Milbon Co., Ltd.
FY2019 First Quarter (January 1, 2019 –March 31, 2019)
Financial Results Presentation Materials

May 7, 2019
Copyright © 2019 Milbon. All rights reserved.

Table of Contents

P2

Consolidated Operating Results

P3

Consolidated Sales by Product Category

P10

Consolidated Statement of Earnings

P11

Consolidated Trends in Capital Expenditures and R&D Expenses

P12

Trends in Market Related Data, Trends in FPs

P13

Outlook of Milbon GroupP14

Outlook of Overseas Subsidiaries

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1

Consolidated Operating Results (FY2019 3 months)
Although increase in sales secured, income decreased due to impact of special factors
during the previous fiscal year
（Unit: million yen）

FY20183 months*

FY20193 months*

Increase/Decrease

Increase/
Decrease ratio (%)

Net sales

7,592

7,886

293

3.9

Gross profit

5,170

5,313

142

2.8

SG&A expenses

3,780

4,048

267

7.1

Operatingincome

1,390

1,265(124)( 9.0)

Ordinary income

1,208

1,162(46)(3.8)

Profit attributable toowners of parent

1,074

841(232)(21.7)*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the firstquarter of FY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

2

Consolidated Sales by Product Category [Hair Care Product]
While premium brands have continued to grow, there was a slight decrease overall due to a decrease inrevenue for professional brands

Consolidated Sales (FY2019 3 months)
FY20183 months*
4,358

FY2019 ※）3 months*(Unit: million yen)

Increase/Decrease

4,323

Increase/
Decrease ratio (%)

(34)

(0.8)

• The special demand for the upgrade of the premium brand Aujua has run its course. The Eternal Stage
Series has been added from the current fiscal year to expand the range of support for adult women
who seek further beauty. The new Diorum Line that is the first part of this series was introduced in
March, and we are working to propose high unit price menus for salons.
• The acquisition of new salons led by distributors has progressed for the premium brand “milbon”, andgrowth has been achieved through an increase in new salons. Going forward, we will strengthen efforts
aimed at increasing sales per store through repeat orders.
• Sales have decreased for professional brands due to a lack of new product launches. Preparations
including product study sessions for distributors are underway for the new brand CRONNA for adultwomen scheduled to be released in April.
*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the first quarter ofFY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

3

A Premium Brand, Aujua
Upgrades have run their course, new series and new line added in March
Number of salons
FY2018 *1(Unit: salons)
Increase/
Decrease

FY2019 *1

3,271

3,353

Increase/
Decrease ratio (%)

82

2.5

Consolidated Sales (FY2019 3 months)
FY2018 3 months*2

FY2019 3 months*2

1,250

1,312

Increase/
Decrease(Unit: salons)
Increase/
Decrease ratio(%)

Trends in sales & number of salons(Million yen)

Brand concept

62

5.0

Product range(Number of salons)

8,000

4,000

7,000

3,500

6,000

3,000

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

A wide-ranging line-up that suits the hair textureof individual customers

5,000

2,500

・5 series

4,000

2,000

Eternal stage series (new)

3,000

1,500

What is Aujua?

Aging care series

2,000

1,000

Hair care series

1,000500

Scalp care series

0Hair care that supports beauty, now and into
the future, by addressing each individual’s hairand skin concerns and choosing the mostappropriate item for that time.
This is Aujua.

・13 lines
・86 items

Sales
販売高

*1 Figures for both Japan and overseas are calculated based on shipments over a one-year period.
*2 Gross sales figures are on a non-consolidated basis.
Copyright © 2019 Milbon. All rights reserved.

0

Climatic care series

4

Number of窓口軒数salons

A Premium Brand, “milbon”

Growth with more salons both in Japan and overseas
Number of salons
FY2018 *1(Unit: salons)

FY2019 *1

5,571

6,581

Increase/
Decrease

Increase/
Decrease ratio
(%)

1,010

18.1

Consolidated Sales (FY2019 3 months)
FY2018 3 months*2

FY2019 3 months*2

Increase/
Decrease(Unit: salons)
Increase/
Decrease ratio(%)(Million yen)434570136

31.3

Brand concept

What is “milbon”?

