Milbon Co., Ltd.
FY2023 Third Quarter (January 1, 2023 – September 30, 2023)
Financial Results Presentation Materials

November 10, 2023
© 2023 Milbon Co., Ltd.

0

Table of Contents
P3

Consolidated Operating Results

P4

Factors in YoY Changes in Consolidated Operating Income

P5

Consolidated Sales by Product Category

P17

Consolidated Trends in Capital Expenditures and R&D Expenses

P18

Trends in Fieldpersons (FPs)

P19

Consolidated Net Sales in Japan and Overseas

P20

Consolidated Operating Income in Japan and Overseas

P21

Outlook of Overseas Subsidiaries

P24

Revision to Consolidated Operating Results Forecast

P26

Factors Behind the Revised Consolidated Operating Results Forecast andFuture Initiatives

P32

Appendix

NOTES:

・Figures by the brand are based on shipment value.
・Milbon Co., Ltd. is hereinafter referred to as “the Group.”
Overseas subsidiary in each country is hereinafter referred to as “the Company.”
・“Vs. plan ratio” in this document refers to the comparison between the actual
performance and the revised performance forecast announced on August 10th.

© 2023 Milbon Co., Ltd.

1

Milbon Group
Financial Results for
FY2023 (64 th Term) Third Quarter

Masahiro Murai,
Managing Executive Director© 2023 Milbon Co., Ltd.

2

Consolidated Operating Results（FY2023 9 months）
 Sales grew thanks to the strong performance of haircare products both inJapan and overseas. Overseas, especially in the U.S. and South Korea, isdriving growth.
 Profit decreased due to the persistent high cost of raw materials, theinventory write-down of Elmista, the hairdryer, and the rising SG&A expenses
from the intensified sales activities.
(Unit:million yen)

FY20229 months%
total

FY20239 months%
total

Increase/
Increase/Vs. plan
Decrease
Decreaseratio (%)
ratio (%)

Net sales

32,407 100.0

34,150 100.0

1,742

5.4

(1.0)

Gross profit

21,35765.9

21,023

61.6

(333)

(1.6)

(6.5)

SG&A expenses

15,69448.4

17,607

51.6

1,912

12.2

0.1

Operatingincome

5,662

17.5

3,416

10.0 (2,245)(39.7)(30.3)

Ordinary income

6,042

18.6

3,502

10.3 (2,539)(42.0)(29.1)

Profit attributableto owners of parent

4,310

13.3

2,489

7.3 (1,821)(42.3)(28.3)© 2023 Milbon Co., Ltd.

3

Factors in YoY Changes in Consolidated Operating Income
•
•
•
•
•

The gross profit margin declined due to the persistent high cost of raw materials and the
product mix effect of lower sales of hair coloring products.
A write-down of 900 million yen was recorded due to the lowering of the sales forecast for
the hairdryer.
Marketing expenses increased as the company hosted educational seminars and events inJapan and overseas amid the COVID-19 recovery.
Personnel expenses increased due to an increase in personnel, annual salary increases, aswell as the base pay hike implemented in April.
Travel expenses increased due to higher airfares and other transportation costs, in addition
to more business travel.
Gross profit+1,148

SG&A expenses（Unit: million yen）

(581)

5,662

(900)
Impact of raw
material costs：(341)
Product mix andother factors：(240)

Increase in
FY2022 grossprofit9 months due to higher
sales© 2023 Milbon Co., Ltd.

Decreasein gross
profitmargin

(840)
(370)

(215)

(487)
Disposalandwritedowns

Increase in
Increase in
Increase inmarketing Increase in travel andotherexpenses such personnel transportation
expenses
as holding
expenses
expenses
events4

3,416
FY20239 months

Consolidated Sales by Product Category [Hair Care Products (1)]Consolidated Net Sales (FY2023 9 months)
FY20229 months

18,415

FY20239 months

Increase/
Decrease

19,933

1,517(Unit: million yen)

Increase/
Decrease ratio
(%)

8.2

Vs. plan ratio
(%)

0.0

•

Sales of Premium Brands rose 14.7% YoY. The strong performance of the Inmmetry Line,
Aujua’s new product, and the increase in the number of touchpoints of Global Milbon in
Japan and overseas contributed to the increase in sales.

•

Professional Brands sales decreased by 0.1% YoY. New products such as Elujuda Sun
Protect and Miincurl showed strong performance, while some brands that lacked productlaunches or market activities suffered a decline in sales.

