Milbon Co., Ltd.
FY2016 Second Quarter (December 21, 2015 – June 20, 2016)

Financial Results Presentation Materials

June 29, 2016
Copyright © 2016 Milbon. All rights reserved.

Table of Contents
P3

Consolidated Operating Results

P4-11

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

P15-18 Outlook of Milbon Group
P19-25 Progress in FY2016 (57th term)

Copyright © 2016 Milbon. All rights reserved.

1Fiscal Year 2016 (57th term)
Operating Results for the Second Quarter2

Consolidated Operating Results (FY2016 6 months)
A steady increase in sales in East Asia and Japan led to an overall growth in sales for the Group(Unit: million yen)Amount
FY20156 months

FY20166 months

YoYcomparison(%)

Increase/Decrease

Net sales

13,074

14,218

1,143

108.7

Gross profit

9,138

9,787

648

107.1

SG&A expenses

6,768

7,364

595

108.8

Operating income

2,370

2,423

53

102.3

Ordinary income

2,270

2,188(82)96.4

Net income

1,444

1,464

20

101.4

Copyright © 2016 Milbon. All rights reserved.

3Consolidated Sales by Product Category [Hair Care Product] (1)Sales expanded steadily, mainly in new leave-in treatment products(FY2016 6 months)(Unit: million yen)

FY2015 6 months

FY2016 6 months

7,655

Increase/Decrease

YoY comparison (%)

855

111.2

8,511

• We have launched new products that match the needs of two demographic stages: the turning point for women in their 20s, who areregarded as “awakening to the notion of beauty,” and women in their 50s, “embarking on a quest for beauty.” We are developing
activities to support the creation of various stages of beauty for women by a single designer, while revealing specific examples such as“communication that captures the demographic turning points” and “from design proposals to proposals for the future.”• “Elujuda Sun Treatment,” which is effective in providing protection against UV rays, has been added to the Elujuda line, which has been
popular since its launch. Sales were off to a steady start among women who have busy mornings, but also want to protect their hairagainst damaging UV rays.

Core Products
New - DEESSE’S
Elujuda Sun Treatment

New - PLARMIA Volumizer
Leave-in treatment foam that makes women’s
hair stand from the roots and creates asilhouette with natural volume they can run
their fingers through.
(Unit: million yen)

Leave-in treatment that moisturizes while
protecting hair from UV rays.
(Unit: million yen)

FY target

Results

Prog. rate

700

467

66.8％

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Mar. 31 Debut

4FY target

Results

Prog. rate

250272

109.1％

Mar. 1 Debut

Consolidated Sales by Product Category [Hair Care Product] (2)New - Jemile Fran
Hair Care Series Melty Butter
Leave-in treatment retains the memory of the blowdried style from the night before until the nextmorning and allows for quick styling in the morning.
This product helps working women during theirbusy mornings.
(Unit: million yen)

FY target

Results

Prog. rate

350

202

57.8％

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Jan. 28 Debut

5Aujua (1)Sales grew with the introduction of new line-ups to meet the growing needs for aging care

Number of salons*
FY2015 year-end

2,399 salons

FY2016 Q2-end

2,631 salons

Sales (FY2016 6 months)FY2015 6 months

FY2016 6 months

1,884

Brand concept

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

What is Aujua?

A hair care series that responds tohair concerns by creating andevolving a program just for one
individual. This is Aujua.

2,187Comparison
with FY2015
year-end

A tailor-made hair care program that nurtures beauty of each and everyone

109.7％(Unit: million yen)
YoYcomparison

116.1％

Product range
A wide-ranging line-upthat suits the hair textureof individual customers
・4 series
Aging care series
Hair care series
Scalp care series
Climatic care series

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

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500
00

・15 lines ・96 items* While listed numbers previously included salons that had cancelled theircontracts, such salons have been omitted from the above numbers.
Copyright © 2016 Milbon. All rights reserved.
6販売高
Sales

取引件数
Number of salonsAujua (2)New Product
Aging Care Series
EQUIAL LINE
For women concerned about unmanageable
hair tips and roots as aging advances. Workson hair’s double-layer structure, creating abeautiful silhouette.
(Unit: million yen)

FY targetResultsProg. rate

400

17543.9％

Copyright © 2016 Milbon. All rights reserved.

