FANCL Group Financial Results Briefing. For the period April 1, 2015 to December 31, 2015

Transcription

1 FANCL Group Financial Results Briefing For the period April 1, 2015 to December 31, 2015 January 28, 2016

2 Financial Highlights

3 Summary for Q3 (Oct. to Dec.) of fiscal year to March 2016 Consolidated sales: 24,793 million (+14.1% YoY), Operating income: 1,266 million (-25.7% YoY) Sales: 15,210 million (+12.5% YoY), Operating income: 2,288 million (+3.5% YoY) Sales by brand: FANCL Cosmetics (+7.7% YoY), ATTENIR Cosmetics (+9.3% YoY) boscia was included in scope of consolidation from current FY (sales of 620 million in Q3) Cosmetics Nutritional supplements Others FANCL Domestic (+11.2% YoY) Favorable performance due to launch of Mutenka Active Conditioning, effect of Mild Cleansing Oil promotion, and growth in wholesale sales to convenience stores and drug stores Overseas (-20.8% YoY) Decline due to slowdown in wholesale sales to Hong Kong and China (July. Sept., 2015) ATTENIR Favorable performance resulting from strong customer acquisition with introduction of new marketing merchandise, as well as launch of Winter Coffret and campaign targeting existing customers Sales: 7,614 million (+21.5% YoY), Operating income: million (previous year: 166 million loss) Domestic (+23.0% YoY) Significant increase in earnings due to factors such as increase in customers resulting from promotion of Enkin, a food with functional claims labeling Overseas (-4.1% YoY) Decline due to slowdown in wholesale sales to Hong Kong (July. Sept., 2015) Hatsuga Genmai: Sales: 728 million (+11.3% YoY), Operating income: million (previous year: 59 million) Kale Juice: Sales: 733 million (+2.1% YoY), Operating income: 28 million (-51.0% YoY) 2016 FANCL CORPORATION All Rights Reserved. 3

4 Results of Q3 (October to December) Q3 of FY to March 2016 Q3 of FY to March 2015 (Unit: Millions of yen) Change over previous year Sales 24,793 21, % Cosmetics 15,210 13, % Nutritional supplements 7,614 6, % Other* 1,968 1, % Operating income 1,266 1,703 (25.7%) Ordinary income 1,311 1,771 (26.0%) Net income 793 1,109 (28.5%) Please see additional material for details. *Hatsuga Genmai: Sales: 728 million (+11.3%), Operating income: million (vs. 59 million profit last year) Kale Juice: Sales: 733 million (+2.1%), Operating income: 28 million (-51.0%) 2016 FANCL CORPORATION All Rights Reserved. 4

5 Cumulative Q3 results (April to December) Nine-month period of FY to March 2016 Nine-month period of FY to March 2015 (Unit: Millions of yen) Change over previous year Sales 67,986 58, % Cosmetics 41,200 35, % Nutritional supplements 21,383 17, % Other* 5,401 5, % Operating income 1,382 2,004 (31.0%) Ordinary income 1,532 2,191 (30.1%) Net income 921 1,683 (45.3%) Please see additional material for details. *Hatsuga Genmai: Sales: 1,982 million (+9.7%), Operating income: - 1,133 million (vs. 109 million profit last year) Kale Juice: Sales: 2,096 million (+1.8%), Operating income: million (vs. 128 million profit last year) 2016 FANCL CORPORATION All Rights Reserved. 5

6 Analysis of change in operating income for Q3 (Oct. to Dec.) Results + factors - factors Variable costs Fixed costs (Units: Millions of yen) 2, ,071 1,703 Q3 of FY to March 2015 Increase in gross profit due to an increase in sales Increase in gross profit due to an improvement in cost-of-sales ratio Increase in marketing costs -526 Increase in other variable costs -125 Increase in personnel costs -170 Increase in other fixed costs 1,266 Q3 of FY to March 2016 Cost-of-sales ratio: -1.3% YoY (Breakdown: Cosmetics -1.8%, Supplements: +0.4%, Others: -1.4%) Marketing costs: +2,071 million (Breakdown: Cosmetics: +946, Supplements: +814, Others:+310) TV ads: Cosmetics: Once last year Once this year (Mild Cleansing Oil) Supplements: Once last year Three times this year (Calorie Limit for the Mature Aged, Enkin and Ukon Kakumei (Osaka area)) Others: No TV ads last year Once this year (Hatsuga Genmai) 2016 FANCL CORPORATION All Rights Reserved. 6