•

The milbon:iD is progressing well, with 590,000 registered members, 5,720 registeredsalons, and 1,080 million yen in EC sales (720 million yen at the end of the 3Q of FY2023).

* Sales growth by brand is based on consolidated gross sales.

© 2023 Milbon Co., Ltd.

5

Consolidated Sales by Product Category [Hair Care Products (2)]New Products FY 2023 9 months
Aujua Hair Care Series Inmmetry LineA new line that corrects distortion*1 in the hair and frees fromthe habit of blow drying and ironing to condition hair,leading to lustrous and manageable hair with just a dry.
(Unit: million yen)

FY2023 target

1,100

FY20239 months

Progress rate (%)

780

71.0

Debut on February 11, 2023

Global Milbon Milbon& Aromatic Series
A haircare brand tailored to a variety of hair types, providing moisture,smoothness, and manageability while offering a selection of fragrances.
(Unit: million yen)

FY2023 target

250

FY20239 months

86

Progress rate
(%)

34.5

*1 A condition in which curly or wavy hair suffers from damage, losing its shine and smoothness* Sales figures for each brand are based on shipment value.

© 2023 Milbon Co., Ltd.

6

Debut on April 11, 2023

Consolidated Sales by Product Category [Hair Care Products (3)]Miincurl Iron Keep Primer
A pre-ironing primer oil that protects hair from the heat of the iron andkeeps the ironed hair design soft and hydrated for a long time.
(Unit: million yen)

FY2023 target

150

FY20239 months

143

Progress rate (%)

95.9

Debut on March 11, 2023

Elujuda Sun Protect
Elujuda’s new sun care products that shield hair from theharmful rays of the sun while maintaining its moisture throughout day.
Four items with different forms and usage timings to choose from.
(Unit: million yen)

FY2023 target

400

FY20239 months

454

Progress rate (%)

113.7* Sales figures for each brand are based on shipment value.

© 2023 Milbon Co., Ltd.

7

Debut on March 11, 2023

Premium Brand: Aujua
New products “Inmmetry Line” led the growth in Japan.
Number of Salons*1
FY2022

6,022

FY2023

6,633(Unit: salons)
Increase/
Decrease

Increase/
Decrease ratio (%)

611

10.1

Consolidated Gross Sales (FY2023 9 months)
FY20229 months

6,838

FY20239 months

7,523

Increase/
Decrease(Unit: million yen)
Increase/
Decrease ratio (%)

685

10.0

Brand Concept

Product Range

A premium hair care brand born inconsideration of Japan’s social climate,culture, and characteristics of the hairof the Japanese people.

Aujua supports diverse perspectives on
beauty, now and into the future, byaddressing each individuals' hair and skinconcerns and offering the mostappropriate item for that time.

What is Aujua?
A wide range of product lineups offering
personalized treatment for eachindividual’s needs and hair type.

・5 series / 17 lines / 112 items
Eternal stage series
Aging care series(Number of salons)
7,000
6,000
5,000
4,000

3,000
2,000
1,000
0

Hair care series
Scalp care series

Sales

Climatic care series

Number of salons＊ Figures in the graph are based on non-consolidated total sales
through 2018 and on consolidated total sales since 2019.

*1 Calculated based on the past year's shipment results for both Japan and overseas.
* Sales figures are based on shipment value.

© 2023 Milbon Co., Ltd.

Trends in sales & number of salons(Billion yen)
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0

8

Premium Brand: Global Milbon
Increases in the number of touchpoints in Japan and overseas, particularly in the
U.S., contributed to the increase in sales.
Number of Salons*1
FY2022

FY2023

18,40021,919(Unit: salons)
Increase/
Decrease

3,519

Consolidated Gross Sales (FY2023 9 months)
FY20229 months

3,627

FY20239 months

4,510

Increase/
Decrease ratio (%)

Increase/
Decrease

19.1(Unit: million yen)
Increase/
Decrease ratio (%)

883

24.3

Trends in sales & number of salons(Billion yen)
6

Brand Concept

What is “Global Milbon”?

5

A system hair care brand thatcultivates the “unique beauty” ofeach individual, achieving “360
Degree Beautiful Hair.”Based on the hair research technology wehave cultivated since our founding, weanalyzed diverse hair characteristics from
20 countries. Our analysis broke down thefactors for common hair damage
phenomena derived from our research,leading to the establishment of a new haircare system. This line contains ingredientsthat penetrates the shaft with its highaffinity to repair hair’s inner porosity andto improve hair’s overall integrity, from theinside out.

