SHINNIHONSEIYAKU CO., LTD. Supplementary Briefing Material on Financial Results for the First Quarter of the Fiscal Year Ending September 2021
February 5, 2021
Shinnihonseiyaku Co., Ltd.
Securities Code: 4931
First Section of the Tokyo Stock Exchange
Net Sales: 8,489 million yen (down 2.7% year on year)
◼ In the area of cosmetics, sales in the core mail order channel increased year on year even under the impact of restrained advertising investment in the previous fiscal year. Meanwhile, the performance of direct store and wholesale channels was a factor causing a decline in earnings.
◼ The launch of new product "PERFECT ONE Wrinkle Stretch Gel" and the effects of a brand strategy targeting young age groups have contributed to steady sales above expectations.
Operating Profit: 828 million yen (up 20.8% year on year)
◼ Operating expenses fell significantly from the same period of the previous year due to lower fulfillment (FF) costs and lower call center costs as a result of the progress in efficiency improvement measures, contributing to profit growth.
◼ All types of profit progressed steadily, far above the levels of a year earlier.
Progress of Growth Strategy
◼ Up-selling of the new product "PERFECT ONE Wrinkle Stretch Gel" to existing customers was favorable.
◼ Brand strategy targeting young age groups contributed to capturing demand from the "Minimum Life" generation.*
◼
In the Smart Health Care Business, distribution of the new product "BODY AURA" began.
*: "Minimum Life" generation = Aged under 40
1 Summary of First Quarter Financial Results
2 Plan for the Fiscal Year Ending September 2021
3 Progress of Growth Strategy
4 Initiatives for ESG
APPENDIX
Summary of First Quarter Financial Results
◼ In cosmetics, sales in the core mail order channel increased year on year. This was thanks to the effect of launching a new product along with the favorable brand strategy targeting young age groups, although direct store and wholesale sales were a factor behind a decline in earnings.
◼ Sales of healthcare products declined from the same period last year due to restrained advertising investment, but progress exceeded expectations.
◼ All types of profit increased steadily, far above the levels of a year earlier, mainly as a result of the progress in efficiency improvement measures.
(Unit: Million yen)
Items | First three months of FY ended Sept. 2020 | First three months of FY ending Sept. 2021 | Year-on-year comparison | |
Changes | Changes (%) | |||
Net sales | 8,726 | 8,489 | -237 | -2.7% |
Cosmetics | 8,027 | 7,914 | -112 | -1.4% |
Healthcare | 699 | 574 | -124 | -17.9% |
Operating profit | 685 | 828 | +142 | +20.8% |
Ordinary profit | 701 | 859 | +158 | +22.6% |
Ordinary profit rate | 8.0% | 10.1% | +2.1pt | - |
Profit | 443 | 590 | +147 | +33.2% |
Prior year ordinary profit is retroactively adjusted for changes in accounting policies.
Summary of First Quarter Financial Results - Supplemental Data
◼ Sales in the mail order channel fell due to healthcare, but sales of cosmetics rose year on year.
◼ Growth in net sales in the overseas and domestic EC channels was driven by the launch of a new product and the effects of a brand strategy targeting young age groups.
◼ In operating expenses, efficiency improvement measures made progress for FF costs while call center costs decreased.
(Unit: Million yen)
Mail order Direct store/Wholesale
7,951 567 207
7,850 426 211
-101 -140 +3
-1.3% -24.7% +1.8%
Overseas and domestic
850
948
+98
+11.6%
EC sales
Advertising expenses
2,640
2,534
-106
-4.0%
1,094 779
989 647
-104 -131
-9.5% -16.8%
*: FF cost = Order fulfillment cost
Overseas
FF cost*
Call center cost
Summary of First Quarter Financial Results - Operating Profit Change Factor Analysis
Page 6 © ShinnihonseiyakuPCaog., eLtd6.
◼ Made progress in attracting new customers as advertising expenses were recorded as generally planned while we assessed investment efficiency.
◼
Decline in operating expenses backed mainly by the progress in efficiency improvement measures contributed to a significant increase in operating profit.
