Milbon Co., Ltd.
FY2019 Financial Results
Presentation Materials

February 12, 2020
Copyright © 2020 Milbon. All rights reserved.

Table of Contents
P2

Consolidated Operating Results

P3

Consolidated Sales by Product Category

P12

Consolidated Statement of Earnings

P13

Consolidated Trends in Capital Expenditures and R&D Expenses

P14

Trends in Market Related Data, Trends in FPs

P15

Net Sales and Operating Income in Japan and Overseas

P16

Outlook of Overseas Subsidiaries

P19

Appendix

P20

Milbon Group - Initiatives for FY2020 (61st term)

Copyright © 2020 Milbon. All rights reserved.

1

Consolidated Operating Results
 Q4 was below expectations, partly due to a reaction to the front-loaded
increase in demand prior to the tax hike in Q3. Full-year results were slightly
below the target of 0.9%. YoY grew 7%.
 Gain on the sale of cross-share holdings of approx. 0.3 billion yen wasrecorded in the previous fiscal year. None in the current fiscal year.

(Unit: million yen)

Increase/

Increase/
Decrease
Decrease ratio (%)

FY2018 * % total

FY2019 * % total

Net sales

33,882 100.0

36,266 100.0

2,383

7.0

Gross profit

22,18965.5

23,711

65.4

1,522

6.9

SG&A expenses

15,92847.0

16,959

46.8

1,031

6.5

Operating income

6,260

18.5

6,751

18.6

491

7.8

Ordinary income

5,811

17.2

6,231

17.2

420

7.2

Profit attributableto owners of parent

4,495

13.3

4,517

12.5

22

0.5

* The "Accounting Standard for Revenue Recognition," etc., has been adopted since the first quarter of FY2019. The results for Fiscal Year
12/2018 are also retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

2

Consolidated Sales by Product Category [Hair Care Product (1)]Ah Professional Brands Challenge
Premium Brands Continue to Strong,
Sales(Unit: million yen)

FY2018 *20,222

Increase/
Decrease

FY2019 *21,328

Increase/
Decrease ratio (%)

1,105

5.5

• Aujua Eternal Stage Series Diorum Line, launched in March, contributed to sales growth for
Aujua by promoting high-priced menu proposals at salons.
• Sales of the premium-brand milbon grew throughout the year as distributor-led contact
points were established. Efforts to increase sales at existing salons will be an issue for the
future.
• A new brand, CRONNA, was introduced in April. The company was unable to differentiate
itself from premium brands and existing brands and missed targets significantly. From its
brand strategy, the company aims to increase the number of salons under its brand byshifting our deployment focus from the whole brand to each individual product.
• In July, the company launched the Jemile Fran Hair Base Makeup series. The lineup of oil
finishes to meet customer needs, as well as containers and price ranges tailored to thetarget market, contributed to the overall growth of the Jemile Fran brand.
* The "Accounting Standard for Revenue Recognition," etc., has been adopted since the first quarter of FY2019. The results for Fiscal Year
12/2018 are also retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

3

Consolidated Sales by Product Category [Hair Care Product (2)]New Products
FY2019Aujua Eternal Stage Series Diorum Line
Gives a beautiful freshness to hair that is experiencing
aging in a composite manner.
Supports the feelings of women who always want to havebeautiful hair by nurturing fresh, elastic, and shiny hair.
（Unit: million yen）

FY2019 target *800

FY2019 *783

Progress rate (%)

97.9

March 8, 2019 Debut

CRONNA
Simple care that brings comfort and cleanliness to the hair ofbusy adult women
Increase. Supports the desires of women who want their hairto always receive praise for being beautiful.
（Unit: million yen）

FY2019 target *750

FY2019 *352

Progress rate (%)

47.0* Gross sales figures are on a non-consolidated basis
Copyright © 2020 Milbon. All rights reserved.

4

April 10, 2019 Debut

Consolidated Sales by Product Category [Hair Care Product (3)]New Products
FY2019Jemile Fran Hair Base Make Series
Utilizing only ingredients used in skin care, the special designof the styling product comfortably shapes the appearance of
hair.
（Unit: million yen）

FY2019 target *100

FY2019 *127

Progress rate (%)

127.0* Gross sales figures are on a non-consolidated basis
Copyright © 2020 Milbon. All rights reserved.

5

July 10, 2019 Debut

A Premium Brand, Aujua
New product "Eternal Stage Series Diorum Line" drives brand sales
Number of salons
FY2018 *1

3,271

FY2019 *1

3,698

Consolidated Sales
FY2018 *2

6,726

FY2019 *2

7,485

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

What is Aujua

Hair care that supports beauty, now
and into the future, by addressing
each individual’s hair and skinconcerns and choosing the mostappropriate item for that time.
This is Aujua.

(Unit: salons)
Increase/
Decrease

Increase/
Decrease ratio
(%)

427

13.1

（Unit: million yen）

Increase/
Decrease

Increase/
Decrease ratio
(%)

758

11.3

Product range
A wide-ranging line up that suits
the hair texture of individual
customers
・ 5 series
Eternal stage series (new)Aging care series
Hair care series
Scalp care series
Climatic care series
・ 13 lines
・ 86 items

Trends in sales & number of salons
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

Sales

*1 Figures for both Japan and overseas are calculated based on shipments over a one-year period.
*2 Gross sales figures are on a non-consolidated basis.
Copyright © 2020 Milbon. All rights reserved.

