Milbon Co., Ltd.
FY2016 First Quarter (December 21, 2015 – March 20, 2016)

Financial Results Presentation Materials

March 31, 2016
Copyright © 2016 Milbon. All rights reserved.

0Table of Contents
P3

Consolidated Operating Results

P4-9

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

P13-16 Outlook of Milbon Group

Copyright © 2016 Milbon. All rights reserved.

1

Fiscal Year 2016 (57th term)
Operating Results for the First Quarter2

Consolidated Operating Results (FY2016 3 months)
Profits declined from the previous fiscal year from the effects of the cost of sales ratio
and SG&A expenses. However, they remained at expected levels.
(Unit: million yen)Amount
FY20153 months

FY20163 months

Increase/Decrease

YoYcomparison(%)

Net sales

6,083

6,708

625

110.3

Gross profit

4,282

4,562

280

106.6

SG&A expenses

3,284

3,637

353

110.8

Operating income

997924(72)92.7

Ordinary income

980

813(166)

83.0

Net income

635546(88)86.0

Copyright © 2016 Milbon. All rights reserved.

3

Consolidated Sales by Product Category [Hair Care Product]
Sales are off to a steady start for new products that target two generations
at turning points of beauty(FY2016 3 months)(Unit: million yen)

FY2015 3 months

FY2016 3 months

3,537

Increase/Decrease

3,918

YoY comparison (%)

380

110.8

• We have launched new products that match the needs of two demographic stages: the turning point for women in their 20s, who areregarded as “awakening to the notion of beauty,” and women in their 50s, “embarking on a quest for beauty.” We are developingactivities to support the creation of various stages of beauty for women by a single designer, while revealing specific examples such as“communication that captures the demographic turning points” and “from design proposals to proposals for the future.”• Sales were off to a steady start for Jemile Fran Melty Butter, which helps out women in their 20s during their busy mornings; andPLARMIA Volumizer, which naturally makes hair stand from the roots for women in their 40s and 50s who feel their hair lacks volume.

Core Products
New - PLARMIA Volumizer

New - Jemile FranHair Care Series Melty Butter

Leave-in treatment foam that makes women’s
hair stand from the roots and creates asilhouette with natural volume they can run
their fingers through.

Leave-in treatment retains the memory of the blowdried style from the night before until the nextmorning and allows for quick styling in the morning.
This product helps working women during theirbusy mornings.
(Unit: million yen)

(Unit: million yen)

FY target

Results

Prog. rate

250

161

64.6%

Copyright © 2016 Milbon. All rights reserved.

Mar. 1 Debut

4FY target

Results

Prog. rate

350

12636.2%

Jan. 28 Debut

Aujua (1)Sales expanded steadily with the introduction of new line-ups that meetthe growing needs for aging care

Number of Aujua salons
FY2015 year-end

FY2016 Q1-end

2,511 salons

2,634 salons

Sales (FY2016 3 months)
FY2015 3 months

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 hair care series that responds tohair concerns by creating andevolving a program just for one
individual. This is Aujua.

104.9%(Unit: million yen)

FY2016 3 months

852

A tailor-made hair care program that nurtures beauty of each and everyone

Comparison
with FY2015
year-end

1,013

YoY
comparison

Trends in sales & number of salons

118.8%(Number of salons)(Million yen)

Product range

A wide-ranging line-upthat suits the hair textureof individual customers
・4 series
Aging care series
Hair care series
Scalp care series
Climatic care series

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500
00・15 lines ・96 items

Copyright © 2016 Milbon. All rights reserved.

販売高Sales5

取引件数
Number of salonsAujua (2)New Product
Aging Care Series
EQUIAL LINE
For women concerned about unmanageable
hair tips and roots as aging advances. Workson hair’s double-layer structure, creating abeautiful silhouette.
(Unit: million yen)

FY target

Results

Prog. rate

40087

21.9%

Copyright © 2016 Milbon. All rights reserved.

Jan. 29 Debut

6

Consolidated Sales by Product Category [Hair Coloring Product]
Sales boosted by activities to offer additional color lines and new gray color launched last year

(FY2016 3 months)
FY2015 3 months(Unit: million yen)

FY2016 3 months

2,172

Increase/Decrease

2,441

269

YoY comparison (%)

112.4• The “ORDEVE FRENCH LINE,” a new color line to match Spring/Summer 2016 trends, has been launched. Its shiny and light cold shadesthat complement a casual French look were well-received. We are actively promoting activities to support hair designers so that they offer
trendy hair colors to salon customers.
• “ORDEVE CRYSTAL” was launched in FY2015 and made it possible to dye long hair peppered with gray to become a bright color with abeautiful finish, from the roots to the tips. The product has been well-received, and the number of salons offering it has continued to growsince last year.

Core Product
ORDEVE CRYSTAL
A hybrid color for dying long hair for mature women, with abeautiful finish from the roots to the tips. ORDEVE
CRYSTAL has the brightness of fashion colors, and it dyes
both black and gray hairs evenly for a long-lasting finish.
(Unit: million yen)

FY target

Results

Prog. rate

1,980

394

19.9%

Copyright © 2016 Milbon. All rights reserved.

