Milbon Co., Ltd.
FY2017 Third Quarter (December 21, 2016 – September 20, 2017)

Financial Results Presentation Materials

September 29, 2017
Copyright © 2017 Milbon. All rights reserved.

Table of Contents
P2

Consolidated Operating Results

P3-8

Consolidated Sales by Product Category

P9

Consolidated Statement of Earnings

P10

Consolidated Trends in Capital Expenditures and R&D Expenses

P11

Trends in Market Related Data, Trends in FPs

P12

Outlook of Milbon GroupP13-14 Outlook of Overseas Subsidiaries

Copyright © 2017 Milbon. All rights reserved.

1Consolidated Operating Results (FY2017 9 months)
Steady progress toward achieving FY targets(Unit: million yen)AmountFY2016
9 months

FY20179 months

Increase/
Decrease ratio(%)

Increase/
Decrease

Net sales

21,424

22,8391,415

6.6

Gross profit

14,761

15,511

749

5.1

SG&A expenses

10,916

11,616700

6.4

Operating income

3,845

3,894

49

1.3

Ordinary income

3,495

3,665

170

4.9

Profit attributable toowners of parent

2,370

3,136766

32.3

Copyright © 2017 Milbon. All rights reserved.

2

Consolidated Sales by Product Category [Hair Care Product]
Sales recovered steadily, mainly with premium brands(FY2017 9 months)(Unit: million yen)

FY2016 9 months

FY2017 9 months

12,760

Increase/Decrease

13,210

Increase/Decrease ratio (%)

449

3.5

• Sales have been steady for the premium brands Aujua and “milbon.” Sales of new products in professional brands were
not as expected.

NewElujuda
Mellow Serum/Limber Serum

PLARMIA
Enriched

Leave-in treatment for developing hair one
can lightly run fingers through and is easily
managed from the roots.

Shampoo and treatment that provide the feelingof elasticity demanded by women in their 50swho are no longer satisfied with simple
moisturizing.
(Unit: million yen)

(Unit: million yen)
FY target

Results

Prog. rate

600

307

51.3％
％

Copyright © 2017 Milbon. All rights reserved.

Mar. 30 Debut

3FY target

Results

Prog. rate

500

202

40.6％
％

Mar. 1 Debut

A Premium Brand, Aujua
Secured an increase in sales while holding off on product updates
Number of Aujua salons
FY2016 year-end

FY2017 Q3-end

2,779 salons

2,991 salons

Sales (FY2017 9 months)
FY2016 9 months

Increase/Decrease ratio(%)

7.6(Unit: million yen)

FY2017 9 months

3,426

A tailor-made hair care program that nurtures beauty of each and everyone

Increase/
Decrease ratio
(%)

3,662

6.9

Trends in sales & number of salons(Million yen)

3,500

5,000

3,000

Brand concept

Product range

4,000

A hair care brand that nurtures thebeauty of Japanese women’s hair,born from the climate, culture andhair characteristics of Japan

A wide-ranging line-upthat suits the hair textureof individual customers
・4 series

3,000

What is Aujua?

Aging care series
Hair care series
Scalp care series
Climatic care series

A hair care series that responds tohair concerns by creating andevolving a program just for one
individual. This is Aujua.

2,500
2,000
1,500

2,000

1,000

1,000500

00販売高
Sales・15 lines ・96 items

Copyright © 2017 Milbon. All rights reserved.

(Number of salons)

6,000

4

Numberof salons
取引件数

A Premium Brand, “milbon”
Rolled out overseas in 8 countries

Brand concept
A system hair care brand that cultivates the “unique beauty” ofeach individual, with 360°shiny hair

What is “milbon”?
We conducted an in-depth analysis of the inner structure ofthe hair of women from 20 countries around the world, using
our proprietary CT scanning technology, and discovered SSVs
(Sticked-Shaped Voids). SSVs are hollow, tubular gaps thatform in damaged hair. Accordingly, we developed a hair careline containing ingredients capable of repairing such hollowed
out hair and increasing the density within each strand of hair.
“milbon” is a system hair care product for developing shiny,
beautiful hair from the core.

Number of salons
FY2017 Q3-end・・・・・・・・・・・・・・・3,733 salons

360° BEAUTIFUL HAIR

FY2017 9 months・・・・・・・・・・1,054 million yen

Launched in FY2016—rolled out
consecutively in 12 countries worldwide

SalesCopyright © 2017 Milbon. All rights reserved.

5

Consolidated Sales by Product Category [Hair Coloring Product]
New products aimed at the young demographic were well received,
driving sales of hair color products(FY2017 9 months)(Unit: million yen)

FY2016 9 months

FY2017 9 months

7,529

Increase/Decrease

8,360

Increase/Decrease ratio (%)

831

11.0• We introduced a new brand, “ORDEVE Addicthy,” to respond to the desires of women who want to continue to display freedom in their
hair color design. Sales have significantly exceeded annual targets, thanks to a positive reception for its ability to easily express color
by eliminating red tones.