4

Countries and regionswith Salons

The brand is available in the following
countries and regions:Japan, USA, Hong Kong, China, Thailand,
Taiwan, Turkey, Malaysia, Vietnam,
Indonesia, the Philippines, Singapore,
Germany, Korea, Canada

3
2
1
0
2016

2017

2018

Sales

2019

2020

2021

2022

Number of salons

2023
Target＊ Figures in the graph are based on non-consolidated total sales
through 2018 and on consolidated total sales since 2019.

* Sales figures are based on shipment value.

© 2023 Milbon Co., Ltd.

(Number of salons)
24,00022,00020,00018,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0

9

Consolidated Sales by Product Category [Hair Coloring Products]
Consolidated Net Sales (FY2023 9 months)
FY20239 months

FY20229 months

12,333••

Increase/
Decrease

12,431(Unit: million yen)

Increase/
Decrease ratio (%)

97

0.8

Vs. plan ratio
(%)

(2.1)

Hair coloring products sales in Japan decreased by 1.2% YoY. Inventory adjustment by
distributors, which impacted us until the first half of the year, is showing signs of settling
down, but sales are still believed to be limited by the plateauing demand for hair coloring
using hair bleach. The strong performance of “Ordeve Crystal High Bright,” launched in
July, will allow us to enhance further our proposal and education activities for hair coloringproducts.
Overseas, sales rose 7.8% YoY. Gray color products in South Korea, where hair coloringproducts are the main source of sales, and SOPHISTONE in the U.S. drove the growth.

New Products FY 2023 9 months
Ordeve Crystal High Bright

A new line of Ordeve Crystal, a gray color brand launched in 2015.
It is a “fashion color for mature people” that brings brightness, vibrancy, andtransparency akin to fashion colors.
(Unit：million yen)

FY2023 target

150

FY20239 months

132

Progress rate (%)

88.2* Sales growth by brand is based on consolidated gross sales.

© 2023 Milbon Co., Ltd.

10

Debut on June 8, 2023

Premium Organic Brand: Villa Lodola (1)Sales remained steady, especially for the mainstay product Villa Lodola Color.
Number of Salons*1(Unit: salons)

FY2022

FY2023

12,45813,262

Increase/
Decrease

Increase/
Decrease ratio (%)

804

6.5

Consolidated Gross Sales (FY2023 9 months) (Unit: million yen)
FY20229 months

964

FY20239 months

991

Increase/
Decrease

Increase/
Decrease ratio (%)

27

2.8

Brand Concept
Organic brand that proposes lifestyles that fulfill the beauty of people andthe environment

What is Villa Lodola?
Based on the philosophy of "Beauty, the Organic Way“, the brand is fullycommitted to the natural environment not only in its products, but also in
its manufacturing process, packaging, and promotional tools.
All products are certified by ICEA, an Italian organic certification
organization. Organic hair care born in Italy, where nature's blessings bring
beauty to hair and skin.

Trends in sales & number of salons(Million yen)
1,600

(Number of salons)
16,0001,400

14,0001,200

12,0001,000

10,000

800

8,000

600

6,000

400

4,000

200

2,000

0

0

Sales

Number of salons＊ Figures in the graph are based on non-consolidated total sales
through 2018 and on consolidated total sales since 2019.

*1 Number of contracted salons* Sales figures are based on shipment value.

© 2023 Milbon Co., Ltd.

11

Premium Organic Brand: Villa Lodola (2)New Products FY 2023 9 months
Villa Lodola Renovo Tempus / Fulgens
A series that extends hair color longevity withthe reparative effects of nature's blessings,
promoting healthy beauty in both the scalp and hair.
Two types of shampoos and treatments to choose from,each tailored to different hair types.
(Unit：million yen)

FY2023 target

100

FY20239 months

46

Progress rate (%)

46.0* Sales figures for each brand are based on shipment value.

© 2023 Milbon Co., Ltd.