6(Number of salons)(Million yen)

Number of salons

A Premium Brand, “milbon”
Growth with more salons both in Japan and overseas
Number of salons
FY2018 *1

5,571

FY2019 *1

7,674

Increase/
Decrease

Increase/
Decrease ratio
(%)

2,103

37.7

Consolidated Sales
FY2018 *2

2,142

FY2019 *2

2,551

Increase/
Decrease

Increase/
Decrease ratio
(%)

408

19.1

Trends in sales & number of salons(Number of salons)(Million yen)

3,500

10,000
9,000

3,000

8,000

Brand concept

What is “milbon”?

2,500

A system hair care brand thatcultivates the “unique beauty”
of each individual, with 360
shiny hair.

We conducted an in-depth analysis of theinner structure of the hair of women from
20 countries around the world, using our
proprietary CT scanning technology, anddiscovered a universal form of hair damage.
Accordingly, we developed a hair care line
containing ingredients capable of repairingsuch damaged hair and increasing thedensity within each strand of hair.
“milbon” is a system hair care product fordeveloping shiny, beautiful hair from the
core.

2,000

6,000

1,500

4,000

Countries with salonsJapan, USA, Hong Kong, China,
Thailand, Taiwan, Turkey,
Malaysia, Vietnam, Indonesia,
the Philippines, Singapore,
Germany

5,000
3,000

1,000

2,000

500

1,000

0

0
2016

*1 Figures for both Japan and overseas are calculated based on shipments over a one-year period.
*2 Gross sales figures are on a non-consolidated basis.
Copyright © 2020 Milbon. All rights reserved.

7

7,000

Sales

2017

2018

2019

2020

Number of salons

Targets

Consolidated Sales by Product Category [Hair Coloring Product (1)]
Ordeve Addicthy continues to grow, with gray colors driving sales by category as an issue(Unit: million yen)

FY2019FY2018 *1

FY2019 *1

11,857

Increase/ Decrease

12,994

Increase/
Decrease ratio (%)

1,137

9.6

• Sales for the fashion color Ordeve Addicthy have continued to grow. A clear segregation between eachseries, Ordeve Addicthy and Ordeve that is strong in brown color variations, has been emerging.
• In gray-hair coloring products, Ordeve Seedil was introduced in June. This is an Ordeve brand that is
achromatic, friendly to the skin, and enables cold color expression. Along with Ordeve Ledress, semipermanent color, that was released in March, we will pursue taking a larger share of the gray-hair coloringproduct market, which is highly competitive.

Core ProductOrdeve Addicthy

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)

FY2018 *2

FY2019 *2

3,034

3,916

Increase/
Decrease

Increase/
Decrease ratio
(%)

881

29.1

FY2017 Debut*1 The "Accounting Standard for Revenue Recognition," etc., has been adopted since the first quarter of FY2019. The results for Fiscal Year 12/2018 are also retroactively applied.
*2 Gross sales figures are on a non-consolidated basis.

Copyright © 2020 Milbon. All rights reserved.

8

Consolidated Sales by Product Category [Hair Coloring Product (2)]New Products
FY2019Ordeve Ledress
Gives color and shine to hair while increasing the density withineach strand of hair.
It supports the needs of customers who want to continue to enjoy asalon color while taking care of their hair.
(Unit: million yen)

FY2019 target *700

FY2019 *454

Achievement (%)

64.9

March 7, 2019 Debut

Ordeve Seedil
A gray-hair coloring product for gentle dyeing. Does not irritate thescalp, allowing adult women who have repeatedly used gray-haircoloring products to continue enjoying and feel secure about haircoloring.
(Unit: million yen)

FY2019 target *800

FY2019 *382

Achievement (%)

47.8* Gross sales figures are on a non-consolidated basis
Copyright © 2020 Milbon. All rights reserved.

9

June 6, 2019 Debut

A Premium Organic Brand, Villa Lodola (1)Growth rate slowed due to inability to launch new products as planned.
Number of salons
FY2018FY2019

8,085

9,015

930

Consolidated sales
FY2018 *1,113

Increase/
Decrease ratio(%)

Increase/
Decrease

11.5（Unit: million yen）

FY2019 *Increase/
Decrease

1,187

Increase/
Decrease ratio(%)

73

6.6 1,400(Number of salons)

1,200

10,000Brand concept

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

What is Villa Lodola?

12,000

1,000

8,000

800

6,000

600

Based on the concept of “Beauty, the Organic Way,” Villa Lodola is a trueorganic brand that thoroughly cares about the natural environment not
only for the product itself but also in its container, production phase andpromotional 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.
* Gross sales figures are on a non-consolidated basis
Copyright © 2020 Milbon. All rights reserved.

Trends in sales & number of salons(Million yen)

10

4,000

400

2,000

200
0

0

Sales

Number of salons

A Premium Organic Brand, Villa Lodola (2)Core Product
Villa Lodola ColorWith 92% natural ingredients, the product’s formulation utilizes thepower of plants. It brings comfort of an organic product across all
aspects, including during application, the finish and continued use.

Consolidated sales（Unit: million yen）

FY2018 *FY2019 *803

Increase/
Decrease

882

Increase/
Decrease ratio
(%)

79

9.9

* Gross sales figures are on a non-consolidated basis
Copyright © 2020 Milbon. All rights reserved.

11

FY2015 Debut

Consolidated Statement of Earnings (FY2019)<Consolidated Statement of Earnings> (Unit: million yen)
FY2018 *

% to
sales

FY2019 *Net sales

33,882100.0

36,266 100.0

Cost of sales

11,693

34.5

12,554<Breakdown of net sales by product category>(Unit: million yen)

% to
sales

34.6

FY2018*FY2019 *% totalsales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

20,222

21,328

58.8

1,105

5.5

Hair coloringproducts

11,857

12,994

35.8

1,137

9.6

1,544

1,515

4.2

(29)

(1.9)

-

165

0.5

165

-

257

263

0.7

5

2.0

Permanent wave
products
Cosmetic products

Gross profit

22,18965.5

23,711

65.4

SG&A
expenses

15,92847.0

16,95946.8

Operatingincome

6,260

18.5

6,751

18.6

Ordinary
income

5,811

17.2

6,231

17.2

Profitattributable toowners ofparent

4,495

13.3

4,517

12.5

Others<Major factors for the increase/decrease>

Cost of sales
Cost of sales increased due to production
volume adjustments resulting fromenhanced inventory control.
Profit attributable to owners of parent
While there was a gain of 305 million yen
from the sale of cross-shareholdings in thefirst quarter of FY2018, there was no suchgain in FY2019.