(Unit: 100 million yen)
* Effectiveness of improved efficiency of shipping and delivery costs and agency fees among FF costs
Status of Balance Sheet
◼
Equity ratio rose to 75.1% due to the issuance of new shares by way of third-party allotment in December 2020.
◼ The Company plans to use the funds procured to develop brands, products and customers in its Smart HealthCare Business.
(Unit: Million yen)
(Unit: 100 million yen)
14,000
12,000
10,000
8,000
6,000
4,000
FY ended Sept. 2019
FY ended Sept. 2020
Q1 of FY ending
Sept. 2021
Net cashEquity ratio
Items | End of FY ended Sept. 2019 | End of FY ended Sept. 2020 | Q1-end of FY ending Sept. 2021 | Changes from previous fiscal year-end 14,00 |
Current assets | 14,693 | 16,211 | 16,084 | -127 |
Cash and deposits | 10,576 | 12,271 | 11,573 | -6192,800 |
Accounts receivable-trade | 2,913 | 2,607 | 2,863 | +255 |
Inventories | 1,063 | 1,193 | 1,445 | 10,00 +251 |
Non-current assets | 3,882 | 3,744 | 3,645 | -98 |
Total Assets | 18,575 | 19,956 | 19,729 | -226 |
Liabilities | 5,817 | 5,688 | 4,815 | -873 6,00 |
Trade payables | 416 | 509 | 389 | -119 |
Interest-bearing debt | 1,109 | 936 | 895 | - 4,00 |
Net assets | 12,758 | 14,267 | 14,914 | +647 |
Treasury shares | - | (299) | (293) | +6 |
Total liabilities and net assets | 18,575 | 19,956 | 19,729 | -226 |
Impact of the Spread of COVID-19
◼ Although a state of emergency was declared due to the third wave of infections, there is no major change in the assumed impact on business at present.
◼ We will continue to promote our business activities as initially planned, while closely watching the spread of infections and the status of the economic environment.
◼ Stable needs for skincare products
◼
Continuing stable needs for skincare products
(Limited impact from people making it a practice to wear a mask and reduced opportunities to go out)
◼ Meanwhile, sales of cosmetics down from the previous fiscal year
◼ Expanding needs for skincare products that alleviate concerns, such as rough skin caused by wearing masks
◼
Expanding needs for healthcare products, driven by enhanced health awareness
◼ Direct impact from COVID-19 limited to some channels
◼ Impact of changes in consumer sentiment regarding the advertising investment environment
◼ Continuing stable needs for mail order and e-commerce (EC)
◼ Greater opportunities for proposals due to increased customer service hours
◼ Continuing downward trend in calls received for delivery and product inquiries
◼ Fewer incoming calls on delivery and product inquiries
◼ Greater opportunities for proposing new products due to increasing customer service hours on telephone
◼ Delays in production of advertising and sales promotion tools
◼ Changes in the advertising investment environment
◼
Temporary suspension of operations at direct stores and
◼ Level in the number of customers visiting stores has been unchanged since last spring
other distributing stores due to temporary shutdown of department stores and shopping centers
◼ Shorter business hours under the declaration of a state of emergency
◼ Fewer customers, etc. due to decreased opportunities to go out
◼ Greater opportunities to expand sales channels for new smart healthcare products due to growing healthcare needs
Impact on business in the FY ended September 2020
Assumed impact on business in the FY ending
September 2021
◼
Temporary impact of delays in exports to China and the suspension of domestic distribution in China
◼ Fewer customers mainly due to restrictions on going out
◼
No particular impact from delays in exports, suspension ofdistribution and other factors
◼ Expanding sales opportunities in e-commerce, including live commerce
◼
Temporary impact of regional lockdowns
Plan for the Fiscal Year Ending September 2021
◼ Initial forecast for the fiscal year ending September 2021 remains unchanged based on the results of the first quarter.
◼ In cosmetics, sales expansion is expected due to the effects of new product launches and the capturing of customers through a brand strategy targeting young consumers.
◼ In healthcare, we aim to achieve growth above the plan with our Smart Health Care Business,launched in the first quarter, at the core.