7 Analysis of change in operating income for nine-month period (Apr. to Dec.) Results + factors - factors Variable costs Fixed costs (Units: Millions of yen) 2,004 Nine-month period of FY to March ,800 Increase in gross profit due to an increase in sales 364 Increase in gross profit due to an improvement in cost-of-sales ratio -5,916 Increase in marketing costs -1,274 Increase in other Variable costs Nine-month period FY to March 2016 Cost-of-sales ratio: -0.5% YoY (Breakdown: Cosmetics: -0.7%, Supplements: +1.0%, Others: -2.0%) 1,382 Marketing costs: + 5,916 million YoY (Breakdown: Cosmetics +2,047, Supplements: +2,320, Others: +1,548) TV ads: Cosmetics: Three times last year four times this year (Mild Cleansing Oil, Aging Care Washing cream, etc.) Supplements: Twice last year Six times this year] (Calorie Limit for the Mature Aged, Enkin, and Ukon Kakumei (Osaka area)) Others: No ads last year Three times this year (Hatsuga Genmai, Kale Juice) -360 Increase in personnel costs -235 Increase in other fixed costs 2016 FANCL CORPORATION All Rights Reserved. 7

8 Advertising overview Proactive strategy shows success, but not without challenges Success (1)Acquisition of new customers Cosmetics: Facial wash and skin care products Supplements: Enkin - food with functional claims labeling (2)Expansion of wholesale channels Cosmetics: Improvement of sales at one store location Supplements: Expansion in the number of store deployments Challenges (1)Advertising postponement due to delay in conferral of food with functional claims labeling Initial Revised Fall 2015 Expected conferral of Calorie Limit food with functional claims labeling Dec 2015 Deployment of large-scale advertising campaign highlighting food with functional claims labeling status Q Two rounds of TV commercials for Enkin Advertisements featuring Calorie Limit s food with functional claims labeling status to launch in FY to March 2017 (2)Deployment of advertisements clearly expressing corporate stance 2016 FANCL CORPORATION All Rights Reserved. 8

9 Beauty Business

10 FANCL Cosmetics Mutenka Active Conditioning - sales Mutenka Active Conditioning (new product released September 17) Mutenka, enabling your skin to invigorate itself Targeting female customers already very familiar with Mutenka cosmetics Continuous long-term and in-depth advertising approach via magazines and websites Magazines WEB advertising Campaign website, etc. Directly operated stores EC website Number of new customers +31% SkinCare sales +14% Simplification of basic care and special care series Previous period This period *Sep. to Dec. Previous period This period *Sep. to Dec FANCL CORPORATION All Rights Reserved. 10

11 FANCL Cosmetics Mild Cleansing Oil - promotion Mild Cleansing Oil TV ads (broadcast November 20 December 6) Promotion aimed to increase awareness and sales at drugstores and Lawson stores, promote sales through initiatives such as limited edition bottle designs, and increase customer numbers Promotion results (Nov, Dec) 1.Sales figures (mail order, stores, wholesale) Compared to plan YoY Sales +11% +20% 2.New customers acquired (mail order, stores) Compared to last year s promotion Number of new customers +22% November saw record sales for a single month Award THE BEST COSMETICS AWARDS of 2015 (cleansing category) BITEKI Best Cosme Award 2015 (cleansing category) 2016 FANCL CORPORATION All Rights Reserved. 11

12 FANCL Cosmetics SkinCare product renewals Launch of new FANCL Men s Line (Feb. 19) Simple and effective skin care Men Face Wash (Washing foam) Men All-In-One Skin Conditioner Men s skin care products developed through dermatological research and behavioral analysis 1,512-2,700(30-day supply) Launch of new Mutenka FDR Acne Care Line / Smooth Clear AC (Mar. 18) New additions to the Mutenka FDR (FANCL Doctor) Series developed in cooperation with dermatology specialists Mutenka FDR Series Acne Care Line Dry/Sensitive Skin Care Line One-of-a-kind acne care products promoting healthy skin without the use of antimicrobials or other compounds that are harsh on the skin Mutenka FDR Acne Care Line 1,512-1,944 Beauty Food Product Smooth Clear AC 1,836 (30-day supply) 2016 FANCL CORPORATION All Rights Reserved. 12