* The "Accounting Standard for Revenue Recognition," etc., has been adopted since the first quarter of FY2019. The results for Fiscal Year
12/2018 are also retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

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

Category

FY2015FY2016FY2017FY2018FY2019

Capital expenditures

2,779

4,262

1,570

1,149

1,605

Depreciation andamortization

1,033

1,077

1,272

1,370

1,453

Amount

1,214

1,232

1,422

1,479

1,534

% to sales

4.4

4.2

4.3

4.2

4.2

R&D exp.

FY2019 CAPEX Main Items••••

Establishment of a new domestic base (Matsuyama Sales Office)Compounding equipment for plant (automatic dye weighing machines)
Build system infrastructure
EC site platform

Copyright © 2020 Milbon. All rights reserved.

13

Trends in Market Related Data, Trends in Fieldpersons (FPs)
Market trends (Japan)
2014

2015

2016

2017

2018

Number of salons(salons)

237,525

240,299

243,360

247,578

251,140―

Number of hair
dressers (people)

496,697504,698509,279

523,543533,814―36,30036,091

Number of beauty
customers(thousand people)

37,84737,39537,023

Fieldpersons trends (by country)
2015

JAPAN
USA
MILBON USA, INC.
CHINA

36,643(As of Aug.1)

2018

2019

237

249

258

269

279

100

102

105

111

108

12

9

12

13

13

53

63

48

48

50

18

18

19

22

21

36

40

50

62

70

KOREA
Milbon Korea Co., Ltd.
THAILAND
Milbon (Thailand) Co.,Ltd.
VIETNAMMILBON VIETNAM CO.,
LTD

19

20

23

25

30

75

80

84

82

77

6

6

9

7

7

15

14

13

17

22

Others*2

16

19

24

26

21

42

47

38

43

53

Milbon Trading(Shanghai) Co., Ltd.

Remarks
Ministry of Health, Labour and Welfare,
Report on Public Health Administration andServices
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(Number of FPs / As of January 1, the beginning of the fiscal
year (As of December 21 for 2017 and before))2017 *1

2016

2019

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
(As of December 31, 2019)
6 FPs joined in October 2018, and are assigned on site
31 FPs joined in April 2019, and are currently in OJT on site
10 FPs joined in October 2019, and are currently in training(The above 47 FPs are not included in the left chart.)

7
13*1 Because FY2017 was an irregular accounting period, performance is calculated with adjusted amounts for a 12-month period.
*2 Taiwan, Hong Kong, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2020 Milbon. All rights reserved.

14

Consolidated Net Sales and Operating Income in Japan and Overseas■ Net Sales(Unit: million yen)
FY2018 *Amount

FY2019 *% totalAmount% totalIncrease/
Decrease

Increase/
Decreaseratio (%)

Domestic

28,56984.3

30,409

83.8

1,839

6.4

Overseas

5,312

15.7

5,857

16.2

544

10.2

Total

33,882100.0

36,266

100.0

2,383

7.0

■Operating Income
FY2018 *(Unit: million yen)
FY2019 *% totalIncrease/ Operating income ratio
Increase/(％)
Decrease
Decreaseratio (%) FY2018
FY2019Amount% totalAmountDomestic

5,642

90.1

6,177

91.5

535

9.5

19.8

20.3

Overseas

617

9.9

574

8.5

(43)

(7.1)

11.6

9.8

Total

6,260

100.0

6,751

100.0

491

7.8

18.5

18.6

* The "Accounting Standard for Revenue Recognition," etc., has been adopted since the first quarter of FY2019. The results for Fiscal Year
12/2018 are also retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

15

Outlook of Overseas Subsidiaries (1)■Sales of overseas subsidiaries (non-consolidated and local currency basis)
Currencies(unit)USA
MILBON USA, INC.
CHINA
Milbon Trading (Shanghai)Co., Ltd.
KOREA
Milbon Korea Co., Ltd.
THAILAND
Milbon (Thailand) Co., Ltd.
VIETNAMMILBON VIETNAM CO.,LTD

FY2018FY2019

Increase/
Decreaseratio(%)

Forex rates

Forex rates

FY2018 (yen)FY2019 (yen)US dollar(thousand)

5,730

6,026

5.2

1$=

110.44109.04Yuan(thousand)

81,776

94,11815.1

1 yuan=

16.73

15.82

Won (million)

20,63024,92720.8

1₩=0.1001

0.0936Baht(thousand)

35,86844,42723.9

1 baht=

3.43

3.53

Dong (million)-

22,452

-

1VND=

-

0.004741

USA (MILBON USA, INC)
In Manhattan's direct sales area in the United States, we are winning new young salons and expanding ourshare of the Japanese market for color products. In the distributor sales areas, we are steadily expanding oursales network and have established a structure that covers 35 states with 7 distributors. In addition toexisting distributors, sales at distributors in the North Central area, which started this year, were favorable. As
a result, sales increased despite the transition from direct sales to a distributor system. On a product-byproduct basis, Milbon is highly valued for its good finishing at a technical seminar for distributor, leading to theacquisition of new salons. In the area of hair coloring product Sophistone, demi-color, we are in the process ofcreating a contact point. Going forward, we will continue to hold workshops using the new studios that havebeen relocated.