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

We conducted an in-depth analysis of theinner structure of the hair of women from 20
countries around the world, using ourproprietary CT scanning technology, anddiscovered a universal form of hair damage.
Accordingly, we developed a hair care line
containing ingredients capable of repairingsuch damaged hair and increasing the density
within each strand of hair.
“milbon” is a system hair care product fordeveloping shiny, beautiful hair from the core.

2,000

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

8,000
7,000
6,000
5,000

1,500

4,000
3,000

1,000

2,000
500

1,000

00
2016

*1 Figures for both Japan and overseas are calculated based on shipments over a one-year period.
*2 Gross sales figures are on a non-consolidated basis.
Copyright © 2019 Milbon. All rights reserved.

(Number of salons)

3,000

2,500

Countries with salons

Trends in sales & number ofsalons

52017

2018

Sales
販売高

2019目標targetNumber of salons
窓口軒数

Consolidated Sales by Product Category [Hair Coloring Product]
Ordeve Addicthy has grown and driven sales for the product category
Consolidated Sales (FY2019 3 months)
Increase/
Decrease

FY2018 3 months* FY2019 3 months*
2,848(Unit: million yen)

3,175

Increase/
Decrease ratio (%)

326

11.5

• Sales for Ordeve Addicthy have continued to grow. Meanwhile, the decline in sales ofOrdeve that was seen since the launch of Addicthy is beginning to come to a halt, and weare beginning to see some segregation in these products.
• The new acid color Ordeve Ledress has been introduced as a gray-hair coloring product.
Acid color sales for this product combined with the existing item FARGLAN have grown,
and income also increased for gray-hair coloring products.

*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the first quarter ofFY2018 have also been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

6

Consolidated Sales by Product Category [Hair Coloring Product]
Ordeve Addicthy has grown and driven sales for the product category

Core ProductOrdeve Addicthy
Erases red-tinged brown with high saturation blue.
With clear and transparent color expression, it lets customers freely
realize individual hair color designs.
(Unit: million yen)
FY2018 3 months*

FY2019 3 months*

588

904

Increase/
Increase/
Decrease ratio
Decrease
(%)

316

53.8

FY2017 Debut

Ordeve Ledress
Gives color and shine to hair while increasing the density within eachstrand of hair.
It supports the needs of customers who want to continue to enjoy asalon color while taking care of their hair.
(Unit: million yen)
FY2019 target*

FY2019 3 months*

70090

Increase/
Decrease

Progress rate
(%)

-12.9

*Gross sales figures are on a non-consolidated basis
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7

March 2019 Debut

A Premium Organic Brand, Villa Lodola (1)Connection born between Villa Lodola Color and hair care products for colored hair, sales growthachieved

Number of salons(Unit: salons)

FY2018 year-end

FY2019 Q1-end

8,085

8,362

Increase/
Decrease277Consolidated Sales (FY2019 3 months)
FY2018 3 months* FY2019 3 months*

233

Increase/
Decrease ratio(%)

Increase/
Decrease264

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

30

13.0

(Number of salons)(Million yen)

Trends in sales & number of salons
1,400

12,000Brand concept

1,200

10,000Nurtured in the soil of Italy, these gifts from nature bring out the authentic
beauty of your hair and scalp.

1,000What is Villa Lodola?

600

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

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

88,000

800

6,000
4,000
2,000

200002012 2013 2014 2015 2016 2017 2018 2019
targetSales

Number of salons

A Premium Organic Brand, Villa Lodola (2)Core Product

Villa Lodola ColorWith 92% natural ingredients, the product’s formulation utilizes thepower of plants. It brings comfort of an organic product across all
aspects, including during application, the finish and continued use.

