Milbon : Consolidated Financial Results for the Fiscal Year Ended December 31, 2021

Consolidated Financial Results for the Fiscal Year

Ended December 31, 2021 [Japanese GAAP]

February 10, 2022

Name of registrant:

Milbon Co., Ltd.

Tokyo Stock Exchange, First Section

Code No.:

4919

URL http://www.milbon.co.jp

Representative:

Ryuji Sato, Representative Director, President & CEO

Inquiries:

Masahiro Murai, Managing Executive Director

TEL: [phone]

Scheduled date of annual general meeting of shareholders: March 29, 2022

Scheduled filing date for Securities Report: March 29, 2022

Scheduled starting date of dividend payments: March 30, 2022

Preparation of supplementary materials on the Consolidated Financial Results: Yes

Holding of an explanatory meeting on the Consolidated Financial Results: Yes (For institutional investors and analysts)

(Amounts of less than one million yen have been omitted.)

1. Consolidated financial results for the fiscal year ended December 31, 2021 (January 1, 2021 - December 31, 2021)

(1) Consolidated operating results

(Percentages show year-on-year

changes.)

Net sales

Operating income

Ordinary income

Profit attributable to owners

of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Year ended December 31, 2021

41,582

16.4

7,817

22.3

7,158

23.6

5,109

21.5

Year ended December 31, 2020

35,725

(1.5)

6,394

(5.3)

5,791

(7.1)

4,204

(6.9)

(Note) Comprehensive income	Year ended December 31, 2021: 5,754 million yen [52.4%]	Year ended December 31, 2020: 3,776 million yen [(17.9)%]
		Basic earnings per share	Diluted earnings per share Return on equity (ROE)	Return on assets (ROA)	Operating income ratio
		Yen	Yen	%	%	%
	Year ended December 31, 2021	157.17	-	13.4	15.7	18.8
	Year ended December 31, 2020	129.24	-	11.6	13.6	17.9

(Reference)Equity in earnings (losses) of affiliates

Year ended December 31, 2021: (151) million yen

Year ended December 31, 2020: (138) million yen

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

As of December 31, 2021

48,238

40,197

83.3

1,236.41

As of December 31, 2020

43,075

36,308

84.3

1,117.10

(Reference)

Equity

As of December 31, 2021: 40,197 million yen

As of December 31, 2020: 36,308 million yen

(3) Consolidated cash flows

Cash flows from operating

Cash flows from investing

Cash flows from financing

Cash and cash equivalents

activities

activities

activities

at end of period

Million yen

Million yen

Million yen

Million yen

Year ended December 31, 2021

6,636

(3,995)

(1,919)

13,312

Year ended December 31, 2020

6,548

(161)

(3,416)

12,307

2. Payment of dividends

			Annual dividends				Total dividends	Dividend	Dividends on
									payout ratio	equity (DOE)
		End of 2nd	End of 3rd						(Annual)
	End of 1st quarter		End of fiscal year		Total	(Consolidated)	(Consolidated)
	quarter	quarter
	Yen	Yen	Yen			Yen		Yen	Million yen	%	%
Year ended December 31, 2020	-	27.00	-			29.00	56.00	1,820	43.3	5.0
Year ended December 31, 2021	-	30.00	-			38.00		68.00	2,210	43.3	5.8
Year ending December 31, 2022	-	34.00	-			46.00		80.00		49.7
(forecast)

3. Consolidated operating forecasts for the fiscal year ending December 31, 2022 (January 1, 2022 - December 31, 2022)

	Net sales		Operating income	Ordinary income		Profit attributable to	Basic earnings per share
			owners of parent
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Year ending December 31, 2022	43,900		5.6	7,550	(3.4)	7,410		3.5	5,230		2.4	160.88

*Notes
(1) Significant changes in subsidiaries during the period
(changes in specified subsidiaries resulting in the change in the scope of consolidation)	: None
New: 0 company (Company name: )	Exclude: 0 companies (Company name: )
(2) Changes in accounting policies, changes in accounting estimates and retrospective restatements
1) Changes in accounting policies due to amendment to the accounting standards, etc.	:	None
2)	Changes in accounting policies other than those in 1) above	:	None
3)	Changes in accounting estimates	:	None
4)	Retrospective restatements	:	None

(3) Number of shares issued (common stock)
1) Number of shares issued at the end of the period	As of	33,117,234 shares	As of	33,117,234 shares
(including treasury shares)	December 31, 2021		December 31, 2020
2) Number of treasury shares at the end of the period	As of	606,080 shares	As of	614,837 shares
	December 31, 2021	December 31, 2020
3) Average number of shares during the period	Year ended December	32,508,933 shares	Year ended December	32,529,606 shares
	31, 2021		31, 2020

*These financial statements are not subject to the review of the quarterly financial statements by a certified public accountant or an audit corporation.

