Milbon Co., Ltd.
FY2018 First Quarter (January 1, 2018 – March 31, 2018)

Financial Results Presentation Materials

April 27, 2018
Copyright © 2018 Milbon. All rights reserved.

Table of Contents
P4

Consolidated Operating Results

P5

Consolidated Sales by Product Category

P11

Consolidated Statement of Earnings

P12

Consolidated Trends in Capital Expenditures and R&D Expenses

P13

Trends in Market Related Data, Trends in FPs

P14

Outlook of Milbon GroupP15

Outlook of Overseas Subsidiaries

Copyright © 2018 Milbon. All rights reserved.

1

Fiscal Year 2018 (59th term)
Operating Results for the First Quarter

Copyright © 2018 Milbon. All rights reserved.

2

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 first quarter of the fiscal year under review covers the three month
period from January 1, 2018 to March 31, 2018, the first quarter of the previous
fiscal year covered the three month period from December 21, 2016 to March 20,
2017 (for consolidated subsidiaries, the period of October 1, 2016 to December31, 2016).
Notation in thesematerials

Respective periods

Periods for subsidiaries

First quarter of the fiscal
year under review

FY2018 3 months

January 1, 2018 to March 31,2018 (3 months)

January 1, 2018 to March 31,2018 (3 months)

First quarter of theprevious fiscal year

FY 2017 3 months

December 21, 2016 to March 20, October 1, 2016 to December
2017 (3 months)
31, 2016 (3 months)

Copyright © 2018 Milbon. All rights reserved.

3

Consolidated Operating Results (FY2018 3 months)

Steady sales and fewer-than-expected returns of Aujua resulted in pushing up gross profit(Unit: million yen)

FY20173 months *)FY20183 months *)Increase/
Decrease

Increase/
Decrease ratio(%)

Net sales

6,898

7,789891

12.9

Gross profit

4,544

5,551

1,007

22.2

SG&A expenses

3,757

4,161

404

10.8

Operating income

786

1,390

603

76.7

Ordinary income

717

1,208491

68.5

Profit attributable toowners of parent

538

1,074536

99.7*) See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

4Consolidated Sales by Product Category [Hair Care Product]
Premium brands continued strong performance(FY2018 3 months)
FY2017 3 months *)(Unit: million yen)

FY2018 3 months *)3,924

Increase/Decrease

4,490565

Increase/Decrease ratio (%)

14.4• Sales have been steady for the premium brands Aujua and “milbon.”• More proactive proposal activities following the upgrade of Aujua, such as menu revisions
and reconfirmation of knowledge, increased brand sales.
• In professional brands, Elujuda has garnered strongly rooted popularity since its launch. It
has built a firm position in the leave-in field, and continues to grow. However, sales of theaging series of Plarmia and Jemile Fran targeting working women in their 20s have notmet expectations, despite new product launches for each brand.

*) See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

5

A Premium Brand, Aujua
Upgraded products launched in November 2017 are well received
Number of salons(Unit: salons)
Increase/Decrease

FY2017 year-end

FY2018 Q1-end

3,166

3,406

FY2017 3 months

FY2018 3 months

1,038

1,250

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.

Increase/
Decrease ratio
(%)

240

Sales (FY2018 3 months) *)Increase/
Decrease

Upgrade launched November 2017

7.6
(Unit: million yen)
Increase/
Decrease ratio
(%)

212
20.4
Product range
A wide-ranging line-up thatsuits the hair texture ofindividual customers
・ 4 series
Aging care series
Hair care series
Scalp care series
Climatic care series

Trends in sales & number of salons
7,000

4,000

6,000

3,500

5,000

3,000
2,500

4,000

2,000
3,000

1,500

2,000

1,000

1,000

500

0

・13 lines
・94 items

0Sales販売高*) Figures are on a non-consolidated basis. See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

(Number of salons)(Million yen)

6

Number of salons
取引軒数

A Premium Brand, “milbon”
Steady progress in salons, overseas rollout in 11 countries
Number of salons
FY2017 year-end

FY2018 Q1-end

3,966

4,304

Increase/
Decrease

338

Sales (FY2018 3 months) *)FY2017 3 months

FY2018 3 months

255

Brand concept(Unit: salons)
Increase/
Decrease ratio(%)

8.5(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio(%)(Million yen) Trend in sales & number of salons（軒）(Number of salons)

2,500

6,000

434

179
70.2
What is “milbon”?

