Milbon Co., Ltd.
FY2019 Third Quarter (January 1, 2019 – September 30, 2019)

Financial Results Presentation Materials

October 28, 2019
Copyright © 2019 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

Copyright © 2019 Milbon. All rights reserved.

1

Consolidated Operating Results (FY2019 9 months)
 Sales saw a high rate of growth compared to the period through to Q2,
partly due to the impact of rush demand ahead of the consumption-tax
hike.
 Full-year targets are expected to be reached as planned. （Unit: million yen）
FY20189 months*

FY20199 months*

Increase/
Decrease

Increase/
Decrease ratio (%)

Net sales

24,44426,6512,207

9.0

Gross profit

16,293

17,6091,315

8.1

SG&A expenses

11,606

12,433827

7.1

Operatingincome

4,687

5,175

488

10.4

Ordinary income

4,393

4,804

411

9.4

Profit attributable toowners of parent

3,324

3,411

87

2.6

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

2

Consolidated Sales by Product Category [Hair Care Product]
Premium brands have continued to grow
Consolidated Sales (FY2019 9 months)
FY20189 months*
14,246FY20199 months*（Unit: million yen）

Increase/
Decrease

15,313

1,066

Increase/
Decrease ratio (%)

7.5• Aujua Eternal Stage Series Diorum Line released in March has contributed to the growthof 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 for thepremium brand “milbon,” and growth has been achieved through an increase in new
salons. We will continue to strengthen efforts aimed at increasing sales at existing salons.
• A new brand, CRONNA, was introduced in April. We aim to increase the number of salonsby shifting our deployment focus from the whole brand to each individual product.
• For Jemile Fran Hair Base Make Series, introduced in July, the line up of oil finishes thatmeet customer needs and the containers and price ranges that suit the target
demographic are being positively received.
*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the third 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]
New Products
FY2019 9 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 havebeautiful hair by nurturing fresh, elastic, and shiny hair.
（Unit: million yen）

FY2019 target*

FY2019 9 months* Progress rate (%)

800

528

66.0

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 9 months* Progress rate (%)

750

257

34.4

*Gross sales figures are on a non-consolidated basis
Copyright © 2019 Milbon. All rights reserved.

4

April 10, 2019 Debut

Consolidated Sales by Product Category [Hair Care Product]
New Products
FY2019 9 months
Jemile Fran Hair Base Make Series
Utilizing only ingredients used in skin care, the special design of thestyling product comfortably shapes the appearance of hair.
（Unit: million yen）

FY2019 target*

FY2019 9 months* Progress rate (%)

100

75

75.4

*Gross sales figures are on a non-consolidated basis
Copyright © 2019 Milbon. All rights reserved.

5

July 10, 2019 Debut

A Premium Brand, Aujua
Aujua Eternal Stage Series Diorum Line, a new product, performed well
Number of salons
FY2018 *1

3,271(Unit: salons)

FY2019 *1

3,605

Increase/
Decrease

Increase/
Decrease ratio
(%)

334

10.2

Consolidated Sales (FY2019 9 months)（Unit: million yen）
FY20189 months*2

4,358

FY20199 months*2

5,061

Brand concept
A hair care brand that nurtures the beautyof Japanese women’s hair, born from theclimate, culture and hair characteristics ofJapan.

What is Aujua
Hair care that supports beauty, now andinto the future, by addressing eachindividual’s hair and skin concerns andchoosing the most appropriate item forthat time.
This is Aujua.

Increase/
Decrease

Increase/
Decrease ratio
(%)

703

16.1

Product range
A wide-ranging line up that suits thehair 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*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

Trends in sales & number of salons(Million yen)
8,000

(Number of salons)
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

0

販売高
Sales

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

FY2019*1

5,571

7,397

Increase/
Decrease

Increase/
Decrease ratio
(%)

1,826

32.8

Consolidated sales (FY2019 9 months)
FY20189 months*2

FY20199 months*2

1,452

1,823

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

370

25.5

What is “milbon”?

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

We conducted an in-depth analysis of the inner
structure of the hair of women from 20 countries
around the world, using our proprietary CT
scanning technology, and discovered auniversal form of hair damage.
Accordingly, we developed a hair care line
containing ingredients capable of repairing suchdamaged hair and increasing the density withineach strand of hair.
“milbon” is a system hair care product fordeveloping shiny, beautiful hair from the core.

Japan, USA, Hong Kong, China,
Thailand, Taiwan, Turkey,
Malaysia, Vietnam, Indonesia,
Singapore, and Germany(Number of salons)

3,000

8,000
7,000

2,500
2,000

5,000

1,500

4,000
3,000

1,000

2,000
500

1,000

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.

