Milbon Co., Ltd.
FY2015 Financial Results
Presentation Materials

January 27, 2016
Copyright © 2016 Milbon. All rights reserved.

Table of Contents
P3

Consolidated Operating Results

P4-9

Consolidated Sales by Product Category

P10

Consolidated Statement of Earnings

P11

Consolidated Trends in Capital Expenditures and R&D Expenses

P12

Trends in Market Related Data, Trends in FPs

P13-15 Outlook of Milbon Group
P16-33 2015-2019 Medium-term management plan & Progress
P34-35 FY2016 Management stragegy

Copyright © 2016 Milbon. All rights reserved.

1

Fiscal Year 2015 (56th term)
Operating Results

Masahiro Murai, Managing Director2Consolidated Operating Results
Sales in overseas markets and hair care category have taken the lead in the growth
as well as hair coloring category gets back on a growth track(Unit: million yen)Amount
FY2014FY2015

Increase/DecreaseYear-on-year
Comparison(%)

Net sales

25,22627,377

2,150

108.5

Gross profit

17,281

18,681

1,400

108.1

SG&A expenses

12,83013,954

1,124

108.8

Operating income

4,451

4,727

276

106.2

Ordinary income

4,218

4,427

208

104.9

Net income

2,621

2,950

329

112.6

Copyright © 2016 Milbon. All rights reserved.

3

Consolidated Sales by Product Category[Hair Care Product]
Hair care and leave‐in items containing
あ CMADK have been steadily growing(Unit: million yen)

FY2014FY2015

14,597

Increase/Decrease

16,195YoY Comparison (%)

1,597

110.9

• Activities were focused on enhancing hair designers’ ability to respond to matured women who seek true
professional advice, as well as to younger women in their mid‐20s, who are becoming more conscious of how others
see them.
• Products containing CMADK, Milbon’s original hair keratin restoring ingredients, and aging care products have been
continuously sold well.
* Products containing CMADK includes: Jemile Fran, DEESSE’S Elujuda Emulsion, Aujua Immurise Line series, etc.

Core Products
NEW – Jemile Fran
Shampoo & Treatment

DEESSE’S ELUJUDAEMULSION

A new hair care brand for working women in
their 20. Enlightening young women to hair care,
timed to changes in their sense of beauty.

Leave-in treatment leading to a soft,
fluffy formulation for more moisture andmanageable hair after drying(Unit: million yen)

(Unit: million yen)

FY target

Results

Achievement

400

552

138.2%

Copyright © 2016 Milbon. All rights reserved.

Apr 21 Debut

42014 results2015 results

YoY

1,267

1,422

112.6％

Since 2014

AujuaAging care series continued to grow, expanding number of salons and sales
Number of Aujua salons
FY２０１4 year-end

FY２０１5 year-end

Comparison
with the 2014
year end

2,002 salons

2,511 salons

125.4％

Sales(Unit: million yen)

FY２０１4

FY２０１5

3,582
Brand concept
A hair care brand that nurtures thebeauty of Japanese women’s hair bornfrom the climate, culture and haircharacteristics of Japan

What is Aujua?

4,418

YOY
comparison

Trends in sales & number of salons（Million yen）

123.6%

Product range
A wide-ranging line-upthat fits the hair texture ofeach customers
・4 series
Aging care series
Hair care series
Scalp care series
Climatic care series

A hair care series that responds to every
individual’s hair concerns by creatingand evolving a hair care program just for・14 line ・90 items
one individual. That is Aujua.

Copyright © 2016 Milbon. All rights reserved.

