Milbon Co., Ltd.
Q1 Financial Results Briefing for the Fiscal Year Ending December 2023
May 15, 2023

Event Summary[Company Name]

Milbon Co., Ltd.

[Company ID]

4919-QCODE[Event Language]

JPN[Event Type]Earnings Announcement[Event Name]

Q1 Financial Results Briefing for the Fiscal Year Ending December 2023

[Fiscal Period]

FY2023 Q1[Date]

May 15, 2023

[Venue]Webcast[Number of Speakers]

1
Masahiro Murai

Managing Executive Director

1Presentation

Murai: I will begin my presentation.
Now I would like to explain the financial results along with the presentation materials. First of all, please turnto page two, where I have included consolidated operating results.
As you can see from the figures, sales were JPY10,340 million, and operating income was JPY1,195 million.
As for the domestic situation, I think that major beauty trends, especially with the effects of COVID-19, focusedon the beauty of hair. These trends have advanced to a large extent, but this has not changed, and the growthin sales of Premium Brands in particular has been remarkable.
Overseas, sales in Korea and the US were very strong, leading to an increase in overall overseas sales. In termsof profit, the high cost of raw materials had an impact on the gross profit margin. In addition, operating income
decreased due to a very large increase in activity expenses, partly because of the convergence of COVID-19.
Although some of you may have been a little concerned, operating income for Q1 was 121.3% of the plan,
which is above the plan, and we believe that we are on track to meet the annual plan.

2

Continuing on page three, we will explain hair care products.
As I explained earlier, the Premium Brand continues to do well, which includes overseas, especially in the US.
Next is about the progress on milbon:iD. This is also expected to grow steadily, with both the number ofregistered members and the number of registered salons increasing.
As for the Professional Brand, we have launched a new product, Sun Protect, under the popular Elujuda brand,
and it is doing very well. The YoY increase is now in the form of a 3.8% increase.

3Please refer to page four. Next is the status of new products.
We have now introduced Aujua's Inmmetry line.
This is a product that can be effective to a wide range of people, and I believe that our thoughts have been
conveyed to them. Although there are still areas where we cannot say that we have achieved sufficient results,
I think we can say that we are steadily securing sales.

4Then there are the new hair care products.
As I mentioned earlier, Sun Protect is doing well, and we have also introduced a new product called Miincurl.
This is a product that responds to the Korean hair styles, which is very popular nowadays, and this has beenvery well-accepted by hair stylists.

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Then there is Aujua.
As I mentioned earlier, sales here have been steady. Originally, Aujua was not a product designed to increase
the number of touchpoints, but the 3.2% increase in the number of customers can be seen to indicate that itis achieving a certain level of success.

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Then there is Global Milbon.
Sales here are really going well, with a 24.1% increase in sales.
As you may have noticed, we have left the number of touchpoints as blank. In fact, we found it difficult toobtain accurate figures for the US, where overseas sales have been increasing very rapidly, and when wecollected and compiled the data this time, we found that the figures were negative compared to the previousyear. Therefore, we found the figures unreliable.
We would like to examine this area carefully and hope to be in a position to make an announcement by thetime of the next quarter.

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Then there are hair colorings.
Some may be concerned that the rate of increase may be a little smaller than in the previous period, since theincrease was only 3.2%.
In particular, in Japan, the increase was 1.9% over the previous year. This was, to be honest, somewhat of aninventory adjustment by the distributor. In short, at the end of last year, at the end of Q4, hair coloring issomething that will be needed all the time, so there were a few areas where there were purchases with alarge amount, so excluding the impact of that, we know that hair coloring is going out to the market at almost
the planned level. We are not particularly worried about this area.
Overseas, the Company's reputation remains very strong in South Korea, where sales increased by 11.5%.

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As for Villa Lodola, an organic brand, as you can see, sales and the number of touchpoints have been growingsteadily.

9Then there are the cosmetics.
This is not going as planned, and the difficulties unique to cosmetics and the beauty salon market have notyet been resolved.
However, we are gradually beginning to see clues, and we believe that there will come a time in the near
future when we will be able to increase sales, but for now, these are the results we are seeing. As a result,
there is slight decrease in revenue.

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In this context, we have introduced a new product in cosmetics.
This is a very straightforward product, so it was easy for our customers to understand and accept. In addition,although the product is somewhat seasonal, the annual progress rate is 83%, which is a high achievement.

11Here is a summary of iMPREA's number of contact points.
The number of contact points is increasing steadily, so I think we can expect to see more growth in the future.

