Milbon Co., Ltd.

FY2020 Third Quarter (January 1, 2020 – September 30, 2020)
Financial Results Presentation Materials

November 13, 2020
Copyright © 2020 Milbon. All rights reserved.

0Table of Contents
P2

Consolidated Operating Results

P3

Consolidated Net Sales by Product Category

P14

Consolidated Statement of Earnings

P15

Consolidated Trends in Capital Expenditures and R&D Expenses

P16

Trends in FPs, Market Related Data

P17

Consolidated Net Sales in Japan and Overseas

P18

Consolidated Operating Income in Japan and Overseas

P19

Outlook of Overseas Subsidiaries

P21

Appendix

Copyright © 2020 Milbon. All rights reserved.

1

Consolidated Operating Results (FY2020 9 months)
 Although it affected by the last-minute surge in demand prior to the consumption
tax hike in the previous fiscal year and activity restrictions in the COVID-19 crisis,
the domestic sales has almost recovered to the level of the revised plan.
 In overseas market, the East Asian region has recovered to the situation before the
COVID-19, and in South Korea in particular, it has been positive compared to theprevious fiscal year, and on a consolidated basis, it is in line with the revised plan.
(Unit: million yen)

Increase/

FY2019% total
9 months

FY2020
Increase/
Decrease% total
9 months
Decrease ratio (%)

Net sales

26,651

100.0

25,214100.0(1,437)(5.4)

Gross profit

17,60966.1

16,665

66.1

(943)

(5.4)

SG&A expenses

12,43346.7

12,358

49.0

(75)

(0.6)

Operating income

5,175

19.4

4,307

17.1

(868)

(16.8)

Ordinary income

4,804

18.0

3,842

15.2

(961)

(20.0)

Profit attributable toowners of parent

3,411

12.8

2,740

10.9

(671)

(19.7)

Copyright © 2020 Milbon. All rights reserved.

2

Consolidated Net Sales by Product Category [Hair Care Products (1)]Consolidated Net Sales (FY2020 9 months)
FY20199 months

15,313••••

FY20209 months(Unit: million yen)

Increase/
Decrease

14,654(658)

Increase/
Decrease ratio (%)(4.3)

Premium brands remained strong. Aujua remained positive compared to the previous fiscal
year due to stable repeat demand, despite the inability to roll out new products sufficiently
due to activity limitations and the impact of a decrease in customers visiting stores incentral Tokyo.
Global Milbon is making progress in creating new contact points both domestically andinternationally. Domestically, the company has been boosted by heightened salon’s
awareness of product sales in the aftermath of the COVID-19 crisis and the launch of the
e-commerce website milbon:iD.
For professional brands, Cronna brand was positive compared to the previous year in Q3(July to September) due in part to the impact of new products, but sales of Elujuda andJemile fran were negative due to factors such as the timing of new product launches
coinciding with voluntary restraints and activity limitations.
Launched Door, a new brand for social media natives for professional product lines. The
company is taking on the challenge of new sales promotions, such as video streaming andeasier delivery of samples, but the effect is not yet apparent.

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3

Consolidated Net Sales by Product Category [Hair Care Products (2)]New Products
FY2020 9 months
Aujua Scalpcare Series Fortice Line
A scalp care series that approaches Ageing Bacteriapresent on the scalp to curb complex aging damage ofthe hair and scalp.
(Unit: million yen)

FY2020 target*

FY20209 months*

Progress rate (%)

251

-

-

February 7, 2020 Debut

Cronna Ice Spa Shampoo Orange
A carbonated foam shampoo below the freezing pointthat continues to cool while eliminating the summerspecific worries of smell and stickiness of the scalp.
(Unit: million yen)
FY2020 target*

FY20209 months*-

Progress rate (%)

137-

March 10,February
7,2020
2020Debut
Debut* From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.

Copyright © 2020 Milbon. All rights reserved.

4

Consolidated Net Sales by Product Category [Hair Care Products (3)]New Products
FY2020 9 months
Door
A new hair styling brand that meets the desire of thesocial media native (Gen Z) to express themselves
freely that they want at that time.
(Unit: million yen)

FY2020 target*2

FY20209 months*2-

Progress rate (%)

68-

September 10, 2020 Debut*1 Today's young people have grown up in an environment surrounded by smartphones, PCs, and other devices since their birth.
*2 From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.