Copyright © 2020 Milbon. All rights reserved.

16

Outlook of Overseas Subsidiaries (2)CHINA (Milbon Trading (Shanghai) Co., Ltd.)In the Chinese market, in addition to a sense of economic slowdown, customer needs are diversifying, andwhether salons can respond to these trends is becoming increasingly important. Milbon has maintained a highgrowth rate even in a difficult environment through field activities for targetting salons. However, sales were
somewhat sluggish covered by distributors from the time of founding, including those in Jiangsu, Zhejiang andGuangdong provinces. This is believed to be due to a slight weakness in supporting activities for distributors,
and in order to improve this, we started training involving not only in-house but also distributors.

KOREA (Milbon Korea Co., Ltd.)Sales rose sharply, to 20.8%, largely unaffected by the Japan-Korea trade dispute. This is likely due to thecharacteristics of the beauty industry and the successful localization of people and organizations in milbon. In
hair coloring products, the Ordeve Addicthy, which was launched last year, has been highly regarded by young
beauticians and has steadily secured new sales channels. In hair care, Aujua have steadily secured new dealingsalons. In addition, we have trained 17 in-house trainers who can conduct counseling training. It is expectedthat the quality of educational activities will be further enhanced.

THAILAND (Milbon (Thailand) Co., Ltd.)The hair coloring category is performing well, thanks in part to proactive implementation of training sessions
at individual stores and studios, as well as the effects of training provided to sales at distributors. In the haircare segment, Millbon has been highly evaluated for its salon treatment finish, and both the number of salonsand the amount purchased per salon have increased.

Copyright © 2020 Milbon. All rights reserved.

17

Outlook of Overseas Subsidiaries (3)VIETNAM (MILBON VIETNAM CO., LTD)
Much of Vietnam's population is in the 20s and 30s age groups.The fashion colors Ordeve and Ordeve
Addicthy are highly regarded in the hair coloring product category, and market deployment is being promoted
while the respective positions of these products is being clarified. In the hair care business, For Milbon, we areworking to increase sales at existing stores, rather than increasing the number of salons, mainly limited toquality salons. Professional brand Linckage Meu and Deesse’s Neu Due have also become the key products ofacquiring new salons.

Copyright © 2020 Milbon. All rights reserved.

18

<Appendix> Hair Care Brand Positioning Map

Targets

LINE generation(born 1992-1996)

Premium

brand

Hanako juniorgeneration(born 1987-1991)

Baby boomer juniorgeneration(born 1971-1976)

Professional
Copyright © 2020 Milbon. All rights reserved.

brands19

Hanako generation(born 1956-1964)

facingMilbon Group
Initiatives for FY2020 (61st term)

Ryuji Sato, President and CEO

Copyright © 2020 Milbon. All rights reserved.

20

I. Domestic market environment in Japan■ Current outlook

Trends in Total
Population

1. Population decrease and birth rate decrease

Largest ever decline in population
Growing number of single-personhouseholds due to the declining birthrate
and aging population*Bureau investigation ofministry statistics ofpublic management2019

2. Price slump
Japan's prices are sluggish, reflecting
sluggish prices compared to othercountries in the world.

¥7,50013,9348,824¥100

J A P A N
U n i t e d
S t a t e s

162

C H I N A

153

T H A IL A N D

DAISO

DisneylandJapanese
Approx. 0.5
millionDecrease

2019
Approx.
280
thousandDecrease214* Survey by Nihon
Keizai Shimbun

3. Changes in local communities
Era name

Diversification of values of humanresources and life, and changes incommunities due to changes in the valueof information
Local community

Copyright © 2020 Milbon. All rights reserved.

Urban community
Local community

21

Showa

Heisei

Reiwa"Expansion
and Growth""stagnant""Age of Declining
Population"

II. Social Responsibility Trends (Sustainability Initiatives)■ From the Establishment of SDGs Promotion Committees to Initiatives

1.

In Fiscal Year 2019, workshops were held for all employees.

2.

Utilize SDGs matrix and value chains to set activity targets

3.



Putting Ideas and Initiatives into Practice by Individual Employees

Establishment of contact persons for each theme

Formulation of Basic Sustainability Policy

Basic Sustainability Policy
Through hair designers, Milbon aims to create asustainable society by creating a beauty industry that is
conducive to beauty and spiritual wealth.

Copyright © 2020 Milbon. All rights reserved.

22II. Social Responsibility Trends (Sustainability Initiatives)[SDGs matrix]* Organize the relevance of ESG-related issues and SDGs17 items

Copyright © 2020 Milbon. All rights reserved.

23II. Social Responsibility Trends (Sustainability Initiatives)[Value chain mapping]

Copyright © 2020 Milbon. All rights reserved.

24III. Environment Surrounding Salons and Management Plan
■ Points of the Environment Surrounding Salons (Social Perspectives)
1. Slowdown in consumption after the tax hike (delayed)
Per beauty salon population (total population ÷ number of beauty salons)

2. Decrease in population per beautician

Decreased by 15% over the past 7 years due topopulation decline

15%

Decrease2010

3. Neighborhood consumption andsmall commercial areas continue

2017

Aging population and rising woman employment rate
➣ In the vicinity of residences, workplaces, and schools,
Consumption in the neighborhood is becoming stronger,
and the market is becoming smaller.

4. Reform of organizational structure (environment)
Creating the appeal of salonsWork style reform (as the system progresses, it
is important to retain employees as part ofmanagement strategy, to continue working, andto reform organizational structure (culture))

Copyright © 2020 Milbon. All rights reserved.