(Unit: Million yen)
Items
Prior year ordinary profit is retroactively adjusted for changes in accounting policies.
FY ended Sept. | FY ended Sept. | ||||
2019 | 2020 | ||||
first three | Full-year plan | ||||
months | |||||
Net sales | 33,570 | 33,728 | 8,489 | 35,000 | +3.8% |
Cosmetics | 30,575 | 31,098 | 7,914 | 32,539 | +4.6% |
Healthcare | 2,994 | 2,630 | 574 | 2,460 | -6.4% |
Operating profit | 2,864 | 3,329 | 828 | 3,500 | +5.1% |
Ordinary profit | 2,822 | 3,283 | 859 | 3,460 | +5.4% |
Ordinary profit rate | 8.4% | 9.7% | 10.1% | 9.9% | - |
Profit | 1,824 | 2,122 | 590 | 2,300 | +8.4% |
FY ending Sept. 2021
Results in theYear-on-year change in the full-year plan
(%)
Premises of Plan for the Fiscal Year Ending September 2021
◼ Assumptions of the plan for the fiscal year ending September 2021 remain unchanged based on the results for the first quarter.
◼ From the second quarter onward, we will strengthen our advertising investment in new products and further intensify efforts to attract new customers through our mail order channel.
◼ The conservative initial plan is left unchanged although the initiative to increase efficiency of operating expenses is making good progress.
(Unit: Million yen)
30,804 2,151
30,875 2,145
7,850
614
707
426 211
31,213 2,836
950
+1.1% +32.2% +34.3%
Overseas and domestic EC sales
2,816
3,444
948
4,477
+30.0%
10,245
10,079
2,534
10,846
+7.6%
4,575 3,082
4,194 2,857
989 647
4,109 3,070
-2.0% +7.5%
Mail order
Direct store/Wholesale
Overseas
Advertising expenses
FF cost
Call center cost
Medium-Term Performance Targets
The Company aims to achieve net sales of 40 billion yen or above and an ordinary profit rate of
10% or above in the fiscal year ending September 2023.
We will promote our growth strategy by positioning the fiscal year ending September 2021 as a period for acquiring a wide range of customers and achieving brand growth.
Net sales Ordinary profit rate
45,000
43,000
41,000
39,000
37,000
35,000
33,000
31,000
29,000
27,000
25,000
FY endedSept. 2019
FY ended Sept. 2020
FY ending Sept.2021
Plan
FY ending Sept. 2022 FY ending Sept. 2023
Target
10.0％以or上more
Category | Target | Medium-term strategy |
Cosmetics | Senior generation | Raising LTV and attracting new customers
|
"Minimum Life" generation | Cultivating customers in their 20s and 30s ✓ Deploy a new brand strategy using a celebrity ✓ Digital marketing utilizing social media | |
Middle age generation "Minimum Life" generation | Acceleration of EC and digital expansion
| |
Overseas | Brand development and growth for nurturing global brands ✓ China: Growth driver ✓ ASIA/ASEAN: Brand development ✓ North America: New entries | |
Healthcare | Middle age generation "Minimum Life" generation Senior generation | Development of Smart Health Care Business ✓ Pursue brand value ✓ Acquire customers in segments that were not focused on conventionally |
Senior generation = aged 60 and above; Middle-age generation = aged 40 to 59; "Minimum Life" generation = aged under 40
- New Product: PERFECT ONE Wrinkle Stretch Gel
◼ The Company launched for the first time in Japan a new product in the All-in-One Gel series, "PERFECT ONE Wrinkle Stretch Gel," containing vitamin PP as an active ingredient.
◼ With the expansion of the anti-aging skincare market, the Company, by putting itself in a position where competition with major cosmetics manufacturers is less likely and we can better demonstrate our strengths, can achieve further growth of the Perfect One Brand.
