Milbon Co., Ltd.
FY2018 Second Quarter (January 1, 2018 – June 30, 2018)

Financial Results Presentation Materials

July 25, 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

P16

Progress in FY2018 (59th Term)

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 second quarter of the fiscal year under review covers the six month
period from January 1, 2018 to June 30, 2018, the second quarter of the previous
fiscal year covered the six month period from December 21, 2016 to June 20,
2017 (for consolidated subsidiaries, the period of October 1, 2016 to March 31,2017).
Notation in thesematerials

Respective periods

Periods for subsidiaries

Second quarter of the fiscal
FY2018 6 months
year under review

January 1, 2018 to June 30,2018 (6 months)

January 1, 2018 to June 30,2018 (6 months)

Second quarter of theprevious fiscal year

December 21, 2016 to June 20,
2017 (6 months)

October 1, 2016 to March 31,2017 (6 months)

FY 2017 6 months

Copyright © 2018 Milbon. All rights reserved.

2

Consolidated Operating Results (FY2018 6 months)

Sales grew steadily both in Japan and overseas(Unit: million yen)

FY2017
6 months *)FY20186 months *)Increase/
Decrease

Increase/
Decrease ratio(%)

Net sales

14,956

16,802

1,846

12.3

Gross profit

10,06911,752

1,683

16.7

SG&A expenses

7,736

8,777

1,041

13.5

Operating income

2,333

2,975

642

27.5

Ordinary income

2,147

2,746

599

27.9

Profit attributable toowners of parent

1,508

2,137

628

41.7

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

3

Consolidated Sales by Product Category [Hair Care Product]
Premium brands continued strong performance(FY2018 6 months)
FY2017 6 months *)(Unit: million yen)

FY2018 6 months *)8,680

Increase/Decrease

9,995

1,315

Increase/Decrease ratio (%)

15.1• Sales have been steady for the premium brands Aujua and “milbon.”• The upgrade of the full Aujua line was completed with the scalp care series in May. This
upgrade invigorated activities aimed at client salons and enhanced scalp care proposals,
which had faced issues, resulting in significantly increased sales.

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

4

A Premium Brand, Aujua
Upgraded scalp care series launched in May is also well received
Number of salons*1)(Unit: salons)

FY2017 year-end

FY2018 Q2-end

3,166

3,513

Increase/
Decrease

347

Sales (FY2018 6 months)*2)
FY2017 6 months

Increase/
Decrease ratio
(%)

11.0
(Unit: million yen)

*2)
FY2018 6 months

Increase/
Decrease

Increase/
Decrease ratio(%)

Trends in sales & number of salons(Million yen)

2,299

2,886

587

25.5

Brand concept

Product range

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

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

What is Aujua?

Aging care series
Hair care series
Scalp care series
Climatic care series(Number of salons)

7,000

4,000

6,000

3,500

5,000

3,000

4,000

2,000
3,000
2,000

1,000
Hair care that supports beauty, now andinto the future, by addressing each0
individual’s hair and skin concerns andchoosing the most appropriate item for・12 linesthat time.
販売高
取引軒数
Sales
Number of salons・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 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

5

2,500
1,500
1,000
500
0

A Premium Brand, “milbon”
Steady progress in salons, overseas rollout in 11 countries
Number of salons *1)(Unit: salons)

FY2017 year-end

FY2018 Q2-end

3,966

4,996

Increase/
Decrease

1,030

Sales (FY2018 6 months)
FY2017 6 months*2)

FY2018 6 months*2)

594

948

Increase/
Decrease ratio
(%)

26.0
(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio
(%)

353

59.5

(Million yen)

6,000
5,000

2,000

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 1,500

USA, Hong Kong, China,
Thailand, Taiwan, Turkey,
Malaysia, Vietnam, Indonesia,
Singapore and Germany(Number of salons)

2,500

Brand concept

Countries with Salons

Trend in sales & number of salons

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, 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.