Copyright © 2020 Milbon. All rights reserved.

5

A Premium Brand, Aujua
Demand remains strong and stable under the COVID-19 circumstances
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

3,698

4,006

Increase/
Decrease

Increase/
Decrease ratio (%)

308

8.3

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY20199 months *2

FY20209 months *2

5,085

Increase/
Decrease

Increase/
Decrease ratio (%)

9,000(Number of salons)
4,500

8,000

4,000

7,000

3,500

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

Hair care series

2,000

1,000

Scalp care series

1,000

500

5,113

28

0.6

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 that suits the hair
texture of individual customers

What is Aujua?

Aging care series

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.

Trends in sales & number of salons(Million yen)・5 series
Eternal stage series (new)Climatic care series

0・14 lines02010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sales

・89 items

Number of salons* Graphs are based on individual figures.

*1 Calculated based on the past year's shipment results for both Japan and overseas.
*2 From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.

Copyright © 2020 Milbon. All rights reserved.

6

A Premium Brand, Global Milbon
Growth in number of contact points in both domestic and overseas markets
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

7,674

10,326

Increase/
Decrease

Increase/
Decrease ratio (%)

2,652

34.6

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY20199 months *2

1,939

FY20209 months *2

1,965

Increase/
Decrease

Increase/
Decrease ratio (%)

25

1.3

Brand concept

What is “Global Milbon”?

A system hair care brand thatcultivates the “unique beauty” ofeach individual, with 360° shiny hair

We conducted an in-depth analysis of theinner structure of the hair of women from
20 countries around the world, using our
proprietary CT scanning technology, anddiscovered a universal form of hairdamage. Accordingly, we developed a haircare line containing ingredients capable ofrepairing such damaged hair andincreasing the density within each strandof hair.
“Global Milbon” is a system hair careproduct for developing shiny, beautiful hairfrom the core.

Countries with salonsJapan, USA, Hong Kong, China, Thailand,
Taiwan, Turkey, Malaysia, Vietnam,
Indonesia, the Philippines, Singapore,
Germany, Korea

Trends in sales & number of salons(Number of salons)(Million yen)
3,000

9,000
8,000

2,500

7,000

2,000

6,000
5,000

1,500

4,000

1,000

3,000
2,000

500

1,000

0

0
2016

Sales

2017

2018

2019

Number of salons* Graphs are based on individual figures.

*1 Calculated based on the past year's shipment results for both Japan and overseas.
*2 From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively
applied.

Copyright © 2020 Milbon. All rights reserved.

7

Consolidated Net Sales by Product Category [Hair Coloring Products (1)]Consolidated Net Sales (FY2020 9 months)
FY20199 months

9,889

FY20209 months(Unit: million yen)

Increase/
Decrease

9,148

(741)

Increase/
Decrease ratio (%)(7.5)• In the third quarter (July to September), overseas sales were positive comparedto the previous year, and domestic sales returned to almost the same level aslast year. Consolidated sales turned positive compared to the previous year.
• The popularity of highly designed hair color products using breach agents isstrong, and the recovery of fashion color is rapid. Cumulative sales of Addicthy
exceeded those of last year.
• Domestically, gray color is returning as salons resume, but it continues tostruggle due to competition from other companies and a decrease in activity.
• Overseas, South Korea continues to perform well, and the cumulative total is
growing positively compared to the previous year.

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8

Consolidated Net Sales by Product Category [Hair Coloring Product (2)]Core Product
FY2020 9 months
Ordeve Addicthy
Erases red-tinged brown with high saturation blue.
With clear and transparent color expression, it lets customers
freely realize individual hair color designs.
(Unit: million yen)
FY20199 months *FY20209 months *

3,080

3,285

Increase/
Decrease

Increase/
Decrease ratio (%)

205

6.7

FY2017 Debut

Ordeve Seedil
A gray-hair coloring product for gentle dyeing. Does not irritate
the scalp, allowing adult women who have repeatedly used grayhair coloring products to continue enjoying and feel secure about
hair coloring.
(Unit: million yen)
FY20199 months *242

FY20209 months *412

Increase/
Decrease

Increase/
Decrease ratio (%)

170-

June 6, 2019 Debut* From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively
applied.