Trends in sales & number of salons

6,000

Brand concept

Countries with salons(Million yen)

7

2017

2018

Sales
販売高

2019

目標
2019
targetNumber of salons
窓口軒数0Consolidated Sales by Product Category [Hair Coloring Product]
Ordeve Addicthy has grown and driven sales for the product category(Unit: million yen)

FY2019 9 months
FY20189 months*1

FY20199 months*1

8,853

Increase/
Decrease

9,889

Increase/
Decrease ratio (%)

1,036

11.7

• Sales for the fashion color Ordeve Addicthy have continued to grow. A clear segregation between each series, 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 hair manicure that was released in
March, we will pursue taking a larger share of the gray-hair coloring 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.
(Unit: million yen)

FY2018 9 months*2

FY2019 9 months*2

2,203

3,002

Increase/
Decrease ratio(%)

Increase/
Decrease

798

36.3

FY2017 Debut*1 The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the third quarter of FY2018 have also
been reclassified based on the same standard.
*2 Gross sales figures are on a non-consolidated basis.
Copyright © 2019 Milbon. All rights reserved.

8

Consolidated Sales by Product Category [Hair Coloring Product]
New Products
FY2019 9 months
Ordeve Ledress
Gives color and shine to hair while increasing the density within each strandof 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 9 months* Progress rate (%)

700

322

46.0

March 7, 2019 Debut

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

FY2019 target*

800

FY20199 months*

Progress rate (%)

242

30.3

*Gross sales figures are on a non-consolidated basis
Copyright © 2019 Milbon. All rights reserved.

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)

FY2019Q3-end8,085

Increase/
Decrease

8,835

FY20199 months*

787

879

9.3

750

（Unit: million yen）

Consolidated sales (FY2019 9 months)
FY20189 months*

Increase/
Decrease ratio (%)

Increase/
Decrease

Increase/
Decrease ratio (%)

91

Trends in sales & number of salons(Million yen)

(Number of salons)

11.6 1,400

12,0001,200

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

8,000

800

6,000

600

4,000

400

What is Villa Lodola?

2,000

200

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

*Gross sales figures are on a non-consolidated basis
Copyright © 2019 Milbon. All rights reserved.

10,000

1,000

10

0

0

販売高
Sales

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

Consolidated sales (FY2019 9 months)（Unit: million yen）

FY20189 months*

FY20199 months*

568

655

Increase/
Decrease

Increase/
Decrease ratio (%)

87

15.3

*Gross sales figures are on a non-consolidated basis
Copyright © 2019 Milbon. All rights reserved.

11

FY2015 Debut

Consolidated Statement of Earnings (FY2019 9 months)<Consolidated Statement of Earnings>

Net sales
Cost of sales(Unit: million yen)

FY20189 months*

% to
sales

FY20199 months*

% to
sales

24,444100.0

26,651

100.0

8,151

33.3

9,042

33.9

<Breakdown of net sales by product category>(Unit: million yen)
FY20189 months*

FY20199 months*% totalsales

Increase/
Decrease

Increase/
Decreaseratio(%)

Hair care products

14,24615,313

57.5

1,066

7.5

Hair coloring products

8,853

9,889

37.1

1,036

11.7

Permanent wave
products

1,182

1,168

4.4

(14)

(1.2)

0

101

0.4

101

-

162

178

0.7

16

10.0

Cosmetic products

Gross profit

16,293

66.7

17,60966.1

Others<Major factors for the increase/decrease>

SG&A
expenses

11,606

Operatingincome

4,687

19.2

5,175

19.4

Ordinary
income

4,393

18.0

4,804

18.0

Profitattributable toowners ofparent

3,324

13.6

3,411

12.8

47.5

12,43346.7 Cost of sales
Cost of sales increased due to production volume
adjustments resulting from enhanced inventory control.

Profit attributable to owners of parent
While there was a gain of 305 million yen from the sale ofcross-shareholdings in the first quarter 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 the third quarter of
FY2018 have also been reclassified based on the same standard.
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12

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

FY2015FY2016FY2017FY2018FY2019Jan.–Sep.

FY2019Plan

Capital expenditures

2,779

4,262

1,570

1,149

1,198

1,710

Depreciation andamortization

1,033

1,077

1,272

1,370

1,073

1,498

Amount

1,214

1,232

1,422

1,479

1,127

1,535

% to sales

4.4

4.2

4.3

4.2

4.2

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 the third 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

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―

36,64336,137

Number of beauty
customers(thousand people)

38,46837,84737,395

Fieldpersons trends (by country)
2015

JAPAN
USA
MILBON USA, INC.
CHINA
Milbon Trading(Shanghai) Co., Ltd.

KOREA
Milbon Korea Co., Ltd.
THAILAND
Milbon (Thailand) Co.,Ltd.
VIETNAMMILBON VIETNAM
CO., LTD
Others*2

37,023

Remarks(As of Apr.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 the fiscal
year (As of December 21 for 2017 and before))
2017*1

2016

2018

2018

2019

237

249

258

269

279

100

102

105

111

-

12

9

12

13

13

53

63

48

48

-

18

18

19

22

21

36

40

50

62

-

19

20

23

25

30

75

80

84

82

-

6

6

9

7

7

15

14

13

17

-

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
(As of September 30, 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
-

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.
Copyright © 2019 Milbon. All rights reserved.

