Milbon Co., Ltd.
FY2018 Third Quarter (January 1, 2018 – September 30, 2018)

Financial Results Presentation Materials

October 26, 2018
Copyright © 2018 Milbon. All rights reserved.

Table of Contents
P3

Consolidated Operating Results

P4

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

Copyright © 2018 Milbon. All rights reserved.

1

Starting in the previous fiscal year, the Company changed its fiscal year end
from December 20 to December 31. Additionally, the Company’s consolidated
subsidiaries changed their fiscal year end from September 30 to December 31.
While the third quarter of the fiscal year under review covers the nine month
period from January 1, 2018 to September 30, 2018, the third quarter of theprevious fiscal year covered the nine month period from December 21, 2016 to
September 20, 2017 (for consolidated subsidiaries, the period of October 1, 2016
to June 30, 2017).
Notation in thesematerials

Respective periods

Periods for subsidiaries

Third quarter of the fiscal
year under review

FY2018 9 months

January 1, 2018 to September
30, 2018 (9 months)

January 1, 2018 to September
30, 2018 (9 months)

Third quarter of theprevious fiscal year

FY 2017 9 months

December 21, 2016 to
September 20, 2017 (9 months)

October 1, 2016 to June 30,
2017 (9 months)

Copyright © 2018 Milbon. All rights reserved.

2

Consolidated Operating Results (FY2018 9 months)

Sales and income increased due to strong performance of premium brands and the fashion color Addicthy(Unit: million yen)

FY20179 months *)FY20189 months *)Increase/
Decrease

Increase/
Decrease ratio(%)

Net sales

22,83925,261

2,421

10.6

Gross profit

15,511

17,659

2,148

13.9

SG&A expenses

11,616

12,972

1,355

11.7

Operating income

3,894

4,687

792

20.4

Ordinary income

3,665

4,393

727

19.8

Profit attributable toowners of parent

3,136

3,324

187

6.0

*) See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

3

Consolidated Sales by Product Category [Hair Care Product]
Strong performance of premium brands drove sales in hair care product category(FY2018 9 months)
FY2017 9 months *)(Unit: million yen)

FY2018 9 months *)13,210

Increase/Decrease

14,800

1,590

Increase/Decrease ratio (%)

12.0• The upgrade of the premium brand Aujua, implemented from the end of last year to thefirst half of this year, was completed. Activities associated with switching to the upgrade
led to a revision of menu development and reconfirmation of product knowledge,
revitalizing the market and generating stable repeat orders.
• The acquisition of new salons for the premium brand “milbon” progressed steadily in both
Japan and overseas, seeing a growth in sales. Progress in salons led by distributors has
been a success, particularly in Japan.

*) See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

4

A Premium Brand, Aujua
Upgraded products launched in November 2017 continued to perform well
Number of salons *1)(Unit: salons)
Increase/
Decrease

FY2017 year-end

FY2018 Q3-end

3,166

3,644

478

Sales (FY2018 9 months)*2)
FY2017 9 months

15.1(Unit: million yen)

*2)
FY2018 9 months

3,603

Increase/
Decrease ratio(%)

Increase/
Decrease

Increase/
Decrease ratio(%)

754
Product range

20.9

4,358

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

What is Aujua?

A wide-ranging line-up thatsuits the hair texture ofindividual customers
・ 4 series

Trends in sales & number of salons(Million yen)

(Number of salons)

7,000

4,000

6,000

3,500

5,000

3,000

4,000

2,000
3,000
2,000

Aging care series
1,000
Hair care that supports beauty, now andHair care series
into the future, by addressing each
Scalp care series0
individual’s hair and skin concerns andClimatic care series
choosing the most appropriate item for・12 linesthat time.
Number of salons
Sales
販売高
取引軒数
・80 items
This is Aujua.
*1) Figures for Japan are the number of registered salons. Figures for overseas are calculated based on shipments over a one-year period.
*2) Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

5

2,500
1,500
1,000
500
0

A Premium Brand, “milbon”
Strong performance with progress in salons
Number of salons *1)(Unit: salons)

FY2017 year-end

FY2018 Q3-end

3,966

5,366

Increase/
Decrease

1,400

Sales (FY2018 9 months)
FY2017 9 months*2)

FY2018 9 months*2)

932

1,452

Increase/
Decrease ratio
(%)

35.3
(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio
(%)

520

55.8

(Million yen)

Trend in sales & number of salons (Number of salons)

2,500

2,000

Brand concept

What is “milbon”?