*Explanation on the appropriate use of operating forecasts and other special instructions

Operating forecasts and other statements regarding the future presented in these materials are based on information currently available and certain assumptions deemed to be reasonable, and actual performance may differ substantially due to various factors.

○Accompanying Materials - Contents
1.	Overview of Operating Results, etc. .............................................................................................................................................	2
	(1)Analysis of operating results ....................................................................................................................................................	2
	(2)Analysis of financial position ...................................................................................................................................................	3
	(3)Basic policy on the distribution of profit and dividends for the fiscal year under review and the following fiscal year ........	4
	(4)Business and other risks ...........................................................................................................................................................	5
2.	Outline of the Milbon Group ........................................................................................................................................................	7
3.	Basic Rationale for Selecting the Accounting Standards .............................................................................................................	8
4.	Consolidated Financial Statements and Main Notes ....................................................................................................................	9
	(1)Consolidated Balance Sheets ...................................................................................................................................................	10
	(2)Consolidated Statements of Earnings and Consolidated Statements of Comprehensive Income Consolidated
	Statements of Earnings ...........................................................................................................................................................	12
	(3)Consolidated Statements of Changes in Shareholders' Equity .................................................................................................	14
	(4)Consolidated Statements of Cash Flows ..................................................................................................................................	16
	(5)Notes regarding consolidated financial statements ..................................................................................................................	18
	Notes regarding going concern assumption ........................................................................................................................	18
	Significant matters that serve as the basis for preparation of consolidated financial statements........................................	18
	Per share information ..........................................................................................................................................................	20
	Significant subsequent events .............................................................................................................................................	20
5.	Other .............................................................................................................................................................................................	20
	(1)Change of officers ....................................................................................................................................................................	20

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1. Overview of Operating Results, etc.

(1)Analysis of operating results

① Operating results for the fiscal year under review

During the fiscal year under review, the economy continued to face severe conditions as socioeconomic activities were restricted due to the launch of repeated emergency declarations associated with the spread of COVID-19 from October onwards, the number of people with infections declined due to the spread of vaccines, and there were signs of a recovery in economic activity. However, the number of people with infections of new variant is on the rise recently, and we cannot be optimistic about the future.

In the beauty industry, COVID-19 prompted a rapid surfacing of the importance of incorporating consumers' perspectives in line with changes in people's behavioral patterns and values, and the need for digital-based transformation even though salon management is part of the real world. Recognizing the urgent need to respond to this change, our Group has been working on "Change the Stage 18 Month Missions!" as a period to build a foundation for the new medium-term business plan (2022-2026). In the consolidated fiscal year of the fiscal year under review, the domestic market continued to receive a strong reputation for field activities that combine online and brick-and-mortar sales to salons amid COVID-19. In the hair care products category, sales of premium-brand Aujua and Global Milbon were favorable due in part to the introduction of new products that capture demand and the impact of milbon:iD, an e-commerce website accessible exclusively through salons. In the hair coloring products category, sales of Ordeve Addicthy fashion color continued to be steady. In overseas markets, sales in China and South Korea continued to be steady, and sales in the U.S. also grew significantly as economic activities resumed and collaboration with distributors progressed.

As a result, consolidated net sales for the fiscal year under review amounted to 41,582 million, an increase of 16.4% compared with the corresponding period of the previous fiscal year. Operating income was 7,817 million yen (up 22.3% year-on-year), ordinary income was 7,158 million yen (up 23.6% year-on-year), and profit attributable to owners of parent was 5,109 million yen (up 21.5% year-on-year).

