Milbon Co., Ltd.
FY2018 Financial Results
Presentation Materials

February 13, 2019
Copyright © 2019 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

P16

Milbon Group 2019-2023 Medium-Term Management Plan

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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 fiscal year under review covers the 12 months from January 1, 2018 to
December 31, 2018, the previous fiscal year covered the 12 months and 11 days
from December 21, 2016 to December 31, 2017 (for consolidated subsidiaries,
the 15 months from October 1, 2016 to December 31, 2017).
These financial results presentation materials use adjusted amounts for a 12month period for comparison.
Notation in thesematerials

Respective periods

Periods for subsidiaries

Fiscal year under review

FY2018January 1, 2018 to December 31,
2018 (12 months)

January 1, 2018 to December
31, 2018 (12 months)

Previous fiscal year
(Greater than 12 months
due to irregular accounting
period)ー

December 21, 2016 to December 31,
2017 (12 months plus 11 days)

October 1, 2016 to December
31, 2017 (15 months)

FY2017(Adjusted to 12month period)

December 21, 2016 to December 20,
2017 (12 months)

October 1, 2016 to September
30, 2017 (12 months)

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2

Consolidated Operating Results
Strong performance of hair care products, and premium brands in particular, drove overall sales. The
fashion color Addicthy also performed strongly, and both sales and profit recorded double-digit growth.

(Unit: million yen)

FY2017 *(Adjusted to 12-month
period)FY2018 *Increase/
Decrease

Increase/
Decrease ratio (%)

Net sales

31,70835,185

3,476

11.0

Gross profit

21,661

24,361

2,700

12.5

SG&A expenses

16,347

18,100

1,753

10.7

Operating income

5,313

6,260

947

17.8

Ordinary income

4,980

5,811

830

16.7

Profit attributable toowners of parent

3,785

4,495

710

18.8

* See page 2 for the corresponding periods.
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3

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

FY2017 *(Adjusted to 12-month period)

FY2018 *18,688※）

Increase/Decrease

21,124

2,436

Increase/Decrease ratio (%)

13.0• 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 generated 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.
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4

A Premium Brand, Aujua
Upgraded products launched in November 2017 performed well
Number of salons
FY2017 year-end(Unit: salons)

3,166

Increase/
Decrease ratio(%)

Increase/
Decrease

FY2018 *1

3,271

3.3

105

Sales

(Unit: million yen)

FY2017 *2(Adjusted to 12-month
period)Increase/
Decrease

FY2018 *2

5,193

Increase/
Decrease ratio (%)

Trends in sales & number of salons

6,726

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?
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.

29.5

1,533

(Million yen)

4,000

Product range

7,000

3,500

6,000

3,000

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

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500

Aging care series
Hair care series
Scalp care series
Climatic care series

0・12 lines
・80 items

0

Sales
販売高

*1 Figures for both Japan and 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 © 2019 Milbon. All rights reserved.

(Number of salons)

8,000

5

Number of salons
窓口軒数

A Premium Brand, “milbon”

Strong performance with progress in salons both in Japan and overseas
Number of salons *1(Unit: salons)

FY2017 year-end

FY2018 year-end

3,966

5,571

Sales

Increase/
Decrease ratio(%)

Increase/
Decrease

40.5

1,605

(Unit: million yen)

FY2017 *2(Adjusted to 12-month
period)FY2018 *2

1,486

2,142

Increase/ Decrease

Increase/
Decrease ratio
(%)

44.2

656

(Number of salons)

3,000

7,000

6,000

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
structure of the hair of women from 20 countries 1,500
around the world, using our proprietary CT
scanning technology, and discovered a 1,000
universal form of hair damage . Accordingly, wedeveloped a hair care line containing 500
ingredients capable of repairing such damaged
hair and increasing the density within each0strand of hair.
“milbon” is a system hair care product fordeveloping shiny, beautiful hair from the core.

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

8,000

2,500

Brand concept

Countries with Salons

Trend in sales & number of salons(Million yen)

2,000

5,000
4,000
3,000
2,000
1,000
0
2016

*1 Figures for both Japan and 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 © 2019 Milbon. All rights reserved.

