the management structure we should aim for as a company and continue
to explore organizational structures that encompass diversity.

KPI

FY2021 results

3.2

K PI

RSPO certified palm oil adoption rate (MB+B&C)

Appointment of outside board directors

FY2022 results

4.47

1.27%
increase

2026 target

50.0

%

%

Yumegaoka Factory obtained

2030 target

100

%

%

RSPO Supply Chain

Appointed
two more outsideboard directors

FY2021 results3

out of 11

Certification

FY2022 results5

out of 11

Target 2: Respect for human rights in the supply chain

K PI

2026 target

Continuously appoint
over 1/3 outsideboard directors

Active promotion of female board members

Sustain zero human rights violations through establishment ofMilbon Group Human Rights Policy

MilbonHumanRights Policy

In FY2022, we established the Milbon Group Human Rights Policy as a shared understanding and commitment to respecting human rights throughout the entire value
chain. We have also implemented measures such as establishing the Milbon Report/
Consultation Counter in collaboration with external partners to ensure that human rights
issues are not overlooked. Moving forward, we will enhance our domestic human rights
due diligence system and work toward building a due diligence framework that includes

FY2021 results

1

Appointed
an additional female
board member

2

FY2022 results

2026 target

Continuously appoint
female board members

both domestic and international operations. We will continue our pursuit of zero humanrights violations.

K PI
KPI

Number of human rights violations identified
FY2021 results

FY2021 results

0

MILBON INTEGRATED REPORT 2023

Securing diverse skills, including internationality

Maintained
a count of zerocases

FY2022 results

0482026 target

Keep human rights
violation as close tozero as possible

Startedconsidering the skill matrix
when appointing
board members

FY2022 results

Continued

492026 target

Ensurediverse skills,
including internationality

Five Key Challenges—Summary of KPI Progress

5. Realize work environments with enhanced job satisfaction
Advance efforts to establish work environments allowing employees who sense job fulfillment to keep
working

Target : Achieving systems and framework that encourage employees to continue working

1. Enrich the spirit through beauty(1) Number of registered milbon:iDmembers(2) Number of cities hosting
Smart Salons2026 target

FY2022
results

448,000

FY2022
results

Most recently, the turnover rate for young employees is trending between 9% and 14%.

FY2021
results

169,000

FY2021
results

The number of registered members is steadily
growing, and we aim to achieve a total of one
million members as we work toward creatingsalons with more than 200 registered members.

jor factor and further steps to lower the turnover rate were introduced in FY2022. To
prevent mismatching in the recruitment stage, we are implementing measures tied tohuman resources criteria consistent with Milbon’s plans for the future and to portfolio
design. We will implement initiatives from diverse angles, for example through provision(1) Reduction in CO2 emissions at
Yumegaoka Factory *Compared to 2019 levels

for new employees, but also for supervisors.

2050 target

KPI

Turnover rate of junior employees

2026 target*Average turnover rate for junior employees (new graduates to third year) over the past five years

FY2021 results

11.7

1.7%
reduction%

FY2022
results

FY2022 results

10.0

2026 target

9.0

%

%

2030 target

6.0%

FY2021
results

Carbon neutrality*Group Scope 1&2 emissions

75.0% reduction

59.7
15.3

0
0

FY2022
results

187,000

FY2022
results

23,000

FY2021
results

210,000

FY2021
results

8,700(1) RSPO certified palm oil adoption rateof sales2026 target
FY2022
results% reduction

FY2021
results

30.0
15.0% reduction

3.72030 target% reduction

2026 target% reduction

FY2022
results

0.4

The number of registered users has been exceeding expectations, and moving forward,
efforts will be put into creating content thatappeals to all haircare professionals, including
students aspiring to become one.

3. Practice people-friendly procurement(2) Reduction in petroleum-derived virginplastic use *Compared to 2020 levels, per unit
2030 target

100,000

Started during the COVID-19 pandemic, the total number of users reached 210,000 in FY2021.
Though there was a slight decline in FY2022,
187,000 people still utilized it.

FY2022 served as a preparatory period for
Smart Salons, which opened in Shibuya (Tokyo)
in January 2023, followed by Umeda (Osaka)and Kitakyushu (Fukuoka) in February. The number is set to increase.

% reduction

After adopting renewable energy beginning in
April 2022, as of this year we are on pace toachieve the 2026 target.

2026 target

335,000

2. Promote recycling in manufacturing and consumption activities

of adaptability support for employees on joining the company through training not only

2026 target

100

employees to help minimize turnover
Hearings with departing employees reaffirmed that mismatched placement was a ma-(4) Number of registered education:iDmembers2026 target

1 million

Plans for diverse initiatives in recruiting and for new(3) Total number of annual users of ourstudios, events, and educational videos

FY2021
results% reduction

100
50.0

*MB+B&C

%
%

4.47

%

3.2

%

In 2022, Yumegaoka Factory acquired RSPO
Supply Chain Certification. We plan to gradually begin using the certified palm oil fromFY2023.

Although our 2022 performance was modest,
from 2023 onward, we expect to be able toreduce usage in new products by 10% overall
compared to 2020 levels.

(2) Number of cases of human rights
violations identified
2026 target

Keeping human rights violations
as close to zero as possible
FY2022
results
FY2021
results

00

The Milbon Group Human Rights Policy wasformulated in 2022 for the entire value chain,and the Milbon Report/Consultation Counterwas established.

4. Construct a fair and flexible management structure(1) Appointment of outside board
directors
2026 target

Paid leave utilization to be improved through flextime andContinuously appointat least one-thirdvisualization of utilization rates

FY2022
results

Paid leave utilization improved 4.8 percentage points between FY2021 and FY2022.
One likely factor behind this is an increase in leave options as part of a more flexible

FY2021
results

work style following the introduction of flextime in July 2022. And in December, we
introduced a system allowing employees to visualize their paid leave utilization rates

5

out of 11

3 out of 11

The number of outside board directors for
FY2021 was 3 out of 11, which increased by 2
in FY2022 to 5 out of 11, achieving an appointment rate of over 1/3.

or those of their subordinates. Looking ahead to achieving our targets, we will advanceefforts from two vantages—culture and systems—for instance by conducting detailed(2) Active appointment of female
board members(3) Securing diverse skills, includinginternationality

2026 target

2026 target

Continuously appoint
female board members
FY2022
results

Ensure diverse skills,
including internationalism

2

FY2022 results
Continued appointing board members
based on the skills matrix

1

FY2021 results
Started appointing board members
based on the skills matrix

One new female outside board director was
appointed in FY2022, giving the company two.
We will continue studying this issue, including
the idea of internal board directors.

Began appointing board members based on
the skills matrix in FY2021 and continued thispractice in FY2022. We will continue to promote ensuring a wide range of skills.

FY2021
results

analyses of obstacles to leave utilization and by nurturing a mentality of setting an ex5. Realize work environment with enhanced job satisfaction

ample, especially among managers.

(1) Turnover rate of junior employees*Average turnover rate for junior employees(new graduates to third year) over the past ﬁve years

K P IK P IPaid leave utilization rate

FY2021 results

59.2

%

Increase of
4.8 percentage
points2030 target
2026 target

FY2022 results

64.0

2026 target

%

70.0

%

2030 target

80.0

%

FY2022
results
FY2021
results

6.0
9.02030 target%

2026 target

10.0
11.7

%

%

In FY2022, we took steps to prevent mismatches during recruitment and create follow-up opportunities after placement. Various initiatives
are planned for the future.

MILBON INTEGRATED REPORT 2023

50

(3) Progress in engagement survey(2) Paid leave utilization rate%

FY2022
results
FY2021
results

80.0
70.0

%

2026 target

Manage

%

64.0
59.2

(4) Progress in selecting and improving key
challenges through third-party evaluations

FY2022 results
Implement%

FY2021 results
Build engagement surveys%

Conducted the first engagement survey. We
shared the important challenges based on theaggregated results with the management andemployees, and promoted ongoing improvement activities.

Introducing flextime improved the utilization
rate as it led to more leave options within flexible working styles.

51

Continuous improvement
activities for setting
annual challenges
Engage in ongoing improvement activities
in response to annual challenges selected
through third-party evaluations.

SUSTAINABILITY & ESG

Disclosure Based on TCFD Recommendations

Results of scenario analysis

Response to climate change
Background to initiatives
The Paris Agreement entered into force inConference, nations adopted the Glasgow

emissions by 2050. To meet this target, we2016 called for efforts to support the tran-

Climate Pact with a goal to limit the aver-believe we need to both put in place or-sition to a decarbonized society in the faceage global temperature rise to no moreganizational structures that can make quickof advancing climate change. As a long-than 1.5°C above pre-industrial levels. It

decisions for progress on decarbonization

term goal, signatories reached a global

was against this backdrop that Milbon rec-and to work together with all stakeholders.

consensus to keep the average tempera-

ognized climate change as a real risk withThrough disclosure of information to, andture rise to well below 2°C. In 2021, the In-

implications for management strategy anddialogue with, all stakeholders relating totergovernmental Panel on Climate Change

financial planning over the medium to longclimate change, we aim to ensure infor-(IPCC) published its Sixth Assessment Re-

term and positioned it as a Key Challenge

mation transparency while elevating ourport containing the latest scientific findings

as part of its Sustainability Commitment.

climate change activities and disclosure to

relating to climate change, while at the

The Milbon Group has set a target toa new level, thereby stepping up our con-

COP26 United Nations Climate Change

achieve carbon neutrality of Scope 1 and 2

tribution to realizing a sustainable society.

Milbon declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD) in December 2022 and became a member of the TCFD Consortium, a Japanese organization comprisedof corporations supporting the TCFD recommendations, in January 2023. Milbon will continue to take proactive
steps to address climate change while disclosing information in line with the TCFD recommendations.