Breakdown of net sales by product category and breakdown of net sales into domestic and overseas sales are shown below: [Breakdown of consolidated net sales by product category]

(Unit: Million yen)

	Previous fiscal year	Current fiscal year	Increase	Year-on-year
Product category					(decrease)
				change (%)
	Amount	Ratio (%)	Amount	Ratio (%)	amount
Hair care products	21,135	59.2	24,466	58.8	3,331	15.8
Hair coloring products	12,594	35.3	14,813	35.6	2,219	17.6
Permanent wave products	1,372	3.8	1,449	3.5	76	5.6
Cosmetic products	360	1.0	579	1.4	218	60.6
Other	262	0.7	273	0.7	11	4.3
Total	35,725	100.0	41,582	100.0	5,857	16.4

[Breakdown of net sales into domestic and overseas sales]

(Unit: Million yen)

	Previous fiscal year	Current fiscal year	Increase	Year-on-year
					(decrease)
					change (%)
	Amount	Ratio (%)	Amount	Ratio (%)	amount
Domestic sales	29,880	83.6	33,643	80.9	3,762	12.6
Overseas sales	5,844	16.4	7,938	19.1	2,094	35.8
Total	35,725	100.0	41,582	100.0	5,857	16.4

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②Outlook for fiscal 2022

The economic environment for the next fiscal year remains uncertain due to the re-expansion of COVID-19 and the curtailment of economic activities, as well as the accompanying soaring prices of raw materials and logistics disruptions. As a result, the outlook for the global economy is uncertain.

Under these circumstances, the Milbon Group will launch a new medium-term business plan (2022-2026). In Fiscal Year 2022, the first year of the plan, we will work to lay the foundation for realizing the Beauty Platform Plan, pioneering new functions of beauty salons. In line with changes in society, we will continue to pursue the potential of salons that can become "new channels" for consumers.

In the following fiscal year, we forecast net sales of 43,900 million yen (up 5.6% from the current fiscal year), operating income of 7,550 million yen (down 3.4% from the current fiscal year), ordinary income of 7,410 million yen (up 3.5% from the current fiscal year), and profit attributable to owners of parent of 5,230 million yen (up 2.4% from the current fiscal year).

(2)Analysis of financial position ① Assets, liabilities and net assets

Total assets at the end of the fiscal year under review increased 5,162 million yen from the end of the previous fiscal year, to 48,238 million yen.

Current assets increased by 2,778 million yen from the end of the previous fiscal year to 24,900 million yen. This was mainly due to increases of 1,005 million yen in cash and deposits, 545 million yen in merchandise and finished goods, 473 million yen in notes and accounts receivable-trade, and 183 million yen in raw materials and supplies.

Non-current assets increased by 2,384 million yen from the end of the previous fiscal year to 23,337 million yen. Major contributing factors included an increase of 2,950 million yen in property, plant and equipment due to the construction of a new factory in China and the expansion of a factory in Milbon Thailand, and a decrease of 1,325 million yen in investment securities due to the sale of a portion of investment securities held and a decrease in unrealized gains on the market value of listed shares. Current liabilities increased by 1,209 million yen from the end of the previous fiscal year to 7,310 million yen. The main factors for the change were increases of 764 million yen in accounts payable-other, 296 million yen in income taxes payable, and 147 million yen in accounts payable-trade.

Non-current liabilities increased by 64 million yen from the end of the previous fiscal year to 731 million yen.

Net assets increased by 3,888 million yen from the end of the previous fiscal year to 40,197 million yen. The main factors for the change were increases of 3,191 million yen in retained earnings and 702 million yen in foreign currency translation adjustment due to the depreciation of the yen, and a decrease of 305 million yen in valuation difference on available-for-sale securities due to a decrease in unrealized gains on market value of listed stocks.

As a result, the equity ratio changed from 84.3% at the end of the previous fiscal year to 83.3%. Net assets per share based on the total number of shares issued at the end of the fiscal year were 1,236.41 yen, compared to 1,117.10 yen at the end of the previous fiscal year.

②Cash flows

Cash and cash equivalents ("funds") at the end of the fiscal year under review increased by 1,005 million yen from the end of the previous fiscal year to 13,312 million yen.

The status of cash flows during the current fiscal year and the factors responsible are as follows. (Cash flows from operating activities)

Net cash provided by operating activities was 6,636 million yen. This was mainly due to the recording of income before income taxes of 7,133 million yen, depreciation and amortization of 1,777 million yen, equity in losses of affiliates of 151 million yen, an increase in notes and accounts receivable-trade of 467 million yen, an increase in inventories of 612 million yen, and income taxes paid of 195 million yen.

(Cash flows from investing activities)

Net cash used in investing activities was 3,995 million yen. This was mainly due to expenditures of 3,827 million yen for the purchase of tangible fixed assets, 659 million yen for the purchase of intangible fixed assets, proceeds of 200 million yen from the redemption of investment securities, and proceeds of 472 million yen from the sale of investment securities.

(Cash flows from financing activities)

Net cash used in financing activities was 1,919 million yen. This was mainly due to dividends paid to shareholders of 1,916 million yen.

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