Milbon Co., Ltd.

FY2020 Second Quarter (January 1, 2020 - June 30, 2020)

Financial Results Presentation Materials

August 5, 2020

Copyright © 2020 Milbon. All rights reserved.

Table of Contents

P3 Consolidated Operating Results

P4 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

P22 Progress in FY2020 (61th Term)

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1

Milbon Group

Financial Results for

FY2020 (61th Term) Second Quarter

Masahiro Murai, Executive Director

Copyright © 2020 Milbon. All rights reserved.

2

(Unit: million yen)

Consolidated Operating Results (FY2020 6 months)

  • Sales and profits declined due to the impact of restrictions on the sales of beauty salons and restraint from outing due to the issuance of Japan's Emergency Declaration.
  • Overseas, South Korea and China are expected to return to a recovery trend, but recovery in the U.S., which is heavily affected by infectious diseases, is

expected to take time.

FY2019

% total

FY2020

% total

Increase/

Increase/

6 months

6 months

Decrease

ratio (%)

Decrease

Net sales

17,242

100.0

15,869

100.0

(1,373)

(8.0)

Gross profit

11,496

66.7

10,540

66.4

(955)

(8.3)

SG&A expenses

8,406

48.8

8,151

51.4

(255)

(3.0)

Operating income

3,089

17.9

2,388

15.1

(700)

(22.7)

Ordinary income

2,824

16.4

2,102

13.3

(721)

(25.6)

Profit attributable to

1,999

11.6

1,451

9.1

(548)

(27.4)

owners of parent

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3

Consolidated Net Sales by Product Category [Hair Care Products (1)]

Consolidated Net Sales (FY2020 6 months)

(Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months

6 months

Decrease

Decrease ratio (%)

9,897

9,391

(506)

(5.1)

  • The premium brand has been declining only slightly due to the high repeat needs during the coronavirus pandemic.
  • Regarding Aujua, although it had suffered from weak growth due to activity restrictions in the course for introducing a new product, it was on a recovery trend due to the return of salon customers in June and the resumption of activities.
  • Professional brands were unable to make new proposals because new product launches coincided with the announcement of emergency declaration (all 3 products were launched on April 9). Existing products also fell below the previous year due to the impact of self-restraint.

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4

Consolidated Net Sales by Product Category [Hair Care Products (2)]

New Products

FY2020 6 months

Aujua Scalpcare Series Fortice Line

A scalp care series that approaches Ageing Bacteria present on the scalp to curb complex aging damage of the hair and scalp.

(Unit: million yen)

FY2020 target*

FY2020

Progress rate (%)

6 months*

-

181

-

Cronna Ice Spa Shampoo Orange

A carbonated foam shampoo below the freezing point that continues to cool while eliminating the summer- specific worries of smell and stickiness of the scalp.

(Unit: million yen)

FY2020 target*

FY2020

Progress rate (%)

6 months*

-

83

-

February 7, 2020 Debut

March 10, 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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5

A Premium Brand, Aujua

Despite the harsh business environment, both the number of salons and sales increased.

Number of salons

(Unit: salons)

FY2019 *1

FY2020 *1

Increase/

Increase/

Decrease

Decrease ratio (%)

3,698

3,897

199

5.4

Consolidated gross sales (FY2020 6 months) (Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months *2

6 months *2

Decrease

Decrease ratio (%)

3,290

3,330

39

1.2

Trends in sales & number of salons

(Million yen)

(Number of salons)

9,000

4,500

8,000

4,000

Brand concept

A hair care brand that nurtures the beauty of Japanese women's hair, born from the climate, culture and hair characteristics of Japan

What is Aujua?

Hair care that supports beauty, now and into the future, by addressing each individual's hair and skin concerns and choosing the most appropriate item for that time.

This is Aujua.

Product range

  • wide-rangingline-up that suits the hair texture of individual customers

・5 series

Eternal stage series (new) Aging care series

Hair care series Scalp care series Climatic care series ・14 lines

・89 items

7,000

3,500

6,000

3,000

5,000

2,500

4,000

2,000

3,000

1,500

2,000

1,000

1,000

500

0

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Sales 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.

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6

A Premium Brand, Global Milbon

Despite an increase in the number of salons, sales decreased due to the impact of overseas lockdowns.

