Milbon Co., Ltd. · TSE:4919
Milbon — FY2019 Earnings Presentation
56 slides from Milbon's earnings presentation, Feb 12, 2020
Slide 1: FY2019 Financial Results Presentation Materials
Milbon Co., Ltd. FY2019 Financial Results Presentation Materials February 12, 2020 Copyright © 2020 Milbon. All rights reserved.
Slide 2: Table of Contents
Table of Contents P2 Consolidated Operating Results P3 Consolidated Sales by Product Category P12 Consolidated Statement of Earnings P13 Consolidated Trends in Capital Expenditures and R&D Expenses P14 Trends in Market Related Data, Trends in FPs P15 Net Sales and Operating Income in Japan and Overs
Slide 3: Consolidated Operating Results
Consolidated Operating Results Q4 was below expectations, partly due to a reaction to the front-loaded increase in demand prior to the tax hike in Q3. Full-year results were slightly below the target of 0.9%. YoY grew 7%. Gain on the sale of cross-share holdings of approx. 0.3 billion yen was re
Slide 4: Sales by Product Category: Hair Care Product (1)
Consolidated Sales by Product Category [Hair Care Product (1)] Ah Professional Brands Challenge Premium Brands Continue to Strong, Sales (Unit: million yen) Increase/ Increase/ FY2018 * FY2019 * Decrease Decrease ratio (%) 20,222 21,328 1,105 5.5 • Aujua Eternal Stage Series Diorum Line, launched in
Slide 5: Sales by Product Category: Hair Care Product (2)
Consolidated Sales by Product Category [Hair Care Product (2)] New Products FY2019 Aujua Eternal Stage Series Diorum Line Gives a beautiful freshness to hair that is experiencing aging in a composite manner. Supports the feelings of women who always want to have beautiful hair by nurturing fresh, el
Slide 6: Sales by Product Category: Hair Care Product (3)
Consolidated Sales by Product Category [Hair Care Product (3)] New Products FY2019 Jemile Fran Hair Base Make Series Utilizing only ingredients used in skin care, the special design of the styling product comfortably shapes the appearance of hair. （Unit: million yen） FY2019 target * FY2019 * Progres
Slide 7: A Premium Brand, Aujua
A Premium Brand, Aujua New product "Eternal Stage Series Diorum Line" drives brand sales Number of salons (Unit: salons) Increase/ Increase/ FY2018 *1 FY2019 *1 Decrease Decrease ratio (%) 3,271 3,698 427 13.1 Consolidated Sales （Unit: million yen） Increase/ Increase/ FY2018 *2 FY2019 *2 Decrease De
Slide 8: A Premium Brand, milbon
A Premium Brand, “milbon” Growth with more salons both in Japan and overseas Number of salons Increase/ Increase/ FY2018 *1 FY2019 *1 Decrease Decrease ratio (%) 5,571 7,674 2,103 37.7 Consolidated Sales Increase/ Increase/ Trends in sales & number of salons FY2018 *2 FY2019 *2 Decrease Decrease rat
Slide 9: Sales by Product Category: Hair Coloring Product (1)
Consolidated Sales by Product Category [Hair Coloring Product (1)] Ordeve Addicthy continues to grow, with gray colors driving sales by category as an issue (Unit: million yen) FY2019 Increase/ FY2018 *1 FY2019 *1 Increase/ Decrease Decrease ratio (%) 11,857 12,994 1,137 9.6 • Sales for the fashion
Slide 10: Sales by Product Category: Hair Coloring Product (2)
Consolidated Sales by Product Category [Hair Coloring Product (2)] New Products FY2019 Ordeve Ledress Gives color and shine to hair while increasing the density within each strand of hair. It supports the needs of customers who want to continue to enjoy a salon color while taking care of their hair.
