The hairstylists’ hands were red, swollen, and cracked.

This sight shocked the young man as he helped his older brother at the hairsalon, in the late 1940s.
He was moved by the hairstylists’ efforts to help people realize their beauty,
but couldn’t forget their terribly damaged hands.

“For hairstylists”

Along with respect, there was a pure and genuine feeling of longingness tohelp hairstylists that naturally welled up in this young man’s heart.
This became the cornerstone for Milbon.

Even to this day, over half a century later, this aspiration of our founder,
Ichiro Konoike, is passed down as our immutable cornerstone.

This is based on the eternal, unchanging hope of people everywhere tobe beautiful.

As a manufacturer of salon-exclusive products, we will continue towork closely with hair salons with this universal aim in mind.
Amid rapid social changes, we will continue to open up the possibilities
of salons worldwide to find your beauty.

From our founding, into the future.
Our cornerstone for the future of beauty.

To p M e s s a g e

Maintaining Our Core Values with
Unique Strategies to Continue Our
Endeavors into the Future

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

“Returning to Our Core Values andCreating the Future” to Make an Industry
Out of Beauty with Hair Salons
Hidenori Sakashita, President & CEO, Milbon Co., Ltd.

Since our founding in 1960, Milbon has achieved sustained growth by helping people live beautifully through hair salons. Our endeavors to achieve beauty began with the aspiration of our
founder Ichiro Konoike, “Everything we do, we do for and with hair professionals,” now a corevalue of the company. In January 2024, the baton was passed to Hidenori Sakashita, our third
President & CEO. As we approach the halfway mark in our five-year 2022-26 Medium-Term Management Plan, we present the following message from President & CEO Sakashita.

04

core value based on the aspiration of our found-that is useful to society will not be crushed. It

er Ichiro Konoike, “Everything we do, we do

expresses our attitude of facing the challenge tofor and with hair professionals.” Presently, we

continue making small innovations in response

are market-leaders in Japan as a manufacturer ofto changes in the world.

salon-exclusive products, and since our IPO in

In order to realize these two core values, weMilbon’s Unchanging Mission

1996, we have increased our revenue every fiscal

have set common decision-making standards

year, except for FY2020 due to the impact of thethat all employees must face and return to thisIn January 2024, I, Hidenori Sakashita, was ap-

COVID-19 pandemic. Furthermore, our global

one point: ‘‘greater sales and profit for hairpointed as President & CEO of Milbon. First-

business, which we launched in earnest in 2010,

salons.” Furthermore, as one of the specificly, I sincerely thank you for taking the time tohas established bases in 14 countries and regions

methods to achieve this, we have establishedread our Integrated Report and wish to share myincluding Japan, successively expanding oura strong business model, namely, the Field

thoughts here in the form of an opening message.

market share and gaining trust.

Person (FP) System, our unique sales andDuring my seven years and three months as

As a manufacturer of salon-exclusive products,

training support system in which we work

President of MILBON USA, INC., from 2010,

we have refined our business focus within beauty

closely with each individual hair salon to help

I strived to build the foundation of our global

to the professional-use market, and within that,

address challenges. The other is the TAC

business. After returning to Japan, as General

to the hair salon market. At a glance, deliberately

Product Development System, whereby weManager of Corporate Strategy Development

narrowing our market focus may appear ineffi-

scientifically analyze beauty techniques based

Department, I was responsible for devisingcient, but doing this has enabled us to make con-on the sensitivities of top stylists to develop

our medium-term management plan for thecentrated investment of various resources into

products. We thereby continue to create uniquecreation of a new beauty industry, and was in-business that leads to greater sales and profit forvalue, starting from two user perspectives: thevolved in new projects, such as our DX strategy.

hair salons. In this way, we have achieved uniqueperspective of the hairstylist and hair salon, andNow, as President & CEO, I intend to use thesevalue creation and secured a clear presence.

the perspective of society and customers.

experiences to further advance the beauty in-

I would like to take a moment here to rethink

However, these systems do not work in

dustry, striving to “Realize enriched spirit andthe hair salon setting. As long as people’s hairisolation. The reason why we have been able

society through beauty.” I will preserve the as-continues to grow, they will continue to regu-

to continue to implement this strong businesspiration of our founder Ichiro Konoike and ourlarly visit hair salons to cut, color, or care formodel is deeply related to The Milbon Way,

core value, “Everything we do, we do for andtheir hair. And no matter how efficient proce-a handbook clearly summarizing the Vision,

with hair professionals.” The unchanging mis-dures become, they will still require a certain

and Action Guidelines, of our company thatsion of myself and our company is to enrich theamount of time. In other words, hair salons will

was compiled under the direction of current

lives of hair professionals and hair salon clien-

be a part of people’s lives as places that they

Chairperson Ryuji Sato while he was President.

tele, and therefore we will continue to pursue

visit regularly, where they spend an extended

It includes a description of “Milbon-ism” thatsteady growth in the Milbon Way.

time, and engage in in-person communication.

employees should put into practice: “To be in the

Compared to anywhere else, hair salons are afield, to pay attention, to be independent,” andMaximizing the Value of the Hair Salon
Settingrare and special setting. All hairstylists can be

we strive to ensure its thorough implementationconsidered the ultimate personalized beauty

company-wide. In other words, the ideas andpartner for their customers.

decision-making standards I explained above

As Japan-based global professional haircare

Milbon believes in this value possessed by hair

are not mere slogans, but are thoroughly put

manufacturer, Milbon focuses on the manufac-

salons, and expects it to be enhanced further as

into practice by having all employees shareture and sale of salon-exclusive hair cosmetics,

digitalization accelerates. Furthermore, because

our company’s aspirations and our essential

with the corporate slogan “Find Your Beauty.”

the hair salon setting has these unique features,

purpose, and by holding a common axis andSince our founding in 1960, we have contribut-

there is still great undiscovered potential. By

action guidelines to which we head toward. It

ed to the realization of a more enriched society“going beyond” in three aspects of “beyond

is precisely thanks to this that our company

by continuing to inspire beauty in people’s lives

Japan,” “beyond hair,” and “beyond an indus-

today has earned the overwhelming trust of hairaround the world through hair salons, with atry-perspective,” Milbon maximizes this value,salons and is achieving sustained growth.

aiming to further transform hair salons into an

As I mentioned, since our IPO, while ouressential Beauty Platform indispensable to help-

single-year growth ratio and operating income

ing people live enriched lives.

has fluctuated, apart from FY2020, which was
impacted by the COVID-19 pandemic, we

The Source and Belief of Unique Value
Creation to Realize Our Mission

have continuously increased our sales every

In addition to our core value “Everything we do,

attempting to push my own individuality, I

we do for and with hair professionals,” we holdshould accurately grasp the changes in society,a belief in “building a solid company that won’t

in the times, and in our clientele, and maintaincollapse.” Our founder Ichiro Konoike swore

our continuous innovation from the user

to this belief after he witnessed people close

perspective. For our company, having realized

to him suffer dramatic corporate bankruptcies,

continuous growth, the most important matter

prior to our company’s establishment. Thisis that Milbon and all its employees continue

fiscal year. In such circumstances, as the new
President & CEO, I am aware that, rather thanbelief that a company must be sustainable may

implementing the Milbon Way, and I will devote

be perceived as a conservative stance, but thisall my energy to leading the way.

belief is rather based on the idea that a company

05

To p M e s s a g e

Progress, Achievements, andChallenges to Address in FY2023

dium-term management plan was formu-of transforming the significance of hair sa-

lated, we are on course to achieving ourlons beyond just hair, to being beauty infra-

FY2026 consolidated net sales target.

structure, and to thereby make an industry

Meanwhile, operating income fell 26.8%

Record Net Sales but Challenges
with Operating Income

where we support each other globally began toin the future, we will maintain and improve val-function, without being influenced by econom-

ue-based pricing based on the premise of creat-

ic trends of individual countries or regions.

ing high added-value for new products, while

With our comprehensive global strategy, Sev-

also turning our attention to revising the prices

year-on-year to 5.5 billion yen, resulting in

An especially major development was theen Regions, we have divided the 14 countries

the operating income ratio, which we had

Smart Salon Strategy launched nationwide

and regions globally where we have a presence

maintained in the 16-18% range, falling tothrough collaboration with hair salons that(including Japan) into seven regions, and are

Also, in response to the sharp rise in logistics costs, we have strengthened our milbon:iDof existing products to address current circum-

Confronting the Challenges We Faceand Depicting the Future

stances, to drive improvement of our operating
income ratio.

Milbon formulates medium-term manage-a disappointing 11.6%. Such results are due

endorsed the Strategy. Despite positioning

building region-specific R&D, production, andment plans every five years towards “Real-to multiple factors, including sharp increas-

the first year as test marketing, we achieved

sales systems. The R&D and production bas-izing enriched spirit and society throughes in the cost of raw materials, increaseda solid response, including expansion to 23

es in Japan, China, and Thailand have alreadybeauty.” We are now at the turn of the

SG&A expenses accompanying revitalizedsalons in 19 cities. We aim to expand Smartbegun full-scale operation, as has the North

2022-26 Medium-Term Management Plan,sales activities post-COVID, and other

Salons to 500 shops in 100 cities acrossAmerican R&D base. In addition to aligning

In FY2023, we certainly saw many positive re-ized shipping for hair salons to which we haveunder the theme “Stage for the Future,”

increased costs, such as higher personnel

Japan by 2026, and around the time weourselves to the beauty of each country andsults and progress in Japan and overseas, but weshipped same-day, we are considering revisingand are implementing two strategies: Sevencosts due to the raising of base wages toachieve this target, they will have become

region, we have prepared for geopolitical risks,must also face the fact that our operating in-this to an appropriate service level, with their

Regions, to build a system of local produc-boost our returns to employees. Anotherknown among general consumers, and will

and arranged systems to flexibly handle legal

come has been in an unprecedentedly difficult

understanding. Furthermore, with reduced

Evolving into a Company that is Resilient in Times of Inflation

e-commerce business to reduce the amountof increase. In addition, regarding individual-tion for local consumption in the beauty

factor was a write-down due to lower-thanstart to function as indispensable beauty in-and trade regulations. For example, in FY2023,

situation.. Naturally, remediation of our oper-

margins caused by rising labor costs, we are en-

domain, tailored to the specific beauty of

expected sales of Milbon’s first endeavor

frastructure in each region.

our China Factory gained approval to sell overating income is one of our Five Key Challenges.

deavoring to make value proposals with greater

each region. As hair salons currently facein the field of beauty equipment, the EL-

In addition, milbon:iD, our official online

200 hair coloring products, the most of any do-

In these circumstances, I believe I must endeav-

added value of products and services, and by

structural issues, including a declining

MISTA hairdryer. We have already taken

store that forms the basis of Smart Salonsmestic manufacturer.

or to help Milbon evolve into a company that is

combining multiple products. Also, we are striv-

population and productivity-related indus-

measures such as reducing raw materials

and a new communication tool between

Amid this, in FY2023, we achieved a new re-resilient in times of inflation.

ing for improvement by lifting labor productivi-

trial problems, the second strategy we arecosts since FY2023, and from FY2024↙

customers and hair salons, continues tocord high for overseas net sales, up 13.7% fromexecuting is Salon-based Social Innovation,

enjoy an increase in registered users, fromthe previous year to 11.2 billion yen, and are on

to transform salons into an essential Beauty

448,000 in FY2022 to 670,000 people, andtrack toward achieving the goal of 14.3 billion

Platform to help people live enriched lives.

we are gradually expanding support, aiming

yen in FY2026, the final year of the current me-

Furthermore, in our current 2022-26 Me-

to reach one million users in 2026.

dium-term management plan.

dium-Term Management Plan, we have set

Furthermore, for our Lifetime Beauty

Among the main countries and regions where

Milbon’s vision for FY2026, “Become theCare Strategy, while it remains centered on

we have a presence, the Chinese market isleading manufacturer in Asia and top 5 inhair color and hair care, it proved an im-

facing tough times, including a decline in thethe world by elevating the value of industry

portant year in opening up new potential

consumption mindset amid a post-COVID

professionals in the eyes of consumers andfor hair salons, with the release of products

economic slump. While other companies insociety at large,” in order to achieve our

including cosmetics for skin and eyebrow

the industry struggled across the board, we still

Global Vision, “To become the world’s No. 1

care, Milbon’s first endeavor in the field of

managed to achieve 3.8% growth year-on-year

professional haircare manufacturer.”

beauty equipment, the ELMISTA hairdry-

on a local-currency base. Although we did not

er, and ALANOUS beauty supplement.

achieve our plans for the Chinese market alone,

Additionally, in consideration on recent events, the environment surrounding

Although cosmetics sales remained level

we increased our market share to fourth place,companies and consumers continues tofrom the previous fiscal year, close analy-

and I believe we were able to demonstrate ourchange rapidly and dramatically, includ-

sis of individual products revealed trends

strong position.

ing growing uncertainty accompanying

in what hairstylists found easy to offer to

The decline in sales in the Chinese market

geopolitical risks, acceleration of digital

their clients, or that customers were more

was compensated by strong sales in other over-utilization and of DX, along with Japanese

likely to have recommended to them byseas markets, whereby we were able to achieve

population decrease due to aging and theonwards, we will continue to implement

their hairstylist, providing a clear path toour overall overseas business plan set at the be-

declining birthrate.

measures aimed at improving our operating

new value proposition from FY2024. We

ginning of the year. In the South Korean market

income ratio and ROE.

still cannot speak of many success cases inin particular, we further solidified our position

entered the so-called “post-COVID” era,

beauty supplements, but over time, we willin second place for market share, including

experiencing a rebound in demand follow-

First Step Taken toward the Futurein the Japanese Market

continue to accumulate successful examples

13.9% year-on-year growth in hair color, thanks

for hairstylists of how best to recommend

to the firm support base we have in that seg-

to clients, and how support should be pro-ment. In North America, our America-wide

the former consumption trend of nest egg

Although FY2023 saw us post poor operat-

vided to hairstylists, to carve out the path

network of distributors has begun full-scaledemand with a high priority on hairstylinging results, we achieved significant progress

to greater expansion. Regarding Milbon’s

operation, and hair color, which accounts for

was transformed into a trend that focusedin each of the strategies of the current me-

first endeavor in the field of beauty equip-

80% of net sales, achieved double-digit growthon outings, including travel and dining out.

dium-term management plan.

ment, the ELMISTA hairdryer, there areof 15.7% year-on-year. Contrary to South Ko-

Amid such circumstances, in FY2023, we

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

06

out of beauty.

Strong Foundation of Mutual Support
Starting to Function in the Global Market

ing the COVID-19 pandemic of FY2021-22.
While the flow of people recovered quickly,

Despite this, in FY2023, Milbon achieved

In our Japanese-market strategy of Sa-

many factors that we should reflect upon

rea, gains in confidence are beginning to drive

satisfactory revenue growth from haircare,lon-based Social Innovation, we imple-

deeply, including the accuracy of advancethe growth of hair color. Additionally, in theand set a new record for consolidated net

mented our Smart Salon Strategy, whichplanning and setting of sales flow lines. But

ASEAN market, the relationships we have built

sales of 47.7 billion yen. Our revised plan,

provides an innovative customer experi-on the other hand, I have no doubt that it

up with distributors in each country and region

announced November 10, 2023, was notence through the fusion of digital and re-

was a challenge we needed to undertake toover the past 10 years have become very strong,achieved by 0.1% due to lower-than-ex-

ality, along with our Lifetime Beauty Care

pioneer future potential for hair salons andand although the market size of each is small,

pected growth in hair color sales. But when

Strategy, which expands the business scopeto achieve further growth for the Japanese

we have managed to build a firm foundation for

we consider that 47.7 billion yen was theinto other fields to realize one-stop beauty

hair salon market. I will do my best to en-

future sales growth.

consolidated net sales target for FY2023

at hair salons. I am proud to say that thissure that these lessons become the corner-as initially forecast when the current me-

has been a year of beginnings for the futurestone of Milbon for future success.

In this way, I consider FY2023 to have been
the foundation for a firm growth trajectory

But what does it mean to be an inflation-↙

ty per worker through the use of digital tools.↙

resilient company? If a company is to simply

The Key to Growth in the JapaneseMarket in FY2024

respond to inflation, it could just raise productprices proportionally to the rate of cost increases. But such a customer-hostile approach is sure

The evolution of the company into one that is re-to turn the company into one that customers

silient in times of inflation is a top priority, and instop choosing to support. Certainly, appropriate

the Japanese market in FY2024, we will promotepricing is one option for dealing with soaring

high-value hair color, and measures to boost unit

costs, but at Milbon, we believe that the basicpurchase prices through knowledge-based prod-premise for price adjustments should be to cre-uct sales (a sales method in which product sales

ate and offer products and services with greater

are accompanied by the provision of technicaladded value.

information by hair stylists with expertise). In

On that point, our company has achieved

Japan in the near future, employed people who

growth by continuing to offer products and ser-have supported growth in the beauty market arevices with high added-value. Rather, it is com-

expected to peak in number, and hair salons will

panies like ours that should be strong in times ofreach its limit in securing sales, which is depen-

inflation. In fact, we have already been practic-

dent on the number of users. Meanwhile, the per-ing value-based pricing, calculating prices based

centage of hair salon users who seek color or otheron the perceived value by the customer. But wehair treatments, and knowledge-based product sale

have not adjusted the prices of existing products,

unit purchase prices, have all been increasing forand this has been one factor that brought about

the past 10 years. Because of this, I believe that pop-a drop in our operating income ratio. Therefore,ularizing a range of new techniques and boosting07

To p M e s s a g eknowledge-based product sales prices is theing into a truly global company. Although

key for the future.

the different countries and regions are cur-

In terms of the promotion of high-val-

rently at different stages, we are making

ue hair color, we have begun to redefine

progress toward holding the top market

in-salon hair coloring through a total color

share in each region. In order to advancelinked proposal, combining hair and eye-toward our goal to become number one

brow coloring, in a way that only hair salonsglobally, we must first open the door to be-

can offer. Through these activities, net sales

ing number one in Asia (excluding Japan):in the eyebrow mascara category for FY2024

Building a Social and Corporate
Foundation to Support Sustained
Growthtoring style, in which Board of Directors canof our added value is truly our people, starting

monitor the overall business execution.

build a solid company that won’t collapse,” weare strongly conscious of their importance.

Sustainability Promotion is a Challenge Directly Related to Management

the leading market with a mostly black-hairFrom the perspective of sustainability, theucation and training expenses per capita arebroke through the 0.1 billion yen mark on

culture, like that of Japan. With this aim, we

sharp rise in energy prices is a challenge

well above the average level. In addition, we

day one, compared with the 0.3 billion yen

can broadly divide the market into East Asia

worldwide. We are accelerating an energy

net sales target we set. Progress has exceededand ASEAN. Thereafter, we must subdivide

expectations due to the uncovering of latentneeds and by creating a chain of impressions

To be “Authentically Milbon”: when I was
appointed president of Milbon, I naturally tookthese words to heart as I focused on our future.

with our FPs. As for our foundation, “We will

We, of course, actively return profits to ourconnected with hair. Also, in FY2023, we

Aligning Ourselves with the Universal Wish for Beauty

We at Milbon comprehensively and unflinchingly align ourselves with hairstylists and hairsalons to deliver beauty to society. Althoughcontinuous and flexible innovation is indis-

employees, beginning with nine months of

Depicting the Future of Hair Salonsat All Times

pensable amid the rapid changes in society, thishave set “Realizing work environments withAs the head of Milbon, naturally it is my job

comes down to just continuing to be “authenti-

shift from fossil fuels to renewable energy

enhanced job satisfaction” as one of the mostto depict our future. But in our company’s Me-

cally Milbon.” There is a limit to what I am able

this further into individual countries andto resolve the challenge of securing stable

important challenges we must address, and wedium-Term Management Plan and medium- toto do alone, but together with over 1,100 em-

regions in order to drive our initiatives.

energy in the future. Meanwhile, there arecontinue to enhance our systems and foster

long-term vision, our focus is always on theployees holding the same resolution, the poten-

also concerns that activation of bioenergy

our corporate culture. Also, from FY2024, we

future of hair salons. Milbon’s future is tied totial of our company, and the potential of hair salons, will surely continue expanding limitlessly.

Based on our past experience in global ex-

training upon joining the company. Our ed-

remains an unchanging focal point for Milbon.
If we can persist with this, I believe the rest

transitioned from an eight-member sales

pansion, we know that our unique businessand sunlight as part of decarbonization

will establish a Human Resources Develop-

this, and our company first experiences growth

structure in our Organic Brand Department

model, where we work closely with hair sa-

measures may negatively impact biodiver-ment Committee, which I will chair, and wewhen hair salons grow, and when we create a

Our stated goal “To become the world’s No.

to 350-member field person (FP) system andlons, also works overseas. At the foundationsity. Consequently, to resolve both issues,

are moving to further enhance and strengthen

world where people everywhere can live a beau-

1” is just one checkpoint for Milbon. What is

are working to expand success knowhow.

are distributors and hair salons. In addition,

we are accelerating the construction of aour human capital management.

tiful life.

most important is to comprehensively alignThrough this, we aim to boost high-value

because it is necessary to build up trust withvalue chain to circulate and use resources,

In this age of respect for diversity, in orderTo achieve this, in addition to the sources

ourselves with hair salons and hairstylists inhair color and hair care proposals for our↙

each individual hairstylist, it definitely↙

and a circular economy. Companies thatto be able to offer diverse value to our cus-of our sustainable growth to date, namely oureach country and region, whereby we can gain

fail to respond will likely be exposed to sig-

tomers, we ourselves must become diverse. To

comprehensive, hands-on approach, businessthe number one approval rating from every hairnificant impact on their operating costs. In

achieve this, it is important to shift our humanmodel that produces a virtuous cycle, and oursalon and each individual hairstylist. This hasother words, we are entering an era whenresources strategy from the conventional job-

five-year Medium-Term Management Plan, I

not changed since the day that our foundersustainability initiatives are directly tied tobased, company-driven strategy from a corpo-

am naturally conscious that we must quantify

Ichiro Konoike first decided he wanted to help

the resolution of economic issues.

rate perspective to a skill-based, self-directed

the future for each business, and of our respon-

the hairstylist he saw in front of him. ThroughWe position our Sustainability Commit-

career development from a human resource

sibility to the stock market. By doing so, I hopecontinuing to practice this, I believe that, in due

ment at the core of our strategy, and areperspective. As the values of our customers

to make even stronger strides toward the future

course, we will realize our goal “To become theworking across our business to resolve im-

and workers diversify, we are promoting hu-

of beauty that we envision, with the sympathy

world’s No. 1.”

portant challenges for our company and theman resource portfolio management from aand conviction of all of our stakeholders.

beauty industry. Details are provided in thehuman resources perspective, based on our

section Sustainability & ESG, from page 46.

management strategy.

In 2023, we gained a degree of positive recognition for these initiatives, including selection for inclusion in the FTSE Blossom
Japan Sector Relative Index and the MSCIM I L B O N I N T E G R AT E D R E P O RT 2 0 24

08

the core of our business model and the source

Looking to Transition to a Monitoring-Style Board of Directors

Japan Empowering Women (WIN) SelectIn addition, I am conscious that it is of course

Index. In addition, Yumegaoka Factory,

essential to strengthen and improve the effi-

which is Milbon’s core production facility inciency of corporate governance, which is an

Japan, earned a Gold rating from EcoVadis.

important basis of corporate activities. We

already highly appraised organic brand, Villatakes time. But by taking that time, we gain

A major prerequisite for Milbon to con-have set “Construct a fair and flexible manage-

Lodola, for which we hold big hopes.

understanding of the sincerity of Milbon’stinue to contribute to society through thement structure” as one of our key challenges

In addition, to increase knowledge-based

aspiration, “Help for hairstylists.” There-

power of beauty is that Milbon and society

for realizing continuous growth in the me-

product sales prices, we are popularizing andafter, it will create a firm basis for future

itself be sustainable. The aspiration of ourdium- to long-term. As part of this, we have

expanding deployment of milbon:iD andgrowth in the same way as Japan.

founder Ichiro Konoike of building “a solid

conducted the securing of diverse skills andexternal expertise, together with the active ap-

Smart Salons. With these, we will uncov-

Amid this, we are already witnessing

company that won’t collapse” truly reflects

er latent needs, by fusing the techniques of

the transition from the investment phasethe modern concept of sustainability. In

pointment of women, to promote diversity andhairstylists, with the power of the five senses

to the monetization phase in our overseas

this way, we can say that sustainability has

improve its effectiveness.

of experience, and the might of EC’s conve-

business. Going forward, I believe that thealways been a guiding principle for Milbon.

In FY2023, we split the Nomination andnience. These measures are able to contributeoverseas business will have an even more

As a global manufacturer, Milbon will con-Compensation Committee, establishing sepa-

to future enhancement of the productivity ofsignificant impact on our growth. I con-tinue to earnestly address various social andrate offices for each. In addition, by clarifying

hair salons. They also should be able to answer

sider a truly global company to enjoy sol-environmental issues to contribute to thethe decision-making authority of the Board of

the need to come across new products and in-id growth, where a gain in one market canrealization of a sustainable society for all

Directors and Management Meeting, we en-formation in physical stores, which is expectedcompensate for a deficiency in another. As

people. We will address this throughout thedeavored to enhance the awareness of manage-by the “digital native” generation, who are thewith the Chinese market recently, depend-

entire supply chain, from the procurement

ment participation among Executive Officers.

main drivers of consumption.

ing on the time, or the country or region,of raw materials, to production, sales, andAlso, from FY2024, we began training for Ex-

the economic situation can change in un-

post-consumption.

ecutive Officers, and are starting to see higher

Next We Must Open the Door to
Being No. 1 in Asia

expected ways. For this reason, by making
into a company that is able to achieve sus-

Promoting Human Capital Management Tied to Business Strategy

Now is the time when Milbon is transform-

tained growth globally as a whole.

In conducting human capital management,

Milbon available everywhere, we can evolve

quality discussions as a result. Going forward,
we will build the Management Meeting into a
structure able to debate management at a deep-

Living One’s Own Beautiful Life.
This universal desire that exists throughout the world will never change. We
at Milbon inherit the aspiration of our founding core values, and going forward, we will continue to work with hair salons to create a future where
people can live their own fulfilling and vibrant lives.
I therefore humbly ask for your continued support, as we continue our efforts to meet the expectations of all stakeholders.

Hidenori Sakashita
President & CEO
Milbon Co., Ltd.

er level, and we aim to transition to a moni-09

I n d ex

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President & CEO Message

About Milbon

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Our Activities
Milbon’s History of Growth
Milbon’s Value Creation Processes

In producing this integrated report, we refer to the International Integrated Reporting Framework proposedby the Value Reporting Foundation (VRF).

Milbon’s Sustainable Growth—Three Interlinked Value-Creating Sources for Sustainable Growth

FY2024 is the turning point in the five-year medium-term management plan announced in 2022. We

Milbon from the Investor’s Perspective—Interview with Yasunori Nakagami, CEO of Misaki Capital Inc.

also appointed a new President & CEO, Hidenori Sakashita, in January 2024. In FY2023, we began to see

Milbon Brands and Services

concrete results of our initiatives in Japan and overseas, including a Seven Regions Strategy that contributes
to growth of the beauty industry in each country and region through local production and consumption,and Salon-based Social Innovation, which aims to reform the nature of hair salons. This report primarily
details progress and results achieved in FY2023, and we have strived to communicate clearly to stakeholders

Milbon’s Strategic Focus

2022–2026 Overview of Medium-Term Management Plan
Global Market Strategy Planning and Progress

about the status of our sustainability activities, the strengthening of our governance structure, and other

Domestic Market Strategy Planning and Progressinitiatives that contribute to the sustained enhancement of corporate value.

R&D Strategy Planning and Progress

As was the case in 2022 and 2023, the report’s overall design follows themes that are global and borderless.
We also pursued design and expression appropriate for Milbon to represent an additional theme of

Production Strategy Planning and Progress
Financial Strategy Planning and Progress
Initiatives for Human Capital Management“Returning to our starting point and creating the future” to accompany our change of president. We hopeto gain your understanding and appreciation of our aspiration to provide “Help for hairstylists,” which isAddressing Social Challenges andStrengthening the Management Structure

the foundation of our operations, the nature of our corporate activities, our unique business strategies, andthe social value we create.

Overview and Progress of Sustainability Promotion

This marks Milbon’s fifth integrated report. From our third report, released in 2022, we have shifted our2023–2024 Sustainability Highlights

editorial policy, which had emphasized employee understanding to facilitate their communication with

Message from the Chairperson and Efforts for the Succession System

stakeholders, to instead provide a wider range of stakeholders with a deeper appreciation of Milbon. We did
M I L B O N I N T E G R AT E D R E P O RT 2 0 24

10

not consult just internal sources, but also obtained the cooperation of investors and other external parties,

Initiatives to Strengthen Corporate Governance
Board of Directors, Governance Promotion Framework, etc.
Discussion between the Managing Executive Director and New Outside Board Members

to provide a more objective perspective in an effort to gain your understanding of our corporate activities
and the future we must aim for. We welcome any questions or feedback you may have about this report.
Milbon’s Performance Data & External Assessments
Department in Charge: Corporate Communications Department

Financial Highlights
Non-Financial Highlights
External Assessments and Cooperation with Society
Company Overview and Stock Information
Information Links

11

About MILBON

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About MILBON
P 14
Our Activities
P 16
Milbon’s History of Growth
P 18
Milbon’s Value Creation Processes
P 20
Milbon’s Sustainable Growth—Three Interlinked Value-Creating Sources for Sustainable Growth
P 24
Milbon from the Investor’s Perspective—Interview with Yasunori Nakagami, CEO of Misaki Capital Inc.

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

12

P 26
Milbon Brands and Services

13About MILBON

Our Activities

We stand by the Eternal Desire to be Beautiful

Realizing a spiritually enriching society through beauty

Milbon’s fundamentals since foundation

Management philosophy

Everything we do, we do for and with hairprofessionals.

Milbon works with the hair professionals to inspire beautiful living worldwide.
Beautiful living and beautiful hair enrich the spirit. An enrichedspirit fosters the culture. A society that values culture brings peace

Continuous innovation to “build a solid
company that won’t collapse”

to society. This is the philosophy behind Milbon’s contributions tothe beauty market and, by extension, to the world.

Milbon is a global professional haircare manu-

lon-exclusive hair cosmetics market, we havepractice, we have developed a unique frame-

facturer based in Japan working with the hair-

recently been expanding into non-hair cosmet-

work for ongoing provision and enhancement

care industry worldwide to inspire beautiful

ics and other domains, rather than just haircareof beauty services that are truly needed.

living by people everywhere under the corpo-

products, while actively implementing out aThough we are a manufacturer and seller ofrate slogan, “Find Your Beauty.” Our aim is to

DX strategy. The aim is to maximize the poten-

hair cosmetics, we are by no means a company

enrich society as a whole.

tial of in-person spaces in hair salons.

that simply provides products, as embodied

Ever since our founding in 1960, we haveWith a full-scale global expansion from 2010,

in our motto of “Don’t sell products, sell con-consistently limited our market to focus on

we have steadily grown our businesses, withcepts.” We support beautiful living, craft indi-

haircare professionals and salons through the

our sales, production, and R&D bases extend-

viduality, enrich people’s spirits, and brighten

central strategy of increasing salon sales anding to 14 countries and regions, including Ja-

their lives.

profits. This drive is based on the firm belief

pan, and with hair salons around the worldthat hair salons are essential for enriching so-

becoming vital partners of ours.

Going forward, we will continue our untiring efforts to work with hair professionals tociety and realizing individual beauty, and in

Our customers are not only those haircare

inspire beautiful living worldwide, as we fulfill

keeping with the philosophy that “Everything

professionals and salons, but also all people

our vision of becoming the first Japan-based

we do, we do for and with hair professionals.”

who visit salons as well. That is why, under theworld’s No. 1 professional haircare manufactur-This approach has enabled us to focus all cap-

Milbon-ism (to be in the field, to pay attention,

er. And even in the future beyond that, we will

ital, including human capital on a shared goal

and to be independent), we are thoroughly

continue pursuing sustainable growth, while

to which every employee can always return, andcommitted to adopt two customer viewpoints,

standing by the eternal desire for beauty, tothis has earned us solid trust from hair salons,a haircare professional and salon perspective on

shape a world where people can live beautifully

leading to sustainable growth.

the provider side, and a society and consumer

enriched lives.

perspective on the user side. Putting this into

Having become the leader in Japan’s sa-

Products

Corporate Slogan

Code of conduct

Global vision

The Milbon Way

We aim to become the world’s No. 1 professional haircare manufactur-

Milbon Ethics and Code of Conduct

er through our dedication and educational support toward local beauty industry across the globe.