Number of salons

(Unit: salons)

FY2019 *1

FY2020 *1

Increase/

Increase/

Decrease

Decrease ratio (%)

7,674

8,892

1,218

15.9

Consolidated gross sales (FY2020 6 months) (Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months *2

6 months *2

Decrease

Decrease ratio (%)

1,235

1,188

(47)

(3.8)

Trends in sales & number of salons

(Million yen)

(Number of salons)

3,000

9,000

2,500

8,000

Brand concept

A system hair care brand that cultivates the "unique beauty" of each individual, with 360° shiny hair

Countries with salons

Japan, USA, Hong Kong, China, Thailand,

Taiwan, Turkey, Malaysia, Vietnam,

Indonesia, the Philippines, Singapore,

Germany

What is "Global Milbon"?

We conducted an in-depth analysis of the inner structure of the hair of women from 20 countries around the world, using our proprietary CT scanning technology, and discovered a universal form of hair damage. Accordingly, we developed a hair care line containing ingredients capable of repairing such damaged hair and increasing the density within each strand of hair.

"Global Milbon" is a system hair care product for developing shiny, beautiful hair from the core.

7,000

2,000

6,000

1,500

5,000

4,000

1,000

3,000

500

2,000

1,000

0

0

2016

2017

2018

2019

Sales

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.

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7

Consolidated Net Sales by Product Category [Hair Coloring Products (1)]

Consolidated Net Sales (FY2020 6 months)

(Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months

6 months

Decrease

Decrease ratio (%)

6,423

5,594

(828)

(12.9)

  • In the hair coloring products sale, salon visiting customers declined due to restrictions on salon sales and self-restraint on going outside, and sales fell by about 13%. The decline in Q1 was largely attributable to the drop in overseas sales, which had a quick spread of the infectious disease (approximately 60% fell overseas), but Q2 saw a significant impact from the decline in domestic sales. (approximately 80% decrease came from Japan)
  • Gray colors are struggling due to factors such as the fact that older customers have been reluctant to go to beauty salons and intensifying competition.
  • With respect to the gray coloring Ordeve Seedil Interval Re:Care (products that were released in the previous fiscal year and that were dyed at home during the interim before returning to the salons), the Company was able to propose the sale of single items during the period of self-restraint and meet the demands of customers who seek salon quality.

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8

Consolidated Net Sales by Product Category [Hair Coloring Product (2)]

Core Product

FY2020 6 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)

FY2019

FY2020

Increase/

Increase/

6 months *

6 months *

Decrease

Decrease ratio (%)

1,938

1,878

(59)

(3.1)

FY2017 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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9

A Premium Organic Brand, Villa Lodola (1)

Decreased due to delayed launch of new products and restrictions on activities

Number of salons

(Unit: salons)

FY2019

FY2020

Increase/

Increase/

Decrease

Decrease ratio (%)

9,015

9,351

336

3.7

Consolidated gross sales (FY2020 6 months) (Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months *

6 months *

Decrease

Decrease ratio (%)

563

500

(62)

(11.2)

Trends in sales & number of salons

Brand concept

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

What is Villa Lodola?

Based on the concept of "Beauty, the Organic Way," Villa Lodola is a true organic brand that thoroughly cares about the natural environment not only for the product itself but also in its container, production phase and promotional tools.

All of the products are certified by ICEA, an Italian authority. Villa Lodola supports organic choices, with hair care products nurtured in the soil of Italy, bringing out true beauty.

(Million yen)

(Number of salons)

1,400

10,000

1,200

8,000

1,000

800

6,000

600

4,000

400

2,000

200

0

0

2012

2013

2014

2015

2016

2017

2018

2019

Sales

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.

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10

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 gross sales (FY2020 6 months) (Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months *

6 months *

Decrease

Decrease ratio (%)

403

385

(18)

(4.6)

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.

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11

(Unit: million yen)

Consolidated Net Sales by Product Category [Cosmetic Products]

Consolidated Net Sales (FY2020 6 months)

(Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months

6 months

Decrease

Decrease ratio (%)

47

136

89

186.1

  • Because of restrictions on the activity due to COVID-19, not all salons proceed with the new activity of cosmetics immediately after the resumption of the activity. We were not able to introduce it as expected.

New Products

Imprea Whitening Laser Shot

A whitening solution that directly approaches the origin of smelts, like targeted by a laser. It suppresses the formation of melanin and prevents spots and freckles.