For the
entire face
• All-in-one type
• Mid-price range (7,150 yen including tax)
→ Market expected to grow in the future
Direct store/Mail order/Wholesale
EC
Major cosmetics manufacturers
• Spot beauty essence
• High price range (10,000 to 15,000 yen)
→ Many players and highly competitive environment
For facial parts
*: Compiled from Fuji Keizai PRESS RELEASE dated April 30, 2020 "Survey of the Japanese market for anti-aging skincare products by pharmaceutical product category"
- New Product: PERFECT ONE Wrinkle Stretch Gel
◼ Up-selling to existing customers progressed faster than expected, contributing to higher customer unit prices and LTV.
◼ From the second quarter onward, we will focus our advertising investment on PERFECT ONE Wrinkle Stretch Gel and accelerate the acquisition of new customers.
Trends in the number of customers subscribing to PERFECT
ONE Wrinkle Stretch Gel
September
December
September
✓ Up-selling progressed faster than expected ✓ Expected to exceed the estimated number of customers as of the fiscal year-end → Effects: Higher unit price per customer and higher LTV
Further promote up-selling initiativesConcentrate investment to accelerate the acquisition of new customers
Cultivating New Customer Segments through Brand Strategy
◼ Appointed Kento Nakajima to appear in the brand commercial in November 2020 in an aim to enhance awareness of the Perfect One Brand with a focus on the "Minimum Life" generation, thereby cultivating a new customer base.
◼
Acquisition of new customers in the "Minimum Life" generation progressed favorably as we actively disseminated information using social media and implemented online and offline measures.
Trend in number of social media account followers
No. 1 in Twitter search trends achieved soon after the launch of new commercial
Perfect One original Kento Nakajima mask case
July
7月
August
8月
September
9月
October
10月
November
11月
December
12月
Status of acquisition of new customers in the "Minimum Life" generation in domestic EC channels
"Minimum Life" generation doubled from the September level since thestart of new commercials
Number of new customers acquired
in the month
Cumulative number of customers up
to the previous month
Inside view of pop-up spaceCommercial broadcast on digital screen
September 9月
October 10月
November 11月
December 12月
Limited-time campaign launched
Pop-up event held at @cosme TOKYO
Number of new customers in the
Brand Development and Growth for Nurturing Global Brands
◼
Promoting expansion of overseas sales based on EC, focusing on China with high growth potential.
◼ In China, efforts were made to expand brand awareness through live commerce by KOL* and promotion on social media. In the 2020 W11 (Double Eleven) event, sales were steady, exceeding the previous year's level.
◼
Furthermore, in anticipation of full-scale deployment in the U.S, began test marketing using KOL in the first
KOL
Social media promotion
*: Abbreviation of Key Opinion Leader. Refers to an influencer with specialties.
quarter. | Target | Sales channel | Policy |
Taiwan/ Hong Kong | Mainly consumers in their 20s to 40s with high spending power | EC (Company website, MOMO, etc.) Direct store/Wholesale (Variety shops) Mail order | Strengthen brand awareness and promote multi-channel marketing |
China | EC (Cross-border EC, RED, Tmall, etc.) | Approach consumers in their 20s with strong ability to send out information to increase awareness and heighten LTV. | |
ASEAN
| EC (Company website, shopee, etc.) Direct store/ Wholesale (Variety shops) | Aggressively deploy mid-priced products in view of potential consumption power. | |
U.S. | EC (Company website) | Increase awareness for full- scale deployment. |
KOL
Live commerce
◼ Launched the Smart Health Care Business to support "self-reliant health care" of individuals heading toward the new normal era.
◼ With EC at the core, also began distributing products in drugstores, targeting the "Minimum Life" and middle-age generations.
◼ Distinguish from the conventional healthcare in terms of customers and channels and promote incremental sales.
Smart Health Care | Healthcare | |
Concept | Supports "self-reliant health care" | Assists in "maintaining good health" or "solving concerns" |
Target | "Minimum Life" and middle-age generations | Senior generation |
Products | ||
Sales channel | EC (dedicated site) Drugstores | Mail order EC |
◼ In the Smart Health Care Business, launched the second new product "BODY AURA" in January 2021.
◼ A supplement that boosts people's self-protection power*1 necessary for managing health going ahead.