Governance and risk managementin raw material procurement costs underconsumption activities and practicing peo-and opportunities for Milbon Co., Ltd. The

both 1.5°C and 4°C scenarios and would

ple-friendly procurement, as prescribed

impacts of these risks and opportunities

potentially be significantly impacted byin Milbon’s Sustainability Commitment,

for Milbon were evaluated, and responses

an increase in the costs of the company’s

would help minimize identified risks andwere considered. Results of scenario anal-

own operations under the 1.5°C scenario.

capture identified opportunities. Measures

ysis showed that Milbon would potential-

The results also showed that progress on

will also be advanced as part of efforts inly be significantly impacted by increases

promoting recycling in manufacturing andother areas.

Sustainability Committee, the TCFD Working

significant business challenge and has put inGroup is responsible for exploring specificplace a promotion framework for resolving

measures for realizing the organization’s car-those issues. Specifically, the Sustainability

bon neutrality target, deploying those mea-

Committee, chaired by the Managing Execu-

sures across the Milbon Group, and managing

tive Director, meets once a month. The Sus-

and monitoring the progress of initiatives, as

tainability Committee examines and discusses

well as reporting to the Sustainability Commit-

policy on climate change action and issues

tee on the progress or status of initiatives. The

around implementation of related measures

TCFD Working Group also identifies climate

with details reported, or submitted for dis-change-related risks to the organization. Oncecussion, to the Management Meeting and theevery half year, the TCFD Working Group re-Board of Directors as required. The Board ofports on the status of its activities to the Man-

Directors regularly supervises this process,agement Meeting and the Board of Directors

instructing courses of action and adjusting

via the Sustainability Committee and receives

strategy accordingly. Installed beneath thesupervision from the Board of Directors.

Supervision

Board of Directors

Execution

Management Meeting

Deliberation of reported/resolved matters

Raw material
procurement

Milbon’s operations

Role:

Monitor the status of initiatives in view of
the Sustainability Commitment

Frequency: Monthly Chair: Managing Executive Director
Members: 1 each from the Corporate Strategy Development
and Corporate Communications Departments
WG

TCFD Working Group

Role: Monitor the status of initiatives for achievingcarbon neutrality; identify and evaluate climate change risk
Frequency: As required Chair: Managing Executive Director
Members: 1 from the Corporate Strategy Development
Department, 3 from the Corporate Communications Department
Progress reports

Development/instruction of specific initiatives

Milbon Group

Strategy
Global average surface temperature change relative to 1986–2005

For this, the first fiscal year of TCFD dis-

Agency (IEA) were used for the analysis.

closure, we conducted a scenario analysis

For the 1.5°C temperature rise scenario, weof Milbon Co., Ltd., the standalone core

analyzed the impact of changes in policy,of the Milbon Group. For the scenario

regulations, technology, markets, and con-analysis, we envisaged temperature rises

sumer perceptions associated with a tran-of 1.5°C and 4°C and examined the risks

sition to a decarbonized society. For theand opportunities presented by climate

4°C temperature rise scenario, we analyzed

change at three points in time—the years

physical impacts resulting from both acute2025 (short-term), 2030 (medium-term),change (e.g. heavy rainfall, floods) andand 2050 (long-term). Scenarios provided

chronic change (e.g. increases in average

RCP8.5 (scenario without stringent global warming mitigation)by the IPCC and the International Energy

temperature, changes in annual rainfall).

Source: Fifth Assessment Report, IPCCClassification

Time frame

ImpactIncrease in procurement costs due to the introduction
or expansion of carbon pricing applicable to suppliers

Risk

2030

Large

Increase in procurement costs resulting from land use
constraints due to laws and regulations for protecting
forests

Risk

2025

Survey procurement channels and traceability in the context of risk related to climatechange and the international situation

Plant-derived
raw materials

Risk

2030

MediumIncrease in operating costs due to the introduction or
expansion of carbon pricing applicable to Milbon

Risk

2030

Small

Increase in energy costs due to rising retail electricity
pricesRisk

2030

MediumIncrease in compliance costs due to more stringent laws
and regulations at various worldwide locations

Risk

2030

MediumIncrease in costs for adapting to a circular economy

Risk

2030

MediumIncrease in sales due to a rise in competitiveness as aresult of the impact of carbon pricing on competitors

Opportunity

2030

MediumDecrease in emissions and energy costs due to theintroduction of in-house power generation

Opportunity

2030

MediumIncrease in sales of environmentally friendly products

Opportunity

2030

Medium

Risk

2050

Large

Estimate the increase in costs to suppliers due to carbon pricing, investigate passing
on costs to product prices, and investigate alternative raw materials

Actively use RSPO certified palm oil. Target 100% use of Mass Balance certified palm oil
by 2030.

MediumIncrease in procurement costs due to strengthening oflaws and regulations relating to raw material
traceability

Investigate efficient procurement and purchasing methods for securing raw materials

Containers andpackaging materials

Use of our own energy

Response to laws
and regulations

Product development

Actively use plant-derived plastic and resin-reducing molding methods for packaging of new
products with the aim of reducing petroleum-derived virgin plastic use by 30% by 2030
Research plastic container recycling methods

Estimate the increase in costs of containers and packaging materials due to carbon pricing,investigate passing on costs to product prices, and investigate alternative raw materials

Estimate the cost of carbon pricing for Scope 1 and 2 emissions using carbon prices
under the NZE scenario in WEO 2021, 2022
Increase the percentage of electricity generated in-house based on projections ofrising electricity costs

Identify the various regulations and envisage switching to other raw materials or
passing on costs to products depending on the impact of rising costs
Secure costs and establish internal systems for adapting to laws and regulations,particularly in the EU

Develop products that respond to the needs of consumers' daily lives, enhancefunctionality, and reduce environmental impact

Milbon’s operations

Increase in the cost of procuring palm oil and otherplant-derived raw materials due to climate change

Research palm oil alternatives and investigate adapting by altering the existing formula
Estimate fluctuations in the price of procuring palm oil due to climate change

Procurement
Decrease in procurement costs due to initiatives for
ensuring stable procurement of raw materials

Opportunity

2030

MediumIncrease in costs for repairing damaged manufacturing
facilities

Risk

2050

Small

Risk

increase in costs due to damaged inventories as aresult of flooding and typhoon damage

2050

Ascertain the impact of climate change on each raw material
Survey climate change in countries where principal natural raw materials originate andundertake activities to protect those materials

Disaster response

Decrease in sales due to impacts on deliveries andResearch raw materials and securing of procurement channels

Small

Confirm that insurance will cover repairs to manufacturing facilities damaged in a disaster
Prepare alternative transportation arrangements in readiness for disaster due toconcerns about the impact on some logistics warehouses

Metrics and targets
Activities to minimize the risk of increases

operating costs due to the introduction

our manufacturing base and the Japanese

in raw material procurement costs, whichof carbon pricing and escalating electric-

business location with the highest CO2

scenario analysis results indicate would

ity prices, in addition to our CO2 emis-

emissions, by 2030. We will then aim

have the largest impact on our business,sion reduction targets for 2030, we haveto achieve carbon neutrality across thewill continue through efforts to achieve

set a new goal for the Milbon Group to

Milbon Group by 2050. We will continue

targets for reduction of petroleum-de-achieve carbon neutrality by 2050. With

our efforts to minimize risk by regular-

rived plastic containers and packaging

regard to the Milbon Group’s Scope 1 andly monitoring the status of initiatives forand for procurement of RSPO certified

2 emissions, first we will aim to achieve

achieving carbon neutrality and develop-

palm oil. To address the risk of increased

carbon neutrality at Yumegaoka Factory,

ing measures to address risks.

Mean over
2081–2100（℃）6.02026

2030

Targets for reduction of petroleum-derived
virgin plastic (compared to 2020, volume
used per unit of net sales)

15% reduction in the use of petroleumderived virgin plastic

30% reduction in the use of petroleumderived virgin plastic

RSPO certified palm oil adoption rate
(MB+B&C)

50%

100%

Yumegaoka Factory

Milbon Group

4.0
2.0

RCP8.5
RCP6.0
RCP4.5
RCP2.60.0-2.0

Envisaged responses

4°C temperature rise scenario

Raw material
procurement*Matters covered in deliberation by the Sustainability Committee and the TCFD Working Group in FY2022 include the formulation of ethics, human rights, and environmental policies; management of progress ofthe Five Key Challenges under the Sustainability Commitment; implementation of scenario analyses and reporting on findings; and formulation of annual targets supporting attainment of carbon neutrality by the
Milbon Group.