FY2020 target*

FY2020

Progress rate (%)

6 months*

-

28

-

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 Premium Brand, Imprea

Stagnation of new dealing salons due to activity restrictions

Number of salons

(Unit: salons)

FY2019 *1

FY2020 *1

Increase/

Increase/

Decrease

Decrease ratio (%)

200

234

34

17.0

Consolidated gross sales (FY2020 6 months) (Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months *2

6 months *2

Decrease

Decrease ratio (%)

47

136

89

186.1

Brand concept

The brand concept of Imprea is "Change Your Impression by Beauty Authority". We will provide new beauty value by leveraging beauticians' ability to provide solutions, which is one of the strengths of them.

What is Imprea?

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 skin impression by establishing a good balance between the "corner-layer keratin" on the surface of the skin, which holds the key to skin impression.

"Change Your Impression"

Through communication that takes advantage of strength as a beautician, we propose impressions that comprehensively capture hair and face through 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.

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13

Consolidated Statement of Earnings (FY2020 6 months)

(Unit: million yen)

FY2019

% to

FY2020

% to

6 months

sales

6 months

sales

Sales

17,242

100.0

15,869

100.0

Cost of sales

5,746

33.3

5,329

33.6

Gross profit

11,496

66.7

10,540

66.4

SG&A

8,406

48.8

8,151

51.4

expenses

Operating

3,089

17.9

2,388

15.1

income

Ordinary

2,824

16.4

2,102

13.3

income

Profit

attributable

1,999

11.6

1,451

9.1

to owners of

parent

(Unit: million yen)

FY2019

FY2020

Increase/

Increase/

% to sales

Decrease

6 months

6 months

Decrease

ratio (%)

Hair care products

9,897

9,391

59.2

(506)

(5.1)

Hair coloring

6,423

5,594

35.3

(828)

(12.9)

products

Permanent wave

770

660

4.2

(110)

(14.3)

products

Cosmetic products

47

136

0.9

89

186.1

Others

103

85

0.5

(18)

(17.6)

SG & A expenses

Personnel costs, which are fixed costs, account for a large share, and the ratio rises.

Ordinary income

Decreased due to a increase in share of loss of Kosei Milbon Cosmetics Co., Ltd. and a increase in foreign exchange losses

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14

Consolidated Trends in Capital Expenditures and R&D Expenses

(Unit: million yen)

Category

FY2016

FY2017

FY2018

FY2019

FY2020

FY2020

Jan.-Jun.

Plan

Capital

4,262

1,570

1,149

1,605

611

1,958

expenditures

Depreciation and

1,077

1,272

1,370

1,453

755

1,632

amortization

R&D exp.

Amount

1,232

1,422

1,479

1,534

741

1,796

% to sales

4.2

4.3

4.2

4.2

4.7

4.6

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

Fieldpersons trends (by country) (Number of FPs / As of January 1, the beginning of the fiscal year (As of December 21 for 2017 and before))

2016

2017 *1

2018

2019

2020

JAPAN

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

40

50

62

70

-

(Shanghai) Co., Ltd.

KOREA

20

23

25

30

32

Milbon Korea Co., Ltd.

80

84

82

77

-

Others *2

25

33

33

35

38

37

31

37

39

-

Upper column: Number of FPs (persons)

Lower column: Sales per FP (million yen)

(As of June 30, 2020)

10 FPs joined in October 2019, and are currently in OJT on site

40 FPs joined in April 2020, and are currently in training

(The above 50 FPs are not included in the left chart.)

Market Related Data (Japan)

FY2016

Remarks

Number of business

172,304

establishments

Bureau economy census of ministry

(households)

statistics of public management

Number of workers

443,241

Statistics Bureau, Ministry of Internal

Number of beauty

Affairs and Communications:

customers

37,023

Population statistics as of October 1st of

(thousand people)

each year Population statistics for

females 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 salons and beauticians in the "Market Trends,"until FY2020 Q1 was judged to differ greatly from the actual situation. Accordingly, the number of business establishments and number of workers are shown in the data from the Economy Census of the Statistics Bureau of the Ministry of Internal Affairs and Communications. The number of workers includes workers other than those with a beautician 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

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16

Consolidated Net Sales in Japan and Overseas

FY2020 6 months

(Unit: million yen)