Second new product
BODY AURA 6,480 yen (including tax)
✓ A supplement containing 40 billion*2 L.rhamnosus lactic acid bacteria, which can actively reach the intestines, coupled with fermented wheat germ extract FWGE, which is made by fermenting and concentrating original baker's yeast obtained by separating only the wheat germ from wheat.
✓ This is the first health food in Japan that combines these two ingredients, and the Company has obtained exclusive sales rights.
In addition to EC sales, we plan to distribute the product to 5,000 drugstores throughout Japan by the end of the current fiscal year
Distribution in 1,500 stores has already been decided as of the end of December
Working to achieve incremental sales by targeting customers and channels that do not cannibalize with existing products
*1: The ability to maintain strength by eating and exercising.
*2: Contains 40 billion L. rhamnosus bacteria at the time of manufacturing the product
Initiatives for ESG
- Strengthening Governance
◼ Aiming to increase corporate value over the long term by enhancing management soundness, transparency and compliance.
◼ Aggressively working to build an organizational structure that can respond quickly and flexibly to recent changes in the business environment while strengthening governance.
August 2020
Establishment of the Nomination and Compensation Committee
Composed of three members: President & Representative Director of the Board CEO and two Outside Directors.
November 2020
Evaluation of the effectiveness of the Board of Directors
Conducted a questionnaire survey and recognized the appropriateness of and issues with the Board of Directors to further improve its functions.
December 2020
Abolition of retirement benefits system for directors and other officers and introduction of performance-based stock compensation system and transfer-restricted stock compensation system
Implemented with a view to improving medium- to long-term business results and corporate value.
*Approved at the Ordinary General Meeting of Shareholders in December 2020.
Company Name | Shinnihonseiyaku Co., Ltd. |
Representative | Takahiro Goto, President & Representative Director of the Board Chief Executive Officer |
Established | March 1992 |
Head Office | 1-4-7 Otemon, Chuo-ku, Fukuoka City, Fukuoka Prefecture |
Share Capital | 4,158 million yen [as of December 31, 2020] |
Executives | Takahiro Goto, President & Representative Director of the Board Chief Executive Officer Mitsuyoshi Fukuhara, Executive Director of the Board Masayuki Kakio, Outside Director Haruki Murakami, Outside Director Keiichi Zenmyo, Full-time Outside Auditor Seiichiro Hatori, Director of the Board Kazuhiro Tagami, Director of the Board Takashi Tanabe, Outside Audit & Supervisory Board Member Yuji Nakanishi, Outside Audit & Supervisory Board Member |
Business Profile | Planning, mail order, store sales and wholesale of cosmetics, health foods, and pharmaceuticals. |
Net Sales | 33.72 billion yen [FY ended September 30, 2020] |
Bases | Fukuoka (head office), Tokyo Office, 12 direct stores, Yoshizuka Office and Logistics Center |
Total Assets | 19.7 billion yen [as of December 31, 2020] |
Vision
Creating Healthy and Enriched Lives for People around the World
Mission
Achieving the Greatest Possible Satisfaction and Trust from Our Customers, Making Our Employees Happy and Giving
Them Dreams for the Future, as a Company That Contributes to Society, We Aim to Expand Our Efforts Far and Wide without Limitation
Domain
One to One health & beauty-care.
Creator of Lifestyles that Foster Beauty and Good Health Through Database Marketing
History
Date
March 1992
Founded Shinnihonliving Co., Ltd. (currently Shinnihonseiyaku Co., Ltd.) as a company that planned and sold daily essentials at Higashi-Ori, Onojo City, Fukuoka Prefecture (share capital of 10 million yen).
July 1994 Started sales of health foods by mail order.
Overview
June 1996 Relocated the head office to Otogana-Higashi, Onojo City, Fukuoka Prefecture.
December 2000 Commenced sales of basic cosmetics by mail order.
April 2002 Renamed Shinnihonliving Co., Ltd. to Shinnihonseiyaku Co., Ltd.
March 2003 Opened a logistics center in Yoshizuka, Hakata-ku, Fukuoka City, Fukuoka Prefecture.
April Relocated the head office to Yoshizuka, Hakata-ku, Fukuoka City, Fukuoka Prefecture.