6

2017

2018
Sales
Sales
販売高

2019 target
2019目標NumbersalonsNumberof ofsalons
窓口軒数

Consolidated Sales by Product Category [Hair Coloring Product]
With additional color, Addicthy, launched last year, led steady sales

Sales(Unit: million yen)

FY2017 *(Adjusted to 12-month period)

Increase/Decrease

FY2018 *11,264

12,202938

YoY change (%)

8.3• 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 coloring products
were 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 *(Adjusted to 12-month
period)2,012

FY2018 *3,034

Increase/
Decrease

1,021

Increase/
Decrease ratio (%)

50.7

FY2017 Debut* Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2019 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 year-end

6,895

8,085

Increase/
Decrease ratio(%)

Increase/
Decrease

17.3

1,190

Sales

(Unit: million yen)

FY2017 *(Adjusted to 12month period)

FY2018 *

966

1,113

Increase/
Decrease

Increase/
Decrease ratio
(%)

15.1

146

Brand concept

Trends in sales & number of salons(Million yen)

12,000

1,200

10,0001,000

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?

400

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.

8

8,000
6,000

600

4,000
2,000

200
0

* Figures are on a non-consolidated basis. See page 2 for the corresponding periods.
Copyright © 2019 Milbon. All rights reserved.

(Number of salons)

1,400

0

Sales
販売高

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

(Unit: million yen)

FY2017 *(Adjusted to 12month period)

679

FY2018 *Increase/
Decrease

803

124

Increase/
Decrease ratio
(%)

18.3

* See page 2 for the corresponding periods.
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9

FY2015 Debut

Consolidated Statement of Earnings(Unit: million yen) <Breakdown of net sales by product category>(Unit: million yen)<Consolidated Statement of Earnings>
FY2017 *(Adjusted to 12month period)

Sales31,708

%
total
sales

FY2018*100.0

35,185FY2017 *% total
sales

100.0

(Adjusted to 12month period)

10,04731.7

10,82430.8

Gross profit

21,661

68.3

24,361

69.2% totalsales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

18,68821,124

60.0

2,436

13.0

Hair coloring products

11,264

12,202

34.7

938

8.3

1,482

1,590

4.5

107

7.3

273

267

0.8

(5)

(2.2)

Permanent wave
products

Cost of sales

FY2018 *Others<Major factors for the increase/decrease>
Cost of sales:

SG&A
expenses

16,34751.6

18,10051.4

1.

FY2017: Increase due to the impact from integrationand expansion of domestic plants

Operatingincome5,313

Ordinary
income

4,980

15.7

5,811

16.5

Profitattributableto owners ofparent

3,785

11.9

4,495

12.8

16.8

6,260

17.8

2.

FY2018: Impact from special factor of the reversal ofprovision for sales returns of the previous version of* See page 2 for the corresponding periods.
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10

Aujua and productivity improvement

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

FY2014

Category

FY2015FY2016FY2017FY2018

Capital expenditures

1,028

2,779

4,262

1,570

1,149

Depreciation andamortization

1,004

1,033

1,077

1,272

1,370

Amount

1,168

1,214

1,232

1,422

1,479

% to sales

4.6

4.4

4.2

4.3

4.2

R&D exp.

FY2018 CAPEX Main Items•••

Compounding equipment for plant (4-ton vacuum tank) and other equipment
Relocation and expansion of Okayama Sales Office
Renovation of Central Research Institute* Relocation and expansion of Fukuoka Branch scheduled for 2020

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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―

36,64336,387

Number of beauty
customers(thousand people)

38,46837,84737,395

Fieldpersons trends (by country)
2014

2015

37,023

2018

Remarks(As of Aug. 1)

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 the fiscal year
(As of December 21 for 2017 and before))

20162017 *1

2018

JAPAN
Milbon Co., Ltd.

216

237

249

258

269

104

100

102

105

111

USA
MILBON USA, INC.

12

12

9

12

13

40

53

63

48

48

CHINA
Milbon Trading(Shanghai) Co., Ltd.