Jan. 29 Debut

7

A Global Hair Care Brand, “milbon”“milbon,” a new global hair care brand carrying the Company name, has been launched

Brand concept
A system hair care brand that cultivates the “unique beauty” ofeach individual, with 360°shiny hair

What is “milbon”?
We conducted an in-depth analysis of the inner structure ofthe hair of women from 20 countries around the world, using
our proprietary CT scanning technology, and discovered SSVs
(Sticked-Shaped Voids). SSVs are hollow, tubular gaps thatform in damaged hair. Accordingly, we developed a hair careline containing ingredients capable of repairing such hollowed
out hair and increasing the density within each strand of hair.
“milbon” is a system hair care product for developing shiny,
beautiful hair from the core.

Number of salons

360° BEAUTIFUL HAIR

As of June 20, 2016・・・・・・238 salons

Sales (FY2016 6 months)

To be launched consecutively in 12
countries around the world, from June 1

FY2016 6 months・・・・・・・・48 million yen

Copyright © 2016 Milbon. All rights reserved.

8

Consolidated Sales by Product Category [Hair Coloring Product]
Sales boosted by well-received gray-hair coloring products launched last year

(FY2016 6 months)
FY2015 6 months(Unit: million yen)

FY2016 6 months

4,606

Increase/Decrease

YoY comparison (%)

338

107.3

4,944

• The “ORDEVE FRENCH LINE,” a new color line to match Spring/Summer 2016 trends, has been launched. Its shiny and light cold shadesthat complement a casual French look were well-received. We are actively promoting activities to support hair designers so that they offer
trendy hair colors to salon customers.
• “ORDEVE CRYSTAL” was launched in FY2015, which made it possible to dye long hair peppered with gray to produce a bright color with abeautiful finish, from the roots to the tips. This product has been well-received, and sales have continued to grow since last year.

Core Product
ORDEVE CRYSTAL
A hybrid color for dying long hair for mature women, with abeautiful finish from the roots to the tips. ORDEVE
CRYSTAL has the brightness of fashion colors, and it dyes
both black and gray hairs evenly for a long-lasting finish.
(Unit: million yen)

FY targetResultsProg. rate

1,980833

42.1％

Copyright © 2016 Milbon. All rights reserved.

FY2015 Debut9Villa Lodola (1)Villa Lodola Color, which was launched last year, continues todrive sales and the number of salons

Number of salons
FY2015 year-end

4,014 salons

FY2016 Q2-end

4,935 salons

Sales (FY2016 6 months)
FY2015 6 months

122.9％(Unit: million yen)

FY2016 6 months

182

Comparison
with FY2015
year-end

363

YoY
comparison

Trends in sales & number of salons(Million yen)

199.6％(Number of salons)

600

6,000

Brand concept

500

5,000

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

400

4,000

300

3,000

200

2,000

100

1,000

What is Villa Lodola?

Based on the concept of “Beauty, the Organic Way,” Villa Lodola is atrue organic brand that thoroughly cares about the naturalenvironment not only for the product itself 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.

Copyright © 2016 Milbon. All rights reserved.

10002012

2013

2014
販売高
Sales

2015

target2016目標取引件数
Number of salonsVilla Lodola (2)Core Product
Villa Lodola ColorWith 92% natural ingredients, the product’s
formulation utilizes the power of plants. It
brings comfort of an organic product acrossall aspects, including during application, thefinish and continued use.
(Unit: million yen)

FY target

Results

Prog. rate

31523975.9％

Copyright © 2016 Milbon. All rights reserved.

FY2015 Debut

11

Consolidated Statement of Earnings (FY2016 6 months)(Unit: million yen)AmountSales

FY20156 months

FY20166 months

13,074

14,218

Increase/
Decrease

1,143<Breakdown of net sales by product category>YoYcompari-son
(%)

108.7

FY20166 months% totalsales

YoYchange

Hair careproducts

7,655

8,511

59.8

855

111.2

Hair coloringproducts

4,606

4,944

34.8338107.3

718

664

4.7(54)

92.5

9498

0.7

3

104.2

Permanent wave
products

Cost of sales

3,935

4,430

494

112.6

(Unit: million yen)
YoYcompari-son (%)

FY20156 months

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

9,138

9,787

648

107.1

SG&A
expenses

6,768

7,364

595

108.8

Operatingincome2,370

2,42353• Salary hikes from increases in the number ofpersonnel and promotions• Rent hikes at new bases*Supplemental Info. – Return to shareholders<Dividends>

102.3(Unit: yen)

FY2014Ordinary
incomeNet income

2,270
1,444

2,188
1,464

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(82)
20

96.4
101.4

12FY2015

FY2016 planEnd of 2Q

343538End of FY

343940

Total

6874

78

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

FY2012FY2013

FY2014FY2015FY2016
Jan.–Jun.