52

Demand for productsSupervision, instruction

Sustainability Committee

Description of opportunity-risk

1.5℃シナリオ
1.5°C temperature rise scenario

Structure

Milbon views sustainability-related issues as

MILBON INTEGRATED REPORT 2023

Scenario analysis revealed around 40 risks

1950

2000

2050

2100 (Year)

Model results over historical period
RCP2.6 (scenario with stringent global warming mitigation)
Targets for reduction of CO2 emissions(Scope 1 and 2)

2026: 75% reduction (compared to 2019)
2030: Carbon neutrality

2050: Carbon neutrality

53

Recorded emissions (t-CO2)

2019

2020

2021

2022

Milbon Co., Ltd. Scope 1

1,248

1,205

1,300

1,357

Scope 2 (market reference)

3,151

2,707

2,829

1,531

Yumegaoka Factory Scope 1

502

471

503

530

Scope 2 (market reference)

1,931

1,739

1,560

450

Yumegaoka Factoryemissions as a percentage ofMilbon Co., Ltd. emissions

55.3%

56.5%

51.5%

33.9%

SUSTAINABILITY & ESG

Main sustainability-related initiatives in 2022 and 2023

2022–2023 Sustainability Highlights

Jan

Sustainability educationand promotion

Environment

SocialGovernanceVilla Lodola COLOR Interval Re:-

Released the 2021–2022 special

Appointed two female executive

Care won the Jury’s Award at thebrand film “Words I Encounteredofficers for the first time

Sustainable

at the Salon”

2022

Cosmetics

Award

Environment

SocialGovernanceInvited an external presenter toSepoffer a TCFD Study Session forboard directors, Audit & Super visory Board members, and execu-

2021, and Milbon Co., Ltd. won thetive officers

International Award in the corporate category for its efforts to promote SDGs

Sustainability educationand promotion

Launched

MILBONBEAUTYOct

MOVIES, a “Find Your Beauty”

Conducted an employee engagement sur vey for FY2022

short film project, in collaboration
Asia

Feb

Invited an external lawyer to offer a
Corporate Governance Study Ses-

with Short Shorts Film Festival &sion for board directors, Audit & SuCompleted third-par ty question-

Positioned our Sustainability Com-naire and interviewed outside

mitment at the core of our strate-board members to evaluate Board

gies, and updated KPIs, in the new

effectiveness in FY2022

medium-term management planNov

pervisory Board members, and exAwarded a Silver EcoVadis Sustain-

ecutive officers

ability Rating
Established the voluntary Gov-

Dec

ernance Committee to discuss
medium- to long-term improvements for corporate governanceMar

Developed a system to predict

Resoluted to donate 100,000 euros

the result of alternative methods

to the Office of the United Nations

to animal testing on eye irritation

High Commissioner for Refugees

using the HSP method

to provide humanitarian assistance2023

Appointed one new female outsideboard director

cal and digital worlds to satisfy theof Yomu Milbon, an internal web

customer’s desire for more

outsidemagazine continuously publishedUkraine and neighboring regions

board directors, bringing the total

since 2020 to support employee

Adopted smaller caps (54% lessnumber of outside board direc-

efforts toward sustainability

plastic) for new hair color line,

tors to five (ratio of outside board& Productivity Management Out-

Revised our structure for promot-

Launched Smart Salon as a new

Began publishing FY2022 editions

Appointed

Recognized as a Cer tified Healthnewmendations of the TCFD

ing sustainability and added thehair salon format that fuses physi-

to victims of the military conflict in

ENOG

two

Became a signatory to the recom-

Education and Promotion Working Group in addition to the TCFD
Working Group within the Sustain-Janability Committee

Joined the TCFD Consortium

Also assigned sustainability promotion members within each business division and strengthened

directors: 45%)

collaborations

standing Organization for 2022
Invited an external presenter to
Formulated and announced theApr

Milbon Group Human Rights Policy

provide Human Rights Training for

Changed container specifications

board directors, Audit & Supervisory Board members, and executive officers

Switched all electricity used at the
Yumegaoka Factory, our core do-for haircare products to reduce theDonated 10 million yen to Japanamount of plastics used, aiming to

Platform’s Emergency Response

reduce by approx. 10 tons per year

to Southeast Turkey Ear thquake
2023 program to suppor t disas-Feb

mestic plant, to RE100 standard re-

ter relief and recovery effor ts fornewable energy

those suffering from the ear thquake in Turkey and Syria
Established the Risk Management
Set a target of 20% ratio of female
in management positions by 2030

May

in order to secure diversity of corehuman resources

Committee comprised of internalboard members, Audit & Super vi-

Formulated and announced thesory Board members, and execu-

Milbon Group Environmental Policy

tive officers

Recognized as a Cer tified HealthAwarded the MILBON BEAUTY& Productivity Management Out-

AWARD to the shor t film that mostJunstanding Organization for 2023

embodied “beauty” from among

Outsourced

films presented at Shor t Shor ts

contacts for whistleblowers to a

Film Festival & Asia 2022

third-par ty organization and pro-

Milbon’sinternal

Formulated and announced theParticipated in Kobe Plastic Next,

Mar

moted it to employees

a program for recycling refill packs

Extended new sports sponsorships

and cleaning up Kobe City

with female professional golfers to

Milbon Ethics and Code of Conduct

inspire future-focused people tolive beautifully

Established the TCFD Working

Acquired RSPO Supply Chain Cer-

Group within the Sustainability

tification at the Yumegaoka Facto-

Jul

Committeery, our core domestic plant

Announced our climate change
policy on the corporate website
in

line

with

the

Began publishing FY2023 editions

TCFD

of Yomu Milbon

recommendations

Apr
Aug

Adopted new containers, that use
75% less plastic than existing con-Adopted new packaging using atainers, for the new Villa Lodola

plant-derived plastic blend for new

RENOVO product series

products, COLOR GADGET Color
Shampoo and Mizulisse

May

Held the second MILBON BEAUTY

Jun

MILBON INTEGRATED REPORT 2023

54

AWARD ceremony

55

003

GOVERNANCE

Initiatives to Strengthen
Corporate Governancedepartments. This helps to ensure thatcy of meetings by creating a bureau fordas, implementing activities according

decision-making by management is ap-

the Board of Directors, the Management

to annual schedules, making prepara-

propriately conveyed to employees.

Meeting, and the Nominations and Com-tions, and following up on proceedings,

thepensation Committees. Structures put inhave started making a difference throughFY2022 plan, in FY2023 we sought toplace to enable the smooth performance

greater effectiveness of the different

enhance the effectiveness and efficien-of tasks, such as arranging meeting agen-organizations.

Following

SUSTAINABILITY & ESG

Realizing comprehensive evolution
and transformation of organizational governance inanticipation of the next stage

implementationof

The growing importance of comprehensive governance management due to global expansion
Between FY2019 and FY2022, three newmembers and executive officers fromident & CEO and comprises three board

committees were established—the Sus-

within the company. The committee

directors from inside the company, in-tainability Committee, Risk Management

designates risks that need to be tackled

cluding the President & CEO, and one

Committee, and Governance Committee.

as a company due to their importanceoutside board director. It undertakes de-

The Sustainability Committee, which I

and priority as companywide risks, andliberations contributing to corporate gov-

Masahiro Murai

chair, was established in FY2019. It pro-advances measures after selecting rep-

ernance improvements over the medium

Managing Executive Director in charge of Sustainability Promotion

motes companywide implementation ofresentatives for each type of risk fromto long term, primarily regarding the ef-

sustainability activities centering on theamong Risk Management Committee

fectiveness of the Board of Directors.

Five Key Challenges and bears a duty

members. Companywide risks currently

Each of these three committees isto report to the Board of Directors andbeing addressed include: (1) risks relat-closely involved with the Board of Di-

the Management Meeting. Coordinating

ing to confidentiality; (2) risks relating torectors and the Management Meeting.

with both management and employees,

governance of overseas subsidiaries; (3)As such, we have created a framework

it serves as a hub organization within therisks relating to appropriate communica-

enabling

company.

tion of information to consumers; and (4)management, and we are reviewing therisks relating to disasters caused by major

corporate governance system to reflect aearthquakes and business continuity.

fresh stage of growth awaiting us.

For Milbon, enhancing corporate governance is a critical management challenge. Through greater trans-parency, fairness, and management efficiency, we aim for ongoing improvements to corporate value.

Reexamining the results of FY2022, Managing Executive Director Masahiro Murai explains initiatives
underway to bring about better and stronger corporate governance.

The Risk Management Committee, established in FY2022, is chaired by the
President & CEO and comprises board

Strengthening corporate governance in preparation for the future

directors, Audit & Supervisory Board

The

GovernanceCommittee,

comprehensive

governancealso

formed in FY2022, is chaired by the Pres-

Aiming for corporate governance that keeps evolving

Milbon views sustainability as one of its

on the stock exchange. With regard toto the next generation. At present, wemost important goals, and we are tak-corporate governance, however, we wereare pushing ahead with various reforms.

ing steps to “construct a fair and flexible

initially slow to make reforms—some-

As we transition to a new stage ofI have talked here about initiatives forfor Milbon to enhance its corporate val-

Milbon will continue its quest to estab-management structure” that allows us

thing we deeply regret. One of the main

growth, the next few years will be crucial

making corporate governance at Milbon

ue over the medium to long term, it islish a sound management framework by

to fulfill our commitment to all the var-reasons underlying this slow adoption offor determining how to transform ourstronger and better, but there is no one

essential that we establish a framework

persisting with efforts to realize stronger

ious stakeholders in society and deliver

corporate governance was that our busi-

management framework and heighten

correct format for corporate governance,that allows us to reach for even greaterand better corporate governance thatlasting value. We believe that a compa-

ness was growing and our share price was

the effectiveness of our corporate gov-

and the Corporate Governance Code isheights. We will do that by laying foun-results in high stakeholder regard forny’s corporate governance system must

steadily growing even without actively fo-

ernance. We are engaging in discussions

merely presented as one set of guide-

dations enabling ongoing discussion

our management transparency, fairness,function accurately and reliably for it tocusing on corporate governance. Howev-

from various perspectives, looking aheadlines. This became increasingly apparent

about Milbon’s corporate governanceefficiency and objectivity and enables

achieve sustainable corporate growth.

er, in light of changing social conditions

to the future of Milbon in the next five

to us during observational visits to sev-

priorities and by improving effective-

strategic decision-making by senior man-With the exception of FY2020, theand the speed of our corporate and busi-

years, ten years, and beyond. Our focus iseral companies recognized as corporate

ness while referring to outside parties foragement after active deliberation.

beginning of the COVID-19 pandemic,

ness expansion, it became necessary to

on reviewing our management structure

governance leaders. We believe that

judgment and evaluation.

