FY2024 Second Quarter Financial Results Presentation Q&A (Summary)Friday, August 9, 2024, 16：00-17：00
Responses by：Hidenori Sakashita, President and CEO
Masahiro Murai, Managing Executive Director■Results in the Second Quarter1.

Do you plan to utilize all deferred expenses in the second half of this year?
Yes, we plan to utilize all deferred expenses within this fiscal year. Excluding these deferrals, theoperating income for the second quarter is in line with our projections.

2.

Could you provide details on the “Other expenses” listed on page 5 of the presentationmaterial?
It primarily includes depreciation, amortization, and travel expenses.

■Results in the Domestic Market
3.

Do you anticipate the growth rate of domestic sales to continue into the second half of thisyear?
We expect it to continue, allowing us to meet our full-year forecast. Strong sales of haircare products
are anticipated to fully offset the delays in hair coloring products.

4.

Could you provide details on the results and future expectations for the Villa Lodola Color
proposal and the initiative to link hair color with eyebrow color?
Regarding Villa Lodola Color, our Field Persons initiated market expansion efforts this year. They
conducted in-house study sessions in the first quarter and commenced full-scale sales activities in thesecond quarter. While there have been positive outcomes, such as increased touchpoints, repeat
business has been delayed. We plan to boost sales by further promoting hair coloring education forsalons.
For the initiative linking hair color with eyebrow color, although the concept was well received, salons
often use our eyebrow products with other companies’ hair coloring products. The coordination
between our eyebrow and our hair coloring products was not strong enough, resulting in strong salesof eyebrow products but insufficient adoption of our hair coloring products.
In the hair coloring products category, we recognize that while gray color is performing well, there areissues with fashion color. We have already begun internal discussions on the need for a comprehensive
reform in sales strategy, product development, and branding.

5.

You mentioned addressing the product mix issue due to the decreasing sales composition of
hair coloring and the increasing sales of haircare. Could you explain the current profitability
gap between hair coloring and haircare, and when you expect haircare profitability to matchthat of hair coloring?
Previously, there was a gap of about five percentage points between the gross profit margins of haircoloring and haircare. However, in the first half of FY2024, this gap has narrowed to approximately
two percentage points. While haircare profitability will not increase immediately, it is improving due
to strong sales of high value-added products. Notably, the gross profit margin of “Aujua,” our flagshiphaircare brand, is now comparable to that of hair coloring. Recent Aujua products have even higher
gross profit margins due to their high value-added nature. Sales of new products account for about
10% of the Company’s total annual sales. Alongside this focus on new products, we will graduallyenhance the profitability of its haircare business by revising the prices of existing products, whoseprofitability has been declining. These price revisions will be implemented starting next year.

■Results in the Overseas Market
6.

It appears that your business in China has fallen behind your plan in local currency basis. Could
you provide your outlook for the second half of the year?
At the beginning of this year, we projected a 9% year-on-year sales growth in China. However, it has
become challenging to meet this target. Customer visits to hair salons decreased after the Lunar New
Year, impacting our business. Since this is an issue of the macroeconomic environment, it is difficult
to provide a precise growth figure for the second half. Nevertheless, we aim to offset the slowdown
in China with robust performance in Japan and South Korea.

7.

The year-on-year sales growth in the U.S. for the second quarter was +2% in local currency basis.
Was this impacted by economic sentiment?
The financial results in the U.S. tend to show greater volatility on a quarterly basis due to the timingof distributors’ purchases and new product launches. We do not believe this is an effect of economicsentiment.

Disclaimer
This document is a summary or the views of Milbon Co., Ltd. based on questions and answers during
the financial results presentation. Milbon Co., Ltd. makes no guarantee that this information is accurate
or complete and may revise this information without prior notice.
With respect to the business forecasts included in this document, any statement that is not historicalfact is a forward-looking statement based on information available and certain premises that are judged
to be rational at the time of the announcement. Please be aware that actual results may differ from any
forward-looking statements due to risks, uncertainties, and a number of other factors.