25

Working style
Reform(System)×

In the organization
Reformation of theideal way
(Corporate Culture)

Creating the appealof salonsIII. Environment Surrounding Salons and Management Plan
■ Points of the Environment Surrounding Salons (Customer Perspectives)
1.

Shift from Consumer Concept to Lifestyle
Concept

C o n s u m e r

i d e a s

Focus exclusively on
consumption

2.

3.

From external value, internal value
and desire for self-realization are
increasing.

ExternalValue

As customers' desire for self-fulfillment
grows, while there is an information
overload, real-life consultants are beingsought.

i d e a s

Focusing on the entire
lifestyle

Internal
SelfValue
realization
Desire・・・??

Desire for selfrealization
grows

Copyright © 2020 Milbon. All rights reserved.

L i f e s t y l e

26

Information
overload

Look for real-life
consultants

III. Environment Surrounding Salons and Management Plan
Market policy concept

2 major promoting themes

LIFETIME BEAUTY INNOVATION for NEXT100

Creating a Lifetime Beauty Salon = Supporting the creation of alifetime beauty salon that continues to provide beauty and emotionalfulfillment through lifetime beauticians with the aim of achieving amonthly productivity of 1 million yen per beautician

Through our core business activities,
To sustainable growth in beauty industry,
Aiming to earn the trust of customers and society
Contributing to SDGs
▲2020 Policy manual
The policy manuals also refer to SDGs efforts and approach the market as a whole.

Copyright © 2020 Milbon. All rights reserved.

27

III. Environment Surrounding Salons and Management Plan
■ Initiatives from a Social Perspective▼ Brochure on customer fan index survey① Responding to the development of small commercial areas
Understanding of Commercial Areas: Area Marketing Support
Customer Understanding: Customer Fan Index Survey

•"Area marketing support" refers to data on the
population and households of the survey area, deepening
the understanding of the store's trading area andcustomer understanding, and creating promotions
tailored to the target customer setting and market.

•"Customer Fan Index Survey" provides easy-to-use
questionnaire tools for smartphones and tablets, enabling
the company to easily gather points for problem-solvingfrom the voices of customers, which will lead to anincrease in customer strength.

▲ Area marketing support② Beauty Partner Development

Milbon Counseling Method (MCM)
Milbon Carrier Step-Up Curriculum (MCC)
Milbon Hair Color Academy (MCA)
Milbon Designers’ Ability (DA) ** Designers’ Ability (DA) is an educational event designed to expand the potential of hair designers by facing their sensibilities.
Copyright © 2020 Milbon. All rights reserved.

28

III. Environment Surrounding Salons and Management Plan
■ Initiatives from a Social Perspective③ Reform of organizational structure (cultivation of corporate culture)
Nurturing Environment = Process Management
Growing Environment = Management of Vision and Career Plan⇩Salon Engagement Initiative Guide
Management workshop for young managers
Store manager training• Salon Engagement Initiative Guides: Provide
support for the creation of a corporate culture
by proposing points to raise "the level of thecompany's liking, willingness to voluntarily
engage in business, and willingness tocontribute" as a foundation for long-term
productivity improvement.

Copyright © 2020 Milbon. All rights reserved.

29▼ Salon Engagement
Initiative Guides

III. Environment Surrounding Salons and Management Plan
■ Initiatives from the Customer's Perspective① Shift in thinking
 Shift from Consumer Concept to Lifestyle Concept
 Shift from External Ideas to Self-fullfilment Ideas⇩
Through Real Communication and Digital Communication,
Fulfill the customers' Beauty and Spiritual Wealth② Creating a relationship of trust between customers and beauticiansProfessional education for each brand••••Aujua Sommelier
Global Milbon Stylist Club
Villa Lodola Organic Preacher
Imprea leader

Copyright © 2020 Milbon. All rights reserved.

30

III. Environment Surrounding Salons and Management Plan

Lifetime Beauty Salons, which
are communities of beauty andspiritual wealth, are the creationof social value and play a central
role in the creation ofsustainable cities and regions.

➣ Creating a new way of be au ty
Copyright © 2020 Milbon. All rights reserved.

31

IV. Overseas Market Environment【Asia】


Chinese market : Fiscal Year 2019 Results +15.1% (Local currency basis)
①
②

③



Korean market : Fiscal Year 2019 Results +20.8% (Local currency basis)①②

EC Regulations Affect take-home products
As the discriminant power of the consumer increases and it struggles for mere retail, theunique field activity of the milbon leads to differentiation and continues to grow by 2
orders of magnitude
Impact of the new coronaviruses
Getting back to a growth trajectory based on reliability through quality of product and field
activities by Fieldpersons after the circumstances that low-priced products were enteredinto the market
Double-digit growth without being affected by the Japan-Korea trade disputeCharacteristics of the beauty market

Localization of personnel and organizations

Impacts and concerns in Asia

Diffusion of new coronaviruses-uncertainty

Copyright © 2020 Milbon. All rights reserved.

32

IV. Overseas Market Environment【USA】
North American market Fiscal Year 2019 Results : +5.2% (Local currency basis)①

Accelerate transition to a distributor system (7 distributors as of the end of December 2019)②

Sophistone's first product launched③

July in 2019 Direct Sales Area (Manhattan) Demi-Color *, Bleach

USA Office Studio Relocation
Consisting lighting studios, toward the launch of hair coloring products* Demi-color: Colors hair without bleaching. Allows for delicate color adjustments in the blonde range.
Copyright © 2020 Milbon. All rights reserved.