12

Debut on April 11, 2023

Consolidated Sales by Product Category [Cosmetic Products (1)]Consolidated Net Sales (FY2023 9 months)
FY20229 months

391

FY20239 months

Increase/
Decrease ratio(%)

Increase/
Decrease

421(Unit: million yen)

30

7.7

Vs. plan ratio
(%)

(1.8)

• Imprea, the brand shipped directly to salons*1, saw an increase in sales thanks to the new
products that coordinate well with hair color and are easy for hairstylists to recommend totheir customers. However, the existing skincare products are struggling to grow, and we will
implement strategies to keep customers loyal.
• “Beauty Up Mist”, a product from the “Im” brand that is distributed by distributors*2, waslaunched in July and achieved sales that significantly exceeded the full-year target in thefirst month. We plan to increase the number of touchpoints by leveraging the high ratingsof the product from hairstylists who have tried it and by creating more opportunities forhairstylists to try it.

*1 Same as our Premium Brands of haircare products, the product inventory is shipped directly from Milbon to salons while distributors remain to be part ofour supply chain.
*2 Same as Professional Brands of haircare products, distributors stock products and sell them to salons.

© 2023 Milbon Co., Ltd.

13

Consolidated Sales by Product Category [Cosmetic Products (2)]New Products FY 2023 9 months
iMPREA Milky Soufflé UV
An airy, soufflé-textured sunscreen cream that blocks powerfulultraviolet rays and protects the skin from damage caused by dryness
and other factors to the stratum corneum.
(Unit: million yen)

FY2023 target

FY20239 months

32

48

Progress rate (%)

152.6

Debut on February 11, 2023

Im Beauty Up Mist
Make-up setting mist launched by a new cosmetics brand“Im," a distributor-distributed brand. Two types are available tochoose from based on your favorite makeup texture.
(Unit: million yen)

FY2023 target

20

FY20239 months

39

Progress rate (%)

196.1* Sales figures for each brand are based on shipment value.

© 2023 Milbon Co., Ltd.

14

Debut on June 6, 2023

Premium Brand: iMPREA
Sales increased driven by new products, although existing products sales struggled.
Number of Salons*1
FY2022

1,601(Unit: salons)

FY2023

Increase/
Decrease

1,914

Increase/
Decrease ratio (%)

313

19.6

Consolidated Gross Sales (FY2023 9 months) (Unit: million yen)
FY20229 months

391

FY20239 months

Increase/
Decrease

402

Increase/
Decrease ratio (%)

10

2.8

Brand Concept

What is iMPREA?

The brand concept of iMPREA is “Revolutionize Your Aurawith your Professional Stylist”. We will provide new beauty
value by leveraging Professional Stylists’ ability to provide
solutions, by utilizing their strengths.

iMPREA is a salon exclusive brand created through joint research by KOSÉ,
which specializes in skin research, and Milbon, which specializes in hair research.
We will improve the complexion by establishing a good balance of moisture in
the “horny layer keratin" on the surface of the skin, which holds the key tocomplexion.

“Revolutionize Your Aura with your Professional Stylist”
This is a communication method that takes advantage of the unique strengths of hair salons, in which the hair stylist crafts your aura byapproaching a total impression of both the hair and face.
We deliver an aura change that is unique to you.
*1 Calculated based on the past year's shipment results.
* Sales figures are based on shipment value.

© 2023 Milbon Co., Ltd.

15

Consolidated Sales by Product Category [Other]
New Products FY 2023 9 months
Elmista（Results for dryer unit only）
A hair dryer, jointly developed with Panasonic, thatmicronizes and atomizes beauty serum.
Five types of serums are available to choose fromaccording to hair concerns and desired texture.
(Unit: million yen)

FY2023 target

300*1

FY20239 months

80

Progress rate (%)

26.7

Debut on April 11, 2023

AlanousNearly 20 years of 5-ALA research led to the creation of a beauty
supplement that comes in two types: “ALANOUS 5-ALA,” afunctional food that helps maintain skin hydration, and“ALANOUS 5-ALA BEAUTY MULTI CARE,”a health food that supports overall wellness.
(Unit: million yen)

FY2023 target

70

FY20239 months

41

Progress rate (%)

59.8* Sales figures for each brand are based on shipment value.

© 2023 Milbon Co., Ltd.

16

Debut on September 7, 2023

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

Category

FY2019FY2020

FY2021

FY2022

FY20239 months

FY2023
Plan

Capitalexpenditures

1,605

1,917

4,644

4,097

2,112

2,927

Depreciation andamortization

1,453

1,562

1,777

2,026

1,635

2,301

Amount

1,534

1,581

1,741

2,074

1,666

2,372

% to sales

4.2

4.4

4.2

4.6

4.9

4.8

R&D exp.