（Number of salons）
3,000

5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

2,500
2,000
1,500
1,000
500
0
2010

2011

2012
Sales

5

2013

2014

Number of salons2015Consolidated Sales by Product Category[Hair Coloring Product](1)New color line approach and brand new gray color launch led to a rise in sales(Unit: million yen)

FY2014FY2015

8,817

Increase/Decrease

9,506

689

YoY Comparison (%)

107.8• New color lines to much Spring/Summer 2015 and Autumn/Fall 2015 trends were launched. New lines that cancreate natural cool colors are well received, and activities to support hair designers to offer trend hair color tosalon customer have proactively continued.
• Brand new hair color range Ordeve Crystal was launched in May. This new product made it possible to dye hair
peppered with gray evenly for a clear color from the roots to the tips, and earned a good reputation.

Core Products
New - ORDEVE CRYSTAL
A hybrid color for matured women who want tocontinue enjoying the color, tone and texture withbeautiful finish from the roots to the tips.
(Unit: million yen)

FY target

Results

Achievement

740

1,014

137.1%

Copyright © 2016 Milbon. All rights reserved.

May 28 Debut

6

Consolidated Sales by Product Category[Hair Coloring Product](2)ORDEVE additional color – New in 2015
INNOCENT LINEJan 29 Debut

A soft sheen created by achromaticcolor express a color purity

HEALTHY LINESep 1 Debut

Display the unadorned beauty of hairthrough smooth, cool beige hues
(Unit: million yen)

(Unit: million yen)

FY target

Results

Achievement

FY target

Results

Achievement

500

577

115.5%

220

276

125.6%

Copyright © 2016 Milbon. All rights reserved.

7

Villa Lodola (1)Villa Lodola Color lunch drives the increase in overall sales and dealing salons
Number of salons
FY２０１4

FY２０１5year-end

year-end

1,626 salons

4,014 salons

Sales
FY２０１4Comparison
with the 2014
year end

246.9％(Unit: million yen)

FY２０１5115
Brand Concept

489

YoY
comparison

Trends in sales & number of salons(Million yen)422.7%

4,500
4,000

500

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

3,500
3,000

400

What is Villa Lodola

300

Based on the concept of ‘Beauth the Organic Way’, Villa Lodola is thetrue organic brand that thoroughly care about natural environment not
only for the product itself but production phase, container andpromotional tools. All of the products are certified by ICEA, certification
authority in Italy. Villa Lodola supports the choice from the value oforganic, with hair care product nurtured in the soil of Italy, brings out thetrue beauty.

200

Copyright © 2016 Milbon. All rights reserved.

(Number of salons)

600

8

2,500
2,000
1,500
1,000

100

500

0

0
2012

2013
Sales

2014
Number of salons2015

Villa Lodola (2)Core ProductNEW - Villa Lodola Color
By formulation which utilizes the power of plants, composedof 92% natural ingredients, it brings comfort with the organic
product across all aspects of the product, including during
application, the finish, and during successive use.
(Unit: million yen)

FY target

Results

Achievement

120

262

218.3％

Copyright © 2016 Milbon. All rights reserved.

Feb 1 Debut

9

Consolidated Statement of Earnings
Breakdown of net sales by product category
AmountIncrease/
Decrease
FY2014

Sales

25,226FY201527,377

2,150

YOY
compari
son
(%)

108.5

Cost of sales

7,945

8,695

749

YoY
changeYoY
comparison (%)

59.1

1,597

110.9

9,506

34.7

689

107.8

1,520

1,410

5.2

-109

92.8

291

264

1.0

-26

90.9

FY2014FY2015% tototal
sales

Hair care products

14,597

16,195

Hair coloring product

8,817

Permanent wave
products
Others(Million yen)

109.4

Major factor for the increase in SG&A expenses
Gross profit

17,281

18,681

1,400

108.1

SG&A
expenses

12,83013,954

1,124

108.8

Operatingincome

4,451

4,727

276

• Salaries due to increase the number of personnel• Sales promotional tools• Rental for newly opened Ginza Branch

Supplemental Info. - Return to shareholder<Dividends>(Unit: Yen)

106.2

FY2014

Ordinary
incomeNet income

4,218
2,621

Copyright © 2016 Milbon. All rights reserved.

