Milbon Co., Ltd.
FY2020 Financial Results
Presentation Materials

February 12, 2021
Copyright © 2021 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

P22

Appendix

P23

Milbon Group - Initiatives for FY2021 (62nd term)

Copyright © 2021 Milbon. All rights reserved.

1

Consolidated Operating Results
 Although sales for the full year were lower than the year before due to COVID-19,
the revised sales figures for both domestic and overseas were achieved. Sales in
China and South Korea were positive year-on-year.
 Profits declined due to a decrease in sales volume and an increase in fixed costs
such as personnel expenses.
(Unit: million yen)

FY2019FY2020% totalIncrease/

Increase/
Decrease% totalDecrease ratio (%)

Net sales

36,266 100.0

35,725 100.0

(541)

(1.5)

Gross profit

23,711

65.4

23,385

65.5

(326)

(1.4)

SG&A expenses

16,95946.8

16,990

47.6

30

0.2

Operating income

6,751

18.6

6,394

17.9

(357)

(5.3)

Ordinary income

6,231

17.2

5,791

16.2

(440)

(7.1)

Profit attributable toowners of parent

4,517

12.5

4,204

11.8

(313)

(6.9)

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2

Consolidated Net Sales by Product Category [Hair Care Products (1)]Consolidated Net Sales
FY201921,328(Unit: million yen)

Increase/
Decrease

FY202021,135(192)

Increase/
Decrease ratio (%)

(0.9)

•

Even in COVID-19 crisis, sales of hair care products remained almost unchanged, down
0.9% YoY, supported by needs for take-home products. Domestically, salons' heightenedawareness of take-home product sales due to the prolonged customer visit cycle and thelaunch of milbon:iD, an e-commerce website launched in June, helped to create newchannels.

•

In the premium brands, sales of “Aujua” grew due to increased sales of take-homeproducts, mainly repeat customers. The number of salons of “Global Milbon” increased due
to introducing a new small-lot bundle. As a result, sales of premium brands grew 5.8% YoY.

•

In the professional brands, sales of the "Cronna" brand increased due to the popularity ofthe "Cronna Ice Spa Shampoo Orange" launched in March, but new products of otherbrands were not introduced as expected due to restrictions on activities during the periodof restraint, resulting in a 6.8% YoY decline in the overall professional brand.

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3

Consolidated Net Sales by Product Category [Hair Care Products (2)]New Products
FY2020Aujua 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 *-FY2020 *Progress rate (%)

374-

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 *-FY2020 *Progress rate (%)

139-

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 © 2021 Milbon. All rights reserved.

4

Consolidated Net Sales by Product Category [Hair Care Products (3)]New Products
FY2020Door
A new hair styling brand that meets the desire of thesocial media native*1 (Gen Z) to express themselves
freely that they want at that time.
(Unit: million yen)

FY2020 target *2-

FY2020 *2

Progress rate (%)

106-

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.

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5

A Premium Brand, Aujua
Steady growth due to continuing popularity even in the Covid crisis
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

3,698

4,222

Increase/
Decrease

Increase/
Decrease ratio (%)

524

14.2

Consolidated gross sales
FY2019 *2

FY2020 *2

7,519(Unit: million yen)

Increase/
Decrease

7,960

Increase/
Decrease ratio (%)

441

5.9

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?
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)
9,000

(Number of salons)
5,000

8,000

4,500

7,000

4,000
3,500

6,000

3,000

5,000

2,500

・5 series

4,000

Eternal stage series

3,000

Aging care series

2,000

1,000

Hair care series

1,000

500

Scalp care series

0

2,000
1,500

0

Climatic care series
・15 lines

Sales

・96 items

Number of salons*Figures in the graph are based on non-consolidated total sales through 2018
and on consolidated total sales since 2019.

*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.

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6

A Premium Brand, Global Milbon
Sales grew along with the expansion of the number of salons in each country.
Number of salons
FY2019 *1(Unit: salons)

FY2020 *1

7,674

9,916

Increase/
Decrease

2,242

Consolidated gross sales
FY2019 *2

FY2020 *2

2,769

2,975

Increase/
Decrease ratio (%)

29.2(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio (%)

205

7.4

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(Million yen)
4,000

(Number of salons)
14,0003,500

12,0003,000

10,000

2,500

8,000

2,000

6,000

1,500

4,000

1,000

2,000

500
0

0
2016

2017

Sales

2018

2019

Number of salons

2020

2021
Targets*Figures in the graph are based on non-consolidated total sales through 2018
and on consolidated total sales since 2019.

*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.