Copyright © 2020 Milbon. All rights reserved.

9

A Premium Organic Brand, Villa Lodola (1)Impacted by restriction activities and a decrease in the number of salon customers in central Tokyo

Number of salons
FY2019

9,015(Unit: salons)

FY20209,621

Increase/
Decrease

Increase/
Decrease ratio (%)

606

6.7

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY20199 months *879

FY20209 months *790

Increase/
Decrease

Increase/
Decrease ratio (%)(89)(10.2)

Trends in sales & number of salons(Number of salons)(Million yen)

Brand concept

1,400

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

What is Villa Lodola?
Based on the concept of “Beauty, the Organic Way,” Villa Lodola is a trueorganic brand that thoroughly cares about the natural environment not
only for the product itself but also in its container, production phase andpromotional 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.

10,000

1,200

8,000

1,000
800

6,000

600

4,000

400

2,000

200
0

0
2012

2013

2014

Sales

2015

2016

2017

2018

2019

Number of salons* Graphs are based on individual figures.

* From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively
applied.

Copyright © 2020 Milbon. All rights reserved.

10

A Premium Organic Brand, Villa Lodola (2)Core Product
Villa Lodola ColorWith 92% natural ingredients, the product’s formulation utilizes thepower of plants. It brings comfort of an organic product across all
aspects, including during application, the finish and continued use.

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY20199 months *655

FY20209 months *593

Increase/
Decrease

Increase/
Decrease ratio (%)

(62)

(9.5)

FY2015 Debut* From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.

Copyright © 2020 Milbon. All rights reserved.

11

Consolidated Net Sales by Product Category [Cosmetic Products]
Consolidated Net Sales (FY2020 9 months)
FY20209 months

FY20199 months

101(Unit: million yen)

Increase/
Decrease

223

Increase/
Decrease ratio (%)

121-• As a result of the coronavirus pandemic, there were some areas in which large-scale events
could not be held, so we reconstructed our proposal activities on a small scale and worked
to create an opportunity to touch and test our products. In areas where large-scale events
have not yet been held, many salons have become interested in Imprea.
• As of the end of September, the number of contracted salons exceeded the annual target of500. In addition to aiming to expand the number of contact points, the Company will tackle
the challenges that have newly been identified.

New Products
Imprea Whitening Laser Shot

A whitening solution that directly approaches the origin of spots,
like targeted by a laser. It suppresses the formation of melaninand prevents spots and freckles.
(Unit: million yen)
FY2020 target*

FY20209 months*-

Progress rate (%)

39-

February 7, 2020 Debut* From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively
applied.

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12

recovery in economic activity

A Premium Brand, Imprea
Revitalization of activities after self-restraint period
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

200

447

Increase/
Decrease

247

Increase/
Decrease ratio (%)

123.5

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY20199 months *2101

FY20209 months *2

223

Increase/
Decrease

Increase/
Decrease ratio (%)

121-

Brand concept

What is Imprea?

The brand concept of Imprea is “Revolutionize Your Aurawith your Professional Stylist”. We will provide new beauty
value by leveraging Professional Stylists’ ability to provide
solutions, which is one of the strengths of them.

Imprea is a salon exclusive brand created through joint research by KOSÉ,
which specializes in skin research, and Milbon, which specializes in hair research.
We will improve the complexion by establishing a good balance between the"corner-layer keratin" on the surface of the skin, which holds the key tocomplexion.

“Revolutionize Your Aura with your Professional Stylist”
Through communication that takes advantage of strength as a beautician, we propose impressions that comprehensively capture hair and facethrough beauticians, and deliver " Change Your Impression " to customers.

*1 Calculated based on the past year's shipment results.
*2 From the first quarter of FY2020, consolidated gross sales figures are used. Figures for the first quarter of FY2019 have also been retroactively applied.

Copyright © 2020 Milbon. All rights reserved.