17

18

18

19

22

25

36

40

50

62

KOREA
Milbon Korea Co., Ltd.

17

19

20

23

25

64

75

80

84

82

THAILAND
Milbon (Thailand) Co.,
Ltd.

6

6

6

9

7

8

15

14

13

17

12

16

19

24

26

46

42

47

38

43

Others *2

Ministry of Health, Labour and Welfare, Report on
Public Health Administration and Services
Number of beauty salon facilities / number of
employees (year-end)

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
12 FPs joined in October 2017 are assigned on site
30 FPs joined in April 2018 are currently in OJT on site
7 FPs joined in October 2018 are currently in training(The above 49 FPs are not included in the left chart.)*1 Because FY2017 was an irregular accounting period, performance is calculated with adjusted amounts for a 12-month period.
*2 Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2019 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)(Unit: million yen)
FY2017 *1

Japan

Increase/
Decreaseratio (%)

FY2018 *1

Start
operations

Forex rates
FY2017 (Yen)

27,17329,8729.91960 -

579

632

-

2004

959

1,368

-

2009

1,941

2,064

-

2009

Milbon (Thailand) Co., Ltd.

119

123

-

2013

Others *2

935

1,123

20.1

-

Milbon Co., Ltd.

USAMILBON USA, INC.

CHINA
Milbon Trading(Shanghai) Co., Ltd.

KOREA
Milbon Korea Co., Ltd.

THAILAND13-

1 dollar =111.31110.44

16.37

16.73

0.09720.1001

3.21

3.43

-

-

1 yuan =1 won =

1 baht =*1 See page 2 for the corresponding periods.
*2 Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
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Forex rates
FY2018 (Yen)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 December (12 months), with figures in local currencies.
Currencies(unit)USA
MILBON USA, INC.

CHINA
Milbon Trading (Shanghai) Co.,Ltd.

Increase/
Decrease ratio
(%)

5,256

5,730

9.0

Yuan
(thousand)

62,77081,77630.3

Won(million)

20,357

20,630

1.3

Baht(thousand)

39,68935,868(9.6)

Milbon Korea Co., Ltd.
Milbon (Thailand) Co., Ltd.

FY2018US dollar(thousand)

KOREA

THAILANDFY2017

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, we started transactions
with a new distributor in California in the second half, and are off to a strong start. Existing distributors also progressedstrongly. On the product front, “milbon” is growing significantly as a result of focused activities and proposals such as
Christmas gifts suited to each season. Additionally, the fashion color Ordeve Addicthy launched targeting Asian salons in
Manhattan has been received very positively.

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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 and theintroduction of a new color. In hair care products, the number of salons that introduced “milbon” expanded steadily and has
started generating solid results. Additionally, the DA inspire event held in Japan to support designer education was held in
China for the first time. The event attracted more than 1,000 participants, and improved the milbon brand image.

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 steadily recovered ground due to our superiority in terms of quality and education, and net sales grewslightly year on year. On the product front, Ordeve Addicthy was launched in October and performed strongly, to the pointthat we were swamped with requests from existing Ordeve salons for introductory training sessions. However, revenue inthe hair coloring product category as a whole decreased. Neo Liscio, a permanent wave product introduced in August, hasbeen highly regarded in the market for its soft finish, and is being adopted at a growing number of salons. In hair careproducts, Aujua, a scalp care series launched in September, got off to a strong start as a result of meeting the needs of
Korean women, who are sensitive about scalps and thinning hair.

THAILAND (Milbon (Thailand) Co., Ltd.)Sales decreased from the previous fiscal year due to the impact from a narrowing of our focus to a single distributor inorder to concentrate our activities on the top salons. By product, although Ordeve Addicthy performed strongly, the decrease
in revenue due to the repricing of Ordeve was larger than expected, resulting in a decrease in revenue for the hair coloringproduct category as a whole. In the hair care product category, “milbon” is steadily growing with these focused activities.
However, its performance was not enough to cover the lower sales of other hair care products.

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15

Milbon Group
2019-2023
Medium-Term Management Plan

Ryuji Sato, President & CEO

Copyright © 2019 Milbon. All rights reserved.