Beauty market
M I L B O N I N T E G R AT E D R E P O RT 2 0 24

14

Hair coloring products

Haircare products

Permanent wave products

Organic haircare brands(professional use, knowledge-based)(knowledge-based, professional use)

(professional use)

(professional use, knowledge-based)

Styling products

Cosmetic products

Beauty supplement

Beauty equipment(knowledge-based)(knowledge-based)(knowledge-based)(knowledge-based)*Knowledge-based product sales: A sales method in which product sales are accompanied by valuable information based on the knowledge and insights of professional hairstylists.

Professional-use market

Our BusinessDomains

Public market
for consumers(B2C)(B2B/B2B2C)

Services

Hair salon market (Customers of hair professionals
and hair salons)

Central Business Strategies
Increasing salon sales
and profits:
Narrowing down business focus toconcentrate all capitalon a single goal

Earning the overwhelming
trust of hair salons

Achievingsustainable growth
milbon:iD (Milbon’s official online stores)

Smart Salon ®

Seminars and events
15

About MILBON

Milbon’s History of Growth

Since its establishment in 1960, Milbon has maintained a policy of continuous innovation while capturing the trends and demands of a rapidly changing society. To this end, we
adopt two customer viewpoints—a haircare professional and salon perspective, and a society and consumer perspective—under the philosophy that “Everything we do, we do for
and with hair professionals.” This section presents the history of innovation at Milbon, from our founding to the present, together with our trajectory toward sustainable growth.

Establishing a Strong Business Model

Beyond Japan

1960

2004

Yutaka Beauty Chemicals Co., Ltd.
(currently Milbon) established

Training Center opened for new employee
training
Started a Field Person (FP) Strategy, truly
personalized for haircare professionals

2016
2005
2007

The Field Man Strategy was launched as a unique sales
and education support system for hair salons. As a sales
strategy in an age of product saturation, Milbon shiftedto activities that offer personalized solutions to stylists
and salons under the slogan, “Don’t sell products, sell
concepts.” Currently known as the Field Person (FP)System, it is contributing to greater sales and profits
for hair salons.

1987

TAC
Product
Development
Systemintroduced for joint development withleading haircare professionals
TAC Product Development is Milbon’s unique productdevelopment system for developing products and concepts in collaboration with leading haircare professionals who are admired by our target customers. In a fusionof sensitivity and science, the system will incorporate
the technical skills and aspirations of leading hairstylists
into products and services to reach a broader audience.

1993

2010

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

1997

Central Research Institute established1998

Liscio hair straightening products, based onhair ironing technology, launched2012

As more people place importance on living in harmony
with nature, the Villa Lodola organic hair care brand
was launched in Japan after all ingredients were certified by ICEA—Europe’s representative organizationfor organic certification.

milbon:iD (Milbon’s official online stores) began
full operation
milbon:iD (Milbon’s official online stores) began full operation to help hair salons connect with their customers. Even
when people had to avoid public places during the COVID-19
pandemic, milbon:iD offered a mechanism for keeping traditional sales channels open, not only allowing customers topurchase Milbon products from the safety of their own homes,
but also accruing the sales to the relevant distributor and hairsalon. The stores have contributed to improved customer convenience and ensured revenue for the hair salons. As of the endof 2023, there were 670,000 registered milbon:iD members.

2021

The education:iD, an online learning service forhaircare professionals, launched

2023

Smart Salon® launched as a new beauty experiencein collaboration with hair salons
Smart Salon were launched in collaboration with participatinghair salons as a new hair salon experience that fuses physicaland digital worlds. As of the end of 2023, there were 23 Smart
Salons in 19 cities around Japan. Offering a range of beauty
experiences utilizing digital and other elements within the salons, the Smart Salons have delivered a boost to in-salon salesof knowledge-based products. The aim is to open Smart Salonsin 100 Japanese cities by 2026.

2017

ELMISTA, a hairdryer jointly developed with
Living Appliances and Solutions Company ofPanasonic Corporation, launched

Capital and business alliance with KOSÉ
Corporation announced to develop salon-exclusive
cosmetics

ALANOUS, Milbon’s first health supplement
brand, launched

Milbon signed a capital and business alliance agreement withKOSÉ Corporation to develop cosmetics sold exclusively forsalons and to strengthen competitiveness. With the sharedgoal of improving the competitiveness of Japanese beauty
companies competing on the global stage, the two companies
established Kosé Milbon Cosmetics Co., Ltd. Starting with theiMPREA salon-exclusive premium cosmetics brand launchedin April 2019, the alliance is continuing to create a wide rangeof new cosmetics products.

ALANOUS was announced as Milbon’s first supplement brandand part of its expansion beyond the haircare business. It was
launched as a result of around 20 years of continuous appliedresearch into using 5-ALA, sometimes referred to as the sourceof life energy, as a beauty supplement. With the main components of 5-ALA able to maintain skin moisture, we havelaunched two product lineups; foods with functional claims
and health foods.

Head Office relocated from Osaka to Tokyo

2019

Innovation Center opened to conduct mediumto long-term research utilizing cutting-edge
technologies

Sophistone, Milbon’s first hair color brand forEurope and North America, launched

The Innovation Center was opened in Haneda Innovation
City, a large-scale complex in the Haneda area, as Milbon’s
new research facility for developing products and services froma longer-term perspective. As a place to help realize the Beauty Platform Plan, to conduct long-term research, and to drive
joint research with highly unique government, academic, andprivate-sector partners, the Innovation Center is engaged inresearch that sows the seeds for future projects and businesses.

Sophistone was launched as Milbon’s first hair color brandfor Europe and North America. Development was based on
rigorous research of the values, techniques, and hair colorantcharacteristics of Europe and North America’s hair color cultures. As Milbon’s first full-scale brand developed exclusively
for regions other than Japan, it has received high praise fromlocal stylists for its reminiscent evocation of Japanese meticulousness and attention to detail, bringing new value to haircoloring in Europe and North America.

Record-high sales

Liscio hair straightening products were launched toprovide a hair ironing treatment in answer to an increasing desire for straight hair. By establishing a technical system that provides simple and stable results,
Liscio has contributed younger hairstylists to become
immediate assets to the team, and it helped attract
more customers while increasing customer retention
rates. Known as “Japanese Hair Straightening,” Liscio
was a major hit in the United States as well.

2001

2020

Beyond Hair and beyond an Industry-Perspective

Aujua, a premium haircare brand addressing awide range of hair concerns, launched

Villa Lodola,an organic haircare brand, launched

Launched “milbon,” a premium haircare brand,
through analysis of diverse hair characteristics
around the world
The Company’s namesake brand, milbon, was launched as apremium haircare brand for “360 Degree Beautiful Hair” tobring Milbon’s haircare quality to the rest of the world. Using hair research technology cultivated since our founding,
we analyzed a wide variety of hair in 20 countries. From theresearch, we identified common hair damage phenomena andestablished a unique haircare system.

Ordeve, a new foiling-optimized,
comprehensive hair color line, launched

Haircare concerns grew as hair coloring reached a broader audience. To address wide ranges of hair concerns,
Aujua was developed as a premium haircare brand offering personalized treatment, born from in-depth research on everything from the texture and shine of black
hair unique to the Japanese to the climate and culture ofJapan. Aujua has grown to become our flagship brand,with annual sales topping 11 billion yen in 2023.

Nigelle styling products, a brand for creating
natural-looking hairstyles, launched
In response to the growing needs to easily reproduce
hairstyles designed by hair stylists at home, a new styling product, Nigelle, was launched. We have won the
overwhelming trust of our customers by establishinga system offering consistent support from the time ofin-salon treatment to hair maintenance at home. Nigelle was released in Taiwan as well, making it Milbon’s
first product marketed outside Japan.

Yumegaoka Factory establishedAs the mainstay of salon management shifts fromperming to coloring, Ordeve was developed as a newcomprehensive hair color line optimized to foiling.
The aim was to offer high quality hair colorings only
possible through the advanced technical skills of haircare professionals. With Field Persons passing on thetechnical system to hairstylists, Ordeve played an instrumental role in market development as it gained
popularity, embodying the very transformation of theindustry to coloring.

MILBON (THAILAND) CO., LTD. established as
Milbon’s first overseas production factory
A full-scale global expansion from 2010 led to Milbon establishing its first overseas production factory in Rayong Province,
Kingdom of Thailand, in 2013. Together with the Yumegaoka
Factory in Japan and the China Factory, established in 2021, theThailand Factory has become an important link in our global
production system, promoting the local production for local
consumption of beauty, a system that stands for the beauty ofdifferent cultures in different countries and regions. Milbon
is developing trust through a “Made by Milbon” philosophy
rather than “Made in Japan”.

MILBON USA, INC. established as Milbon’s
first overseas subsidiary
With the Liscio hair straightener having gained popularity primarily in New York, MILBON USA, INC.
was established in New York City, as Milbon’s firstoverseas subsidiary, due to North America being a central focus of the global beauty culture.

In July 1960, Yutaka Beauty Chemicals Co., Ltd.
(currently Milbon) was established and started manufacturing and selling cosmetics products (cold wave
perming solutions, shampoos, etc.) for haircare professionals dedicated to beautiful living. In January 1965,
the company merged with two other companies andchanged its name to “Milbon,” a name chosen for its
beauty and catchiness for future global expansion.

1984

2013

Recorded revenue growth in every fiscal year since our
IPO in 1996 (excepting FY2020, when COVID-19 struck).
Overseas sales have also been steadily increasing.

Medium-term targets for 2015–2019
achieved one year ahead of schedule

Company listed on First Section of the Tokyo
Stock Exchange (TSE)Consolidated Net Sales (100 million yen)

Consolidated Operating Income (100 million yen)Overseas Sales (100 million yen)

1st Medium-Term(2010–2014)
Management Plan

2nd Medium-Term(2015–2018)
Management Plan

3rd Medium-Term
Management Plan
(2019–June 2020)

Current Medium-Term(2022–2026)
Management Plan

Medium-Term Management Plan “Change the Stage—18-Month Missions!” implemented in response to COVID-19 ( July 2020 to December 2021)

1617

About MILBON

Milbon’s Value Creation Processes
Milbon’s Main Capitals
Human Capital

INPUT

Based on our fundamental philosophy that “Everything we do, we do for and with hair professionals,” Milbon has consistently since its foundation focused its businessactivities on the central strategy of contributing to greater sales and profits for hair salons while aiming to enrich the spirit and society through beauty. We have focused
our capital investment, at enormous expense in terms of time and money, on realizing strategies such as human resources education to develop specialized beauty experts,
strengthening basic hair research, and building a development structure with a hands-on perspective in which researchers themselves visit hair salons. These capitals areembodied by our unique business models, the Field Person System and TAC Product Development System, in line with The Milbon Way as our Code of Conduct. With afive-year medium-term management plan as a driver for growth, this will help ensure a continuous value creation process.

Value Creation Process

OUTPUT*Fiscal year ending December 31, 2023

Instilling The Milbon Way and development of specialized beauty experts
Number of consolidated employees:
Education and training
expenses per person:

1,140
Education and training
time per person:

151,662 yen

79.0 hours

・Thoroughly instilling corporate philosophy through The Milbon Way
・Development of specialized beauty experts through ongoing implementation of substantialtraining programs
・Development of a Field Person System to support greater sales and profits for hair salons

Manufacturing Capital *Fiscal year ending December 31, 2023

Three sources ofvalue creation

Production bases:

2

3

Our Philosophy

Our Approach

Our Vision

The Milbon Way

Stable global supply structure

Capital expenditure for manufacturing equipment:

11.08 billion yen

Intellectual Capital*Fiscal year ending December 31, 2023

Two customer viewpoints:
Business strategy:

R&D system fusing sensitivity and science

Japan, Thailand, China, USA

Milbon’s fundamentals:

2.33 billion yen R&D intensity: 4.9 %Number of patent applications: 241 in Japan 34 overseas

R&D expenses:

Social and Relationship Capital
Strong connection with society through beauty*Fiscal year ending
December 31, 2023

Overseas
sales ratio:

14 countries and regions,
Number ofcountries/regions: including Japan

23.6 %

14,274670,000
40,000

Number of salons regularly sharing information:
Number of registered members of milbon:iD,
our official online stores:
Number of registered users of education:iD,
our online learning tool for haircare professionals:

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

・Building strong relationships with hair salons・Gaining Milbon fans through overseas expansion of our unique business model・Creation of new communication channels through promotion of DX

Natural Capital
Total energy consumption (crude oil equivalent):

2,309 KL

CO2 emissions:47,138 ㎥*Scope 1・2・3

272,003 t-CO2

・Consideration of human rights and the environment throughout supply chains
・Promotion of sustainability in all business activities

Financial Capital*Fiscal year ending December 31, 2023

45.93 billion yen

86.0 %

Maintenance of a sound and stable financial structure
Equity ratio:

・Robust financial structure able to protect employees even in unforeseen circumstances

18

Greater sales and profits for hair salonsEverything we do, we do for andwith hair professionals.

(1) Market research(4) Procurement, production and logistics

Finding new shoots of innovation through Milbon-ism

Promoting stable procurement and supply through a global
production system

At Milbon, we strive to instill our corporate philosophy through The Milbon
Way and we implement the Milbon-ism of “to be in the field, to pay attention, and to be independent.” Everyone from sales to product development,
and even the president himself, visit hair salons in person to identify any new
shoots of innovation from the two customer viewpoints of hair professional
perspectives and consumer perspectives.

(2) Planning

We are promoting stability in raw material procurement and product supply throughour global production system with three factories in Japan and overseas. We also
employ a system of high-mix, variable-volume production to meet market needs andvarying demand, while actively working to reduce our CO 2 emissions and our usageof petroleum-derived virgin plastics, and utilize RSPO-certified palm oil.

(5) Sales and education support

Ensuring accuracy of planning through joint development with leading haircare professionals

Building strong and trusting relationships through the multifaceted support of hair salons

In addition to uncovering information and needs through two customer viewpoints, we make use of the TAC Product Development System, a unique joint
development platform shared with leading haircare professionals who areadmired by our target customers. In this way, we are able to improve the accuracy of planning to develop the products and services that are truly in demand.

We are developing strong and trusting relationships by contributing to the increasing of sales and profits for hair salons in multifaceted ways through a unique sales
and education support system for hair salons embodying the phrase, “Don’ t sell
products, sell concepts.” We are also creating new communication channels between
consumers and hair salons through the promotion of DX, and opportunities foreducation support that go beyond time and place.

*Fiscal year ending December 31, 2023

Building a supply chain that takes human rights and environment into consideration

Water consumption:

Hair professional perspectives andconsumer perspectives

Economic ValueFY2023

FY2026 Target

Net sales

47.76 billion yen

58.0 billion yen

Operating income

5.52 billion yen

10.8 billion yen

ROE

8.9 %

13.9 %

ROIC

8.6 %

13.6 %

Dividend payout ratio

71.6 %

50.0 %

Social Value
The Five Key Challenges for Achieving a Sustainable Society
Key Challenge 1: Enrich the spirit through beauty■ Number of registered milbon:iD members
FY2023 result

670,000

2026 target

1,000,000■ Number of cities in Japan hosting Smart Salons
23 Smart Salons
FY2023 result in 19 cities

500 Smart Salons2026 target in 100 cities

Key Challenge 2: Regenerative and recycling-oriented manufacturing and consumption activities

・Fusion of sensitivity and science through the TAC Product Development System
・Promotion of local production for local consumption in the beauty domain througha global
development structure
・Japan’s leading basic hair research capabilities through cutting-edge technologies and equipment

Net assets:Five-year medium-term
management plan

Japan (obtained GMP certification for cosmetics),
Thailand, and China

・Promotion of stable procurement of raw materials through a global production system
・High-mix, variable-volume production to meet market needs and varying demand

R&D bases:

Uniquebusiness models

Most Recent Accomplishments and Goals(3) Research and development
Bringing technical and other skills of leading hairstylists
to a broader audience through advanced R&D capabilities
In a fusion of sensitivity and science, we make it possible to incorporate
technical and other skills, based on the sensitivities of leading hairstylists,
into our products and services. With four R&D bases currently around theworld, including Japan, we are also currently promoting the development of asystem of local production for local consumption in the beauty domain,
tailored to the individual beauty and culture of each country and region.

Return of Management Resources(6) Feedback and improvement
Reflecting frank and prompt feedback
Unlike the public market, being sold exclusively to hair salons allows both sales and
R&D workers to receive ongoing feedback about our products and services from bothstylists and consumers. This allows to us to smoothly reflect this feedback in
improvements and development of the next products and services.

■ Reduction rate of CO2 emissions at Yumegaoka Factory *Compared to 2019 levels
FY2023 result

81.0 %

2026 target■ Reduction rate of petroleum-derived virgin plastic use
FY2023 result

9.6 %2026 target

75.0 %(achieved ahead of schedule)*Compared to 2020 levels,per unit of sales

15.0 %Key Challenge 3: Practice people-friendly procurement■ RSPO certified palm oil adoption rate (MB+B&C)
FY2023 result

9.5 %

50 %

2026 target

Key Challenge 4: Construct a fair and flexible management structure■ Active appointment of outside board directors and female board members
Implementing
andFY2023 result
2026 target continuous appointment

52

Key Challenge 5: Realizing a rewarding work environment■ Turnover rate of junior employees
FY2023 result

10.8 %*Average turnover rate of junior employees(new graduates to 3rd year ) over the past five years

2026 target

9.0 %2026 target

70.0 %■ Paid leave utilization rate
FY2023 result

67.8 %*For details, see Sustainability & ESG starting from page 46.

VALUE

OUTCOME

Realize Enriched Spirit and Society through Beauty
Creating a beauty industry that enriches beauty andthe spirit through our collaboration with haircare professionals
Fostering sustainable cities and communities throughour dedication and contribution to beautiful living tailored toeach country and region19About MILBON

Milbon’s Sustainable Growth

Source 1 Our Philosophy—Three Interlinked Value-Creating Sources for Sustainable Growth

The Milbon Way

Interlinked value-creating sources with thoroughness as a common threadEver since our foundation in 1960, we at Milbon have achieved sustainable growth by maintaining continuous innovation, which ensures greater
sales and profits for hair salons, based on the firm belief that hair salons are essential for realizing individual beauty and a spiritually enriching society. This section explains in detail how three interlinked value-creating sources realize this sustainable growth.

The fundamentals of disseminating and implementing Milbon-isms
The Milbon Way handbook summarizes the Milbon-isms, management philosophy, and management strategies that Milbon employees should embrace. It was
created in 2012 by current chairman Ryuji Sato under the theme of Continuity and Change, and it has been continually revised in tune with the changing times.
It is a set of important guidelines to which every employee should always return. The Milbon Way ensures dissemination mainly of the philosophy to be inheritedat the heart of our business strategy—Everything we do, we do for and with hair professionals—through ongoing education and training programs, provided
both in Japan and overseas, from the moment our employees join the company and continuing throughout their careers. It is becoming entrenched as part of ourcorporate culture, with all employees routinely carrying it and putting its contents into practice. With employees maintaining high levels of understanding andresonance according to our employee awareness surveys, it serves as a source of innovation creation in all business activities.

1

Philosophy and belief handed down fromfoundation

POINT 1.

POINT 2.

Action guidelines: “Be in the field”“Pay attention” “Be independent”

Following are the Milbon philosophy and belief established by our founder,

Milbon-isms that all employees should embrace are “to be in the field, to pay

Ichiro Konoike, that have been handed down to every employee to the present

attention, and to be independent.” Our employees are required to have call forday: one is the philosophy that “Everything we do, we do for and with hair pro-the thorough practice of this triple action guideline. This hands-on approach isfessionals” (always providing close support to hair salons); and the other is theanother cherished belief that has been handed down from our founder, Ichiro

Our Philosophy

belief that “We will build a solid company that won’t collapse” (a sustainable

Konoike, and we are still fostering this culture to this day. Whether employedcompany that continues to be of service to the world). To realize these, we havein sales, product development, or in a managerial position, everyone must spend

The Milbon Way

consistently narrowed our market focus to hair salons and are continuously in-time in the field, listen attentively to the voices of customers and haircare profes-

novating in tune with changes in society.

sionals with the ears, eyes, and heart, and learn to think and act independently.

Structure for disseminating Milbon-isms
as our corporate philosophy

2

Three
Sources3

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Our Approach

Our Vision

Unique business models

Five-year medium-term
management plan

Structure for creating unique business models
that continually evolve by capturing socialand customer changes

Structure for formulating medium- tolong-term visions and medium-term
management plansthat achieve
continuous innovation

Milbon-isms

Philosophies, beliefs and aspirations

Corporate philosophy

Philosophies:

Focus: Narrowing down focus means to discard some things

Beliefs:

Business domains: Narrow down to hair professionals and salonsContinuous innovation to “build a solid company that won’t collapse”

Beauty services: Narrow down to cosmetics, etc. centered on hair

“Create requirements for growth rather than just trying to grow”
Aspirations:

POINT 3.

Everything we do, we do for and with hair professionals

1. Clearly define what not to do, rather than what to do“Create a company that is highly valued in the world in which we live”

2. Fully investigate one thing at a time

“Realize Happiness and job satisfaction for employees and their families”

3. Refine essential and universal values not affected by times and trends“A company that is of service to the world is a company that the world will not allow to collapse”

4. Always question norms in the industry

Thorough and ongoing education and training

We continue to invest heavily in our human capital, including spending at least 2% of labor costs on employee education and training every year. We focus on new
employee training in particular, with the first nine months at Milbon spent as a training-only period since 1984. In addition to basic beauty techniques, employees
learn a wide range of skills, including broad knowledge of the beauty industry, management analysis, and planning. Since his time as president and CEO, current
chairman Ryuji Sato has provided instruction on The Milbon Way himself to strengthen its dissemination. Such efforts continue in all subsequent training as well,including the annual training provided in the second and fifth years of employment, and workshops regularly held in each business location in Japan and overseas.

Overview of Education and Training
1st year

New employee training: 9 months total(2 months)
Generalist position

Milbon Person training(understanding your company
and work)

New graduate
employees
Researchers

・Learning about beauty
・Learning about beauty techniques
・Learning about Milbon(4 months)

Field Person training(improving FP expertise)・Learning about more advanced beauty
techniques
・Hair salon problem-solving training

2nd year and beyond(3 months)

On-the-job training

Annual follow-up training(analyzing and improving your current situation)
・Experiencing failure and success in actual
salonsDeveloper training (Learning all steps in the Milbon product development process)・Experiencing all development steps to understand product development and learn appropriate decision-making

Training for promoted employees
Assignment

Self-development support system andopen-application training
Succession planning andother succession training

Ongoing thorough dissemination and implementation of The Milbon Way

Overview of Milbon Person Training

1 Understanding Milbon-ism and Philosophy

the work of hair professionals by
2 Understanding
3 Understanding hair salon management
acquiring beauty techniques

Based on The Milbon Way, learn the mindset that you shouldhave as a Milbon employee and the company's mission.

Understand not only how to use your company's products, but also
the techniques used by hair professionals in salons, and acquire theskills and knowledge to provide educational support to hair salons.

Deepen your understanding of the management of hair salons sothat you can be attentive to the concerns of hair salon owners, what
they are currently struggling with, and what kind of support theyneed.

Building a system in which each and every employee thinks and embodies initiatives that lead to "increased sales and profits of hair salons" on their own throughunderstanding The Milbon Way and the work of hair salons.

20

21

About MILBON

Source 2 Our Approach

Source 3 Our Vision

Unique Business Models

Five-year Medium-Term Management Plan

Creating high added value and earning the overwhelming trust of hair salons

Achieving targets through annual actions with a focus on medium- to long-term visions

Our unique business models, consistently focused on hair salons and hair professionals, embody the corporate philosophy disseminated throughIn line with The Milbon Way, we have established our ideal and desired visions of the beauty market. To realize these visions, we have formulated and executed

The Milbon Way. We are earning the overwhelming trust of hair salons by creating and providing high added value that ensures greater sales andmedium-term management plans with a five-year commitment since FY2010, replacing the rolling medium-term management plans we followed previously, withprofits for hair salons that no other company can imitate. We achieve this through two strategies; the Field Person (FP) System that provides aa focus on the latest trends in society and social changes expected over the following decade. These plans enable every employee to continue taking actions whilesales and educational support system closely tailored to hair salons under the slogan “Don’t sell products, sell concepts,” and the Target Authority

remaining focused on the vision, which leads to continuous innovation and sustainable growth.

Customer (TAC) Product Development System that standardizes and incorporates the sensibilities and technical skills of leading hairstylists into
products and services.

FP System

FP-provided educational support andproposals for greater sales and profits

TAC ProductDevelopment System

Technical skills of leading hairstylists incorporated into products and services

Tools for greater sales and profits for hair salons

Unique competitive strategy only possible with salon-exclusive products, and a solid cycle of trust with hair salonsField Person (FP) System, closely
tailored to hair salons

POINT 1.

POINT 2.

Five-year medium-term management plans to date2010–20142015–20182019–July 2020

July 2020–December 2021

2022–2026

1st Medium-Term
Management Plan

2nd Medium-Term
Management Plan

3rd Medium-Term
Management Plan

Carried out
Change the Stage—18-Month Missions!

Current medium-term
management plan
(Salon-based Social Innovation)

Beyond Japan(Global operations)

Beyond hair
(Lifetime Beauty Care)

Beyond an industry-perspective(Perspectives ofsociety and customers)

Accelerated digitization based on
preparations already made

Make DX progressa foundation for growth

TAC Product Development System,
focused on customer viewpoint

Respond flexibly to changing behavioral patterns and values as a result of the COVID-19 pandemic

Annual market strategies and business plans
linked to medium-term management plans

Research and planning from micro and macro
perspectives

Under the slogan “Don’t sell products, sell concepts,” we provide

In a fusion of sensitivity and science, we also operate our TAC Productvalue-added services such as beauty techniques associated with ourDevelopment System as a B2B2C initiative with two customer view-

products. We also operate our FP System, a unique sales and educa-

points (hair professional perspectives and consumer perspectives). It

tional support system that contributes to greater sales and profits foris a unique product development system that standardizes and incor-

From our five-year medium-term management plans, we formulate annual

We formulate plans and strategies from both micro and macro perspectives.

hair salons through problem-solving and educational support for hairporates the sensibilities and technical skills of leading hairstylists into

market strategies and annual business plans as specific single-year initiatives.

Embodying the Milbon-ism of “to be in the field, to pay attention, and to besalons. There are three types of Field Persons divided by expertise andproducts and services in collaboration with hair professionals. Behind

We then provide briefings on these initiatives to management personnel to

independent,” the president personally visits salons in many countries androle. As employees who are well acquainted in beauty, our FPs visit

this system is a wealth of knowledge, among the highest in Japan,

ensure full implementation within each department. In addition to these in-regions and conducts surveys on market trends to understand these micro

salons on a regular basis to provide training, attend in-salon meetings,

about basic and fundamental research into hair and scalp, which has

ternal briefings, we also provide salon partners and distributors with annual

perspectives. By combining this with global trends, including general eco-plan sales promotions, and thereby building a strong relationship ofled to the creation of unique added value. In cooperation with ourbriefings on market strategies for realizing the annual plans. The aim is to

nomic trends, as well as medium- to long-term trends, it is possible to formu-trust by addressing the challenges and aspirations of individual salons.

overseas R&D bases, we are also currently working to develop prod-

create a structure that ensures the achievement of our goals by constantly

late plans and strategies with a sense of reality and conviction.

ucts that support global beauty needs and localized products that sup-capturing any gaps that exist between our vision and the current state.

POINT 1.

POINT 2.

port local beauty needs of each country and region. We are creating a

Types of Field Persons

structure that will allow us to operate the TAC Product Development
System overseas as well.

Field Marketing Salesperson (FMS)
Visits salons with distributor salespersons to support the salons in areas of sales andmanagement, using information provided by the distributors, while helping to solve a range ofproblems

TAC Product Development System Flowchart
Understand market needs

Field Salon Educator (FSE)M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Field Cosmetics Educator (FCE)
Provides specialized education and development support related to cosmetics, including
skincare cosmetics for hair salons

Analyze and standardize successful beauty techniques

Identify customer needs

Develop products and services

Sensibilities and technical skills of
leading hairstylists

FCE

22

Embodying Milbon-isms, thepresident personally visits salonsin many countries and regions
and conducts surveys on market
trends, challenges, and needs

Always gathering information on
and understanding global trends,
including general economic
trends, as well as long-term
trends, as a regular habit

Formulating plans and strategies witha sense of reality and conviction

Needs andproblems

US R&D
Thailand R&D(Global R&D structure)

Milbon wins the Porter Prize for a unique competitive strategy that maintains high profitability

Global products
Supporting
global beauty needs

China R&D
Salon customers

Improvement and execution with a constant focus ongaps between the vision and the current stateMacroperspectives

Product development in cooperation with global R&D bases
Milbon Central
Research Institute

Knowledge and techniques

Hair salon

Briefings to management personnel andseparate briefings to salon partners and distributors

Microperspectives

Standardization as products and services to bring beauty to a broader audience

Distributors
Solution
proposals

Scientific development technologies
of Milbon(TAC Product Development System)

Field Persons

Products

Gather information from hair salons around Japan

Select TAC hairstylists

Field Person System Structure

FSE

Five-year medium-term management plan

Annual market strategies and business plans

Provides educational support that includes advanced beauty techniques and human resource
development, while contributing to solving problems faced by hair salons and hairprofessionals

FMS

Ideal and desired visions of the beauty market over the following decade

Localized products
Supporting the beautyneeds of each region

Our unique competitive strategy has been highly rated, winning the Porter Prize 2020, a program sponsored by the School of
Products tailored tothe specific beauty(culture and values) ofeach country and region

International Corporate Strategy, Hitotsubashi University Business School. We received the award in recognition of our consistent focus on stylists and salons since our establishment in 1960, and the uniqueness of a business strategy that has achieved
sustainable growth while maintaining high profitability, including increased revenues for 23 consecutive years (as of the timeof the award) since our listing in 1996.

23

About MILBONM I L B O N I N T E G R AT E D R E P O RT 2 0 24

24

Milbon from the Investor’s Perspective—Interview with Yasunori Nakagami,

Big fish in a small pond

Big fish in a big pond

strongest position in business

conflicts with rivals emerge

The key to Milbon’s global expansion

CEO of Misaki Capital Inc.

Global market = big pond

Chief Executive Officer, Misaki Capital Inc.
Research fellow at RIETI

Global market = a collection of small ponds

Milbon has achieved continued high proﬁtability and sustainable growth up to the present in the hair salon market throughBy separating certain salons or regional segments and concentrating on these,
it is possible to build barriers one at a time

construction and execution of unique business models and competitive strategies. Yasunori Nakagami, Chief Executive

build sufficient barriers globally.
Presently, Milbon enjoys a competitive edge
and is achieving steady market share growth inEast Asia, with its shared culture of Asian hair.
It is also expanding its business in the UnitedStates. In these circumstances, I believe that it isbetter to build sturdy barriers one at a time byconcentrating on certain countries in East Asia,or certain customers or regional segments in the
United States, rather than adopting an even approach across the board. In overseas business, aOﬃcer at Misaki Capital, a company that pursues “three beneﬁts,” aiming to realize beneﬁts (returns) for investors throughstrategy, in 1984, Konoike employed 20 newincreasing corporate value (beneﬁt for companies), thus contributing to enhancing beneﬁts for society, explains below,

graduates at once and invested approximately

Milbonʼs unique nature, future potential, and more.

50 million yen in training, an unthinkable level

The Key is Creating a “Pond” on the
Global Stage

big pond should not be seen as such, rather, it isof investment in human capital. This resulted in

Generally, rather being the big fish in a big

ed to the Milbon business model. Throughessential to look at where to create a small pond
within the big pond. I feel that this is well-suit-

sharp declines in ordinary income to 24 million

pond, where conflicts emerge in the manage-

focused investment, a temporary fall in profit

Milbon: A Company with a
Unique “Barrier” and High “Fundamental Value”

include whether the candidate for invest-

A company’s “price,” in other words its

yen and an ordinary income ratio of 1.1% forment world, the strongest position is to be a

margin may occur in efforts to win the trust ofment has built a unique “barrier” against

share price, fluctuates by few percent each

FY1984. However, through this switch to the FP

big fish in a small pond, where one can swim

salons, but once a barrier has been built, it will

the market and whether we believe that weday, and this fluctuation is even greater

System two years later, in FY1986, the compa-

freely and comfortably. In the Japanese mar-not easily fall. Milbon has already proved this in

can expect growth from the current shareover an entire year. But if we ask wheth-

ny began to see a significant upturn in results,

ket, Milbon has truly been able to make itself

the Japanese market.