13

Consolidated Statement of Earnings (FY2020 9 months)<Consolidated Statement of Earnings> (Unit: million yen)
FY20199 months

Sales
Cost of sales

% to
sales

FY20209 months

% to
sales

26,651 100.0 25,214 100.0
9,042

33.9

8,548

33.9

Gross profit

17,60966.1 16,665

66.1

SG&A
expenses

12,43346.7 12,358

49.0

Operatingincome

5,175

19.4

4,307

17.1

Ordinary
income

4,804

18.0

3,842

15.2

Profitattributableto owners ofparent

3,411

12.8

2,740

10.9

Copyright © 2020 Milbon. All rights reserved.

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

FY20199 months

FY20209 months% to sales

Increase/
Decrease

Increase/
Decreaseratio (%)

15,313

14,654

58.1

(658)

(4.3)

Hair coloringproducts

9,889

9,148

36.3

(741)

(7.5)

Permanent wave
products

1,168

1,036

4.1

(131)

(11.2)

Cosmetic products

101

223

0.9

121

119.4

Others

178

150

0.6

(28)

(16.0)

Hair care products<Major factors for the increase/decrease>

Net sales -1,437 million yen (-5.4%)
SG&A-75 million yen (-0.6%)
In SG&A expenses, travel expenses andmarket development expenses declined
significantly due to the impact of the covid19 crisis, but it was unable to compensate
for the increase in personnel expenses(increase in new hiring and base salaryraise)

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

FY2016FY2017FY2018FY2019FY2020Jan.–Sep.

FY2020
Plan

Capitalexpenditures

4,262

1,570

1,149

1,605

1,068

1,958

Depreciation andamortization

1,077

1,272

1,370

1,453

1,152

1,632

Amount

1,232

1,422

1,479

1,534

1,163

1,796

% to sales

4.2

4.3

4.2

4.2

4.6

4.6

Category

R&D exp.

FY2020 CAPEX Main Items (Plan)
•
•
•
•
•

Establishment of sales office in Niigata
Plant equipment: compounding and filling (vacuum emulsification, etc.)
Establishment of Aoyama Sales Office 2
Acquisition of land for construction of the new training center
Part of expenditure for establishment of a plant in China

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15

Trends in Fieldpersons (FPs), Market Related Data
(Number of FPs / As of January 1, the beginning of theFieldpersons trends (by country) fiscal year (As of December 21 for 2017 and before))2017 *1

2016

2018

2019

2020

249

258

269

279

297

102

105

111

108

-

USA

9

12

13

13

17

MILBON USA, INC.

63

48

48

50

-

CHINA

18

19

22

21

30

Milbon Trading(Shanghai) Co., Ltd.

40

50

62

70

-

KOREA

20

23

25

30

32

Milbon Korea Co., Ltd.

80

84

82

77

-

25

33

33

35

38

37

31

37

39

-

JAPAN

Others *2

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
(As of September 30, 2020)
10 FPs joined in October 2019, and areassigned on site
40 FPs joined in April 2020, and are currently
in training
0 FPs joined in October 2020 no recruitment
activities in autumn(The above 50 FPs are not included in the left
chart.)

Market Related Data (Japan)
FY2016
Number of businessestablishments(households)

172,304

Number of workers

443,241

Number of beauty
customers(thousand people)

37,023

Remarks
Bureau economy census of ministry
statistics of public management
Statistics Bureau, Ministry of Internal
Affairs and Communications:
Population statistics as of October 1st ofeach year Population statistics forfemales aged 15 to 64* Data in the Ministry of Health, Labour and Welfare's
Ministry of Health, Labour and Welfare administrative
report, which had been used for the number of salonsand beauticians in the "Market Trends,“until FY2020 Q1
was judged to differ greatly from the actual situation.
Accordingly, the number of business establishments andnumber of workers are shown in the data from the
Economy Census of the Statistics Bureau of the Ministryof Internal Affairs and Communications. The number ofworkers includes workers other than those with abeautician license.

*1 Because FY2017 was an irregular accounting period, performance is calculated with adjusted amounts for a 12-month period.
*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others

Copyright © 2020 Milbon. All rights reserved.