16

Summary of thePrevious Medium-Term Management Plan
andLooking Toward the
New Medium-Term Management Plan

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17

I.

Summary of the Previous Medium-Term Management Plan (2015-2018)

 Performance in Japan exceeded the plan, with net sales growing approximately
10,000 million yen and operating income growing approximately 1,800 million
yen from the previous medium-term end, achieving the FY2019 target a year
ahead of the plan Profit attributable to owners of parent exceeded the plan due to profit on sale ofcross-held shares resulting from their re-examination(Unit: million yen)
FY2019 target(Previous medium-term end)
Amount% total sales

FY2018 results
Amount% total sales

CAGR
2014-2018(%)

Achievement(%)

35,000100.035,185

100.0

8.7

100.5

Domestic

28,50081.4

29,872

84.9

7.2

104.8

Overseas

6,500

18.6

5,312

15.1

19.4

81.7

Operating income

6,000

17.1

6,260

17.8

8.9

104.3

Profit attributable toowners of parent

3,850

11.0

4,495

12.8

14.4

116.8

Net sales

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18

I.

Summary of the Previous Medium-Term Management Plan (2015-2018)

Review of the Previous Medium-Term Management Plan

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19

II.

Looking Toward the New Medium-Term Management Plan

1. Global market environment[Global Trends] - Four Impacts 1) Movement and diversification of economic center of gravity
2) Increased flows and complexity of global markets
3) Aging demographics on a global scale
4) Accelerating technological innovation and diffusion[Trends in Japan]
1) Demographic trends, decline of overall population, low birthrate
and aging population
2) Population moving to cities, concentrated in urban centers
3) Rising productivity4) Emergence of new business models

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20

II.

Looking Toward the New Medium-Term Management Plan

2. Status of domestic beauty market
1) Average length of employment⇨ Difficult to retain hair dressers
2) Trends in numbers of hair designers
Acquirers of national certification(per year)⇨ Remains difficult to hire young employees
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21

Trends in numbers of employees⇨ Affect greatly to productivity

II.

Looking Toward the New Medium-Term Management Plan

3) Increasingly diverse work styles
Emergence of freelance work and outsourced salons,
entry by other business types⇨ Slow to respond to broader selection
4) Higher personnel expenses due to labor, higher startingsalaries, etc.

⇨ Increase in management cost

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22

II.

Looking Toward the New Medium-Term Management Plan

Roundup of domestic beauty market
We now need the following with a new value system:
Management(hiring)
capability

Instead of “because it’s a beauty salon…,”
create the same environment as a top local
enterpriseMarketing(customer)
capability

Tackle not just hair design, but the root issue:
hair problems

And not “individual capability” but“organizational capability”

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23

Hair designer’s
individual
capability

Organizational
capability

II.

Looking Toward the New Medium-Term Management Plan

3. Trend of corporate social responsibility⇨ The way of being an enterprise that contributes to SDGs is in concern

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24

II.

Looking Toward the New Medium-Term Management Plan

Four global impacts
Trends in Japan

Toward a new era

Status of domestic beauty market
Trend of corporate social responsibility

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25

2019-2023
New Medium-Term Management Plan

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26

III.

2019-2023 New Medium-Term Management Plan

1. Milbon Group Medium-Term Vision & Global Vision Roadmap
From taking the perspective of industry to truly taking theperspective of society and customers“Change the Stage!!”—To continuously create a new future—

Convert to and pursue the creation of a new beauty industry basedon beauty culture emanating from Japan<Medium-Term Vision>
Establish the No. 1 position in Asia and enter the top five globally by creating abusiness entity as a global manufacturer that generates “professional value” that truly
takes the perspective of society and customers

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27

III.

2019-2023 New Medium-Term Management Plan

◆Create a global vision roadmap aiming to improve corporate value over the
medium- to long-term, based on the MILBON WAY
The MILBON WAY
Global Vision Roadmap<Milbon Global Vision>

Aims to be the global No. 1, first as a Japanese global
professional manufacturer, by making local contributions tobeauty in countries and regions around the world throughfield activities focused on education.
<Our Cause>
Milbon will contribute to tackling social issues in countries
and regions around the world by creating a new global field
for beauty, empowering women, and creating work-related
outlooks and employment for women.

