Milbon Co., Ltd.
FY2019 Second Quarter (January 1, 2019 – June 30, 2019)
Financial Results Presentation Materials

July 31, 2019
Copyright © 2019 Milbon. All rights reserved.

Table of Contents

P3

Consolidated Operating Results

P4

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

P20

Progress in FY2019 (60 th Term)

Copyright © 2019 Milbon. All rights reserved.

1

Milbon Group
Financial Results for
FY2019 (60 th Term) Second Quarter

Masahiro Murai, Executive Director

Copyright © 2019 Milbon. All rights reserved.

2

Consolidated Operating Results (FY2019 6 months)

Steady progress toward achieving full-year targets（Unit: million yen）

FY20186 months*

FY20196 months*

Increase/
Decrease

Increase/
Decrease ratio (%)

Net sales

16,247

17,242995

6.1

Gross profit

10,823

11,496672

6.2

SG&A expenses

7,847

8,406

558

7.1

Operating income

2,975

3,089

113

3.8

Ordinary income

2,746

2,824

78

2.8

Profit attributable toowners of parent

2,137

1,999

(137)

(6.4)

*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for thesecond quarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

3

Consolidated Sales by Product Category [Hair Care Product]
While premium brands have continued toあ
grow, professional brands are a challenge

FY2019 6 months
FY20186 months*

9,615(Unit: million yen)

FY20196 months*

Increase/
Decrease

9,897

Increase/
Decrease ratio (%)

281

2.9

• The Aujua Eternal Stage Series Diorum Line released in March has contributed to
the growth of Aujua, as we have been working to propose high unit price menus
for salons.
• The acquisition of new salons led by distributors has continued to progress forthe premium brand “milbon,” and growth has been achieved through an increasein new salons. We will continue to strengthen efforts aimed at increasing sales
at existing salons.
• The new brand CRONNA, a professional brand product for adult women, wasintroduced in April. Although sufficient results have not been achieved yet, thechallenges are becoming clear, and we will work to catch up during the second
half.
*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for thesecond quarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

4

Consolidated Sales by Product Category [Hair Care Product]
New Products

FY2019 6 months
Aujua Eternal Stage Series Diorum Line
Gives a beautiful freshness to hair that is experiencing aging in acomposite manner.
Supports the feelings of women who always want to have beautiful hairby nurturing fresh, elastic, and shiny hair.
（Unit: million yen）

FY2019 target*

FY2019 6 months* Progress rate (%)

339

800

42.4

March 8, 2019 Debut

CRONNA
With gentle and simple care, helps busy women experience beautiful
hair.
Supports the desires of women who want their hair to always receive
praise for being beautiful.
（Unit: million yen）

FY2019 target*

FY2019 6 months* Progress rate (%)

750

176

23.6

*Gross sales figures are on a non-consolidated basis
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5

April 10, 2019 Debut

A Premium Brand, Aujua
Aujua Eternal Stage Series Diorum Line, a new product, performed well
Number of salons

FY2018*1

FY2019*1

3,271

3,480

(Unit: salons)

Increase/
Decrease

Increase/
Decrease ratio (%)

209

6.4

Consolidated sales (FY2019 6 months) （Unit: million yen）
FY20186 months*2

FY20196 months*2

2,886

3,265

Increase/
Decrease

Increase/
Decrease ratio (%)

378

13.1

Brand concept

Product range

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

A wide-ranging line 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

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.

Trends in sales & number of salons(Million yen)

4,000

7,000

3,500

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500

0

*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 © 2019 Milbon. All rights reserved.

6(Number of salons)

8,000

0

販売高
Sales

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

FY2019*1

5,571

7,040

(Unit: salons)
Increase/
Decrease

Increase/
Decrease ratio (%)

1,469

26.4

Consolidated sales (FY2019 6 months) （Unit: million yen）
FY20186 months*2

FY20196 months*2

948

1,173

Increase/
Decrease

Increase/
Decrease ratio (%)

225

23.8

Trends in sales & number of salonsBrand concept

What is “milbon”?