FY2019

FY2020

Increase/

Changes in Local

6 months

6 months

Increase/

Decrease ratio

currency base *1

Net Sales

% to sales

Net Sales

% to sales

Decrease

(%)

(%)

Consolidated Net Sales

17,242

100.0

15,869

100.0

(1,373)

(8.0)

(7.2)

JAPAN

14,383

83.4

13,373

84.3

(1,009)

(7.0)

(7.0)

Overseas

2,859

16.6

2,495

15.7

(363)

(12.7)

(8.2)

USA

315

1.8

189

1.2

(125)

(39.9)

(38.9)

CHINA

759

4.4

642

4.0

(117)

(15.5)

(10.7)

KOREA

1,143

6.6

1,165

7.3

21

1.9

9.8

Other *2

639

3.7

497

3.1

(141)

(22.2)

(22.0)

*1 Figures are the rates of change in real terms on a local currency basis. Current exchange rates of 108.23 yen to the U.S. dollar, 15.37 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

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17

Consolidated Operating Income in Japan and Overseas

FY2020 6 months

(Unit: million yen)

FY2019

FY2020

Increase/

Increase/

6 months

6 months

Decrease ratio

Operating

Operating

Operating

Operating

Decrease

(%)

Income

income ratio(%)

Income

income ratio(%)

Consolidated

3,089

17.9

2,388

15.1

(700)

(22.7)

Operating Income

JAPAN

2,723

18.9

2,360

17.7

(363)

(13.3)

Overseas

365

12.8

27

1.1

(337)

(92.5)

USA

(87)

(27.7)

(164)

(86.5)

(76)

-

CHINA

197

26.0

95

14.8

(102)

(51.8)

KOREA

350

30.7

275

23.7

(74)

(21.3)

Other *

(95)

(14.9)

(179)

(36.0)

(83)

-

* 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, INC

  • Lockdown, which began in mid-March, continued in Q2, and cumulative sales declined 38.9% YoY. Although the situation has been recovering since bottoming out in April, the resumption of economic activity in each state remains unstable, and it is expected that it will take some time for the company to recover its sales to the level of last year.
  • During the lockdown, the company continued to communicate with distributor executives, and regularly distributed the information to salons via the Internet. The company focused on maintaining relationships with them.
  • The distributors have begun to utilize a system called salon intractive in which distributors deliver products from distributors to salon customers, and Milbon USA plans call for introduction in August in the direct sales area of Manhattan as well.

CHINA (Milbon Trading (Shanghai) Co., Ltd.)

  • The business operation has been in recovery trend from February, which monthly sales declined 80% compared to the same month last year, and sales for the second quarter from April to June increased 10.6%. However, the results in cumulative period still declined by 10.7%.
  • Since April, when it became possible to resume some activities, the company shared information about market changes and countermeasures by COVID-19 with business partners in a studio or online format. The relationship with salons has been built, leading to an increase in the number of salons with whom the company does business.
  • As for the Global Milbon, the number of salons increased as the company expanded the targets, and sales of hair care products grew.
  • During periods when activities for salons are restricted, in-house study sessions are held to review basic color knowledge and improve basic techniques. It is hoped that the improvement of application technique will lead to the speed of treatment and lead to shorter service times.

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19

Outlook of Overseas Subsidiaries (2)

Figures in the text are based on local currency.

KOREA (Milbon Korea Co., Ltd.)

  • The beauty salon market recovered its vigor from mid-May, reflecting government subsidies and signs of a softening of social distance. However, despite the outbreak of a mass infectious disease in certain area of Seoul and a resurgence of regulatory and cautious attitudes, sales increased 9.8% YoY.
  • In the hair coloring products category, Addicthy, which is highly designed, contributed to the acquisition of new salons and sales growth. The market is also growing thanks to the use of SNS distribution, etc. in partnership with influencer beauticians.
  • In haircare category, the company took advantage of the unexpectedly difficult times for COVID-19 activity, and held a course to become a sales educator for top sales representatives of major distributors nationwide in preparation for the July launch of Global Milbon. Not only did they acquire knowledge and skills up to the level where training activities could be conducted for salons, they also contributed to the sales promotion of existing products.

