Milbon Co., Ltd.

FY2020 First Quarter (January 1, 2020 –March 31, 2020)
Financial Results Presentation Materials

May 12, 2020
Copyright © 2020 Milbon. All rights reserved.

Table of Contents
P2

Consolidated Operating Results

P3

Responding to the Risk of the spread of COVID-19

P4

Consolidated Sales by Product Category

P14

Consolidated Statement of Earnings

P15

Consolidated Trends in Capital Expenditures and R&D Expenses

P16

Trends in Market Related Data, Trends in FPs

P17

Consolidated Net Sales in Japan and Overseas

P18

Consolidated Operating Income in Japan and Overseas

P19

Outlook of Overseas Subsidiaries

P21

Appendix

Copyright © 2020 Milbon. All rights reserved.

1

Consolidated Operating Results (FY2020 3 months)
 Sales declined in China, which was affected by the spread of COVID-19.
 In Japan, sales grew, but consolidated earnings fell because of restrictions on
activities such as the cancellation of large-scale events and seminars
scheduled to be held from March.
(Unit: million yen)

FY2019% total
3 months

FY2020% total
3 months

Increase/

Increase/
Decrease
Decrease ratio (%)

Net sales

7,886

100.0

7,825

100.0

(60)

(0.8)

Gross profit

5,313

67.4

5,233

66.9

(79)

(1.5)

SG&A expenses

4,048

51.3

4,202

53.7

154

3.8

Operating income

1,265

16.0

1,031

13.2

(233)

(18.5)

Ordinary income

1,162

14.7

835

10.7

(326)

(28.1)

Profit attributable toowners of parent

841

10.7

601

7.7

(240)

(28.6)

Copyright © 2020 Milbon. All rights reserved.

2

Responding to the Risk of the spread of COVID-19
We place top priority on the safety and health of our employees, theirfamilies, customers, and other stakeholders, and strive to prevent the
spread of infectious diseases.
Our current response to infectious disease risk is as follows.
■ Response to Customers and Related Parties• Discontinuation or postponement of all studio seminars and events at outside venues• In visiting customers, we check in advance the availability of visits, and when making visits,
we thoroughly implement the wearing of masks, hand washing, and alcohol disruption.
• Delivering products directly from Milbon to salon customers who wish to make a repeatpurchase of premium brand such as Aujua and Global Milbon on behalf of beauty salons.

■ Response to Employees• Recommendation for working from home and staggered commuting hours.
• Overseas business trips are prohibited, and domestic business trips are postponed or
handled by web conferences.
• Prohibition of meetings and meal meetings attended by large numbers of participants• Distribution of masks and alcohol sanitizers to all employees

Copyright © 2020 Milbon. All rights reserved.

3

Consolidated Sales by Product Category [Hair Care Products (1)]Consolidated Sales (FY2020 3 months)
FY20193 months

4,323

FY20203 months(Unit: million yen)

Increase/
Decrease

4,424

Increase/
Decrease ratio (%)

101

2.3

• Domestically, sales of the premium brands Aujua and Global Milbon continued to
grow. Both the number of salons and sales increased thanks to the acquisition of
new sales outlets, but the growth has been sluggish since March due to theimpact of COVID-19.
• The new product, Aujua Fortice Line, launched in February, had a highreputation, but it did not go as well as expected due to activity restrictions due
to COVID-19.
• Among professional brands, Cronna launched its new Cronna Ice Spa Shampoo
Orange in March. Strong performance thanks to the promotion of sales activities
by distributors in an easy-to-understand manner of the product features ofcarbonated foam below the freezing point. Jemile Fran Hair Base Makeup series
launched last year continued to perform well for Jemile Fran.

Copyright © 2020 Milbon. All rights reserved.

4

Consolidated Sales by Product Category [Hair Care Products (2)]New Products
FY2020 3 months
Aujua Scalpcare Series Fortice Line
A scalp care series that approaches Ageing Bacteriapresent on the scalp to curb complex aging damage ofthe hair and scalp.
(Unit: million yen)

FY2020 target*

600

FY20203 months*

Progress rate (%)

14.3

85

February 7, 2020 Debut

Cronna Ice Spa Shampoo Orange
A carbonated foam shampoo below the freezing pointthat continues to cool while eliminating the summerspecific worries of smell and stickiness of the scalp.
(Unit: million yen)
FY2020 target*

150

FY20203 months*

43

Progress rate (%)

28.8

March 10, 2020 Debut* From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

5

A Premium Brand, Aujua
Launched a new product, Scalpcare Series Fortice Line
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

3,698

3,757

Increase/
Decrease

Increase/
Decrease ratio (%)

59

1.6

Consolidated sales (FY2020 3 months) (Unit: million yen)
FY20193 months *2

FY20203 months *2

1,324

Increase/
Decrease

Increase/
Decrease ratio (%)

9,000(Number of salons)
4,500

8,000

4,000

7,000

3,500

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

Hair care series

2,000

1,000

Scalp care series

1,000

500

1,427

102

7.8

Brand concept

Product range

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

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

What is Aujua?

