Pola Orbis Holdings Inc. · TSE:4927

Pola Orbis — FY2013 Earnings Presentation

38 slides from Pola Orbis's earnings presentation, February 2014

  1. Slide 1: Conference Presentation for Financial Results of Fiscal 2013 and 2014-2016 Medium-term Management Plan

    Conference Presentation for Financial Results of Fiscal 2013 and 2014 – 2016 Medium-term Management Plan Satoshi Suzuki President POLA ORBIS HOLDINGS INC. This report contains projections of performance and other projections based on information currently available and certain assumptions judged to

  2. Slide 2: Part I Fiscal 2013 Consolidated Performance / Part II Medium-term Management Plan

    Part I Fiscal 2013 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2014 Part II 2014 - 2016 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. Cosmetic Market Trends 3. 2014 – 2016 Medium-term Manageme

  3. Slide 3: Part I Fiscal 2013 Consolidated Performance

    Part I Fiscal 2013 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2014 3

  4. Slide 4: Overview of Fiscal 2013

    Overview of Fiscal 2013 Consolidated net income was higher than expected as a result of favorable foreign exchange rates. Operating income was in line with expectation, led by flagship brands. Consolidated Net sales ¥191,355 mil. (+5.8% YoY) Operating income ¥16,017 mil. (+18.5%) Performance Net sal

  5. Slide 5: Extraordinary Loss on H2O PLUS

    Extraordinary Loss on H2O PLUS Aim: • Strengthen the brand portfolio by adding a brand with clear concept July 2011 • Establish a business platform in Asia (Acquisition completed) • Earn know-how to utilize local agents in overseas markets Past 2 years: • Stalled shipments at the new agent, caused b

  6. Slide 6: Analysis of Consolidated P&L Changes: Net Sales to Operating Income

    Analysis of Consolidated P&L Changes Net Sales to Operating Income Compared with FY2012 FY2013 YoY forecasts (Millions of yen) Results Results Amount % Amount % Net sales 180,873 191,355 10,482 5.8% 2,855 1.5% Cost of sales 36,946 38,655 1,709 4.6% 201 0.5% Gross margin 143,927 152,700 8,772 6.1% 2,

  7. Slide 7: Analysis of Consolidated P&L Changes: Operating Income to Net Income

    Analysis of Consolidated P&L Changes Operating Income to Net Income Compared with FY2012 FY2013 YoY forecast (Millions of yen) Results Results Amount % Amount % Operating income 13,520 16,017 2,497 18.5% 17 0.1% Non-operating income 1,243 1,972 729 58.7% 1,472 294.6% Non-operating expense 158 154 -4

  8. Slide 8: Factors Impacting Net Income

    Factors Impacting Net Income (Millions of yen) Positive impact Negative impact 16,000 +431 mil. 14,000 Increase in income from improved cost of sales ratio -4,249 mil. ・Impairment loss on intangible assets 12,000 of H2O PLUS -2,030mil. -962 mil. ・Loss on business liquidation of POLA USA Increase acc

  9. Slide 9: Part I Fiscal 2013 Consolidated Performance

    Part I Fiscal 2013 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2014 9

  10. Slide 10: Operating Results by Segment

    Operating Results by Segment Compared with FY2012 FY2013 YoY forecasts (Millions of yen) Results Results Amount % Amount % Consolidated net sales 180,873 191,355 10,482 5.8% 2,855 1.5% Beauty care 168,811 178,306 9,494 5.6% 2,506 1.4% Real estate 2,841 3,035 194 6.8% 35 1.2% Others 9,220 10,013 793

  11. Slide 11: Beauty Care Segment Operating Results by Brand

    Beauty Care Segment Operating Results by Brand FY2012 FY2013 YoY (Millions of yen) Results Results Amount % Net sales 168,811 178,306 9,494 5.6% POLA 99,204 100,740 1,536 1.5% ORBIS 48,009 48,163 153 0.3% Brands under development 8,587 9,104 516 6.0% Overseas brands (Jurlique・H2O+) 13,011 20,298 7,2

  12. Slide 12: Part I Fiscal 2013 Consolidated Performance

    Part I Fiscal 2013 Consolidated Performance 1. Highlights of Consolidated Performance 2. Segment Analysis 3. Forecasts for Fiscal 2014 12