Namely, we will continuously grow and build a relationship oftrust by creating socially (including environmentally) positive
economic value.

Copyright © 2019 Milbon. All rights reserved.

28

From taking the perspective of industry to truly taking the perspective of society andcustomers“Change the Stage!!”—To continuously create a new future—
Convert to and pursue the creation of a new beauty industry based on beauty culture
emanating from Japan<Milbon Global Vision>
Aims to be the global No. 1, first as a Japanese global professional manufacturer, bymaking local contributions to beauty in countries and regions around the world
through field activities focused on education.
<Our Cause>
Milbon will contribute to tackling social issues in countries and regions around theworld by creating a new global field for beauty, empowering women, and creating
work-related outlooks and employment for women.
Namely, we will continuously grow and build a relationship of trust by creatingsocially (including environmentally) positive economic value.
<Medium-Term Vision>
Establish the No. 1 position in Asia and enter the top five globally by creating abusiness entity as a global manufacturer that generates “professional value” that truly
takes the perspective of society and customers■Toward a company that creates achain of innovation from theperspective of society andcustomers■Toward a company that contributes
to SDGs = Toward a company thatearns trust through sustainablegrowth and contributions to societyIII.

2019-2023 New Medium-Term Management Plan

■Toward a company that creates achain of innovation from theperspective of society and customers

Copyright © 2019 Milbon. All rights reserved.

■Toward a company that contributes to
SDGs = Toward a company that earns
trust through sustainable growth andcontributions to society

29

III.

2019-2023 New Medium-Term Management Plan

2. 2023 Medium-Term Management Plan sales targets

Consolidated sales target:
48,500 million yen* The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the beginning of FY2019.

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30

III.

2019-2023 New Medium-Term Management Plan

◆Global position
FY2018FY2023* Japan share calculated based on gross sales

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31

2019-2023

New Medium-Term Management Plan

Japan Market Strategy

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32

III.

2019-2023 New Medium-Term Management Plan

3. Japan market strategy
From an industry perspective
toward truly taking the perspective of society and customers
From “CHALLENGE 80”* to next stage “NEXT 100”

LIFETIME BEAUTY INNOVATION for NEXT100“NEXT 100” signifies employment and customer capabilities for the era of 100-year lifespans
High-value integration built on 100% salon menu using Milbon products

Create business of in-salon sales of products covering range from hair to skin based on expertise
Support creation of lifetime beauty salons
And take on the challenge of monthly productivity of 1 million yen per person* Challenge 80: A strategy that supports productivity initiatives to get monthly sales per salon staff member to 800,000 yen. Began in 2008.

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33

III.

2019-2023 New Medium-Term Management Plan

4. Five measures for Japan market[Measure 1]
Enhance system to support salon productivity improvements(1) Product development• Practice R&D based on “R&D VISION 2028”• Enhance customer perspective, leading-edge technology⇨ creating high value-added products(2) Fieldperson (FP) structure
Enhance FP system

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34

III.

2019-2023 New Medium-Term Management Plan

[Measure 1] Create system - Continued (3) Build studio site network

Planned for FY2019●New (Matsuyama)
Study for FY2020 or later●Expand areas of coverage(Niigata, Kagoshima, etc.)●Enhance coverage area in Tokyo metropolitan area
(Shibuya, Fujisawa, Chiba)Tokyo
metropolitan area

16 existing bases:
Sapporo, Sendai, Saitama, Ginza,Tokyo, Aoyama,Tokyo, Yokohama, Shizuoka, Nagoya, Kanazawa, Kyoto, Osaka, Kobe,
Okayama, Hiroshima, Fukuoka, Kumamoto

Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

[Measure 2]
Support enhancement of BtoBtoC real communication capability
 MCM (Milbon Counseling Method)⇨Build total counseling techniques and education activities
from hair care to skin care
[Measure 3]
BtoBtoC digital communication
 Milbon official EC site•••

Dedicated to customers
visiting beauty salonsCounseling in-person sales
Record beauty salon sales

Real contact
Face-to-face counseling capability
Proposal

On site activities
Milbon Web counseling Digital diagnosis system

Distributors

SalonsUse mobile terminals/apps, etc.