Slide 11: A Premium Organic Brand, Villa Lodola (1)
A Premium Organic Brand, Villa Lodola (1) Growth rate slowed due to inability to launch new products as planned. Number of salons Increase/ Increase/ FY2018 FY2019 Decrease ratio Decrease (%) 8,085 9,015 930 11.5 Consolidated sales （Unit: million yen） Increase/ Increase/ FY2018 * FY2019 * Decrease r
Slide 12: A Premium Organic Brand, Villa Lodola (2)
A Premium Organic Brand, Villa Lodola (2) Core Product Villa Lodola Color With 92% natural ingredients, the product’s formulation utilizes the power of plants. It brings comfort of an organic product across all aspects, including during application, the finish and continued use. Consolidated sales （
Slide 13: Consolidated Statement of Earnings (FY2019)
Consolidated Statement of Earnings (FY2019) <Consolidated Statement of Earnings> (Unit: million yen) <Breakdown of net sales by product category> (Unit: million yen) % to % to Increase/ FY2018 * FY2019 * FY2018* FY2019 * % total Increase/ Decrease sales sales sales Decrease ratio (%) Hair care produ
Slide 14: Trends in Capital Expenditures and R&D Expenses
Consolidated Trends in Capital Expenditures and R&D Expenses (Unit: million yen) Category FY2015 FY2016 FY2017 FY2018 FY2019 Capital expenditures 2,779 4,262 1,570 1,149 1,605 Depreciation and 1,033 1,077 1,272 amortization 1,370 1,453 Amount 1,214 1,232 1,422 1,479 1,534 R&D exp. % to sales 4.4 4.2
Slide 15: Trends in Market Related Data, Trends in Fieldpersons
Trends in Market Related Data, Trends in Fieldpersons (FPs) Market trends (Japan) 2014 2015 2016 2017 2018 2019 Remarks Number of salons 251,140 ― Ministry of Health, Labour and Welfare, 237,525 240,299 243,360 247,578 (salons) Report on Public Health Administration and Services Number of hair 533,8
Slide 16: Net Sales and Operating Income in Japan and Overseas
Consolidated Net Sales and Operating Income in Japan and Overseas ■ Net Sales (Unit: million yen) FY2018 * FY2019 * Increase/ Increase/ Decrease Decrease Amount % total Amount % total ratio (%) Domestic 28,569 84.3 30,409 83.8 1,839 6.4 Overseas 5,312 15.7 5,857 16.2 544 10.2 Total 33,882 100.0 36,2
Slide 17: Outlook of Overseas Subsidiaries (1)
Outlook of Overseas Subsidiaries (1) ■Sales of overseas subsidiaries (non-consolidated and local currency basis) Increase/ Forex rates Forex rates Currencies FY2018 FY2019 Decrease (unit) FY2018 (yen) FY2019 (yen) ratio(%) USA US dollar 5,730 6,026 5.2 1$= 110.44 109.04 MILBON USA, INC. (thousand) C
Slide 18: Outlook of Overseas Subsidiaries (2)
Outlook of Overseas Subsidiaries (2) CHINA (Milbon Trading (Shanghai) Co., Ltd.) In the Chinese market, in addition to a sense of economic slowdown, customer needs are diversifying, and whether salons can respond to these trends is becoming increasingly important. Milbon has maintained a high growth
Slide 19: Outlook of Overseas Subsidiaries (3)
Outlook of Overseas Subsidiaries (3) VIETNAM (MILBON VIETNAM CO., LTD) Much of Vietnam's population is in the 20s and 30s age groups.The fashion colors Ordeve and Ordeve Addicthy are highly regarded in the hair coloring product category, and market deployment is being promoted while the respective p
Slide 20: Appendix: Hair Care Brand Positioning Map
<Appendix> Hair Care Brand Positioning Map Premium brand Hanako junior Baby boomer junior LINE generation Hanako generation Targets generation generation (born 1992-1996) (born 1956-1964) (born 1987-1991) (born 1971-1976) Professional brands facing Copyright © 2020 Milbon. All rights reserved. 19
Slide 21: Milbon Group Initiatives for FY2020 (61st term)