  13. Slide 13: Forecasts for Fiscal 2014

    Forecasts for Fiscal 2014 Aim for over 10% increase of operating income by sales and profit growth of overseas brands. FY2014 YoY FY2014 YoY (Millions of yen) Full Year Amount % 1H Amount % Consol. net sales 198,000 6,644 3.5% 94,600 3,184 3.5% Beauty care 184,700 6,393 3.6% 88,300 2,963 3.5% Real e

  14. Slide 14: Part II 2014-2016 Medium-term Management Plan

    Part II 2014 - 2016 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. Cosmetic Market Trends 3. 2014 – 2016 Medium-term Management Plan 4. Supplement to the Key Strategies 14

  15. Slide 15: Previous Medium-term Management Plan

    Previous Medium-term Management Plan Generate stable profits with  Consolidated net sales ⇒ CAGR* of 2–3%* Compound growth rate annual flagship brands and invest funds  Operating income ⇒ CAGR of 10% or higher to implement growth strategy  Operating margin ⇒ 9% (10% in Japan) in 2013 Strategy 2－A

  16. Slide 16: Review of the Previous Medium-term Management Plan

    Review of the Previous Medium-term Management Plan Management indicators: Growth strategies: Goal Result Evaluation Strategies Evaluation Generate stable profits with 1 Excelled Consolidated CAGR* CAGR flagship brands net sales 2 – 3% 5.0% Excelled Accelerate growth of the portfolio Fell 2 of brands

  17. Slide 17: Beauty care: Overview of each brand (1)

    Beauty care: Overview of each brand (1) Achieved stable sales growth and Accomplishment over 10% CAGR of operating income  Number of PB stores reached to 600 Sustained like for like sales growth over Sales OP income and margin +6% YoY (Millions of yen)  Annual sales of B.A series reached to (Milli

  18. Slide 18: Beauty care: Overview of each brand (2)

    Beauty care: Overview of each brand (2) Brands under development Realized steady sales growth and Accomplishment loss reduction Net sales Operating income  Expanded THREE through department stores and started overseas operation (Millions of yen) (Millions of yen)  pdc, FutureLabo and decencia real

  19. Slide 19: Part II 2014-2016 Medium-term Management Plan

    Part II 2014 - 2016 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. Cosmetic Market Trends 3. 2014 – 2016 Medium-term Management Plan 4. Supplement to the Key Strategies 19

  20. Slide 20: Domestic Cosmetic Market

    Domestic Cosmetic Market In 2013, domestic cosmetic market showed 1 to 2% growth. However, in the past five years, it remained flat. Market ratio increased in skin-whitening and anti-aging fields, and high prestige products priced higher than ¥10,000, where the Group puts efforts in Domestic Cosmeti

  21. Slide 21: Overseas Cosmetic Market

    Overseas Cosmetic Market China and ASEAN, key regions for the Group, have high interests in skincare and their markets are expected to expand. In China, there are signs of market changes such as struggles of department stores in major cities and emergence of mail order sales. Priority at CAGR* the G

  22. Slide 22: Part II 2014-2016 Medium-term Management Plan

    Part II 2014 - 2016 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. Cosmetic Market Trends 3. 2014 – 2016 Medium-term Management Plan 4. Supplement to the Key Strategies 22

  23. Slide 23: Long-term Vision (Goals for 2020)

    Long-term Vision (Goals for 2020) Corporate Philosophy STAGE3 “Inspire all people and touch their hearts” Become a highly profitable global enterprise Consolidated Net sales STAGE2 Goals for FY2020: (Billions of yen) •Consol. net sales: ¥250.0 bil. or higher Further strengthen domestic •Overseas sal

  24. Slide 24: 2014-2016 Medium-term Management Plan

    2014–2016 Medium-term Management Plan The 2nd stage of the long-term vision for 2020 Aim to enhance the enterprise value by further strengthening domestic earnings structure, accelerating overseas expansion, and improving capital efficiency. Consolidated net sales: Capital efficiency: ◆ Consol. net

  25. Slide 25: Initiatives for 2014 Onward (1)

    Initiatives for 2014 Onward (1) Strategy 1. Sustain stable growth of flagship brands to lead Group earnings Reinforcement of business platform for long-term stable growth サインズショット  Evolve into a revolutionary skin analysis system. イメージカット  Development of next generation products in anti-aging and

  26. Slide 26: Initiatives for 2014 Onward (2)

    Initiatives for 2014 Onward (2) Strategy 3. Overseas brands contributing to profitability through high sales growth Materialize profitable expansion centered in Asia  Continue to open stores in China and activate existing stores by promoting repeat customers.  Launch the first joint developed prod