33

V. Cosmetics Business[Start of market activities]
The number of distributor IA * and salons handled have been increased,accordingly, the number of cases increased, and new seeds andchallenges to be solved have become clearer.
(As of the end of Fiscal Year 2019)



Number of distributors IA: Approx. 150



Number of salons approx. 200[New seeds]

Skin lotions that are difficult to switch are top sellers

Monthly sales of more than 0.2 million yen per
beautician

Counseling effect for hair and skincare as a whole* IA (Imprea Ambassador): Similar position/role to FCEs at distributors. IAs work with FCEs to follow up on salons.
Copyright © 2020 Milbon. All rights reserved.

34

Measures for Fiscal Year 2020

Copyright © 2020 Milbon. All rights reserved.

35

VI. Measures for FY2020 ~ Historical Medium-Term Results Trends ~Current medium-term(2019-2023)

Billions of yen

485

500
450

2nd term

400

363

350

1st term

300

274
238

250
200

390

180

187

192

197

2008

2009

2010

205

335

339

2017

2018

291

252

219

150
100
50
0

2007

2011

2012

2013

Domestic hair care

Copyright © 2020 Milbon. All rights reserved.

2014

2015

2016

Overseas hair care

36

2019

Cosmetic products

2020

2021

2022

2023

VI. Measures for FY2020 ~ Sales Targets for Current Medium-term ~
YoY
+6.9%
(Local currency basis+10% or more)

Billions of yen

500
450

300

50

339

363
2
59

53

85

8
63

YoY
+5.6%

250
200
150

286

302

319

2018

2019

2020

350

100
50
0
Domestic hair care

Copyright © 2020 Milbon. All rights reserved.

Challenge Themes ②

Cosmetic
Business

Challenge Theme ①

390

400
350

485

2021

Overseas hair care

37

2022
Cosmetic products

2023

Overseas
CAGR(5yr)+9.9%

Domestic hair
CAGR(5yr)+4.1%

VI. Measures for FY2020 ~ Group-Wide ~■ Product Development & Production System
1. Basic Research

In response to changes in hair due to aging, we have focused on aging fungicontained not only in hair and roots but also in scalp flora, and have discovered
new technologies that can reduce the aging of the scalp and hair.

2. R&D branch establishment

Establishment of R&D research branch in the U.S.
NEW
CHINA

3. China Factory project startedPlant, R&D branch office(Platform)

THAILAND
Factory (Extended Building)/
R&D Laboratory

Copyright © 2020 Milbon. All rights reserved.

Central institute and plant=

Hai-Shio Chemical Industrial
District, Zhejiang Province
Scheduled to be constructed

JAPAN

38

NEW
United States
R&D branch office(2020)

VI. Measures for FY2020 ~ the Japanese Market ~1. Build studio site network

Niigata Studio
Sales OfficeStrengthen educational seminar atstudio by establishing new bases

April, 2020

Gaienmae Studio Sales
Office (tentative)
Around autumn 2020

Structure of 19 domestic bases

2. Fieldperson (FP) system
Relocation of Training Center to Strengthen
FP Training Environment
2019
FCE
FMS
FSE
Total

2020

19 persons- 28 persons (+9 persons)
178
91
297

Copyright © 2020 Milbon. All rights reserved.

39

New training center
Scheduled to start operation
around autumn 2021

VI. Measures for FY2020 ~ the Japanese Market ~3. Strengthen real-communication capabilities
Provision of a program to improve counseling skills of Beauty Partners
 MCM (Milbon Counseling Method) Training: The Hair and Skin Total Approach
Communication program that enhances the value of "beauty" and “peace of mind" inorder to fulfill customers' lifelong beauty needs through our "customer-oriented
counseling capabilities"

4. Strengthen digital communication (support for education)■ Biyoshi Doga

■ Seminar-linked video■ Milbon Channel -YouTube-

Contents for beauticians

Introduced blended learning as
support for beauticians

Distribution of information to end users

Technique combination of e-Learningand studio seminars consisting
technical session

App
Biyoshi Doga

SearchCopyright © 2020 Milbon. All rights reserved.

40

Distribution from YouTube of information that
customers want to know (new products andhow to use them, etc.)

VI. Measures for FY2020 ~ the Japanese Market ~5. Strengthen digital communication (e-commerce site)
Milbon's own BtoBtoC official e-commerce site
Full-fledged rollout in June by adding premium
hair care brands

+
Aujua

Copyright © 2020 Milbon. All rights reserved.

41

Milbon official Online Stores, Inc.

Milbon:iD

Face-to-facecounseling isstarting point

Createrepeatingcustomer

Sales isrecorded tosalon

VI. Measures for FY2020 ~ the Japanese Market ~6. Corporate branding and product branding■ Transportation advertisements
Osaka Umeda
StationFrom February. 17
Tokyo Station
Yaesu

Fukuoka Hakata
StationFrom February. 17

From February. 3

NEW

KanagawaYokohama Station
Nagoya Sakae

From March 2

StationFrom February 22

FYB magazine

SearchCopyright © 2020 Milbon. All rights reserved.

■ Find Your Beauty Project
Disseminating information on values ofbeauty professionals, etc.

Activity Report

R&D

42

GIRLS POWER

VI. Measures for FY2020 ~ the Japanese Market ~■ Main Products (First Half)
Category

Product name

Premium
Brand

Professional
Brand

Technical
Brand
Aujua
Scalp care series
Fortice line

(Unit: million yen)
LaunchTargetmonthamountAujua Scalp Care Series Fortice Line

February

600

Milbon Creative Style Series TEXTURE Added Items

March

50

iMPREA Whitening Laser Shot

March

50

CRONNA Ice Spa shampoo orange

March

150

Elujuda Daytime line 2 lines 3 types

April

400

Special package promotion for Elujuda

April

150

February

250

April

250

Ordeve Seathrough Line, Inc.
Neo Liscio Bright rich
MilbonCreative Style Series
TEXTURE additional items

Copyright © 2020 Milbon. All rights reserved.

iMPREAWhitening
Laser show

CRONNAIce spa shampoo
Orange43

ElujudaDaytime line

ElujudaSpecial package
Promotions

OrdeveSeathrough line

Neo Liscio
Bright richVI. Measures for FY2020 ~ Overseas Market ~1. Promotion of localization + establishment of new bases

Singapore
Local incorporation

Milbon Korea Co., Ltd.