At Misaki Capital, we do not believe in

price relative to the “fundamental value” of

er that “price” accurately represents thewhich became the start for Milbon’s high “bar-the big fish in a small pond. However, it is stillshort-termism, rather, we believe the orig-

the company.

fundamental value of a company, this isrier” that continues to this day.

conceivable that even a “barrier” has a lifespan,

In Future, Our Hope in Milbon is in“Management” rather than “Operation”

inal role of shareholders is to contribute

A “barrier” refers to a strong and uniquesurely not always the case. Nobody knows

I believe there are only two ways a compa-

and that it may hit its growth limit , in a small

to the increase of corporate value from abusiness model a company has built thatthe “true price” of a company, that is, its

ny can obtain such a “barrier.” One would be

pond. Consequently, for Milbon to continue tolong-term perspective. In order to achieve

can repel its rivals. A market where rea-

fundamental value. Nevertheless, as an in-to spend a jaw-dropping amount of money,

achieve sustainable growth, the key will be to

Finally, as an investor, we do not want the com-this, we work alongside the management

sonable profits can be expected will see thevestment business, we are responsible forthe other would be to take a staggering risk.

further develop this wonderful barrier.

pany we invest in to fail. But at the same time,and employees at companies we invest in,appearance of strong rivals accordingly. To

estimating the fundamental value of com-

If it was a “barrier” that could be easily repli-

The small pond in which Milbon has achieved

it is certain that there is no growth when one

aiming to maximize benefits for that com-undertake long-term investment in thesepanies and to ascertain whether its price iscated, it could no longer be called a “barrier.”

growth to date, the Japanese market, is experi-

is fearing failure. It is true that some investorspany, based on our first philosophy: Misaki

conditions, it is critical that the current

appropriate in relation to this. Here, I want

Konoike truly spent a jaw-dropping amount ofencing population decline, and this should result

prioritize short-term profit, but Misaki Capital

Capital is “Constructivist.” We should be

earnings can be maintained in the future

to focus on “barriers.” This is because ex-money and took a staggering risk, succeedingin an equivalent fall in the number of users ofbelieves the most important job of a corporate

able to realize a capital market in its ideal

and, in addition, that a company will stillcess profit protected by a “barrier” is thein building this sturdy “barrier.” I feel that thishair salons. We expect the milbon:ID and Smart

manager is to produce sustainable profit, for thetransition story was a great decision in JapaneseSalon strategies being advanced by Milbon togood of society, stakeholders, and, in the casemanagement history.

function as future growth drivers.

of Milbon, especially for hair salons. Althoughform, to bring wealth to everyone, whenachieve steady growth going forward. For

management, employees, and shareholders

this reason, Misaki Capital is not interest-

unite as one to raise corporate value. To

ed in companies temporarily making highthis end, Misaki Capital invests in just overprofits: an important criterion is whether

10 companies, carefully selected from thethe company is protected with a “barrier.”

approximately 4,000 listed companies inIn this aspect, Milbon has continued its

Japan, forming multi-members teams thatengage with each company.

source of “value.”

Creation of the FP System: A Great
Decision in Japanese Management
History

So why and how does this barrier function?

Also, in order to maximize the rare value of-

it is a wonderful thing to continue producing

At Misaki Capital, we believe that one reason

fered by the hair salon setting of “in-person,

profit by operation of a strategy that has suc-lies in “switching costs,” the financial and psy-

periodic, extended time,” the company is ex-

ceeded once, this success has an expiry date.

chological costs that are incurred when a salon

panding into other fields aside from just hair,

What is truly required of a company is manage-

excellent business performance over a long

Misaki Capital thoroughly investigateschanges over to different products and services.

and in the future, we must also pay attention

ment, and this is accompanied by risk. We hope

period, which can be seen as evidence of its

how “barriers” are shaped. In our inves-

For example, suppose a person in charge of pur-to these concrete results. Hair-related products

for true management through continuous in-

In an investment business that has a fidu-

high “barrier.” Most recently, in FY2023,

tigation of Milbon, I was particularlychasing at a hair salon is deciding whether toare a great fit as a sales flow line, being directly

novation by Milbon, a company that pledges tociary responsibility for client assets, selec-

issues including soaring raw material costs

impressed by the transition made by theswitch or continue with a product, and feels alinked to techniques of hairstylists, which is the“Build a solid company that won’t collapse,” bytion of a company that acts as a gateway is ofworldwide and the struggle with new busi-

company’s founder Ichiro Konoike in 1984

certain product is better than Milbon’s product.

greatest value of hair salons. But with non-haircontinuing to take risks without fear of failure,utmost importance, as misreading this cannesses led to disappointing results, suchto the Field Person (FP) System, Milbon’s

But that is where the trust for Milbon accumu-

products, the challenge is to depict physical andand seeing through such risk-taking to comple-

expose clients to risk. Selection of gateways

as significant declines in profitability andunique sales and education support system,

lated through the FP System comes to mind.

psychological flow lines for both hairstylists

tion based on this philosophy.

for investment is even more decisive andcapital productivity, but we do not believe

based on the concept “Don’t sell products,

Consequently, although it is very possible thatand customers. This challenge, which encom-

critical in the case of Misaki Capital, be-there was any decrease in the actual funda-

sell concepts.”

cause of how far we narrow our investment

mental value of Milbon.

they may not choose the Milbon product every

passes both issues and possibilities, will force

At the time, the Japanese beauty market

time, if this becomes a recurring choice, it posesmanagement to face many decisions whether tocontinue, end, or adjust course.

targets. In this context, an important crite-

When thinking about the fundamental

was dominated by foreign manufacturers. It

a risk for the hair salon of losing their businessria for determining whether a company’svalue of a company, we must be aware that

was amid such conditions that Konoike triedwith Milbon and thus the support from FPs.

Furthermore, our biggest expectation is on

stock is worth holding for the long term

its “price” and “value” are different things.

to gain the trust of hair salons throughThis creates a situation where Milbon products

the overseas business as a driver for future

low-profile, meticulous action that wascontinue to secure a place.

growth, and I sense great potential there. Of

Criteria for determining long-term investment

1
2

The company has built a unique “barrier” in the market
A barrier produces excess profit and supports fundamental value

Management rather than operation
The barrier is strengthened, raising fundamental value

beyond the capabilities of foreign compa-

Now, with new services such as milbon:iD, thecourse, culture and hair qualities vary by coun-nies. The same is true today, where theofficial online store, and Smart Salon, I believe

try and region, and while it is necessary to adapt

deciding factor in business is based on

the barrier will become even higher. To explain

flexibly in response to those differences, we canhuman relations. I believe that building afurther, creation of a barrier is not somethingimagine that there are management concerns

fan-base through low-key efforts to visit

that is achieved simply through decisions ofthat hair salons have in common. Consequently,

every salon is an inefficient but an ex-

the management. Of equal or even greater im-

Milbon’s FP System should be able to help solve

tremely rational strategy.

portance is the organizational strength to fullythese challenges. If Milbon is able to build trust

implement management decisions, and I believe

and use the TAC Product Development Systemthat Milbon also has such strength.

to create products that are tailored to hair quali-

In 1983, Milbon had roughly 100 employees and its ordinary income was around 77
million yen. But in order to execute histies and other factors, Milbon should be able to25About MILBON

Our Brands

Professional Brands: To complement new trends, design changes and generational differences

Shaping new value in response to expectations and desires for beauty

Elujuda (Hair Care)

GRAND LINKAGE (Hair Care)

Nigelle (Styling)

Manageability of hair is the foundation for achieving

The finish after in-salon coloring will stay beautiful

Exquisite piecey texture, movement, and texture as

the desired hairstyle. The Elujuda brand elevates theand longer. Grand Linkage delivers beautiful, shinier

expressed by hair professionals continues to evolve

quality of hair design by providing comfortable tex-hair to people of all ages.

for people who enjoy trends that are always half a step

Milbon provides products focusing on professional hair cosmetics
used in hair salons and hair cosmetics used at home by customersof hair salons, the value of which is maximized through counselingand techniques of hairstylists who are beauty professionals. Now, wehave developed our range beyond just products related to hair. We are
expanding into new fields, and now offer salon-exclusive cosmetics
and products in the beauty healthcare field, in order to develop hairsalons into a Beauty Platform that is indispensable for people’s enriched lives. Here, we introduce each of our main brands.

FY2023 Consolidated sales ratio and results by category
Cosmetic products

0.57

0.41

billionyen (1.2%)

Permanent wave productsyen (3.0%)
1.46 billion

Otherbillionyen (0.9%)

47.76
billion yen

Hair coloring products

Haircare productsyen (35.5%)
16.95 billion

yen (59.4%)
28.35 billion

Premium Brands: To complement the diverse values of “beauty”

Aujua (Hair Care)“milbon” (Hair Care)

Villa Lodola (Hair Care/Hair Color)ture that lasts the whole day, with hair as manageableahead. Nigelle styling brand provides styling tools

as a salon finish, no matter your age.

born from such styling techniques.

im (Cosmetics)

ALANOUS (Health Care)Our Brands

Japanese women are becoming more beauty

Through nano-level analysis of hair, we dis-

An organic hair care brand. All products are cer-conscious and more beautiful every year. Con-

covered Stick-Shaped Voids (SSVs), a common

tified organic by ICEA, a leading European or-

sequently, they also have diverse concerns aboutdamage phenomenon in people around theganic certification organization. Using nature’shair, not limited to one per person. And theseworld. Products under the milbon brand containgreat power for beautiful hair. We are offeringchange with changes in season and style, and as“SSVR-Silk*,” increasing density in the cortex

new options through Villa Lodola.

people get older. Aujua was born from the idea ofand repairing these voids, restoring hair to its

providing a custom-made hair care program fororiginal beauty from the inside out. With this,individuals with various hair concerns.

we offer an innovative hair care solution linking

A salon exclusive brand created through joint research

5-ALA is a substance used for greening deserts. This

with KOSÉ. “im” brand fulfills the wish for alluring

substance which has existed on Earth for 3.6 billion

makeup while updating your personal style.

years, is also called the “source of life.” Milbon, which
specializes in the science of beauty, conducted some

*Follow the link for details of each brand

20 years of basic research into 5-ALA, leading to theand lineup:

creation of ALANOUS. These beauty supplements

https://www.milbon.com/en/brand/

help you feel fresh and healthy from the inside out

professionally-applied salon treatments to at-

every day.

home care.
*Isostearoyl Hydrolyzed Silk: Hair repairing ingredientPJOLI (Hair Care)M I L B O N I N T E G R AT E D R E P O RT 2 0 24

26

iMPREA (Cosmetics)

ELMISTA (Beauty Equipment)

Technical Brands: To complement the specialized techniques of professional hairstylists

ORDEVE SERIES (Hair Color)

ENOG (Hair Color)

Neo Liscio (Perm)

Neo Liscio is a line of hair straightening solutions

Contains botanical and organic ingredients with

A salon exclusive brand created through joint

A product that combines the beauty appliancehair repair properties, with particular attention

research with KOSÉ. Hair salons are the only

technologies of industry leader Panasonic andto the feel and finish. The fragrance is a combi-

place that can identify each person’s individual-

Milbon’s expertise in hair science. ELMISTA

nation of essential oils: at times relaxing, and at

ity and provide their own beauty. iMPREA is an

is a new next-generation hair dryer developed

There are as many visions of the ideal hairstyle as

A hair color brand that allows you to create colors you

times inspiring. The use of ingredients that re-

unprecedented brand that delivers a personalizedin collaboration by the two companies that re-there are humans on Earth. ORDEVE is a made-to-have always been looking for. A color that nobody has

designed to allow customers to achieve natural look-turn to nature and recycled packaging makes for

impression to customers through “Impression

plenishes each strand of hair from the root to theorder hair color line tailored to the unique hair types

ever seen before. Your own color, made by you.

ing, smooth hair that can be freely styled. It addresses

more eco-friendly products. PJOLI allows each

ProductionTM” a communication method lever-

tip with hair serums while it dries hair to a silk-and expectations of our customers, achieving a re-hair concerns caused by aging while offering mature,

person to shine authentically.

aging the strengths of hair salons.

smooth finish. Hair drying time is transformed

fined, exquisite expression of hair texture. Cherishingstraight styles. Straight hair that allows beautiful hair

into hair care time that gives hair a smooth andthe experiences of those who enjoy hair coloring, we

design for people of all ages.

shiny finish.

strive to bring radiance to their lives.

27About MILBONOur Services

milbon:iD E-commerce platform where hair salons and customers can purchase salon products online

Fusing physical and digital worlds to maximize the value of hair salons

FY2023 Results

670,000 registered users and 5,480 registered salons

Milbon creates and offers various services fusing the physical and digital to maximize the hair salon setting for the further development of hair

Milbon’s official online store, milbon:iD, is an e-commerce platform service

salons. We use various formats, including seminars, events, and online platforms, to help to nurture lifelong hairstylists who align themselves withto support improved productivity of hair salons by allowing customers who

consumers’ beauty throughout their lives. Our physical and digital educational support covers topics from beauty techniques and knowledge tovisit salons to purchase products online. The creation of more purchasecareer development. Below, we introduce these services provided by Milbon.

opportunities contributes to greater sales and profit for hair salons.

Smart Salon

port as a communication tool fusing physical and digital worlds. Further-

Also, since it began full operation in June 2020, it has rapidly gained supTM

more, through coordination with Smart Salons®, launched in FY2023, we

Smart Salons will create a new concept of hair salon settings to seamlessly connect hairstylists and customers byfusing physical and digital worlds
FY2023 Results

are endeavoring to further expand its functions and improve convenience.

Test-marketing rolled out to 23 salons in 19 cities in Japan
education:iD An online education platform for hairstylists where they can visualize their own progress
Smart SalonTM is an interactive salon that creates an unprecedented
connection between hair salons and consumers, enabling a new hairsalon experience by fusing physical and digital worlds. From FY2023,

FY2023 Results

40,000 registered users

we began a business roll out in collaboration with salons that sup-education:iD is an online education platform that uses the digital world toport the project, and despite being in the test marketing phase, it has

provide hairstylists with opportunities for self-development without being

expanded to 23 salons in 19 cities across Japan. In conjunction withhindered by time or place. It facilitates online seminars to deliver knowledge

Milbon’s official online store, milbon:iD, we are already seeing cases

and technical information. In this way, we support improved learning effec-

of improvements in knowledge-based product sales.

tiveness, efficiency, convenience, and working environment for hairstylists,
helping them upgrade their skills in an individualized format.

The new value experience realized by Smart Salons TM

KAORIUM —letting your nose be the guide

DAGASHI —search and sample
Video learning materials

Applying for seminars and events

Product and education information page LINKS

Over 300 videos including instruction by leading

It is possible to apply for in-person and online

Product PR sheets and manuals, POP and otherhairstylists and curriculum-based learning thatseminars and events.

materials can be downloaded anytime. It is also possible to view product-related educational videos.

users can watch on demand.

AI-based expression and diagnosis of your fragrance preferences se-

Sample-sized products arranged like candies in a penny candy store. It

lected from bottles lined up in the device, to provide product recom-

enables you to casually try products recommended by your hairstylists

mendation. KAORIUM engenders a more enjoyable purchasing expe-or items of your interest at special trial prices.

rience and guarantees encounters with novel products, with fragrance

Providing a wide range of educational opportunities and educational events linking hair salons around the world
FY2023 Results

as a starting point.

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

28

Seminars & Events

Total number of annual users of our studios, events, and educational videos 271,000 people*KAORIUM, developed by SCENTMATIC Inc. (CEO: Toshiharu Kurisu, Head office: Tokyo,
Japan), is an AI-based system providing a fused experience of scents and words, that can convert
various scents into “sensory words” and simultaneously select a scent from the words. *KAORIUM is a registered trademark of SCENTMATIC Inc.

Smart Salon Viewer—investigate and discover

STYLESTOCK—suggestions from haircare professionals for you

In addition to providing in-person opportunities in the form of educational seminars and events using studios, Milbon is enhancing its online seminars linked toeducation:iD. Seminars and events cover technical, including trend design courses, and learning the latest product information. In addition, they cover communiTablet-based system that allows customers to discover information

This new milbon:iD service delivers information on shampoos, cos-cation to promote the purchase of knowledge-based products, and points to offer higher added-value aimed at boosting salon service unit prices. Furthermore, it

about shampoos, treatments and cosmetics used by hairstylists. People

metics, styling techniques, and other recommendations from hairstyl-

facilitates our Beauty Sommelier Training System to nurture beauty specialists. In addition, those who register for seminars and events will be able to view related

can also enjoy hair coloring and makeup simulations, fragrance analy-

ists direct to the customer’s smartphone.

video curricula in education:iD, effectively combining the real and digital aspects to provide educational opportunities tailored to the needs of each hairstylist.

sis and other content which we are constantly expanding so that cus-

These education support activities are available not only in Japan but worldwide.

tomers never tire of it, to raise the value of time spent in hair salons.

* Follow the link for seminar and event details: https://www.milbon.com/en/company/seminar/

29

FocusClick to jump to the relevant page

Focus
Milbon’s Strategic Focus

P 32
2022–2026 Overview of Medium-Term Management Plan
P 34
Global Market Strategy Planning and Progress
P 36
Domestic Market Strategy Planning and Progress
P 38
R&D Strategy Planning and Progress
P 40
Production Strategy Planning and Progress
P 42
Financial Strategy Planning and Progress
P 44
Initiatives for Human Capital Management
M I L B O N I N T E G R AT E D R E P O RT 2 0 2430

31

Focus2022–26 Overview of Medium-Term Management Plan

Smart Salon Strategy

Becoming a truly global company, leading in Asia and top 5 in the world

The Smart Salon Strategy is a strategy implemented in collaboration with participating hair salons for the nationwide expansion of Smart Salons, which offer a
range of digital-based value experiences in physical salons. The strategy builds on the foundation of milbon:iD (Milbon’s official online stores), which has rapidly
gained support as a new communication tool for customers and salons. While many customers have been attracted to knowledge-based products, which are theRealize Enriched Spirit and Society through Beauty
Milbon establishes a medium-term management plan every five years
to help realize “Enriching the sprit and society through beauty.”

mainstay of sales along with the technical services at hair salons, our research has shown that there has been a certain level of anxiety about their price, suitability,

Realize Enriched Spirit and Society through Beauty

cently, the 2022–26 Medium-Term Management Plan named “Stage

Implementing five-year plans

for the Future,” we have outlined our goal to become the leading

Medium-term Five-year management planmanufacturer in Asia and top 5 in the world by elevating the value of2022–26 theme

industry professionals in the eyes of consumers and society at large.
Our current medium-term management plan is roughly divided
into a global strategy and a domestic strategy. In the global market

Milbon‘s vision

we execute our global strategy, called Seven Regions, aiming to build

Become the leading manufacturer in Asia and top 5 in the world by
elevating the value of industry professionals in the eyes of consumers and society at large

main, tailored to the individual beauty and culture of each country

the convenience of milbon:iD, the percentage of customers purchasing knowledge-based products in salons and the value of those purchases can be improved.
This will also help create a sustainable growth model that does not rely solely on customer numbers or technical service sales even as the population shrinks.

Through these plans, it has achieved sustainable growth. Most re-a system of local production for local consumption in the beauty do-

and availability in salons. By unearthing these potential needs through the technical skills of haircare professionals, the experience provided by Smart Salon, andand region. In the domestic market we execute our domestic market

Two Major Strategies

strategy, called Salon-based Social Innovation, aiming to develop

Global Strategy
Seven Regions:hair salons, which are facing structural issues such as a population
decline and industrial issues such as productivity, into an essential

Promoting a local production for local
consumption system in the beauty domain

Domestic Market Strategy

Beauty Platform to help people live fulfilling lives. Details of prog-

Reforming the format of hair salons inSalon-based
Social Innovation: concordance with the changing times

ress made in each strategy are described individually from page 34.

The power of hair professionals

The power of Smart Salon

The power of milbon:iD

Unearthing of potential needs forknowledge-based products

Improvement of percentage of customers
purchasing knowledge-based products insalons and the value of those purchases

Seamless connection 365 days a year,
even outside of hair salon visits

Lifetime Beauty Care Strategy

Exhibit at the 2025 Osaka-Kansai Expo

The Lifetime Beauty Care Strategy is a strategy to expand from a hair-centered

Under the theme “Beauty salons of the future where you can live beautifullybusiness domain to skin care and other cosmetics, and beauty health care. The

in your own way,” our company plans to exhibit in the Osaka Pavilion RE-

aim is to maximize the value of the rare community characteristics offered by

BORN area at the 2025 Osaka-Kansai Expo to spread a new idea of a hair

hair salons. That is, places to visit regularly, spend an extended period time, andsalon to the world.

enjoy face-to-face communication. Together with the Smart Salon Strategy,
the Lifetime Beauty Care Strategy is expected to further improve productivity
for hair salons, where technical services have accounted for a large proportionof sales in the past. It will also help deliver a lifetime of salon-based beauty
care for customers. We are actively cooperating with other companies, that

Outline of global strategy, the Seven Regions

have their own unique technologies, to develop and sell innovative products

Our comprehensive global strategy, Seven Regions, recognizes that the value of beauty varies with the specific culture of each country and region.

time to penetrate and solidify, we will continue creating new ways of existingWith this in mind, we have established Seven Regions from the 14 countries and regions in which we already have a presence ( Japan, South Korea,

for hair salons to achieve sustainable growth for both Milbon and the salons,Greater China, ASEAN, North America, the EU, and the Middle East), and we are promoting a local production for local consumption systemand to further enrich lifetime beauty care for customers.

and services like this. And even though these products and services will takeSustainability Commitmentin the beauty domain, tailored to the individual beauty of each region.
To realize this system, we are developing and considering sales, R&D, and production bases within each region so that everything from R&D to
production, logistics, and sales can be conducted independently in each region. This will not only create beauty products tailored to the specificbeauty of each country and region, which varies according to culture, but will guard against geopolitical risks and enable a flexible response to

In addition to positioning our Sustainability Commitment at the core of ourSalon-based Social Innovation strategy, we have selected, and are actively pri-

Regular visits

Extended visits

Maximizing the value of hair salon spaces

the perspective of sustainability as well, this system will also reduce CO2 emissions as the need for long-distance transportation is eliminated.

Expansion into other domains

beauty needs around the world and localized products based on the needs of each region, and coupling those products with our unique sales andeducation support system.

Beauty: The culture and values specific to each country and region

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Everything from R&D to production, logistics, sales,
and human resources conducted independently ineach region( Japan, South Korea, Greater China, ASEAN, North America,
the EU, and the Middle East)

Development of a system of
local production for
local consumption
in the beauty domain

HaircareCosmetics

Developing hair salons to a Beauty Platform by improving productivity
and providing a one-stop shop for beauty

Tailored to the specific beauty of each culture
Guarding against geopolitical risks
Flexibly responding to laws and trade-related regulations
Demonstrating economies of scale in areas such as raw material procurement
Reducing CO2 emissions as the need for long-distance transportation is eliminatedment targets for the 2022–26 Medium-Term Management Plan. Although

FY2023 as initially forecasted when the current medium-term management

an essential beauty platform to help people live enriched lives.
To achieve this aim of reforming the format of hair salons, and together with our Sustainability Commitment, we are promoting two
specific strategies: the Smart Salon Strategy, a salon-driven strategy toconnect with consumers by fusing physical and digital worlds; and thetered business domain to cosmetics and beauty health care.

through hair salons by working across our businesses to address key sustainability challenges within our company and the beauty industry.

2023. However, 47.7 billion yen was also the consolidated net sales target for

Salon-based Social Innovation
Beauty Platform Plan
Two Major Strategies
Smart Salon Strategy

Milbon's digitaltransformation pivotal
in building a stronger
bond with customers

Lifetime Beauty Care
Strategy

Five Key Challenges of
the Sustainability
Commitment

Evolving customeroriented TAC ProductDevelopment System
for B2B2C

Strategy Foundation*For the Five Key Challenges of the Sustainability Commitment, please see Sustainability & ESG on page 46.

FY2022 results

FY2023 results

FY2024 target

FY2026 target

Consolidated net sales

45.23 billion
yen

47.76 billion
yen

50.62 billion
yen

58.00 billion
yen

Domestic

35.33 billion
yen

36.50 billion
yen

38.62 billion
yen

43.70 billion
yenOverseas9.90 billion
yen

11.26 billionyen

12.00 billionyen

14.30 billion
yenGross profit

29.50 billion
yen

29.52 billion
yen

32.40 billionyen

38.16 billion
yen

Operating income

7.55 billionyen

5.52 billionyen

6.60 billion
yen

10.80 billion
yen

Operating margin16.7 %

11.6 %

13.0 %

18.6 %

ROE

13.2 %

8.9 %

13.9 %

ROIC

12.5 %

8.6 %

13.6 %

Dividend payout ratio

50.2 %

71.6 %The table on the right details the most recent operating results and manage-

Hair salons today are facing significant, structural issues, including aInnovation, our domestic market strategy, to transform hair salons into

contribute to the realization of a spiritually enriching and sustainable society

Operating results and targets for the 2022–26 Medium-Term Management Plan

the result was 0.1% below the revised target we announced on November 10,

To meet these problems, we have developed the Salon-based Socialand for which our stakeholders have high expectations (see Sustainability &Divide the world into regions for deploying measure

we set a new record for consolidated net sales of 47.7 billion yen in FY2023,

decreasing population and productivity-related industrial problems.

oritizing, Five Key Challenges with high relevance to our business activities
ESG from page 46 for details). Together with our various strategies, we will

Beauty Health Care

Outline of domestic market strategy, the Salon-based Social Innovation

Lifetime Beauty Care Strategy, a strategy to expand from a hair-cen-32

Rare Community Characteristics Offered by Hair SalonsFace-to-face communication

laws and trade-related regulations. It will also make it possible to demonstrate economies of scale in areas such as raw material procurement. FromOur aim is to develop trust in the Made by Milbon philosophy in every country and region by developing global products based on common

Provided by: Osaka Pavilion (public corporation)plan was formulated, so we are generally on course to achieving our target.
Meanwhile, operating income for FY2023 fell 26.8% year-on-year to 5.5billion yen, resulting in the operating margin falling to 11.6% from the initial 16–18% range. These results were due to higher-than-expected expenses
including sharp increases in the cost of raw materials and higher personnel
costs due to the raising of base wages to enhance returns to employees. We are
currently implementing measures to improve our operating margin and considering other measures as well. Taking these circumstances into account, weare revising our targets from the medium-term management plan announced
in FY2022, and will make further announcements after close examination.

61.6 %

50.0 %
33

FocusGlobal Market Strategy Planning and Progress
Tailoring to diverse beauty by building of a system of local production for
local consumption in the beauty domain

Harumichi Okazaki
Board Director, Director of International FP Sales and Marketing,Director of FP Sales and Marketing, in charge of Education Planning

sales in FY2024 was 12 billion yen, representing

In structural terms, we hire locally at our

region. Launched in 2019 as a hair color brand for

year-on-year growth of 6.6%, we are current-

overseas bases to ensure the people working

Europe and North America, Sophistone has been

ly forecasting operating income of 1.07 billion

there have the specific cultural knowledge andparticularly popular. In FY2024, we aim to growyen, or a year-on-year reduction of 16.7%, due

competence to provide close support to the lo-

by 12.4% by accelerating growth of this brandto factors including enhanced hair coloring

cal hair salons. Going one step further, as con-through collaborations with influencers with asales activities in North America, and office ex-sumer values become more diverse, the greater

strong impact in the beauty market. In addition,pansion and increased staff in South Korea. At

the importance of ensuring diversity at Headsince we are starting to see our deficits shrinking

the same time, we are finally starting to transi-

Office in Japan, as the people responsible foras logistics costs decline as well, we are hoping totion our overseas business from the investment

steering our global business. To remain nec-

achieve profitability from FY2025 while taking

phase to the profit phase, so in many respects,

essary for society in a world of diverse values,

into account the balance with the enhancement

we are now reaching a turning point where wewe need to consciously accelerate the Milbonof our sales structure and other factors.

can become a truly global company.

Group’s rate of human resource globalization.

The above three regions currently account for

As part of this change, we started to formu-

over 70% of our overseas net sales, but there arelate a common global policy for our overseas

increasing expectations for growth of the ASE-

businesses in FY2024, which is in addition to

Aiming for an evenly balanced
domestic and overseas sales ratio

AN region going forward and we will also drive

our unique Field Person System, one of ourtargeting growth of 9.2% in FY2024 by in-revenue growth in the EU region. We are fore-

company strengths, and our TAC Product De-

To realize this system of local production

creasing the number of Milbon hair color-casting considerable growth in the ASEAN re-velopment System and other R&D capabilities.

In the future, with continuous growth of ourfor local consumption in the beauty do-

ing fans among hair salons. We are doing

gion, with a year-on-year target of 10.0% growth

In formulating this policy, members of Inter-overseas business, we expect the composition

main, we are developing R&D, production,

this through development of in-salon hairfor FY2024. To achieve this, in addition to morenational Operations from the Head Office inof domestic and overseas sales in our consol-and sales bases within each region so thatcoloring menu proposals and educational

active collaborations with distributors to further

Japan contact and actively visit each country

idated net sales figures to be vastly different

With a full-scale global expansion from 2010,

everything from production to sales can beinitiatives aimed at increasing the number

expand market share, we will also transition toto gather information, while also reflectingfrom what it is at present. In other words, weMilbon currently has a presence extend-

conducted independently in each region.

of people using hair salons. Our China

a new manufacturing structure that includes

on common global trends identified from theexpect to have built a robust business founda-

ing to 14 countries and regions, including

So far, we have opened R&D bases in North

Factory obtained approval to sell 200-plus

knowledge-based products, through expansion

styles and aspirations of “smart hair profession-tion where, rather than one region affecting

Japan, as it works to fulfill its global vision

America, Thailand, and China, and pro-hair colorings in FY2023, which is a record

and improvement of the Thailand Factory. Forals,” who are cutting-edge haircare profession-

overall business performance, we have a mutu-

of becoming the world’s No. 1 professional

duction bases in Thailand and China. We

number even among local manufacturers,

the first time in the EU region, we achieved ourals with communication abilities and advanced

ally supportive global structure that maintains

haircare manufacturer. Overseas consolidat-

believe that a system of local production

and we will shift to full production fromsales target in FY2023, and to achieve further

technical skills. This has enabled us to visualize

sustainable growth. It is highly likely that, as

ed net sales for FY2023 reached 11.26 billion

for local consumption in the beauty domain

FY2024, so we will be fully prepared for thegrowth of 14.7% in FY2024, we plan to employ

a year’s worth of educational activities and toearly as 20 years from now, our domestic andyen, representing a 13.7% year-on-year in-will offer a range of benefits. It will not only

coming recovery of consumption.

an additional two local representatives. Current-

promote evidence-based activities.

overseas sales will account for equal shares ofcrease, exceeding the 10 billion yen mark forcreate beauty products tailored to the specif-

In the South Korean region, which is cur-ly in the Middle East region, we are gathering

As concrete measures for FY2024, we are

the first time and delivering an overseas sales

ic beauty of each country and region, which

rently an important pillar of our overseas

information on local distributors for whom ouradopting online-to-offline (O2O) communi-

Going forward, we will continue tailoring

ratio of 23.6%. Although this was 0.8% be-varies according to culture, but also guard

business and the source of a global beauty

corporate philosophy resonates, and we are con-cation in our education support program, andour efforts to the individual beauty of each

low the overseas sales target of 11.35 billion

against geopolitical risks, enable a flexible

trend, the sales of gray color products has

ducting market surveys, so we are almost at theholding DA-LINK events, a large educationalcountry and region, and we will create a struc-

yen that we revised upward in the revised

response to laws and trade-related regula-been strong, spurred by an aging popula-

stage where we can start moving.

event that has had a major impact in South Ko-ture that enables mutually sustainable growthplan announced on November 10, 2023, ittions, and make it possible to demonstratetion. Accounting for 70% of our sales, reve-rea, in a total of five regions (South Korea, Chi-for each country and region, with a focus on

was still 0.8% higher than the 11.17 billion

economies of scale in areas such as raw ma-nue from our hair coloring products has in-na, Taiwan, Malaysia, and Thailand). Throughour Seven Regions global strategy. We believe

yen in our original plan. Our unique busi-

terial procurement.

creased by 4.3%. On the foundation of thissuch activities, we aim to develop smart hairthat this will help us achieve further expansion

professionals with the communication abilitiesof our global business, and consequently create

and technical skills demanded by consumers ina peaceful world where people can live a beau-

the coming era, and make approaches to thosetiful life, so we will continue working toward

cutting-edge salons that are setting trends.

this goal.