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The main purpose of this section is to explain the changes in the composition of the income statement fromthe previous fiscal year to the current fiscal year.
In the previous fiscal year, in Q1, we were not so much affected by the high cost of raw materials, but this isaffecting us right now, which is a negative factor for gross profit.
As you can see, the ratio of SG&A expenses increased from 51.4% in the previous year to 53.7%, but this isdue to a slight increase in activity expenses as a result of more active sales activities and large-scale events. Ithink that was a factor in the decrease in profit.
As another comment, first of all, Q1 of the last fiscal year was a situation in which foreign exchange gains werebeing generated. In the current fiscal year, the ordinary income margin declined because of the foreignexchange losses incurred against it.

13

Please turn to the next page. I have included the information on changes in capital expenditures and otheritems.
We have just finished Q1, so we have not made much progress, but I think we can see that things will proceed
as planned so far.

14Then the next page.
The number of Field Persons in each country, including Japan, is shown in the table below.
I think we are doing well here as well. There was some concern in Korea that there might not be enough staff,
but the number of staff here has been increasing steadily, and we believe that we can expect more of themin the future.

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Then the next page, domestic and overseas sales.
I am explaining the situation at the end of Q1. As you can see, the domestic increase was 5.7%. As for overseas,
the increase was 12.4%. However, this was affected by the exchange rate, and in terms of real growth rate, itwas 5.5%.

16Then the next page, operating income.
Regarding here, it is certain that the domestic side is a bit lower in terms of operating margin. As I mentioned
at the beginning of this presentation, the overall profit decreased, but we are not so worried about this areaand moreover, the profit exceeded the plan.
This is because Q1 is the quarter in which such a tendency tends to appear, and even though sales have notprogressed that much, new products are still being introduced rapidly and expenses for preparation areincurred. Therefore, operating income is not very high in this quarter.
Also, despite last year's Q1 had very little activity and little contact between people, sales went pretty well.
This was a little surprising. The operating margin was 15.8%, which is exceptional for Q1, so we would like you
to understand that this is how it has turned out in comparison with this quarter.
I would like to comment on overseas on the next page.

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First, we have US for the overseas.
Regarding MILBON USA, within Global Milbon for hair care, we have launched The Premium Position called
the “Gold Line”, and we are steadily expanding it. The first thing that should be noted is that the PremiumPosition is steadily expanding, and the wealthy are showing a very high level of interest.
In terms of coloring, we are just getting started. Although the percentage of coloring products has not yet
risen that much, we are planning to enhance sales for the hair coloring products in the future by holding
several one-day intensive hair color training sessions and other events.
Last November, MILBON USA actually implemented a price increase. In addition, the amount of profit isincreasing due to sales of high unit-price Global Milbon, and although profits are still in the red, the amountof deficit is gradually improving.
Also, I think it can be said that transportation- and logistics-related expenses have also become lower
compared to the previous fiscal year.

18Please go to the next page, Milbon China.
As you are already aware, the number of infected people has increased dramatically as a reaction to the liftingof the zero-COVID-19 policy. The Lunar New Year break in January this year also had an impact, resulting in asignificant decrease in sales in January compared to the previous year.
However, since February, we have seen a gradual and steady recovery, and although the YoY decrease was
2.7% on a local currency basis, we are hopeful that the full year outlook for the year will be favorable.
We are sure that there are things, such as the economic turmoil after COVID-19, but we still believe that weshould not propose and do the same thing they have been doing in the past in all of our beauty salons.
Therefore, Milbon China is devising activities for each salon, and activities for salons, and together, we arethinking about how to make sales and attract customers as the economy recovers in earnest.
Although we still have a long way to go, I think we can expect to see an increase in sales in the future.
In terms of profit, the China Factory had not yet started production in Q1 of last year, so this cost wasaccounted for in SG&A expenses, and the elimination of this cost burden also contributed to the increase inprofit. However, sales have not yet gone as planned, and the profit margin is still a lonely figure, but we believe
it will recover steadily in the future.

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Then finally, there is the Milbon Korea situation.
In Korea, more than 70% of sales are hair coloring. This area has been performing very well, and they havebeen conducting various activities for young hair stylists, so I believe that we can expect to continue to see
this trend.
In hair care, Global Milbon is steadily increasing the number of touchpoints and sales.
As I mentioned earlier, in terms of profits, we are trying to strengthen our structure this year. Milbon Korea
is now working on a structure that will allow the Company to continue to grow over the long term byincreasing personnel and aggressively expanding the costs of various events to ensure continued growth.
Although the operating margin is not low, it may give the impression that it is slightly lower than in theprevious fiscal year, but these are the factors behind it.
That's all from me.
[END]20