5,000

2,000

4,000

A system hair care brand thatcultivates the “unique beauty”
of each individual, with360°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
Thailand, Taiwan, Turkey,0
strand of hair.
Malaysia, Vietnam, Indonesia, “milbon” is a system hair care product forSingapore and Germany
developing shiny, beautiful hair from the core.

3,0002,0001,0000
2016 2017 2018*) Figures are on a non-consolidated basis. See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

7Sales
販売高

Number of salons
取引軒数

Consolidated Sales by Product Category [Hair Coloring Product]
With additional color, Addicthy, which was launched last year, drove sales of hair coloring products(FY2018 3 months)
FY2017 3 months *)(Unit: million yen)
FY2018 3 months *)2,667

Increase/Decrease

2,905237

Increase/Decrease ratio (%)

8.9• Ordeve Addicthy, launched in February 2017, was well received. We added a new color thateliminates any shades of yellow, broadening the scope of proposals with vibrant shades of colors
unique to Addicthy. At Addicthy introduced salons, this additional color has been steadily introduced,
and with increasing repeat rates of existing colors, driving sales growth.

*) See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

8

A Premium Organic Brand, Villa Lodola (1)Villa Lodola Color continues to be well-received and to drive brand sales
Number of salons
FY2017 year-end

FY2018 Q1-end

6,895

7,160

Increase/
Decrease

265

Sales (FY2018 3 months) *)FY2017 3 months

FY2018 3 months

202

233

(Unit: salons)
Increase/
Decrease ratio(%)

3.8(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio
(%)

31

15.7

Trends in sales & number of salons(Million yen)

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.

What is Villa Lodola?

8,000800
6,000600
4,000400

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 arecertified by ICEA, an Italian authority. Villa Lodola supports organicchoices, with hair care products nurtured in the soil of Italy, bringing
out true beauty.

2,00020000Sales
販売高*) Figures are on a non-consolidated basis. See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

(Number of salons)

1,400

9

取引軒数
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.
(Unit: million yen)

FY20173 months *)FY20183 months *)

143

176

Increase/
Decrease

33

Increase/
Decrease ratio (%)

23.2*) See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

10FY2015 Debut

Consolidated Statement of Earnings (FY2018 3 months)<Consolidated Statement of Earnings> (Unit: million yen)Amount
FY20173 months *)FY20183 months *)Increase/
Decrease

Increase/
Decreaseratio (%)

Sales

6,898

7,789

891

12.9 *1

Cost ofsales

2,354

2,238(116)(4.9) *2

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

FY20173 months *)FY20183 months *)% totalsales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

3,924

4,490

57.6

565

14.4

Hair coloringproducts

2,667

2,905

37.3

237

8.9

Permanent wave
products

260348

4.5

88

33.9

Others4645

0.60(0.5)<Major factors for the increase/decrease>*1 Sales: Increase due to strong sales in Japan and exchange rate
effects, etc.
*2 Cost of sales: Decrease due to much fewer returns of previous
version of Aujua than expected, etc.
*3 Operating income: Increase due to above factors and unused SG&A
expenses*4 Profit attributable to owners of parent: Increase due to above factors
and sale of a portion of cross-held shares

Gross profit

4,544

5,551

1,007

22.2

SG&A
expenses

3,757

4,161

404

10.8

Operatingincome786

1,390603

76.7 *3*Supplemental Info. – Return to shareholders <Dividends>(Unit: yen)

Ordinary
incomeProfitattributable toowners ofparent

717

538

1,208

1,074

491

536

68.5

FY201699.7 *4*) See page 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

11FY2017

FY2018 planEnd of 2Q

384024End of FY

405224

Total

789248

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

FY2014FY2015FY2016FY2017FY2018Jan.–Mar.

FY2018Plan

Capital expenditures

1,028

2,779

4,262

1,570

369

1,668

Depreciation andamortization

1,004

1,033

1,077

1,272

326

1,376

Amount

1,168

1,214

1,232

1,422

332

1,448

% to sales

4.6

4.4

4.2

4.3

4.3

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.

12

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―

37,02336,617

Number of beauty
customers(thousand people)

39,076

38,46837,84737,395

2017

Remarks(As of Nov. 1)

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

201420152017 *1)

2016

JAPAN
Milbon Co., Ltd.

216

237

249

258

104

100

102105USA
MILBON USA, INC.