FY2023 CAPEX Main Items (Plans)
Sales Offices, Studios• Establishment andmaintenance of businesslocations(Relocation of Fukuoka
Sales Office, etc.)• HR Development Center

Digital•••milbon:iD
education:iD
Smart Salon (Digital marketing,etc.)

Production system•

Yumegaoka Factory(Machinery andequipment)
Thailand Factory(Machinery andequipment)

Others•Internal infrastructure,
production equipment, etc.

•

Innovation Center•© 2023 Milbon Co., Ltd.

17

Trends in Fieldpersons (FPs)
Fieldpersons Trends (by Country) (Average number of FPs during the period)
FY2021JAPANUSA
MILBON USA, INC.
CHINA
Milbon Trading(Shanghai) Co., Ltd.

SOUTH KOREA
Milbon Korea Co., Ltd.

Others *1

FY2022The number of Fieldpersons reported
represents the average number during theperiod and is not as of January 1. Please
note that the calculation method waschanged starting from FY2022 3Q, and thefigures for 2021 have been recalculated
accordingly based on the new method.

FY2023

328.2

335.4

350.5

102

105

-

13.2

13.0

13.3

68

102

-

29.8

31.6

34.3

72

66

-

26.0

32.8

33.8

130

126

-

36.0

36.2

37.8

41

63

-

Upper column: Average number of FPs during the period(persons)
Lower column: Net sales per FP (million yen)
(As of September 30, 2023)-28 FPs joined in April 2023, and are currently in OJT
on site.
-9 FPs are scheduled to join in October 2023.
(The above 37 FPs are not included in the left chart.)*1 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others© 2023 Milbon Co., Ltd.

18

Consolidated Net Sales in Japan and Overseas
FY2023 9 months(Unit: million yen)

FY20229 months

FY20239 months

Increase/
Decrease

Increase/
Decrease
ratio

Changes in local
currency base*1

Vs. plan ratio

(%)

(%)

(%)

Net sales% to sales

Net sales% to sales

32,407100.0

34,150

100.0

1,742

5.4

4.3

(1.0)

JAPAN

25,062

77.3

25,829

75.6

767

3.1

3.1

(0.9)

Overseas

7,345

22.7

8,320

24.4

975

13.3

8.5

(1.4)

USA

882

2.7

1,225

3.6

342

38.9

28.0

5.9

CHINA

1,649

5.1

1,729

5.1

79

4.8

3.3

(9.8)

SOUTH
KOREA

3,150

9.7

3,495

10.2

345

11.0

5.4

1.3

Other*2

1,662

5.1

1,870

5.5

207

12.5

9.3

(2.2)

Consolidated net sales[Reference] Exchange rate

(Unit: yen)

FY2022 9 months FY2023 9 months

USA（USD）
CHINA（CNY）
SOUTH KOREA（KRW）

128.6719.44

139.5519.73

0.10110.1064*1 Figures are the rates of change in real terms on a local currency basis*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany, and others© 2023 Milbon Co., Ltd.

19

Consolidated Operating Income in Japan and Overseas
FY2023 9 months(Unit: million yen)

FY20229 months
OperatingincomeFY20239 months

Operatingincomeratio(%)

OperatingincomeOperatingincomeratio(%)

Increase/
Decrease

Increase/Vs. plan ratio
Decrease ratio
(%)

(%)

Consolidated
operating income

5,662

17.5

3,416

10.0

(2,245)(39.7)(30.3)

JAPAN

4,587

18.3

2,373

9.2

(2,213)(48.3)-

Overseas

1,074

14.6

1,042

12.5

(32)

(3.0)

-

(193)

(21.9)

(48)

(4.0)

145

-

-

CHINA

(1)

(0.1)

69

4.0

70

-

-

SOUTH
KOREA

1,092

34.7

991

28.4

(101)

(9.3)

-

Other*

176

10.6

30

1.6

(146)

(82.9)-

USA* Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany, and others© 2023 Milbon Co., Ltd.

20

Outlook of Overseas Subsidiaries (1)USA (Milbon USA)•The 3Q sales of this year showed a significant increase, partly as a result of the recovery
from the delayed sales to the 4Q caused by the shipment issues in the 3Q of the previous
year.

•

Global Milbon haircare products, which make up 80% of the sales, continues to perform
well. The Company has expanded its new touchpoints by successfully turning distributor
sales reps and hairstylists into product fans through various educational events.