4,000
3,000
2,000
1,000
0
2016 2017 2018
Sales
販売高

Number of salons
取引軒数*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 3 for the corresponding periods.
Copyright © 2018 Milbon. All rights reserved.

6

Consolidated Sales by Product Category [Hair Coloring Product]
With additional color, Addicthy, which was launched last year, drove sales of hair coloring products(FY2018 6 months)
FY2017 6 months *)(Unit: million yen)
FY2018 6 months *)5,462

Increase/Decrease

5,886

424

Increase/Decrease ratio (%)

7.8• 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.

7

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

FY2017 year-end

FY2018 Q2-end

6,895

7,507

Increase/
Decrease

612

Sales (FY2018 6 months)
FY2017 6 months *)FY2018 6 months*)

444

510

Increase/
Decrease ratio(%)

8.9(Unit: million yen)

Increase/
Decrease

65

Increase/
Decrease ratio
(%)

14.7

(Million yen)

Trends in sales & number of salons

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?

8,000

800
6,000
600
4,000

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.

2,000

200

0

0

販売高
Sales

*) 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

8

Numberof salons
取引軒数

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 6 months)
FY2017
6 months *)FY20186 months *)

316

371

(Unit: million yen)

Increase/
Decrease

55

Increase/
Decrease ratio
(%)

17.5

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

9

FY2015 Debut

Consolidated Statement of Earnings (FY2018 6 months)<Consolidated Statement of Earnings> (Unit: million yen)

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

FY2017
6 months*)

FY20186 months*)

14,956

16,802

Increase/
Decrease

1,846

FY2017 *) FY2018 *) % total
6 months
6 monthssales

Increase/
Decreaseratio (%)

12.3
3.3 *1

4,887

5,050

162

Gross profit

10,06911,752

1,683

16.7

SG&A
expenses

7,736

8,777

1,041

13.5

Operatingincome

2,333

2,975

642

27.5 *2

Ordinary
income2,147

Profitattributable toowners ofparentIncrease/
Decrease

Increase/
Decreaseratio (%)

Hair care products

8,680

9,995

59.5

1,315

15.1

Hair coloringproducts

5,462

5,886

35.0

424

7.8

Permanent wave
products

709

819

4.9

109

15.4

Others

104

101

0.6

(3)

(2.9)

<Major factors for the increase/decrease>*1 Cost of sales: Impact of much fewer returns of previous version of
Aujua than expected, etc.
*2 Operating income: Increase due to sales growth and above factor*3 Profit attributable to owners of parent: Increase due to above factors
and sale of a portion of cross-held shares*Supplemental Info. – Return to shareholders <Dividends>(Unit: yen)

1,508

2,746

2,137

599

628

FY201627.9

41.7

Copyright © 2018 Milbon. All rights reserved.

10

FY2018End of 2Q

38

40

24

End of FY

40

52(Plan) 24

Total

78

92

(Plan) 48*3*) See page 3 for the corresponding periods.

FY2017

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

FY2014FY2015FY2016FY2017FY2018Jan.–Jun.

FY2018Plan

Capital expenditures

1,028

2,779

4,262

1,570

670

1,668

Depreciation andamortization

1,004

1,033

1,077

1,272

666

1,376

Amount

1,168

1,214

1,232

1,422

712

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―

37,02336,526

Number of beauty
customers(thousand people)

39,076

38,46837,84737,395

2017

Remarks(As of Feb. 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

JAPAN
Milbon Co., Ltd.

216

237

249

258

104

100

102

105

USA
MILBON USA, INC.

12

12

9

12

40

53

63

48

CHINA
Milbon Trading(Shanghai) Co., Ltd.

17

18

18

19

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)

2018

269

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)13

13 FPs joined in October 2017, and are currently in
OJT on site
31 FPs joined in April 2018, and are
currently in training

22(The above 44 FPs are not included in the left chart.)