14

Consolidated Net Sales and Operating Income in Japan and Overseas■ Net Sales (FY2019 9 months)
FY2018 9 months*

Amount(Unit: million yen)

FY2019 9 months*% totalAmount% totalIncrease/
Decrease

Increase/
Decrease ratio(%)

Domestic

20,511

83.9

22,336

83.8

1,824

8.9

Overseas

3,933

16.1

4,315

16.2

382

9.7

Total

24,444100.0

26,651

100.0

2,207

9.0

■Operating Income (FY2019 9 months)
FY2018 9 months

Amount% total

FY2019 9 months

Amount% total(Unit: million yen)
Increase/
Increase/
Decrease
Decreaseratio (%)

Operating income ratio(％)
FY2018FY20199 months
9 months

Domestic

4,159

88.7

4,690

90.6

530

12.8

20.3

21.0

Overseas

527

11.3

485

9.4

(42)

(8.0)

13.4

11.2

Total

4,687

100.0

5,175

100.0

488

10.4

19.2

19.4

*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the third 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)USA
MILBON USA, INC.
CHINA
Milbon Trading (Shanghai)Co., Ltd.
KOREA
Milbon Korea Co., Ltd.
THAILAND
Milbon (Thailand) Co., Ltd.
VIETNAMMILBON VIETNAM CO., LTD

FY2018(Jan.–Sep.)

FY2019(Jan.–Sep.)

Increase/
Decrease ratio (%)

US dollar(thousand)

4,298

4,238

(1.4)

Yuan
(thousand)

62,986

71,941

14.2

15,217

18,473

21.4

25,63332,699-12,916Won(million)
Baht(thousand)Dong(million)

Forex rates
FY2018 (yen)1 dollar =109.61
1 yuan=
16.86

1 won =
0.0998
1 baht =27.6
3.42
1 dong =-Forex rates
FY2019 (yen)109.1315.90
0.09383.50
0.004747

USA (MILBON USA, INC.)
In the U.S. direct sales category in Manhattan, sales grew due to the acquisition of large store openings. In theJapanese direct sales category, sales were steady for Ordeve Addicthy, introduced last year. In the distributor
category, distributors in the north central area, with which we started transactions from the current fiscal year,
performed very well, nearly tripling in volume. However, distributor sales in the northeast area fell significantly
below the previous fiscal year’s level, due to management issues within distributors. In addition, given the factthat distributors in the southwest area having first deliveries in the same period of the previous year, revenue
decreased in the distributor category. As a result, the direct sales category could not compensate for decrease inrevenue in the distributor category, and there was a slight year on year decrease overall. While we introduced
SOPHISTONE, hair coloring products for the blonde range, we have yet to develop new salons and, going
forward, will repeatedly hold venue seminars.

Copyright © 2019 Milbon. All rights reserved.

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 of customer
needs. It seems that sales fell for the manufacturers that were incapable of responding to such needs.
Milbon maintained a high growth rate amid a harsh environment through attentive activities for salons.
However, sales were somewhat sluggish at distributors from the time of founding, including those in
Jiangsu, Zhejiang and Guangdong provinces. This is believed to be due to slightly insufficient activities for
distributors and will be a challenge going forward.
KOREA (Milbon Korea Co., Ltd.)The hair coloring product category was solid and grew 21.3% year on year due to our superiority in terms
of product quality and education, such as Ordeve Addicthy, launched last year, steadily acquiring new
salons. For hair care products, growth was 20.4% year on year as a whole, due in part to solid growth insalons newly introducing Aujua. Moreover, by establishing a second studio in Seoul, we will enhance our
educational activities aimed at large salons, which we were unable to adequately respond to until now.
THAILAND (Milbon (Thailand) Co., Ltd.)
Performance was strong in the hair coloring product category as a result of activities to clarify thedifference between Ordeve and Ordeve Addicthy, as well as color design seminars by outside instructors.
In the hair care product category, the number of new salons grew as we were able to encourage continued
activities by distributors through the introduction of new “milbon” products in March and May.

Copyright © 2019 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 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 product category, Linkage-μ
and Deesse’s Neu are being leveraged to acquire new salons. In addition, “milbon” is being deployedmainly to limited high-quality salons.

Copyright © 2019 Milbon. All rights reserved.

18

<Appendix> Hair Care Brand Positioning Map
Premium Brands

Targets

LINE generation(born 1992-1996)

Hanako juniorgeneration(born 1987-1991)

Baby boomer juniorgeneration(born 1971-1976)

Hanako generation(born 1956-1964)

Professional Brands
19

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.