121291240

53

6348CHINA
Milbon Trading(Shanghai) Co., Ltd.

1718181925364050

KOREA
Milbon Korea Co., Ltd.

17192023647580

84

THAILAND
Milbon (Thailand) Co., Ltd.

666981514131216

1924

46

4247

38

Others *2

2018

269

1322

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
13 FPs joined in October 2017, and are currently in
OJT on site
31 FPs joined in April 2018, and arecurrently in training(The above 44 FPs are not included in the left chart.)

25

726

*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.

13

Outlook of Milbon Group
Double-digit growth in Japan(comparison periods differ for overseas subsidiaries due to change to fiscal year end; see next page)(Unit: million yen)
Increase/
Decreaseratio (%)

Forex rates
FY2017(Yen)

FY20173 months *1)

FY20183 months *1)

5,856

6,479

10.6

1960

145

131－

2004

Milbon Trading(Shanghai) Co., Ltd.

169373－2009

KOREA427485－

2009

2517－

2013273301

10.2-Japan
Milbon Co., Ltd.

USAMILBON USA, INC.

CHINA

Milbon Korea Co., Ltd.

THAILAND
Milbon (Thailand) Co., Ltd.

Others*2)

Startoperations

Forex rates
FY2018(Yen)--

109.56108.23

1 dollar =1 yuan =

16.17

17.15

1 won =

0.09390.1017

1 baht =3.29

3.45--*1) See page 3 for the corresponding periods.
*2) Taiwan, Hong Kong, Vietnam, Malaysia, Turkey, Indonesia, the Philippines, Singapore, Germany and others
Copyright © 2018 Milbon. All rights reserved.
14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 March (3 months), with figures in local currencies.
Currencies(unit)USAMILBON USA, INC.

CHINA
Milbon Trading (Shanghai) Co., Ltd.

KOREA
Milbon Korea Co., Ltd.

THAILAND
Milbon (Thailand) Co., Ltd.

FY2017(Jan.–Mar.)FY2018(Jan.–Mar.)

Increase/
Decrease ratio (%)

US dollar(thousand)

1,148

1,212

5.6

Yuan
(thousand)

16,09421,806

35.5

Won(million)

4,684

4,777

2.0

Baht
(thousand)

9,428

5,084

(46.1)USA (MILBON USA, Inc.)
The direct sales category is performing well, as our sales strategy of targeting 25 high-end Manhattan salons succeeded,and we also expanded the number of salons handling our products in the Chicago area. Performance in the distributor
category struggled somewhat, partly due to heavy turnover of distributor salespersons in the South. Regarding newproducts, “milbon” Repair series launched in February was well received. Currently, installation is near-guaranteed when
implemented at salon seminars.

CHINA (Milbon Trading (Shanghai) Co., Ltd.)The distributor area is performing well, with particularly large growth in the Fujian and Zhejiang provinces. By product,hair coloring products are progressing steadily, partly due to offering trend information and penetration through use bycolor specialists, etc.
In hair care products, we have begun to generate reliable repeats for “milbon” Repair series by focusing educational
activities on 40 salons.
*Figures in the text on pages 15 and 16 are based on local currencies.
Copyright © 2018 Milbon. All rights reserved.

15

Outlook of Overseas Subsidiaries (2)KOREA (Milbon Korea Co., Ltd.)
After the loosening of regulations in the Cosmetics Act of Korea, some key distributors have switched from Milbon
products to low-priced hair coloring products of emerging competitors. For the salons that switched products, they arestarting to reconfirm the quality of Milbon products, and we plan to win them back through thorough implementation of ourhighly regarded education system and re-proposing of colors.

THAILAND (Milbon (Thailand) Co., Ltd.)
From the current period, we have strategically narrowed our focus from the previous three distributors to a singledistributor. As a result, order trends have changed significantly (in the previous fiscal year, although we narrowed ouractivities to one distributor, we continued to receive orders from the other two). Sales in the first quarter of FY2018 havedecreased year on year, but this is due to the impact of a large order at the end of the previous fiscal year to fully roll out thesingle-distributor system. Our outside sales at distributors are growing steadily, and we consider the above to be atemporary factor. Additionally, Ordeve Addicthy, which was launched at the end of last year, has received a positivereception. Salons introducing Atenje (straight perm product) are increasing steadily through studio seminars and seminar
activities by distributor salespersons.

Copyright © 2018 Milbon. All rights reserved.

16

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.