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7

Consolidated Net Sales by Product Category [Hair Coloring Products (1)]Consolidated Net Sales
FY201912,994(Unit: million yen)

Increase/
Decrease

FY202012,594(400)

Increase/
Decrease ratio (%)(3.1)• The fashion color product “Ordeve Addicthy”, which has been growing since its
launch in 2017, continues to perform well. Design colors that can only be doneat salons are popular, and the need for bleach colors is becoming established,
and there is also a tendency for gray hair to enjoy designs using bleach agents.
Despite the continued decline in fashion color product “Ordeve”, the popularity of“Addicthy” contributed to the growth in sales of fashion color products as awhole, resulting in a 3.0% increase YoY.
• The gray color product “Ordeve Seedil”, launched in 2019, was specialized incold colors. Although addition of new warmer colors to broaden the range of
responses in FY2020, adequate proposals could not be done stemming fromrestricted activities and continuing fierce competition. As a result, sales of graycolor products as a whole decreased in 10.7% YoY.

Copyright © 2021 Milbon. All rights reserved.

8

Consolidated Net Sales by Product Category [Hair Coloring Product (2)]Core Product
FY2020Ordeve 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)
FY2019 *FY2020 *

4,029

4,630

Increase/
Decrease

Increase/
Decrease ratio (%)

601

14.9

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)
FY2019 *382

FY2020 *641

Increase/
Decrease

Increase/
Decrease ratio (%)

259-

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 © 2021 Milbon. All rights reserved.

9

A Premium Organic Brand, Villa Lodola (1)While steady growth in the number of salons, sales declined
Number of salons
FY2019

9,015(Unit: salons)

FY202010,128

Increase/
Decrease

Increase/
Decrease ratio (%)

1,113

12.3

Consolidated gross sales (FY2020 9 months) (Unit: million yen)
FY2019 *1,187

FY2020 *1,101

Increase/
Decrease

Increase/
Decrease ratio (%)

(85)

(7.2)

Brand concept

Trends in sales & number of salons(Million yen)
1,400

(Number of salons)
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.

8,000

800

6,000

600

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.

4,000

400

2,000

200
0

0
Sales

Number of salons*Figures in the graph are based on non-consolidated total sales through 2018
and on consolidated total sales since 2019.

* 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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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
FY2019 *882

FY2020 *827(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio (%)

(55)

(6.3)

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 © 2021 Milbon. All rights reserved.

11

Consolidated Net Sales by Product Category [Cosmetic Products]
Consolidated Net Sales(Unit: million yen)

Increase/
Decrease

FY2020FY2019165

360

Increase/
Decrease ratio (%)

195-• Due to limitations on activities, such as the inability to carry out large-scale events, sales
promotion activities were not sufficiently carried out, and sales did not reach the expectedlevel.
• Due to implementation such as questionnaire surveys on cosmetics to salon customers andreviewed lineup of starter kits, number of salons were expanded and greatly exceeded theannual target of 500.

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*-

FY2020*Progress rate (%)-

52

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

A Cosmetics Brand, Imprea
Progress in creating new channels while activities were restricted
Number of salons(Unit: salons)

FY2019 *1

FY2020 *1

200

645

Increase/
Decrease

445

Consolidated gross sales
FY2019 *2

FY2020 *2

165

360

Increase/
Decrease ratio (%)

222.5(Unit: million yen)

Increase/
Decrease

Increase/
Decrease ratio (%)

195-

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 © 2021 Milbon. All rights reserved.

13

Consolidated Statement of Earnings (FY2020)<Consolidated Statement of Earnings> (Unit: million yen)
FY2019

Sales
Cost of sales

% to
sales

FY2020% tosales

36,266 100.0 35,725 100.0
12,55434.6 12,339

34.5

Gross profit

23,71165.4 23,385

65.5

SG&A
expenses

16,95946.8 16,990

47.6

Operatingincome

6,751

18.6

6,394

17.9

Ordinary
income

6,231

17.2

5,791

16.2

Profitattributableto owners ofparent

4,517

12.5

4,204

11.8

Copyright © 2021 Milbon. All rights reserved.

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

FY2019FY2020% to sales

Increase/
Decrease

Increase/
Decreaseratio (%)

Hair care products

21,32821,135

59.2

(192)

(0.9)

Hair coloringproducts

12,994

12,594

35.3

(400)

(3.1)

Permanent wave
products

1,515

1,372

3.8

(142)

(9.4)

Cosmetic products

165

360

1.0

195

118.3

Others

263

262

0.7

(0)

(0.3)

<Major factors for the increase/decrease>【SG & A expenses】• Travel expenses and market development
expenses temporarily decreased due to
COVID-19• Increase in personnel expenses due to
new hiring, salary increase, etc.
• Increase in logistics costs due to anincrease in sales of direct delivery
products (premium brands)

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

Category

FY2016FY2017FY2018FY2019FY2020Capitalexpenditures

4,262

1,570

1,149

1,605

1,917

Depreciation andamortization

1,077

1,272

1,370

1,453

1,562

Amount

1,232

1,422

1,479

1,534

1,581

% to sales

4.2

4.3

4.2

4.2

4.4

R&D exp.

FY2020 CAPEX Main Items (Plan)•••

Establishment of sales office in Niigata
Plant equipment: compounding and filling (vacuum emulsification, etc.)
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

100

USA

9

12

13

13

17

MILBON USA, INC.