4,427
2,950

208
329

104.9
112.6

10

FY2015E of FY is a plan

2016 planEnd of 2Q

34

35

38

End of FY

34

39

40

Total

68

74

78

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

FY2011FY2012FY2013

FY2014FY2015

Plan for
FY2016

528

840

1,680

1,028

2,779

4,329

1,011

947

878

1,004

1,033

1,113

Amount

870

873

969

1,168

1,214

1,215

% to sales

4.2%

4.0%

4.1%

4.6%

4.4%

4.2%

Category
Capital expenditures
Depreciation andamortization

R&D exp.
• R&D expense to sales ratios are calculated based on consolidated figures, starting this quarter end, also retrospectively adjusted.

FY2015 CAPEX Main Items• Land purchase and construction work of New Yumegaoka Plant• Initial expenditure for Tokyo Ginza Branch• Relocation of Sapporo Sales Office• Warehouse expansion of Thai Factory

Copyright © 2016 Milbon. All rights reserved.

11

Trends in Market Related Data, Trends in FPs
Market trends (Japan)
Number of salons(Unit: Number of Salons: Salons / Number of hair dresser: people / Number of beauty customer)

2010

2011

2012

2013

2014

2015

223,286

228,429

231,134

234 089

237,525

Remarks—

Number of
hairdressers

456,872

471,161479,509487 636496,697—

Beauty customer
population

39,812

39,64039,076

38,46837,84737,4502013

2014

Ministry of Health, Labor and Welfare Public Health Administration Report
Number of beauty salon facilities/number of employees (year-end)

Statistics Bureau, Ministry of Internal Affairs and Communications:
population statistics as of October 1st each year
Population statistics for females aged 15 to 64(As of Aug. 1)

Fieldpersons trends (by country)
2011

2012

2015

203

221

230

238

266

Milbon Co., Ltd.

95

92

95

95

89

USA

9

10

12

12

9

MILBON USA, Inc.

39

35

36

40

71

CHINA

11

15

16

17

18

Milbon Trading (Shanghai) Co.,
Ltd.

11

12

17

25

36

KOREA

11

13

18

17

20

Milbon Korea Co., Ltd.

30

34

39

64

71

-

-

3

6

6

6

8

15

JAPAN

THAI
Milbon (Thailand) Co., Ltd.

OthersCopyright © 2016 Milbon. All rights reserved.

4

3

8

11

16

95

135

55

50

47

12

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

*25 FPs are expected to join in Apr. 2016(not included in the left chart)

Outlook of Milbon Group (1)Sales in all areas centering on East Asia including Japan has been steadily growing

Number of
employees

Sales (million yen)

Number of FPs

FY2014FY2015

YoY
comparison

Start
operations

Forex rates
FY2014FY2015579

JAPAN
Milbon Co., Ltd.

266

22,612

23,880

105.6

1960

-

-

482

642

133.1

2004

1$=
102.30119.33

430

665

154.6

2009

1 yuan =
16.73

19.32

1,099

1,425

129.6

2009

1 won =
0.09730.1076

48

90

187.3

2013

1 baht =
3.16

3.58

552

672

121.7

-

-

-

13

USA
MILBON USA, Inc.

9
25

CHINA
Milbon Trading(Shanghai) Co., Ltd.

18
31

KOREA
Milbon Korea Co., Ltd.

20
47

THAI
Milbon(Thailand)Co., Ltd.
※

Others *1

6
16
16*1: Taiwan, Hong-Kong, Vietnam, Malaysia, Turkey, Indonesia, Philippine and others
Copyright © 2016 Milbon. All rights reserved.

13

Outlook of Milbon Group (2)JAPAN (Milbon Co., Ltd.)The new hair coloring products launched in the first half of the term, Ordeve Crystal and Villa Lodola Color, are highly thought ofin the market. Additional colors for the existing hair coloring product Ordeve also had good sales results and the sales of the haircoloring products category have increased. In addition to the products that meet the needs of older generations, Milbon launched a
new hair care brand, Jemile Fran shampoo & treatment, for the younger generation in their 20s who have just started their careers.
The hair coloring products category continued achieving good sales results based on Milbon’s supporting activity that provided thisgeneration at the ‘timing of changing their awareness of beauty’ with professional hair design and hair care values.