Milbon Group Initiatives for FY2020 (61st term) Ryuji Sato, President and CEO Copyright © 2020 Milbon. All rights reserved. 20
Slide 22: I. Domestic Market Environment in Japan
I. Domestic market environment in Japan ■ Current outlook Trends in Total Population 2019 Japanese Approx. 0.5 1. Population decrease and birth rate decrease Approx. million 280 Decrease thousand Largest ever decline in population Decrease Growing number of single-person *Bureau investigation of
Slide 23: Basic Sustainability Policy
II. Social Responsibility Trends (Sustainability Initiatives) ■ From the Establishment of SDGs Promotion Committees to Initiatives 1. In Fiscal Year 2019, workshops were held for all employees. 2. Utilize SDGs matrix and value chains to set activity targets Putting Ideas and Initiatives into Pract
Slide 24: Sustainability Initiatives: SDGs Matrix
II. Social Responsibility Trends (Sustainability Initiatives) [SDGs matrix] * Organize the relevance of ESG-related issues and SDGs17 items Copyright © 2020 Milbon. All rights reserved. 23
Slide 25: Sustainability Initiatives: Value Chain Mapping
II. Social Responsibility Trends (Sustainability Initiatives) [Value chain mapping] Copyright © 2020 Milbon. All rights reserved. 24
Slide 26: Environment Surrounding Salons (Social Perspectives)
III. Environment Surrounding Salons and Management Plan ■ Points of the Environment Surrounding Salons (Social Perspectives) 1. Slowdown in consumption after the tax hike (delayed) Per beauty salon population (total population ÷ number of beauty salons) 2. Decrease in population per beautician Dec
Slide 27: Environment Surrounding Salons (Customer Perspectives)
III. Environment Surrounding Salons and Management Plan ■ Points of the Environment Surrounding Salons (Customer Perspectives) 1. Shift from Consumer Concept to Lifestyle C o n s u m e r i d e a s L i f e s t y l e i d e a s Concept Focus exclusively on Focusing on the entire consumption lifestyle 2
Slide 28: 2 Major Promoting Themes
III. Environment Surrounding Salons and Management Plan Market policy concept LIFETIME BEAUTY INNOVATION for NEXT100 2 major promoting themes Creating a Lifetime Beauty Salon = Supporting the creation of a lifetime beauty salon that continues to provide beauty and emotional fulfillment through lifet
Slide 29: Initiatives from a Social Perspective (1)
III. Environment Surrounding Salons and Management Plan ▼ Brochure on customer fan index survey ■ Initiatives from a Social Perspective ① Responding to the development of small commercial areas Understanding of Commercial Areas: Area Marketing Support Customer Understanding: Customer Fan Index S
Slide 30: Initiatives from a Social Perspective (2)
III. Environment Surrounding Salons and Management Plan ■ Initiatives from a Social Perspective ③ Reform of organizational structure (cultivation of corporate culture) ▼ Salon Engagement Nurturing Environment = Process Management Initiative Guides Growing Environment = Management of Vision and Caree
Slide 31: Initiatives from the Customer's Perspective
III. Environment Surrounding Salons and Management Plan ■ Initiatives from the Customer's Perspective ① Shift in thinking Shift from Consumer Concept to Lifestyle Concept Shift from External Ideas to Self-fullfilment Ideas ⇩ Through Real Communication and Digital Communication, Fulfill the custo
Slide 32: Creating a New Way of Beauty
III. Environment Surrounding Salons and Management Plan Lifetime Beauty Salons, which are communities of beauty and spiritual wealth, are the creation of social value and play a central role in the creation of sustainable cities and regions. ➣ Creating a new way of be au ty Copyright © 2020 Milbon.