63

48

48

50

27

CHINA

18

19

22

21

30

Milbon Trading(Shanghai) Co., Ltd.

40

50

62

70

50

KOREA

20

23

25

30

32

Milbon Korea Co., Ltd.

80

84

82

77

79

25

33

33

35

38

37

31

37

39

34

JAPAN

Others *2

Upper column: Number of FPs (persons)Lower column: Sales per FP (million yen)
(As of December 31, 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 © 2021 Milbon. All rights reserved.

16

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

FY2019FY2020

Increase/
Decrease

Increase/
Changes in Local*1
Decrease ratio currency base

Net Sales% to sales

Net Sales% to sales

36,266100.0

35,725

100.0

(541)

(1.5)

(1.1)

JAPAN

30,40983.8

29,880

83.6

(528)

(1.7)

(1.7)

Overseas

5,857

16.2

5,844

16.4

(12)

(0.2)

2.4

USA

657

1.8

464

1.3

(192)

(29.3)(27.8)

CHINA

1,488

4.1

1,528

4.3

39

2.7

5.2

KOREA

2,334

6.4

2,543

7.1

209

9.0

13.2

Other *2

1,377

3.8

1,307

3.7

(69)

(5.1)

(4.7)

Consolidated Net Sales

(%)

(%)

*1 Figures are the rates of change in real terms on a local currency basis. Current exchange rates of 106.76 yen to the U.S. dollar, 15.44 yen to the Chinese yuan,
and 0.0901 yen to the Korean won*2 Thailand, Vietnam, Malaysia, Taiwan, Hong Kong, Turkey, Indonesia, the Philippines, Singapore, Germany and others

Copyright © 2021 Milbon. All rights reserved.

17

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

FY2019Operating
IncomeFY2020Operatingincome ratio(%)

Operating
IncomeOperatingincome ratio(%)

Increase/
Decrease

Increase/
Decrease ratio(%)

Consolidated
Operating Income

6,751

18.6

6,394

17.9

(357)

(5.3)

JAPAN

6,177

20.3

5,989

20.0

(188)

(3.0)

Overseas

574

9.8

405

6.9

(168)

(29.4)

USA(252)(38.4)(302)(65.1)

(50)

-

CHINA

343

23.0

292

19.2

(50)

(14.6)

KOREA

678

29.1

645

25.4

(33)

(4.9)

Other *

(195)

(14.2)(230)(17.6)(34)-* 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)•

Although economic activity resumed around June, several regions conduct lockdown again
in the fourth quarter (October to December). As a result, annual sales decreased 27.8%
YoY.

•“Global Milbon” was especially popular for take-home product.
(Take-home product : In-store use = 73%: 27% in 2019, 83%: 17% in 2020)•

Strengthen communication with salons by holding 301 online seminars only in the second
half of the fiscal year (July to December) under the circumstances of COVID-19•

Achieved the annual target of 300 salons with a total of 517 salons for the hair coloringproduct “Sophistone”

Copyright © 2021 Milbon. All rights reserved.

19

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

CHINA (Milbon China)•

In China, the impact of COVID-19 began in January, earlier than in other countries. In
February, sales declined by more than 80% YoY, but recovered rapidly, achieving a 5.2%
YoY increase in sales for the full fiscal year.

•

During the period when the salon activities were restricted, Milbon’s activities, such as
conducting education on basic coloring skills and study sessions on proposal abilities as abeauty professional, are well appreciated by salons and hair designers, and gain the
deep trust.

•

Styling products, which have been used in many seminars held by top designers andhave become popular, continue to perform well. Hair care sales increased steadily(+25.5% YoY) in conjunction with salon education activities, thanks to improved
awareness among general customers and strong product reputation.

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20

Outlook of Overseas Subsidiaries (3)Figures in the text are based on local currency.

KOREA (Milbon Korea)•

Sales of the hair coloring products, which account for more than 70% of sales in Milbon
Korea, continued to be strong, rising 13.7% YoY. In addition, sales of hair care products
also grew strongly, rising 13.1% YoY, resulting in an overall increase in sales of 13.2%
YoY.

•

In hair coloring products, “Ordeve Addicthy” is particularly popular, and it has strong
support from young beauticians who make full use of digital, such as video distribution
services and SNS.

•In hair care products, the company held workshops for distributor sales prior to thelaunch of “Global Milbon” in July. As a result, the company steadily acquired the numberof salons and sales of other products grew. “Aujua” also performed well, and the growthof these products contributed to sales expansion in hair care products.

•

For the first time, Milbon Korea tries new graduate recruitment from a non-beauty school,and plans to conduct new employee training over a 6-month period. Develop humanresources and diversify human resources as the foundation for future growth.

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21

<Appendix> Hair Care Brand Positioning Map
Premium

brand

Professional
Copyright © 2021 Milbon. All rights reserved.