16

Consolidated Net Sales in Japan and Overseas
FY2020 9 months(Unit: million yen)

FY20199 months

FY20209 months

Increase/
Decrease

Increase/
Changes in Local*1
Decrease ratio currency base

Net Sales% to sales

Net Sales% to sales

26,651

100.0

25,214100.0(1,437)

(5.4)

(4.8)

JAPAN

22,336

83.8

21,102

83.7(1,233)

(5.5)

(5.5)

Overseas

4,315

16.2

4,111

16.3

(204)

(4.7)

(1.4)

USA

462

1.7

334

1.3

(127)

(27.7)(26.6)

CHINA

1,144

4.3

1,107

4.4

(36)

(3.2)

0.4

KOREA

1,731

6.5

1,832

7.3

100

5.8

11.5

Other *2

977

3.7

836

3.3

(140)

(14.4)(14.1)

Consolidated Net Sales

(%)

(%)

*1 Figures are the rates of change in real terms on a local currency basis. Current exchange rates of 107.55 yen to the U.S. dollar, 15.34 yen to the Chinese yuan,
and 0.0890 yen to the Korean won*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others

Copyright © 2020 Milbon. All rights reserved.

17

Consolidated Operating Income in Japan and Overseas
FY2020 9 months(Unit: million yen)

FY20199 months
Operating
IncomeFY20209 months

Operatingincome ratio(%)

Operating
IncomeOperatingincome ratio(%)

Increase/
Decrease

Increase/
Decrease ratio(%)

Consolidated
Operating Income

5,175

19.4

4,307

17.1

(868)

(16.8)

JAPAN

4,690

21.0

4,087

19.4

(603)

(12.9)

Overseas

485

11.2

219

5.3

(265)

(54.7)

USA(182)(39.5)(215)(64.3)

(32)

-

CHINA

287

25.2

214

19.3

(73)

(25.6)

KOREA

538

31.1

439

24.0

(99)

(18.5)

Other *

(158)

(16.3)(218)(26.1)(59)-* Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others

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18

Outlook of Overseas Subsidiaries (1)Figures in the text are based on local currency.

USA (MILBON USA)
•
•
•

•

The damage to covid-19 crisis was so great that economic activity resumed around June, although thesituation varied from state to state and area to area.
Sales were strong in July as customers surged into salons due to the resumption of salon operations.
Since then, activities have continued under the impact of admission restrictions and re-lockdowns.
By category, the creation of a contact point for the hair coloring product Sophistone was strong. Whilethe company targeted 300 salon contracts a year, it had more than 400 salons as of the end of
September, exceeding expectations. Continued support activities such as online seminars and productexplanations are being utilized during lockdowns.
Sales of hair care products grew through the "Salon Interactive" system, which delivers products from
distributors to salon customers through salons.

CHINA (Milbon China)•••

The cumulative total has returned to the level of the previous year. Clarified the 18-month mission andshared it with employees and distributors. It proposes how to grow in coexisting with coronavirus andimplements educational activities associated with it, leading to a trust relationship with salons.
Styling products continued to grow from Q2. (Cumulative total +16.7%) It is becoming popular becauseof the use of millbon styling products in seminars sponsored by many top hair designers.
Hair coloring products were also positive compared to the previous quarter (July to September). Benefits
included a review of basic color knowledge and workshops to improve technology during Q2.

Copyright © 2020 Milbon. All rights reserved.

19

Outlook of Overseas Subsidiaries (2)Figures in the text are based on local currency.

KOREA (Milbon Korea)••••

Mainstay hair coloring products remained strong. Addicthy, which was launched in May, has been sellingwell, and the number of new contact points has increased, and sales have been steady even in theCorona crisis.
Sales of hair care products also grew at both new contact points and sales. The introduction of Aujua
has also progressed to salons that had been postponed in Corona.
Global Milbon launched in July. The Company has been holding workshops for distributor sales since
before the launch, which has steadily acquired the number of salons and also contributed to theincrease in sales of existing products.
The third branch is scheduled to be opened in November.

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20

<Appendix> Hair Care Brand Positioning Map

Targets

LINE generation(born 1992-1996)

Premium

brand

Hanako juniorgeneration(born 1987-1991)

Baby boomer juniorgeneration(born 1971-1976)

Professional
Copyright © 2020 Milbon. All rights reserved.

brands21

Hanako generation(born 1956-1964)

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

Copyright © 2020 Milbon. All rights reserved.

22