•

Sales of SOPHISTONE, a hair color brand tailored for the European and North American
markets, also saw an increase in sales as the Company conducted educational events tointroduce the product and turn the attendees into product fans.

•

Revenue narrowed the deficit due to higher sales, but it remained in the red due to
expenses related to educational events held to expand the sales of products as well as
higher logistics costs. In terms of logistics costs, the integration of logistics centers has
reduced warehousing costs, but rising shipping costs remain an issue. In response, theCompany will work to improve its logistics system.

Figures in the text are based on local currency.

© 2023 Milbon Co., Ltd.

21

Outlook of Overseas Subsidiaries (2)CHINA (Milbon China)•

Salon customers are changing and demanding more reasonable and high-quality services
from salons. The number of customers visiting salons and the unit price per service havebeen on a downward trend, and the Company has been affected by this trend, with sales
declining in the three months of the 3Q. However, due in part to a rebound to the
lockdown of some areas in the 2Q of last year, sales increased on a cumulative basis.

•

The Company provides salons with service planning and technical training to adapt tocustomer changes. In addition to these initiatives, the introduction of professional-use
treatments such as “Grand Linkage” and “Global Milbon” to salons has led to steady
growth in haircare products.

•

Sales of hair coloring products were weak due to a decline in the frequency of color
services among salon customers as well as the outbreak of counterfeit products. The
Company will seek to differentiate its products by offering service planning and education
to salons to increase the value of in-salon coloring, and will accelerate proposals of thehair color product Ordeve Addicthy, which caters to trends among young customers.

•

The cumulative profit for the 3Q increased due to higher sales, despite higher personnel
expenses due to increased headcount and higher travel and transportation expenses due
to increases in hotel and airfare prices.

* Figures in the text are based on local currency.

© 2023 Milbon Co., Ltd.

22

Outlook of Overseas Subsidiaries (3)SOUTH KOREA (Milbon Korea)•

As for hair coloring products, which account for more than 70% of total sales, gray color
products remained steady due to the aging population. On the other hand, fashion color
products are affected by changes in color trends. In order to increase resilience tochanging trends, the Company aims to achieve sustainable growth by further
strengthening the haircare and perm categories in the next fiscal year and beyond.

•Sales of haircare products, especially Global Milbon, performed well. Sales are increasing
due to the expansion of touchpoints through collaboration with excellent distributor
representatives.

•

The decrease in profit was due to higher marketing expenses for educational events
targeting Millennial and Gen Z hairstylists, who have a high influence on the industry. In
the 4Q, the Company will continue to hold events to increase awareness of its products
and education, as well as affinity for Milbon.

* Figures in the text are based on local currency.

© 2023 Milbon Co., Ltd.

23

Revision to Consolidated Operating Results Forecast (1) The revision of the consolidated net sales forecast is due to the fact that the full-year sales
forecast for “Elmista,” the hairdryer introduced in Japan has been reduced by 180 million
yen, from 300 million yen to 120 million yen.
 In addition to lower net sales, we lowered profit forecast due to a 900 million yen inventory
write-down of “Elmista.” Despite our sales efforts, sales did not proceed as expected. After
recalculating the sales forecast, it became clear that we would have to keep the product ininventory for a longer period of time than originally expected, resulting in the write-down in
the 3Q.

FY2022

FY2023
Initialtarget% totalFY2023
Revisedtarget(As ofAugust 10)

Net sales

45,23849,200100.0%

Gross profit

29,50932,16021,957(Unit:
million yen)

SG&A
expenses
OperatingincomeOrdinary
incomeProfitattributableto owners ofparent© 2023 Milbon Co., Ltd.

% totalFY2023
Revisedtarget% totalIncrease/
Decrease

48,000100.0%

47,820100.0%

(180)

65.4%

31,25065.1%

29,90062.5%(1,350)23,86048.5%

23,90049.8%

23,900

50.0%

0

7,551

8,300

16.9%

7,350

15.3%

6,000

12.5%

(1,350)

7,829

8,250

16.8%

7,370

15.4%

6,160

12.9%

(1,210)

5,577

5,800

11.8%

5,200

10.8%

4,260

8.9%

(940)

24

Revision to Consolidated Operating Results Forecast (2)Factors Affecting Changes in Operating Income（Unit: million yen）
Inventory write-down
for Elmista: (904)Others：
(210)

7,350
(236)

(1,114)6,000

Revised target for
operating income(As of August 10,
2023)© 2023 Milbon Co., Ltd.