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
Double-digit growth in Japan(comparison periods differ for overseas subsidiaries due to change to fiscal year end; see next page)(FY2018 6 months)(Unit: million yen)
Increase/
Decreaseratio (%)

Forex rates
FY2017(Yen)

FY2017
6 months *1)

FY20186 months *1)

12,847

14,188

10.4

1960

276

305

－

2004

Milbon Trading(Shanghai) Co., Ltd.

431

706

－

2009

KOREA

886

981

－

2009

53

55

－

2013

460

565

22.7

-

Japan
Milbon Co., Ltd.

USAMILBON USA, INC.

CHINA

Milbon Korea Co., Ltd.

THAILAND
Milbon (Thailand) Co., Ltd.

Others *2)

Start
operations

Forex rates
FY2018(Yen)--

111.59108.67

1 dollar =1 yuan =

16.27

17.09

1 won =

0.09590.09991 baht =

3.14

3.44

-

-

*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.
13

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 June (6 months), with figures in local currencies.
Currencies(unit)USA
MILBON USA, INC.

CHINA
Milbon Trading (Shanghai)Co., Ltd.

Increase/
Decrease ratio
(%)

2,629

2,821

7.3

Yuan
(thousand)

30,692

41,351

34.7

Won(million)

9,909

9,827

(0.8)

Baht
(thousand)

18,69916,164(13.6)

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

FY2018(Jan.–Jun.)

US dollar(thousand)

KOREA
THAILANDFY2017(Jan.–Jun.)

USA (MILBON USA, Inc.)
The direct sales category is performing well as our sales strategy of targeting 25 high-end Manhattan salons succeeded.
In the distributor category as well, efforts to strengthen relationships with distributors are beginning to show results. On
the product front, “milbon” is growing significantly as a result of focused activities and a positive reception for proposals
suited to each season. In the second half, we plan to introduce the fashion color Ordeve Addicthy and gray-hair coloringproduct Ordeve beauté for the Asian black hair market, and market expansion is anticipated. This introduction will precede
the launch of hair coloring products for European and US markets in 2019.

Copyright © 2018 Milbon. All rights reserved.

14

Outlook of Overseas Subsidiaries (2)CHINA (Milbon Trading (Shanghai) Co., Ltd.)The direct sales and distributor areas both grew substantially, increasing by 30% year on year. By product, the fashioncolor Ordeve is progressing steadily, partly due to the results of holding seminars for color specialists in each area. In haircare products, we have begun to generate reliable repeats for “milbon” by focusing educational activities on 40 salons andlaunching the styling series Creative Style.

KOREA (Milbon Korea Co., Ltd.)
Milbon distributors are being affected by the continuous entry into the market of low-priced hair coloring products fromcompetitors, and we are struggling somewhat. We are competing on our superiority with respect to quality and education.
Still, winning customers back is expected to take some time. In hair care products, the upgrade of Aujua was completed forthe hair care series in April and is scheduled for the scalp care series in September. The Nigelle jelly series launched in May
has also been well received in the market. With regard to perms, Neo Liscio, which is highly regarded in Japan, is scheduled
for introduction in August, and strong performance is expected going forward.

THAILAND (Milbon (Thailand) Co., Ltd.)
Although sales fell significantly year on year in the first quarter of FY2018 owing to the impact of a large order at the endof the previous fiscal year as a result of a narrowing of our focus to a single distributor, performance is beginning to recoversteadily due to the introduction of the new “milbon” line and continued implementation of perm workshops. One factor in therecovery is that distributors have become able to confidently conduct Milbon product seminars, thanks to a stronger
collaborative structure that includes training conducted in Japan for educators who work at the distributors.

Copyright © 2018 Milbon. All rights reserved.

15

Milbon Groupth
Progress in FY2018 (59 Term)

Ryuji Sato, President and CEO

Copyright © 2018 Milbon. All rights reserved.