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

We conducted an in-depth analysis of the inner 1,500

structure of the hair of women from 20 countries
around the world, using our proprietary CT 1,000
scanning technology, and discovered auniversal form of hair damage . Accordingly, weCountries with Salons developed a hair care line containing 500
ingredients capable of repairing such damaged
USA, Hong Kong, China,
hair and increasing the density within each
0
Thailand, Taiwan, Turkey,
strand of hair.
2016 2017 2018
Malaysia, Vietnam, Indonesia, “milbon” is a system hair care product for
Sales
Number of salons
販売高
窓口軒数
developing shiny, beautiful hair from the core.
Singapore and Germany*1) Figures for Japan are the number of registered salons. Figures for overseas are calculated based on shipments over a one-year period.
*2) Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

6

6,000
5,000
4,000
3,000
2,000
1,000
0

Consolidated Sales by Product Category [Hair Coloring Product]
With additional color, Addicthy, launched last year, led steady sales(FY2018 9 months)(Unit: million yen)
FY2018 9 months *1)

FY2017 9 months *1)

8,360

Increase/Decrease

9,080

719

Increase/Decrease ratio (%)

8.6• Ordeve Addicthy, launched in February 2017 and well received, continued strong performance. A newcolor was added in March, seeing further progress in new salons and repeat orders of existing colors.
While the solidly performing Addicthy is driving fashion color growth, sales of gray-hair coloringproducts remain flat.

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

FY2017 9 months *)FY2018 9 months

1,497

2,203

Increase/
Decrease

705

Increase/
Decrease ratio
(%)

47.1

FY2017 Debut*) Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

7

A Premium Organic Brand, Villa Lodola (1)Villa Lodola Color contributes to growth in brand sales
Number of salons(Unit: salons)

FY2017 year-end

FY2018 Q3-end

6,895

7,809

Increase/
Decrease

914

Sales (FY2018 9 months)
FY2017 9 months*)

FY2018 9 months*)

696

787

Increase/
Decrease ratio
(%)

13.3
(Unit: million yen)

Increase/
Decrease

91

Increase/
Decrease ratio
(%)

13.2

Trends in sales & number of salons(Million yen)

(Number of salons)

1,400

12,000

1,200

10,0001,000

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

800

What is Villa Lodola?

600

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

400

8,000
6,000
4,000
2,000

200
0

0
2012

2013

2015

販売高
Sales

*) Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

2014

8

2016

2017

2018

窓口軒数
Number of salons

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

Sales (FY2018 9 months)
FY20179 months *)FY20189 months *)

493

568

(Unit: million yen)

Increase/
Decrease75

Increase/
Decrease ratio
(%)

15.2

*) See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

9

FY2015 Debut

Consolidated Statement of Earnings (FY2018 9 months)<Consolidated Statement of Earnings>
FY2017% total
9 months *) sales
Sales

22,839(Unit: million yen)

FY20189 months*)% totalsales

25,261

100.0

100.0

Cost of
sales

7,328

32.1

7,601

30.1

Gross profit

15,511

67.9

17,65969.9

SG&A
expenses

11,61650.9

12,972

51.4

Operatingincome

3,894

17.1

4,687

18.6

Ordinary
income

3,665

16.0

4,393

17.4

Profitattributable toowners ofparent

3,136

13.7

3,324

13.2

*) See page 2 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

10<Breakdown of net sales by product category>(Unit: million yen)
Increase/
Decrease

Increase/
Decreaseratio (%)

58.6

1,590

12.0

9,080

35.9

719

8.6

1,101

1,213

4.8

112

10.2

167

167

0.7

0

0.3

FY20179 months *)FY20189 months *)Hair care products

13,21014,800Hair coloringproducts

8,360

Permanent wave
products
Others% totalsales<Major factors for the increase/decrease>
Cost of sales:
1. FY2017: Increase due to the impact from integrationand expansion of domestic plants
2. FY2018: Impact from special factor of the reversal ofprovision for sales returns of the previous version of
Aujua and productivity improvement
SG&A expenses:
1. Higher personnel expenses due to an increase inpersonnel for the cosmetic products business2. Increase in rent and depreciation and amortization
due to the establishment of new bases including
Head OfficeConsolidated Trends in Capital Expenditures and R&D Expenses(Unit: million yen)

FY2014FY2015FY2016FY2017FY2018Jan.–Sep.

FY2018Plan

Capital expenditures

1,028

2,779

4,262

1,570

962

1,668

Depreciation andamortization

1,004

1,033

1,077

1,272

1,018

1,376

Amount

1,168

1,214

1,232

1,422

1,070

1,448

% to sales

4.6

4.4

4.2

4.3

4.2

4.3

Category

R&D exp.

FY2018 CAPEX Main Items (Plan)••••

Compounding equipment for plant (4-ton vacuum tank)
Relocation and expansion of Fukuoka Branch
Relocation and expansion of Okayama Sales Office
Renovation of Central Research InstituteCopyright © 2018 Milbon. All rights reserved.