13 Attenir Reiteration of brand philosophy The Attenir mission statement Retain product quality and luxury of a leading brand, but offer at one-third of the marketprice or lower Ongoing new product releases 1 Prime Rouge (Mar. 16, 2015 release) All ten shades 1,620 2 Eye Extra Serum (Oct. 20, 2015 release) A skin care essence for adults who show signs of aging around the eyes 3 SkinClear Cleanse Oil (Feb. 17, 2016 release) Focus on addressing skin stains, as a cause of dull skin in adults SkinClear Cleanse Oil Makeup Remover NEW Skin Stain Clear 3,291 (approx. 120 applications) 4 BB Cream (Mar. 16, 2016 release) Two shades available 2,160 SkinClear Cleanse Oil 1,836 (approx.2-month supply) Further expansion of customer base with launch of these products as strategic marketing merchandise FANCL CORPORATION All Rights Reserved. 13

14 Health Business

15 Health Science Promotion of Enkin 1 Second round of TV commercials for Enkin (Japan s first food with functional claims labeling) (Nov ) Promotion aimed at stimulating mail-order and store sales, increasing the number of customers, and expanding sales and recognition at convenience stores Promotion results (November, December) 1. Sales figures (mail-order, stores, wholesale) Sales Compared to plan YoY + 30% 5.1 times 2. New customers (mail-order and stores) No. of new customers Compared to previous promotion +19% 3. Eye care functional supplement POS results Company B Company A FANCL share 70% Nov. results in five major drugstores 2016 FANCL CORPORATION All Rights Reserved. 15

16 Health Science Promotion of Enkin 2 Success in capturing the previously elusive middle-aged to elderly, and male demographics Customer age composition Customers by gender Enkin All Supplements Ordinary Male 20% Female 80% Enkin Female Male 50% 50% 10s 20s 30s 40s 50s 60s 70s 80s * Enkin: New customers between Jul. and Dec Approximately 80% of customers are at least 50 years of age * Enkin: New customers between Jul. and Dec Ratio of male customers is high compared to normal (male-female 2:8) Two rounds of TV commercials are scheduled for Q4. The yearly sales target is set at 3 billion (3.5 times that of previous year) FANCL CORPORATION All Rights Reserved. 16

17 Health Science Customer numbers 1. Advertising effects No. of new customers over previous year (Apr.-Dec.): Double 2. Increase in registrations to periodic delivery service Orders Customer retention Existing mail-order supplement customers +18% Regular Orders Periodic Delivery Orders Approx. 35% +5% End of Dec End of Dec Dec periodic supplement delivery order ratio Nov Nov *Customers who have purchased supplements on two occasions or more in the past four months Sales entered a period of sustained growth as a result of high customer retention FANCL CORPORATION All Rights Reserved. 17

18 Health Science Food with functional claims labeling Launch of two products: Kaimin Support and Kaicho Support (Feb. 19) Kaimin Support (Sleep care) For customers with stress-induced sleep deprivation Evidence from clinical trials Patents for active ingredient L-Serine Kaicho Support (Bowel care) Over 5 billion Bifidobacteria beneficial to the intestinal tract 2,454 (10-day supply) 6,997 (30-day supply) 2,376(30-day supply) Effective design to protect live cultures from stomach acid Consumer Affairs Agency s food with functional claims labeling system: Start of second-round assessment discussions Present Vitamins/minerals ineligible for functional claims labeling Future Submit findings in fall 2016; if approved, labeling to start April 2017 We can expect greater market activity with the expansion of labeled products FANCL CORPORATION All Rights Reserved. 18