Decrease ingross profit
due to lower
sales forElmista andother factors

Disposal andwrite-downs
25

Revisedforecast for
operatingincomeMilbon Group
Factors Behind the Revised
Consolidated Operating Results Forecast
and Future Initiatives
Ryuji Sato,
Representative Director, President and CEO© 2023 Milbon Co., Ltd.

26

Factors That Led the Hairdryer Business to Fall
Short of the Goal
Sales of the hairdryer fall short of the target due to overly
optimistic sales goals and inadequate pre-launch review of issues.
Overly optimistic sales goals• Overconfidence in the distinctive

Overconfidence in the
product’s performance andbrand partnerships led tooverly ambitious sales targets.

product feature of “beauty serum
atomization”• Overreliance on the association
with brands such as Aujua andGlobal Milbon as a purchasing
motivator

Inadequate pre-launch
review of issues

Insufficient strategies topromote the product tosalons resulted in a
deficiency in the customer
journey from experiencing
the product to making apurchase.

• Insufficient verification ofchallenges related to theprofessional use of the product insalons.
• Insufficient preparation due to lackof experience in selling andmarketing beauty appliances.
© 2023 Milbon Co., Ltd.

27

Marketing Policy for Elmista During the Year
Based on the successful cases from July to September, we will
implement initiatives to boost year-end sales with supportive
salons and carry the momentum into the next year.
Successful
High level of customer satisfaction with the hair finish aftercases from Jul. using the product.
to Sep.
The appearance of salons that can sell the product to theircustomers by using creative techniques.
Conducting a trial and purchase event for milbon:iD customers.
Creating opportunities
for customers to try the
product before buying it• Rental service forcustomers (11/1-12/31)
started.
• This service allows
customers to rent Elmista
for 1 week for 1,980 yen
via “Rentio”, a home
appliance rental service.

© 2023 Milbon Co., Ltd.

Initiatives to raiseawareness• Pop-up at Panasonic
Beauty OMOTESANDO• Rental service
information email sent
to milbon:iD members.
28

Year-end promotion• Buy one dryer unit
and get six Airconc(beauty serum
cartridges) for free.

Marketing Policy for Elmista for Next Years andBeyondUsing the results of the year-end sales campaign in 2023 as afoundation, we will launch new initiatives.
Product• Launch two types ofAirconcs from Elujuda
brand, our mostrenowned brand forleave-in treatments.

Sales activity• Expand the distributionof Elmista by adapting it
to a distributor-basedmodel for salons(previously only available
through direct salondelivery).
• Conduct introduction

activities targeting the
40,000 salons that are
the touchpoints for Eljuda.

© 2023 Milbon Co., Ltd.

29

Awareness / experience• Enhance productawareness through inhouse social medias andYouTube.

• Provide opportunities toexperience the productthrough ongoing rental
services.

Significance of New Business Initiatives
We are working on new business initiatives in new productcategories as the third growth strategy, alongside 'Hair Care' and'Overseas,' aiming for sustainable growth.

New Business
Skincare, beauty healthcare,beauty appliance, etc.,
including collaboration
with other companies

HaircareHaircare in a broader sense,
including color and perm

Overseas
Promoting local production
for local consumption in each region
where we conduct business.

The key points of new business initiatives
Decrease in the number ofcustomers due to population decline

Productivity improvement

The need for in-person service

ProblemofsalonsStrengths
The need for repeated, periodic visitsofsalonsThe need for an extended stay

Potential to improve the productivity of salons byexpanding product sales and offering other services
beyond hair.
© 2023 Milbon Co., Ltd.

30

Return to Shareholders
Dividend Forecast
Year-end dividend is set at 48 yen, as originally planned.
Total dividend for the year is expected to be 88 yen.

FY2021

FY2022

FY2023

FY2023
Forecast

End of 2Q

30

40

40

-

End of FY

38

46

-

48

Total

68

86

-

88

43.3%

50.2%

-

67.2%

（Unit: yen）

Consolidated
dividend
payout ratio© 2023 Milbon Co., Ltd.

31

<Appendix> Hair Care Brand Positioning Map
Premium

BrandsProfessional© 2023 Milbon Co., Ltd.

32

BrandsWith respect to the business forecasts included in this document, any
statement that is not historical fact 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 anumber of other factors.
© 2023 Milbon Co., Ltd.

33