USA (Milbon USA, Inc.)
The contract distributor purchased a local distributor and sales activities through the distributor have expanded to seven stateson the East Coast. Milbon was able to gain the trust of the distributor’s management and sales staff by providing them withproposals and support for solving the distributor’s issues. Based on this trust, our sales activities are firmly taking hold. The numberof partner salons is steadily increasing.
In January, the prices of existing products were raised for the first time since the establishment of Milbon USA. We were worried
that it might decrease the sales, but the market recognized high care effect of Plarmia Hair Serum launched in February and it
became a big hit. For this reason, the sales increased for a full business year.

CHINA (Milbon Trading (Shanghai) Co., Ltd.)
Milbon Shanghai routinely held seminars for distributors. The distributors’ proactive training activities for salons strengthened
their relationship with strong salons in the region. As a result, the number of new salons has increased, contributing to an increaseof sales. Milbon Shanghai has started market activities in new southwest areas (Sichuan Province and Chongqing City) and thenumber of dealing salons is steadily increasing.
For salons, Milbon Shanghai performs activities to propose season trend color designs in each season under a basic policy that
promotes repeat customers. In addition, Milbon Shanghai is introducing in-salon treatment for repairing the inside of the hair and is
promoting its own hair care technician qualification system. Improving stylists’ counseling skills and product knowledge contributed
to an increase in the sales in the hair care products category.

Copyright © 2016 Milbon. All rights reserved.

14

Outlook of Milbon Group (3)KOREA (Milbon Korea Co., Ltd.)
Milbon Korea launched additional colors for Ordeve in February and August focusing on Ordeve’s unique attractions, which are
not provided by other companies, and thereby could significantly increase overall sales. In addition, the distributor came tounderstand ‘proposal-based sales’ advocated by Milbon, and then Milbon Korea could plan and implement, in cooperation with the
distributor, seminars and overseas training. Sales activities with high added value will develop the market further.
Milbon Korea commenced test marketing for the system hair care brand Aujua in October. It has selected 10 target salons that
perform test sales throughout South Korea and is preparing for the main launch.

THAILAND (Milbon (Thailand) Co., Ltd.)[Sales division] Launch of new colors in combination with semiannual season color proposal is unique to Milbon, and it
facilitates the introduction of products by the distributor. Seminars were held utilizing the distributor’s studio and the sales of haircoloring products category had good results. Elujuda Emulsion containing CMADK has a good market reputation. As the Thai
population is aging, the Plarmia brand is steadily growing and the sales has good results.
[Production division] Overall shipments were delayed due to issues related to an import permit in receiving countries, but now
Milbon Thailand has started to export products to all destination countries (eight countries) that were planned at the beginning of
the year. From next year onward, Milbon Thailand will start shipments to China. For increases in production volume going forward,
Milbon Thailand is organizing machines and equipment and enhancing the safety management measures required to increase in
number of employees.

Copyright © 2016 Milbon. All rights reserved.

15

Ｍｉｌｂｏｎ Ｇｒｏｕｐ
2015-2019 Medium-term management plan
Progress&
FY 2016 Management strategy

Ryuji Sato, President & CEO

Copyright © 2016 Milbon. All rights reserved.

16

2015-2019 Medium-term management plan
～Medium-term vision～

Medium-term vision
Milbon aims to be No. 1 in Asia and enter the top
five in the world in professional-use haircosmetics
Sales target at the medium-term end (FY2019)
Consolidated sales
Domestic
Overseas

Consolidated operating income

Copyright © 2016 Milbon. All rights reserved.