May 2005 Started sales of cosmetics brand "RAffINE series."
May 2006 Relocated the head office to Akasaka, Chuo-ku, Fukuoka City, Fukuoka Prefecture.
May Launched RAffINE Perfect One.
October Established Iwakuni-Hongo Research Institute as the base for cultivating and researching medical plants*1.
November Started sales of pharmaceuticals by mail order.
March 2010 Opened its first direct store in Fukuoka PARCO shopping mall.
July Opened a Tokyo sales office in Uchisaiwaicho, Chiyoda-ku, Tokyo (currently Tokyo Office).
April 2012 Started wholesale of RAffINE series.
October 2013 Relocated the head office to Otemon, Chuo-ku, Fukuoka City, Fukuoka Prefecture.
April 2014 Changed the cosmetics brand name to "Perfect One."
December 2016 Started sales overseas by mail order (Taiwanese market).
February 2017 Was awarded the Steering Committee Award in the 7th "Company I Want to Cherish Most in Japan" Grand Prize.
March Perfect One All-in-One Gel series became number one*2 in the Japanese all-in-one skincare market.
September 2018 Started cross-border EC in the Chinese market.
September Was awarded the top prize and the rookie of the year at the beauty awards hosted by Taiwan's popular infotainment TV show "Queen."
June 2019 Listed on Tokyo Stock Exchange Mothers.
January 2020 Relocated Tokyo Office to Marunouchi Building in Chiyoda-ku, Tokyo.
December 2020 Changed listing market to the First Section of the Tokyo Stock Exchange.
*1: Integrated into Yoshizuka Office (R&D center) in June 2020.
*2: Fuji Keizai "Cosmetics Marketing Handbook 2017" (Actual manufacturer and brand market shares in the moisture section and the all-in-one section in 2016)
Financial closing year & month September 2017 September 2018 September 2019 September 2020 | Q1 of FY ending September 2021 |
Net sales Million yen 28,372 31,210 33,570 33,728 | 8,489 |
Ordinary profit Million yen 2,265 2,491 2,822 3,283 | 859 |
Profit Million yen 1,477 1,751 1,824 2,122 | 590 |
Share capital Million yen 220 250 3,826 3,826 | 4,158 |
Total number of shares issued Shares 1,003,630 1,009,630 21,611,300 21,611,300 | 21,855,200 |
Net assets Million yen 2,685 4,191 12,758 14,267 | 14,914 |
Total assets Million yen 8,560 9,491 18,575 19,956 | 19,729 |
Equity ratio % 30.7 43.6 68.7 71.2 | 75.1 |
Return on equity % 57.3 51.8 21.6 15.7 | - |
Dividend payout ratio % 20.7 20.1 15.4 30.5 | - |
Cash flows from operating activities Million yen 2,372 1,415 1,992 2,920 | - |
Cash flows from investing activities Million yen (280) (420) (943) (367) | - |
Cash flows from financing activities Million yen (1,546) (419) 6,567 (851) | - |
Cash and cash equivalents at the end of the period Million yen 2,377 2,954 10,576 12,271 | 11,573 |
Number of employees (excluding temporary employees) People 346 361 354 330 | - |
Net assets per share Yen 261.97 409.58 590.37 662.97 | - |
Earnings per share Yen 147.69 174.46 113.99 98.5 | - |
Dividend per share Yen 30.50 35.00 17.50 30.00 | - |
Prior year ordinary profit is retroactively adjusted for changes in accounting policies.
The content presented in this material is based on multiple assumptions and are not intended to promise or guarantee the realization of future planned numbers or measures.
IR&PR Division, Corporate Planning Division, Shinnihonseiyaku Co., Ltd.
TEL: +81-92-303-8318 FAX: +81-92-720-5819
For inquiries, please use the inquiry form on the Shinnihonseiyaku Co., Ltd. website.
We will reply to you as soon as we can.https://corporate.shinnihonseiyaku.co.jp/contact/
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Shinnihonseiyaku Co. Ltd. published this content on 24 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 February 2021 07:01:01 UTC.