FY2015 Debut7Villa Lodola (1)Villa Lodola Color, launched last year, continues to drive sales

Number of salons
FY2015 year-end

4,014 salons

FY2016 Q1-end

4,479 salons

Sales (FY2016 3 months)
FY2015 3 months

111.6%(Unit: million yen)

FY2016 3 months

65

Comparison
with FY2015
year-end

161

YoYcomparison

Trends in sales & number of salons(Million yen)

246.7%(Number of salons)

600

6,000

Brand concept

500

5,000

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

400

4,000

300

3,0002002,000100

1,000

What is Villa Lodola?
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.

Copyright © 2016 Milbon. All rights reserved.

002012

2013

2014
Sales
販売高82015

target2016目標

Number of salons取引件数

Villa Lodola (2)Core Product
Villa Lodola ColorWith 92% natural ingredients, the product’s
formulation utilizes the power of plants. It brings
comfort of an organic product across all
aspects, including during application, the finish
and continued use.
(Unit: million yen)

FY target

Results

Prog. rate

315

108

34.3%

Copyright © 2016 Milbon. All rights reserved.

FY2015 Debut9Consolidated Statement of Earnings (FY2016 3 months)(Unit: million yen)Amount
FY20153 months

Sales

6,083

FY20163 months

6,708

Increase/Decrease625<Breakdown of net sales by product category>YoYcomparison(%)

110.3

FY20153 months

FY20163 months% totalsales

Hair careproducts

3,537

3,918

58.4

380

110.8

Hair coloringproducts

2,172

2,441

36.4

269

112.4

331

307

4.6(24)

92.6

41

41

0.6

0

100.0

Permanent wave
products

Cost ofsales

1,800

2,145

345

119.2

(Unit: million yen)YoY
YoY
comparichangeson (%)

Others<Major factor for the increase in SG&A expenses>
Gross profit

4,282

4,562

280

106.6

SG&A
expenses

3,284

3,637353

110.8

Operatingincome

997

Ordinaryincome980Net income924(72)• Salary hikes from increases in the number of personneland promotions• Rent hikes at new bases*Supplemental Info. – Return to shareholders<Dividends>

92.7(Unit: yen)

FY2014635813546

Copyright © 2016 Milbon. All rights reserved.

(166)
(88)

83.0
86.0

10

FY2015FY2016 planEnd of 2Q

34

35

38

End of FY

3439

40

Total

6874

78

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

FY2012FY2013

FY2014FY2015FY2016
Jan.–Mar.

FY2016PlanCapital
expenditures

840

1,680

1,0282,779

216

4,329

Depreciation andamortization

947

878

1,004

1,033

231

1,113

Amount

873

969

1,168

1,214

292

1,215% to sales

4.0%

4.1%

4.6%

4.4%

4.4%

4.2%

Category

R&D exp.

FY2016 3 months CAPEX Main Items (Plan)• Expansion of Yumegaoka Plant• Development of new sales management system (to be introduced in 2017)• Opening of Okayama Sales Office• Relocation of Fukuoka Branch• Opening of Kumamoto Sales Office

Copyright © 2016 Milbon. All rights reserved.

11

Trends in Market Related Data, Trends in FPs
Market trends (Japan)(Unit: Number of salons: salons / Number of hair dressers: people / Number of beauty customers: thousand people)

2010

2011

2012

2013

2014

2015

Number of salons

223,286

228,429

231,134

234,089

237,525―

Number of hairdressers

456,872

471,161479,509487,636496,697―

Number of beauty
customers

39,812

39,64039,076

38,46837,84737,395

Remarks
Ministry of Health, Labour and Welfare, Report on Public HealthAdministration and Services
Number of beauty salon facilities / number of employees (year-end)
Statistics Bureau, Ministry of Internal Affairs and Communications:
Population statistics as of October 1st of each year
Population statistics for females aged 15 to 64

Fieldpersons trends (by country)
20122013

2014

2015

2016 Q1

JAPAN200

210216237

Milbon Co., Ltd.

102104104

100

USA

10121212

MILBON USA, INC.

35364053

CHINA

13161718

Milbon Trading(Shanghai) Co., Ltd.

14172536

KOREA

13171719

Milbon Korea Co.,Ltd.

34416475

3666815471216101

65

50

47

THAILAND
Milbon (Thailand)Co., Ltd.

Others-Copyright © 2016 Milbon. All rights reserved.

12246

Upper column:
Number of FPs (persons)

9Lower column:
Sales per FP (million yen)18

* 27 FPs are expected to join in Apr.
2016 (not included in the left chart)

20* Starting from the current fiscal year,
sales per FP are calculated based on
the number of FPs at the beginning of
the fiscal year (adjusted
retrospectively to 2012).

618

Outlook of Milbon Group (1)East Asia, including Japan, continues to drive growth
Number ofemployees
Number ofFPsJapan
Milbon Co., Ltd.

USA557
246
14

MILBON USA, INC.

9CHINA

24

Milbon Trading(Shanghai) Co., Ltd.