22

brand

Milbon Group
Initiatives for FY2021 (62st term)
Ryuji Sato, President and CEO
I. Last year's review and market environment
II. 3 perspectives and market policy
III. Measure for Fiscal Year 2021
IV. Consolidated target for Fiscal Year 2021

Copyright © 2021 Milbon. All rights reserved.

23👉 I. Last year's review and market environment
II. 3 perspectives and market policy

III. Measures for Fiscal Year 2021

IV. Consolidated target for Fiscal Year 2021

Copyright © 2021 Milbon. All rights reserved.

24

Looking back at the 2020 COVID-19 crisis –Monthly changes
in sales YoY
U.S. (dollars)

180%
160%

China (yuan)

140%
120%

JAPAN

100%
80%
60%
40%
20%
0%

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25

Korea (won)Looking back on the 2020 COVID-19 crisis

1

Practicing the Milbon ISM, Milbon Way, strong
point of the organizational climate that
supports beauticians and beauty salons

2

Cosmetics industry and beauty industry are
similar but different, that is considered to be
our advantage

3

Already taken the initiative toward structural
challenges in industry existed even before
coronavirus crisis (providing digital educational
infrastructure, EC platform, etc.)

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26

Market economy environment - Crises and trials are opportunities -In making crises and trials opportunities for transformation

By COVID-19

Overwhelmingly
large

Surfacing and
By COVID-19
New changes

accelerating
structural issues
existing in industry
before COVID-19

It is impor tan t to co ncen trate o n thees sen tial witho ut be ing co n fus e d by the
tempora r y tr en d by C OVI D-19
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27

Market economic environment - Japan‘s top priority issues -Totalpopulation

Decliningbirthrate

Assuming that women aged 25
to 39 are mothers of the future※100% in 2015

1400

in 2040: 75%
in 2060: 50%

Decrease/day*229%
To 35% in2040= Cities withpopulations of*1
40,000 to
50,000disappear every
month

Percentage ofthe elderly

Employment
Rate of Women*3

71%

Percentage ofSingle-person
Households
*4

About

35%

*1 Average natural increase/decrease in Japan's total population [Based on data from Statistics Bureau, Ministry of Internal Affairs and Communications]2019 to May 2020
*2 The population of the elderly aged over 65 is 28.7% [Ministry of Internal Affairs and Communications estimate] As of September 15, 2020
*3 Employment rate of women aged 15 to 64 is 71.1% [Based on data from Statistics Bureau, Ministry of Internal Affairs and Communications] FY2019*4 Percentage of single-person households is 35.7% [based on future estimates of the number of households in Japan] 2020 estimates
Copyright © 2021 Milbon. All rights reserved.

28

Market economy environment- The wave of digitization (Business model reform) -Accelerating
technologicalinnovation

To lower industry barriers
and ambiguous boundaries

Accelerating
diffusion

Importance ofDigitalTransformation(DX)

Emergence of newcompetitors who destroy
existing rules and set
new rules

Wave of digitization

Copyright © 2021 Milbon. All rights reserved.

29

Market economy environment - Transformation period Transformation period with K-shaped recovery or shakeout

Starting point of
COVID-

Recovery and rise
Above K-shaped recovery
with our 18-Month Mission

19

Shakeout

We co ntin ue to recover an d gro w bya dva ncing o ur 18-Mo nth M iss io n.
Copyright © 2021 Milbon. All rights reserved.

30

Medium-term business plan: Toward a new stage with an 18-Month Mission

18-Month Mission
Track for a new stage
Initially anticipated medium-termstage evolution and sales track
New sales trajectory driven
by the new stage trajectory
2019>

2020.1 > 2020.7>

2022.1>2023.12

Ta r g e t i n g f o r t h e 1 8 - m o n t h p e r i o d e n d i n g D e c e m b e r 2 0 2 1
and linking it to the next stage of growth

Copyright © 2021 Milbon. All rights reserved.

31

Efforts for 18-Month Mission

The company is promoting efforts for 25 missionsin 4 stages: store sales, education, products, andin-house measures.

Copyright © 2021 Milbon. All rights reserved.

32

Termination of medium-term business plan (2019-2023)
The current medium-term business plan(2019-2023) wast e r m i n a t e d i n F i s c a l Ye a r 2 0 2 0 .
I n F i s c a l Ye a r 2 0 2 1 , w e w i l l c o n c e n t r a t e o n o u r 1 8 - M o n t hMission to lay the foundation, and schedule to formulate
a new medium-term business plan (2022-2026).

2019

2020

2021

2022

2023

2024

2025

2026

Medium-term business plan (2019 - 2023)⇒ Terminated as of Dec. 2020

COVID-19

Response tochallenges
surfaced/accelerated
by COVID-19(planned)

18-Month
MissionCopyright © 2021 Milbon. All rights reserved.

New medium-term business plan (2022-2026)

33

I. Last year's review and market environment👉 II. 3 perspectives and market policy
III. Measures for Fiscal Year 2021

IV. Consolidated target for Fiscal Year 2021

Copyright © 2021 Milbon. All rights reserved.