Overseas consolidated net sales
exceeds 10 billion yen for the firsttimesales target of 14.3 billion yen.

ness model of maintaining close ties withsupport for our hair coloring products, hair

hair salons has received high praise in thecare has achieved double-digit growth, re-global market as well, and we will build onthat trust to continue to steadily expand our

Steadily expanding market share ineach region

Contributing to further developmentof hair salons with a common global
focus

cording net sales of 4.71 billion yen and yearon-year growth of 7.4%. In addition, we held

While our target for overseas consolidated net

consolidated net sales.

a large-scale educational event DA-LINK

market share going forward.

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

34

net sales to 1.62 billion yen, in the North America

Under the 2022–26 Medium-Term Man-

While our overall overseas business perfor-

for 100 Generation MZ haircare profession-

agement Plan, we are promoting our com-mance in FY2023 is explained above, we

als with a strong influence in the industry.

prehensive global strategy, Seven Regions,also achieved significant results and prog-

We had more than 1,500 online participants,

in recognition of the 14 countries and re-ress in each individual region.

leaving a significant impact on our pene-

FY2022 results

FY2023 results

FY2024 target

9.90 billion
yen

11.26 billion
yen

12.0 billion
yen

United States

1.32 billion
yen

1.62 billionyen1.81 billion
yen

China

2.11 billionyen

2.24 billion
yenOverseas consolidated net sales

FY2026 Overseas Consolidated Target
Sales target

14.30 billion yen

2.46 billion
yen

United States

1.85 billion yen

China

4.74 billion yen

South Korea

5.20 billion yen

Other

2.51 billion yen

gions in which we already have a presence

In the Greater China region, for example,

tration into hair professional salons, and( Japan, South Korea, Greater China, ASE-

we have already become a market leader

further strengthening our position as theAN, North America, the EU, and the Mid-in both Taiwan and Hong Kong and our

second highest market share provider. WithSouth Korea

4.15 billion
yen

4.71 billion
yen

4.78 billion
yen

dle East). We are building a system of local

business continues to grow. In the Chineseplans to further increase our appeal through

Other *1

2.30 billion
yen

2.67 billion
yen

2.94 billion
yenproduction for local consumption in themarket, the situation has been difficult,distributor sales in FY2024, we are forecast-

beauty domain, tailored to the specific beau-with issues such as falling consumer sen-ing a growth of 9.1% year-on-year.

Overseas operating income

1.35 billion
yen

1.29 billion
yen

1.07 billion
yenty, which is the culture and values, of eachtiment in a post-COVID economic down-

In the North America region, we are op-

Overseas operating margin13.7 %

11.5 %

9.0 %country and region. Our vision for FY2026,

turn. Even in such a business environment,erating an extensive distributor network

the final year of the plan, is to become thewe achieved 12.0% higher revenue in ourthat covers all 50 US states, where we haveleading manufacturer in Asia and top 5 inhaircare business, which helped us increaseachieved double-digit growth for our hair-

the world by elevating the value of industry

net sales by 3.8% year-on-year demonstrat-

care business, which accounts for 80% ofprofessionals in the eyes of consumers anding the strong relationships we have steadi-

sales there. Contrary to South Korea, it hassociety at large. Right now, we are on anly built up with each and every salon. Esti-

been support for haircare products that has

extremely steady growth trajectory toward

mated market share also improved to fourth

resulted in hair coloring achieving revenue

achieving our overseas consolidated net

place from eighth place in 2019, and we are

growth of 18.8% year-on-year, and growth in*1. Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, Philippines, Germany, etc.

Japan

South Korea

Greater China

ASEAN

North America

Achieved new record fornet sales, while operating
margin remains a challenge

Strengthened No.2
market share byholding large educational
events, etc.

Achieved No.4
market share in China,
increasing revenues evenduring an economic
downturn

Actively participated incollaborations with
distributors to expand
market share

Aiming for profitability
from FY2025, with haircoloring products driven byhair care

EU

Middle East

Achieved sales target for the Aiming for full-scale entry
first time, with plans toby gathering information
employ additional local
on local distributors andrepresentatives for further conducting market surveys
growth35

FocusCombining hairstylist techniques and cosmetics

Customers in the future

Domestic Market Strategy Planning and Progress
Ongoing implementation of the Salon-based Social Innovation strategy,
and enhancement of hair coloring services

Smart Salonsmilbon:iD

Visiting for the experience

Purchasing on milbon:iD

Hair salons
New entry point

In-salon treatment

Connections outside ofsalon visits

Repeat customers

Akiko Nishioka

With the addition of experiences as an entry point andmilbon:iD as a stepping-off point, connection withcustomers can continue outside of salon visits

Executive Officer, Deputy Director of FP Sales and Marketing andGeneral Manager of Tokyo Aoyama Branch

New record of 36.5 billion yen fordomestic net sales

The challenge of increasing salesof knowledge-based products andexpanding into new domains

Milbon is currently the market leader in Japan’s salon-exclusive hair cosmetics market.
As of the end of December 2023, we had 870

As I already said, FY2023 was a year ofachievements and challenges for us. We

New salon-exclusive color offerings combining hair coloring and eyebrow care

In-salon hair coloringin the past

Coloring (hair)In-salon hair coloringin the future

Coloring (for the hair) andcoloring (for the face)

Total hair and eyebrow coloring package that combines Milbon
hair coloring and eyebrow care in a way that only hair salons canworlds. With FY2023 positioned as a test

communication tool that enables us to send in-products are a core part of our revenue mix, so

is the type of proven success know-how that wemarketing phase, we initially expected toformation directly to customers.

we see hair coloring as an important starting

will continue to expand. Although we have juststart with about 10 salons, but we ended up

Under the Lifetime Beauty Care Strategy,

point that leads to other products such as sub-begun implementing these two high-value hair

opening 23 salons in 19 cities nationwide.

we have taken on the challenge of maximizing

sequent hair care and cosmetics. For this rea-color push strategies, the customer response so

We are already receiving reports from thethe potential of hair salon spaces by not only

son, we have started implementing a high-value

far has been excellent, so the results have been

front lines about many positive changes

maintaining our focus on hair, but also releasing

hair color push strategy in FY2024 to enhancevery encouraging.

not seen previously in conventional sa-

products in other categories, such as skin care,and grow our hair coloring business. In addi-

We have also started pushing our Smart Sa-

tion to this strategy being indispensable to en-lons to increase sales of knowledge-based

non-consolidated employees working acrossalso achieved some important progresslons, including new experiences bringing

eyebrow care, and other cosmetics, as our firsta wide domestic network of 8 branches andand achievements in our domestic market

customers into the salons, increased sales

beauty equipment and supplement offerings.

courage customers to choose beauty over the

products with the targets of reaching about 100

11 sales offices. This keeps us close to thestrategy, Salon-based Social Innovation,of knowledge-based products, and income

FY2023 net sales of cosmetics remained almost

many other options available to them, includ-

Smart Salons in FY2024, and 500 Smart Sa-

more than 200,000 hair salons in Japan andunder the 2022–26 Medium-Term Man-

streams that are not dependent on the la-unchanged from FY2022 at 570 million yen.

ing demand for going out, it will also help im-lons in 100 cities in FY2026. At the same time,

has helped us achieve sustainable growth.

agement Plan.

bor of haircare professionals. In addition to

However, with results that included 40 million

prove our declining operating margin.

we have set ourselves the target of reaching

requests from salon owners to open multi-

yen in sales of “im” makeup fixer mist, a new

The first pillar of our high-value hair col-870,000 registered members of milbon:iD in

ple sites, we are even getting inquiries frombrand launched in July 2023, which was twiceor push strategy is to redefine the concept of

FY2024 by implementing measures to raise its

regional salons currently facing declining

the original target of 20 million yen, it feels as if

in-salon hair-coloring, by combining hair andappeal. The new milbon:iD functions include

populations and other challenges. In fact,

a new culture of selling and purchasing cosmet-

eyebrow coloring into a total hair and eye-

STYLESTOCK, where members have personalized pages with information on products andIn FY2023, the domestic market entered
the post COVID era, and although the flowof people recovered quickly, there was ashift in consumption trends from the nest

With the population decreasing rapidly inJapan due to aging and a declining birthrate, many hair salons are seeing the population within their local areas shrinking.

egg demand from people staying in home,

In such an environment, hair salons will

Smart Salons that have already opened,

ics in hair salons, which we have been steadilybrow coloring package that only hair salonsand prioritizing hairstyling in 2021-22, tonot only face difficulty maintaining thereceives requests for inspection visits on abuilding up, is starting to take hold.

a trend that focused on outings, including

same level of sales as in the past from theirmonthly basis.

travel and dining out. Despite these diffi-

customer numbers and technical services,

cult market conditions, we achieved strong

but also concerns about staff shortages are

sales of haircare products that led to a newrecord of 36.5 billion yen for domestic net

beginning to be voiced. This is why we arepromoting the Salon-based Social Innova-

can provide. In a survey of consumers, 66% of

styling techniques used in their treatments, andOn the other hand, the ELMISTA hair dry-people responded that they wanted to change

a salon-driven live shopping feature stream-

In addition, milbon:iD, which are Milbon’s

er that we launched as our first endeavor in

their makeup after in-salon hair coloring treat-ing content to milbon:iD members. Throughofficial online stores on which Smart Salonsthe field of beauty equipment performed very

ment, with about 60% of those people actu-

these initiatives, we aim to achieve the target ofare built, has continued to grow in popular-

poorly, with the posting of a revaluation loss

ally changing their eyebrow products straight38.62 billion yen for domestic net sales alone in

ity since its full launch in 2020. The num-

due to a downward revision for sales. Afteraway. When we started efforts to link hair and

FY2024, a 5.8% increase from FY2023.

eyebrows, we achieved greater success than ex-

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

sales alone, increasing 3.3% year-on-year.

tion domestic market strategy to transformber of registered members of milbon:iDanalysis and reflection, we believe the main

Although we fell short of the initial plan,

hair salons into an essential Beauty Plat-

have grown from 448,000 in FY2022 tofactors affecting this outcome were inaccurate

pected, selling more than 100 million yen of

the result was still 0.1% higher than the re-form, a community of beauty and spirit

670,000 in FY2023, putting us on track toplanning, such as setting targets in advance, andeyebrow products on the first day of launch

vised target we announced on Novemberthat is indispensable for people to live en-reaching the target of 1,000,000 members

unsuitable setting of sales flow lines in the sa-

against an initial target of 300 million yen for

10, 2023. The results for operating income,riched lives, by increasing sales of knowl-in FY2026. Going forward, milbon:iD willlons. However, the dryers rated extremely wellthe entire first year. Disseminating new values

on the other hand, were poor, falling 31.7%

edge-based products and expanding into

not only be a stepping-off point for cus-among customers who actually bought them, so

through linked proposals with hair as the start-

We believe that local community spaces will

year-on-year to 4.23 billion yen due to

new domains.

tomers after their Smart Salon experience,

we believe that this has been a necessary chal-ing point will achieve important breakthroughs

inevitably become more important going for-

Salons to offer a lifetime of beauty inthe age of 100-year life spans

multiple factors, including sharp increas-

Salon-based Social Innovation compris-

but it is expected to also help expand thelenge for us as well in achieving future develop-

for us in future product strategies in other do-ward as the population ages and depopulation

es in the cost of raw materials, increased

es the Smart Salon Strategy and Lifetime

concept of what a customer is. For example,

ment and growth for salons going forward. We

mains as well.

progresses. Naturally, in the age of 100-year life

SG&A expenses accompanying revitalized

Beauty Care Strategy. Under the Smarthair salons that have struggled gaining andwill therefore continue to reflect on progress,

The second pillar of our high-value hair colorspans, we will not only need a healthy body tosales activities post-COVID, and personnel

Salon Strategy, we have already launchedmaintaining customers in the past, will beconfront our challenges, learn from our success-push strategy was the FY2023 transition fromlive healthy lives, but a healthy mind will also

costs that were higher than anticipated due

Smart Salons in collaboration with partic-

able to develop relationships in both phys-es, and maintain our research trajectory.

an eight-member sales structure in our Organ-

be indispensable. In such a world, hair salons

to higher base wages and more mid-career

ipating hair salons to provide new beauty

ical and digital worlds. For us as well, mil-ic Brand Department to a 350-member Field

will become places offering a lifetime of beauty

hirings than planned.

experiences fusing physical and digital

bon:iD has grown to become a new B2B2C

Person (FP) System, together with efforts toand maintaining close ties with their customers

expand success know-how. Our aim was to en-

for much longer than at present. The Beauty

hance our high-value coloring service offerings

Platform that we envision will see the format

through Villa Lodola, an organic brand that isof hair salons continuing to reform and growDomestic net sales
Domestic operating income
Domestic operating margin36

Redefining in-salon hair coloring

Smart Salons and milbon:iD, expanding the concept of what a customer is

Linking hair care and cosmetics by promoting high-value hair coloring

FY2022 results

FY2023 results

FY2024 target

FY2026 target

35.33 billion yen

36.50 billion yen

38.62 billion yen

43.70 billion yen

With these achievements and lessons inreceiving strong praise and is already used inthrough dedication to beautiful living. We will

6.19 billion yen

4.23 billion yen

5.52 billion yen

8.20 billion yen

FY2023, we realize that, while our haircare

approximately 9,700 salons in Japan. A num-

therefore continue working with distributors

products are gaining solid support, we needber of those hair salons using Villa Lodola are

and hair salons through social innovation thatto urgently rebuild our hair color offerings inoffering treatments several thousand yen more

helps people live spiritually enriching lives evenparticular because of slowing growth. Haircare

expensive than normal hair colorings, and thisas the population shrinks.

17.5 %

11.6 %

14.3 %

18.8 %

37

FocusR&D Strategy Planning and Progress

veloping global products based on global beauty

a 9.6% reduction in petroleum-derived virginlearn about intellectual property. As a result,needs and localized products based on the dif-plastic use per unit of sales compared to 2020

we had 275 registered patents (241 in Japan andferent needs of each country and region. In ad-levels by encouraging reuse of bottles through34 overseas) as of December 31, 2023. Going

dition to full-scale product development withthe adoption of bottles with pumps and provid-

forward, we will work to raise awareness acrosslocal hair professionals in North America, we

ing refill pouches for new products.

the entire company while reconfirming that out-

Taking on the challenge of new domains and driving down
the manufacturing cost ratio

an important role in R&D from Japan to North
America. We are developing these human resources in China in preparation for recruiting
them in Thailand, in order to achieve this goal.

Reducing the manufacturing cost ratio
and promoting IP strategy across theorganization

Masaya Tanaka

Together, we have made significant progress in

Executive Officer, Research and Development Director

shifting from research structures to develop-

After implementing the above initiatives, wement structures globally as well.

Developing the R&D foundation
through ongoing investment in R&D

value for customers, but to ongoing R&D and
improved corporate value as well.

Updating R&D to respond to socialand customer changes

plan to launch new products in 21 categories in

The beauty market has undergone consider-

One of the changes that has occurred in thisFY2024, with a sales target of 3.2 billion yen forable changes over recent years. The spread of

post-COVID era is that our Japanese R&D staff

these new products, or 6.42% of overall sales. To

social media and other changes accelerated theare now more actively visiting overseas R&D

improve the operating margins, which has been

product lifecycle, producing a flood of informa-and scalp research capabilities. As part of our

promote and accelerate our expansion into

bases, distributors, and hair salons. This has en-

a company-wide issue since FY2023, we will set

tion and products and ensuring customers are

unique product development system, we arecosmetics and other domains.

abled visiting Japanese R&D staff to personallyseparate target ratios for the cost of raw and pro-already equipped with lots of information anddeveloping the unique TAC Product Devel-

gather information on needs and trends of local

cessed materials used in new products as part ofoptions. In such an environment, in order for

opment System, standardizing and incorpo-

markets and customers, and laws and regula-efforts to reduce the manufacturing cost ratio.

customers to continue choosing Milbon prod-tions, which they could previously only obtain

Through this initiative, we expect the overall

ucts, we recognize the importance of commu-

from local representatives. The result has been

manufacturing cost ratio to steadily decline as

nicating the value and concepts of products toa massive improvement in the quality of infor-

existing products are replaced by new products.

hair professionals, and reorganizing and deliv-

Significant progress in shifting fromresearch structures to development
structures in overseas markets

Under the slogan “fusion of sensitivity

rating the technical skills and other expertiseand science,” we are continuing to developof top-class hairstylists into products andproducts that leave a lasting impression on its

services. In addition to taking effects, bene-

customers by fusing the outstanding sensible

fits, and safety into account, the system also

beauty techniques of hair professionals withfocuses on the senses, meaning the feel andAs for progress and achievements of R&D

Another change was in basic research, where

greater added value in the hair coloring and hair

At the same time, our sales composition has

our own scientific research and development

smell of products when used by hair profes-

in FY2023, we continued to focus on basic

we conducted new research into hair growthcare categories, which account for a large pro-changed dramatically, from a time when the fo-

capabilities. Our mission in terms of R&D issionals and customers. The foundation of ourresearch to strengthen the haircare field.

using human iPS cells in a joint research↙

portion of our sales. In new product areas, we↙

cus was on professional-use products to the↙

to create and provide markets and customers

customer-oriented value creation is that not

Also, in order to further ensure customer

with new value as the source of the future

only sales staff but R&D staff actively spend

input, we are improving the accuracy of de-and sustainable growth for hair salons and fortime in the field, and we have received highvelopment from the customer’s perspective

us. To this end, we continue to invest fully

praise and surprise comments from overseas

by doubling the frequency and participants

and continuously, allocating at least 4.0% of

hair salons as well.

in customer surveys and monitoring surveys

We are also developing products with evenmation obtained.

Haneda Innovation Center, Tokyo(opened December 2023)

New base for developing products and services
from a longer-term perspective

ering that information to customers as well.

Pursuit of unique areas split off from existingproducts
A base for fostering partnerships with othercompanies and collaborations with industry,
academia and government

Conducting highly
confidential research to
produce the seeds of new
businesses in the future

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

consolidated net sales to R&D expenses. ThisWe also attach great importance on basic

conducted at every stage, from planning toamounted to 2.33 billion yen in FY2023 andresearch, as evidenced by the fact that one-

production. In addition to cosmetics, we

2.64 billion yen in FY2024.

fifth of our 100 or so R&D staff, or aroundlaunched ELMISTA hair dryers as our firstdivision

Graduate

will promote the creation of new value while ad-current focus on knowledge-based products,

We have defined our medium- to long-term

20 people, are engaged in basic research. As

beauty equipment offering, and ALANOUS

School of Medicine, Osaka Metropolitan Uni-

dressing various challenges we faced in FY2023.

which now account for 60% of our overall sales.

vision for R&D as establishing a product de-such, we currently have the highest level ofas our first beauty supplements, as efforts inversity, and discovered a component that pro-In global markets, on the other hand, we will

In addition to customer value that can be en-velopment structure that can quickly respondhair and scalp knowledge in Japan. We utilize

new domains other than hair. Despite vari-

motes hair growth in human hair follicle tis-

deepen our understanding of local beauty needs

joyed in the hair salon space, it is becoming

to the increasing rate of change of market

the SPring-8 large-scale synchrotron radia-

ous issues and reflections, we will certainlysue. This research was presented at the 33rdand markets and enhance our compliance withmuch more important to create value, from theneeds. We have also established five prior-tion facility to observe hair and cells down

be able to use the knowledge we acquired

International Federation of Societies of Cos-

laws and regulations in each country. On top of

perspectives of society and consumers, that can

ity policies, and are implementing relevantto the nano level, as well as conduct joint

during the R&D process in future challenges

metic Chemists (IFSCC) Congress in Barcelo-

that, we will expand our range of products andbe enjoyed in one’s daily life. We therefore real-measures, in our R&D Vision 2026, which isresearch with universities, and the accumu-

and for future successes.

na 2023, and was selected in the top ten in theservices for Sophistone, the hair color brand forize the increasing necessity of updating the way

associated with our 2022–26 Medium-Termlation of knowledge through these efforts has

As per our comprehensive global strategy,

applied research oral presentation category. We

Europe and North America that is growing in

we do R&D to respond to these changes.

Management Plan. The five priority policies

led to the creation of products with unique

Seven Regions, we are building a system ofplan to sequentially apply this component topopularity in North America. We will also focus

For Milbon, R&D is the source of value cre-are: (1) Establish fundamental technologies

value based on solid evidence. Furthermore,

local production for local consumption in

new products to be launched in FY2024.

our efforts on developing unique products foration and of our future. More than anything, I

for creating sustainable social and econom-

we have started developing a foundation forthe beauty domain. Centered on the Jap-

We also made important progress in terms of

the Chinese market, and products that meets theam proud of our R&D staff who we entrust with

ic value; (2) Build a product development

further value creation, including assigninganese Central Research Institute, and in

facilities in December 2023, with the opening ofneeds of the ASEAN market in Thailand.

that future. In addition to their amazing level ofstructure that supports our global market

people in charge of research from skin andcollaboration with R&D bases in Northan innovation center at Haneda, Tokyo, as a new

Together with these initiatives, we will contin-

expertise, I am proud that they approach theirstrategy; (3) Build a new research founda-

nutritional perspectives as part of efforts to

America, Thailand, and China, we are de-establishedwithinthe

Utilization of leading research technologies

base for development of products and services,ue to implement an intellectual property strat-

work every day with the shared goal of develop-

tion for expanding into the Lifetime Beauty

with a long-term perspective. We expect that theegy that is rapidly growing in importance. Our

ing products that leave a lasting impression on

Care domain; (4) Enhance the speed and ac-

center will be used to pursue areas split off fromdedicated intellectual property department will

our customers, regardless of the work they doexisting product development research. We also

strictly protect and appropriately manage ouror their position in the company. And that theyplan to conduct highly confidential research into

intellectual property in line with our mission

are not doing it for the company or for self-ful-Comprehensive, hands-on approach of R&D staff
Japan’s leading basic research capabilities in the field of hair

the future seeds of business there through co-to protect Milbon and Milbon’s products. By

fillment but most of all, for our customers. Ouroperation with other companies, collaborations

FY2023, in order to respond to the diversifying

R&D staff are always out in the field, face-to-Creation of products with unique value based on solid evidencewith industry, government, and academia, andR&D activities in intellectual property opera-

face with the people they are developing prod-

curacy of development through an evolved
TAC Product Development System; and (5)Create an organizational structure and develop human resources to ensure ongoingstable supply of products to the market.
We take pride in two of our greatest
strengths in R&D; a unique product development system based on thorough customer validation in collaboration with hairprofessionals, and Japan’s leading basic hair

38

comes from the R&D division not only lead tohave also started sending evaluators who play

R&D slogan

Techniques based on theoutstanding sensitivities ofhair professionals

Performance indicators

Fusion of sensitivity and science
Scientific research and development capabilities of Milbon

FY2022 result

FY2023 result

utilization of cutting-edge research technologies.

tions as well, we have been working to further

ucts for. Going forward, we will continue these

FY2024 plan

In terms of sustainability initiatives, we are

improve accuracy and efficiency by conducting

efforts to tackle and identify the unknown, andworking to reduce the amount of petroleum-de-

AI patent searches and utilizing patent mapping

to incorporate it as value into our products,

rived virgin plastic we use to help achieve a recy-

software, as well as reestablishing strategies such

maintaining dedication toward beautiful andcling-oriented society. In FY2023, we achieved

as creating opportunities for our R&D staff tohappy living.

R&D expenses (value)

2.07 billion yen

2.33 billion yen

2.64 billion yen

Sales ratio

4.6 %

4.9 %

5.2 %

39

FocusHigh-mix, variable-volume production: A system of production that meets market needs and varying demand

Production Strategy Planning and Progress
Further cooperation to establish a global production system andcontrol the cost of raw materials

Hair salon market

Public market

Vast variety of products to meet the diverse needs of customers,
and demand varies according to the product

Limited range of products

Japan Factory

Kazunobu Konoike
Board Director, Director of Production, and in charge of Research andChanging from domestic and overseas production, to focus on domestic production andbecoming a mother factory exporting techniques, etc. to the world

Thailand Factory

Changing from professional-use products, to a global supply base to ASEAN and other markets
by starting to manufacture knowledge-based products

China Factory

Changing from hair care and hair coloring production, to a production base dedicated to
the Chinese market

Three factories cooperating to strengthen a system of local production for local consumption in the beauty domain

Development and Organic Brand

Developing trust by transitioning from a “Made in Japan” philosophy to “Made by Milbon”
Factory in 2013 and our China Factory in

oped, the Yumegaoka Factory, our core fac-

2022 as we implemented a full-scale global

tory within the Milbon Group, will become

expansion. In other words, instead of justa base focused on the Japanese domestic

expanding and streamlining production

market, while also playing the role as afunctions, our production system has tran-

mother factory for exporting our inherited

The mission of Milbon’s Production Head-sitioned in response to customer needs andcustomer-oriented approach and accumu-

quarters is to ensure stable supply of thecompany-wide strategies.

lated technologies to the overseas market.

Adoption of a structure with oversight of the entire supply chain andunique production methods

products needed, when they are needed.
In line with the approach we have taken
since the company was founded, that close
coordination throughout the entire supply

1 Stable product supplies around the world
Foundation for trust

2 Economies of scale in raw material procurement
Cost control

information gathering for3 Enhanced
raw materials and legal regulations

Preparing for risks

tainability initiatives. The Five Key Challenges

On the other hand, we are implementing fu-

that we need to focus on in particular are ex-ture-focused initiatives for our global logistics

plained in detail in the section on Sustainability

system. They include the establishment of a

& ESG from page 46. Of them, in the challenge

specialized trade warehouse in Japan (Maishima,

to reduce CO2 emissions at our Yumegaoka

Osaka), reductions in lead times for processing

Meanwhile, we are also continuing to pursue

Factory, we have achieved our 2026 target three

trade and shipping preparations, systemization

We previously obtained ISO 45001 certi-

further quality improvements, and implement

years ahead of schedule by adopting renewableof trade flows, and establishment of a logistics

fication, for management systems of occu-

various reforms to realize the smart factory

energy. In the challenge to reduce the rate of

warehouse in the EU (already completed despite

pational health and safety, to ensure em-

concept of automation and efficiency, at ourpetroleum-derived virgin plastic usage, we have

not yet having fully entered that market).

ployee safety, but as part of this initiative,

Yumegaoka Factory in Japan.

also achieved solid progress despite a struggle.

To enable these logistics functions to operate

Producing solid results by controlling
raw material costs and reducing environmental impact

we also obtained ISO 22716 certification in

In FY2023, we introduced a high-speed line

In the challenge to adopt RSPO certified palm

efficiently, it is essential that we improve thehas oversight across the supply chain as a

FY2023. Our aim was to again obtain an ex-

into the hair coloring production process tooil, after successfully obtaining RSPO Supply

accuracy of our demand planning-based pro-whole, covering not just production, but

To ensure stable supply of products in the

ternal institution’s verification of appropri-

double production capacity to around 200 units

Chain Certification at the Yumegaoka Factory,

duction plans. Therefore, since FY2022, we

global market, as part of our effort to build

ate management for our production system

per minute. In addition to this, we built lines

we have started to purchase certified raw mate-have been shifting to a system where FP Sales

rials from FY2023 and we are promoting an un-

and Marketing, which is in charge of sales, andchain is essential, our business structure

planning, procurement, and logistics aswell. Under this structure, we have adopt-a system of local production for local con-based on Good Manufacturing Practices

in unused space within the factory while en-

ed two methods of production—“build-

sumption in the beauty domain, we are(GMP), the international standard related

hancing our hair care offerings, which enabled

derstanding of respect for human rights and en-

Production Headquarters work closely together

to-stock” and “high-mix, variable-volume

currently enhancing our global production

to the cosmetics manufacturing and quality

us to finally approach maximum productivity

vironmental friendliness among our suppliers.

to develop plans. This is an important initiative

production”—that

uniquesystem centered on the Yumegaoka Facto-

management protocols we had previously

per area of land at the Yumegaoka Factory. We

In addition to efforts to reduce our gas andthat contributes to preventing deterioration ofstrengths of the company. Together, theyry in Japan, through cooperation between

established. We will continue to maintainhave also started automation focusing on indi-water consumption, and measure and reduce

manufacturing costs due to adjusting produc-

enable our factories to produce and sup-our factories in Thailand and China. We

and develop suitable systems as a model forrect operations such as quality management,

our environmental impact, we continue totion, as well as to curbing waste.

are also developing trust by transitioning

global factories going forward.

cleaning, and in-factory distribution, and we

implement measures toward respecting andIn this way, while overseeing the supply chain

will continue to implement ongoing reform toensuring diversity through direct recruitment

from manufacturing planning to logistics, Pro-

improve productivity.

of people with disabilities and developing aduction Headquarters is in charge of the stablefunctionasply a wide variety of products without
excesses or shortages. Of these, high-mix,

from our philosophy of “Made in Japan” tovariable-volume production is a unique“Made by Milbon.”Our global production system is starting to deliver benef its as we expand into

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

method for us as a salon-exclusive product

While our Thailand Factory only pro-more countries. In response to the glob-

Our efforts to procure raw materials and con-worker-friendly environment regardless of

supply of products to customers and helping

manufacturer. It enables us to flexibly pro-

duced professional-use products in the past,

al price hikes of raw materials, each oftrol the manufacturing cost ratio have tradition-

gender. Thanks in large part to these initia-

maximize profits by controlling manufacturing

duce and supply a wide variety of products,

it has begun transitioning to production andour three factories have been procuring

ally included conducting risk assessments fortives at the Yumegaoka Factory, we were rated

cost ratio. But for this to happen, it is even more

tailored to the diverse and extensive range

supply of knowledge-based products for

raw materials through separate tradingeach raw material, securing second and third

highly in the area of labor and human rights inimportant to cooperate further with all internalof customer needs, according to market

2025. In the future, it will become a glob-

companies even though some of the ac-

sources, formulating long-term procurement

the EcoVadis FY2023 ratings, receiving a Golddivisions, including R&D Headquarters which

al production and logistics base, supplying

tual raw material manufacturers were theplans, and securing inventories according to risk

rating that placed us in the top 5% of all com-is in charge of product development, as well asaround 70% of its total production to thesame. We have now started to develop alevels. However, with recent sudden rises in thepanies evaluated.

with our overseas bases.

ASEAN market and other global markets.

structure for price negotiations and pro-price of raw materials, from FY2022 onward,

Even in this reform process, ensuring productsafety and security is an absolute benchmark thatneeds and changes in demand. We are also
fostering a culture of continuous improvement in operations through our C3 activities (standing for Change, Challenge, andOur China Factory, on the other hand,

curement amongst the three factories to-

our Production Division started to work with

Customer), in which all employees partici-

is our production base dedicated to thegether, rather than each factory operating

the Research & Development Department frompate to improve operations.

Chinese market, and is collaborating withindependently. Furthermore, in terms of

the initial development stage of new products,

This production strategy has contin-

our R&D base in China to provide a stable

information gathering, we are alreadyto review systems for proposals and other oper-

One issue we are facing in the domestic market

because the role of Production Headquarters isued to evolve as our business model has

supply of products that comply with strict

starting to more quickly and accurately

ations related to raw material selection and pro-is a logistics issue known as the “2024 Problem,”not just to secure customer trust in Milbon, buttransformed. For example, our Yumegao-

local laws and regulations. After starting togather information on raw material prices,

curement. The division has also been enhancing

which is a social issue that we are currently ad-

to also ensure trusting relationships between thecooperation with suppliers by holding informa-

Toward addressing logistics issues

will never change for us because we value customer viewpoints more than anything. This is

manufacture a portion of our haircare prod-

alternative raw materials, and legal regu-

dressing by restructuring our domestic logistics

hair salons that use our products and their cus-

factory, was originally established to en-

ucts in FY2022, we obtained approval to selllations. Going forward, we will continue

tion exchange events for raw material manufac-

network. While the direct impact of a shortage

tomers. With this firmly in mind, we will con-hance our hair coloring business, but we

200-plus hair colorings in FY2023, which is

to enhance such cooperation to enable ourturers, trading companies, partner companies,

of drivers will not become apparent for sometinue to encourage a trust relationship between

built and expanded an exclusive productiona record number even among local manufac-

global production system to not only en-

and others. Through such initiatives, we weretime yet, increased logistics costs are inevita-

hair professionals and customers around theline for haircare products there when weturers in China, and we are finally ready tosure stable production and supply of prod-

able to reduce raw material costs by several hun-ble if the situation does not change, so we areworld and a beautiful way of life through “Madestarted promoting hair care. Subsequent-shift into full production in FY2024.

ucts, but to bring a range of other benef its,

dred million yen in FY2023.

considering a response that includes reviewing

by Milbon.”ka Factory, currently our core production

ly, we started operation at our Thailand

40

Promoting procurement strategy
and information gathering thatleverages global expansion

Effects of a global production system operated
with cooperation between three factories

As this global production system is devel-

including global information gathering.