Digital contact

Copyright © 2019 Milbon. All rights reserved.

Femalecustomers

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2019-2023 New Medium-Term Management Plan

[Measure 4]
Challenge in cosmetic products businessi.

New partner KOSÉ Corporation①

Partnered with L’Oréal 1963-2001 = Commitment to beauty②

Shared value toward education activities③

Insistence on high added value with focus on basic cosmetics= Product development capability④

Serious and sincere corporate culture, good match in terms ofstrategy and human resources⑤

Synergy between hair and skin, pro and public through differencesin business domains+
Spring 2007 “Fate”
Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan
[Measure 4] Cosmetic products business - Continued ii. Why cosmetics?
①

Dedicated salon sales after 1, 5, 10, 43 years⇨ Difficult with just hair care②

Global vision in 2010③

Contact with changes in women through 20 years of change in Taiwan④

2002-2014 Cosmetics Vision - Revision of the MILBON WAY⑤

Japanese cosmetic products market (total for public and pro markets):
1.6 trillion yen market

Challenge: Two big hurdles• Customer psychology• Hair designer psychology
What salons want: “education support”• What is not possible in current market• Milbon’s strength

Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

[Measure 4] Cosmetic products business - Continued iii. March 2019 product presentation①

22-23 start items for dedicated salon cosmetics brand②

Education support system: Milbon (FCE) & distributors (ambassadors)

iv. Medium-Term VisionFirst, aim for No. 1 industry share, and make cosmetic products
business a second pillar following hair care business.

Sales target: 5,000 million yen

Copyright © 2019 Milbon. All rights reserved.

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III.

2019-2023 New Medium-Term Management Plan

[Measure 5]
Advance corporate and product branding with view toward creatingsalon take-home product business and cosmetic products business① Online magazine/official SNS accounts
Official SNS accounts- Twitter/Instagram -Milbon online magazine- Find your beauty MAGAZINE -Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

[Measure 5] Advance branding - Continued ② Video promotion

Get more than 3 million total views
on YouTube and other social media
Copyright © 2019 Milbon. All rights reserved.

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III.

2019-2023 New Medium-Term Management Plan

[Measure 5] Advance branding - Continued ③ Exclusive advertising at Stations
Osaka Umeda Station
From Feb. 18

NEW
Fukuoka Hakata Station

Yaesu, Tokyo Station

From Feb. 4
From Feb.11

NEW
Nagoya Sakae Station
From Feb. 15

Copyright © 2019 Milbon. All rights reserved.

42

2019-2023
New Medium-Term Management Plan

FY2019 Japan Market
Key Points of Strategy Activities
Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

5. Initiatives in Japan in FY2019◆“Lifetime beauty partner” education for creation of “lifetime beauty salons”
Three environments needed to enhance employment capability①
Environment for developing people (human resource development
capability)②
Environment where people can continue to work (support fordiverse work styles)③
Environment where people find fulfillment and motivation in work
(attraction of salons)

Salon◆Examples of Milbon activities• Management support curriculum (study
groups, management classes)• Education environment support (e.g.
videos)Copyright © 2019 Milbon. All rights reserved.

Hair designer

Three bands needed to enhance customer capability①
Beauty age band②
Value band③
Proposal bandSalon
customer• Career development curriculum (class with productivity
exceeding 1 million yen)
• Design skill education curriculum (polish design skills)• Customer perspective counseling technical education,
etc.

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2019-2023 New Medium-Term Management Plan

◆New products in FY2019(Unit: million yen)

Category

Product name

Launchmonth

TargetamountHair coloringproducts

ORDEVE Seedil
ORDEVE Seedil Interval Re:Care

June

800

Gray-hair coloringproducts (create
lifetime salon coloringcustomers)

ORDEVE Ledress(Hair manicure)

March

700

Hair careproducts

Aujua Eternal Stage Series
Diorum Line

March

800

“milbon” Extended Series(Treatment for menu)

July

40

CRONNA

April

750

Copyright © 2019 Milbon. All rights reserved.