35,000 million JPY
28,500 million JPY
6,500 million JPY (18.6% to consolidated sales)

7,000 million JPY

17

2015-2019 Medium-term management plan
～Progress at the end of FY2015～

In the first year, the targets were achieved in net sales, overseas sales
ratio, operating income and all. Made a good start(Unit: million yen)

FY2015 target
Amount

FY2019 target(Medium-term end)

FY 2015 results% to sales

Amount% to sales

Amount

Prog.
rate*

% to sales

26,900100.0

27,377100.0

35,000

100.0

78.2

Domestic

23,68788.1

23,88087.2

28,50081.4

83.8

Overseas

3,213

11.9

3,496

12.8

6,500

18.6

53.8

Gross profit

18,15567.5

18,681

68.2

24,500

70.0

76.3

SG&A

13,49450.2

13,95451.0

17,50050.0

79.7

Operating income

4,661

17.3

4,727

17.3

7,000

20.0

67.5

Ordinary income

4,369

16.2

4,427

16.2

6,630

18.9

66.8

Net income

2,630

9.8

2,950

10.8

4,130

11.8

71.4

Net sales*FY2015 results to FY2019 target
Copyright © 2016 Milbon. All rights reserved.

18

2015-2019 Medium-term management plan
～FY2015 results by country～

East Asia market has continued to grow as the second pillar of
corporate strategy
Net sales (million yen)Prog.
rate*1(%)

FY2015 target

FY2015 results

FY2019 target

23,68723,88028,50083.8

United States
MILBON USA, INC.

552

642

840

76.4

China
Milbon Trading (Shanghai) Co., Ltd.

543

665

1,350

1,365

1,425

80

Other areas *2
East Asia *3 total

Japan
Milbon Co., Ltd.

Korea
Milbon Korea Co., Ltd.
ThailandMILBON (THAILAND) CO., Ltd.

South-east Asia *4 total

FY2015
actual2019
estimate
-

-

119.3

105.0

49.3

1yuan=
19.32

17.00

2,500

57.0

1won=
0.10760.1000

90

250

36.3

1baht=
3.58

3.20

673

672

1,560

43.1

-

-

2,361

2,558

4,490

2.36

-

-

280

293

1,020

28.8

-

-

*1 FY2015 results to FY2019 target*2 Taiwan, Hong-Kong, Vietnam, Malaysia, Turkey, Indonesia, Philippine and others
Copyright © 2016 Milbon. All rights reserved.

Exchange rate

19

1＄=

*3 China, Korea, Taiwan and Hong-Kong*4 Thailand, Vietnam, Malaysia, Indonesia, Philippine and others

2015-2019 Medium-term management plan
～CAPEX FY2015～

Establishing new domestic branches and expansion of production site
to be ready for the future 10 years
Use

FY2015Investment in
future growth

Main items

Return toshareholders

2,779 million yen• Land purchase and construction for new
Yumegaoka Plant• Establishmentexpansion of new domestic
branch (Ginza and Sapporo)• Establishment of new foreign rep office(Philippine)• Expansion of Thai warehouse

1,211 million yen• Dividend payout ratio 39.3%

ROE11.7%

Copyright © 2016 Milbon. All rights reserved.

10,000 million yen• Construction of new Yumegaoka Plant• Expansion of Thai Factory• Establishment of new domestic branches(Ginza, Yokohama, etc 8 domestic
locations, Philippines, etc. foreign
location)• M&A investment in the US and Europe• Business in cosmetics

7,000 million yen• Dividend payout ratio is targeted at 40%- 60 million yen

Increase in R/E
Capital efficiency

FY20193,000 million yen
ROE12% or over FY2019 target

20

Copyright © 2016 Milbon. All rights reserved.

21

Market environment & Corporate strategy
1. Polarized market in terms of quality and size

2. Trends in high-quality salon

3. Focus attention on new target generation

Copyright © 2016 Milbon. All rights reserved.