Our factories are also actively promoting sus-

appropriate delivery service levels.

41

Financial indicators

Focus

FY2022 results

Maintaining a solid financial foundation and steady growth bycapturing changes in the profit structure

18.3 billion yen

Resources Development Center and Innovation

83.38 %

86.0 %

85.5 %

Center. We are also working to revise our initialROE

13.2 %

8.9 %

13.9 %

plans in light of the current decline in profit

ROIC

12.5 %

8.6 %

13.6 %

levels. While steadily investing in the market,

Dividend payout ratio

50.2 %

71.6 %

50.0 %

including sewing the seeds for growth through4.09 billion yen

3.15 billion yen

5-year total: 23.0 billion yen (under review)

milbon:iD and Smart Salon, we are reviewing

Investment amount

non-urgent investments for the next medi-

Masaaki Kato
General Manager, Finance Department

um-term management plan.

procurement strategy between our three factories

and managed in the past, we also aim to work witharound the world, we aim to achieve our manu-

the Human Resources Division to establish an

In terms of our key theme of achieving sustain-

facturing cost ratio target for FY2026 throughappropriate recruitment plan, including mid-ca-

able growth through optimization of profit shar-ongoing reductions in raw material costs.

reer hires, in line with our strategies and financial

ing, we increased the target dividend payout ratio

indicators. In this way, we strive to achieve our per

to 50% from 40% in our previous medium-term

capita labor productivity target.

management plan, while considering our equity

To achieve this target, we need to revise andstrengthen our sales price strategy through anappropriate pricing method that responds to the

We also believe that in driving these reforms,

balance and cash position. Against the outlook

cost-push inflation we are currently experiencing.

we have to review, and adjust our mindset onof a future profit improvement, we determined

ments and continuous increases in dividends.

at least 18.3 billion yen (equivalent to six

We therefore plan to fully promote value-based

profit and loss management. We currently havethat we could sufficiently maintain our initial

We also establish profit, investment, andmonths of fixed expenses), and (5) dividend

pricing to create even higher added value in new

a presence in 14 countries and regions, including

financial commitment even with the fall in profit

capital plans based on our five-year medi-

payout ratio of 50% and dividend on equity

products, and to revise our pricing for existing

Japan, which we have divided into our Seven Re-

levels in FY2023, and we paid an actual dividend

At Milbon, the financial philosophy of main-

um-term management plans, and formulate

ratio (DOE) of 6–7%. We are actively using

products from FY2025.

gions. Although we manage and disclose profit

payout ratio of 71.6%. We also established a basetaining an equity ratio of at least 70% is theannual market policies, and management and

ROIC and ROE at present as our most im-

Secondly, in response to rising logistics costs,

and loss results separately for each region, we

unit price for returning profits to our employees,

foundation for realizing its belief in “build-financial plans, to identify any gaps between

portant indicators, while also focusing on in-while we are working internally to improve theserecognize that in the future we will also needbut as previously mentioned, we will continue

ing a solid company that won’t collapse.” We

relevant targets and actual performance.

vestment efficiency; health and growth of thecosts, we will also consult and cooperate withto clarify whether each of the regions is in theto research ways of sharing profits appropriately

established this financial indicator based on

Moreover, we have structures for ongoingbalance sheet, including profit and loss state-salon partners in the future to develop ideal andinvestment phase or the profit phase, while mak-to improve wages in proportion to the increase

research that found companies with an equity

problem-solving over one-year and five-year

ment; and visualization of department-levelappropriate service levels through which we willing decisions on which of the Seven Regions, orin labor productivity.

ratio between 60% and 80% have the highest

spans, with the structures themselves being

initiative outcomes.

be able to appropriately control the logistics costs.

specific countries and regions, to increase invest-

In addition, for our key theme of building a

profit growth potential, and with the belief

essential for us to achieve sustainable growth.

Although consolidated net sales are gen-Finally, we consider labor productivity to be

ment in. In terms of overseas business, our In-

financial base that can withstand unexpectedthat it will support the optimal balance be-

By constantly reviewing and improving ourerally on track for achieving these financial

an extremely important indicator for ensuring

ternational Operations, overseas subsidiaries, andevents through financial management, we will

tween preparing for unexpected events andplans, we are building a system that ensure

targets for FY2026, the final year of the me-

profits. Going forward, we expect continuing

Finance Department have been holding planning

continue to improve our structure by closely

investing for growth.

we meet our targets.

dium-term management plan, we did facedemand for annual wage increases of at least 3%

council meetings from FY2024, where they makeexamining the status of our returns on invest-

However, we do not believe that everything

the challenge of a significant drop in oper-

and increases in base pay. However, rather thanin-depth forecasts, formulate plans, and manage

ment while striving to achieve appropriate cash

will be fine if we just maintain a high equity

Key medium-term themes andcontributing factors to address inmeeting financial targets

ating margin during FY2023. In addition tocontrolling labor costs, we believe that the ideal

progress of investments, profit and loss manage-balances going forward. Our aim here is to se-

temporary factors, the underlying cause ofis to return increased profits achieved throughment, and plans for specific countries and regions

cure an investment foundation for long-term

the fall in operating income was increasedlabor productivity gains, to workers through ap-

within each of the Seven Regions.

growth, and build a robust financial foundation

costs, such as rapid increases in the cost of

propriate wage levels. We therefore believe that,In the domestic market, there are concerns

indicator is to create a junction that cannot

We have established implementation of

raw materials that were not fully expected

while developing our profit structure through theabout the market shrinking as the population de-be ignored, assuming we can maintain our

stakeholder capitalism and creation of long-when formulating the medium-term man-milbon:iD and Smart Salon strategies, it is im-clines, so we consider our Smart Salon Strategy

Furthermore, in collaboration with the Inves-historically high equity ratio and continue

term corporate value as the basic policy ofagement plan. This is why we have started toportant to raise not only the labor productivity ofand Lifetime Beauty Care Strategy, as the two

tor Relations Division, we aim to disclose mea-

to grow with our current business model.

our 2022–2026 Medium-Term Management

implement measures with the understanding

the Sales Division, which directly generates sales,

major strategies under our Beauty Platform Plan,sures to realize management that is conscious ofPlan. We have also established the three

that, in addition to growth in sales, we needbut also the labor productivity per employee ofto be our key to growth. Hence, we recognize

the cost of capital and stock prices, as required

and acquisitions, and other activities requir-

key themes of creating growth investments

to focus mostly on the three financial indica-

all group employees, including those in indirect

the need for promotion of the Smart Salon Strat-by the capital market, along with the outlook

ing reasonable levels of capital going forward,

and a strong company through emphasis on

tors of gross profit margin, logistics costs, anddivisions. Although not specifically consideredegy, contribute to the profit of milbon:iD, thefor improving the medium-term profit structure.

we want to allow for the possibility of man-investment efficiency, achieving sustain-

labor productivity to ensure steady growth

foundation of the Smart Salon Strategy, and both

Milbon has always been rated highly for its

agement decisions for growth that are notable growth through optimization of profit

that captures changes in the profit structure.

strengthening and promoting profit and loss man-ability to envision a future and make that future

shackled to a financial philosophy.

sharing, and building a financial base that

Implementation of stakeholder capitalism andcreation of long-term corporate value

agement in the Lifetime Beauty Care Strategy. Wea reality. As explained above, for our financial

are therefore building a structure to visualize theplans, we developed a problem-solving struc-

Key themes

profit structure, strengthen profit and loss man-ture that identifies gaps between targets andagement of the future outlook, and ensure that all

performance over one-year and five-year spans

employees, as well as management, are aware of

based on our five-year medium-term manage-

the relationship between strategy and finance inment plans. Nevertheless, the capital market

order to carry out our initiatives.

has expressed concern about future quantifica-

Solving problems over one-year
and five-year spansratio. Rather, it is essential that our financial philosophy does not hinder growth. At
the end of the day, the main purpose of thisFor example, in the event of overseas mergers

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

The most important strength of our financial strategy is our debt-free management,

can withstand unexpected events throughfinancial management. In this way, we aim

Addressing gross profit margin, logistics costs, and labor productivity
to improve profitability

which we have maintained since 2009. Our

to improve long-term value for the company

balance sheet might give the impression of

based on people (Human Capital), things

being static, but it is backed by a strong busi-(Manufacturing Capital), and finances (Fi-Firstly, to improve gross profit margin, we areness model and strategy that have resulted innancial Capital).

strengthening our strategic purchasing capa-

performance and a solid financial structure

We have established five specific financial

bilities through a collaboration between thewith a continuous average growth rate of 7%

targets: (1) net sales CAGR of 7.3%, (2)wage

Research & Development Department andper year in the hair salon market. At the same

increases proportional to increases in labor

Production Headquarters from the raw mate-time, we are developing a healthy cycle of ad-

productivity; (3) ROIC of at least 13.6% andrial selection stage. We have also establishedequate funds on hand for next growth invest-

ROE of at least 13.9%; (4) cash position of

new raw material cost ratios for new prod-

Financial philosophy: Maintain an equity ratio of at least 70%
Assuming sustainable growth using the current business model
Using funds on hand to prepare for unexpected events and invest in growth42vestments in future creation through the Human

FY2026 target

11.29 billion yen

Equity ratio

Financial Strategy Planning and Progress

FY2023 results

12.26 billion yen

Cash positionucts from FY2024. New products account foraround 10% of sales each year. Going forward,
we will see gradual improvements in the cost
ratio each year as these new products replace
the existing ones, and through a coordinatedBasic policy of the 2022–26 Medium-Term Management Plan1sustainable growth through optimization
2 Achievingof profit sharing
Creating growth investments and a strong company
through emphasis on investment efficiency

3

Building a financial base that can withstandunexpected events through financial management
Financial targets

1
per capita labor productivity for all Group employees,
2 Improved
and wage increases in proportion to labor productivity
3 ROIC of at least 13.6% and ROE of at least 14.9%
position of at least 18.3 billion yen
4 Cash(equivalent to six months of fixed expenses)
Net sales CAGR of 7.3%

payout ratio of 50% and dividend on
5 Dividend
equity ratio (DOE) of 6–7%

that anticipates unexpected events, in line with
our financial philosophy.

tions. For this reason, we have started a project

Improving structures through investment control and building a proactive
management structure

to promote appropriate proactive management.

As part of our investment strategy throughny-wide management strategies and financial tar-

FY2026, which is related to our key theme ofgets, and promote appropriate disclosures while

creating growth investments and a strong com-reflecting opinions of the capital market. In thispany through emphasis on investment efficiency,

way, we aim to strengthen trust with all stake-

we are making steady progress with major in-holders and improve long-term corporate value.

Our Corporate Strategy Department, Finance
Department, and Investor Relations Division
will collaborate in the future to connect compa-

43

FocusKPI

Next-generation leadershipdevelopment

2022 results

Junior employee turnover rate2) Fostering greater motivation

A Corporate Culture that Values People is the Very Basis of
Value Creation and Growth

Paid leave utilization rate

64.0%

Engagement survey

Implementation ofengagement survey

3) Promoting omnidirectional
dialogue

Smoother internal communication

4) DE&I promotion

Ratio of female managers

2023 results

10.0%(Average turnover rate for junior employees(new graduates to third year) over the past 5 years)

Initiatives for Human Capital Management2024 target

2025 target

Development of future management
leadership development program

Implementation of future management
leadership development program

10.8%
67.8%

10.9%

2030 target

9.0%

6.0%

70.0%

80.0%

A state where the three important
indicator areas are functionin
as strengths

Continuation of engagement
survey and implementation ofgoal setting, etc.

10.0%2026 target

Establishment of new internal
communication content andimplementation of Field Person discussions

Implementation of
Milbon Person discussions

20.0%

preparation for transition to a succession structure inincrease, there are concerns about the risk of diluted

since 1984. In 2025, we plan to open a Human Re-

FY2024. Of the 42 people who participated in therelationships. Given this, we believe that “promoting

sources Development Center in Odawara, Kanagawa

Junji Morimotoprogram during the four and a half years through toomnidirectional dialogue” is also a theme that needs

Prefecture, and we will use this as an opportunity to

Board Director in charge of Corporate Administration,

2019, three have become board directors and sevento be strengthened. We will continue to strength-

further develop human resources and build an or-

have become executive officers. Now that the tran-en and conduct meetings at the company-wide levelganization capable of providing higher added value

sition to the new structure is complete, we are re-and organizational level for sharing The Milbon Way,

than ever before. Furthermore, we will continue tostructuring our succession plan for the next 10 and 20

and in FY2024, not only will we create new internal

take on the challenges of gaining and maintaining

years, and prior to the start of the next MCU, we havecommunication content designed to promote mutual

the highest approval rating among hair professionals

started the idea of launching MCU-Prep, a program

understanding between employees and management,by formulating appropriate personnel plans backed

for young leader candidates, in FY2025. Furthermore,

but we will also create opportunities for the new

by strategy, rebuilding our sales structure to provide

in conjunction with launching an executive officer

President & CEO, Hidenori Sakashita, to engage incoordinated, high-value proposals that stem from hairtraining program with the cooperation of institutional

dialogue with all departments (through Field Person/

coloring, building and maintaining customer experi-

investors in FY2024, we also established a new Human

Milbon Person discussions).

ence value, and launching projects that contribute toInternal Audit, and Quality Assurance

Bringing happiness to ouremployees and their families andproviding job satisfaction
Along with Milbon’s philosophy “Everything we do, we do for and with hair professionals” is its founding core value, namely,its commitment to “building a solid company
that won’t collapse.” This was the firm belief in sustainability that our founder Ichiro
Konoike swore to uphold after witnessing
the tragedies of people close to him suffering
corporate bankruptcies, prior to our company’s establishment, and it embodies his

Value creation:

Greater sales and profits for hair salons(5) Strengthening people and organization to
improve the value provided
2022–2026 Medium-term Management Plan
Human resources strategies(1)
Next-generation leadershipdevelopment(2)
Fostering greater
motivation(3)
Promoting omnidirectional
dialogue(4)
DE&I promotion

Foundations supporting human resources strategies
Remuneration policy
Recruitment–training policies

strong commitment to “bring happiness to

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

44

Theme

1) Next-generation leadershipdevelopment

Systemization of human resources strategies linked to management
strategies
While investing in human capital has been part

Resources Development Committee, chaired by the

Furthermore, in an era in which diversity is re-of our corporate culture since our founding,President & CEO. We also have systems for ongoing

spected, we ourselves must become a diverse com-human resources strategies had not been clearly

discussion of issues and measures related to peoplepany in order to provide diverse value to customers.

linked to our medium- to long-term businessand organization, and moving forward, we are con-

We see promoting DE&I as an essential part of thisstrategies. For this reason, at the start of ourtinuing reforms to realize a corporate entity where

evolution. In FY2023, we launched our new compa-

2022–2026 Medium-term Management Plan,

leaders are born naturally and continually.

ny-wide DE&I Promotion Project. Initial activities

we visualized the gap between the current sit-

Next, in the area of fostering greater motivation,

have been focused on the active involvement anduation and our medium- to long-term vision

in FY2022, we introduced an engagement survey forcareer continuity of our female Field Persons (FPs),

and proceeded to systematize human resources

all Group employees which includes a compliance

who account for a large number and percentage of ourstrategies linked to our management strategies

awareness survey, and have since been reporting toworkforce and who are pivotal to our future businessin order to gain a more in-depth understanding

management, engaging in reporting to and dialogue

growth. In December 2023, a workshop was conduct-

our employees and their families and provide

ment to management that values people andof the importance of human capital managementwith various departments, and creating and imple-

ed for our senior management, and in FY2024, we

job satisfaction.”

to value creation that starts with people.

and to link it to the medium- to long-term im-

menting action plans. Our overall engagement scorewill consider specific measures, through which we

provement of our corporate value.

remains high compared to other companies, and ouraim to achieve our 20% target of female managers.

Realization of this belief requires tirelessWe regard the development of workplaceinnovation based on the idea that “if a com-environments where each and every em-

Thus, our human resources strategies wereMoving forward, we will expand the scope of ourpany is useful to society, society will not letployee can enjoy good physical and mental

engagement rating is AA, which is the second highest

formulated in a way to bring about our 2022–

activities to include not only female FPs, but also

it collapse.” As systems that embody ourhealth, achieving job satisfaction and a senseof 11 levels of ranking. We are not content to rest on

2026 Medium-term Management Plan, and un-

women in other occupations.

willingness to take on this challenge, weof purpose in life, as an important founda-

our laurels, but rather have defined the three areas ofder our basic policy of “fostering a corporate cul-tion for realizing such value creation. In thisPhilosophy Strategy, External Adaptation, and Trans-“Strengthening people and organization to improve

have built two unique business models: theture that enables every employee to continue toformation Activities as key indicators for continuous

the value provided” is a particularly important theme

FP System, a sales and education support

regard, we have been improving various sys-

work with a spirit of independence and a feelinginnovation that embodies a solid company that won’t

for Milbon as it contributes directly to greater sales

system in which we closely tailored to eachtems, promoting awareness and conductingof satisfaction, supporting Milbon’s sustainable

and profits for hair salons. Since our foundation, we

individual hair salon, and the TAC Productother activities to enhance those systems

collapse. As a goal for FY2026, the final year of our

growth,” we defined five key human resources

have invested generously in employee education andDevelopment System, by which we developthat support the balance between family and

2022–2026 Medium-term Management Plan, we

strategy themes: (1) Next-generation leadershiptraining, allocating more than 2% of personnel ex-

beauty services and products that exceed thework and to nurture a corporate culture that

aim to achieve high levels of both “expectation” anddevelopment, (2) Fostering greater motivation,penses every year and providing nine months’ worth

expectations of our target customers by learn-encourages the appropriate use of such sys-“satisfaction” in these three areas, demonstrating that

(3) Promoting omnidirectional dialogue, (4)of training for new employees across the 40 years

ing from successful hair professionals and hairtems. To demonstrate our commitment as athey are areas of strength. Furthermore, to promote

DE&I promotion, and (5) Strengthening people

Group, we have included “realizing work en-

diverse work styles, we will actively foster greater mo-salons in the field as well as from their end

and organization to improve the value provid-

users. These business models were shaped

vironments with enhanced job satisfaction”

tivation and create environments that encourage em-

ed. By continuing to create new added value

ployees to keep working, including the development

Ratio of male/female employees (%) *Permanent employees, consolidated

and evolved into a strength in the mid-1980s,

as one of the Five Key Challenges under our

to be a source of sustainable growth, we aim to

Average length of service (years)

when our workforce was only about one-

Sustainability Commitment, and we haveand promotion of a system that enables specialized

strengthen the cycle of continuing to contributetenth of what it is today, by investing inbeen actively engaged in promoting activ-

positions to be established for each department andto greater sales and profits for hair salons.

(1) All workers (2) Permanent employees (3) Non-permanent employees

human capital—something that was almost

ities based on the KPIs of junior employee

job type, raising the retirement age to 65, introducing a

Return rate following childcare leave (male/female) (%)

unthinkable at the time given our profits andturnover rate, paid leave utilization rate, andsuper flextime system, and adding productivity items

investment performance.

engagement survey indicators. In recognition

Through this experience, we have learnedof this, we have been selected as a Certified

firsthand that the growth of people is key toHealth & Productivity Management Out-

growth of the company, which is precisely

standing Organization for four consecutive

why we have consistently pursued contribu-

years since FY2021 under a program run bytions to society and sustainable growth since

Japan’s Ministry of Economy, Trade and In-

our founding through our enduring commit-

dustry (METI) and the Nippon Kenko Kaigi.

Strengthening the cycle ofvalue creation by promoting
the key themes

to the evaluation system. In addition, we will promote

In the area of next-generation leadership devel-

Over the past 10 years, the number of employees

opment, in FY2015, Milbon launched its own

has increased by about 70% on a consolidated ba-

next management leadership development pro-sis. As departments and the organizational hierar-

gram, Milbon Corporate University (MCU), inchy expand and employees with diverse attributes

Realizing the narrative that thegrowth of people is key to growth ofthe company
Milbon’s management philosophies include “Thegrowth of people is key to growth of the company”
and “Create requirements for growth, and the company will naturally grow.” We continue to practicethese philosophies as an integral part of realizing our
founding belief of “building a solid company that
won’t collapse.” On the other hand, we recognizethat we will need to systematically and quantitatively
show how such investment in human capital is linked
to our growth, and we will endeavor to gain the understanding of the capital market. Doing so will enable employees to continue working with a sense ofjob satisfaction, thereby contributing to greater sales
and profits for hair salons which will be beneficial tosociety, and Milbon will continue to grow. To realize
this narrative, we will continue to face our challenges
in earnest, and will continue to work wholeheartedly
on management that values people.
FY2022 results

Permanent employees, consolidated
Average age
Turnover rate for total employees (%)
Gender pay gap (%) *1,2,3
Proportion of employees who took childcare leave (male/female) (%)
Number of employees taking paid leave for family care
Ratio of employees with disabilities (%)

the operation of a skill-based human resource port-

Number of people with disabilities engaged in work outside their facilities under supported employment

folio from the perspective of human resources that

Number of harassment reports

emphasizes self-directed career development.

employee training and development globally.

Number of occupational accidents *Fatal accidents
Education and training expenses per employee (yen)Education and training hours per employee (hours)
Engagement score (deviation)
Engagement rating (11 levels of ranking)

FY2023 results

1,097
51.7/48.3
35.5
10.8
5.1

1,140
50.6/49.4
35.4
10.8
4.5

(1)68.6 (2)72.0 (3)52.9
20.0/100
100/96.9
175
2.16
23
0
2
120,458
72.9
61.3
AA (2nd highest of 11 levels of ranking)(1)70.9 (2)74.3 (3)50.6
25.0/100
100/100
191
2.12
24
0
3
151,66279.0
62.8
AA (2nd highest of 11 levels of ranking)

Scope

Milbon Group
Milbon Group
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Co., Ltd.
Milbon Group
Milbon Group*1 Calculated in accordance with the stipulations of the Act on Promotion of Women’s Active Engagement in Professional Life (Act No. 64 of 2015)*2 “Regular employees” refers to Executive Officers (other than Board Directors) and permanent employees. “Irregular employees” refers to associate employees (employees rehired after reaching retirement age), part-time employees,
and fixed-term contract employees.
*3 The gender pay gap among employees are primarily due to relatively recent hiring of women for career-track positions, younger age of female employees with shorter tenure and their relatively high percentage with reduced working
hours, and other factors. Wage structures and systems are uniformly defined, irrespective of gender or age.
For details, refer to Non-Financial Highlights on page 74.

45

Sustainability & ESG

Click to jump to the relevant page

Sustainability&ESG
Addressing Social Challenges andStrengthening the Management Structure
P 48
Overview and Progress of Sustainability Promotion
P 56
2023–2024 Sustainability Highlights
P 58
Message from the Chairperson and Efforts for the Succession System
P 60
Initiatives to Strengthen Corporate Governance
P 62
Board of Directors, Governance Promotion Framework, etc.
P 68
Discussion between the Managing Executive Director and
New Outside Board Members

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

46

47

Sustainability & ESG / Commitment

Overview of Sustainability Promotion at Milbon

Approach and framework for promoting sustainability

Toward the realization of a spiritually rich and sustainable society through beauty

We believe that creating a sustainable beauty industry will in turn lead to realization of a sustainable society. The Sustainability Promotion Committee, chairedby the Managing Executive Director, is responsible for supporting the company-wide promotion of sustainability initiatives in cooperation with various departments. Through periodic reporting to the Board of Directors and the Management Meeting, we strive to incorporate these activities into management strategies

Basic Guideline for Sustainability

and improve them, while providing management oversight.

We strive to achieve a sustainable society through our collaboration with haircare professionals.

awareness, which underpins the promotion of sustainability, we have been fostering a culture of independent thinking and action through the creation of ongo-

Each and every employee, including the management team, plays a leading role in promoting sustainability at Milbon. To enhance employee knowledge anding, regular contact points, starting with a company-wide workshop on SDGs in 2019, followed by sustainability workshops every year as part of new employee
training, and regular publication of an in-house sustainability web magazine to share the latest trends and internal activities throughout the company.

The Five Key Challenges for achieving a sustainable society
To fulfill its commitments to all stakeholders in society and provide lasting value, Milbon positions sustainability at the core of its business strategy
and promotes sustainability throughout its business operations. In 2019, we established the Sustainability Promotion Committee and organizedspecific activity themes to be addressed by Milbon from the three perspectives of ISO, ESG, and SDGs into an ESG/SDGs matrix. We subsequently
reassessed the issues within the matrix to identify those with high relevance to our business activities and those for which stakeholders have highexpectations. Five Key Challenges were then selected based on three areas: solving societal issues, achieving sustainable business growth, and establishing internal foundations. KPIs have been set to focus our efforts on the key challenges.

Achieving both sustainablebusiness growth and solvingsocial issues
Foundation for
the Company’s sustainablebusiness growth

Regenerative and recyclingoriented manufacturing
and consumption activities

Internal Promotion System
Workshops as part of
new employee training

Regular publication of an
in-house sustainability web magazine

Enhancement of knowledge
and awareness

Creation of ongoing,
regular contact points

Board of Directors / Management Meeting
Supervision

Practice people-friendly
procurement
Enrich the spirit
through beauty

Construct a fair andflexible management
structure

Reporting

Sustainability
Promotion Committee

Individual
Working Groups

Chair

Education Promotion
Working GroupManaging Executive Director
in charge of Sustainability Promotion

Realizing a rewarding
work environment

TCFD Working Group

Collaboration witheach division

KPIs, progress, and targets for the Five Key Challenges
Leading role in promotion Each and every employee
Priority themes

KPI [Medium- to long-term theme]

Results as of Dec. 31, 2022 Results as of Dec. 31, 2023

2030 target

Key challenge 1: Enrich the spirit through beauty

Co-creating value with stakeholders
Establishment of knowledge-based① Number of registered milbon:iD members
product sales* business utilizing both ② Number of cities in Japan where Milbon deploys
the physical and digital realms
knowledge-based product sales (Smart Salon)
Fostering lifetime beauty partners

2026 target

Process and criteria for determining the Five Key Challenges

448,000
Preparing development

670,000
23 hair salons in 19 cities

1 million
500 hair salons in 100 cities in Japan① Total number of annual users of our studios, events, andeducational videos

187,000

271,000

335,000

focus its efforts on. In 2019, challenges were examined from three separate perspectives—ISO 26000, the 17 Sustainable Development Goals (SDGs), and en-② Number of registered education:iD members

23,00040,000100,000

vironmental, social, and governance (ESG). The opinions of various departments, outside experts, and management team were then gathered before the issues

The Sustainability Committee, chaired by the Managing Executive Director, took the lead in selecting the Five Key Challenges that Milbon should particularly*Knowledge-based product sales: A sales method in which product sales are accompanied by valuable information based on the knowledge and insights of professional hairstylists

Achieving both sustainable business growth andsolving social issues

Key challenge 2: Regenerative and recycling-oriented manufacturing and consumption activities

Establishment of a carbon-neutral
production system

Reduction rate of CO2 emissions at Yumegaoka Factory(compared to 2019 levels)

Sustainable container andpackaging design

Reduction rate of petroleum-derived virgin plastic use(compared to 2020 levels, per unit sales)

59.7 % reduction
0.4 % reduction

81 % reduction
9.6 % reduction

75 % reduction(achieved ahead of schedule)
15 % reduction

Achieve carbon neutrality
30% reduction

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

48

RSPO certified palm oil adoption rate (MB+B&C)

4.47%

9.5%

50%

100%

Respect for human rights
in the supply chain

Number of human rights violations identified

00

Keep human rights violation
as close to zero as possible

Keep human rights violation
as close to zero as possible① Appointment of outside board directors② Active appointment of female board members③ Securing diverse skills, including internationality

Improving the effectiveness of
the Board of Directors

Progress in selecting and improving key challenges
through third-party evaluations

Key challenge 4: Construct a fair and flexible management structure
5 outside board directors(5 out of 11)
2 female board members(2 out of 14)
0 foreign board members(0 out of 14)

5 outside board directors(5 out of 11)
2 female board members(2 out of 14)
0 foreign board members(0 out of 14)

Continuous appointment of over 1/3
outside board directors
Continuous appointment of female
board members
Ensure diverse skills, includinginternationality

Ongoing implementation

Ongoing implementation

Continuous improvement activities
for setting annual challenges

We have designated “enrich the spirit through beauty”—which is integral to our business activities—as Key Challenge 1, that is, the core issue in our Five Key
Challenges. We believe that beauty leads to emotional well-being and that a spiritually enriched society will engender a sustainable society. In order to contribute

10.0%

10.8%

9.0%

Three perspectives

ISO
26000

SDGs

ESG

Reflect opinions of departments,
experts, and management

Rearrange according to business relevanceand stakeholder expectations

SDGs / ESG matrix

Five Key Challenges

External assessments of our activities

Key challenge 5: Realizing a rewarding work environment
Achieving systems and frameworks ① Turnover rate of junior employees*Average turnover rate of junior employeesthat encourage employees to(new graduates to 3rd year) over the past five years
continue working② Paid leave acquisition rate
③ Progress of engagement survey

issues, achieving sustainable business growth, and establishing internal foundations.

2 and 3 as our contribution to solving societal issues to remain sustainable throughout our entire supply chain.

Sustainable procurement of palm oil

Promoting diversity among
the Board of Directors

activities and those for which stakeholders have high expectations and interest. The key challenges were then selected based on three points: solving societal

to such a society, we ourselves must remain sustainable. We have therefore designated Key Challenges 4 and 5 as internal foundations for this, and Key Challenges
Key challenge 3: Practice people-friendly procurement

Foundation for the Company’s sustainable business growth

were arranged within an ESG/SDGs matrix. The issues were subsequently reassessed within the matrix to identify those with high relevance to our business

6.0%

64.0%
67.8%
70.0%
80.0％
Completed design of the engagement Conducted engagement survey
Continue engagement survey
survey system and conducted survey and set targets, etc.*
for the first time
* Including survey report to the management team, feedback to the senior management team, and developmentof action plan

Our activities in promoting sustainability are assessed by a number of ESG evaluation organizations, and we have received a certain level of recognition. In
FY2023, we were selected for inclusion in the FTSE Blossom Japan Sector Relative Index and the MSCI Japan Empowering Women (WIN*) Select Index,
and our core production facility, the Yumegaoka Factory, was awarded a Gold rating in the FY2023 survey conducted by Ecovadis. For details, see the listof external assessments on page 76.
* The inclusion of Milbon Co., Ltd. in any MSCI index and the use of MSCI logos, trademarks, service marks, or index names do not constitute a sponsorship, endorsement, or promotion of Milbon Co., Ltd. by MSCI
or any of its affiliates. The MSCI indexes are the exclusive property of MSCI. MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

49

Sustainability & ESG / Commitment

1

OUTCOME: Promotion of a beautiful, spiritually enriched society by supporting the education of hair professionals and improving accessibility for consumers

Priority theme 1:

KPI

Establishment of knowledge-based product sales business utilizing both the physical anddigital realms

Number of registered milbon:iD members

2022
results

448,000

2023
results

670,000

2026
targetThe Five Key Challenges for achieving a sustainable society

Enrich the spirit through beauty

Key Challenges

KPI Status and Targets for Each of the Five Key Challenges
Priority theme 2:

Fostering lifetime beauty partners

KPI

Total number of annual users of our studios, events,and educational videos

2022
results

187,000

2023
results

271,000

2026
target335,000

Approx. 40%
increase

Approx. 50%
increase

Target:Approx. 50%
increase

1,000,000

Target:Approx. 20%
increase

Continued to rapidly gain support, reaching 670,000 registered members

271,000 users supported in both the physical and digital realms

milbon:iD is Milbon’s official online store and was officially launched in June 2020. Since then, not only has it contributed to greater sales andIn addition to providing in-person opportunities to hair professionals, such as educational seminars and events using its studios, Milbon has also been accelerating

profits for hair salons through e-commerce, but it has also continued to rapidly gain support as a new communication tool between hair salons andits provision of online educational content since September 2022 (after COVID-19), including the streaming of educational videos linked to its education:iD

consumers, fusing the physical and digital worlds. In FY2023, the number of registered members reached 670,000, well on the way to the milestone

service. The total number annual users in FY2023 was 271,000. Since the end of the COVID-19 pandemic, our Designer’s Ability (DA) educational event inof 1,000,000 by FY2026. In FY2024, we will further support smooth purchasing experiences for customers, from product consideration to purchase,particular has seen a record number of participants, and we are starting to see the use of educational videos on basic techniques take root in hair salons. We will

and we will continue to create enriched purchasing experiences. We will do this by expanding two new functions: live shopping for milbon:iD

continue to build a framework for providing optimal education by combining our strengths in FP activities, studio seminars, video content, and other aspects somembers to shop while watching live video feeds from hair salons, and STYLE STOCK—a feature that highlights on each member’s personal pagethat Milbon will continue to be selected.

the items that were used during their treatment at a hair salon along with their styling video.