Aging care series

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

Trends in sales & number of salons(Million yen)・5 series
Eternal stage series (new)Climatic care series

0・14 lines02010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sales

・89 items

Number of salons* Graphs are based on individual figures.

*1 Calculated based on the past year's shipment results for both Japan and overseas.
*2 From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

6

A Premium Brand, Global Milbon
Growth with more salons both in Japan and overseas
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

7,674

8,970

Increase/
Decrease

Increase/
Decrease ratio (%)

1,296

16.9

Consolidated sales (FY2020 3 months) (Unit: million yen)
FY20193 months *2

FY20203 months *2

557

578

Increase/
Decrease

Increase/
Decrease ratio (%)

20

3.6

Brand concept

What is “Global 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 our
proprietary CT scanning technology, anddiscovered a universal form of hairdamage. Accordingly, we developed a haircare line containing ingredients capable ofrepairing such damaged hair andincreasing the density within each strandof hair.
“Global Milbon” is a system hair careproduct for developing shiny, beautiful hairfrom the core.

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

Trends in sales & number of salons(Number of salons)(Million yen)
3,000

9,000
8,000

2,500

7,000

2,000

6,000
5,000

1,500

4,000

1,000

3,000
2,000

500

1,000

0

0
2016

Sales

2017

2018

2019

Number of salons* Graphs are based on individual figures.

*1 Calculated based on the past year's shipment results for both Japan and overseas.
*2 From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

7

Consolidated Sales by Product Category [Hair Coloring Products (1)]Consolidated Sales (FY2020 3 months)
FY20193 months

3,175

FY20203 months(Unit: million yen)

Increase/
Decrease

2,995

(179)

Increase/
Decrease ratio (%)(5.6)• Sales fell due to a decline in sales in China following the impact of COVID-19 anddifficulties in sales of low-priced gray coloring products in Japan, where thecompetitive environment is harsh.
• Fashion color sales continued to be strong for Ordeve Addicthy. In particular, theevaluation of High Bleach (a bleaching agent having high decolorizing power) is
high. However, Ordeve sales are on a declining trend.
• In gray colors, sales of Ordeve Seedil and Ordeve Ledress, both launched lastyear, were sluggish due to a lack of progress in switching from existing products,
and the expansion of new sales outlets also struggled, resulting in a decrease insales.

Copyright © 2020 Milbon. All rights reserved.

8

Consolidated Sales by Product Category [Hair Coloring Product (2)]Core Product

FY2020 3months
Ordeve 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)
FY20193 months *911

FY20203 months *1,039

Increase/
Decrease

Increase/
Decrease ratio (%)

127

14.0

FY2017 Debut* From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

9

A Premium Organic Brand, Villa Lodola (1)Decreased due to delayed launch of new products and restrictions on activities.
Number of salons
FY2019

9,015(Unit: salons)

FY20209,214

Increase/
Decrease

Increase/
Decrease ratio (%)

199

2.2

Consolidated sales (FY2020 3 months) (Unit: million yen)
FY20193 months *FY20203 months *

264

257

Increase/
Decrease

Increase/
Decrease ratio (%)

(6)

(2.5)

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

Brand concept

1,400

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

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

10,000

1,200

8,000

1,000
800

6,000

600

4,000

400

2,000

200
0

0
2012

2013

2014

Sales

2015

2016

2017

2018

2019

Number of salons* Graphs are based on individual figures.

* From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

10

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 (FY2020 3 months) (Unit: million yen)
FY20193 months *FY20203 months *

204

204

Increase/
Decrease

Increase/
Decrease ratio (%)

0

(0.3)

FY2015 Debut* From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

11

Consolidated Sales by Product Category [Cosmetic Products]
Consolidated Sales (FY2020 3 months)
FY20203 months

FY20193 months

Increase/
Decrease

71-(Unit: million yen)

Increase/
Decrease ratio (%)

71-• Due to a downturn in consumer sentiment following the consumption tax hike,
distributors and salons are seeking new items sold and taking measures toincrease sales per customer, and therefore there is strong interest in thecosmetics business. Although there were signs of an increase in the number of
new distributors and salons, the impact of COVID-19 has limited the company's
activities.