34

Fiscal Year 2021 Market policy concept
Respond to surfaced and accelerated changes/issues from social
perspectives/customer perspectives

L i f e T i m e B e a u t y I n n o va t i o n fo r N E X T 1 0 0
Perspective 1

Lengthening of the salon visit cycle

Q:How many times do you go to a beauty salonin the future due to the COVID-19 crisis?

Q:How long do you think the salon
visit cycle will be extended?

Decrease
Remainunchanged
or increased

35.0%

1 monthor more63.1%

N 2103 (women in 20s to 60s) Milbon survey (October 2, 2020)

Copyright © 2021 Milbon. All rights reserved.

1 monthless than35

1 in 5(22.0% of the total)

has a prolonged
salon visit cycle ofmore than 1 monthFiscal Year 2021 Market policy concept
Perspective 2
Metropolitan
areas

Acceleration of neighborhood consumption[Trends in the number of visitors][Ginza Station][Rate of recovery by residence]

15-20%
reduction
30%
reduction

Recovery rate (%)** Comparison between
2019 and 2020
% total (%)

Jul.

Oct.
Jul.

Jul.

Oct.
Jul.

Average

Average

Total

Total

Less than 10 km
Less than 10-20 km
Less than 20-30 km
More than 30 km

Near residential
areas

Be back 100%

Recovery rate (%)*

[Kichijoji Station]% total (%)

Jul.

Oct.
Jul.

Jul.

Oct.
Jul.

Average

Average

Total

Total

Less than 10 km

The visitor
population recovered
in “Near residential
areas" compared to“Metropolitan areas"

Less than 10-20 km
Less than 20-30 km
More than 30 km

KDDI Location Analyzer

Copyright © 2021 Milbon. All rights reserved.

36

Fiscal Year 2021 Market policy concept
Perspective 3

Increased the value & expectations for buying-place

Needs for buying-place

Needs for 1-stop shopping

Cosmetics shopping areas in COVID-19 crisis
Total

Buying-place stress

Unit price5,000 yen ～Unit price7,000 yen ～20s

Having trouble with
where to buy
cosmetics

9.3%

10.6%

9.2%

19.3%

Difficult to purchasefor counselingcosmetics

15.9%

19.2%

20.7%

23.3%

Cosmetics proposals by salons in COVID-19 crisis
Total
Expectations as a place
to receive advice on
cosmetics
feeling easy topurchase cosmetics
due to closeness

12.2%

Unit price5,000 yen ～16.3%

Q:What is the change in the importancein shopping?

Want to purchaseat 1 location,
as much as possible

77.6%

Expectations for buying places

Unit price7,000 yen ～

15.2%

20s

19.3%

Want to shorten
shopping time

78.7%
9.6%

9.8%

9.5%

13.2%

N 1794 (women in 20s to 60s) Milbon survey (September 15, 2020)

Copyright © 2021 Milbon. All rights reserved.

37

N 1794 (women in 20s to 60s) Milbon survey (September 15, 2020)

Line of market policy
Link to lifetime beauty salon 1.5, a communityof beauty and mind, through lifelong beauty

Initiatives for 18-Month Mission
Promoting the 3 keywords with optimal balance between real and digital

365 days
Total Customer
Concept

Beauty Somlier plan = Education: iD
Digital DA = DA Inspire & Award

Lifetime
Beauty Salon 1.5

Knowledge Multi-skill
Human
Sales
Resources

Milbon:iD
Copyright © 2021 Milbon. All rights reserved.

38

①Accelerate digitization/milbon: iD

End of 2020

1300
salons

FY2021

FY2021

Milbon:iD
Registration
Targets

ImpreaContact Targets

3000 salons

Copyright © 2021 Milbon. All rights reserved.

End of 2020

600
salons391800 salons②Education: iD/Beauty Sommelier plan
Education:iD

Digital learning
content

Setting up a new platform that enables selflearning without being constrained by timeand location

Progresscheck

Share/Collaborate
SupportHair designer

Salon

MilbonBeauty Sommelier Training System
Using Education: iD to learn about
4 beauty categories
Knowledge
power

Beauticians’
skill

Counselingcapabilities

In 4 categories
Somlier certification
Hair care
SommelierCosmetics
SommelierHair color
Sommelier
Design logic
Sommelier
Copyright © 2021 Milbon. All rights reserved.

40

BeautySomlier
Certification*Be certified under the following conditions
・3 or more somlier certifications
・Acquisition of counseling by MCM(Milbon Counseling Method)・Repeat & knowledge sales ratio and sales
results

③Milbon Digital Arena/Digital DA

Digital virtual space "Milbon Digital Arena"
Planning to open near-future platforms where design data can be experienced in
3DCG spaces at any time, anywhere, such as various seminars, hair shows, andphoto galleries

Digital education event "Digital DA"
Planning to digitize the Milbon's yearly educational
event (DA), which is one of Asia's largest
educational events to inspire beauticians’ design
capabilities
Copyright © 2021 Milbon. All rights reserved.