45

2019-2023

New Medium-Term Management Plan

International Market Strategy

Copyright © 2019 Milbon. All rights reserved.

46

III.

2019-2023 New Medium-Term Management Plan

6. International market strategy[1] Advance region-specific growth strategies with sense of speed① Launch International Planning Division responsible for global
strategy (in Tokyo Head Office)② “Quality” of education sales* with market activity humanresources x “Quantity” of distributor salespersons③ Enhance area marketing and businesses that increase
profitability (market entry via brands and brand management)* Education sales are fieldpersons (FPs) with both education and sales capabilities to act overseas

Copyright © 2019 Milbon. All rights reserved.

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III.

2019-2023 New Medium-Term Management Plan
[2] Create market base by becoming more local
 Make human resources local① Milbon Korea Co., Ltd.
All employees are local hires② Milbon Trading (Shanghai) Co., Ltd.
All branch managers are local hires③ Representative office in Turkey
Representative is local hire

 Make organizations local (convert representative offices into
local subsidiaries)① Milbon Vietnam② Milbon Malaysia③ Singapore under consideration
Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan
[3] Key points for New Medium-Term Management Plan

① Asia region
 China (continuous growth and build multifaceted supply system)
 Korea (build new growth strategy)② Europe and US regionHair coloring product for Europe and US markets: SOPHISTONE
Start in North America, then move to Europe③ Countries with new openings
 Set sights on India

Copyright © 2019 Milbon. All rights reserved.

49

New Medium-Term Financial Targets& Targets for FY2019

Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

7. Medium-term financial targets
FY2023 target(New medium-term end)*

FY2018 results*
Amount(Unit: million yen)

% total sales

Amount% total sales

Increase/
Decreaseover mediumterm plan

CAGR
2018-2023（%）

33,882100.0

48,500100.0

14,617

7.4

Domestic

28,57084.3

40,00082.5

11,430

7.0

Overseas

5,312

15.7

8,500

17.5

3,188

9.9

Gross profit

22,18965.5

32,100

66.2

9,910

7.7

SG&A

15,92847.0

23,300

48.0

7,371

-

Operatingincome

6,260

18.5

8,800

18.1

2,539

7.0

Ordinary
income

5,811

17.2

8,400

17.3

2,588

7.6

Profit attributable toowners of parent

4,495

13.3

5,960

12.3

1,464

5.8

Net sales* The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the beginning of FY2019. The results for
FY2018 have also been reclassified based on the same standard.

Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

9. Sales targets by country0

FY2018 results *1

Japan
Milbon Co., LtdUSA
MILBON USA, INC.

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

THAILAND
Milbon (Thailand) Co.,Ltd.
MALAYSIAMILBON MALAYSIA SDN.
BHD.

VIETNAMMILBON VIETNAM CO., LTD

Other areas *2(Unit: million yen)

FY2023 target *1

CAGR
2018-2023 (%)

28,56940,000

7.0

632

1,050

10.7

Forex rates

Forex rates

FY2018 (Yen)FY2023 (Yen)

-

-

110.4

105.0

16.7

16.0

0.10000.1000

3.43

3.20

27.19

27.00

0.00487

0.00480--

1 dollar =1 yuan =

1,368

2,784

15.3

2,064

2,520

4.1

1 won =
1 baht=

123

201

10.4

191

302

9.5

103

201

14.3

828

1,440

11.7

1 ringgit =1 dong =*1 The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the beginning of FY2019. The results for
FY2018 have also been reclassified based on the same standard.
*2 Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others

Copyright © 2019 Milbon. All rights reserved.

52

III.