Milbon has been on a consistent growthoverhaul both the corporate governanceand strengthening corporate governance

trajectory, enjoying revenue increases insystem and the foundations we had es-

to align with our vision of the future.

every year following the company’s listing

tablished if we wished to entrust Milbon

Advancing initiatives aimed at improving corporate governance effectivenessIn FY2022, we carried out a significant

nese companies. With the inclusion of in-directors, Audit & Supervisory Board

number of reforms to strengthen thesights and opinions from executives andmembers and executive officers from

corporate governance system. First, we

experts, we have experienced a steady

within the company, the aim being to cre-

increased the number of outside board

evolution toward a Board of Directors

ate an organizational framework allow-

directors in line with Japan’s Corporatethat fosters lively discussions. This has

ing both the Board of Directors and theGovernance Code as it applies to theenabled us to hold more accurate andManagement Meeting to perform their

Prime Market with the aim of improving

well-informed deliberations.

respective functions effectively. There are

the effectiveness of the Board of Direc-

We also took steps to strengthen thealso benefits to the dissemination of infor-

tors and ensuring its transparency. All

monitoring function of the Board of Di-

mation given that Management Meetingoutside board directors elected to daterectors and promote greater separation

members are also heads of departments

have possessed extensive experience,

between management and supervision.

and can clearly communicate contents ofwith some even having served as repre-

This involved the establishment of a new

Management Meeting deliberations andsentative directors of prominent Japa-

Management Meeting made up of board

the processes behind them within their

MILBON INTEGRATED REPORT 2023

56

New initiatives in FY2022–23
Increase the number of outside board directors
Newly establish the Management Meeting
comprising board directors, Audit &Supervisory Board members andexecutive officers from within the company

Enhance lively, accurate debate from management and specialist’s perspectives(1) Strengthen monitoring by the Board of Directors(2) Run the Board of Directors and Management Meeting effectively(3) Adequate companywide communication concerning decision-making(1) Improve the effectiveness and efficiency of such meetings as the Nominations and

Newly establish a bureau

Compensation Committees(2) Implement activities according to annual schedules(3) Enhance meeting preparations and follow-up

Newly establish the Risk Management
Committee

Designate risks that need to be tackled as a company due to their importance and priority ascompanywide risks and advance measures

Newly establish the Governance Committee

Undertake discussions contributing to corporate governance improvements over the medium
to long term, primarily regarding the effectiveness of the Board of Directors

57

GOVERNANCE

A Discussion by
Outside Board Directors

Driving steady reform in line with the changing
stages of Milbon

depending on their circumstances, rather

and stage of development. My impression

without thinking and accepting after care-than just accept everything. What are youris that, while delivering a sound response

fully examining them. Even if the resulting

thoughts on how Milbon is responding?

to external demands, Milbon is clarifying

response appears the same, it can have

Hamaguchi: First of all, I think the recent

important areas within the company thata substantial impact on the organization-

governance-related demands on compa-

need to be improved, and then steadi-

al culture and thinking abilities five years

nies might be somewhat rigid and a little

ly working on those challenges. In otherlater. Within this context, it should not be

too rushed, so each company should con-words, we can be confident in its response.

difficult for Milbon to emulate and catch upsider responding or implementing them in

Takato: That is right. There is a significant

with the good aspects of pioneering mod-accordance with their own circumstances

difference between accepting any demandels, and with effort, even surpass them.

Responding with an eye on stage and generational changes
Hamaguchi: While Milbon’s governance isness units, it’s possible for discussions tolar and potentially a third pillar emerges,

steadily improving, I still believe that there

become less active due to conflicting in-

the president will need to take on a moreare specific challenges to address. For ex-

terests. However, in the case of Milbon,

comprehensive role in overseeing the en-ample, it appears that the audit function is

although there are new business ventures,

tire organization. In such a case, it is likely

preoccupied with accounting audits, indi-

it is still in a transitional phase from a sin-that further structural changes within thecating a need to strengthen the aspects ofgle-business structure centered aroundorganization will be necessary.

management and offer advice from their multifaceted and objective perspectives. In this way, we strive to ensure trans-

management audits.

hair, so I don’t have such concerns at the

Takato: Yes, you are right. I believe it isHamaguchi: From what I observe internally,

moment. On the other hand, precisely be-

I can see that the next generation respon-

directors with management experience at leading Japanese companies, to provide their opinion on our corporate gover-crucial to always maintain a third-party

cause of this, President Sato’s presence issible for leading Milbon’s management isperspective that allows for a multifaceted

undoubtedly overwhelming. Of course, I

undoubtedly growing, and the average

and objective view of the organization. In

believe President Sato is aware of this as

age of the employees is also very young.

this regard, I find it very positive that thewell and takes care in his speech and atti-

Having a significant presence of the newinternal board directors actively partici-

tude to ensure it doesn’t become an issue.

generation implies the ability to embrace

Taizo Hamaguchi, Outside Board Director

pate in discussions within Milbon’s Board

Takato: Indeed, Milbon’s previous struc-new concepts and changes with flexibility.

of Directors. What are your thoughts

ture may have involved the president tak-Therefore, I believe it would be beneficial(Executive Director of ITOCHU Corporation) After joining ITOCHU Corporation, he served as Executive Officer ofon this?

ing on a role similar to that of a director

to construct an appropriate organizational

ITOCHU Corporation, and separately as President and CEO, Chairman, and Advisor of ITOCHU-SHOKUHIN Co.,

Hamaguchi: I share the same view. Whenof operations. However, as the cosmetics

structure in accordance with the develop-

a company expands and has multiple busi-

business grows to become the second pil-ment situation of the company.

At Milbon, we engage the services of outside board directors with extensive experience and knowledge to supervise
parency and improve efficiency of management. We invited Taizo Hamaguchi and Etsuhiro Takato, two outside board
nance initiatives and to discuss such things as challenges to future sustainable growth for our company.

Ltd. He currently works as Executive Director of ITOCHU Corporation.

Enhancing educational opportunities to broaden perspectives
Etsuhiro Takato, Outside Board Director

Takato: I believe that growth of the young-edge related to broader societal issues like

While Milbon does have an executive de-(Advisor to Ajinomoto Co., Inc.) After joining Ajinomoto Co., Inc., he served as President and Director of various

er generation is the result of Milbon’s in-

ESG. Individuals working in a corporate

velopment program, it could also explore

overseas subsidiaries, President of Ajinomoto SEA Regional Headquarters Co., Ltd., and Representative Director

vestment in education. I am particularly

environment often find it challenging toopportunities for activities such as pursuingof Ajinomoto Co., Inc. He currently works as an advisor to the company, and as an outside board director for Seven

impressed by the long-term training sys-

access external knowledge. Therefore, I

an MBA or studying at various universities

Bank, Ltd. and TOKYO VERDY, Inc.

tem for new employees. It vividly reflectsbelieve it is crucial to establish a structured

in Japan.

Milbon’s corporate culture of valuing its

curriculum framework to address this issue.

Hamaguchi: That’s true. Learning becomespeople. I look forward to seeing future en-

Takato: Among these considerations, I

more effective when it becomes a habit,

hancements of these systems to foster the

believe that education for potential board

creating a fertile ground for knowledge ab-

growth of executives and beyond.

members should be given greater empha-

sorption. Providing educational opportuni-

A series of steady, flexible improvements
Takato: I was invited to join Milbon as an

the term “management” in the same con-whole. This brought companies to a cross-

Hamaguchi: I think that’s absolutely right. In

sis. At Ajinomoto, where I worked before,

ties has a much better cost-effectivenessoutside board director in FY2022, so I

text. The term “governance,” which is orig-

road requiring a change in mindset wheresuch cases, it would be advisable to incor-

they had a well-established framework forcompared to introducing machinery, as it

would like to ask you, since you have held

inally a Western concept, started to appear

they also had to contribute to society, as

porate not only practical skills but knowl-

this, and I personally benefited from it.

fosters a culture of learning.

this role since 2016, for your opinion ofaround the turn of the century. During thatsocial entities, to achieve growth. I think it

governance at Milbon.

time, the business community was talking

was this change in mindset that was behind

Hamaguchi: I remember that Milbon was

about the need for companies to focus on

the popularization of governance. Having

still a developing company when I was firstcompliance as social entities and, in turn,said that, my understanding is that this was

Hamaguchi: Finally, what aspects would

formation and entering a new stage as aagement has been successful thus far, we

invited to be an outside board director.

society also started to see companies fromjust a restating of the commonsense reality

you like our stakeholders to pay atten-

company, it may take some time. There-

must not assume that it will automaticallyOver the six years of my engagement, I

that perspective. Companies started think-that companies also have to operate hon-tion to in terms of Milbon’s future gover-fore, I believe it would be beneficial forcontinue to thrive. This principle applies

have seen the company make steady im-

ing about what concrete action they should

estly, for the sake of society.

nance promotion efforts?

stakeholders to observe the company’s

not only to the beauty industry but also

provements in the areas that needed

take, and the concept of governance be-

Hamaguchi: In other words, companies

Takato: As you mentioned earlier, while

progress with a long-term perspective.

to businesses in any sector.

improving.

came a necessary part of that. So, it mightthat do not contribute to the earth andthere are still some remaining challeng-

What are your thoughts on this?

Takato: Even over the year since I tooksociety in an honest manner will no longer

es in promoting governance at Milbon,

Hamaguchi: Amidst these circumstanc-Takato: That is right. It is important for

be more accurate to say that “manage-

up this post, I have noted changes thatment” turned into “compliance” and thenbe deemed necessary by society, so gov-

I have a strong sense that the company

es, there is no doubt that the next few

evolving toward the future and to con-are happening. Corporate governance isinto the popular concept of “governance.”

ernance is implemented to ensure thisis steadily improving. Reflecting on myyears are crucial for Milbon. It is a time oftinue growing on a daily basis in order toa term that has gained a lot of attention

Takato: I think you are right. Until that time,

accountability.

experience with other companies, I findsignificant generational transition. Con-

achieve the society it envisions.

again recently, but can I ask when you firstmany companies believed that profits wereTakato: Nonetheless, companies nowadays

that Milbon has a highly dedicated work-

versely, if Milbon fails to implement the

Hamaguchi: Exactly. We would like tobecame aware of this concept?

all-important, but there was a gradual shift

are faced with a wide array of requirements,

force who genuinely engages with gov-

necessary changes during this period, it

support and accompany Milbon as it dil-Hamaguchi: I think it was at the beginning

among the general population toward

including Japan’s Corporate Governanceernance. On the other hand, given thatwill have a profound impact on the Com-

igently strives to create an organizationof the new century. Prior to that, we usedthoughts of the earth and society as aCode, so they need to respond flexibly

Milbon is undergoing a significant trans-

pany’s future. Furthermore, while man-that contributes to society.