41

④Digital marketing

Marketing support

Milbon FP

Traditional marketing data

Salon

New digital marketing data
Introduction of a tool that can estimate
the visitor population based on GPS
information on mobile phone handsets⇒ Information on current
visiting/staying population
become available

Public Statistics (Census, etc.)
・Population of residents
・Working/commuting population

Data by time for designated areas, facilities, and road units(Number of people, age, annual householdincome, consumption amount, etc.)(Number, age, residential/work/visit distinction, place of residence,
distance to place of residence)
Data processed in a manner that cannot be specified by individuals is used for telecommunications subscribers
approved by mobile phone companies.

Using digital to develop more accurate support for salons
Copyright © 2021 Milbon. All rights reserved.

42

⑤Find Your Beauty PJ 【Strengthen awareness of milbon:iD]

SNS

Copyright © 2021 Milbon. All rights reserved.

You
Tube

43

AdvertisingMedia

⑤Find Your Beauty PJ 【Why we go to a salon】

Pr ov ide p rofe ssi onal beau ty val ue an dvar iou s in fo rma tio n

Copyright © 2021 Milbon. All rights reserved.

44

Toward the Lifetime Beauty Salon Next Plan

Early 2000
Transforming of the salon management, from permcentred to hair color-centred
And now

New transformation happens= K-shaped starting point
Changing from technique sales-centred to balance
between technique sales and knowledge sales becomesthe foundation of salon management= Optimal balance between real and digital
Copyright © 2021 Milbon. All rights reserved.

45

Toward the Lifetime Beauty Salon Next Plan

Changing from technique sales-centred to balance between techniquesales and product sales becomes the foundation of salon management～Toward a New Way of Becoming a Salon～
Community of beauty and mind, and the platforms of the cities

Transition period of Lifetime Beauty Salon 1.5
Social Innovation➣ Toward the Lifetime Beauty Salon Next Plan

Copyright © 2021 Milbon. All rights reserved.

46

I. Last year's review and market environment

II. 3 perspectives and market policy

👉 III. Measures for Fiscal Year 2021
IV. Consolidated target for Fiscal Year 2021

Copyright © 2021 Milbon. All rights reserved.

47

Posture of Domestic FP
To s t r e n g t h e n s t u d i o e d u c a t i o n t h r o u g h
the establishment of new bases

Candidates for new establishment

New Aoyama Sales Office and Studio

Chiba Sales Office and Studio

Scheduled in July 2021

Transfer extension candidates
Osaka 3F Studio Renovation

Saitama Sales Office and Studio
Fukuoka Sales Office and Studio

Scheduled in July 2021

Kanazawa Sales Office and Studio

19 Domestic Sites

Milbon e-Studio Tokyo
March 2021 (planned)

Copyright © 2021 Milbon. All rights reserved.

48

Posture of Domestic FP

Strengthening Education Strategy(Real × Digital)

Education
SoftwareEstablishment of Education
Promotion Office

7 branches nationwide

StudioCopyright © 2021 Milbon. All rights reserved.

49

DigitalNew mainstay products in the first half of 2021
(Unit: million yen)

Category
Premium
Brand

Professional
Brand

Technical
Brand
Cosmetic
products
Aujua
Hair Care Series
Repairlity Line

Launch Target
month amount

Product name
Aujua Hair Care Series Repairlity Line

February

800

Villa Lodola Color Interval Re:CareJanuary

50

Global Milbon Premium Positions

June

400

Grand Linkage

February

1,200

Door Fade Veil

April

50

Cronna Ice Spa Shampoo Orange Extra Cool

April

80

Elujuda treatment for breach hair

June

500

[Exclusive for International] Neo Liscio Aqua Curl

March

75

Ordeve Lucent Line

March

350

Imprea Eyebrow Mascara (7 colors) & Pencil

March

83

Villa Lodola Color
Interval Re:Care

Copyright © 2021 Milbon. All rights reserved.

Grand Linkage

Door
Fade veil

50

CronnaIce Spa Shampoo
Orange Extra Cool

OrdeveLucent line

ImpreaEyebrow Mascara & Pencil

Posture of International FP, Specific measures

C o n s i d e r d i s t r i b u t i o n b a s e s i n We s t e r n M a r k e t sUSEU
Establishment of import and EU
logistics system

Establishment of a logistics
system in the US

Copyright © 2021 Milbon. All rights reserved.

(Under consideration in the Netherlands)

51

Posture of International FP, Specific measures
Establishment of new bases and studios
in Asian markets
KOREA

Seoul (Gangnam)
Seoul (Gangbuk)
DaejeonBusan
GwangjuShanghai
BeijingChengduHong Kong
Taipei
Hanoi
Ho Chi Minh
Kuala Lumpur
Singapore
Bangkok
ManilaJakarta
New York
Düsseldorf
IstanbulGwangju[Full-scale launch in 2021]
VIETNAM

Ho Chi Minh

Preparations for theestablishment of the studio[Scheduled to start in 2022]

Copyright © 2021 Milbon. All rights reserved.