11

Trends in Market Related Data, Trends in Fieldpersons (FPs)
Market trends (Japan)
2012

2013

2014

2015

2016

Number of salons(salons)

231,134

234,089

237,525

240,299

243,360―

Number of hair
dressers (people)

479,509487,636496,697504,698509,279―

37,02336,454

Number of beauty
customers(thousand people)

39,076

38,46837,84737,395

2017

Remarks(As of Apr. 1)

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

of FPs / As of January 1, the beginning of the fiscal year
Fieldpersons trends (by country) (Number(As of December 21 for 2017 and before))

2014

2015

2017 *1)

2016

2018

JAPAN
Milbon Co., Ltd.

216

237

249

258

104

100

102

105

USA
MILBON USA, INC.

12

12

9

12

40

53

63

48

8 FPs joined in October 2018 are currently in training

CHINA
Milbon Trading(Shanghai) Co., Ltd.

17

18

18

19

22 (The above 52 FPs are not included in the left chart.)

25

36

40

50

KOREA
Milbon Korea Co., Ltd.

17

19

20

23

64

75

80

84

THAILAND
Milbon (Thailand) Co.,
Ltd.

6

6

6

9

8

15

14

13

12

16

19

24

46

42

47

38

Others *2)

269 Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
13 FPs joined in October 2017 are assigned on site

13 31 FPs joined in April 2018 are currently in OJT on site

25

7

26

*1) Calculations are based on values adjusted for 12 months.
*2) Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2018 Milbon. All rights reserved.

12Outlook of Milbon Group
Japan continues to be steady(comparison periods differ for overseas subsidiaries due to change to fiscal year end; see next page)(FY2018 9 months)(Unit: million yen)
Increase/
Decreaseratio (%)

Forex rates
FY2017(Yen)

FY20179 months *1)

FY20189 months *1)

19,58021,328

8.9

1960

439

470

-

2004

669

1,061

-

2009

1,401

1,518

-

2009

84

87

-

2013

664

795

19.7

-

Japan
Milbon Co., Ltd.

USAMILBON USA, INC.

CHINA
Milbon Trading(Shanghai) Co., Ltd.

KOREA
Milbon Korea Co., Ltd.

THAILAND
Milbon (Thailand) Co., Ltd.

Others *2)

Start
operations

13

-

-

111.42109.61

1 dollar =1 yuan =

16.26

16.86

1 won =

0.09690.9978

1 baht =*1) See page 2 for the corresponding periods.
*2) Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2018 Milbon. All rights reserved.

Forex rates
FY2018
(Yen)

3.18

3.42

-

-

Outlook of Overseas Subsidiaries (1) For the outlook of overseas subsidiaries, comments are based on year-on-year comparisons for the period of January
through September (9 months), with figures in local currencies.
Currencies(unit)USA
MILBON USA, INC.

CHINA
Milbon Trading (Shanghai) Co.,
Ltd.

KOREA
Milbon Korea Co., Ltd.

THAILAND
Milbon (Thailand) Co., Ltd.

FY2017(Jan.–Sep.)

FY2018(Jan.–Sep.)

Increase/
Decrease ratio(%)

US dollar(thousand)

3,889

4,298

10.5

Yuan
(thousand)

48,14862,986

30.8

Won(million)

15,423

15,217(1.3)

Baht(thousand)

29,35725,633(12.7)USA (MILBON USA, Inc.)
The direct sales category is performing well, as our sales strategy of targeting high-end Manhattan salons succeeded
and the expansion also progressed in high-quality salons in Chicago. In the distributor category, transactions with a new
distributor in California began in August. Existing distributors also progressed well. On the product front, “milbon” isgrowing as a result of focused activities and a positive reception for proposals suited to each season.

Copyright © 2018 Milbon. All rights reserved.

14

Outlook of Overseas Subsidiaries (2)CHINA (Milbon Trading (Shanghai) Co., Ltd.)The direct sales and distributor categories grew by more than 20% and 30%, respectively. By product, the fashion color
Ordeve is progressing steadily, partly due to the results of holding seminars for color specialists in each area. In hair careproducts, the number of salons that introduced “milbon” expanded steadily and has started generating solid results.

KOREA (Milbon Korea Co., Ltd.)
While Milbon distributors were being affected by the continuous entry into the market of low-priced hair coloring products
from competitors, we are steadily recovering ground due to our superiority in terms of quality and education. Moreover,
Ordeve Addicthy, which is performing well in Japan, is scheduled to be launched in October and strong performance is
expected. Neo Liscio, permanent wave product introduced in August, has been highly regarded in the market for its soft
finish, getting off to a good start.

THAILAND (Milbon (Thailand) Co., Ltd.)Sales continued to fall from the previous fiscal year due to the impact from a narrowing of our focus to a single distributor
in order to concentrate our activities on the top salons. By product, “milbon” is steadily growing with these focused activities.
However, its performance was not enough to cover the lower sales of other hair care products.

Copyright © 2018 Milbon. All rights reserved.

15

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