Slide 33: IV. Overseas Market Environment: Asia
IV. Overseas Market Environment 【Asia】 Chinese market : Fiscal Year 2019 Results +15.1% (Local currency basis) ① EC Regulations Affect take-home products ② As the discriminant power of the consumer increases and it struggles for mere retail, the unique field activity of the milbon leads to differe
Slide 34: IV. Overseas Market Environment: USA
IV. Overseas Market Environment 【USA】 North American market Fiscal Year 2019 Results : +5.2% (Local currency basis) ① Accelerate transition to a distributor system (7 distributors as of the end of December 2019) ② Sophistone's first product launched July in 2019 Direct Sales Area (Manhattan) Dem
Slide 35: V. Cosmetics Business
V. Cosmetics Business [Start of market activities] The number of distributor IA * and salons handled have been increased, accordingly, the number of cases increased, and new seeds and challenges to be solved have become clearer. (As of the end of Fiscal Year 2019) Number of distributors IA: Approx
Slide 36: Measures for Fiscal Year 2020
Measures for Fiscal Year 2020 Copyright © 2020 Milbon. All rights reserved. 35
Slide 37: Historical Medium-Term Results Trends
VI. Measures for FY2020 ~ Historical Medium-Term Results Trends ~ Current medium-term (2019-2023) Billions of yen 485 500 450 2nd term 390 400 363 335 339 350 1st term 291 300 274 252 238 250 219 205 192 197 180 187 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20
Slide 38: Sales Targets for Current Medium-term
VI. Measures for FY2020 ~ Sales Targets for Current Medium-term ~ Billions of yen YoY +6.9% Challenge Themes ② 485 500 (Local currency basis Cosmetic +10% or more) Business 50 450 Challenge Theme ① 390 Overseas 400 85 363 8 CAGR(5yr) 339 2 +9.9% 350 63 59 53 300 250 YoY Domestic hair +5.6% CAGR(5yr)
Slide 39: Group-Wide: Product Development & Production System
VI. Measures for FY2020 ~ Group-Wide ~ ■ Product Development & Production System 1. Basic Research In response to changes in hair due to aging, we have focused on aging fungi contained not only in hair and roots but also in scalp flora, and have discovered new technologies that can reduce the aging
Slide 40: Japanese Market: Studio Network and Fieldperson System
VI. Measures for FY2020 ~ the Japanese Market ~ 1. Build studio site network Niigata Studio Sales Office Strengthen educational seminar at April, 2020 studio by establishing new bases Gaienmae Studio Sales Office (tentative) Around autumn 2020 Structure of 19 domestic bases 2. Fieldperson (FP) syste
Slide 41: Japanese Market: Real and Digital Communication
VI. Measures for FY2020 ~ the Japanese Market ~ 3. Strengthen real-communication capabilities Provision of a program to improve counseling skills of Beauty Partners MCM (Milbon Counseling Method) Training: The Hair and Skin Total Approach Communication program that enhances the value of "beauty" a
Slide 42: Japanese Market: E-commerce Site
VI. Measures for FY2020 ~ the Japanese Market ~ 5. Strengthen digital communication (e-commerce site) Milbon's own BtoBtoC official e-commerce site Milbon official Online Stores, Inc. Full-fledged rollout in June by adding premium Milbon:iD hair care brands Face-to-face Create Sales is counseling is
Slide 43: Japanese Market: Corporate and Product Branding
VI. Measures for FY2020 ~ the Japanese Market ~ 6. Corporate branding and product branding ■ Transportation advertisements Osaka Umeda Station From February. 17 Tokyo Station Yaesu Fukuoka Hakata Station From February. 17 From February. 3 NEW Kanagawa- Yokohama Station Nagoya Sakae Station From Marc
Slide 44: Main Products (First Half)
VI. Measures for FY2020 ~ the Japanese Market ~ ■ Main Products (First Half) (Unit: million yen) Launch Target Category Product name month amount Aujua Scalp Care Series Fortice Line February 600 Premium Milbon Creative Style Series TEXTURE Added Items March 50 Brand iMPREA Whitening Laser Shot Marc