MILBON INTEGRATED REPORT 2023

58

Continuing to grow into a company that benefits society

59

Milbon to always have the mindset of

GOVERNANCE

Board of Directors

Common standards for all board directors and Audit & Supervisory Board Members
Board directors and Audit & Supervisory Board Members shall understand and take the initiative in practicing The Milbon Way, theaction guideline for all employees of the Company, and thereby contribute to the development of a sustainable beauty market.

Skill selection

Corporate Governance Structure Quick Reference Table(as of March 31, 2023)

The skills considered necessary for our Board of Directors were reviewed and selected by the same Boardof Directors in October 2021, taking into account theopinions of each board member.

Skill plotting criteria for each board
director(From the left)

Chisa Hayakawa

Shoichiro Takahata

Ryuji Sato

Hidenori Sakashita

The skill plot of each board director was determined

Etsuhiro Takato

Kazunobu Konoike

Yasufumi Takeda

Mitsuru Oshio

based on the extent of work experience in the rele-

Tsuneko Murata

Masahiro Murai

Junji Morimoto

Keisuke Endo

Outside Board Director

Outside Board Director

Outside Board Director

Representative Director, President & CEO

Board Director

Outside Board Director

Board Director

Managing Executive Director

Board Director

Standing Audit & Supervisory Board Member

Board Director

vant skill area.

Institutional design

Company with an Audit & Supervisory Board system

Term of office ofBoard Directors

2 years

Adoption of Executive
Officer system

Yes

Voluntary Committee of
the Board of Directors

Nominations Committee, Compensation Committee,
Governance Committee

Accounting Auditor

GYOSEI & CO.

Outside Audit & Supervisory Board Member

Taizo Hamaguchi

Yoshihiko Okuda

Outside Board Director

Outside Audit & Supervisory Board Member

Overview of Executive Officer System and list of executive officers
Milbon adopted an Executive Officer

items, the Management Meeting encour-

understanding and communication ofAreas of expectation for Board Directors and Audit & Supervisory Board
Members (use of skills matrix)

System in FY2021 in anticipation ofages a division of roles with the Board ofeach employee in the workplace.

an enhanced monitoring function for

Directors to mutually enhance manage-

We have also introduced a stock com-the Board of Directors in the future. In

ment supervision and execution func-

pensation scheme into the compen-

FY2022, we established the Manage-

tions and strengthen effectiveness. Withsation system to encourage executive

In order to continuously improve the Board of Directors’ required supervisory functions, we have created a matrix of the various skills pos-ment Meeting comprising internal board

many of the executive officers also being

officers to perform their duties, as our in-sessed by board directors and Audit & Supervisory Board Members, and are using this matrix as a criterion for determining candidates.

directors, standing Audit & Supervisory

the heads of their respective depart-ternal board directors do, with an aware-

Board members, and executive officers.

ments, there is a deep understanding ofness of sustainable improvement of cor-

As an organization tasked with deliberat-

resolutions taken by the Management

porate value.

ing on business execution-level agenda

Meeting, which helps to facilitate correct

Name

Corporate
management

Finance/
Accounting

Legal/Risk

GlobalESG/SDGs

R&D

Production/
Logistics

Sales/
MarketingIT/
DigitalHR/
Labor

Qualifications

Ryuji Sato

(From the left)

Hiroyuki Ogata

Masahiro Murai

Executive Officer, General Manager of Corporate Strategy Development

Yasufumi Takeda

Harumichi Okazaki
Executive Officer, Director of International FP Sales and Marketing

Board Director

Kazunobu Konoike

Hiroe Fujiwara

Junji Morimoto

Executive Officer, General Manager of Organic Brand

Hidenori Sakashita

Executive Officer, Deputy Director of FP Sales and Marketing and General

Taizo Hamaguchi (Outside)

Isao Oka

Akiko Nishioka
Manager of Tokyo Aoyama Branch
Executive Officer, Deputy Director of FP Sales and Marketing

Certified Public
Accountant

Shoichiro Takahata (Outside)

Masayoshi Okada
Executive Officer, Deputy Director of FP Sales and Marketing and General

Tsuneko Murata (Outside)

Manager of Nagoya BranchToshihiko Suzuki

Etsuhiro Takato (Outside)

Executive Officer, General Manager of Education Planning

Audit & Supervisory
Board Member

Masaya Tanaka

Tax
Accountant

Chisa Hayakawa (Outside)

Executive Officer, Deputy Director of Research and Development andGeneral Manager of Global R&D

Mitsuru Oshio
Keisuke Endo (Outside)

LawyerTax
Accountant

Yoshihiko Okuda (Outside)

See Corporate Governance Report for details. (Japanese only)

Expertise and experience details
Corporate Management: Experience in corporate management / Finance and Accounting: Expertise and experience in corporate finance and accounting / Legal and Risk: Expertise and experience in corporate legal affairs, risk management, BCP, etc. / Global: Overseas experience / ESG/SDGs: Expertise in general sustainability and ESG issues in-

https://www.milbon.com/ja/docs/287f2dad845b561c82f641d3dfe4e88a85d854e7.pdf

cluding environmental, social, and governance issues / R&D: Expertise and experience in R&D and product development in the cosmetics industry / Production and Logistics:
Expertise and experience in manufacturing, production, and logistics management in Japan and abroad / Sales and Marketing: Expertise and experience in sales activities andmarketing / IT and Digital: Expertise and experience in IT utilization, DX promotion, and information security / HR and Labor: Expertise and experience in human resources development, HR strategy, and improving job satisfaction

MILBON INTEGRATED REPORT 2023

60

61

GOVERNANCE

Milbon’s Governance Promotion Framework

The Board of Directors consults the Nominations and Compensation Committees, which are comprised mainly of outside board directors, on proposed compensation amounts, and determines individual compensation amounts after obtaining advice as necessary.
Outside board directors and Audit & Supervisory Board Members shall receive only base compensation, as they are independent fromthe execution of business operations, and compensation linked to performance is not appropriate for them.

Corporate governance system(2) Method of calculating compensation for board directors (excluding outside board directors)

General Meeting of Shareholders
Consultation

Nominations Committee

Consultation

Compensation Committee

Reporting,agenda proposal

Governance Committee

Reporting

Reporting

Audit

Reporting

Risk Management Committee

Recommendation<Performance indicator> Consolidated net sales: Weight 60% / Consolidated operating income: Weight 30%/ Consolidated profit: Weight 10%
Accounting audit

Performance-linked coefficient
ReportingInternal Audit Department

Management Meeting(Chair: Managing Exective Director)

Corporate Administration Department

Over 120%

Over 115%,
less than 120%

Over 110%,less than 115%

Over 105%,less than 110%

Over 100%,less than 105%Over 95%,
less than 100%

Over 90%,less than 95%

Less than 90%

Performance-linked
coefficient

200%

175%

150%

125%

100%

80%

50%

0%

(3) Ratio of each type of compensation, etc.

Business divisions(Bureau of Compliance and Risk Management)

Achievement of targets

Audit, evaluation, guidanceSupervision, instruction
Audit, guidance, support

Company’s shares equivalent to the amount obtained by multiplying the base compensation plus the performance-linked compensation by 20%.

Reporting

Representative Director, President & CEO

Sustainability Committee

mance indicators, performance-linked coefficients, and actual performance-linked compensation are as follows.
3) Stock-based compensation: Stock-based compensation is granted once a year (around May) with a restriction on transfer until retirement of theBusiness Execution Structure(Chair: Representative Director, President & CEO)target multiplied by the weighting ratio, and then multiplying the performance-linked coefficient corresponding to the percentage ofachievement of the target by the performance-linked standard amount corresponding to the position, and is paid in cash. The perfor-

Accounting Auditor

3 (incl. 2 outside audit & supervisory board members)
Appointment, dismissal,
supervision

Supervision, monitoring

Appointment, dismissal

Audit & Supervisory
Board Members

Audit

11 (incl. 5 outside board directors)

BoD resolution, deliberation ofreported matters, business reportyear, performance-linked compensation is calculated by adding up the percentage of achievement of each performance indicator

Audit & Supervisory Board

Board Directors

Report5 members(incl. 3 outside board directors)

2) Performance-linked compensation: In order to raise awareness of the need to improve the Company’s performance in each fiscal

Appointment, dismissal, determination of compensation limit

Board of Directors

Report5 members(incl. 3 outside board directors)

4 members(incl. 1 outside board director)

Appointment, dismissal, determination of compensation limit

1) Basic compensation: The amount of basic compensation is determined in accordance with the board director’s position and paid in cash.

The ratio of each type of compensation, etc. for board directors (excluding outside board directors) is as follows
Basic compensation: Performance-linked compensation = 70% : 30%

Board of Directors and Audit & Supervisory Board composition

Stock-based compensation = (Basic compensation + Performance-linked compensation) x 20%.
Performance-linked compensation for the fiscal year ended December 31, 2022

45%

Percentage of outside board
directors on the Board of Directors

14

60

%

%

Percentage of outside board directors on
Nominations and Compensation Committees

100%

Ratio of female board member(total of Board of Directors and Audit & Supervisory Board)

Fiscal year ended Dec. 31, 2022 (63rd term)

100%

Board of Directors attendance rate
(13 meetings in FY2022)

Audit & Supervisory Board attendance rate
(8 meetings in FY2022)

Board of Directors and Audit & Supervisory Board composition

Male

FemaleInternal Board Members

Actual (million yen)

Achievement (%)

WeightingConsolidated net sales

43,90045,238103.0

60%

Consolidated operating income

7,550

7,551

100.0

30%

Consolidated net income

5,230

5,577

106.6

10%

(Note) Achievement of targets for year ended Dec. 31, 2022: (103.0% × 60%) + (100.0% × 30%) + (106.6% × 10%) = 102.8%

fiscal year ending December 31, 2022

Outside Board Members

Our Board of Directors conducts an annual external survey on the effectiveness of the board, which includes outsourcing questionnaire surveys and interviews with outside board members. The results of these surveys and interviews are shared within the Boardof Directors, and improvement measures are discussed and considered. For an outline of the corporate governance framework in
FY 2023 , please refer to the Corporate Governance Report.