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

50

KPI

Number of cities in Japan where Milbon deploys knowledge-based
product sales（Smart Salon）

KPI

2022
results

Rollout
preparation

2022
results

23,0002023
results

23 salons in 19 cities

2023
results

40,0002026
target

500 salons in 100 major cities in Japan2026
target100,000

Target:Approx. 2,100%
increase

Number of registered education:iD members

Approx. 70%
increase

Target:Approx. 150%
increase

Created best practices through test marketing at 23 salons in 19 cities

Provision of personalized educational support helped grow the number of registered members to 40,000

Smart Salons provide customers with a new salon experience by combining physical and digital worlds. Following a preparatory period in FY2022,

education:iD—Milbon’s online service supporting hair professionals—provides a personalized environment that enables hair professionals to obtain the edu-

we began to roll out Smart Salons in FY2023 in cooperation with hair salons that supported the concept. In FY2023, 23 salons were opened in 19

cation and information they need at the right time through the use of digital technology, thereby supporting improvements in their learning effectiveness andcities, despite being in the test marketing period, and successful salons have already yielded positive results, including improved knowledge-based

efficiency, convenience, and work environment. In FY2023, the number of registered members grew to 40,000. This was as a result of holding seminars on trends,

product sales. Moreover, some of the salon owners who provided support have even voiced their desire to open more than one Smart Salon. In

including the South Korean hairstyles that are popular among young women, providing follow-up support after the seminars, and the ongoing activities of FPs.

FY2024, all eight branches in Japan will collaborate, and we will select target salons with aspirations for growth and promote the creation of suc-In FY2024, we will support the creation of an environment in which all hair professionals can confidently provide lifelong support to their customers by devel-

cessful salons to become flagship Smart Salons. At the same time, we will visualize the conditions for success, improve the attractiveness of Smart

oping educational content for hair professionals tailored to the 10 role models in their career and by promoting the development of content for beauty schools

Salons, and build an enhanced system which encompasses everything from proposals to follow-up support.

and their students.

51

Sustainability & ESG / Commitment

2

OUTCOME: Acceleration of the circular economy throughout the supply chain

Priority theme 1:
KPI

2022
results2023
results2026
targetEstablishment of a carbon-neutral production system

2022
results

Approx. 21.3%
increase%

2023
results%%

Practice people-friendly procurement

3

KPI*Compared to 2019 levels

59.7
81.0
75.0

Key Challenges

OUTCOME: Development of a sustainable supply chain

Priority theme 1:

Reduction rate of CO 2 emissions at Yumegaoka Factory

2030
target2026
targetAchieved ahead ofschedule

2030
targetCarbon neutrality

Sustainable procurement of palm oil

RSPO certified palm oil adoption rate (MB+B&C)

4.47
9.5
50.0
100.0

%

%

Approx. 5%
increase
Target:Approx. 40%
increase
Target:Approx. 50%
increase%%

Achieved 2026 target three years ahead of schedule by adopting renewable energy

Began purchasing certified raw materials; will adopt RSPO compliant raw materials for new products

Milbon has implemented low-energy processes that use less electricity, steam, and water since FY2021, contributing to a 15,000 kg reduction in CO2

Milbon joined the Roundtable on Sustainable Palm Oil (RSPO) in 2019, and was approved as an ordinary member in 2022. We also became a member of theemissions in FY2023. Also, in FY2023, we achieved our FY2026 target of reducing emissions by 75% (compared to 2019 levels) three years ahead

Japan Sustainable Palm Oil Network ( JaSPON) in 2020, and have been promoting the sustainable procurement of palm oil, one of the main raw materials of ourof schedule thanks to the year-round use of renewable energy that we adopted in April 2022. Between now and 2026, we will maintain the current

products. In FY2022, we completed acquisition of RSPO supply chain certification for the Yumegaoka Factory, our core plant. In FY2023, we began purchasing

reduction rate in anticipation of an increase in production volume, while considering ways to achieve carbon neutrality in FY2030. As a measurecertified raw materials, and we are ensuring that appropriate operations are carried out in accordance with strict rules. We will continue to develop and produce

for further reducing city gas consumption, we will consider introducing technologies to improve the thermal efficiency of boiler steam and adding

new products based on the rule that, in principle, no new raw materials will be used that are not RSPO compliant, and by leveraging our frameworks of close

solar power generation facilities on the factory premises to secure a stable supply of renewable energy. At the same time, we will continue to researchcooperation with suppliers and our global procurement system, we will further increase our use of certified raw materials to achieve our goal of a 50% adoptioncogeneration systems and geothermal power generation with a view to optimizing our energy use in the future.

rate in FY2026, as well as taking countermeasures against recent sharp increases in raw material prices.

Priority theme 2:

Priority theme 2:

KPI

2022
results2023
results
M I L B O N I N T E G R AT E D R E P O RT 2 0 24

52

Regenerative and recycling-oriented manufacturing andconsumption activities

Key Challenges

2026
target2030
targetSustainable container and packaging design

Reduction rate of petroleum-derived virgin plastic use

KPI*Compared to 2020 levels, per unit of sales

0.4
9.6
15.0
30.0

%

%

9.2% increase

Respect for human rights in the supply chain

Number of human rights violations identified

0

2022–2023 results
Target:Approx. 5%
increase%%

Target:15% increase

Old pouch

New pouch

2026–2030 target

MilbonKeep human rights
violation as close tozero as possible

Human
R i g h t s Po l i c y

Accelerated changes in container molding methods and reduction of container weight etc., leading to a 9.6%
reduction

Clarified policies and strengthened respect for human rights throughout the value chain

We are promoting reductions in the use of petroleum-derived virgin plastic through implementation of the 4Rs. In FY2023, we accelerated new

We support the four international norms and principles, including the United Nations (UN) International Bill of Human Rights, and respect the Ten Principles

product efforts to reduce container weight by changing the molding method, , and to recommend the use of refill pouches so that the originalof the UN Global Compact (UNGC) as a signatory to the UNGC. In FY2022, we formulated the Milbon Group Human Rights Policy and established thecontainer can continue to be used. We also worked on adopting plant-derived plastic and recycled plastic for container bottles, and began to change

Milbon Report/Consultation Counter in collaboration with external partners to establish a system that enables prompt and appropriate corrective and remedial

the specifications of some pouches, from the conventional aluminum pouches to aluminum vapor-deposited pouches that are easier to recycle. As

action to be taken when violations are identified. In FY2023, we also formulated the Milbon Ethics and Code of Conduct and the Milbon Sustainable Procure-a result, the reduction rate (compared to 2020 levels) has progressed significantly from 0.4% in FY2022 to 9.6%. In addition to aggressive measures

ment Basic Policy. By utilizing the Global Compact Network Japan (GCNJ) Self-assessment Tool and Ecovadis, we are expanding the scope of respect for humanfor new products, we will promote the introduction of measures for existing products, and set quotas for each item by brand to further invigorate

rights from within the Group to the entire value chain. We continue to have zero human rights violations, and moving forward, we will build a human rights due

efforts not only for those departments in charge, but for the entire company.

diligence framework that includes suppliers and our overseas bases.

53

Sustainability & ESG / Commitment

Construct a fair and flexible management structure

Key Challenges

4

OUTCOME: Development of structures for the sustainable improvement ofcorporate value

Priority theme 1:
KPI

Promoting diversity among the Board of Directors

Appointment of outside board directors

KPI

Active appointment of female board
members

5 out of 112022–2023
results2

2026–2030
targetContinuous appointment ofover 1/3 outside board directors

2026–2030
targetContinuous appointment offemale board members

Continued appointing board members
based on the skills matrix(0 foreign board members)

2026–2030
targetOUTCOME: Realization of a workplace environment with enhanced job satisfaction allowing employees to keep working

2022
results

Ensure diverse skills,
including internationality

2026
target2030
targetAchieving systems and framework that encourage employees to continue working

Turnover rate of junior employees

KPI

2023
results

Securing diverse skills, including internationality

2022–2023
results

5

Priority theme:

2022–2023
results

KPI

Realizing a rewarding work environment

Key Challenges*Average turnover rate of young employees (new graduates to 3rd year) over the past five years

10.0
10.8
9.0
6.0

Promoted employee retention by strengthening the followup system for the first three years of employment%

0.8% increase

ment of female board members, with one more female outside board director being appointed in FY2024, bringing the total to three. In addition,%

Target:1.8% decrease

Particularly with respect to ensuring diversity, we will consider setting quantitative targets while carefully examining the impact on improving
effectiveness. As for women’s advancement, we have set a target of 20% female managers by 2030, and to achieve this, we will first foster a sharedunderstanding within the company, starting with the executive structure.

Priority theme 2:

KPI

Improving the effectiveness of the Board of Directors

Progress in selecting and improving key challenges through third-party evaluations

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Targetcourse held four times a year. As for Field Person (FP) positions, we have developed a support system that includes enhanced onsite follow-up using ReCoBook
as individual follow-up interviews in their second year. Moving forward, we willconsider follow-up measures for third year employees, and will also look intoarea recruitment to prevent turnover due to assigned location gaps.

Paid leave utilization rate

KPI

Fostering a system and culture through visualization ofutilization rates and broader options

2022
results2023
results2026
target2030
target

64.0
67.8
70.0
80.0

In FY2023, utilization of paid leave increased to 67.8%, 3.8 percentage points

%

%

%

higher than the previous year. This was largely due to having begun to display
and email the utilization rates of employees. In addition to developing a system

3.8% increaseof hourly and half-day paid leave for FY2024 to expand the paid leave options
for managers and supervisors, we also conducted a company-wide survey on

Target:Approx. 2% increase

Target:Approx. 10% increase%

paid leave utilization. These will be linked to effective measures to be considered in the future, such as expanding the number of days in the planned paid
leave system and setting up days to encourage paid leaves to be taken. In addition, we will promote the creation of a workplace environment that enables
employees to continue to work with greater job satisfaction by encouraging
managers to take the initiative in fostering a culture that encourages employees
to utilize leave systems.

Continuous improvement activities for setting annual challenges

Identifying challenges from an external perspective; promoting further improvements in quality
The Milbon Board of Directors is evaluated based on a combination of an annual effectiveness evaluation questionnaire conducted by an externalorganization as well as the results of interviews conducted by the bureau with all outside board members. A summary of the results is submitted to

KPI

Progress of engagement survey

Company-wide measures to improve the Philosophy
Strategy as the number one priority
In the engagement survey, after completion of the system design and its first

FY2022
results

Completed design of the engagement survey systemand conducted survey for the first time

implementation in FY2022, we engaged in improvement activities, such as individual feedback meetings with all department heads, created action plans,

the Board of Directors, which deliberates and promotes action plans that contribute to future improvement activities. In FY2023, to improve theand continued implementation in FY2023. Out of all the survey items, we havequality of deliberations by the Board of Directors, Management Meeting, and the Nomination and Compensation Committee, an annual agenda

selected Philosophy Strategy, External Adaptation, and Transformation Activ-

was scheduled and a bureau was established to improve operational efficiency.
Also in FY2022, a new Governance Committee was established to deliberate the improvement of the effectiveness of and strengthening solidarity
between the Board of Directors and the Management Meeting. Starting in FY2024, both meetings, which used to be held on the same day, are to be

FY2023
results

held on different days to facilitate the appropriate sharing of discussion outcomes and improve the quality of discussion at Board of Directors meet-

Conducted engagement surveys
and set targets, etc.*

ities as priority items, and in FY2024, we will plan and review company-wide* Including survey report to management team,
feedback to the senior management team, and development of action plan

progress of each department. Furthermore, rather than superficial improvements

and knowledge of executive officers and other members of the management team.
tion to a monitoring style board of directors where the Board of Directors monitors the overall execution of business.

measures to improve the Philosophy Strategy in particular while checking thein ratings, for the resolution of essential issues, we will consider measures tosupport improvement and enhancement that lead to the fostering of momentum

ings. In addition, a new program was launched in March 2024 with the cooperation of institutional investors to improve management perspectives
Moving forward, we will establish a system that allows the Management Meeting to make deeper management-related deliberations, and transi-

54

Milbon’s plans for the future.. In addition, in FY2023, the second-year follow-up

and substantial follow-up by Corporate Administration in their first year, as well%board directors having experience in working overseas, as a new step forward, we appointed a South Korean employee as executive officer in FY2024.
number and balance of personnel. Given this, we recognize the need for deliberation in the future, including on the appropriateness of such KPIs.

follow-up tied to human resource criteria and portfolio design consistent withtraining, which had previously been held once a year, has been bolstered to a

Target:3% decrease

women have been appointed to two out of the eight executive officer positions. As for diversity, including internationalism, in addition to plenty ofAt present, considering the fact that the bulk of our sales are mainly in Japan, some KPIs have not been clearly defined in terms of the specificmained at 10.0% for the second consecutive year. As an initiative to retain junioremployees, we have implemented recruitment measures and post-employment%

Ensuring greater diversity through the appointment of outside board directors, female board members, andnon-Japanese employees
Outside board directors have been appointed to 5 out of the 11 positions on Milbon’s Board of Directors. We are also actively promoting the appoint-

The turnover rate for new graduates in their third year of employment has re-2026
targetfor positive challenges as well as to the identification and spread of best practices.

Continue engagement surveys

Examples of this includes an enhanced awards system and greater interaction andexchange with management and other departments.

55

Sustainability & ESG

Aug
Sep

2023–2024 Sustainability Highlights

Invited an external presenter toprovide a Human Capital Management
Workshop for board directors, Audit &Supervisory Board members, andexecutive officers

2023
Jan

Environment

SocialGovernanceBecame a signatory to the recommendations of the TCFD

Launched Smart Salon as a new hairsalon format that fuses physical anddigital worlds to satisfy thecustomer’s desire for more

Sustainability educationand promotion

Oct

Participated in the 30by30 Alliance for
Biodiversity

Invited an external presenter toprovide a DE&I Workshop for board
directors, Audit & Supervisory Board
members, and executive officers

Nov

Joined the TCFD Consortium

Yumegaoka Factory receives Goldrating in EcoVadis sustainability survey

Feb

Mar

Apr

Changed container specifications
for haircare products to reduce theamount of plastics used, aiming to
reduce by approx. 10 tons per year

Donated 10 million yen to Japan
Platform’s Emergency Response to
Southeast Turkey Earthquake 2023
program to support disaster relief
and recovery efforts for those suffering from the earthquake in
Turkey and Syria

Completed third-party questionnaire and interviewed outsideboard members to evaluate Board
effectiveness in FY2023

Formulated and announced theMilbon Group Environmental
PolicyRecognized as a Certified Health& Productivity Management Outstanding Organization for 2023

Formulated and announced theMilbon Ethics and Code of Conduct

Participated in Kobe Plastic Next, aprogram for recycling refill packs
and cleaning up Kobe City

Extended new sports sponsorships
with female professional golfers to
inspire future-focused people tolive beautifully

Dec

2024
EnvironmentJan

Announced our climate change policyon the corporate website in line with
the TCFD recommendations
Adopted new containers, that use
75% less plastic than existing
containers, for the new Villa
Lodola RENOVO product series

Began publishing FY2023
editions of Yomu Milbon,
an internal web magazine
continuously published since2020 to support employee
efforts toward sustainabilityMay

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

56

Selected for inclusion in the MSCIJapan Empowering Women (WIN)
Select Index developed by MSCI

GovernanceDonated 5 million yen to the Japan
Platform, a non-profit organization, forthe 2024 Noto Peninsula Earthquake
Relief and Recovery Program to aid victims of the Noto Peninsula Earthquake
and the recovery of affected areas

Hidenori Sakashita was appointed as
the new President & CEO

Feb

Mar

Conducted water quality surveysof the Kume River and the Kizu
River, which are the directdrainage routes to the sea for waterused at the Yumegaoka FactorySocialSustainability educationand promotion
Began publishing FY2024 editions of
Yomu Milbon, an internal web magazine continuously published since2020 to support employee efforts
toward sustainability

Completed third-party questionnaire
and interviewed outside board
members to evaluate Board effectiveness in FY2024
Combined plant-derived plastic for the
PJOLI series, and used containers madewith less petroleum-derived plastics

Divided and reorganized the Nomination and Compensation Committee into the Nomination Committee and the Compensation Committee, each with its own bureau

Established the Human Resources Development Committee for the purposeof developing a human resources strategy linked to the medium- to long-term
management strategy

Appointed one new female outsideboard director

Certified as a 2024 Health &Productivity Management Outstanding Organization

Launched the Executive Officer Training Program, inviting institutional
investors as external presenters tostrengthen the management perspective

Appointed one new outside audit &supervisory board member

Apr

Jun

Held the second
BEAUTY AWARD

Acquired ISO 22716 certification
for the Yumegaoka FactoryJul
Held the Water Quality Survey
and Waterside Nature Observation, a hands-on experience withlocal children to learn about riverenvironment conservation incollaboration with the civic group,
Network of Fish and Children

Formulated and announced the Milbon
Sustainable Procurement Basic Policy

MILBON

Selected for inclusion in the ESG
investment index, FTSE Blossom
Japan Sector Relative Index

May

Disclosed Scope 3 emissions at Japanesebusiness locations
Continued water quality surveys of the
Kume River and the Kizu River
Conducted biodiversity conservation
activities at the Kameyama Satoyama
Park, certified as an area where
biodiversity is being conserved57

S u s t a i n a b i l i t y & E S G / Po i n t o f G ove r n a n ce
M I L B O N I N T E G R AT E D R E P O RT 2 0 24

58

Message from the Chairperson andEfforts for the Succession System
Chairperson Ryuji Sato
Toward realization of an organization of limitless growthThis year, Ryuji Sato became chairperson after stepping down from his role as President & CEO̶a position he served for
16 years since 2008. At the same time, Hidenori Sakashita, who had served as a board director, was appointed President &mission is to create and contribute sustainablevalue to society, and so it is only natural thatMy three roles as chairperson

management of the business be carried out byture) and to build new relationships with them.
In particular, I hope to play a supporting role inpromoting Smart Salons, as we strive to expand

people best suited for the job, regardless ofDuring my 16 years as president, I am proud towhether the business is family-run.

have created three arrows for further growth in

We have also laid internal foundations for thethe future: our global business, expansion into

succession system by appointing people who areother fields, and promotion of DX—as typified

truly suited to realizing our vision for the future.

by milbon:iD and Smart Salons. Having built

In addition, the importance of outside board di-these foundations, I believe there are three main

rectors has been increasing rapidly of late, andthings I must do as chairperson in the future.

them to 100 cities by 2026.

Continue growing into the future ina way that’s true to Milbon
What I am looking for in the new structure is by

we are working to strengthen the effectiveness ofFirst is the thorough instilling of “Milbon-ism.”no means a big change, but rather the continuous

the Board of Directors and secure diverse skills bythat he took during his tenure to realize an organization that continues to grow. He also talks about his future duties as

The Milbon Way, which summarizes our cor-smaller innovations that I mentioned earlier un-

inviting people with deep knowledge in various

chairperson.

porate philosophy, describes our core beliefs,

der Continuity and Change. Although major re-fields to serve as outside board directors. These

including our belief in sustainability, namely,

forms may certainly bring about significant tem-changes are also helping us build solid founda-“building a solid company that won’t collapse.”porary changes, in my view, such changes cannot

tions for transitioning to the new system.

To realize this belief, I have always emphasized

be called sustainable growth. Rather, our contin-

CEO. Below, Chairperson Sato extends his gratitude to all stakeholders and explains the measures for the succession system

the Milbon Corporate University (MCU),

leaders and managers as being the same, but

At the same time, if the ratio of outside board

the importance of Continuity and Change as

ued growth has been achieved through constanta unique management leadership develop-

I believe that there are clear differences be-

directors increases, the number of internal board

key words. Continuity: that which must not

smaller innovations attuned to the changing

ment program for incoming managers. For

tween the two. If we compare an organiza-

directors will inevitably be limited. In an era in

be changed. This is, of course, our belief intimes and society. Going forward, we will con-four and a half years between 2015 and 2019,tion to a forest, the manager’s role is to lookwhich diverse work styles are recognized, promo-“building a solid company that won’t collapse.”tinue to achieve steady growth, step by step.

I took over as Milbon President & CEO fromabout 10 candidates participated in the pro-at the forest and to nurture each and everytion is not the only path, but opportunities for

So then, how can we actualize this belief ? The“Be true to Milbon by being in tune withfounder Ichiro Konoike in 2008, and havegram each year. To promote the develop-

tree, while the leader’s role is to envisage

self-realization should be protected for employees

answer is Change: continuous innovation—put-

the times and not being influenced by trends.”

been in charge of the company for 16 years.

ment of talented people who are capable ofthe future of the forest itself and think about

who pursue a dream of being involved in manage-

ting into practice the idea that if a company is

These are the words I conveyed to all employ-

During these 16 years, we have faced muchthinking and acting, not from a standpoint of

how to create that future, that is, to shapement as a board member in the future. Thus, in

useful to society, society will not let it collapse.

ees upon my retirement as president, in appre-

adversity, including the collapse of Lehman

departmental optimization, but from a com-

the future. The leader draws up a grand de-addition to the aim of mutually enhancing man-

At first glance, continuity and change may seemciation of their support Coincidentally, despite

Brothers, disasters such as the Great East Ja-

pany-wide optimization based on a broad,sign for the future, takes action together withagement supervision and execution and strength-

like contradictory terms. However, I believe thatnot having prior discussion, the newly appoint-

pan Earthquake, and even a pandemic caused

high-level viewpoint, the management team

employees who sympathize with that future,ening effectiveness, the decision was made to in-change is necessary in order to keep intact theed President & CEO Sakashita made a similarly

by COVID-19. I would like to take this op-

actively participated in the program by hav-

and gains the empathy of stakeholders . The

troduce the Executive Officer System in FY2021.

fundamentals that should be continued, and thatworded appeal to all employees—“be Authen-portunity to express my sincere gratitude

ing myself and other board directors serve as

leaders at Milbon should be people who en-

it is my responsibility to thoroughly instill thistically Milbon.” When I heard his words, I wasto our biggest business partners—the hair

instructors. Moreover, apart from classroom

gender this kind of sympathy and empathy

philosophy in our company.

convinced that the buds of growth that I nur-salons and distributors—as well as our sup-learning, participants also took part in discus-

for the future. Furthermore, I believe that apliers and other associates, our employees forsions about the future of Milbon and madeleader should be a self-directed thinker at all

their dedicated efforts, and all our stakehold-final presentations to the senior management

times, so that they can find clues to growth

It is true that there were some concerns voiced

ically from when I was appointed president toJust as hair professionals are empathetic to

ers for their support in making it possible forteam. The program has led to solid results.

with determination in the face of adversity.

from outside Milbon that I should become annow, by the time we transition from the current

their customer’s sense of self, what Milbon’s

us to continuously grow sustainably.

Establishing a unique succession
plan for the next successor

Milbon should have only one leader

Second is developing the next leader. Just as

tured over the past 16 years would surely blos-

the scale of our company has changed dramat-

som and flourish in the generations to come.

Of the 42 people who participated in theWith this in mind, since 2015, we have been

executive chairperson while retaining represen-management structure to the next one, the leader

leaders should do is move forward into the future

At Milbon, we have set the tenure for board

program over the past four and a half years,

discussing the development of a succession

tative authority, and that even if representative

will need to have even greater caliber to achieve

in a way that is both true to Milbon and in tune

directors at one term of two years before

three, including President & CEO Sakashita,system as the most important agenda item

authority was transferred to the new president, I

sustainable growth. I have always said both insidewith hair professionals, hair salons, and consum-

reaching the age of 65. I turn 65 this year, so

are now board directors, and seven have beenat our annual personnel meetings. In 2021,

would still be directing behind the scenes. I am

and outside the company, “People are finite; or-

ers. However, in no way does that mean that ev-

working backward from 2024, we have been

appointed as executive officers. I believe that

we began selecting specific candidates andvery much aware of the influence that I have had

ganizations are infinite.” No matter how talented

erything cannot be changed. It is about having

discussing the next structure of leadershipwe have created the foundation for a systemsolidifying the system. Ultimately, Hidenori

as President & CEO for 16 years, and thankfully,or popular a manager may be, he or she cannot

the courage to keep making changes for the sakesince 2014. I have long insisted to board direc-

to realize our ideal of “aiming to be a corpo-

Sakashita was recommended as the next Pres-I am still in very good health. However, from theescape death. On the other hand, an organiza-of what must not change. The new structure will

tors that it is our job to train our successors byrate entity where leaders are naturally andident & CEO based on his global experience

outset when I began to think about a succession

tion can continue to create value on an enduring

be a time of blossoming growth buds. I look for-the time we step down, and on this occasion,

continually formed.”as the representative of MILBON USA, hissystem, I decided that I would not hold any rep-basis by connecting ideas from person to person.

ward to your further support and encouragement

I am relieved to say that we were able to carrysense of management balance refined as the

resentative authority after stepping down as pres-As a specific means of achieving this, prior to theas we continue to grow into the future in a way

out the transition as originally planned. I will

general manager of the Corporate Strategy

ident. The reason for this is clear: I believe thatstart of the next MCU, I am promoting the ideathat is true to Milbon.

Department, and above all, his sense of re-

Milbon should have only one leader. Supposingof first launching MCU-Prep, a program to teachsponsibility and determination. Following

I was to keep representative authority, peopletrue top management skills to young leader can-consultation with the Nominations Commit-

would wonder, “Who is Milbon’s leader?” There

didates in their 30s. Positioned like a preparatory

tee and approval by the Board of Directors inwould never ever be a change of leadership in any

school for transitioning to the MCU, I believe

make another decision at the end of FY2025
as to when I will step down as board director
but stay on as chairperson, but in any case,Realization of a system that isopen to society and adapts to thechanging times

I have been proceeding to establish a succession system with that determination in mind.

What is required of corporate leaders chang-

2023, the final decision was made along with

substantive sense. To make this clear to people

that this system will systematically train the next

There are two premises on which all myes from time to time and with the size of thethe succession system for board directors andboth inside and outside the company, I decided

leader candidates better than ever.

thinking has been based: What kind of per-corporate organization. In fact, at the end of

executive officers.

not to hold any representative authority.

son should be our leader, and at the same

FY2007, when I became President & CEO,

Although it seems that some in the capital

I also gave much thought to whether or not I

tionship with hair salons and distributors. The

time, what kind of structure should we have?

we had consolidated net sales of 18 billion yen

market would like an explanation as to why

would remain in the company as chairperson after

beauty market is all about face-to-face business

It goes without saying that the core of anand about 450 employees, but today we have

we did not choose to be a family-run busi-

stepping down as president. However, as younger

where relationships of trust between people areorganization is the leader, but that does notconsolidated net sales of 47.7 billion yen andness from the start, our founder chose theemployees increase in number and one generation

important. This is especially why, while taking

necessarily mean that only the leader should

1,140 employees. The quality and importancepath of going public of his own volition inof workers makes way for another, I thought thattime to maintain the relationships that have ex-

be nurtured and selected.

of the leadership required during this growtha decision to contribute to society as a more

a little more remains to be done by people like me

isted up to now, we will make the most of thehave increased dramatically.

social entity. In other words, management

who can pass on the philosophy and history of

new structure of chairperson and president forThis is why, in addition to the external

Third and final is our nearly 30-year rela-training that had been offered to gener-

In this context, what kind of person isand capital have already been clearly sepa-

Milbon, and above all, the thoughts of our found-the president to visit hair salons (something thatal managers and above, in 2015, I launchedmeant by a leader? Some people think ofrated. We believe that our most important

er. And so, I decided that I would fulfill that role.

was not so easy to do under the former struc-59

S u s t a i n a b i l i t y & E S G / Po i n t o f G ove r n a n ce

Initiatives to Strengthen Corporate Governance

Reforms implemented in FY2023–2024 and results
achieved

Current priority issues and new initiatives for theirresolution

Following deliberations by the Governance Committee in FY2023, theAt present, we regard improving the management viewpoint and perspec-

Nomination and Compensation Committee, which had been a single entity

tive at the management level and establishment of a management struc-

Milbon’s approach to corporate governanceto that point, was split into the Nomination Committee and Compensationture aligned with current trends, including compliance with the Corporate

Committee beginning in FY2023 in order to improve the quality of delib-

Governance Code as the two priority issues in governance, and we are tak-Milbon recognizes that strengthening its corporate governance is an important management challenge that is crucial for realizing its belief in

erations. According to the FY2024 questionnaire assessing both committees

ing measures to address them.

“building a solid company that won’t collapse,” fulfilling its commitment to all the various stakeholders in society, and providing lasting value. We

for the FY2023 period, assessments of effectiveness improved significantly.

To improve the management viewpoint and perspective at the manage-view constructing a fair and flexible management structure as one of the key challenges for sustainability, and we are working to promote it by set-

Furthermore, to promote greater separation between management and su-

ment level, we recognize that it is essential to improve the managementting specific KPIs, including compliance with the Corporate Governance Code, in an effort to enhance and strengthen management transparency,

pervision, we are updating the decision-making authority of the Board of

viewpoint and perspective of management, especially executive officers,

fairness, and efficiency. In addition, we are currently focused on reforms aimed at transitioning to a monitoring style board of directors in which

Directors and the Management Meeting and facilitating the transfer of au-

and following deliberations by the Governance Committee, we launchedmanagement and supervision are separated, by establishing a structure that allows the Board of Directors to monitor the overall execution of businessthority to the Management Meeting.

an executive officer training program in March 2024 with the cooperation

Looking ahead to transitioning to a monitoring style board of directors

and the Management Meeting to make more in-depth management-related deliberations.

Corporate governance = Essential for making timely, appropriate management decisions andfor realizing the belief in “building a solid company that won’t collapse”
Enhancing and strengthening managementtransparency, fairness, and efficiency

Toward a monitoring style board of directors inwhich management and supervision are separated

Outcomes and progress against the KPI of constructing a fair and flexible management structureof institutional investors. In this program, participants learn about the con-bureaus have been established for the Board of Directors, Management

cept of corporate analysis from an investor’s point of view through several

Meeting, Nomination Committee, and Compensation Committee, andstudy sessions, and ultimately make a presentation to the board directors

structures have been put in place for them to organize agenda before eachon Milbon’s management issues with the aim of aligning the management

meeting, operate effectively according to annual schedules, and prepare andperspectives of the Board of Directors and the Management Meeting. On

follow up before and after meetings without delay. The Human Resources

top of that, we are also reexamining the Executive Officer System, and are

Development Committee was also established in FY2024 for the purpose ofcurrently designing a new system in preparation for its launch in FY2026.

developing a human resources strategy linked to the medium- to long-term

At the same time, we will promote the strengthening of cooperation be-

management strategy. It is chaired by the President & CEO and consists oftween candidates for the next board directors and the Board of Directors

internal board directors.

and Nomination Committee through the executive officer training program

As mentioned earlier, to ensure diversity, we have increased the number

and other initiatives mentioned above, and also discuss and consider issuesof female board members and two women continue to play active roles assuch as clarification of the human resources we seek in board directors andIn terms of specific KPIs and progress in addressing the key challenge of constructing a fair and flexible management structure, in the area of ap-

executive officers. Moreover, to ensure diversity, including internationality,

establishment of a human resources system.

pointing outside board directors to promote diversity among the board, we achieved our target of continuously appointing at least one-third outside

a non-Japanese employee has been appointed executive officer in FY2024.

On the other hand, in establishing a management structure aligned withboard directors with five out of the 12 board directors being outside board directors following the General Meeting of Shareholders in March 2024.