18KOREA

32

Milbon Korea Co.,
Ltd.

20

THAILAND

53

Milbon (Thailand) Co.,Ltd.

6Others*

1919

Sales (million yen)

YoYcomparison
(%)

Start
operations

FY20153 months

FY20163 months

5,276

5,739

108.8

1960

--

162

147

90.5

2004

1 dollar =114.23121.46

113

154

135.9

2009

1 yuan =
18.81

18.93

327

408

124.8

2009

1 won =
0.10600.104224

1872.82013

1 baht =
3.49

3.37

177

240

135.2

---

* Taiwan, Hong-Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines and others
Copyright © 2016 Milbon. All rights reserved.

Forex rates

13FY2015

FY2016

Outlook of Milbon Group (2)JAPAN (Milbon Co., Ltd.)New products targeting two generations of women in their 20s, “awakening to the notion of beauty,” and in their 50s,
“embarking on a quest for beauty,” were launched and off to a steady start after being well-received by both generations.
Efforts to establish the brand are also progressing smoothly, with the expansion of product line-ups for Jemile Fran, geared
toward working women in their 20s, and Plarmia, an aging care brand.
Additionally, the two gray-hair coloring products, Ordeve Crystal and Villa Lodola Color, launched last year, were wellreceived by the market and contributed to an improvement in performance through their introduction to salons and repeatsales.
We are expanding our efforts for corporate branding. For example, we filled the Tokyo Metro’s Ginza Station with ourtransit advertising in February.

USA (MILBON USA, Inc.)
Sales overall declined compared with the same period of the previous fiscal year, when they rose due to last-minutedemand ahead of a price hike. Meanwhile, the number of salons has been gradually increasing, thanks to the synergistic
effects of Plarmia Refining (salon treatment) and Plarmia Hair Serum series (take-home products).
Seminars focused on techniques, including the workshops on blow drying and styling, were well-received. The blowdrying workshops, taught by stylists popular among overseas celebrities, received a special level of acclaim.

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14

Outlook of Milbon Group (3)CHINA (Milbon Trading (Shanghai) Co., Ltd.)The distributors empathetic to the Company’s education-oriented activity policy are contributing to sales growth for top
regional salons in each area, mainly in East China, South China and North China.
A tour of Japan was conducted mainly for owners of the major dealing salons in each region. More than one hundred
participants developed a deeper trust in Milbon companies and its quality. They reinforced their relationships throughobserving events and tours of the Central Research Institute and plants in Japan.
In addition to existing salon treatments, the introduction of products that repair hair from the inside led to greater
breadth in supporting different hair texture. Hair care products are expanding favorably, as a variety of customer needs can
now be addressed. As for hair coloring products, the proposal of seasonal trend colors has appealed to the trending needsof women in their 20s and 30s with a high sense of beauty, resulting in an increase in Ordeve sales.

KOREA (Milbon Korea Co., Ltd.)Sales of hair-coloring products grew significantly, thanks to the success of promotions for Ordeve’s additional colors,
such as the giveaway of an original apron and the “Trend Color Chart,” which collected all the new colors added during thepast three years.
Test marketing of Aujua, the system hair care brand, commenced from October. Trial sales were conducted at 10
selected salons, and studio lectures were done specially for employees who had been selected as Aujua leaders at eachsalon. Such thorough, individualized and onsite education activities successfully energized the salons and led to favorable
repeat purchases. Solid know-how that will be required to firmly establish Aujua at the salons is being accumulated in
preparation for the full launch from the next fiscal year, and expectations are high for future growth in the hair care market.
DA Korea was held for the second time. DA is an education-type event held for the purpose of nurturing hair designers.
The event was a huge success, with attendance of approximately 1,500 hair designers. These events will continue to beheld in the future as they are also expected to contribute to Milbon’s branding strategy.

Copyright © 2016 Milbon. All rights reserved.

15

Outlook of Milbon Group (4)
THAILAND (Milbon (Thailand) Co., Ltd.)[Sales division]
The consumption of valued-added services and products such as salon treatment and take-home products has declined
due to the reaction against the increase in sales resulting from the commencement of business with a new distributor inNovember 2014, as well as a slump in general consumption reflecting uncertainty over Thailand’s economic outlook.
“Bleach ON Color,” a promotion using the new hair coloring lines launched in fall/winter of FY2016, continued to perform
well and contributed in maintaining sales for the hair coloring segment overall. We are also making efforts to expand themarket by repeatedly conducting digital permanent lectures using Atenje, a straightening permanent solution.

[Production division]
Production on both a monetary and volume basis has been strong. Particularly on a volume basis, production has
exceeded the annual result of the previous year by more than 50% and is performing strongly. Shipments have also
exceeded the plan by more than 20% due in part to the start of shipments to China. Personnel have been added inconjunction with the increase in production volume. The plant now has over 50 employees in total.
Improvements of the cost of sales ratio is also progressing steadily, as efforts are being made to procure raw materials
locally and expenses are being reduced.

Copyright © 2016 Milbon. All rights reserved.

16

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