Outline and composition of each committee
Committee

FY2023 Committee members

Number of meetings
in FY2022 / attendance

Principal matters of discussion in FY2022

Nomination Committee

Outside Board Director Taizo Hamaguchi (chair); Representative Director, President& CEO Ryuji Sato; Executive Managing Board Director Masahiro Murai; Outside
Board Director Tsuneko Murata; Outside Board Director Etsuhiro Takato

2 / 100%

Advice on proposed internal organizational framework

Compensation Committee

Outside Board Director Taizo Hamaguchi (chair); Representative Director, President& CEO Ryuji Sato; Executive Managing Board Director Masahiro Murai; Outside
Board Director Etsuhiro Takato; Outside Board Director Chisa Hayakawa

2 / 100%

Consideration of details of basic policy on board
member compensation and deliberation/consideration
for determination of board member compensation

Representative Director, President & CEO Ryuji Sato (chair); Executive Managing
Board Director Masahiro Murai; Board Director Hidenori Sakashita; Outside Board
Director Etsuhiro Takato

1 / 100%

Governance Committee

Target (million yen)

(4) Total amount and number of Board Directors’ and Audit & Supervisory Board Members’ compensation, etc. for the

Board of Directors
Audit & Supervisory
Board

Performance metric

Discussion concerning methods for running the Board of
Directors and Management Meeting

Board Directors / Audit & Supervisory Board Members

Number of
persons

Total amount ofcompensation, etc.
(thousand yen)

Basic compensation

Performance-linked
compensation

Board Directors

13（5）405,007（45,036）

272,615（45,036）

78,600（ー）

Audit & Supervisory Board Members

3（2）

48,012（16,008）

48,012（16,008）(including Outside Board Directors)(including Outside Audit & Supervisory Board Members)

Restricted stockcompensation

Total (non-monetary)

351,215

53,792（ー）

53,792

Succession plan
The Company considers succession planning for the CEO
as one of its most important management strategies. Since
2015, we have been implementing a unique CEO successor
development program, which aims to cultivate potential candidates for the next CEO position. Under this program, a totalof 42 candidates have been selected and divided into fourgroups, each undergoing a two-year program starting fromMILBON CORPORATE UNIVERSITY (MCU)
Next Management Leadership Development Program
Period:Two-year program (2015–2019 Medium-Term Management Plan: 1st to 4th programs)

Purpose:To provide growth opportunities for future executives through sessions with board
members, ranging from inheriting the corporate philosophy to fostering future visionand strategic thinking abilities, enabling them to take on leadership roles

Theme:

Continuity and Change

Enlightening
points:Penetration of corporate philosophy, self-awareness, future orientation, foresight, and execution power

future CEO. Each board director serves as a lecturer in theirCompleted byrespective jurisdiction and area of expertise, ensuring active(1) Basic policy for board director compensation

Total (monetary)*1. Amounts of compensation paid to board directors include compensation paid, during terms of office, to two board directors who left the board at the conclusion of the 62nd Ordinary General Meeting of Shareholders on March 29, 2022. 2. Cashcompensation for board directors of an amount up to 500 million yen (up to 70 million yen for outside board directors) per year was approved at the 62nd Ordinary General Meeting of Shareholders on March 29, 2022. Amounts do not include
remuneration received by board directors who also serve as employees of the company. The number of board directors at the conclusion of the 62nd Ordinary General Meeting of Shareholders was 11 (including five outside board directors). 3. Stockcompensation for board directors of a value up to 100 million yen, but a quantity of no more than 100,000 shares, per year was approved at the 60th Ordinary General Meeting of Shareholders on March 26, 2020. The number of board directors at theconclusion of the 60th Ordinary General Meeting of Shareholders was nine (including two outside board directors). 4. Compensation for Audit & Supervisory Board members of an amount up to 70 million yen per year was approved at the 56th Ordinary
General Meeting of Shareholders on March 17, 2016. The number of Audit & Supervisory Board members at the conclusion of the 56th Ordinary General Meeting of Shareholders was three (including two outside Audit & Supervisory Board members).

2015. The program focuses on developing and selecting theCompensation for board members

Amount of compensation, etc. by type (thousand yen)participation and supervision by the Board of Directors. The

Appointment to executive officer

42

Final
examination
2nd year
1st yearpersons
In charge of business division

Compensation for board directors (excluding outside board directors) shall consist of base compensation, performance-linked compensa-

program concluded in 2019, and the selected candidates cur-tion, and stock-based compensation as an incentive to continuously increase corporate value, in order to encourage each board director

rently hold positions as department heads within the compa-

to perform his/her duties with an awareness of business performance and sustainable improvement of corporate value.

ny. Going forward, we will further narrow down the candidates and formulate a future development plan, continuing the process of selecting the next CEO.

MILBON INTEGRATED REPORT 2023

62

Next succession program (under deliberation)

63

004

P66

PERFORMANCE
Milbon’s Performance Data

P68

Financial Highlights

Non-Financial Highlights

Financial summary of operating results, pershare information, financial indicators, andother information for the 11-year period 2012
to 2022

Quantitative data for the 3-year period 2020 to2022 from the perspectives of people and soci-

P70

P71

Company Overview and Stock
Information
Company overview and stock information

Click to jump to the relevant pageety, environment, and governance

External Assessments andParticipating Organizations,etc.
Cooperationand society

withexternal

assessments

004

PERFORMANCE

Financial Highlights*1: FY2017 was irregularly closed, and the financial figures are for the 12 months and 11 days from December 21, 2016 to December 31,
2017. In addition, upon consolidation, the figures for overseas consolidated subsidiaries are based on the non-consolidated financial figures
for the 15-month period from October 1, 2016 to December 31, 2017.
*2: Effective from the beginning of FY2019, the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ)PERFORMANCEStatement No. 29, March 30, 2018) and the Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 30,2018) were adopted early, and FY2018 amounts were retrospectively applied.
*3: Earnings per share and net assets per share have been retroactively adjusted for the three stock splits during the below period. The
relevant stock splits are as follows (1) 1.1 for 1 stock split on December 21, 2010; (2) 1.2 for 1 stock split on December 21, 2013; and (3) 2
for 1 stock split on January 1, 2018.

Financial summary of operating results, financial indicators, etc. for the 11-year period from2012 to 2022

Operating results (million yen)
Net Sales
Gross profit
Operating income
Ordinary income
Profit attributable to owners of parent
Net assets
Total assets
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Depreciation
Capital expenditure

2012

2013

2014

2015

2016

2017 *1

2018 *2

2019

2020

2021

2022

21,887
14,833
3,986
3,735
2,128
20,367
23,662
2,977(1,506)
(910)
952
840

23,82916,174
4,302
4,059
2,516
22,14926,321
3,511(1,198)(1,387)882
1,680

25,226
17,281
4,451
4,218
2,621
24,10428,1382,766(1,236)(1,052)
1,008
1,028

27,377
18,681
4,727
4,427
2,950
26,21230,7993,895(2,834)(1,135)
1,038
2,779

29,134
20,100
5,113
4,733
3,069
27,70632,4443,355(4,366)(1,262)
1,083
4,262

33,456
22,797
5,345
4,997
3,817
31,10337,642
4,346(1,919)(1,317)
1,278
1,570

33,882
22,189
6,260
5,811
4,495
33,151
39,634
6,487(1,202)(1,639)
1,380
1,149

36,26623,711
6,751
6,231
4,517
35,882
41,912
4,486(2,777)(1,869)
1,493
1,605

35,72523,385
6,394
5,791
4,204
36,30843,075
6,548(161)(3,416)
1,609
1,917

41,582
27,498
7,817
7,158
5,109
40,197
48,2386,636(3,995)(1,919)
1,777
4,644

45,23829,509
7,551
7,829
5,577
43,991
52,760
5,008(3,865)(2,578)
2,026
4,097

64.35
615.8427.50

63.69
563.4828.33

80.03
736.0534.00

90.10
800.51
37.00

93.73
846.1639.00

116.58949.9946.00

137.31
1,012.58
54.00

137.99
1,096.02
56.00

129.24
1,117.10
56.00

157.17
1,236.41
68.00

171.491,352.52
86.00

86.1
10.8
9.2
67.8
18.2
17.1
9.7
42.7

84.1
11.8
10.1
67.9
18.1
17.0
10.6
37.1

85.7
11.3
9.6
68.5
17.6
16.7
10.4
42.5

85.1
11.7
10.0
68.2
17.3
16.2
10.8
39.3

85.4
11.4
9.7
69.0
17.6
16.2
10.5
41.6

82.6
13.0
10.9
68.1
16.0
14.9
11.4
39.5

83.6
14.0
11.6
65.5
18.5
17.2
13.3
39.3

85.6
13.1
11.1
65.4
18.6
17.2
12.5
40.6

84.3
11.6
9.9
65.5
17.9
16.2
11.8
43.3

83.3
13.4
11.2
66.1
18.8
17.2
12.3
43.3

83.4
13.2
10.6
65.2
16.7
17.3
12.3
50.2

11,0698,820
1,678

12,616
9,288
1,623

14,597
8,817
1,520

16,1959,506
1,410

17,7119,892
1,260

19,511
12,095
1,569

20,222
11,857
1,544

318

301

291

264

270

279

257

21,32812,994
1,515
165
263

21,135
12,594
1,372
360
262

24,466
14,813
1,449
579
273

26,312
16,631
1,450
572
272

6.4
359
(24)
184
(51)
451
30
407
(1)