  27. Slide 27: Initiatives for 2014 Onward (3)

    Initiatives for 2014 Onward (3) Strategy 5. Strengthen operations  Develop new materials in anti-aging and skin-whitening fields. R&D  Continue to spend 2% of consolidated net sales to R&D.  One-plant production system will start in September 2014.  Accelerate outsourcing of production, mainly t

  28. Slide 28: Initiatives for 2014 Onward (4)

    Initiatives for 2014 Onward (4) Strategy 6. Improve capital efficiency and shareholder return Capital Efficiency ◆ Target for ROE: 8% or higher in FY2016  Consolidated payout ratio: set “over 50%” as a new goal Shareholder  Dividend per share: ¥87 on annual basis Return (Plan for FY2014) (Interim

  29. Slide 29: 2014-2016 Medium-term Management Plan

    2014–2016 Medium-term Management Plan The 2nd stage of the long-term vision for 2020 Aim to enhance the enterprise value by further strengthening domestic earnings structure, accelerating overseas expansion, and improving capital efficiency. Consolidated net sales: Capital efficiency: ◆ Consol. net

  30. Slide 30: Part II 2014-2016 Medium-term Management Plan

    Part II 2014 - 2016 Medium-term Management Plan 1. Overview of the Previous Medium-term Management Plan 2. Cosmetic Market Trends 3. 2014 – 2016 Medium-term Management Plan 4. Supplement to the Key Strategies 30

  31. Slide 31: Future Overseas Brands Expansion (1)

    Future Overseas Brands Expansion (1) Forecast (Millions of AUD) Net sales Operating margin FY2013 Result FY2016 Goal (CAGR) FY2013 Result FY2016 Goal *1 *2 157 +15% － 8% or higher *1 Operating loss is approx. AUD 4 mil. in FY2013 *2 Operating margin after amortization of goodwill and intangible asse

  32. Slide 32: Future Overseas Brands Expansion (2)

    Future Overseas Brands Expansion (2) Forecast (Millions of USD) Net sales Operating margin FY2013 Result FY2016 Goal (CAGR) FY2013 Result FY2016 Goal *1 *2 56 +15% － 6% or higher *1 Operating loss is approx. USD 5 mil. in FY2013 *2 Operating margin after amortization of goodwill and intangible asset

  33. Slide 33: Financial Strategy and Investment Plan

    Financial Strategy and Investment Plan  Operating income: CAGR 15% or higher Improve capital efficiency ↓  Realize higher net income growth than Goal for FY2016 EPS operating income growth • Lower normal effective tax rate by reducing loss in Earnings per share overseas business ROE 8% • Tax revis

  34. Slide 34: Supplemental Materials

    KKK POLA ORBIS BhkR HOLDINGS Supplemental Materials POLA ORBIS HOLDINGS INC.

  35. Slide 35: FY2013 Key Topics (1)

    FY2013 Key Topics (1) Strategy 1. Generate stable profits with flagship brands Product  Launched “B.A Grand Luxe II” in September  Total number of PB stores: 602 (up 30 since FY2012) Channel  Cosmetics sales at PB: +7.8% YoY Like for like sales at PB: +6.8% YoY Reference: Esthe-in sales: +0.1%, d

  36. Slide 36: FY2013 Key Topics (2)

    FY2013 Key Topics (2) Strategy 2. Accelerate growth of the portfolio of brands under development  Received “Best Cosmetics Award” of 2013 (5 items in 7 categories)  Opened its first stand alone store “THREE AOYAMA” in Aoyama, Tokyo. THREE AOYAMA Strategy 3. Development the Group’s presence oversea

  37. Slide 37: FY2013 Key Topics (3)

    FY2013 Key Topics (3) Strategy 4. Reinforce R&D capabilities POLA CHEMICAL  Joint development with two overseas brands INDUSTRIES H2O+ “totalSource Optimum Cleanser & Optimum Toner” Strategy 5. Reinforce the operating base Plant  Prepared structures for the integration in September 2014. Integrati

  38. Slide 38: Beauty Care Segment Operating Results by Product Type

    Beauty Care Segment Operating Results by Product Type FY2012 FY2013 YoY (Millions of yen) Results Results Amount % Net sales 168,811 178,306 9,494 5.6% Cosmetics 155,849 165,508 9,658 6.2% Fashion 12,962 12,798 -163 -1.3% Operating income 11,812 14,780 2,967 25.1% Cosmetics 11,644 14,684 3,039 26.1%

Pola Orbis Holdings — FY2013 Earnings Presentation on 6ix