However, some KPIs for the construction of a fair and flexible management

current trends, including compliance with the Corporate GovernanceIn terms of actively promoting female board members, we had two female board directors by FY2023, and in FY2024 we will transition to a board

structure have not been clearly defined in terms of the specific number andCode, while we take all aspects of the Corporate Governance Code serious-with three female board directors. Moreover, in the area of securing diverse skills, including internationality, we continue to appoint board members

balance of personnel. For this reason, we are continuing deliberations on thely, we do more than simply comply with them. Our policy is to understandbased on the skills matrix, and while considering the appointment of foreign-national board members to the Board of Directors, a non-Japaneseappropriateness of the KPIs, including the setting of quantitative targets.

the essence of the expectations of the capital market and to express our own(South Korean) employee representing Milbon Korea, an overseas subsidiary, has been appointed as an executive officer, starting in FY2024.

As part of its discussions on governance issues and policies for future initia-

distinctive stance in line with the company’s actual circumstances. In thisIn terms of our progress in selecting and improving key challenges through third-party evaluations aimed at improving the effectiveness of thetives with the participation of outside board directors, the Governance Com-

context, we recognize that there is a strong demand for disclosure of our

Board of Directors, evaluation is based on a combination of an annual questionnaire assessing effectiveness which is conducted by an external or-

mittee discussed the need to strengthen coordination between the Manage-

measures to realize management that is conscious of the cost of capital andganization as well as the results of interviews conducted by the bureau with all outside board members. A system is in place whereby a summary ofment Meeting and the Board of Directors. In response to this, starting instock prices. In view of our responses to recent changes in cost structure,

the results is submitted to the Board of Directors, which deliberates and promotes action plans that contribute to future improvement activities.

FY2024, the two meetings, which used to be on the same day, are to be held

including the sharp rise in raw material prices, these will be disclosed in

on different days to facilitate the timely sharing of outcomes of discussions

due course upon analyzing and evaluating our current cost of capital andat the Management Meeting with the Board of Directors and to improve theexamining policies and initiatives to improve profitability.

Key Challenge: Construct a fair and flexible management structure
KPI 1

Promoting diversity

Appointment of outside board directors (5 out of 12 in FY2024)
Active promotion of female board members (3 in FY2024)
Securing diverse skills, including internationality(enhancement of board directors with experience in working overseas)

KPI 2

Improving effectivenessquality of discussion at Board of Directors meetings.

FY2023–2024 initiatives

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Separation of the Nomination Committee
and the Compensation Committee

Establishment of bureaus for each committee

Establishment of
the new Human Resources Development Committee

Increase in the number of female board members

Appointment of non-Japanese employees to executive officers

Management Meeting and
the Board of Directors Meeting to be held on different days

Ongoing evaluation through a combination of an annual questionnaire assessing effectivenessand the results of interviews

Reform of the corporate governance promotion framework
As for reform of our organizational structure, in FY2022, the Board of Directors, which had previously only made resolutions and reports, added
deliberation items, making it easier to reflect the diverse knowledge and opinions of internal and outside board directors in management. In addition, a new Management Meeting composed of internal board directors, standing Audit & Supervisory Board members, and executive officers wasestablished to strengthen the monitoring function of the Board of Directors and to promote greater separation between management and supervision. This resulted in a clear division of roles between the Board of Directors and the Management Meeting, and the two bodies began to function
effectively together. Moreover, since the members of the Management Meeting also serve as heads of their respective departments, this reform also
has the effect of ensuring appropriate understanding and instilling of the contents and processes deliberated within each division, thereby facilitating communication between management and non-board employees.

FY2024 priority issues and initiatives

1

Improve management viewpoint
and knowledge at the management level

Implemented a training program for executive officers tolearn about corporate analysis from an investor’s point of view

2

Establishment of a management structurealigned with current trends, including
the Corporate Governance CodeIn preparation to disclose our measures to realize managementthat is conscious of the cost of capital and stock prices

Furthermore, as for committee functions, in FY2019, we established the Sustainability Promotion Committee, chaired by the Managing Executive
Director in charge of Sustainability Promotion. Then in FY2022, we established the Risk Management Committee, chaired by the President & CEO
and consisting of internal board directors and executive officers, as well as the voluntary Governance Committee, also chaired by the President &CEO and consisting of internal board directors and outside board directors. Each committee is closely involved with the Board of Directors and theManagement Meeting, thus creating a framework enabling comprehensive governance management.

60

In addition, to build an organizational structure that is highly effective,

61

Sustainability & ESG

Board of Directors

Common standards for all board directors and Audit &Supervisory Board Members

Areas of expectation for Board Directors and Audit & Supervisory Board Members (use of skills matrix)

Board directors and Audit & Supervisory Board Members shall understandrectors is conducted. The results are shared within the Board of Directors,

and take the initiative in practicing The Milbon Way, the action guideline forand measures for improvement are discussed and considered. In February ofIn order to continuously improve the Board of Directors’ required supervisory functions, we have created a matrix of the various skills possessed by

all employees of the Company, and thereby contribute to the development of

FY2024, a questionnaire survey of all board directors and Audit & Supervi-board directors and Audit & Supervisory Board Members, and are using this matrix as a criterion for determining candidates.

a sustainable beauty market.

sory Board members was conducted by a third-party organization regarding

Name

Corporate
Finance/management Accounting

Position and responsibility within Milbon

Legal/
Risk

GlobalBoard Director

Research/ Production/
ESG/
Sales/
HR/
IT/Digital
Qualifications
Product
Sustainability development
Name Labor
Logistics Marketing

Evaluating the effectiveness of the Board of Directors
Once a year, a survey and analysis of the effectiveness of the Board of Di-

the evaluation of the effectiveness of the Board of Directors in FY2023, andSkill selection

interviews were conducted with outside board directors and outside Audit &The skills considered necessary for our Board of Directors were reviewed andSupervisory Board members.

Ryuji Sato

Chairperson

selected by the same Board of Directors in October 2021, taking into account

The results of the above survey and interviews indicate that Milbon’s Board

Hidenori Sakashita

President & CEO

the opinions of each board member. They were further revised by the Boardof Directors is, overall, functioning effectively. On the other hand, some is-

Masahiro Murai

Managing Executive Director
In charge of Finance, Corporate Communication, and Sustainability Promotionof Directors at its meeting in February 2024.

sues were identified as requiring improvement. An overview of these issues

Kazunobu Konoike

Board Director
Director of Production and in charge of Development Headquarters, and Organic Brand

Skill plotting criteria for each board director

Junji Morimoto

work experience in the relevant skill area.

Board Director

Harumichi Okazaki Director of International FP Sales and Marketing, Director of FP Sales and Marketing,Corporate Governance Structure Quick Reference Table

and in charge of Education Planning

Hiroyuki Ogata
Taizo Hamaguchi

Outside Board Director

Tsuneko Murata

Outside Board Director

Etsuhiro Takato

Outside Board Director

Chisa Hayakawa

Outside Board Director

Tomomi Fukumoto

Outside Board Director

ing of the Board of Directors for discussion. The following is a summary of

The skill plot of each board director was determined based on the extent ofBoard Director
In charge of Corporate Administration, Internal Audit, and Quality Assurance

Board Director
Director of Corporate Strategy Development andVice President of Kosé Milbon Cosmetics, Co., Ltd.

was given to each director in advance, and was presented at the March meet-(as of March 2024)

Tax Accountant

Audit & Supervisory Board Member

Mitsuru Oshio

Audit & Supervisory Board Member

Yoshihiko Okuda

Outside Audit & Supervisory Board Member

Tax Accountant

Takashi Hirano

Outside Audit & Supervisory Board Member

LawyerInstitutional design

Company with an Audit & Supervisory Board system

Term of office of Board Directors

2 years

Adoption of
Executive Officer system

Yes

Voluntary Committee

Nominations Committee, Compensation Committee,
Governance Committee

Accounting Auditor

GYOSEI & CO.

the topics discussed by the Board of Directors.
•Greater discussion regarding the formulation of management strategies and businessplans with an awareness of profitability and capital efficiency•Greater discussion for the analysis and improvement of management and market valuation with an awareness of the cost of capital and stock prices•Continuous improvement in how the Board of Directors monitors investment effectiveness and key measures implemented•Further enhancement of the social and management perspectives of internal board directors and executive officers

The above matters will be incorporated into the annual schedules of theBoard of Directors and the Management Meeting, used for enhancing thetraining programs for senior management, and will be reviewed during FY2024
to increase the effectiveness of the Board of Directors. For details, please refer
to Governance ( Japanese only) under Information Links on page 79.

Tackling Issues Related to Sustainability
Led by the Sustainability Promotion Committee chaired by the Managing Executive Director, Milbon has selected Five Key Challenges based on three areas—
solving societal issues, achieving sustainable business growth, and establishing internal foundations—and is promoting efforts to realize a sustainable society

Expertise and experience details
Corporate Management: Experience in corporate management / Finance and Accounting: Expertise and experience in corporate finance and accounting / Legal and Risk: Expertise and experience in corporate legal

joined the TCFD Consortium, a Japanese organization comprised of corporations supporting the TCFD recommendations. The impact of climate change on our

Development: Expertise and experience in R&D and product development in the cosmetics industry / Production and Logistics: Expertise and experience in manufacturing, production, and logistics management inbusiness and our response to it are discussed by the Sustainability Promotion Committee and TCFD Working Group, approved by the Management Meeting andJapan and abroad / Sales and Marketing: Expertise and experience in sales activities and marketing / IT and Digital: Expertise and experience in IT utilization, DX promotion, and information security / HR and Labor:
Expertise and experience in human resources development, HR strategy, and improving job satisfaction

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

62

through development of the beauty market. We have also endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) andaffairs, risk management, BCP, etc. / Global: Overseas experience / ESG/Sustainability: Expertise in general sustainability and ESG issues including environmental, social, and governance issues / Research and ProductFrom the left of this page

Board of Directors, and posted on our website. For details, please refer to Response to Climate Change under Information Links on page 79.

From the left of this page

Tomomi Fukumoto

Outside Board Director

Chisa Hayakawa

Outside Board Director

Etsuhiro Takato

Outside Board Director

Hidenori Sakashita

President & CEO

Masahiro Murai

Managing Executive Director

Junji Morimoto

Board Director

Tsuneko Murata

Outside Board Director

Taizo Hamaguchi

Outside Board Director

Kazunobu Konoike

Board Director

Harumichi Okazaki

Board Director

Hiroyuki Ogata

Board Director

Mitsuru Oshio

Standing Audit & Supervisory Board Member

Ryuji Sato

Chairperson

Yoshihiko Okuda

Outside Audit & Supervisory Board Member

Takashi Hirano

Outside Audit & Supervisory Board Member

63Sustainability & ESG

Executive Officers

Milbon’s Governance Promotion Framework
We consider enhancing corporate governance as a critical management challenge. Through greater management transparency, fairness, and efficiency, we aim forongoing improvements to corporate value.

General Meeting of Shareholders
Appointment, dismissal, determination of compensation limit
Consultation

Nomination Committee

Consultation

Compensation Committee
5 members (incl. 3 outside board director)

Governance Committee

Board of Directors

Report

7 members (incl. 4 outside board director)

Audit & Supervisory
Board Members

Audit
Reporting

12

Reporting, agenda
proposalAppointment, dismissal

Audit & Supervisory Board

Board Directors

ReportAppointment, dismissal, determination ofcompensation limit

Reporting(incl. 2 outside audit & supervisoryboard members)(incl. 5 outside board directors)

Reporting

5 members (incl. 2 outside board director)
BoD resolution, deliberation of reported matters, business reportSupervision, monitoring

Accounting Auditor

3

Selection, dismissal, supervision

Accounting audit

Audit

Business Execution Structure
Risk Management Committee

ReportingPresident & CEO(Chair: President & CEO)

Reporting,recommendation

Sustainability Committee

Internal Audit Department

Management Meeting(Chair: Managing Executive Director)

Human Resources Development Committee(Chair: President & CEO)Corporate Administration Department

From left to right

Kim Jaewook
Masaya Tanaka
Hiroe Fujiwara
Akiko Nishioka
Isao Oka
Masayoshi Okada
Toshihiko Suzuki

Executive Officer, Deputy Director of International FP Sales Department, South Korea Regional Director, ASEAN Region
Executive Officer, Research and Development Director
Executive Officer, General Manager of Organic Brand
Executive Officer, Deputy Director of FP Sales and Marketing and General Manager of Tokyo Aoyama Branch
Executive Officer, Deputy Director of FP Sales and Marketing
Executive Officer, Deputy Director of FP Sales and Marketing and General Manager of Nagoya Branch
Executive Officer, General Manager of Education PlanningSupervision, instruction
Audit, guidance, support

Management Strategy Meeting

Audit, evaluation,
guidance

Business divisions(Bureau of Compliance and Risk Management)

Board of Directors and Audit & Supervisory Board composition

Overview of Executive Officer System
Milbon adopted an Executive Officer System in FY2021 in anticipation of an enhanced monitoring function for the Board of Directors in the
future. In FY2022, we established a Management Meeting consisting of internal board directors, standing Audit & Supervisory Board members,

Percentage of
Outside Board Directors

and executive officers. Management Meetings are held once a month, separately from the Board of Directors, to deliberate, resolve, and report onimportant matters related to business execution. By promoting a division of roles between the Management Meeting and the Board of Directors,
we aim to mutually enhance and strengthen management supervision and execution, as well as to accelerate decision-making.
With many of the executive officers also being the heads of their respective departments, there is a deep understanding of resolutions taken by
the Management Meeting, which helps to facilitate correct understanding and communication of each employee in the workplace.

Percentage of outside board
directors on Nominations andCompensation Committees (total)

Ratio of female board member(total of Board of Directors andAudit & Supervisory Board)Internal Board Members

Board of Directors
attendance rate
(13 meetings in FY2023)

Audit & Supervisory Board
attendance rate
(8 meetings in FY2023)

Outside Board Members

Board of Directors
Audit & Supervisory
Board

Male

FemaleFurthermore, to bolster the management decision-making of executive officers and the Management Meeting, in addition to classroom lectures
given by institutional investors, we have implemented a unique program whereby participants make presentations to the Board of Directors on
their analysis of our company’s management as well as their proposed solutions to issues. This program also assists the Nomination Committee’s
understanding of candidates for the next board directors.

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

64

Theme: Milbon’s Management Analysis and Proposed Solutions to Issues
Study sessions led byinstitutional investors

Preparation of presentationmaterials according toprogram theme

Presentation to
the Board of Directors
and feedback

We have also introduced a stock compensation scheme into the compensation system to encourage executive officers to perform their duties, as ourinternal board directors do, with an awareness of sustainable improvement of corporate value.

Roles of the Executive Officer System and the Management Meeting
Deliberations, resolutions, and reports onimportant matters related to business executions

Accelerate decision-making

Mutual enhancement and effectiveness ofmanagement supervision and execution

Proper understanding and facilitation of communication
among each employee in the workplace

Outline and Composition of Each Committee
Committee

FY2024 Committee members

Number of meetings in FY2023 / attendance

Principal matters of discussion in FY2023

Nomination
Committee

Outside Board Director Taizo Hamaguchi (chair);
Chairperson Ryuji Sato; President & CEO Hidenori Sakashita;
Managing Board Director Masahiro Murai; Outside Board Director Tsuneko Murata;
Outside Board Director Etsuhiro Takato; Outside Board Director Tomomi Fukumoto

2 / 100%

・Human resource criteria for senior management
・Selection of board directors, audit and supervisory board mem-bers, and executive officers for FY2024
・Composition of the Nomination Committee for FY2024

Compensation
Committee

Outside Board Director Taizo Hamaguchi (chair);President & CEO Hidenori Sakashita; Managing Board Director Masahiro Murai;
Outside Board Director Etsuhiro Takato; Outside Board Director Chisa Hayakawa

2 / 100%

・Policy for determining compensation for board members
・Level of executive compensation for FY2024
・Performance-linked compensation indicators for FY2024

GovernanceCommittee

President & CEO Hidenori Sakashita (chair);
Chairperson Ryuji Sato; Managing Board Director Masahiro Murai;
Outside Board Director Etsuhiro Takato; Outside Board Director Chisa Hayakawa

4 / 100%

・Strengthening of cooperation between the Board of Directors
and the Management Meeting
・The future role of Executive Officers and training programs

Improving the effectiveness of voluntary committees
In FY2023, in addition to the full-scale operation of the Governance Committee as a voluntary committee, Milbon proceeded to build a structure that helps
strengthen the effectiveness of each committee. This includes separating the previous Nomination and Compensation Committee into the Nomination Committee and the Compensation Committee to enable more focused discussions. In addition, by establishing a bureau for each committee, the committees are able
to better focus on deliberations and have more lively discussions. In FY2023, the main topics for discussion were as follows: the change of president & CEO(Nomination Committee), the review of KPIs in performance-linked compensation (Compensation Committee), and the Executive Officer System (Governance Committee). Respective measures are being implemented based on the results of these discussions.

65

Messages from the Newly Appointed Internal Board Directors

Sustainability & ESG

Compensation for Board Members

In March 2024, Milbon appointed two new executive officers to the Board of Directors and invited two new outside board members. Below are messages fromthe two newly appointed internal board directors. On p.68, the two newly appointed board members are introduced in a three-way conversation with Managing

Basic policy for board director compensation
・ Compensation for board directors (excluding outside

Method of calculating compensation for board directors

Executive Director Masahiro Murai.

1) Basic compensation: The amount of basic compensation is determined in

Evolving into a strong and flexible organizational
structure(excluding outside board directors)

board directors) shall consist of base compensation, per-accordance with the board director’s position and paid monthly in cash.

formance-linked compensation, and stock-based compen-

2) Performance-linked compensation: In order to raise awareness of the need tosation as an incentive to continuously increase corporate

improve the Company’s performance in each fiscal year, performance-linked

value, in order to encourage each board director to per-compensation is calculated by adding up the percentage of achievement ofform his/her duties with an awareness of business perfor-

each performance indicator target multiplied by the weighting ratio, andmance and sustainable improvement of corporate value.

then multiplying the performance-linked coefficient corresponding to the・ The Board of Directors consults the Nominations andpercentage of achievement of the target by the performance-linked standard

Compensation Committees, which are comprised main-amount corresponding to the position, and is paid once a year (April) in

ly of outside board directors, on proposed compensa-

cash. The performance indicators, performance-linked coefficients, and ac-tion amounts, and determines individual compensationtual performance-linked compensation are as follows.

amounts after obtaining advice as necessary.

<Performance indicator> Consolidated net sales: Weight 40% / Consolidated operating income: Weight 50% / Consolidated profit: Weight 10%

・ Outside board directors and Audit & Supervisory Board
Members shall receive only base compensation, as they are3) Stock-based compensation: Stock-based compensation is granted once a

independent from the execution of business operations,year (around May) with a restriction on transfer until retirement of theand compensation linked to performance is not appropri-

Company’s shares equivalent to the amount obtained by multiplying theate for them.

base compensation plus the performance-linked compensation by 20%.

Performance-linked CoefficientAchievement of targets

Over 120%

Over 115%,
less than 120%

Over 110%,less than 115%

Over 105%,less than 110%

Over 100%,less than 105%Over 95%,
less than 100%

Over 90%,less than 95%

Less than 90%

Performance-linked
coefficient

200%

175%

150%

125%

100%

80%

50%

0%

Actual performance-linked compensation for the fiscal year
ended December 31, 2023

Ratio of each type of compensation, etc.
The ratio of each type of compensation, etc. for board directors (ex-Performance metriccluding outside board directors) is as follows:

Fiscal year ended Dec. 31, 2023 (64th term)

WeightingTarget (million yen) Actual (million yen) Achievement (%)

Basic compensation:
Performance-linked compensation = 70% : 30%
Stock-based compensation =(Basic compensation + Performance-linked compensation) x 20%.

Consolidated net sales

49,20047,762

97.1

60%

Consolidated operating income

8,300

5,525

66.6

30%

Consolidated profit attributableto owners of parent

5,800

4,001

69.0

10%

Target achievement rate for the fiscal year ended December 31, 2023：
97.1%×60%+66.6%×30%+69.0%×10%=85.1%

Total amount and number of Board Directors’ and Audit & Supervisory Board Members’ compensation, etc.
for the fiscal year ended December 31, 2023

Harumichi Okazaki

Hiroyuki Ogata

Okazaki joined Milbon in 1996. He has served as the representative of MILBON

Ogata joined Milbon in 1999. By promoting business and managing finances as General(THAILAND) CO., LTD. and MILBON USA, INC., as well as the Director of Inter-

Managers of Cosmetics Planning, Finance, and Corporate Strategy, he has contributed

national FP Sales Department, contributing to the growth of Milbon’s overseas busi-

to building foundations for Milbon’s growth, including new businesses. He has served

ness. He has served as an executive officer from 2022, and in 2024, he was appointed as

as an executive officer since 2022, and in 2024, he was appointed as a board director (Di-a board director (Director of International FP Sales Department, Director of FP Sales

rector of Corporate Strategy and Vice President of Kosé Milbon Cosmetics, Co., Ltd.).

and Marketing, and in charge of Education Planning).

Sharing my extensive global experience and knowledge

Developing beauty into an industry with continuous innovation

I have accumulated a great deal of global experience not only in Japan, Thai-

After joining Milbon, I worked in sales for 10 years before taking on the rolesland, and the U.S., but also in my role as Director of International FP Salesof General Manager of Corporate Strategy, Finance, and Cosmetics Planning.

Department, where I managed the leaders of 13 countries and regions. I rec-During this time, I gained experience working in a wide range of depart-

ognize that it is my responsibility to contribute to the further development

ments and businesses within the company, including launching the cosmeticsof the Milbon Group by drawing on my extensive knowledge in corporate

business and other new businesses, corporate branding, and the management

management, sales, marketing, education, and other areas that I have culti-

of affiliated companies. Through this experience, I was able to cultivate avated during the course of my duties.

bird’s-eye view and perspective of society and our company that is beyond

Adapting to the rapidly changing society and environment

Amount of compensation, etc. by type (thousand yen)

Board Directors

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

66

Total amount ofcompensation, etc. (thousand yen)

Basiccompensation

Performance-linked
compensation

11

298,407242,1540(including Outside Board Directors)(5)

Audit & Supervisory Board Members

3(including Outside Audit & Supervisory Board Members)(2)(50,040)(50,040)(-)

48,01248,012-(16,008)(16,008)

(-)

Total
(monetary)

242,154
48,012

Restricted stockcompensation

56,253
(-)

-

(-)

Total
(non-monetary)

56,253-

Notes:
1. At the 62nd Ordinary General Meeting of Shareholders held on March 29, 2022, it was approved that the amount of cash compensation for board directors shall be up to 500 million yen (up to 70 million yen for outside board
directors). The number of board directors at the conclusion of the 62nd Ordinary General Meeting of Shareholders was 11 (including five outside board directors).
2. Stock compensation for board directors of a value up to 100 million yen, but a quantity of no more than 100,000 shares, per year was approved at the 60th Ordinary General Meeting of Shareholders on March 26, 2020. The number ofboard directors at the conclusion of the 60th Ordinary General Meeting of Shareholders was nine (including two outside board directors).
3. Compensation for Audit & Supervisory Board members of an amount up to 70 million yen per year was approved at the 56th Ordinary General Meeting of Shareholders on March 17, 2016. The number of Audit & Supervisory Board
members at the conclusion of the 56th Ordinary General Meeting of Shareholders was three (including two outside Audit & Supervisory Board members).

Succession plan (development program for the next executive candidates)
We consider succession planning for the CEO as one of our most important management strategies. Since 2015, we have been cultivating potential
candidates through our unique next management leadership development program called the Milbon Corporate University (MCU). For four and ahalf years from 2015 to 2019, we had 42 candidates take part in the two-year program to train and select the next CEO. There is active participationand supervision by the Board of Directors in the program, with each director serving as a lecturer in his or her respective jurisdiction and area ofexpertise. The program concluded in 2019 and has produced solid results, with MCU graduates becoming not only department heads, but also executive officers and board directors, including the new President & CEO, Hidenori Sakashita. In addition, prior to the implementation of the second
phase of MCU, we have initiated the concept of MCU-Prep, a program to train and select the next successor candidates. By building a more mid- tolong-term succession plan, we aim to become a corporate entity that produces leaders continuously.

any single department or division.
As the head of strategic planning, I will continue striving to develop beauty

In Japan, which is the market leader, in my view it will be necessary to listen

into an industry by utilizing such a view and perspective, creating products

more closely to distributors and hair salons in each area and to build a strong

and services from the perspectives of both consumers and hair professionals/

and flexible organizational structure in which people act based on their own

hair salons in the B2B2C sector, and remaining committed to creating con-ideas at their own discretion. To that end, I intend to demonstrate my leader-tinuous innovation.

ship and management skills in building a bottom-up organization with autonomy and independence, an approach that I have promoted in different countries

Number of persons

Striving to create long-term value with a bird’s-eye view
and perspective

Appropriate information disclosure is also a key strategy

and regions as the Director of International FP Sales Department. And in the

In recent years, there has been a rapid increase in stakeholder interest notglobal market, where addressing diversity is especially essential, I see an ur-

only in financial information, but also in non-financial information such asgent need for Milbon to evolve into a diverse organization in order to develop

sustainable management and human capital management. It is only natural

products and services that meet the increasingly diverse needs of consumers.

that we continue to evolve our unique business model by further refining the

I firmly believe that only with a strong and flexible organizational structuresources that support our sustainable growth. Furthermore, with recognition

that adapts to the rapidly changing environment and society can we contributethat promoting appropriate information disclosure from a bird’s-eye view isto the sustainable development of hair salons and local communities, not only

also one of our key management strategies, I will aim to create long-termin Japan, but also in countries and regions around the world. To that end, I willvalue through sincere dialogue with our stakeholders.

make even greater efforts to realize a truly global company.

MILBON CORPORATE UNIVERSITY (MCU) Next Management Leadership Development Program
Final examination
2nd year
1st year
Period:Purpose:Completed by42

persons

Appointment of the new President & CEO
Appointment of board directors and executive officers
In charge of business division

Two-year program (2015–2019 Medium-Term Management Plan: 1st to 4th programs)
To provide growth opportunities for future executives through sessions with board members, ranging frominheriting the corporate philosophy to fostering future vision and strategic thinking abilities, enabling themto take on leadership roles
Theme:
Continuity and Change
Enlightening points: Penetration of corporate philosophy, self-awareness, future orientation, foresight, and execution power

2024
Start of the
MCU-Prep concept

To the next
MCU

Toward a corporate entity whereleaders are born one after another(Training and selecting successor
candidates after next)67

S u s t a i n a b i l i t y & E S G / Po i n t o f G ove r n a n ce

Discussion between the Managing Executive Director and New Outside Board Members

Further Sustainable Growth to Meet New Expectations of the Capital Market
At Milbon, we engage the services of outside board directors with extensive experience and knowledge to supervise management and oﬀer advice
from their multifaceted and objective perspectives. In this way, we strive to ensure transparency and improve eﬃciency of management. In thissection, Managing Executive Director Masahiro Murai interviews Outside Board Director Tomomi Fukumoto and Outside Audit & Supervisory
Board Member Takashi Hirano, who were newly appointed as outside board members in March 2024, on their views on sustainability and corporate
governance and on what approach Milbon should take in the future.

Importance of communication asa mediator between the company
and societylar, as corporate governance has become more

for top executives and the management teamadvanced, I have felt that the role played by

to adopt a long-term view and demonstrate aoutside company auditors has gotten bigger.
I believe that company auditors will be re-would also be more effective than relying on

After working at Yagi & Ushijima (currently
Ushijima & Partners, Attorneys-at-Law), Masuda,
Funai, Eifert & Mitchell in Chicago, U.S., andserving as the Executive Officer in charge of
Law and Corporate Affairs at Microsoft Japan,
he currently serves as a Partner of Blakemore &Mitsuki, Audit & Supervisory Board Member(Outside Auditor) of FALTEC Co., Ltd., andOutside Corporate Auditor of Ryobi Limited.

so in an era of shifting consumer expectations

ture will be how to evolve Milbon’s systems andof companies and rapid and complex changes instructures without changing the fundamentals.

legal regulations. Moreover, many of these chal-

Murai: What do you both think is needed tolenges are not unique to Milbon, but are sharedstrengthen governance while maintaining such a

by all companies in the same boat. If anything, I

sense of balance?

think it is healthy to keep a sense of challenge.

Fukumoto: Milbon is rising to the challenge of

Murai: Finally, I would like to ask you both about

new businesses and overseas expansion in an-

your expectations for Milbon and your aspira-ticipation of the next stage. In my view, what istions as outside board members.

needed at such times is diversity, as is currently

Fukumoto: I recognize that the recent revision

being promoted by various companies. In Japan,of the Corporate Governance Code has given

efforts for ensuring diversity are mainly focusedrise to new stakeholder expectations regardingon activities for the greater participation of wom-sustainability and corporate integrity. However,en. However, a company is a collective of people

companies do not necessarily have to meet all ofwith diverse values, including age, work history,

those expectations in the same way. It is import-

and underlying culture, not just gender. I believe

ant to identify and address materialities that arethat creating an organizational structure and cor-

relevant to the company’s business and that will

porate culture that allows such employees to max-

lead to increased corporate value. This should

imize their individual strengths will surely lead toalso include investor expectations for Milbon,

stronger governance.

and this is where I would like to help.

Hirano: The truth is that many people still con-Hirano: As Ms. Fukumoto says, the themes offuse corporate governance with compliance. Cor-the Governance Code are like hints reflecting

porate governance is similar to compliance in thatinvestor expectations to management. It is only

quired to act as advisors to management frominternal logic alone. Also, although ESG is

Murai: You are both actively involved as out-

a company-wide standpoint, not only from aoften viewed as a concept originating in Eu-

been rapidly becoming more and more advanced

they relate to the question of whether appropriate

natural that different companies will consider

side board members at other companies, so

legal standpoint.

rope and North America, it is important torecently. What is your view of this?

internal controls are in place and whether systems

different themes to be important. On the oth-my first question is: What do you think your

Murai: Ms. Fukumoto, you have extensive

promote understanding of ESG in a way that

Hirano: As a company auditor, I constantly keep

and structures have been established that reduce

er hand, speaking with my lawyer’s hat on, notrole is?

experience in corporate communication andsuits that particular company’s objectives anda close eye on whether the company has funda-

the likelihood of mistakes. With governance,

addressing the themes that the government isFukumoto: As society’s expectations of com-

ESG, so tell me please: What is your view onculture. It must not be promoted as a newmental governance principles and rules in place,

though, in addition to this, it is also important totrying to tackle in real earnest could be a consid-

panies steadily changes, I recognize that we

trends in these areas?

initiative forced by external pressure. The

and I also check whether systems are in place forestablish a unified sense of direction and aware-erable risk. For this reason, I think that decisions

philosophy of “becoming a company that isensuring those rules are observed. This is because,

ness of where the company should be headingneed to be made based on the indicators of what

useful to society” is pervasive within Milbon,

amid the rapidly growing demands of society on

and to create systems and structures aligned tois important to the company and the direction in

this. Going forward, I think it is imperative thatwhich society is headed, and I hope to contributemust keep an eye on a more diverse range ofstakeholders and feed their voices back into

Fukumoto: With the COVID-19 pandemic,
advances in digital transformation (DX), andM I L B O N I N T E G R AT E D R E P O RT 2 0 24

company management. I am acutely aware ofchanges in the global situation, people are

and this is one of its major strengths. If ESG

companies, rules are often created in advance, but

Milbon’s expectations of me, and I am very

becoming more diverse in what they value.

is positioned as the pursuit of Milbon’s own

in reality they turn into a mere formality. In the

Milbon attaches great importance to governanceto Milbon in these areas.

eager to see how I can leverage my experience

With this in mind, I think that we need tophilosophy, I think it will lead to unique ini-case of Milbon, I imagine that the company has

in order for the entire company to move forward

Murai: Thank you very much for your powerful

and give back to the company.

engage in dialogue with society and promotetiatives, rather than being perceived as some-

faced challenges in establishing and strengthening

as one team in the same positive direction.

comments. I look forward to your ongoing sup-Hirano: In my case, I have been involved inmutual understanding and empathy between

thing borrowed. Furthermore, I have always

its governance structure given its own coinciding

various companies as a company auditor for

management and society. As for ESG, there

been conscious of communicating the risks

rapid growth.

more than 15 years. In recent years in particu-

was once a time when it was regarded as anand opportunities of business itself, such as

Murai: As you say, we are currently responding to“external diseconomy,” but now, addressing

future changes in consumer perceptions andthe very Corporate Governance Code by under-

global environmental considerations and hu-

the procurement of raw materials.

standing the intent and essence of each one rather

man rights issues are no longer optional for a

Murai: Milbon has also always kept a close eyethan simply following it.

company. We live in an era where such actions

on consumer perceptions, but what specific

Hirano: Another point that I was a little con-

Murai: Based on the belief of “building a solid

are a license to continue business, and unlesschanges do you envisage?

cerned about when I met with Milbon employees

company that won’t collapse,” Milbon aims tothey are integrated with growth strategies,

Fukumoto: The Sustainable Development

is that they still may perceive themselves as a small

continue growing sustainably, even if incremen-

the company itself cannot remain sustainable.