Consolidated Sales (FY2019 3 months)
FY2018 3 months* FY2019 3 months*

176

Increase/
Decrease

20427(Unit: million yen)

Increase/
Decrease ratio
(%)

15.8

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

9FY2015 Debut

Consolidated Statement of Earnings (FY2019 3 months)<Consolidated Statement of Earnings>
FY20183 months*

Sales
Cost of sales

Gross profit

7,592% tosales

100.0(Unit: million yen)
FY20193 months*

7,886% tosales

100.0(Unit: million yen)
FY20183 months *FY2019
Increase/% total sales
Decrease
3 months *Increase/
Decreaseratio (%)

Hair care products

4,358

4,323

54.8(34)(0.8)

Hair coloring products

2,848

3,175

40.2

326

11.5

Permanent wave
products

341

337

4.3(3)(1.1)

Others (includingcosmetics)

4450

0.75

12.1

2,422

31.9

2,573

32.6

5,170

68.1

5,313

67.4

Cost of sales
While there was a special factor of the reversal ofprovision for sales returns of the previous version ofAujua in FY2018, no special factors in FY2019

SG&A
expenses

3,780

49.8

4,048

51.3

Operatingincome

1,390

18.3

1,265

16.0

Ordinary
income

1,208

15.9

1,162

14.7

Profitattributable toowners ofparent<Breakdown of net sales by product category><Major factors for the increase/decrease>

SG&A expenses
Personnel expenses: Increased due to increase in
number of personnel and system changes (change fromcorporate housing to housing allowance system, etc.)

Profit attributable to owners of parent

1,074

14.2

841

10.7

While there was a gain from the sale of crossshareholdings in FY2018, no such gain in FY2019*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the first quarter of FY2018 have also
been reclassified based on the same standard.
Copyright © 2019 Milbon. All rights reserved.

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

FY2015FY2016FY2017FY2018FY2019Jan.–Mar.

FY2019
Plan

2,779

4,262

1,570

1,149

469

1,710

1,033

1,077

1,272

1,370

350

1,498

Amount

1,214

1,232

1,422

1,479

371

1,535

% to sales

4.4

4.2

4.3

4.2

4.7*

4.2

Category
Capital expenditures

Depreciation andamortization
R&D exp.

FY2019 CAPEX Main Items (Plan)••••

Establishment of a new domestic base (Matsuyama Sales Office)Compounding equipment for plant (automatic dye weighing machines)
Build system infrastructure
EC site platform*The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the first quarter ofFY2018 have also been reclassified based on the same standard.
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11

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

2014

2015

2016

2017

Number of salons(salons)

234,089

237,525

240,299

243,360

247,578―

Number of hair
dressers (people)

487,636496,697504,698509,279

523,543―

36,64336,282

Number of beauty
customers(thousand people)

38,46837,847

37,395

JAPANUSAMILBON USA, INC.
CHINA
Milbon Trading(Shanghai) Co., Ltd.
KOREA
Milbon Korea Co.,Ltd.
THAILAND
Milbon (Thailand) Co.,Ltd.
VIETNAMMILBON VIETNAM
CO., LTD
Others *2

2017*1

2016

Remarks(As of Nov. 1)

Ministry of Health, Labour and Welfare,
Report on Public Health Administration andServices
Number of beauty salon facilities / number ofemployees (year-end)
Statistics Bureau, Ministry of Internal Affairs andCommunications:
Population statistics as of October 1st of each year
Population statistics for females aged 15 to 64(Number of FPs / As of January 1, the beginning of thefiscal year (As of December 21 for 2017 and before)

Fieldpersons trends (by country)
201537,023

2018

2018

2019

237

249

258

269

279

100

102

105

111

-

12

912

13

13

53

63

48

48-

18

18

19

22

21

36

40

50

62-

19

20

23

25

30

75

80

84

82

-

66

97715

14

1317-

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

6 FPs joined in October 2018, and are currently in
OJT on site
31 FPs joined in April 2019, and are currently intraining(The above 37 FPs are not included in the leftchart.)

7-16

1924262142473843-*1 Because FY2017 was an irregular accounting period, performance is calculated with adjusted amounts for a12-month period.
*2 Taiwan, Hong Kong, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
12Copyright © 2019 Milbon. All rights reserved.

Outlook of Milbon Group Results were negative during first three months of 2019 as a result of the receipt of inventory
returns from conventional general agents along with the establishment of the subsidiary MILBON(Unit: million yen)
VIETNAM CO., LTD.
FY2018 3
months *1
JAPANUSAMILBON USA, INC.

FY2019 3
months *1

Increase/DecStart
Forex rates FY2018
rease ratio
operations
(yen)
(%)

6,282

6,428

2.3

1960

131

133

1.7

2004

CHINA
Milbon Trading(Shanghai) Co., Ltd.