FY2016
Plan

Capitalexpenditures

840

1,680

1,028

2,779

1,783

4,329

Depreciation andamortization

947

878

1,004

1,033

468

1,113

Amount

873

969

1,168

1,214590

1,215% to sales

4.0%

4.1%

4.6%4.4%

4.2%

4.2%

Category

R&D exp.

FY2016 6 months CAPEX Main Items (Plan)• Expansion of Yumegaoka Plant• Development of new sales management system (to be introduced in 2017)• Opening of Okayama Sales Office• Relocation of Fukuoka Branch• Opening of Kumamoto Sales Office

Copyright © 2016 Milbon. All rights reserved.

13

Trends in Market Related Data, Trends in FPs
Market trends (Japan)(Unit: Number of salons: salons / Number of hair dressers: people / Number of beauty customers: thousand people)

2011

2012

2013

2014

Number of salons

228,429

231,134

234 089

237,525――

Number of hairdressers

471,161479,509487 636496,697――

Number of beauty
customers

39,076

39,64038,4682015

2016

Remarks

37,32737,395(As of Jan. 1)

37,847

Ministry of Health, Labour and Welfare, Report on
Public Health Administration and Services
Number of beauty salon facilities / number ofemployees (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

Fieldpersons trends (by country)
2012

201320142015

2016 Q2

JAPAN200

210

216

237

Milbon Co., Ltd.

102104104100USA

10121212

MILBON USA, INC.

35364053

CHINA13161718

Milbon Trading(Shanghai) Co., Ltd.

14172536

KOREA

13171719

Milbon Korea Co.,
Ltd.

3441

64

75

3666815471216101

65

50

47

THAILAND
Milbon (Thailand)Co., Ltd.

Others-Copyright © 2016 Milbon. All rights reserved.

14246

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)9

* 25 FPs are in training as of June 20, 2016(not included in the left chart)

18* Starting from the current fiscal year, sales
per FP are calculated based on thenumber of FPs at the beginning of thefiscal year (adjusted retrospectively to2012).

20

618

Outlook of Milbon Group (1)East Asia, including Japan, continues to drive growth
Number ofemployees
Number ofFPs

Japan
Milbon Co., Ltd.

USA

557
246
15MILBON USA, INC.

9CHINA

24

Milbon Trading(Shanghai) Co., Ltd.

18

KOREA

32

Milbon Korea Co., Ltd.

20THAILAND54

Milbon (Thailand) Co.,Ltd.

6Others*

1818Sales (million yen)

YoYcomparison(%)

Startoperations

FY20156 months

FY20166 months

11,441

12,330

107.8

1960

--301

285

94.6

2004

1 dollar =116.71118.41

279

370

132.4

2009

1 yuan =
19.07

18.24

670

788

117.7

2009

1 won =
0.10710.1012

47

39

82.9

2013

1 baht =
3.56

3.33

333

403

121.0

-

--

* Taiwan, Hong-Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines and others
Copyright © 2016 Milbon. All rights reserved.

Forex rates

15FY2015

FY2016

Outlook of Milbon Group (2)JAPAN (Milbon Co., Ltd.)New products targeting two generations of women in their 20s, “awakening to the notion of beauty,” and in their 50s,
“embarking on a quest for beauty,” were launched. By proposing activities that link the hair color with the hair care, sales ofproducts in both categories have steadily increased.
“milbon,” a global hair care brand that carries the Company name and which is set to become the Company’s third
launch of a premium brand, was launched in June. Marketing activities combining actual experience with digital means
were undertaken, including press conferences and parties ahead of the launch, as well as the dissemination of information
via SNS and other media. We are carrying out our full-fledged efforts for corporate branding.

USA (MILBON USA, Inc.)
We concentrated our efforts on educational activities by creating a “Style Book” using existing hair styling products, as atool for proposing hair styles that match life styles. In addition, we focused on activities that will lead to proposals for takehome products, through in-house education at salons that have adopted our major brand of salon treatment, “Plarmia.” Asa result of these efforts, sales of styling products and the Plarmia brand have increased.
These activities resulted in an increase in salon sales in the second quarter (January to March), whereas a decrease insales had been reported in the first quarter (October to December). In terms of the distributors, although sales decreased
due to the effects of inventory adjustments, sales from distributors to salons were strong.