16

FY2018 Domestic Environment (1) Growth factors based on current situation(1) Product capabilities<Hair care products>

Aujua“milbon”
Elujuda, Jemile Fran

<Hair coloring products><Permanent products>

Ordeve Addicthy
Neo Liscio(2) Salon market• Leading salons: Grew as Aujua contributed to higher productivity• Young salons: New salons acquired through Addicthy and “milbon”(3) Collaboration with distributors• Project to create successful salons, etc.

Copyright © 2018 Milbon. All rights reserved.

17

FY2018 Overseas Markets (1) East Asia
 Continued growth in Chinese market[Market changes]
Change in awareness at leading salons and young salons(1)

Awareness regarding service and customer contact(2)

Awareness regarding human resources development efforts

 Korean Market is recovering steadily from a
temporary drop Southeast Asia
 Malaysia

Plan to convert to local subsidiary in 2019
Established new representative office in Singapore in March 2018

 Vietnam

Plan to convert to local subsidiary during the year

Copyright © 2018 Milbon. All rights reserved.

18 Designer education event aimed at Japan and rest of Asia
DA Inspire*) Area competitions held in FY2017
8 areas in Japan (Sapporo, Sendai, Tokyo, Kanazawa, Nagoya, Osaka, Hiroshima, Fukuoka)
3 areas overseas (Malaysia, Taiwan, Korea)•

June 19: DA Grand Prix Finals*DA of the Year selected from Grand Prix winners in each DA area•

Evening of June 19: Milbon Designers Award*Award ceremony for DA of the Year
Photo Revolution of the Year awarded at same time after selection by screening committee

 DA scheduled to be held in Shanghai starting in FY2018, expanding to 4 areas overseas*) DA (Designer’s Ability) Inspire is an educational event aimed at allowing hair designers
to expand their potential by reflecting on their own sensitivity.
Copyright © 2018 Milbon. All rights reserved.

19

FY2018 Overseas Markets (2) North America
 “milbon”: Introduction in high-end Manhattan salons begins
 Development of hair coloring products for European and US
markets: steady progress Ordeve Addicthy, Ordeve beauté: Launch scheduled for Asian
black hair market at the end of 2018, prior to launch of haircoloring products for European and US markets

Copyright © 2018 Milbon. All rights reserved.

20

FY2018 Cosmetic Products Business Progress

 Sales – Education System[Toward establishment of education system] 21 FCEs (Field Cosmetics Educators) selected• Plan to assign 7 units, each consisting of 3 FCEs for one branch Start of training
Six months, starting in October 2018
• FCE (Field Cosmetics Educator)
3 or 4 courses, starting in 2018
• FS (Field Sales)• FE (Field Educator)
Advance launch scheduled for spring 2019

Copyright © 2018 Milbon. All rights reserved.

21▼FP (Fieldperson)
Triangular structureOutlook of consolidated operating forecasts for FY 2018
 The consolidated operating forecasts have been revised upward, taking
into consideration the first half results and stable growth in the second
half.
(Unit: million yen)
FY2018 1H
AmountIncrease/
Decrease ratio (%)(Year-on-year)

FY2018 full-year targets(before revision)
Increase/AmountDecrease ratio (%)(Year-on-year)*(A)

FY2018 full-year targets(after revision)
Amount change
Increase/Amount from targets before Decrease
ratio (%)
revision(Year-on-year)*
(B)
(B-A)

Net sales

16,802

12.3

34,0007.2

34,700700

9.4Operatingincome

2,975

27.5

5,740

8.0

6,160

420

15.9

Ordinary
income

2,746

27.9

5,270

5.8

5,640

370

13.2

Profitattributable toowners ofparent

2,137

41.7

3,990

5.4

4,240

250

12.0

*Because FY2017 was an irregular accounting period, values are compared with adjusted amounts for a 12-month
period calculated for comparison.

Copyright © 2018 Milbon. All rights reserved.

22

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.