Toward a Structure of

20 Overseas Bases

52

Posture of International FP, Specific measures

Doubling the number of sales reps of distributors
Increase the quality and quantity of human resources formarket activities centered on the Milbonway

489

700

840

1000

2018

2020

2021

2023

Copyright © 2021 Milbon. All rights reserved.

53

Posture of International FP, Specific measures

Development of localized brands

Europeandthe US

Launch of permanent color
Creation of 1800 Sophistone fans

Asia

Digital Permanent Brand "Aqua Curl"
Expansion from South Korea to Asian markets

Copyright © 2021 Milbon. All rights reserved.

54

Posture of R&D and Production, Specific measures

Establishment of a Central × Regional R&D system

Evolve as Central Research Laboratory

Response to gobal (regional) needs

Platform,
Prescriptions, human resources andinformation

U.S. R&D (completed in April),
China (completed at the end of October),Tokyo metropolitan area,Thailand

U.S. branch
officeTokyo metropolitan
branch office(JAPAN)

Copyright © 2021 Milbon. All rights reserved.

Central ResearchLaboratory
Platform

55

China branch
officeThailand branch
officePosture of R&D and Production, Specific measures

Establishment of a global production system

Expansion of the Thai factory➣ system for 100 employees,
1.5~2.0 crew shifts➣ expansion scheduled [December 2021]

Establish a plant in China➣ building scheduled [October 2021]➣ hair care operation scheduled [2022]➣ hair color operation scheduled[after 2023]

P r o m o t e w i t h t h e c o o p e ra t i o n o f e a c h d i v i s i o n

Copyright © 2021 Milbon. All rights reserved.

56

Establishment of the Innovation Center
Establishment of the Innovation Center
that will lead to the creation of the future

I N N O VAT I O N
E D U C AT I O N
MPFP *
Training center

Creating the future, through Relocation of MPFP* trainingt o To k y o m e t r o p o l i t a n a r e a , a n d M a n a g e m e n t S t r a t e g y ×
Basic Researc h(b ranch of f ic es)*MP: Milbon Person (Milbon employees)
FP: Field Person (a Milbon salesperson who acquires beauty techniques as well as product knowledge and supports the prosperity of salons)

Copyright © 2021 Milbon. All rights reserved.

57

Selection of 5 most important sustainability issues

Co-creation of value withstakeholders:"Creation of a community ofbeauty and mind"
Top priority in the beauty market

Essential problem
to combine solving social
issues and sustainablebusiness growth2
Production andconsumer activities
for recycling andcirculating

1
Realization of spiritualrichness through beauty

Essential problem related
to the internal foundation
for sustained business growth

3

4

5

Human-friendly
procurement
activities

Fair and flexible
management
structure

Materializationof meaningful
workingenvironment

Copyright © 2021 Milbon. All rights reserved.

58

Priority initiatives in SDGs's priority issues
Essential problem

Priority Initiatives

Indicators

Ambitious targets

Co-creation of value with stakeholders: "Creation of a community of beauty and mind“ Top priority in the beauty market

1

Development of Lifetime Beauty Partner

Fostering beauticians with expertise(Beauty Sommeliers)

Realization of spiritualrichness through beauty

Improved beauty accessibility

Number of registered stores and customers
of official online stores "milbon: iD"

1,000 people(FY 2025)
3,000 stores/60,000 people(End of 2021)

Essential problem to combine solving social issues and sustainable business growth2
Production and consumer
activities for recycling andcirculating

3
Human-friendly
procurement activities

Develop brands to realize sustainableproduction processes* Sequential disclosure

Supporting recycling-oriented
consumption activities

Development of hair care recycling program

Test marketing at
100 salons (FY 2021)

Contributing to improving productivityof baobab oil producers

Sustainability-conscious quality management
methods, and progress in educational support
for productivity improvement

Ensure traceability of materials to dentify
issues for next improvement activities

Risk assessment rate for suppliers

Realization of recycling-oriented
production activities•

To be released(End of 2022)

100% implementation(By 2030)

Essential problem related to the internal foundation for sustained business growth

4
Fair and flexible
management structure

5
Materialization of
meaningful working
environment

Diversification of composition of theboard members and their skills

Progress in appointing outside directors morethan a third, and woman executive

Improving the effectiveness of theboard of directors

Progress in selecting of important issues,and improvement activities, through thirdparty evaluation

Building a personnel system that canrealize diverse workstyles

Employee survey ratings,
Turnover rate

Copyright © 2021 Milbon. All rights reserved.

59

Achieved in FY 2021
* Selected throughevaluation resultsfor FY 2021
*Set through survey resultsin “Job pride/satisfaction""Acceptance of diversity“,and Turnover Rate

4 Structural reform themes for sustainable growth1

Enhance resilience touncertain businessenvironment

2
Digital utilization(including internal andexternal companies)

Copyright © 2021 Milbon. All rights reserved.