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20

Hair Care Brand Positioning Map

P r e m i u m b r a n d

Targets

LINE generation

Hanako junior

Baby boomer junior

Hanako generation

generation

generation

(born 1992-1996)

(born 1956-1964)

(born 1987-1991)

(born 1971-1976)

P r o f e s s i o n a l b r a n d s f a c i n g

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21

Milbon Group

Progress in Fiscal Year 2020

(61th Term)

Ryuji Sato, President and CEO

  1. Impact of COVID-19 on business results

Monthly changes in sales YoY by country (January to June)

  1. About the beauty market of After Corona Measures Based on Discussion and Hypothesis

Change the Stage 18 monthly missions 4 Stages 25 Mission

  1. Various progress points
    1. Sales by Product Brand
    2. Capital Expenditures
    3. SDGs Promotion

IV. Consolidated Operating Forecasts for Fiscal Year 2020 V. Return to shareholders

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22

  1. Impact of COVID-19 on business results

Monthly changes in sales YoY by country

(January to June)

Copyright © 2020 Milbon. All rights reserved.

23

Monthly changes in sales YoY by country

(Unit: %)

January

February

March

April

May

June

Consolidated

100.4

100.2

97.6

63.5

76.9

115.9

JAPAN

99.7

105.4

102.4

60.3

76.0

118.0

KOREA

105.5

103.9

90.5

104.6

114.9

139.7

CHINA

98.7

16.1

55.8

100.4

104.7

129.9

USA

138.4

113.9

40.9

16.7

32.3

66.6

  • Overseas figures are based on local currency.
  • 100% = Year-on-year change ±0%

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24

Copyright © 2020 Milbon. All rights reserved.
25
Sales high YoY monthly trends by country

[Trends in Japan]

Impact of COVID-19 on business results

1/6 First-time

2/5 D Princess

3/12 WHO Pandemic

4/7 Declaration of

5/4 Extension of

Sequestration

3/13 Enactment of the

Emergency Situation

Declaration

infections in Japan

procedure

amendment Special

4/16 Departure

5/27 To cancel the

2/26 Voluntary restraint

Measures Law

nationwide

declaration

of events

3/24 Olympic

2/27 National holidays

postponement

3/25 Request for self-

restraint in Tokyo

January

February

March

April

May

June

[Domestic response]

2/5

Raw Materials &

3/30 Policy education

4/2 Urgent message

6/1

Distributors and salons

Materials

Digitization

4/14 Commencement of

Started interviews

Mask procurement

temporary delivery

6/ 1

milbon: iD start

Sales YoY (%)

4/20 Masks & Alcohol

6/16 Change the Stage

Sending

18-month mission

150

  • In-graphdata labels are numeric values for consolidated sales.

140

130

120

KOREA

110

115.2

CHINA

100

100.4

100.2

97.6

90

JAPAN

80

76.9

70

63.5

Consolidated

60

USA

50

40

30

20

Left chart:

10

* Overseas figures are based on local currency.

YoY sales change of major distributors

* 100% = Year-on-year change ±0%

(Based on interviews)

0

*Sales include beauty containers and

Tokyo metropolitan distributors

90

60

70

other products.

Distributor in the Kansai area

90

70

80

Agencies Chubu area distributor

80

90

Fukuoka distributor

70

90

  1. About the beauty market of after Corona

Measures based on Discussion

and Hypothesis

Change the Stage 18 monthly missions

4 Stages 25 Mission

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26

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

■ Discussion and assumptions about the beauty market

Crisis and challenge are opportunities: life, economy, people, companies, and the world are all connected

Change in the

Determine responses

Change working

market

and measures

styles

In making crises and challenges opportunity for change

New

changes

by corona

Corona surfacing and accelerating structural issues existing in industry before corona

Be overwhelmingly

large

Capture the essence without being confused

by the Corona temporary climate

Measures based on the Medium-Term Business Plan (Annual Policy)

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27

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

■ Instructing countermeasures from discussion and hypothesis

Responding to Changes in society and beauty markets is to accelerate response to changes in society and customer values as outlined in the Medium-Term Business Plan

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28

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

  • Policy of reviewing and accelerating the mid-term business plan from considerations and hypotheses to countermeasures

Domestic policies: Lifetime Beauty Innovation Next 100

Improving productivity

Establishment of a studio and FP system incorporating digital education Full-scale development of the take-home business

Corporate branding and product branding

Customers

Take-home Digitization Education

business Support

EC support

Real Support

Copyright © 2020 Milbon. All rights reserved.