NewORDEVE
Addicthy

ORDEVE’s additional color
FEMININITY LINE

Erases red-tinged brown with high saturation
blue. With clear and transparent color
expression, it lets customers freely realize
individual hair color designs.
(Unit: million yen)

Expresses stylish femininity to suit eachindividual through “transparent pink” withadjustable saturation.
(Unit: million yen)

FY target

Results

Prog. rate

755

1,497

198.4%

Copyright © 2017 Milbon. All rights reserved.

Feb. 1 Debut

6FY target

Results

Prog. rate

400

18345.9%

Feb. 1 Debut

A Premium Organic Brand, Villa Lodola (1)Villa Lodola Color continues to be well received and to drive sales

Number of Villa Lodola salons
FY2016 year-end

5,632 salons

FY2017 Q3-end

6,524 salons

Sales (FY2017 9 months)
FY2016 9 months

15.8(Unit: million yen)

FY2017 9 months

572

Increase/
Decrease ratio
(%)

696

Increase/
Decrease ratio(%)

Trends in sales & number of salons(Million yen)

12,0001,000

10,000

800

8,000

600

6,000

400

4,000200

2,000

21.6

Brand concept
Nurtured in the soil of Italy, these gifts from nature bring out theauthentic beauty of your hair and scalp.

What is Villa Lodola?
Based on the concept of “Beauty, the Organic Way,” Villa Lodola is atrue organic brand that thoroughly cares about the naturalenvironment not only for the product itself but also in its container,
production phase and promotional tools. All of the products are
certified by ICEA, an Italian authority.
Villa Lodola supports organic choices, with hair care products
nurtured in the soil of Italy, bringing out true beauty.

Copyright © 2017 Milbon. All rights reserved.

(Number of salons)

1,20000
2012

2013

2014
Sales
販売高

72015

2016

target2017目標Number of salons
取引件数

A Premium Organic Brand, Villa Lodola (2)Core Product
Villa Lodola ColorWith 92% natural ingredients, the product’s
formulation utilizes the power of plants. It
brings comfort of an organic product acrossall aspects, including during application, the(Unit: million yen)finish and continued use.
FY2016 9 months

FY2017 9 months

Increase/Decrease
ratio (%)

37349332.3

FY2015 Debut* Previously, the rate of progress toward achieving FY targets was indicated, but from the third quarter of FY2017,
year-on-year comparisons are shown.

Copyright © 2017 Milbon. All rights reserved.

8

Consolidated Statement of Earnings (FY2017 9 months)(Unit: million yen)Amount
FY20169 months

FY20179 months

Increase/
Decrease

Increase/
Decreaseratio (%)

Sales

21,424

22,8391,415

6.6

Cost ofsales

6,663

7,328665

10.0

Gross profit

14,761

15,511

749

5.1

SG&A
expenses

10,916

11,616700

6.4

Operatingincome

3,845

3,894

49

1.3

Ordinary
income

3,495

3,665

170

4.9

Profitattributableto owners ofparent

2,370

3,136

Copyright © 2017 Milbon. All rights reserved.

766

32.3

*1

<Breakdown of net sales by product category>(Unit: million yen)
Increase/
Decrease

Increase/
Decrease ratio
(%)

57.9

449

3.5

8,360

36.6

831

11.0

972

1,101

4.8

128

13.2

161

167

0.7

5

3.5

FY20169 months

FY20179 months

Hair careproducts

12,76013,210Hair
coloringproducts

7,529

Permanentwaveproducts
Others% totalsales<Major factors for the increase/decrease>*2*1 Cost of sales: Increase in depreciation and amortization associated with startof operations at new Yumegaoka Plant, etc.
*2 SG&A expenses:• Higher personnel expenses due to an increase in personnel and salary hikes• Increase in R&D expenses due to structural enhancements*3 Profit attributable to owners of parent: Increase due to the sale of a portion ofcross-held shares

Supplemental Info. – Return to shareholders(Unit: yen)<Dividends>
FY2015*39FY2016

FY2017 planEnd of 2Q

353840End of FY

394042Total

747882

Consolidated Trends in Capital Expenditures and R&D Expenses(Unit: million yen)

FY2013

FY2014FY2015FY2016FY2017
Jan.–Sep.

FY2017
Plan*)

1,680

1,028

2,779

4,262

877

1,760

878

1,004

1,033

1,077

818

1,240

Amount

969

1,168

1,214

1,232

979

1,372

% to sales

4.1%

4.6%

4.4%

4.2%

4.3%

4.2%

Category
Capitalexpenditures
Depreciation andamortization
R&D exp.

FY2017 CAPEX Main Items• Development expenses for sales management system• Establishment of a new domestic base (Shizuoka Sales Office)• Interior, equipment, etc., due to relocation of domestic bases(Fukuoka Branch, Okayama Sales Office, Yokohama Sales Office)*) Figures reflect the revision of operating forecasts announced on February 24.
Copyright © 2017 Milbon. All rights reserved.