3,000

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 hairdamage.
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.

2,500

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

8,000

7,000
6,000

2,000

5,000

1,500

4,000
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 © 2019 Milbon. All rights reserved.

7(Number of salons)(Million yen)

2017

Sales
販売高

2018

2019
2019目標targetNumber of salons
窓口軒数

Consolidated Sales by Product Category [Hair Coloring Product]
Ordeve Addicthy has grown and driven sales for the product category
FY2019 6 months(Unit: million yen)

FY20196 months*1

FY20186 months*1

5,735

Increase/
Decrease

6,423

Increase/
Decrease ratio (%)

687

12.0

• Sales for the fashion color Ordeve Addicthy have continued to grow. A clear segregation between the twoseries, Ordeve Addicthy and Ordeve that is strong in brown color variations, has been emerging.
• In gray-hair coloring products, a new product, 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 the Ordeve
Ledress hair manicure that was released in March, we will pursue taking a larger share of the gray-haircoloring product 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.

FY2018 6 months*2 FY2019 6 months*2

1,310

1,886

Increase/
Decrease(Unit: million yen)

Increase/
Decrease ratio (%)

576

44.0

FY2017 Debut*1 The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the second
quarter of FY2018 have also been reclassified based on the same standard.
*2 Gross sales figures are on a non-consolidated basis.
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8

Consolidated Sales by Product Category [Hair Coloring Product]
New Products
FY2019 6 months
Ordeve 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*

FY2019 6 months*

Progress rate
(%)

194

27.8

700

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*

FY2019 6 months*

Progress rate
(%)

119

15.0

800

*Gross sales figures are on a non-consolidated basis
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9

June 6, 2019 Debut

A Premium Organic Brand, Villa Lodola (1)Villa Lodola Color continued to be strong and drove brand sales
Number of salons
FY2018year-end(Unit: salons)

FY2019Q2-end8,085

Increase/
Decrease

8,612

Increase/
Decrease ratio (%)

527

6.5

Consolidated sales (FY2019 6 months) （Unit: million yen）
FY20186 months*

FY20196 months*

510

563

Increase/
Decrease

Increase/
Decrease ratio (%)

52

10.4

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

What is Villa Lodola?

(Million yen)

(Number of salons)

1,400

12,000

1,200

10,000

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 © 2019 Milbon. All rights reserved.

Trends in sales & number of salons

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 (FY2019 6 months) （Unit: million yen）
FY2018 6 months* FY2019 6 months*

371

Increase/
Decrease ratio(%)

Increase/
Decrease

423

52*Gross sales figures are on a non-consolidated basis
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11

14.2

FY2015 Debut

Consolidated Statement of Earnings (FY2019 6 months)<Consolidated Statement of Earnings>
FY20186 months*
Net sales
Cost of sales

% to
sales

16,247 100.0
5,423

33.4

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

FY20196 months*

17,242 100.0
5,746(Unit: million yen)

% to
sales

33.3

FY20186 months*

FY20196 months*% totalsales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

9,615

9,897

57.4

281

2.9

Hair coloringproducts

5,735

6,423

37.2

687

12.0

797

770

4.5

(26)

(3.4)

-

47

0.3

47

-

98

103

0.6

5

5.1

Permanent wave
products
Cosmetic products

Gross profit

10,823

66.6

11,496

66.7

SG&A
expenses

7,847

48.3

8,406

48.8

Operatingincome

2,975

18.3

3,089

17.9

Ordinary
income

2,746

16.9

2,824

16.4

Profitattributable toowners ofparentOthers<Major factors for the increase/decrease>

SG&A expenses
Personnel expenses (+283 million yen):
Increased due to increase in number of personnel
and system changes (change from corporate
housing to housing allowance system, etc.)