29

Real
FP
FP
Brand
Brand
Brand

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

activities Sales

Discussion and Hypothesis

Free customers are difficult to capture

Shifting from central urban areas to neighboring residential areas

Customers are not the only visitors in front of us or in the current month.

Measures

▶

Lifetime customers, customer-oriented MCC *1,

Bases

FP

and customer fan index surveys

▶

Accelerating Neighborhood Consumption and Small

Bases

Commercial Areas: Lifestyle Area Marketing

Customers who have not visited the salons during the current month

  • should also be included in this month's customer.
    Target for customer management ~ Conversion of ideas ~

Medium-Term Initiative

Bases

Build studio site network

FP

FP system

business home-Take

Sales of hair coloring and hair care products, make them to the emergency public marketed product

Ongoing online purchasing of hair care products sold exclusively in salons

Even in emergency situations, take-home business becomes as a bridge between salon and salon customers

▶

Ordeve interval re:care : change awareness from salon use product

FP

to take-home, and strengthen sales, and increase product value

(Temporary legislation) Aujua, Global Milbon Supporting

FP

Digital

▶

Direct Delivery to Customers

【EC】

To accelerate EC operation through

promotion of milbon:iD (2020.06～)

Connected consumption

FP

Real

Digital

Digital

▶ Real = sell technique (hairstyle)

[Video]

【EC】

Digital = Sell knowledge (takehome business)

(FP system, FD activities)

Real

Strengthening Real

Communication

Capabilities

Digital Digital

[Video] 【EC】

aspects Educational

Accelerating Digital Education (Labor Perspective)

Responding to changes from collective to personal

(Labor Perspective)

Transition to self-reliantmulti-skilled human resources

(possess 2 or more strengths)

Installation of digital facilities in studios so that online

FP

Bases

Digital

▶

seminars will be performed smoothly.

[Video]

Responding to individual = to offer education videos, utilize MS Teams for meeting, product

support via SNSs, visit salons during the day etc.

Promotion of Personal Education

FP

Digital

▶

[Video]

・ SD&MCC support *3

Promotion of digital education for various speciality

FP

Real

Digital

▶

[Video]

qualification

Strengthen digital communication [Video Education] [E-commerce site]

Brand

Corporate branding Product branding

Cosmetic products

ofTerms productivity

The balance between service revenue

and take-home product sales.

▶

Product sales became more important.

Copyright © 2020 Milbon. All rights reserved.

Enhancing the value of various specialist

FP

Real

Brand

Cosmetic

qualification systems and MCM＊４

products

Creating and offering VM*5

To accelerate the cosmetics business

  • 1 MCC Milbon carrier step curriculum
  • 2 MCA Milbon Color Academy
  • 3 SD Self-Development (Voluntary Learning Climate Support)
  • 4 MCM Milbon Counseling30Method
  • 5 VM visual marketing

Challenge in cosmetic products business

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

■ 4 Stages 25 Mission Specific Measures

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31

II. About the beauty market of after Corona Measures based on Discussion and Hypothesis

■ 18-saleMission/4-stage 25 Mission New sales track

Aftercorona

C h a n g e s i n

s o c i a l v a l u e s

Accelerate

by corona

New sense of value

As outlined in the mid-term business plan

Changes in the values and structure

created by Corona

of society and customers

Missions! Month 18 Stage the Change

(according to changes in the market)

Track for a new stage

Orbit of

New sales trajectory

Sales and Stage

2019

2020.1

2020.7

18-month

2022.1

2023.12

mission

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32

III. Various progress points

Sales by product brand

Capital Expenditures

SDGs promotion

Consolidated Operating Forecasts for Fiscal Year 2020

Return to Shareholders

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33

III. Various progress points

■ Sales by Product Brand ①

* Consolidated gross sales basis

[Premium brand for hair care products]

① Aujua

Japan

Q2 cumulative sales YoY +1.2%

Group contact number of salons

Beginning of the year

End of June

3,698 salons

3,897 salons

② Global Milbon

Japan

Q2 cumulative sales YoY +2.5%

Group contact number of salons

Beginning of the year

End of June

7,674 salons

8,892 salons

[Professional brand for hair care products]

  • Cronna Ice Spa Shampoo Orange annual target achievement rate 56.0%
    ② Elujuda SDGs Special Packaging Launched April 9 Limited 6 Months Sales Progress 37.3%
    • The timing of the launch coincided with the emergency declaration.
    • Scheduled to launch a new special package in fall
      • New buds: Salons with premium brands can also be sold.