Gwangju

Structure of

19 overseas bases

Establishment of
new bases

2. Plan to double the number of sales person at distributors

2018

2019

489

754

Copyright © 2020 Milbon. All rights reserved.

2020

830
44

VI. Measures for Fiscal Year 2020 ~ Overseas Market ~3. Development of Sophistone(hair coloring products for Europe and North America Market)■ Sophistone Deployment ScheduleDemi-Color *1 January 2020 Distributor salons area
Permanent color *2 July 2021 Direct sales area in Manhattan*1 Demi-color: Colors hair without bleaching. Allows for delicate color adjustments in the blonde range.
*2 Permanent color: Colors hair while bleaching. Hair coloring product generally used in Japan.
Copyright © 2020 Milbon. All rights reserved.

45

VI. Measures for FY2020 ~ Cosmetics business ~Challenge in cosmetic products business<Full-scale development in 2020>
Challenge in cosmetic products business

FCE

Distributors IA

×Approx. 150

FMS
FSE

28

With the FP's
collective strengths

About 900 salons

Full-fledged implementation of educational, promotional, andcustomer management activities using all of FP's strengths,
from the creation of model salons to full-fledged expansion ofsalon counters

Copyright © 2020 Milbon. All rights reserved.

46

VI. Measures for FY2020 ~ Cosmetics business ~Direction of Strategy Development

12
3

Deepening iMPREA “Impression Produce”

Be fun and easy to work on
Customer proposals and promotions
Strengthen development of new sales floors, creations ofhuman resources, and creation of sales operations forsalons by making full use of VM and customer
management

Development of new consumer-oriented
salon sales software
Copyright © 2020 Milbon. All rights reserved.

47

VII. Consolidated Targets for Fiscal Year 2020
■ Statement of Earnings

Net sales(Unit: million yen)

FY2019FY2019FY2020

FY2020Results% total sales

Target% total sales

Increase/
Decrease

Increase/
Decrease ratio(%)

36,266100.0

39,000

100.0

2,733

7.5

Domestic

30,40983.8

32,737

83.9

2,327

7.7

Overseas

5,857

16.2

6,263

16.1

405

6.9

Gross profit

23,711

65.4

25,990

66.6

2,278

9.6

SG & A expenses

16,95946.8

18,690

47.9

1,730

10.2

Operating income

6,751

18.6

7,300

18.7

548

8.1

Ordinary income

6,231

17.2

6,670

17.1

438

7.0

Profit attributableto owners ofparent

4,517

12.5

4,730

12.1

212

4.7

Copyright © 2020 Milbon. All rights reserved.

48

VII. Consolidated Targets for Fiscal Year 2020
■ Net Sales by Products Category (Consolidated Net Sales)
FY2019FY2020 target(Unit: million yen)
Increase/ Decrease

Increase/ Decrease
ratio (%)

Hair care products

21,32823,243

1,914

9.0

Hair coloring products

12,994

13,170

175

1.3

1,515

1,527

11

0.8

Cosmetic products

165

800

634

384.0

Others

263

260

△3

△ 1.2

Permanent wave products■ Premium Brand Sales (Non-consolidated gross sales) Number of Customers (Group)(Unit: million yen)
FY2019

Increase/ Decrease

Increase/ Decrease
ratio (%)

Sales

7,485

8,500

1,014

13.6

Number of salons* (salons)

3,698

4,200

502

13.6

Sales

2,551

3,100

548

21.5

Number of salons Domestic* (salons)

4,370

5,100

730

16.7

Number of salons Overseas* (salons)

3,304

4,162

858

26.0

Sales

1,187

1,350

162

13.7

Number of salons (salons)

9,015

10,100

1,085

12.0

Aujua

MilbonFY2020 target

Villa Lodola* Number of salons: Figures for both Japan and overseas are calculated based on shipments over a one-year period.
Copyright © 2020 Milbon. All rights reserved.

49

VII. Consolidated Targets for Fiscal Year 2020
■ Capital expenditures and others(Unit: million yen)Classification

FY2020PlannedFY2019

Capital expenditures

1,605

1,958

Depreciation andamortization

1,453

1,632

Amount

1,534

1,796

% to sales

4.2

4.6

R&D exp.

FY2020 CAPEX Main Items
•
•
•
•
•

Establishment of a new domestic base (Niigata Sales Office)Plant compounding and filling equipment (vacuum emulsificationequipment, etc.)
Studio Sales Office in Tokyo
Part of the expenditures of constructing a new training center
Part of the expenditures of building a plant in China

Copyright © 2020 Milbon. All rights reserved.

50

VII. Consolidated Targets for Fiscal Year 2020
■ Annual plans (new products, events, capital expenditures, etc.)
1Q

2Q

3Q

4Q

■ Ordeve additional line
■ Aujua scalp care series■ Additional line
■ Milbon creative style■ Additional series items■ iMPREA additional items■ CRONNA additional items■ Elujuda Daytime line
■ Additional items■ Special package promotion■for Elujuda■ Neo Liscio Additional Series■ Villa Lodola additional items
Villa Lodola Color■ Ordeve Addicthy■ Additional line
■ Villa Lodola Livel Series■ Additional styling items■ Milbon Repair Series■Additional items■ New professional■ Styling brand door
■ Ordeve additional line
■ Ordeve Addicthy■ Additional line
■ Ordeve Seedil Additional line

■ New professional■ Hair care brand grand linkage■ Special package promotion■ for Elujuda■ Transportation advertisements
Tokyo/Yokohama/Nagoya/Osaka/■ Fukuoka■ Through professional e-commerce ■ DA-AWARD■ Develop hair care premium brand ■ DA-INSPIRE■ Established new sales office in ■■ Niigata Studio■ Plant compounding and filling■ equipment, etc.