Profit attributable to owners of parent
2,137

13.2

1,999

11.6

While there was a gain of 305 million yen fromthe sale of cross-shareholdings in the firstquarter of FY2018, there was no such gain in
FY2019.

*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for thesecond quarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

12

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

FY2015FY2016FY2017FY2018FY2019Jan.-Jun.

FY2019Plan

Capital expenditures

2,779

4,262

1,570

1,149

921

1,710

Depreciation andamortization

1,033

1,077

1,272

1,370

710

1,498

Amount

1,214

1,232

1,422

1,479

746

1,535

% to sales

4.4

4.2

4.3

4.2

4.3

4.2

Category

R&D exp.

FY2019 CAPEX Main Items (Plan)

•
•
•
•

Establishment of a new domestic base (Matsuyama Sales Office)Compounding equipment for plant (automatic dye weighing machines)
Build system infrastructure
EC site platform*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for thesecond quarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

13

Trends in Market Related Data, Trends in Fieldpersons (FPs)
Market trends (Japan)
2013

2014

2015

2016

2017

2018

Remarks

Number of salons(salons)

234,089

237,525

240,299

243,360

247,578―

Number of hair
dressers (people)

487,636496,697504,698509,279

523,543―

Number of beauty
customers(thousand people)

38,46837,84737,39537,02336,64336,202(As of Feb. 1)

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 theFieldpersons trends (by country) fiscal year (As of December 21 for 2017 and before))
2015
JAPAN

2017*1

2016

2018

2019

237

249

258

269

279

100

102

105

111

-

USA
MILBON USA, INC.

12

9

12

13

13

53

63

48

48

-

CHINA
Milbon Trading (Shanghai) Co., Ltd.

18

18

19

22

21

36

40

50

62

-

KOREA
Milbon Korea Co., Ltd.

19

20

23

25

30

75

80

84

82

-

7

THAILAND
Milbon (Thailand) Co., Ltd.

6

6

9

7

15

14

13

17

Others(As of June 30, 2019)
6 FPs joined in October 2018, andare currently in OJT on site
31 FPs joined in April 2019, andare currently in training(The above 37 FPs are not includedin the left chart.)-

7

VIETNAMMILBON VIETNAM CO., LTD*2Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)

-

16

19

24

26

21

42

47

38

43

-

*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
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14

Consolidated Net Sales and Operating Income in Japan and Overseas■ Net Sales (FY2019 6 months)
FY2018 6 months*

Amount(Unit: million yen)

FY2019 6 months*% totalAmount% totalIncrease/
Decrease

Increase/
Decreaseratio (%)

Domestic

13,632

83.9

14,383

83.4

751

5.5

Overseas

2,614

16.1

2,859

16.6

244

9.3

Total

16,247100.0

17,242

100.0

995

6.1

■ Operating Income (FY2019 6 months)
FY2018 6 months

FY2019 6 months(Unit: million yen)

Increase/
Increase/
Decrease
Decreaseratio (%)

Operating income ratio(％)
FY2018FY20196 months 6 months

Amount% totalAmount% totalDomestic

2,649

89.0

2,723

88.2

74

2.8

19.4

18.9

Overseas

326

11.0

365

11.8

39

11.9

12.5

12.8

Total

2,975

100.0

3,089

100.0

113

3.8

18.3

17.9

*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for thesecond quarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

15

Outlook of Overseas Subsidiaries (1)■ Sales of overseas subsidiaries (non-consolidated and local currency basis)
Currencies(unit)FY2018(Jan.-Jun.)

FY2019(Jan.-Jun.)

Increase/
Decrease ratio(%)

USA
MILBON USA, INC.

US dollar(thousand)

2,821

2,869

1.7

CHINA
Milbon Trading (Shanghai) Co., Ltd.

Yuan
(thousand)

41,351

46,826

13.2

Won(million)

9,827

11,927

21.4

THAILAND
Milbon (Thailand) Co., Ltd.