New Products
Imprea Whitening Laser Shot
A whitening solution that directly approaches the origin of smelts,
like targeted by a laser. It suppresses the formation of melaninand prevents spots and freckles.
(Unit: million yen)
FY2020 target*

50

FY20203 months*

19

Progress rate (%)

39.6

February 7, 2020 Debut* From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

12

A Premium Brand, Imprea
Full-fledged development of Imprea, a cosmetics brand exclusively sold in salons
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

200

261

Increase/
Decrease

61

Increase/
Decrease ratio (%)

30.5

Consolidated sales (FY2020 3 months) (Unit: million yen)
FY20193 months *2

FY20203 months *2-

71

Increase/
Decrease

71

Increase/
Decrease ratio (%)-

Brand concept“Change Your Impression”

The brand concept of Imprea is “Change Your Impression
by Beauty Authority”. We will provide new beauty value by
leveraging beauticians’ ability to provide solutions, which isone of the strengths of them.

Through communication that takes advantage ofstrength as a beautician, we propose impressions
that comprehensively capture hair and face throughbeauticians, and deliver " Change Your Impression "to customers.

What is Imprea?
Imprea is a salon exclusive brand created through joint
research by KOSÉ, which specializes in skin research, andMilbon, which specializes in hair research.
We will improve the skin impression by establishing a goodbalance between the "corner-layer keratin" on the surfaceof the skin, which holds the key to skin impression.

*1 Calculated based on the past year's shipment results.
*2 From the first quarter of FY2020, consolidated total sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.
Copyright © 2020 Milbon. All rights reserved.

Consolidated Statement of Earnings (FY2020 3 months)<Consolidated Statement of Earnings> (Unit: million yen)
FY20193 months

Sales
Cost of sales

% to
sales

7,886 100.0
2,573

32.6

FY20203 months

% to
sales

7,825 100.0
2,592

33.1

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

FY20193 months

FY20203 months% to sales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

4,323

4,424

56.6

101

2.3

Hair coloringproducts

3,175

2,995

38.3

(179)

(5.6)

337

291

3.7

(45) (13.6)

-

71

0.9

71

50

42

0.5

(7) (15.9)

Permanent wave
products
Cosmetic products
OthersGross profit

5,313

67.4

5,233

66.9

SG&A
expenses

4,048

51.3

4,202

53.7

Operatingincome

1,265

16.0

1,031

13.2

Ordinary
income

1,162

14.7

835

10.7

841

10.7

601

7.7

Profitattributableto owners ofparentCopyright © 2020 Milbon. All rights reserved.

14-<Major factors for the increase/decrease>

SG&A expenses• Increase in personnel expenses due toincrease in personnel and salary• Increase in fixed costs associated with theestablishment of the Kyushu Distribution
CenterOrdinary income
Decrease due to foreign exchange losses
and share of loss of entities accounted forusing equity method

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

FY2016FY2017FY2018FY2019FY2020Jan.–Mar.

FY2020
Plan

Capitalexpenditures

4,262

1,570

1,149

1,605

325

1,958

Depreciation andamortization

1,077

1,272

1,370

1,453

372

1,632

Amount

1,232

1,422

1,479

1,534

380

1,796

% to sales

4.2

4.3

4.2

4.2

4.9

4.6

Category

R&D exp.

FY2020 CAPEX Main Items (Plan)
•
•
•
•
•

Establishment of sales office in Niigata
Plant equipment: compounding and filling (vacuum emulsification, etc.)
Establishment of Aoyama Sales Office 2
Acquisition of land for construction of the new training center
Part of expenditure for establishment of a plant in China

Copyright © 2020 Milbon. All rights reserved.

15

Trends in Market Related Data, Trends in Fieldpersons (FPs)
Market trends (Japan)
2014

2015

2016

2017

2018

Number of salons(salons)

237,525

240,299

243,360

247,578

251,140―

Number of hair
dressers (people)

496,697504,698509,279

523,543533,814―36,30035,983

Number of beauty
customers(thousand people)

37,84737,39537,02336,643

2019

Remarks
Ministry of Health, Labour and Welfare, Report on
Public Health Administration and Services
Number of beauty salon facilities / number of
employees (year-end)
Statistics Bureau, Ministry of Internal Affairs andCommunications:
Population statistics as of October 1st of each year
Population statistics for females aged 15 to 64(As of Nov.1)(Number of FPs / As of January 1, the beginning of theFieldpersons trends (by country) fiscal year (As of December 21 for 2017 and before))2017 *1

2016

2018

2019

2020

249

258

269

279

297

102

105

111

108

-

USA

9

12

13

13

17

MILBON USA, INC.

63

48

48

50

-

CHINA

18

19

22

21

30

Milbon Trading(Shanghai) Co., Ltd.

40

50

62

70

-

KOREA

20

23

25

30

32

Milbon Korea Co., Ltd.

80

84

82

77

-

25

33

33

35

38

37

31

37

39

-

JAPAN

Others *2

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
(As of March 31, 2020)
10 FPs joined in October 2019, and are
currently in OJT on site
40 FPs are scheduled to join in April 2020
(The above 50 FPs are not included in theleft chart.)*1 Because FY2017 was an irregular accounting period, performance is calculated with adjusted amounts for a 12-month period.
*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2020 Milbon. All rights reserved.