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16

Outlook of Milbon Group (3)CHINA (Milbon Trading (Shanghai) Co., Ltd.)
Under the theme, “Promoting an 80% customer repeat rate,” we conducted a policy briefing for the area’s top salons ateight of the leading cities in China, leading to penetration of the Milbon brand and contracts with new salons.
Seasonal colors for spring and summer were proposed, and “ORDEVE Smokey Ash Matt,” a hair color that dyes hair tohave the color of foreign models’ hair, was launched. The hair color was well-received by both Chinese designers andcustomers, and performance, which was also boosted by the Chinese New Year, grew dramatically.
We established a temporary office in Southwest China (Chengdu, Sichuan Province) and commenced marketingactivities. We also entered into a new contract with a distributor in North China (Qingdao, Shandong Province) andcommenced sales.

KOREA (Milbon Korea Co., Ltd.)In February, we conducted a promotion for the launch of “LUMIERE Line,” ORDEVE’s additional color. The regular
introduction of new seasonal colors has been well-received as a way of proposing new colors to salon customers who arealways looking for something new, and an attractive way of enhancing the ORDEVE brand’s value. As a result, the haircoloring product increased sales by 34% year-on-year.
In addition to actively promoting new hair colors, we also conducted activities to strengthen our hair care products, in aneffort to establish a foundation in the hair care market through the Plarmia and Aujua brands, as a way of successfullytransitioning from the “Milbon of hair color products” to the “Comprehensive Milbon brand.” The ten selected salons where
test marketing of Aujua has been conducted have received steady repeat orders for these products. Plans are under way
to increase personnel and reinforce the activity framework in preparation for the full-fledged marketing activities scheduledfrom October.

Copyright © 2016 Milbon. All rights reserved.

17Outlook of Milbon Group (4)
THAILAND (Milbon (Thailand) Co., Ltd.)[Sales division]
Lectures on color and digital perms continue to be held at studios of each distributor, resulting in increases in the salesof the ORDEVE and Atenje brands. Moreover, by stepping up our advertising and other efforts to establish the Plarmia
brand in Thailand, which has rapidly aging demographics, we were able to significantly increase sales of the brand.
Meanwhile, although we launched a new salon treatment, difficulties in understanding the technical processes involvedin the new product for the new staff, as well as its differences from conventional products, combined with fierce
competition in the leave-in treatment market resulted in a decrease in the sales of hair care products.
Going forward, we intend to repeat color technique lectures in the popular hair color market and to reinforce activities toaddress the adult’s market by raising the visibility of the strong Plarmia brand.

[Production division]
The production of the global hair care brand, “milbon” commenced in February (total of 15 products), and consequently
shipments were made to Japan for the first time.
Shipping destinations currently comprise 10 countries, including Japan and the Philippines, and shipment volume isincreasing steadily.
The improvement of the cost of sales ratio is also progressing steadily, as efforts are being made to raise the efficiencyof the production facilities and increase production volume, in addition to procuring raw materials locally and reducing
expenses.

Copyright © 2016 Milbon. All rights reserved.

1819Milbon Group
Progress in FY2016 (57th term)

Ryuji Sato, President and CEO

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20

Initiatives for FY2016 (57th term) (1)■ Domestic market
1. Market environment
2. Measures
3. Brand product line-ups
 Aujua Villa Lodola [New brand] Global hair care brand, “milbon”

Copyright © 2016 Milbon. All rights reserved.

21

Initiatives for Corporate Branding (1)■ Corporate muse andexclusive advertising at
Tokyo Metro’s Ginza Station▲Scenes from Tokyo
Metro’s Ginza
Station, filled withMilbon advertising▲Corporate muse (ATSUKO)■ Website renewal

Copyright © 2016 Milbon. All rights reserved.

22

Initiatives for Corporate Branding (2)■ Press conference and launch party forthe global hair care brand, “milbon”

Copyright © 2016 Milbon. All rights reserved.

23

Initiatives for FY2016 (57th term) (2)■ Overseas markets (1)1. East Asia region (Milbon Trading (Shanghai) Co., Ltd., Milbon Korea Co., Ltd.,
Taiwan, Hong-Kong)

2. Southeast Asia region (Milbon (Thailand) Co., Ltd., Malaysia, Vietnam, Indonesia,
the Philippines)

Thailand Plant

Copyright © 2016 Milbon. All rights reserved.

24Initiatives for FY2016 (57th term) (3)■ Overseas markets (2)3. Europe and US region (MILBON USA, INC., Turkey)■ In conclusion

Copyright © 2016 Milbon. All rights reserved.

25

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