➣ Reducing fixed costs➣ Improve cash positions➣ Sustainability of the supply chain➣ Collaboration among companies
・Beauty Sommelier plan
= Education: iD・Digital DA= DA Inspire & Award・Milbon : iD60

4 Structural reform themes for sustainable growth3

To evolve customer
relationships➣ Beauty Sommelier plan
= Education: iD➣ Evolving milbon: iD
How to support consumers, from experience
to repeat, and how to increase points ofcontact with customers

4

Realization of social
innovation➣ Lifetime Beauty Salon,
a community of beauty and mind
➣ Healthcare domain➣ Promoting sustainability

Copyright © 2021 Milbon. All rights reserved.

61

I. Last year's review and market environment

II. 3 perspectives and market policy

III. Measures for Fiscal Year 2021

👉 IV. Consolidated target for Fiscal Year 2021
Copyright © 2021 Milbon. All rights reserved.

62

Target setting for Fiscal Year 2021

Record-high
sales
+6.9
%

Net sales(Million yen)

36,266(1.5)%

Forward-looking investment
for future growth■18-Month Mission: Cost for new growth stage

38,200Digitalization cost = 300 million yen

35,725・ Digital DA held (+150 million yen)・ Increase in depreciation due to DX investment

2019

2020

Target for 2021

Digital DA/EC/ training videos, etc.
(+100 million yen)・ IT environment improvement (+50 million yen)Overseas expenses = 200 million yen

Record-highprofitOperatingincome・ China factory (+100 million yen)

(Million yen)

6,751

・ U.S. R&D (+100 million yen)

+0.4
%

(5.3)
%
6,394

■ Activity expenses, which had temporarily
declined by COVID-19

6,420

Market development expenses,
travel expenses, etc.

2019

2020

Target for 2021

Copyright © 2021 Milbon. All rights reserved.

63

Consolidated Targets for Fiscal Year 2021

■Statement of Earnings(Unit: million yen)

FY 2020

FY 2020

FY 2021

FY 2021

Results% total sales

Target% total sales

Increase/
Decrease

Increase/
Decreaseratio (%)

35,725100.0

38,200

100.0

2,474

6.9

Domestic

29,88083.6

31,318

82.0

1,437

4.8

Overseas

5,844

16.4

6,882

18.0

1,037

17.8

Gross profit

23,38565.5

25,310

66.3

1,924

8.2

SG & A expenses

16,99047.6

18,890

49.5

1,899

11.2

Operating income

6,394

17.9

6,420

16.8

25

0.4

Ordinary income

5,791

16.2

5,710

14.9

(81)

(1.4)

Profit attributableto owners ofparent

4,204

11.8

4,050

10.6

(154)

(3.7)

Net sales

Copyright © 2021 Milbon. All rights reserved.

64

Consolidated Targets for Fiscal Year 2021
■Net Sales by Product Category (Consolidated Net Sales)
FY 2020

FY 2021 target

21,135
12,594
1,372
360
262

Hair care products
Hair coloring products
Permanent wave products
Cosmetic products
Others(Unit: million yen)

Increase/ Decrease

22,768
13,112
1,416
640
264

1,632
517
43
279
1

■Premium Brand Sales (Consolidated Gross Sales), number of salons
FY2019

Aujua

Sales
Number of salons* (salons)
Sales

MilbonNumber of salons Domestic* (salons)
Number of salons Overseas* (salons)

Villa
LodolaSales
Number of salons (salons)

FY2020 target

7,960
4,222
2,975
5,306
4,610
1,101
10,128

8,655
4,600
3,659
6,420
6,831
1,200
11,000* Number of salons: Figures for both Japan and overseas are calculated based on yearly shipments.

Copyright © 2021 Milbon. All rights reserved.

65

Increase/
Decrease

694
378
683
1,114
2,221
98
872

Increase/ Decrease
ratio (%)

7.7
4.1
3.2
77.4
0.7
(Unit: million yen)
Increase/ Decrease
ratio (%)

8.7
9.0
23.0
21.0
48.2
9.0
8.6

Consolidated Targets for Fiscal Year 2021
■Capital expenditures, Depreciation and R&D expenses(Unit: million yen)Classification

FY 2020

FY 2021
PlannedCapitalexpenditures

1,917

7,488

Depreciation andamortization

1,562

1,819

Amount

1,581

1,765

% to
sales

4.4%

4.6%

R&D exp.

FY 2021 CAPEX Main Items• Established Aoyama Sales Office• Acquisition of land for of the new training center / the Innovation Centre• Milbon Digital Arena (Digital virtual space system)• Salon education video platform• Expansion of the Thai factory• Factory construction in China
Copyright © 2021 Milbon. All rights reserved.

66

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

FY2019FY 2020

FY 2021
Forecast

End of 2Q

27

27

28

End of FY

29

29

28

Total

56

56

56

Copyright © 2021 Milbon. All rights reserved.

67

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 © 2021 Milbon. All rights reserved.

68