19 Stores

20 New stores, store renewals Three store openings brought forward in response to strong demand Nine-month period: 8 new stores, 24 renovated stores Store openings at Shinjuku Takashimaya, Yokohama Takashimaya, etc. Q4: 5 new stores, 16 renovated stores New openings at Tobu Department Store Ikebukuro, etc. Year Total 13 new stores (3 more than planned) 40 renovated stores Tobu Department Store Ikebukuro Structuring of a highly-profitable store model Low-cost Hybrid Shop Paint and remodel existing fixtures for a like-new appearance Create clear distinction between beauty and health product areas by rearranging fixtures Initial investment amount greatly reduced Curbing of depreciation expenses, extraordinary losses We will continue to advance utilization of part-time employees and work towards making shops into key pillars of profit 2016 FANCL CORPORATION All Rights Reserved. 20

21 Initiatives with inbound demand 1 Store launches in duty-free shops in towns and airports Opening at Mitsukoshi Ginza s Japan Duty Free GINZA Opening at Narita Airport Terminal 2 FaSoLa, now seven locations at four airports Narita Airport (3 locations) Kansai Airport (2 locations) Mitsukoshi Ginza Japan Duty Free GINZA Chubu Airport (1 location) 2 Establish specialized inbound site Haneda Airport (1 location) We aim to acquire inbound demand which we had previously been unable to obtain 2016 FANCL CORPORATION All Rights Reserved. 21

22 Full Year Outlook

23 Full-year outlook to March 2016 FY to March 2016 Please see additional material for details. FY to March 2015 Change YoY Sales 90,000 77, % Cosmetics 54,700 47, % Nutritional supplements (Unit: Millions of yen) 28,300 23, % Others* 7,000 6, % Operating income 1,500 4,001 (62.5%) Ordinary income 1,650 4,283 (61.5%) Net income 900 2,301 (60.9%) *Hatsuga Genmai: Sales: 2,580 million (+8.7%) Operating income: - 1,250 million (previous year 97 million profit) Kale Juice: Sales: 2,720 million (+1.5%) Operating income: million (previous year 166 million profit) 2016 FANCL CORPORATION All Rights Reserved. 23

24 Full-year outlook and analysis of change in operating income Plan + factors - factors 654 8,649-9,481 Variable costs Fixed costs (Units: Millions of yen) 4,001 Increase in gross profit due to increased sales Decrease in gross profit due to an improvement in cost-of-sales ratio Marketing Increase in costs -1,617 Increase in other variable costs -548 Increase in personnel costs -157 Increase in other fixed costs 1,500 FY to March 2015 FY to March 2016 Cost-of-sales ratio: -0.7% YoY. Improvement in productivity accompanying increased sales, increase in cosmetic and supplement sales as a percentage of total sales. Marketing costs: + 9,481 million YoY (Breakdown: Cosmetics + 3,667 million, Supplements + 4,293 million, Others + 1,520 million) Factors causing increases: Cosmetics: Increased promotion costs for facial cleansing category and skin care lines Supplements: Increased TV ad expenditure and costs for Enkin, Calorie Limit for the Mature Aged and other focus products. Others: Increased promotion costs for Hatsuga genmai and Kale juice businesses 2016 FANCL CORPORATION All Rights Reserved. 24

25 (Ref.)Received Minister of State for Special Missions Award for Leading Companies Where Women Shine Outline of award Established in 2014 by the Cabinet Office. Awarded to companies promoting workplace environments in which women can participate and contribute to the fullest extent. -Prime Minister s Award (2 recipients), Minister of State for Special Missions Award (5 recipients) FANCL was nominated by Kanagawa Prefecture and conferred the Minister of State Award. Award rationale 1 High rate of women in managerial positions (44.4%) -Appointments to permanent positions also rising 2 Outstanding cooperation in disclosure of information 3 Female employees support core business functions Performance record including ratio of female managers As of 09/30/2015 No. of employees: 905 (% of female employees: 66.5%) No. of female managers: 76 (% of female managers: 44.4%) No. of female officers: 5 (% of female officers: 21.7%) Rate of childcare leave utilization: 100% Rate of return to work after childcare leave: 100% Rate of use of working hour reduction policy for childcare: 90% (Top-left: Chairman, Representative Director Kenji Ikemori) 2016 FANCL CORPORATION All Rights Reserved. 25

26