2019-2023 New Medium-Term Management Plan

8. Financial strategy
Cash flow from operating activities: Greater than 26,000 million yen
Use

2015-2018
Previous Medium-Term Management Plan

Investment in future
growthMain items

2019-2023
New Medium-Term Management Plan

9,800 million yen
・Construction of new Yumegaoka Plant
・Establishment and expansion of new domestic
bases
Domestic bases: six, including Ginza
Overseas subsidiary branches: two, including
Daejeon (Korea)
Overseas: three, including Philippines
・Relocation of head office to Tokyo
・Cosmetic products business・Sales management software

12,000 million yen
・Establishment of integrated education center in
Aoyama, Tokyo・Establishment of new bases
・Relocation and expansion of existing bases
・Expansion of Thai Factory
・Launch of cosmetic products business・Creation of Villa Lodola as business company
・System investments
・Building China supply system

5,800 million yen
Return to shareholders

・Dividend payout ratio
FY2015 41.1% FY2016 41.6%
FY2017 39.5% FY2018 39.3%

・Stable return to shareholders targeting a dividend
payout ratio of 40%
2,400 million yen

Increase in R/E

Capital efficiency

10,000 million yen

ROE performance2015 11.7%
2016 11.4%
2017 13.0%
2018 14.0%

Copyright © 2019 Milbon. All rights reserved.

4,000 million yen

Aim for ROE 14% or over

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2019-2023 New Medium-Term Management Plan

10. FY2019 target■ Capital expenditures and others■ Statement of Earnings(Unit: million yen)Amount
FY2018results*

FY2019target*Increase/
Decrease

Increase/
Decreaseratio (%)

33,88236,6002,717

8.0

28,57030,870

2,300

8.1

5,312

5,730

418

7.9

Gross profit

22,18924,270

2,080

9.4

SG&A

15,92817,4301,501

9.4

Operatingincome

6,260

6,840

579

9.3

Ordinary
income

5,811

6,190

378

6.5

Profit attributable toowners of parent

4,495

Net sales
Domestic
Overseas

4,350

(145)

(3.2)

(Unit: million yen)Classification

FY2018results*

FY2019plan*

Capital expenditures

1,149

1,710

Depreciation andamortization

1,370

1,498

Amount

1,479

1,535

% to sales

4.4

4.2

R&D
expenses

FY2019 CAPEX Main Items••••

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 beginning of FY2019. The results for
FY2018 have also been reclassified based on the same standard.

Copyright © 2019 Milbon. All rights reserved.

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III.

2019-2023 New Medium-Term Management Plan

■FY2019 Consolidated Sales by Product Category(Unit: million yen)

FY2018results*

FY2019target*Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

20,222

22,104

1,882

9.3

Hair coloring products

11,857

12,330472

4.0

Permanent wave products

1,544

1,534

(11)

(0.7)

257

632

374

145.0

Others* The “Accounting Standard for Revenue Recognition,” etc., has been adopted since the beginning of FY2019. The results for
FY2018 have also been reclassified based on the same standard.

Copyright © 2019 Milbon. All rights reserved.

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III.

2019-2023 New Medium-Term Management Plan

■FY2019 Sales (non-consolidated) and number of salons (consolidated) for premium brands(Unit: million yen)
Increase/
Decrease

Increase/
Decrease ratio(%)

FY2018 results

FY2019 target

Sales

6,726

7,500

773

11.5

Number of salons* (salons)

3,271

3,600

329

10.1

Sales

2,142

2,600

457

21.3

Number of salons
Domestic* (salons)

3,645

4,200

555

15.2

Number of salonsOverseas* (salons)

1,926

2,500

574

29.8

Sales

1,113

1,270

156

14.1

Number of salons (salons)

8,085

10,000

1,915

23.7

Aujua

“milbon”

Villa Lodola* Number of salons: Figures for both Japan and overseas are calculated based on shipments over a one-year period.

Copyright © 2019 Milbon. All rights reserved.

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2019-2023 New Medium-Term Management Plan

■Return to shareholders<Dividend forecast>(Unit: yen)

FY2017FY2018FY2019forecast

End of 2Q

40

24

27

End of FY

52

30

27

Total

92

54

54

* On January 1, 2018, the Company conducted a stock split at
a ratio of two shares for every one share of common stock.

Copyright © 2019 Milbon. All rights reserved.

57

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.