7.9
435
1
281
(63)
703
141
461
(136)

10.4
482
(32)
430
(23)
1,099
192
600
(165)

12.8
642
80
665
149
1,425
383
763
(267)

13.2
571
(19)
737
81
1,603
229
934
(233)

16.4
736
(36)
1,208
231
2,440
534
1,089
(315)

15.7
632
(49)
1,368
320
2,064
515
1,246
(168)

16.2
657
(252)
1,488
343
2,334
678
1,377
(195)

16.4
464
(302)
1,528
292
2,543
645
1,307
(230)

19.1
905
(561)
2,148
449
3,368
1,109
1,487
(20)

21.9
1,328
(168)
2,114
(9)
4,159
1,351
2,301
184

Per-share information (yen) *3
Earnings per share
Net assets per share
Dividends per share

Financial indicators (%)
Equity ratio
Return on equity (ROE)
Return on assets (ROA)
Gross profit margin
Operating margin
Ordinary margin
Net profit margin
Dividend payout ratio (Consolidated)

Sales by category (million yen)
Haircare products
Hair coloring products
Permanent wave products
Cosmetic products
Other

Overseas sales and operating income (million yen)Overseas sales ratio (%)
United States (net sales)
United States (operating income)
China (net sales)
China (operating income)South Korea (net sales)
South Korea (operating income)
Other overseas (net sales)
Other overseas (operating income)MILBON INTEGRATED REPORT 2023

66

67

PERFORMANCE

Non-Financial Highlights

2020

2021

2022

CO2 emissions *Total emissions (t-CO2)

3,912

4,129

2,888

Milbon Co. Ltd.

CO2 emissions *Within total emissions, Scope 1 (t-CO2)

1,205

1,300

1,357

Milbon Co. Ltd.

CO2 emissions *Within total emissions, Scope 2 market-based (t-CO2)

2,707

2,829

1,531

Milbon Co. Ltd.

CO2 emissions *Within total emissions, Scope 2 location-based (t-CO2)

2,680

2,800

1,558

Milbon Co. Ltd.

471

503

530

Milbon Co. Ltd. manufacturing plant

CO2 emissions *Within total emissions, Scope 2 market-based (t-CO2) *Manufacturing plant

1,739

1,560

450

Milbon Co. Ltd. manufacturing plant

CO2 emissions *Within total emissions, Scope 2 location-based (t-CO2) *Manufacturing plant

1,768

1,783

504

Milbon Co. Ltd. manufacturing plant

Manufacturing plant emissions as a percentage of Milbon Co., Ltd. emissions (%) *Manufacturing plant

56.5

51.5

33.9

Milbon Co. Ltd. manufacturing plant

Electricity consumption - Total ('000 kWh)

6,190

6,518

6,990

Milbon Co. Ltd.

Electricity consumption - Purchased electricity ('000 kWh)

6,190

6,466

6,895

Milbon Co. Ltd.

Electricity consumption - In-house power generation ('000 kWh)

0

51.8

94.9

Milbon Co. Ltd.

0

0

3,312

Milbon Co. Ltd.

CO2 emissions *Within total emissions, Scope 1 (t-CO2) *Manufacturing plant

Quantitative data for 2020 - 22 from an ESG perspective
2020

2021

2022

Target Company

Diversity & Inclusion
1,038

1,097

Milbon GroupElectricity consumption - Renewable energy ('000 kWh)54.2/45.8

53.3/46.7

51.7/48.3

Milbon Group

Total energy consumption (KL: crude oil equivalent)

2,134

2,249

2,383

Milbon Co. Ltd.

780

810

842

Milbon Co. Ltd.

Total energy consumption - Intensity (KL: million yen)

0.071

0.067

0.059

Milbon Co. Ltd.

59.1/40.9

58.1/41.9

56.7/43.3

Milbon Co. Ltd.

City gas consumption (km³)

240

264

276

Milbon Co. Ltd.

Gasoline consumption (kL)

288.5

307.1

293.3

Milbon Co. Ltd.

Average length of service (years)

10.8

10.3

10.8

Milbon Co. Ltd.

Heavy oil consumption (kL)

0

0

0

Milbon Co. Ltd. manufacturing plant

Average age

35.3

35.2

35.5

Milbon Co. Ltd.

Light oil consumption (kL)

0.425

0.069

0

Milbon Co. Ltd. manufacturing plant

63

62

70

Milbon Co. Ltd.

Kerosene consumption (kL)

0

0

0

Milbon Co. Ltd. manufacturing plant

Ratio of male/female hires (%) *Permanent employees, non-consolidated

36.5/63.5

35.5/64.5

48.6/51.4

Milbon Co. Ltd.

Gender pay gap (%) *Permanent/non-permanent employees

70.5/46.0

70.3/47.2

72.0/52.9

Milbon Co. Ltd.

Gender pay gap (%) *All workers

66.4

66.6

68.6

Milbon Co. Ltd.

Yearly turnover rate among new graduates within 3 years (%) *1

14.3

10.2

6.0

Milbon Co. Ltd.

Waste volume (t)Water resources

Ratio of male/female employees (%) *Permanent employees, consolidated
Number of employees *Permanent employees, non-consolidated
Ratio of male/female employees (%) *Permanent employees, non-consolidated

Number of hires *Permanent employees, non-consolidated

Air emissions
Nox (t)---Milbon Co. Ltd. manufacturing plant

Sox (t)0

0

0

Milbon Co. Ltd. manufacturing plant

408.1

523.0

415.5

Milbon Co. Ltd. manufacturing plant

Water intake - Total (m³)

40,44547,21950,261

Milbon Co. Ltd. manufacturing plant

Water supply - Third-party water sources (m³)

40,44547,21950,261

Milbon Co. Ltd. manufacturing plant

0

0

0

Milbon Co. Ltd. manufacturing plant

Waste

84.3/15.7

84.8/15.2

65.7/34.3

Milbon Co. Ltd.

3.3

3.6

5.1

Milbon Co. Ltd.

Turnover rate for management and non-management employees (%)

6.2/2.8

4.2/3.5

3.0/5.6

Milbon Co. Ltd.

Turnover for reasons other than mandatory retirement *Management/non-management (%) *2

0.9/2.3

0.0/2.9

0.8/3.8

Milbon Co. Ltd.

Water consumption (m³)

40,44547,21950,261

Milbon Co. Ltd. manufacturing plant

9.5

9.0

10.3

Milbon Co. Ltd.

Water consumption - Intensity (m³/million yen)

1.354

1.404

1.247

Milbon Co. Ltd. manufacturing plant

Water discharge by destination - Total (m³)

23,454

26,21429,992

Milbon Co. Ltd. manufacturing plant

Sewage - Wastewater to third party (m³)

23,454

26,21429,992

Milbon Co. Ltd. manufacturing plant

Other (m³)

0

0

0

Milbon Co. Ltd. manufacturing plant

Number of national statutory violations relating to water intake/discharge

0

0

0

Milbon Co. Ltd. manufacturing plant

Ratio of new graduate/mid-career hires (%)
Turnover rate for total employees (%)

Ratio of female employees in management positions (%)

Other (m³)

Annual working hours (average hours/employee)

2,116

2,152

2,065

Milbon Co. Ltd.

Annual scheduled working hours (average hours/employee)

1,900

1,900

1,900

Milbon Co. Ltd.

Ratio of paid leave taken (%)

59.4

59.2

64.0

Milbon Co. Ltd.

Proportion of employees who took childcare leave (male/female) (%)

12.5/100

19.3/100

20.0/100

Milbon Co. Ltd.

Pollution load

Return rate following childcare leave (male/female) (%)

100/100

100/100

100/96.9

Milbon Co. Ltd.

BOD (t)

4.7

5.9

4.2

Milbon Co. Ltd. manufacturing plant

Number of employees working shortened hours for childcare

23

23

30

Milbon Co. Ltd.

SS (t)

2.2

6.2

3.4

Milbon Co. Ltd. manufacturing plant

Number of employees taking paid leave for family care

153

145

175

Milbon Co. Ltd.

n-HEX (t)

1.9

1.4

1.4

Milbon Co. Ltd. manufacturing plant

1,054

1,219

Milbon Co. Ltd. manufacturing plant

2021

2022

Plastic0

0

0

Milbon Co. Ltd.

2.34

2.13

2.16

Milbon Co. Ltd.

Number of people with disabilities engaged in work outside their facilities under supported employment

20

20

23

Milbon Co. Ltd.

Board of Directors

Number of rehired employees

19

23

25

Milbon Co. Ltd.

Number of Internal Board Directors

7

6

6

Milbon Co. Ltd.

Number of Outside Board Directors

2

3

5

Milbon Co. Ltd.

Ratio of Outside Board Directors (%)

20

33

45

Milbon Co. Ltd.

Ratio of female Board Directors (%)

0

11

18

Milbon Co. Ltd.

Number of Board of Directors meetings

13

14

13

Milbon Co. Ltd.

99

99

100

Milbon Co. Ltd.

Number of employees working shortened hours for family care
Ratio of employees with disabilities (%)

Consumption (t)

940

2020

Target Company

35/4.351/5.964/7.1

Milbon Co. Ltd.

Number of occupational accidents *Lost time injuries

0

1

1

Milbon Co. Ltd.

Number of occupational accidents *Fatal accidents

0

0

0

Milbon Co. Ltd.

Ratio of employees participating in health checkups (%)

98.0

99.6

99.2

Milbon Co. Ltd.

Attendance rate at Board of Directors meetings (%)

Ratio of employees participating in stress checks (%)

95.7

93.4

93.8

Milbon Co. Ltd.