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34

III. Various progress points

■ Sales by Product Brand ②

* Consolidated gross sales basis

【Hair coloring products】

Ordeve brands as a whole

YoY Growth

-11.6%

Ordeve Addicthy

YoY Growth

-3.1%

Ordeve Seedil

Seedil Interval Re:Care (home color between salon visits)

January to March

April to May

June (Single month)

Average monthly sales volume

Approx. 1,500

Approx. 14,500

Approx. 3,000

■Point of progress of cosmetic products business

Imprea

2019Q4

2020Q2

2020Q2

Past year's shipments

Number of contract

Number of salons

200

234

376

(salons)

Sales

165

137

(Millions yen)

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35

III. Various progress points

■ Progress on the EC Site

Milbon official e-commerce website "milbon:iD" launched on June 1

Beginning of the annual plan

Number of salons registered in June

500 salons

Targeted number of salons in December

1000 salons

As of the end of July

Contracted and registered salons numbered approximately 900.

・ Registered, in operation:

Approx. 100 salons

・ Registered, in preparation:

Approx. 400 salons

・ Contracted

Approx. 400 salons (awaiting for credit card

system authorization)

Full operation expected to be from end of 2020 to 2021

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36

III. Various progress points

■ Capital Expenditures

Timing of

Amount

Situation

Capital Expenditure

Invested

implementation

(Million yen)

In progress

Investment in capital to establish

Implemented

1,622

*

a plant in China

Variance in

Acquisition of land for

2021 or

1,000

construction of the new

timing

fieldperson training center

thereafter

Variance in

Establishment of Aoyama 2nd

In 2021

240

timing

Sales Office

New

Remote seminar distribution

From the second

facilities, etc.

half of 2020

* Total 3.6 billion yen (Plan)

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37

III. Various progress points

  • SDGs Promotion
    1. Signs the United Nations Global Compact (UNGC)
    2. Continuation of support for employment of people with disabilities
    3. Collection of haircare plastic containers (currently under test marketing) FY2019 30 salons ⇨ FY2020 100 salons
    4. Raw materials
      • Membership in the Organization RSPO to Promote Sustainable Use of

Palm Oil

(Some products currently use palm oil, which has acquired RSPO certification, and will be applied to all products in the future.)

  • Use of FSC-certified paper

(Currently only part of the pamphlet is available. In the future, the application will be promoted to all decorative boxes and promotional materials.)

  • Release of SDGs Matrix - scheduled to be opened in Augusut 2020
  • Publication of the Integrated Report (scheduled for the end of August 2020)

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38

IV. Consolidated Operating Forecasts for Fiscal Year 2020

■ Statement of Earnings

(Unit: million yen)

Increase/

FY2019

FY2019

FY2020

FY2020

Increase/

Decrease ratio

Results

% total sales

Target

% total sales

Decrease

(%)

Net sales

36,266

100.0

34,900

100.0

(1,366)

(3.8)

Domestic

30,409

83.8

29,600

84.8

(809)

(2.7)

Overseas

5,857

16.2

5,300

15.2

(557)

(9.5)

Gross profit

23,711

65.4

22,960

65.8

(751)

(3.2)

SG & A expenses

16,959

46.8

17,030

48.8

70

(0.4)

Operating income

6,751

18.6

5,930

17.0

(821)

(12.2)

Ordinary income

6,231

17.2

5,280

15.1

(951)

(15.3)

Profit attributable

4,517

12.5

3,840

11.0

(677)

(15.0)

to owners of

parent

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39

V. Return to shareholders

■ Shareholder Returns

(Unit: yen)

FY2018

FY2019

FY2020

End of 2Q

24

27

27

End of FY

30

29

29

*

Total

54

56

56

* FY2020 year-end dividend is forecast

We have left the dividend amount unchanged assuming that the spread of the new coronavirus will gradually converge from the third quarter of the fiscal year under review. The dividend payout ratio is expected to be 47.4%.

The year-end dividend forecast cannot be denied any unexpected changes due to exogenous factors such as the spread and convergence of the new coronavirus. Therefore, if there are large fluctuations in the forecast, the dividend forecast will be revised promptly.

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40

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.

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41

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Milbon Co. Ltd. published this content on 20 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 August 2020 05:12:10 UTC