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

Others *2

1 dollar=Forex rates
FY2019 (yen)--108.23110.22

17.15

16.42

0.1017

0.09803.45

3.5

1 yuan=373
485

425
569

13.8
17.3

200920091 won=
1 baht=

1737

114.0

2013

29(10)(136.6)2013-0.0048272302

11.1---

1 dong=*1 The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the first quarter of FY2019. The results for the first quarter ofFY2018 have also been reclassified based on the same standard.
*2 Taiwan, Hong Kong, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany andothers
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13

Outlook of Overseas Subsidiaries (1)◆Sales of overseas subsidiaries (local currency basis)
Currencies (unit)

FY2018(Jan.-Mar.)FY2019(Jan.-Mar.)

Increase/Decrease ratio (%)

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

US dollar(thousand)

1,212

1,211(0.1)

Yuan (thousand)

21,80625,906

18.8

Won (million)

4,777

5,810

21.6

THAILAND
Milbon (Thailand) Co., Ltd.

Baht (thousand)

5,083

10,721

110.9

VIETNAMMILBON VIETNAM CO., LTD

Dong (million)

-245

-

USA MILBON USA, INC.
In the direct sales category in Manhattan, a large salon was opened, results continued to be strong for Global Milbon, and thefashion color Addicthy that was launched for Japanese salons was well received. Performance in the distributor category was strong
as a result of the area expansion by existing distributors following the northeast area of the US. In addition, there has been a smooth
start for Chinese distributors in New York that we started transactions with in the second half of the previous fiscal year anddistributors following the north central area of the US that we started transactions with from the current fiscal year. However, as aresult of factors including struggling sales by a distributor in an area of California that we started transactions with during the second
half of the previous fiscal year as a result of abnormal weather, revenue has decreased. For the distributor category overall, it was notpossible to compensate for decrease in revenue from a transfer in transactions from direct sales to distributors by a small margin.

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14

Outlook of Overseas Subsidiaries (2)CHINA (Milbon Trading (Shanghai) Co., Ltd.)The local branch managers of the Beijing Branch and Chengdu Branch are beginning to fully understand the approach andway of thinking of Milbon, which is starting to have a positive effect on the branches and leading to results. In addition, in thearea supervised by Shanghai where a market has already been acquired to some degree, steady efforts such as those toimprove the quality of activities by distributor personnel are underway with a view to future growth, not just short-term results.
By product, the fashion color Ordeve is progressing steadily, partly due to the introduction of a new color. In hair careproduct category, Global Milbon performed strongly, partly due to efforts to acquire customers for salon treatments.

KOREA (Milbon Korea Co., Ltd.)
After our struggle with the continuous entry into the market of low-priced hair coloring products from competitors, salonssteadily recovered ground due to our superiority in terms of product quality and education, and hair coloring productcategory grew 18.6% year on year. In hair care, growth was 34.5% for hair care as a whole as a result of an increase insales of Aujua in recognition of its quality and the high quality of education. Neo Liscio, a straightener introduced last year,
has been highly regarded in the market for its soft finish, and results for permanent wave product category increased
115.1% year on year.

THAILAND (Milbon (Thailand) Co., Ltd.)Sales decreased 46.1% in the first quarter of FY2018 because it was a quarter that was significantly affected by anarrowing of our focus to a single distributor, and the results of the first quarter of FY2019 are compared with this quarter.
Performance was strong in the hair coloring product category as a result of activities to clarify the difference between
Ordeve and Addicthy and the introduction of a new color for Ordeve. In the hair care product category, the number of salonsgrew steadily as a result of the Global Milbon line of repair products being highly regarded.

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15

Outlook of Overseas Subsidiaries (3)VIETNAM (MILBON VIETNAM CO., LTD)In Vietnam, much of the population is in the 20s to 30s age group, and it is a market where growth can be expected in thefuture because members of this generation are core customers for beauty salons. In hair coloring product category, Ordeveand Addicthy were both highly regarded, and market deployment is being promoted while clarifying the respective positionsof these products. In the hair care product category, LINKAGE-μ and DEESSE’S NEU are being leveraged to acquire newsalons. In addition, Global Milbon is being deployed mainly to limited high-quality salons.

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16