Audit & Supervisory Board

Education and training expenses per employee (yen)84,742

103,773

120,458

Milbon Co. Ltd.

Number of Standing Audit & Supervisory Board Members

1

1

1

Milbon Co. Ltd.

Education and training hours per employee (hours)

103.8

86.1

72.9

Milbon Co. Ltd.

Number of Outside Audit & Supervisory Board Members

2

2

2

Milbon Co. Ltd.

Number of Audit & Supervisory Board meetings

8

8

8

Milbon Co. Ltd.

100

100

100

Milbon Co. Ltd.

Number of temp staff / ratio compared to permanent employees (%) *Non-consolidated

Educational Support for Hairstylists

Attendance rate at Audit & Supervisory Board meetings

Total number of users of educational events/seminars/videos
Number of registered education:iD members

163,476

210,608

187,108

Milbon Co. Ltd.

-

8,786

23,069Milbon Co. Ltd.

Donation Activities (thousands of yen)

GovernancePeople and society

Environment

975

Number of employees *Permanent employees, consolidated

Nominations and Compensation Committees
Number of Nominations and Compensation Committee meetings

1

2

2

Milbon Co. Ltd.

Ratio of Outside Board Directors (%)

66

75

83

Milbon Co. Ltd.

Number of whistleblowing reports

0

0

7*¹

Milbon Co. Ltd.

Number of harassment reports

3

3

2

Milbon Co. Ltd.

Number of cases subject to legal measures regarding corruption/bribery

0

0

0

Milbon Co. Ltd.

Political donations - total (thousands of yen)

0

0

0

Milbon Co. Ltd.

Fines, etc. associated with corruption (thousands of yen)

0

0

0

Milbon Co. Ltd.

Number of employees dismissed for violating employment regulations

0

0

0

Milbon Co. Ltd.

96.1

93.6

93.3

Milbon Group

6,744

7,018

8,354

Milbon Co. Ltd.

1

0

1

Milbon Co. Ltd.

Compliance

1,118

1,043

1,253

Milbon Co. Ltd.

JHD&C (NPO)

99

117

126

Milbon Co. Ltd.

Ashinaga Foundation

696

813

645

Milbon Co. Ltd.

1,500

1,500

-

Milbon Co. Ltd.

Iga Koikukai (Social Welfare Corporation)

-

-

50

Milbon Co. Ltd.

Japan Platform (Specified Nonprofit Corporation)

-

-

-

Milbon Co. Ltd.

Other compliance

1,000

2,299

-

Milbon Co. Ltd.

Compliance awareness survey response rate (%)

Quality assurance
Number of submissions*2 from customers

Save the Children Japan

Kansai University (Educational Corporation)

KIDS EARTH FUND (NPO)
Support for Ukraine
Other donations including research and development grants
Other

-

-

14,403

Milbon Co. Ltd.

1,100

50

-

Milbon Co. Ltd.

30

30

130

Milbon Co. Ltd.

*1. FY2022 example: Percentage of those joined 4/1/2019 who departed by 4/1/2022*2. Includes voluntary departures and departures due to death, dismissal, and expired sick leave or other period of absence

MILBON INTEGRATED REPORT 2023

Target Company

Energy68

Number of voluntary recalls*1. Increase due to establishment of external reporting/consultation counter and implementation of awareness-raising activities*2. Submissions include inquiries, requests, suggestions, and feedback
For quantitative data prior to FY2019, please refer to https://www.milbon.com/ja/ir/management/esg.html
https://www.milbon.com/en/ir/management/esg.html

69

INFORMATIONINFORMATION

Company Overview and Stock Information
Company overview

As of December 31, 2022

Stock information

Trading Name :Milbon Co., Ltd.

Established :July 1960

Capital :2.0 billion yen

Number of

Non-consolidated – 842

employees :Consolidated - 1,097

Head Office :Kyobashi Edogrand, 2-2-1 Kyobashi,

Listed Stock Exchange: Prime Market,

Chuo-ku, Tokyo
Central Research

2-3-35 Zengenji-cho, Miyakojima-ku,

Institute :Osaka-shi, Osaka

Branches :Saitama / Tokyo Aoyama / Tokyo Ginza /Shareholding ratio by
type of shareholder
27.36%

Stock code :		 4919

Financial instruments
business operators

Individuals and others

26.33%

0.86%

Other companies

12.68%

Number of shares outstanding :		 33,117,234
Number of shareholders :		 14,580

Financial institutions

32.77%

Nagoya / Osaka / Hiroshima / Fukuoka
Sales Offices :Principal shareholders (Top 10)

Sapporo / Sendai / Niigata / Jingumae /Yokohama / Kanazawa / Shizuoka / Kyoto /Kobe / Okayama / Matsuyama / Kumamoto
Yumegaoka Factory / Thailand Factory /Factories :China Factory
Subsidiaries :Shareholder

Number of shares held

Shareholding ratio

The Master Trust Bank of Japan, Ltd.

5,783,600

17.78 %SSBTC CLIENT OMNIBUS ACCOUNT

2,571,867

7.91 %

Milbon Korea Co., Ltd.

Konoike Asset Management Company

1,920,000

5.90 %MILBON (THAILAND) CO., LTD.

Custody Bank of Japan, Ltd. (Trust account)

1,683,000

5.17 %MILBON VIETNAM CO., LTD.

SMBC Trust Bank Ltd. Designated Securities Trust

1,328,000

4.08 %MILBON SINGAPORE PTE. LTD.

MILBON Cooperating Companies Shareholding Association

1,004,056

3.09 %

Kazunobu Konoike

865,718

2.66 %MILBON Employee Stock Ownership Association

605,320

1.86 %

Keiko Murai

483,624

1.49 %

Maiko Kitajima

482,424

1.48 %MILBON USA, INC.
Milbon Trading (Shanghai) Co., Ltd.

MILBON MALAYSIA SDN. BHD.

Milbon (Zhejiang) Cosmetics Co., Ltd.
Milbon Europe GmbH
Affiliated Company : Kosé Milbon Cosmetics Co., Ltd
Representative

Taiwan / Hong Kong / Turkey / Indonesia /Offices :Philippines

External assessments

Foreign institutions and individualsTokyo Stock Exchange

Total number of shares authorized :		 120,408,000

External Assessments and Participating Organizations, etc.

Our unique business model
wins the Porter Prize

EcoVadis Sustainability Rating:
SilverMilbon was awarded the Porter Prize 2020,

EcoVadis ratings evaluate a company’s

Milbon has been recognized as a Certi-

a program sponsored by the School of In-

sustainability efforts according to 21 CSR

fied Health & Productivity Management

ternational Corporate Strategy, Hitotsub-

criteria across four themes—Environ-

Outstanding Organization for 2023 un-ashi University Business School. Since ourment, Labor & Human Rights, Ethics, andder a program run by Japan’s Ministry of

establishment in 1960, we have been con-Sustainable Procurement—for the pur-

Economy, Trade and Industry (METI) andsistently focused on stylists and salons. Rev-

pose of promoting sustainability within

the Nippon Kenko Kaigi. Following onenues have increased for 23 consecutive

global supply chains. More than 100,000

from 2022, this is the third year in a row

years since the Company’s listing to 2019,

companies spanning 200 industries inthat Milbon has been recognized. We will

and Milbon has been recognized for the

175 countries and regions have been

continue efforts in the area of health anduniqueness of its business strategy whichassessed to date. Milbon was awarded

productivity management as a way of in-supports this level of growth and maintains

a Silver rating, placing it in the top 25%

vigorating and motivating the workforce.

high profitability. Going forward, we willof all companies evaluated. We received

continue to use a business model focusedparticularly high marks for Labor &on stylists and salons and contribute to en-

Human Rights.

Recognized as a Certified Health& Productivity Management Outstanding Organization for 2023

riching society through beauty.

*Shareholding ratio is calculated excluding treasury stock (591,511 shares).

Cooperation with society
Share price and trading volume(yen)

Share price

7,000

Trading volume(Number of shares)

6,000,000

4 - 1421 - 22 - 100 - 01

Nations

Ordinary member of the Roundtable on Sustainable Palm Oil(RSPO)

Support for TCFD recommendations and TCFD Consortium
membership

Milbon endorsed the United Nations

In March 2022, Milbon was approved as

In January 2023, Milbon declared its

Global Compact (UNGC) proposed byan Ordinary Member of the Roundtablesupport for the recommendations of thethe United Nations and signed it in May

on Sustainable Palm Oil (RSPO), an organi-

Task Force on Climate-related Financial

2020. UNGC is a voluntary initiative inzation initiated by concerned groups that

Disclosures (TCFD) and became a mem-

which companies and organizations partic-

include the World Wildlife Fund, among

ber of the TCFD Consortium, a Japanese

ipate in the creation of a global framework

others. Milbon has also been a member oforganization comprised of corporations

for sustainable growth by acting as good

the Japan Sustainable Palm Oil Network

supporting

members of society through responsible(JaSPON), participating in information ex-

Milbon views action on climate change

leadership. Based on its own basic sustain-change and other activities, since January

as a pressing issue for management andability policy, Milbon supports the UNGC’s2020.

has incorporated it into the Five Key

10 principles related to human rights, la-*Check out our progress at www.rspo.org

Challenges for achieving sustainability.

Joined the United
Global Compact

6,000

4,800,000
5,000

4,000

3,600,000

3,000
2,400,000
2,000

1,200,000
1,000

2018

MILBON INTEGRATED REPORT 2023

2019

2020

2021

70

2022

2023

TCFD

recommendations.

bor, environment, and anti-corruption as

We set goals and implement initiatives

a participating company that works withaimed at lowering our environmental im-

salons and haircare professionals to solve

pact and proactively disclose informationsocial issues, thereby contributing to theto all stakeholders.

realization of a sustainable society.

71