New Products

EVENTS

CapitalExpenditures [Cash outflow]■ Part of the expenditures of building■ a plant in China■ Establishment of a new sales office ■ Plant compounding and filling■ at Gaienmae Studio■ equipment, etc.
■ Plant compounding and filling■ equipment, etc.

■ Red: Items promoting menu proposals at salons■ Blue: Items for which a contact point is created throughout the year
■ Green... Items that generate sales through promotions

Copyright © 2020 Milbon. All rights reserved.

51(12 venues from Japan to Asia)

VIII. Medium-Term Plan (2019-2023) Measures Progress◆ Group-wide
Product Development & Production
System(Customer perspective, cutting-edge
technology)◆ Japanese Market
Building studio site network
FP system (FP system, FD activity)
Strengthen real communication
capabilities

FY2019 results
Net sale YoY+7.0%
Operating income YoY+7.8%

FY2020 plan
Net sale YoY+7.5%
Operating income YoY+8.1%

2019[Products Utilizing New technology]
Aujua Diorum Line (MX-CMADK)

2020[Products Utilizing New technology]
Aujua Fortice line (aging bacteria)[R&D Laboratory]
Establishment of R&D research lab : USA

Established Matsuyama Studio Sales Office (17offices in Japan)

Niigata Studio Sales Office
Gaienmae Studio Sales Office (Temporary)-19
offices in Japan
FMS: 178 persons, FSE:91 persons, FCE:28
persons
NEW: Hair and Skin Total Approach (MCM)

Restructure and launch FP triangle system
Program to improve counseling skills: MCC, MCA[Video Education]
・ Video clip: +323 Contents (+28)
・ Milbon Channel (YouTube)[EC Site]
Began test marketing of cosmetic products[Video Education]
・ Video clip (new content added)
・ Seminar-linked video (B-learning) launched・ Milbon Channel (Add Content)[EC Site]
Added Premium Hair Care. Full-fledged rollout asmilbon:iD official online stores in Milbon[Traffic Advertising]Tokyo Station Yaesu, Osaka Umeda Station
NEW: Nagoya Sakae Station, Fukuoka Hakata
Station (+2)[Find Your Beauty projects]
GIRLS POWER[Traffic Advertising]
NEW: Yokohama Station (+1)
[Find Your Beauty projects]
Addition of new projects

Promote localization overseas +Establish new bases[VIETNAM] Overseas incorporation[MALAYSIA] Overseas incorporation[Korea] Established new Kohoku Studio(17 overseas bases)[Singapore] Overseas incorporation[Korea] Establishment of a new KOSHU office(to 19 overseas offices)

Plan to double sales by distributors

754 (+265)

830 (+76)

Development of sophistone (hair collar
for Europe and the United Statesmarkets)[Demi-Color, Bleach]
July: Manhattan direct sales area

[Demi-Color, Bleach]
January: Distribution area

・ Distributor IA: Approx. 150 people
・ FCE: 19
・ Number of service counters: 200 salons・ Distributor IA: Start of approx. 150 personnel
system・ FCE: 28 + FP total
・ Number of service counters: 900 salons (+700)
・ With an eye to advertising

Strengthen digital communication

Corporate Branding
Product branding

2021～

New training center

Web counseling
Digital diagnosis system◆ Overseas Markets◆ Cosmetic business
Challenge in cosmetic business

Copyright © 2020 Milbon. All rights reserved.

52[Permanent wave Color]
July: Manhattan direct sales
area

2022

2023

VIII. Progress of Medium-Term Business Plan (2019-2023)
Actual (2019)
Cash flow from operating
activities: ,000 million yen

Medium-term Targets (2019-2023)

4,486 million yen

26 billion yen

Progress rate

17.3%

※ Income tax payment period changed due to the change
in the Fiscal Year 2017 fiscal year-end.

Uses

Actual (2019)

Investment in future
growthMain items

Medium-term Targets (2019-2023)

1,818 million yen
・ Establishment and expansion of new domestic bases
Domestic: Established new Matsuyama Sales Office
Overseas: Established subsidiaries in Vietnam andMalaysia
Established Milbon Korea Kohoku Studio・ System investment (EC platform, etc.)

1,833 million yen

Return to shareholders

・ Dividend payout ratio
FY2019 40.6%

Increase in Retained
Earnings
Capital efficiency

15.2%

・ Establishment of integrated education center in
Aoyama, Tokyo・ Establishment of new bases
・ Relocation and expansion of existing bases
・ Expansion of Thai Factory・ Launch of cosmetic business・ Creation of Villa Lodola as business company
・ System investments
・ Building China supply system

10,000 million yen

18.3%

・ Stable return to shareholders targeting a dividend
payout ratio of 40%

835 million yen
ROE performance
FY2019 13.1%

Copyright © 2020 Milbon. All rights reserved.

12,000 million yen

Progress rate

4,000 million yen
ROE14% or more (FY2023 target)

53

20.9%

IX. Return to shareholders■ Dividend Forecast(Unit: yen)

FY2018FY2019FY2020
Forecast

End of 2Q

24

27

28

End of FY

30

29

30

Total

54

56

58

Copyright © 2020 Milbon. All rights reserved.

54

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