Goals (SDGs) are now being taught in ele-company. In fact, Milbon is the leading compa-

tally, over the long term. And in terms of man-On the other hand, there is no denying thatmentary, junior high, and high schools, so

ny in the market, and because of that, it is viewed

agement structure, we believe that participating

there is a trade-off between such actions andwhile they might be still limited at present,

more stringently by society. Hence, I think a

in management over the medium to long term

short-term profits and product quality. In thissuch “SDG natives” will soon play a lead-change in mindset is needed. On the other hand,

is ideal. One upshot of this is that the term ofcontext, I believe that two types of commu-

ing role in driving consumption. When thisthe fact that all Milbon employees, including theoffice for board directors remains unchanged

nication are necessary: promotion of under-

happens, the definitions of good productyounger generation, are working so enthusiasti-

at two years, even though one year is now thestanding within the company and appropriate

and good company will clearly change. This

cally is a great strength, and is an asset that we cannorm. What do you two think of this approach?

communication with external stakeholders.

means that products that are not sustain-

ill afford to lose. Since governance also has aspects

Fukumoto: While many issues, including sus-

Murai: At Milbon too, we are gradually gain-

able are at risk of becoming unacceptable toof control, I think that the key point here will betainability, must be viewed from a long-term

ing a better and more pervasive understand-consumers and business partners in the long

to be mindful of how to strike a balance between

perspective, there are also talks to relax the stan-ing within the company, and we are in theterm. We are indeed at a turning point.

the two.

dards for the quarterly disclosure of financial re-process of bolstering the appropriate dissem-

Fukumoto: Again, as you say, there are parts ofsults; so I do not think that two-year terms are inination of information.

a company that must be changed, and parts thatany way contrary to today’s world.

must not. “Help for hairstylists” is a principle I

Hirano: I agree. On top of that, I believe that any

hear from every employee, and I believe that strict

company will face some challenges in its orga-

adherence to business based on this principle isnizational structure and rules as it grows amid

something that must not be changed as a funda-changing societal demands. This is all the more

Tomomi Fukumoto
Outside Board Director
After serving as Executive Officer at Suntory
Holdings Limited, she currently is a corporate
alumna of Suntory Holdings Limited, Senior
Advisor of Suntory Foundation for theArts, Board Member of Save the Children
Japan, Director of the Japan Philharmonic
Orchestra, and Outside Director of Tokyo
Kaikan Co., Ltd.

Fukumoto: Promoting sustainability requires
certain decisions to be made which are at

Greater self-perception as a leading company, not a small company

odds with short-term profits, such as Capital
expenditure. For this reason, it is imperative

68

strong will. Actively utilizing outside experts

Takashi Hirano
Outside Audit & Supervisory Board Member

mental aspect of governance. The key to the fu-

Murai: Mr. Hirano, corporate governance has

port for the further development of Milbon.

Ascertaining which themes are important for the company and whichthemes are required by society

Masahiro Murai
Managing Executive Director
Joined Milbon in 1992. As a board director, Murai
previously served as General Manager of the
Corporate Administration Department. Following
his appointment as Managing Executive Director,
he was in charge of Corporate Administration,
Corporate Strategy, CS Promotion, Internal Audit,
Finance, and Cosmetics Planning. Currently,
Murai serves as the Managing Executive Director
in charge of Finance, Corporate Communications,and Sustainability Promotion.

69

Pe r f o r m a n ce

Click to jump to the relevant page

Performance
Milbon’s Performance Data & External Assessments

P 72
Financial Highlights
P 74
Non-Financial Highlights
P 76
External Assessments and Cooperation with Society
P 78
Company Overview and Stock Information
P 79
Information LinksM I L B O N I N T E G R AT E D R E P O RT 2 0 24

7071

Pe r f o r m a n ce

Financial Highlights

solidated subsidiaries are based on the non-consolidated financial figures for the 15-month period from October 1, 2016 to December 31, 2017.
*2: Effective from the beginning of FY2019, the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 30, 2018) and the Guidance on

Financial summary of operating results, financial indicators, etc. for the 11-year period fromAccounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 30, 2018) were adopted early, and FY2018 amounts were retrospectively applied.
*3: Earnings per share and net assets per share have been retroactively adjusted for the three stock splits during the below period. The relevant stock splits are as follows (1) 1.1 for 1 stock split on December

2013 to 2023

21, 2010; (2) 1.2 for 1 stock split on December 21, 2013; and (3) 2 for 1 stock split on January 1, 2018.

Operating results (million yen)

2013

2014

2015

2016

2017 *1

2018 *2

2019

2020

2021

2022

2023

Net Sales

23,82925,22627,377

29,13433,45633,88236,26635,72541,582

45,23847,762

4,302

4,451

4,727

5,113

5,345

6,260

6,751

6,394

7,817

7,551

5,525

Gross profit
Operating income
Ordinary income
Profit attributable to owners of parent
Net assets
Total assets
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Depreciation

16,174
4,059
2,516

17,281
4,218
2,621

18,681
4,427
2,950

20,1004,733
3,069

22,797
4,997
3,817

22,1895,811
4,495

23,711
6,231
4,517

23,385
5,791
4,204

27,498
7,158
5,109

29,5097,829
5,577

29,525
5,586
4,001

22,14924,104

26,212

27,706

31,10333,15135,88236,30840,19743,99145,932

3,511

2,766

3,895

3,355

4,346

6,487

4,486

6,548

6,636

5,008

4,765

26,321

28,13830,79932,44437,642

39,634

41,912(1,198)(1,236)(2,834)(4,366)(1,919)(1,202)(2,777)

882

1,008

1,038

1,083

1,278

1,380

1,493

(1,387)(1,052)
1,028(1,135)2,779(1,262)
4,262(1,317)

48,23852,76053,391(161)(3,995)(3,865)(3,109)

1,609

1,777

2,080

2,275

(1,869)(3,416)

1,605

1,917

(1,919)

2013

2014

2015

2016

2017 *1

2018 *2

2019

2020

2021

2022

2023

Earnings per share

76.42

80.03

90.10

93.73

116.58137.31137.99129.24157.17171.49122.99

39.00

46.00

676.17736.05800.51846.16

Financial indicators (%)

2013

2014

2015

Equity ratio

84.1

85.7

10.1

9.6

Return on equity (ROE)
Return on assets (ROA)
Gross profit margin
Operating margin
Ordinary margin
Net profit margin
Dividend payout ratio (Consolidated)

28.33

11.8

34.00

11.3

67.9

68.5

17.0

16.7

18.1
10.6
37.1

17.6
10.4
42.5

4,097

(2,797)Per-share information (yen) *3

1,149

4,644

(2,578)1,680

Dividends per share

1,570(1,639)43,075

Capital expenditure

Net assets per share

3,151

949.991,012.58

1,096.02

1,117.10

1,236.41

1,352.52

1,411.56

20162017 *1

2018 *2

2019

2020

2021

2022

2023

85.1

85.4

82.6

83.6

85.6

84.3

83.3

83.4

86.0

10.0

9.7

10.9

11.6

11.1

9.9

11.2

10.6

7.5

37.00

11.7

11.4

68.2

69.0

16.2

16.2

17.3
10.8
39.3

17.6
10.5
41.6

13.0
68.1
16.0
14.9
11.4
39.5

54.00

14.0
65.5
18.5
17.2
13.3
39.3

56.00

13.1

56.00

11.6

65.4

65.5

17.2

16.2

18.6
12.5
40.6

17.9
11.8
43.3

68.00

13.4
66.1
18.8
17.2
12.3
43.3

86.00

13.2

88.00

8.9

65.2

61.8

17.3

11.7

16.7
12.3

11.6
8.4

50.2

71.6

Sales by category (million yen)

2013

2014

2015

2016

2017 *1

2018 *2

2019

2020

2021

2022

2023

Haircare products

12,616

14,597

16,195

17,711

19,511

20,222

21,32821,13524,46626,31228,355

1,623

1,520

1,410

1,260

1,569

1,544

1,515

1,372

1,449

1,450

1,463

Hair coloring products
M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Permanent wave products
Cosmetic products
Other

Overseas sales and operating income (million yen)Overseas sales ratio (%)
United States net sales
United States operating income
China net sales
China operating income
South Korea net sales
South Korea operating income
Other overseas net sales
Other overseas operating income

72*1: FY2017 was irregularly closed, and the financial figures are for the 12 months and 11 days from December 21, 2016 to December 31, 2017. In addition, upon consolidation, the figures for overseas con-

9,288

8,817

9,506

9,892

12,095

11,857

12,994165

12,594
360

579

572

571

264

270

279

257

2013

2014

2015

2016

2017 *1

2018 *2

2019

2020

2021

2022

2023

7.9

10.4

12.8

13.2

16.4

15.7

16.2

16.4

19.1

21.9

23.6

1

(32)

80

(19)

(63)

(23)

149

81

281

482

642

430

665

703

1,099

461

600

141
(136)

192

(165)

571

736

(36)

632

(49)

657

(252)

464

(302)

272

16,953

291

435

273

16,631

301

263

262

14,813

418

905

1,328

1,624

(561)

(168)

(89)

737

1,208

1,368

1,488

1,528

2,148

2,114

2,241

1,425

1,603

2,440

2,064

2,334

2,543

3,368

4,159

4,715

763

934

1,089

1,246

1,377

1,307

1,487

2,301

2,678

383

(267)

229

(233)

231
534

(315)

320
515

(168)

343
678

(195)

292
645

(230)

449

1,109
(20)

(9)

1,351
184

68

1,284
30
73

Pe r f o r m a n ce

Non-Financial Highlights

90,954
1,222
6,990
6,895
94.9
3,312
2,383
0.059
276
293.3
730
0
0
0

99,417
1,196
6,539
6,539
91.7
4,842
2,309
0.056
252
376.5
738
0
0
0

2021

2022

2023

Target Company

--0

--0

--0

Milbon Co. Ltd. manufacturing plant

Waste

2021

2022

2023

Target Company

Waste volume (t)

523.0

415.5

539.6

Milbon Co. Ltd. manufacturing plant

Water resources

2021

2022

2023

Target Company

Milbon Co. Ltd.

Water intake - Total (m3)
Water supply - Third-party water sources (m3)Milbon Co. Ltd.

Other (m3)Milbon Co. Ltd.

Water consumption (m3)Milbon Co. Ltd.

Water consumption - Intensity (m3/t)

Milbon Co. Ltd.

Water discharge by destination - Total (m3)Milbon Co. Ltd.

Sewage - Wastewater to third party (m3)Milbon Co. Ltd.

Other (m3)Milbon Co. Ltd.

Number of national statutory violations relating to water intake/discharge

47,21947,219047,2194.900
26,214
26,2140050,26150,261050,261
4.690
29,992
29,9920047,13847,138047,1384.665
26,35926,3590
0

Milbon Co. Ltd. manufacturing plant

Milbon Co. Ltd.

2021

2022

2023

Target Company

5.9
6.2
1.4

4.2
3.4
1.4

3.1
1.9
1

Milbon Co. Ltd. manufacturing plant

CO2 emissions, Scope 3, Category 12 Disposal of sold productsElectricity consumption - Total ('000 kWh)

Quantitative data for 2021–23 from an ESG perspective

Electricity consumption - Purchased electricity ('000 kWh)Electricity consumption - In-house power generation ('000 kWh)Electricity consumption - Renewable energy ('000 kWh)Diversity & Inclusion

Total energy consumption (KL: crude oil equivalent)

2021

2022

2023

Target Company

1,038
53.3/46.7
810
58.1/41.9
10.3
35.2
62
35.5/64.5
70.3/47.2
66.6
10.2
11.7
84.8/15.2
3.6
4.2/3.5
2.5
0.0/2.9
9.0
2,152
1,900
59.2
19.3/100
100/100
23
145
0
2.13
20
23
51/5.9
1
0
99.6
93.4
103,773
86.1
590

1,097
51.7/48.3
842
56.7/43.3
10.8
35.5
70
48.6/51.4
72.0/52.9
68.6
6.3
10.0
65.7/34.3
5.1
3.0/5.6
3.3
0.8/3.8
10.3
2,065
1,900
64.0
20.0/100
100/96.9
30
175
0
2.16
23
25
64/7.1
1
0
99.2
93.8
120,458
72.9
659

1,140
50.6/49.4
870
55.4/44.6
10.8
35.4
71
49.3/50.7
74.3/50.6
70.9
13.0
10.8
59.2/40.8
4.5
1.3/4.5
3.5
1.3/4.0
10.9
2,085
1,900
67.8
25.0/100
100/100
26
191
0
2.12
24
35
63/6.8
0
0
98.2
95.5
151,662
79.0
725

Milbon Group

Educational Support for Hairstylists

2021

2022

2023

Target Company

Total number of users of educational events/seminars/videos

210,608
8,786

187,108
23,069271,154
40,000

Milbon Co. Ltd.

Donation Activities (thousands of yen)

2021

2022

2023

Target Company

Save the Children Japan

1,043
117
813
1,500
----2,299
--50
30

1,253
126
645
--50
----14,403
--130

1,163
171
594
--30
10,000------268

Milbon Co. Ltd.

Number of employees *Permanent employees, consolidated
Ratio of male/female employees (%) *Permanent employees, consolidated
Number of employees *Permanent employees, non-consolidated
Ratio of male/female employees (%) *Permanent employees, non-consolidated
Average length of service (years)
Average age
Number of hires *Permanent employees, non-consolidated
Gender pay gap (%) *Permanent/non-permanent employees
Gender pay gap (%) *All workers
Yearly turnover rate among new graduates within 3 years (%) *1
Yearly turnover rate among new graduates within 3 years (%) for past 5 years*2
Ratio of new graduate/mid-career hires (%)
Turnover rate for total employees (%)
Turnover rate for management and non-management employees (%)
Turnover for reasons other than mandatory retirement for total employees (%)*3
Turnover for reasons other than mandatory retirement *Management/non-management (%)
Ratio of female employees in management positions (%)
Annual working hours (average hours/employee)
Annual scheduled working hours (average hours/employee)
Ratio of paid leave taken (%)
Proportion of employees who took childcare leave (male/female) (%)

People and society

Return rate following childcare leave (male/female) (%)
Number of employees working shortened hours for childcare
Number of employees taking paid leave for family care
Number of employees working shortened hours for family care
Ratio of employees with disabilities (%)
Number of people with disabilities engaged in work outside their facilities under supported employment
Number of rehired employees
Number of temp staff / ratio compared to permanent employees (%) *Non-consolidated
Number of occupational accidents *Lost time injuries
Number of occupational accidents *Fatal accidents
Ratio of employees participating in health checkups (%)
Ratio of employees participating in stress checks (%)
Education and training expenses per employee (yen)Education and training hours per employee (hours)
Total number of employees who received training

Number of registered education:iD members

JHD&C (NPO)
Ashinaga Foundation
Kansai University (Educational Corporation)
Iga Koikukai (Social Welfare Corporation)
KIDS EARTH FUND (NPO)
Support for Ukraine

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

Other donations including research and development grants
Other

CO2 emissions, Scope 2 Market-based
CO2 emissions, Scope 2 Location-based
CO2 emissions, Scope 1, Yumegaoka Factory
CO2 emissions, Scope 2 Market-based, Yumegaoka Factory
CO2 emissions, Scope 2 Location-based, Yumegaoka Factory
CO2 emissions, Scope 3 Total
CO2 emissions, Scope 3, Category 1 Purchased products and services
CO2 emissions, Scope 3, Category 2 Capital goods
CO2 emissions, Scope 3, Category 3 Fuel and energy-related activities not included in Scope 1 & 2CO2 emissions, Scope 3, Category 4 Transportation and distribution (upstream)
CO2 emissions, Scope 3, Category 5 Waste from business
CO2 emissions, Scope 3, Category 6 Business trip
CO2 emissions, Scope 3, Category 7 Employee commuting

Heavy oil consumption (kL)

Milbon Co. Ltd.

Light oil consumption (kL)

Milbon Co. Ltd.

Kerosene consumption (kL)

Milbon Co. Ltd.

Air emissions

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.

NOx (t)SOx (t)Pollution load

Milbon Co. Ltd.
Milbon Co. Ltd.

BOD (t)Milbon Co. Ltd.

SS (t)

Milbon Co. Ltd.

n-HEX (t)Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant

Milbon Co. Ltd. manufacturing plant

Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant

Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant

Plastic

2021

2022

2023

Target Company

Consumption (t)

1,054

1,219

1,136

Milbon Co. Ltd. manufacturing plant

Board of Directors

2021

2022

2023

Target Company

6
3
33
11
14
99

6
5
45
18
13
100

6
5
45
18
13
100

Milbon Co. Ltd.

2021

2022

2023

Target Company

1
2
8
100

1
2
8
100

1
2
8
100

Milbon Co. Ltd.

2021

2022

2023

Target Company

2
2
75

2
2
83

2
2
60

Milbon Co. Ltd.

2021

2022

2023

Target Company

0
3
0
0
0
0

7 *1
2
0
0
0
0

11
3
0
0
0
0

Milbon Co. Ltd.

2021

2022

2023

Target Company

93.6

93.3

97.3

Milbon Group

Quality assurance

2021

2022

2023

Target Company

Milbon Co. Ltd.

Number of submissions from customers*2
Number of voluntary recalls

7,018
0

8,354
1

9,470
1

Milbon Co. Ltd.

Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Number of Internal Board Directors
Number of Outside Board Directors
Ratio of Outside Board Directors (%)
Ratio of female Board Directors (%)

Milbon Co. Ltd.

Number of Board of Directors meetings
Attendance rate at Board of Directors meetings (%)

Audit & Supervisory Board

Milbon Co. Ltd.

Number of Standing Audit & Supervisory Board Members

Milbon Co. Ltd.

Number of Outside Audit & Supervisory Board Members

Milbon Co. Ltd.

Number of Audit & Supervisory Board meetings

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Attendance rate at Audit & Supervisory Board meetings

Nominations and Compensation Committees
Number of Nominations Committee meetings
Number of Compensation Committee meetings
Ratio of Outside Board Directors (%)

Compliance*3 Includes voluntary departures and departures due to death, dismissal, and expired sick leave or other period of absence

CO2 emissions, Scope 1

Warm-water consumption (MJ)

Milbon Co. Ltd.

*2 FY2023 example: Percentage of those joined from 4/1/2016 to 4/1/2020 who departed in under 3 years

CO2 (GHG) emissions *Total emissions (t-CO2)

Gasoline consumption (kL)

Milbon Group*1 FY2023 example: Percentage of those joined 4/1/2020 who departed by 4/1/2023

EnergyCity gas consumption (km3)

GovernanceJapan Platform (Specified Nonprofit Corporation)

Total energy consumption - Intensity (KL: million yen)

Environment

Ratio of male/female hires (%) *Permanent employees, non-consolidated

74

85,907
1,081
6,518
6,466
51.8
0
2,249
0.067
264
307.1
--0
0.069
0

CO2 emissions, Scope 3, Category 11 Use of sold products

2021

2022

2023

Target Company

198,014
1,282
2,559
3,039
474
1,607
1,783
194,173
83,417
4,186
308
17,960318
847
149

220,194
1,280
1,422
3,124
500
440
504
217,492
100,862
4,707
307
17,343
388
1,440
269

272,003
1,420
972
2,884
461
0
0
269,611
144,680
5,915
341
16,048
246
1,490
278

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant
Milbon Co. Ltd. manufacturing plant

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Number of whistleblowing reports
Number of harassment reports
Number of cases subject to legal measures regarding corruption/bribery
Political donations - total (thousands of yen)Fines, etc. associated with corruption (thousands of yen)
Number of employees dismissed for violating employment regulations

Other compliance
Compliance awareness survey response rate (%)

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.
Milbon Co. Ltd.

Milbon Co. Ltd.

*1 Increase due to establishment of external reporting/consultation counter and implementation of awareness-raising activities*2 Submissions include inquiries, requests, suggestions, and feedback
For data prior to FY2020, please refer to https://www.milbon.com/en/ir/management/esg.html

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Pe r f o r m a n ce

External Assessments
Awarded the 2020 20th Porter Prize
In 2020, Milbon was awarded the 2020 20th Porter Prize, sponsored by the School of International
Corporate Strategy, Hitotsubashi University Business School. Having consistently focused ourbusiness on stylists and salons since our establishment in 1960, at the time of receiving the award,
we had maintained high proﬁtability, recording 23 consecutive years of revenue growth since thecompanyʼs listing in 1996, and Milbon has been recognized for the uniqueness of its business strategy that continues its sustainable growth. Going forward, we will continue to maintain a businessmodel focused on stylists and salons, while taking a social perspective and contributing to therealization of an enriching society through beauty.

Recognized as a Certified Health & Productivity Management Outstanding Organization for 2024
Milbon has been recognized as a Certified Health & Productivity Management Outstanding Organizationfor 2024 by Japan’s Ministry of Economy, Trade and Industry (METI) and the Nippon Kenko Kaigi. Thisis the fourth consecutive year that Milbon has been certified , and we will continue to strive to implement
health and productivity management to boost employee vitality and job satisfaction.

Cooperation with Society

Joined the United Nations Global Compact
Milbon endorsed the United Nations Global Compact (UNGC) proposed by the United Nations andsigned it in May 2020. UNGC is a voluntary initiative in which companies and organizations participate
in the creation of a global framework for sustainable growth by acting as good members of society throughresponsible leadership. Based on its own basic sustainability policy, Milbon supports the UNGC’s 10 principles related to human rights, labor, environment, and anti-corruption as a participating company thatworks with salons and haircare professionals to solve social issues, thereby contributing to the realizationof a sustainable society.

Ordinary member of the Roundtable on Sustainable Palm Oil(RSPO)In March 2022, Milbon was approved as an Ordinary Member of the Roundtable on Sustainable Palm Oil(RSPO), which was established by concerned organizations including the World Wide Fund for Nature.
Milbon has also been a member of the Japan Sustainable Palm Oil Network ( JaSPON), participating in

EcoVadis Sustainability Rating: Gold
Milbon’s Yumegaoka Factory received a Silver rating in 2022, followed by a Gold rating in 2023, placing

information exchange and other activities, since January 2020.
*Check out RSPO progress at www.rspo.org

ourselves in the top 5% of all companies evaluated.
EcoVadis ratings evaluate a company’s sustainability efforts according to 21 CSR criteria across four
themes—Environment, Labor & Human Rights, Ethics, and Sustainable Procurement—for the purpose ofpromoting sustainability within global supply chains. More than 100,000 companies spanning 200 industries in 175 countries and regions have been assessed to date. The Milbon Yumegaoka Factory in particular
received a high evaluation in Labor & Human Rights.

Selected as a constituent stock in the FTSE Blossom Japan Sector
Relative Index
Milbon was selected as a constituent stock in the FTSE Blossom Japan Sector Relative Index, an ESG
investment index. The FTSE Blossom Japan Sector Relative Index is formulated by FTSE Russell, a global
index provider.
It is designed as a sector neutral*1 benchmark that reflects the performance of Japanese companies that excel

Support for TCFD recommendations and TCFD Consortium membership
In January 2023, Milbon declared its support for the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) and became a member of the TCFD Consortium, a Japanese organization
comprised of corporations supporting TCFD recommendations. We view action on climate change as apressing issue for management and have incorporated it into the Five Key Challenges for achieving sustainability. We will continue to set goals and promote initiatives to reduce our environmental impact andproactively disclose information to our stakeholders.

in addressing environmental, social, and governance (ESG) issues in their respective sector.Furthermore,in order to promote the transition to a low-carbon economy, only those companies with particularly highM I L B O N I N T E G R AT E D R E P O RT 2 0 24

greenhouse gas emissions that are recognized for their improvement efforts under the TPI Management
Quality score*2 are included.
*1 To avoid any industry bias, constituent stocks are selected in consideration of the industry ratio of FTSE Japan All Cap Index, the parent index.
*2 The Transition Pathway Initiative (TPI), established in 2017 to promote the transition to a low-carbon economy, evaluates the greenhouse gas emissions of companies, and the quality of their management of risks and opportunities associated with a low-carbon transition.

Milbon joined the 30by30 Alliance for Biodiversity on October 10, 2023. The Alliance is based on the G72030 Nature Compact adopted at the G7 Summit held in June 2021, and aims to conserve and protect atleast 30% of terrestrial and marine areas by 2030 to halt and restore biodiversity loss. Japan’s Ministry of

Selected as constituent stock in the MSCI Japan Empowering
Women (WIN) Select Index

the Environment (MOE) is the initiator of this alliance, and was established by a group of companies, local

Milbon was selected as a constituent stock in the MSCI Japan Empowering Women (WIN) Select Index,

database as OECM* and to actively disseminate these efforts.

governments, nonprofit organizations, and others to promote the expansion of national parks, satoyama(rural areas where nature and people coexist), corporate forests, etc. to be registered in the international

produced by MSCI, a leading financial services company in the United States. It is one of the ESG indices

As a manufacturer dedicated to enriching the spirit through beauty, Milbon will continue to value thedeveloped by MSCI and looks at the top 700 Japanese companies by market capitalization (based on thebounty and abundance that biodiversity offers to society at large, and actively engage in activities for pro-MSCI Japan IMI Top 700 Index),and selects outstanding companies based on their disclosure information

tecting our global environment.

on gender diversity, such as the ratio of female managers and the ratio of female employees to new hires.
*The inclusion of Milbon Co., Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks, or index names, do notconstitute a sponsorship, endorsement, or promotion of Milbon by MSCI or any of its aﬃliates. The MSCI indexes are the exclusive
property of MSCI. MSCI index names and logos are trademarks or service marks of MSCI or its aﬃliates.

76

Joined the 30by30 Alliance for Biodiversity*Other Effective area-based Conservation Measures refers to areas being conserved through private-sector efforts, and areas where management not
aimed at conservation has contributed to protection of the natural environment.

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Pe r f o r m a n ce

Company Overview and Stock Information
Company overview

As of December 31, 2023

Corporate Information

Stock information

Trading Name:

Milbon Co., Ltd.

Established:

July 1960

Capital:

2.0 billion yen

Number of employees:

Non-consolidated : 870 / Consolidated : 1,140

Head Office:Kyobashi Edogrand, 2-2-1 Kyobashi, Chuo-ku, Tokyo

Central Research Institute:2-3-35 Zengenji-cho, Miyakojima-ku, Osaka-shi, Osaka

Innovation Center:

HANEDA INNOVATION CITY ZONE B_2-1, 1-1-4, Haneda Airport, Ota-ku, Tokyo

Training Center:

2-15-14 Chuo, Joto-ku, Osaka-shi, Osaka

Branches:

Tokyo Aoyama / Tokyo Ginza / Saitama / Nagoya / Kyoto / Osaka / Hiroshima / Fukuoka

Sales Offices:

Sapporo / Sendai / Niigata / Jingumae / Yokohama / Kanazawa / Shizuoka / Kobe / Okayama / Matsuyama / Kumamoto

Manufacturing plant:

Yumegaoka Factory / Thailand Factory / China Factory

Subsidiaries:

Listed Stock Exchange:

Information Links

Tokyo Stock Exchange

Prime Market,

4919

Stock code:
Total number of shares authorized:

120,408,000

Total number of shares outstanding:

33,117,234
22,687

Number of shareholders:

Milbon Co., Ltd. website
https://www.milbon.com/en/

Management Philosophy/Business Domain

The Way We Are

https://www.milbon.com/en/company/

https://www.milbon.com/en/company/way_we_are/

MILBON USA, INC. / Milbon Trading(Shanghai)Co., Ltd. / Milbon Korea Co., Ltd. / MILBON(THAILAND)CO., LTD. / MILBON MALAYSIA SDN.

Corporate History

Our Brands

BHD. / MILBON VIETNAM CO., LTD. / MILBON SINGAPORE PTE. LTD. / Milbon(Zhejiang) Cosmetics Co., Ltd. / Milbon Europe GmbHhttps://www.milbon.com/en/company/history/

https://www.milbon.com/en/brand/

Affiliated Company:

Kosé Milbon Cosmetics Co., Ltd.

Representative Offices:Taiwan / Hong Kong / Turkey / Indonesia / Philippines

Our Offices

Principal shareholders (Top 10)

Shareholding ratio by shareholder

Shareholder

Number ofshares held

Shareholding
ratio

The Master Trust Bank of Japan, Ltd.

4,269,100

13.12 %

1,920,000

5.90 %

1,469,954

4.52 %

1,328,000

4.08 %

1,029,000

3.16 %

1,017,400

3.13 %

867,0172.66 %

640,620

1.97 %

487,619

1.50 %

483,624

1.49 %

Konoike Asset Management Company
SSBTC CLIENT OMNIBUS ACCOUNTSMBC Trust Bank Ltd. Designated Securities Trust
Custody Bank of Japan, Ltd. (Trust account)
MISAKI ENGAGEMENT MASTSER FUND
Kazunobu Konoike
MILBON Employee Stock Ownership Association
THE BANK OF NEW YORK MELLON 140042
Keiko Murai

Foreigninstitutions andindividuals

26.64 %

Individuals andothershttps://www.milbon.com/en/company/office/Sustainability & ESG-related Information

29.39 %

Financial
instruments
business
operators

Sustainability

Information for shareholders and investors (IR)https://www.milbon.com/en/sustainability/

https://www.milbon.com/en/ir/

ESG/SDGs Matrix and Five Key Challenges

Management Information

2.20%

Financial
institutions

25.58 %

Other companies

16.20 %

https://www.milbon.com/en/sustainability/esg_sdgsmatrix.html

Share price

Trading volume

Governance(Number of shares)

https://www.milbon.com/en/ir/management/governance.html

6,000,000

6,000

Environment

M I L B O N I N T E G R AT E D R E P O RT 2 0 24

4,800,000

5,000

The Milbon Group’s Environmental Policies
Response to Climate Change
Response to Water Resources
Waste and Environmental Pollution

4,000

3,600,000

Supply Chain Management
https://www.milbon.com/en/sustainability/environment/

Financial Highlights
https://www.milbon.com/en/ir/finance/

IR LibraryFinancial Materials
Securities Report
Sponsored Research Report
IR Calendar
https://www.milbon.com/en/ir/library/

3,000
2,400,000

Our Employees and Society
Milbon Human Rights Policy

2,000

Stock Information
https://www.milbon.com/en/ir/stock_bond/Use of RSPO-Certified Palm Oil
Hiring Persons with Disabilities
1,200,000

1,000

Investment in Employee Growth
Supporting Women’s Empowerment(yen)

Health & Productivity Management
https://www.milbon.com/en/sustainability/humanrights/

2019

78

https://www.milbon.com/en/ir/management/

Fundamental Policy
Corporate Governance Structure

7,000

Medium-Term Management PlanESG Data*Shareholding ratio is calculated excluding treasury stock (577,107 shares).

Share price and trading volume

IR-related Information

2020

2021

2022

2023

IR News
https://www.milbon.com/en/ir/news/

2024

79

From our foundation, into the future.

Edit: Atsushi Hino（Kuchibue Shoten）, Shun Ohmi (Kuchibue Shoten）, Misa Dobashi（Kuchibue Shoten）

Art Direction: Toshinori Matsuura（Steve* inc.）

Design: Ayae Nakamura（Steve* inc.）Direction: Mitsunari Oyamada（Steve* inc.）, Rie Shibuya（Steve* inc.）Photo: Hiroko Murayama, Syrup Murayama, Marisa Shimamoto,

Produce: Chihiro lkeyama（GREAT WORKS）

Filming Cooperation: KYOBASHI EDOGRAND

Leading the future of beauty with core values.

We at Milbon,

Kouhei Kurokawa, Keitaro Morishita

alongside hairstylists,
will continue creating a chain of beauty and inspiration around the world,
as a Japan-based global professional haircare manufacturer.
In consideration of the global environment, this report is printed on paper made from FSC (Forest Stewardship Council) -certified wood and controlled materials
in accordance with FSC standards and using vegetable-based inks.