10Trends in Market Related Data, Trends in Fieldpersons (FPs)
Market trends (Japan)
2012

2013

2014

2015

Number of salons(salons)

231,134

234,089

237,525

240,299――

Number of hairdressers (people)

479,509487,636496,697504,698――

37,02336,810

Number of beauty
customers(thousand people)

39,076

38,46837,847

2016

37,395

2017

Remarks(As of Apr. 1)

Ministry of Health, Labour and Welfare, Report on Public
Health Administration and Services
Number of beauty salon facilities / number of employees(year-end)
Statistics Bureau, Ministry of Internal Affairs andCommunications:
Population statistics as of October 1st of each year
Population statistics for females aged 15 to 64

Fieldpersons trends (by country)(Number of FPs / As of the beginning of the fiscal year (December 21))20132014

2015

2016

2017

JAPAN
Milbon Co., Ltd.

210216237

249

104104100102

USAMILBON USA, INC.

121212936405363

CHINA
Milbon Trading (Shanghai)Co., Ltd

1617181817253640KOREA
Milbon Korea Co., Ltd.

17171920

41647580

THAILAND
Milbon (Thailand) Co., Ltd3666681514712161963464247Others*)

258

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)

1222 FPs completed training on September 20, 2017*) Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore and others
Copyright © 2017 Milbon. All rights reserved.

1115 FPs will start training on October 2, 2017
1923

924

(The above 37 FPs are not included in the left chart.)

Outlook of Milbon Group
East Asia region continues to drive growth
Sales (million yen)
FY20169 months

Japan
Milbon Co., LtdUSA
MILBON USA, INC

FY20179 months

Increase/
Decreaseratio (%)

Forex rates
Startoperations

FY2016

18,593

19,5805.3

1960444439(0.9)

2004

542669

23.3

2009

KOREA

1,193

1,401

17.52009Milbon Korea Co., Ltd.

THAILAND

618437.6

2013

Milbon (Thailand) Co., Ltd.

Others*)590

664

12.6--114.95

111.42

1 yuan =*) Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore and others
Copyright © 2017 Milbon. All rights reserved.

1 dollar =CHINA
Milbon Trading(Shanghai) Co., Ltd.

FY20171217.56

16.26

1 won =

0.09900.09691 baht =

3.26

3.18

--

Outlook of Overseas Subsidiaries (1)USA (MILBON USA, Inc.)
A styling series was added to the premium brand “milbon.” This line has responded to market needs, and is contributing
to sales growth due to positive market reception and steady sales for the brand overall.
Sales in the distributor category increased 10.4% cumulatively over the nine months, and sales from distributors tosalons grew 30%. Market expansion is progressing steadily.

CHINA (Milbon Trading (Shanghai) Co., Ltd.)
Local distributor staff can now offer solution-oriented proposals such as conducting product seminars and following up
with independent salons. These efforts have contributed significantly to sales growth.
In the direct sales category, Milbon members responsible for education and marketing have held a “Color SpecialistCourse” and a “Management Seminar,” which led to an increase in transactions with top salons in each area. Inquiries
from outside our sales areas are also rising.

KOREA (Milbon Korea Co., Ltd.)
Regular proposals of additional colors for ORDEVE (fashion color) and educational activities are providing uniqueappeal, and the brand continues to perform strongly due to a favorable reception at salons. ORDEVE is driving sales,
together with ORDEVE beauté (gray-hair coloring products).
Aujua, which we began full-scale sales of in the period under review, was very well received in the market. The numberof salons handling the product has increased steadily. The carist system has been incorporated at salons that have agreed
to and adopted our human resources training system, and we are seeing numerous successful examples.

* Figures in the text on pages 13 and 14 are based on local currencies.
Copyright © 2017 Milbon. All rights reserved.

13

Outlook of Overseas Subsidiaries (2)THAILAND (Milbon (Thailand) Co., Ltd.)[Sales division]
Performance has been strong for the premium brand “milbon,” launched in February 2017, which has been acclaimed
for its outstanding finish and luxurious image.
In hair color products, the number of salons handling our products has grown as a result of implementing a new colorstrategy (a three-item set including new product + trend information + technical education) launched simultaneously inJapan, and conducting educational activities to add more variation to hair coloring seminars.

[Production division]
We are building a stable production and shipment system, with production times stabilized at standard levels and nowaste losses caused by mistakes. The local procurement rate for materials and raw materials is also rising, and themanufacturing cost ratio has improved more than planned. We have also pursued streamlining efforts, such as introducing
an automatic labeler instead of applying labels by hand, with the aim of further improving the manufacturing cost ratio.

Copyright © 2017 Milbon. All rights reserved.

14

Statements concerning the future such as the earnings forecasts given in thisdocument are based on information currently in the possession of the Company andon assumptions that the Company considers reasonable.