Slide 45: Overseas Market: 19 Overseas Bases
VI. Measures for FY2020 ~ Overseas Market ~ 1. Promotion of localization + establishment of new bases Milbon Korea Co., Ltd. Structure of Singapore Gwangju 19 overseas bases Establishment of Local incorporation new bases 2. Plan to double the number of sales person at distributors 2020 2018 2019 489
Slide 46: Overseas Market: Development of Sophistone
VI. Measures for Fiscal Year 2020 ~ Overseas Market ~ 3. Development of Sophistone (hair coloring products for Europe and North America Market) ■ Sophistone Deployment Schedule Demi-Color *1 January 2020 Distributor salons area Permanent color *2 July 2021 Direct sales area in Manhattan *1 Demi-colo
Slide 47: Cosmetics Business Challenge
VI. Measures for FY2020 ~ Cosmetics business ~ Challenge in cosmetic products business <Full-scale development in 2020> Challenge in cosmetic products business Distributors IA FCE FMS × FSE Approx. 150 28 With the FP's About 900 salons collective strengths Full-fledged implementation of educational,
Slide 48: Cosmetics Business: Direction of Strategy Development
VI. Measures for FY2020 ~ Cosmetics business ~ Direction of Strategy Development 1 Deepening iMPREA “Impression Produce” 2 Be fun and easy to work on Customer proposals and promotions Strengthen development of new sales floors, creations of 3 human resources, and creation of sales operations for sal
Slide 49: Consolidated Targets FY2020: Statement of Earnings
VII. Consolidated Targets for Fiscal Year 2020 ■ Statement of Earnings (Unit: million yen) FY2019 FY2019 FY2020 FY2020 Increase/ Increase/ Decrease ratio Decrease Results % total sales Target % total sales (%) Net sales 36,266 100.0 39,000 100.0 2,733 7.5 Domestic 30,409 83.8 32,737 83.9 2,327 7.7 O
Slide 50: Consolidated Targets FY2020: Net Sales by Product Category
VII. Consolidated Targets for Fiscal Year 2020 ■ Net Sales by Products Category (Consolidated Net Sales) (Unit: million yen) Increase/ Decrease FY2019 FY2020 target Increase/ Decrease ratio (%) Hair care products 21,328 23,243 1,914 9.0 Hair coloring products 12,994 13,170 175 1.3 Permanent wave pro
Slide 51: Consolidated Targets FY2020: Capital Expenditures and Others
VII. Consolidated Targets for Fiscal Year 2020 ■ Capital expenditures and others (Unit: million yen) FY2020 Classification FY2019 Planned Capital expenditures 1,605 1,958 Depreciation and 1,453 1,632 amortization Amount 1,534 1,796 R&D exp. % to sales 4.2 4.6 FY2020 CAPEX Main Items • Establishment
Slide 52: Annual Plans for FY2020
VII. Consolidated Targets for Fiscal Year 2020 ■ Annual plans (new products, events, capital expenditures, etc.) 1Q 2Q 3Q 4Q ■ Ordeve additional line ■ Elujuda Daytime line ■ New professional ■ New professional ■ Aujua scalp care series ■ Additional items ■ Styling brand door ■ Hair care brand grand
Slide 53: Medium-Term Plan (2019-2023) Measures Progress
VIII. Medium-Term Plan (2019-2023) Measures Progress FY2019 results FY2020 plan Net sale YoY+7.0% Net sale YoY+7.5% Operating income YoY+7.8% Operating income YoY+8.1% ◆ Group-wide 2019 2020 2021～ 2022 2023 [Products Utilizing New technology] [Products Utilizing New technology] Product Development &
Slide 54: Progress of Medium-Term Business Plan (2019-2023)
VIII. Progress of Medium-Term Business Plan (2019-2023) Actual (2019) Medium-term Targets (2019-2023) Progress rate Cash flow from operating 4,486 million yen 26 billion yen 17.3% activities: ,000 million yen ※ Income tax payment period changed due to the change in the Fiscal Year 2017 fiscal year-e
Slide 55: IX. Return to Shareholders
IX. Return to shareholders ■ Dividend Forecast (Unit: yen) FY2018 FY2019 FY2020 Forecast End of 2Q 24 27 28 End of FY 30 29 30 Total 54 56 58 Copyright © 2020 Milbon. All rights reserved. 54
Slide 56: Forward-looking statements notice
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.