16

Consolidated Net Sales in Japan and Overseas
FY2020 3 months(Unit: million yen)

FY20193 months

FY20203 months

Increase/
Decrease

Increase/
Changes in Local*1
Decrease ratio currency base

Net Sales% to sales

Net Sales% to sales

7,886

100.0

7,825

100.0

(60)

(0.8)

0.0

JAPAN

6,428

81.5

6,590

84.2

161

2.5

2.5

Overseas

1,458

18.5

1,235

15.8

(222)

(15.2)(10.9)

USA

133

1.7

113

1.4

(20)

(15.3)(14.3)

CHINA

425

5.4

291

3.7

(134)

(31.5)(28.0)

KOREA

569

7.2

524

6.7

(45)

(7.9)

0.1

Other *2

329

4.2

307

3.9

(22)

(6.8)

(6.6)

Consolidated Net Sales

(%)

(%)

*1 Figures are the rates of change in real terms on a local currency basis. Current exchange rates of 108.85 yen to the U.S. dollar, 15.61 yen to the Chinese yuan,
and 0.0902 yen to the Korean won*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others
17
Copyright © 2020 Milbon. All rights reserved.

Consolidated Operating Income in Japan and Overseas
FY2020 3 months(Unit: million yen)

FY20193 months
Operating
IncomeFY20203 months

Operatingincome ratio(%)

Operating
IncomeOperatingincome ratio(%)

Increase/
Decrease

Increase/
Decrease ratio(%)

Consolidated
Operating Income

1,265

16.0

1,031

13.2

(233)

(18.5)

JAPAN

1,073

16.7

1,061

16.1

(11)

(1.1)

Overseas

191

13.1

(30)

(2.5)

(222)

(115.8)USA(58)(43.4)(87)(77.2)

(29)

-

CHINA

131

30.9

27

9.6

(103)

(78.7)

KOREA

168

29.6

104

19.9

(64)

(38.2)

Other *

(50)

(15.4)(75)(24.5)(25)-* Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2020 Milbon. All rights reserved.

18

Outlook of Overseas Subsidiaries (1)Figures in the text are based on local currency.

USA MILBON USA, INC•••

Beauty salons have been temporarily closed since mid-March due to the lockdown, and also our field
activities have been restricted, and that have begun to be affected by sales. Double-digit growth wasseen in YoY in January and February, but declined by about 50% in March.
In hair care products, the company focused on Global Milbon, which has an instant effect and a highreputation. The number of sales outlets increased by 1,103 (up more than 45% year on year),introduction through newly contracted distributors contributed to it.
In January, the Company began selling the Sophistone Demi-color *, a hair coloring product in thenortheast and southwestern areas, where it operates distributors. 180 new outlets were acquired in 2
months.

CHINA (Milbon Trading (Shanghai) Co., Ltd.)•••

Movement restrictions, etc. began in January under the impact of COVID-19, and 90% of salons wereclosed in February under the instructions of the government. In March, many salons were open forbusiness, but the number of customers visited was small. Even in April, people remained keenly
conscious of self-restraint, and the number of store visits did not return as expected.
Since mid-March, the company has been able to visit salons and other activities, and since April, it has
been able to conduct activities that are close to normal.
As a measure to recover, the company is working to create a new culture, such as offering quick-timecolors to reduce salon stays and simplified treatments to increase salon treatment rates. Aim to raise theposition of salons in a society and offer proposals that can be positive.

* Colors hair without bleaching. Allows for delicate color adjustments in the blonde range.
Copyright © 2020 Milbon. All rights reserved.

19

Outlook of Overseas Subsidiaries (2)Figures in the text are based on local currency.

KOREA (Milbon Korea Co., Ltd.)•••In January, the company is doing well, and from February it will begin to be affected by restrictions due
to COVID-19. The self-restraint mood widened in the Daegu region where the outbreak occurred, andthe number of people in the streets dropped sharply in a central city. Both distributors and salons aretaking time to recover. The company has been postponing the seminars at the studio, but as long as
there are requests from salons, on-site activities are continuing.
In the mainstay hair coloring products business, although sales have declined slightly due to the impact
of COVID-19, sales of Ordeve Addicthy have begun to grow even in this circumstances, and are
expected to grow in the future.
As a new response, the company will use online education, social media, and YouTube to strengthen
digital marketing, including new products.

Copyright © 2020 Milbon. All rights reserved.

20

<Appendix> Hair Care Brand Positioning Map

Targets

LINE generation(born 1992-1996)

Premium

brand

Hanako juniorgeneration(born 1987-1991)

Baby boomer juniorgeneration(born 1971-1976)

Professional
Copyright © 2020 Milbon. All rights reserved.

brands21

Hanako generation(born 1956-1964)

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