22

New 5 buds from growth factors
Sales growth inhair care category

Sales growth ingrey color category〜Effect of CMADK〜

New Field-activity
System started（support to lift designerʼs
experties）

Overseas sales
growthVilla Lodola
Business growth

Copyright © 2016 Milbon. All rights reserved.

（steady growth inChina and Korea）

23

Corporate branding strategy
BtoB

BtoBtoC
Viewpoint
From
End user

New Corporate Statement & Slogan

C orporate B randing
Copyright © 2016 Milbon. All rights reserved.

24

FY2016 Corporate Strategy ～Corporate Branding～Corporate museGinza stationjack(Corporate model)

Global Milbon

Press conference

Corporate
websiteCorporates
Branding tools

Copyright © 2016 Milbon. All rights reserved.

renewal25

support

1

Corporate muse

（Corporate model）
26*image sample
Copyright (C) 2016 MILBON Corporation. All Rights Reserved.

support

2

Ginza sation-jack27*image sample
Copyright (C) 2016 MILBON Corporation. All Rights Reserved.

support

3

Global Milbon
Press conference
28*image sample
Copyright (C) 2016 MILBON Corporation. All Rights Reserved.

Tools to be used at hair salons

Salon-treatment tool

Display shelf

Wagon

Paper/prastic bag

support4

Corporate branding tools
29

Copyright (C) 2016 MILBON Corporation. All Rights Reserved.

support

5

Corporate website renewal
30*image sample
Copyright (C) 2016 MILBON Corporation. All Rights Reserved.

Brand positioning
Premium
brand（System hair-care）

Cutting-edge
technology for
the JapanesemarketAujua

High-tech
Global standard
Global Milbon

Villa Lodola

Professional
brand
Plarmia

Jemile Fran
Copyright © 2016 Milbon. All rights reserved.

31

ElujudaFY2016 management strategy
Product branding
1. Premium brand (Values > Generation)
 Aujua (5,240 million yen)
 Villa Lodola (570 million yen)
 New brand Global Milbon (635 million yen)
2. Professional brand (Generation > Values) Jemile Fran
 Plarmia
 Elujuda, etc. (product grouping and branding to be done)

Copyright © 2016 Milbon. All rights reserved.

32

FY2016 management strategy
Overseas market (1)1. East Asia region (Milbon Shanghai, Milbon Korea, Taiwan, Hong-Kong)

2. South-east Asia region (Milbon Thailand, Malaysia, Vietnam, Indonesia, Philippine)

About Thai Factory

Copyright © 2016 Milbon. All rights reserved.

33

FY2016 management strategy
Overseas market (2)3. The US and Europe region (Milbon USA, Turkey)

Copyright © 2016 Milbon. All rights reserved.

34

Consolidated FY2016 target
Investment has been accelerated
for corporate branding and production capacity(Unit: million yen)Amount
FY2015
results

Net sales

FY2016
TargetIncrease

Growthrate(%)

27,37728,950

1,572

105.7

Domestic

23,88025,018

1,137

104.8

Overseas

3,496

3,932

435

112.5

Gross Profit

18,681

19,960

1,278

106.8

Sales by category

FY2015
results

FY2016targetHair care products

16,195

Hair coloring products
Permanent wave
products

OthersIncrease/decrease

Growthrate (%)

17,806

1,610

109.9

9,506

9,705

198

102.1

1,410

1,254

-156

88.9

264

185

-79

69.9

Capital expenditures and others
FY2015
results

Classification
SG&A

13,954

14,960

1,005

107.2

Operatingincome

4,727

5,000

272

105.8

Ordinary
income

4,427

4,700

272

106.2

Net income

2,950

3,100

149

105.1

CAPEX

2,779

4,329

Depreciation &Amortization

1,033

1,113

Amount

1,214

1,215

% to
sales

4.4%

4.2%

R&D expenses

Copyright © 2016 Milbon. All rights reserved.

35

FY2016targetStatements concerning the future such as the earnings forecasts given in this document
are based on information currently in the possession of the Company and on
assumptions that the Company considers reasonable.