Baht
(thousand)

16,164

21,07430.4

VIETNAMMILBON VIETNAM CO., LTD

Dong(million)

-

6,504

-

KOREA
Milbon Korea Co., Ltd.

Forex rates
FY2018 (yen)Forex rates
FY2019 (yen)1 dollar =108.67110.08

1 yuan =

17.09

16.23

1 won =

0.09990.09591 baht =

3.44

3.49

-

0.004783

USA MILBON USA, INC
In the direct sales category in Manhattan, results continued to be strong for Global Milbon, and market share
grew for every salon that has introduced products, as they are not available on the Internet, a well-received
fact. In the distributor category, distributors following Chinese salons in New York that we started transactions
with in the second half of the previous fiscal year have started the Global Milbon business with Korean salons.
A distributor in an area of California that struggled in the first quarter due to the impact of abnormal weather
is making up for lost time by narrowing down areas and salons. We secured an increase in revenue throughmarket expansion while making a transition from direct sales to a distributor system.

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16

Outlook of Overseas Subsidiaries (2)CHINA (Milbon Trading (Shanghai) Co., Ltd.)In the Chinese market, there was an economic slowdown coupled with a continued evolution ofcustomer needs. Sales fell for salons that were not able to support such needs despite theirlarge scale. In addition, in the upscale salon market, which has been dominated by leading
foreign manufacturers, Chinese domestic manufacturers are beginning to enter the market, and
it is becoming difficult for foreign manufacturers to increase sales in this market as they havedone previously. Within this difficult environment, the market activities of both hair coloringproducts and hair care products were well received, and a double-digit increase in revenue of
13.2% was secured.
KOREA (Milbon Korea Co., Ltd.)
After our struggle with the continuous entry into the market of low-priced hair coloringproducts from competitors, salons steadily recovered ground due to our superiority in terms of
product quality and education. Furthermore, the introduction of Ordeve Addicthy helped in theacquisition of new salons, and the hair coloring product category grew 17.2% year on year. For
hair care products, growth was 30.1% year on year as a whole due to steady growth in sales ofAujua, as it began to develop a track record at large salons.
THAILAND (Milbon (Thailand) Co., Ltd.)
Performance was strong in the hair coloring product category as a result of activities to clarify
the difference between Ordeve and Ordeve Addicthy, and the introduction of a new color for
Ordeve. In the hair care product category, the number of salons grew steadily as a result of the
Global Milbon line of repair products being highly regarded.
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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 andAddicthy are highly regarded in the hair coloring product category, and market deployment isbeing promoted while the respective positions of these products is being clarified. In the haircare product category, LINKAGE-μ and DEESSE’S NEU are being leveraged to acquire newsalons. In addition, Global Milbon is being deployed mainly to limited high-quality salons.

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18

Copyright © 2019 Milbon. All rights reserved.

19

Milbon Group
Progress in FY2019 (60 th Term)

Ryuji Sato, President and CEO

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20

FY2019 Outlook for Japan (1) Current outlook
1. Impact of U.S.-China and Japan-South Korea friction and decline in
consumer sentiment prior to a consumption tax increase
2. Work style reform, increasing awareness of productivity improvement•

Night visits to salons ⇨ Studio training, shift to digital communication activities

3. Start of market activities for cosmetic products business【Flow of activities】
Distributors:

Contract

Decision to
Salons: introduce products
Contract

Selection of IA*
representativefor each area

6-day IA certifycation training⇨ IA certification(Milbon and distributors)

Preliminary
meeting before
introduction

1st
introductory
training

2nd
introductory
training

Selection oftarget salons

Sales launch

FCE and IA
follow-up on
salons

Productdelivery

3rd introductory
training
OJT uponjoining salon Separate contract for stores introducing EC sites
 Separately select an iMPREA leader in each salon, ensure widespread
understanding of in-house principles, etc.
*IA (iMPREA Ambassador): Similar position/role to FCEs at distributors. IAs work with FCEs to follow up on salons.

Copyright © 2019 Milbon. All rights reserved.

21

FY2019 Outlook for Japan (2) Outlook by product and brand*
1. Hair care products

・ Premium brands performing favorably (+15.2%)(1) Aujua (+13.1%)(2) milbon (+23.8%)
・ Professional brands facing challenges (-5.9%)

2. Hair coloring products

・ Addicthy performing favorably (+44.0%)

3. Villa Lodola business・ Villa Lodola Color performing favorably (+14.2%)

4. New cosmetic products business・ Test marketing of iMPREA*Figures in parentheses show year-on-year increase/decrease ratios calculated based on non-consolidated gross sales.

Copyright © 2019 Milbon. All rights reserved.

22

FY2019 Outlook for Japan (3) Cosmetic products businessTwo points that have emerged① Lotion is selling well at salons,
despite a common belief it is adifficult product.
⇨ The strong relationshipbetween customers and hair
dressers is an effective
contribution.

② Actual sales results exceeded
expected monthly net sales atsalons that are making earnest
efforts.

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23

FY2019 Outlook for Japan (4) For the full year•

Hair care productsContinuing growth of premium brands
Considering future plans for professional brands•

Hair coloring products

Penetration of Seedil
Continuing growth of Addicthy
Continuing growth of Villa Lodola Color•

Cosmetic products

Acquisition of salons (mid- to long-term foundation)
Creation of successful models
Need variations to respond to wishes of each salon

Copyright © 2019 Milbon. All rights reserved.

•

Efforts by all staff/by specific stylists•

Increase productivity of receptionists•

Simultaneous rollout at all salons/rollout at
one salon at a time, etc.

24

FY2019 Outlook for Overseas (1)【East Asia】◆ Chinese market (+13.2%)*①

Change in organizational system (change in personnel including
top management)②

Change in key person in charge of major distributors③

Impact of China’s E-Commerce Law on substitute purchase(Taobao) since January 2019④

Carefully watch impact of U.S.-China trade friction◆ South Korean market (+21.4%)*① Second year of change in top management②

Carefully watch impact of boycott campaign resulting fromJapan’s regulations on exports to South Korea*Figures in parentheses are year-on-year increase/decrease ratios calculated based on actual results on local currency basis.

Copyright © 2019 Milbon. All rights reserved.

25

FY2019 Outlook for Overseas (2)【North America】◆ U.S. market (+1.7%)*1① Smooth shift from direct sales to distributor system
Distributor ratio: FY18Q2 13.4% ⇨ FY19Q2 54.5% (+41.4%)*Approximately 30% growth in volume② Launch of SOPHISTONE in July (hair coloring product for the U.S.
and Europe)【Rollout schedule】●Demi-color*2●Permanent color*3

Jul. 2019

Direct sales areas (Manhattan)

Jan. 2020

Distributor areas

Jul. 2020

Direct sales areas (Manhattan)

Jan. 2021

Distributor areas*1 Figures in parentheses are year-on-year increase/decrease ratios calculated based on actual results on a local currency basis.
*2 Demi-color: Colors hair without bleaching. Allows for delicate color adjustments in the blonde range.
*3 Permanent color: Colors hair while bleaching. Hair coloring product generally used in Japan.

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26

FY2019 Outlook for Overseas (3)◆ Progress in considering a production system in China•

Began to look into establishing a factory, including consulting onarea and other matters◆ Positioning of production bases•

Domestic plant:

Yumegaoka Plant•

Overseas factories: Thai Factory
China Factory

Mother plant

Overseas hub factory
Domestic factory for China⇨ We will continue to report on progress.

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27

FY2019 Conclusion【Progress of Initiatives for SDGs】◆ In-house application• Already holding study groups and workshops for all
employees including officers⇨ Formulating activity plan including numerical targets
based on the roadmap• Identifying problems by mapping the value chain• Creating matrix to verify 17 SDGs and ESG issues(materiality)

Copyright © 2019 Milbon. All rights reserved.

28

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