DEUTSCHE BANK June 15, 2017

2017 Global Consumer Conference

Masahiko Uotani
President & Group CEO

Be a Global Winner with Our Heritage

MY MISSION: Unlock the Long-Term Value Creation &
Awaken the Untapped Potential

Brake The Vicious Cycle

Clean Up Legacy Issues
Drive Innovation & Marketing
Develop Strong Consumer Brands
Build A Glocal Organization
Grow Talent & Diversity
Improve Productivity
15.06.2017
Growing Momentum with VISION 2020
+11%
Sales Growth vs. LY

+5%
+4%

+1%
+0.1%

- 0.4%
2012 2013 2014 2015 2016 2017
(Adjusted) (Forecast)

15.06.2017
Regional Structure IS WORKING!
2016 Sales Growth by Region

EMEA
+9% China Americas
(excluding JPG
+11% Japan
and D&G)
+3% +8%
Asia
TR
Pacific
+60%
+7%

15.06.2017
Global Brands Are Leading Profitable Growth

2016 Prestige Brands Results

Double Digit Growth

+10% +32% +22% +38%

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Q1 2017 Had a Record Performance
Sales Growth (%) OP YoY change (%) OP Margin (%)
Japan +3 +12 18
China +21 +89 19
Asia Pacific +12 +108 20
Americas +5 - -11
EMEA +23 - -8
Travel Retail +81 +131 34
+11 +9 10
TOTAL
223bn 24bn
(Inc. acquired and licensing brands)
15.06.2017
 Americas Key: Turning bareEscentuals Around

Q1 2017 2H 2017/2018 2020

Q1 OP OPM Target
-3.7B Improving OP
(-1.5B before amortization of goodwill etc.)
BE
BE New Management Over
10%
Retail Sales Decline Massive Innovation and New Products
Stores Close Down MATCHCo Launch
Underutilized EC Digital/EC Shift
Strong Brand Equity
Laura Mercier
Laura Mercier New Management
Upfront Investment Sales Integration
Restructuring Cost Shared Services
15.06.2017
 EMEA Key: Leveraging D&G Opportunities

Q1 2017 2H 2017/2018 2020

Q1 OP OPM Target
-2.1B Improving OP
(-1.2B before amortization of goodwill etc.)
D&G D&G Over
10%
Lack Of Investment Weakened Further Increase A&P Marketing Investment
Brand Equity (Prior to License New Campaigns
Acquisition) Production at Own Plant
Accelerated A&P Marketing New Products Launches
Increased Development Cost
Supply Shortage

15.06.2017
The Companys Value and Reputation are Growing
Market Capitalization Peer Recognition
1,523
Shiseido is the most dynamic company
(billion yen)
+112% in the world right now.
Pete Born
Executive Editor
718 WWD

I am very excited about collaborating

with Shiseido and expect great results
from working together.
Jack Ma
April 1st June 1st Founder and Executive Chairman
2014 2017 Alibaba Group
15.06.2017
But We Still Have a Lot to Do
OP Margin Gaps vs. Global Peers
Productivity

Turn Around
bareMinerals
China Local Brands (Aupres, Za,
Pure&Mild)

Japan Personal Care

Channel Shift
Boosting E-Commerce Channels 15.06.2017
Shiseido Strong Heritage and Global Presence
Founded in Sales Results By Region
1872 2016
TR
EMEA
3%
10%

Japan
Americas
19% 850bn 48%

52% Asia
Pacific
of Sales 6%
Generated China
Outside of Japan 14%

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Shiseido DNA

Japanese Aesthetic

Technology & Science

Art & Design

OMOTENASHI

Human Centric
15.06.2017
PRIORITY 1: Global Prestige First

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 : One of Our Fastest Growing Brands

Sales CAGR
Over +30%

OP Margin
Over 25%

2014 2015 2016 2017

(Forecast) 15.06.2017
PRIORITY 2: Asia Cosmetics and Personal Care

FROM JAPAN

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Speed and Innovation: Witnessing the Change in Action
ELIXIR SUPERIEUR Enriched Wrinkle Cream
S
Creating a New Market Category

Quasi-Drug govt. approval Advertising: Hyojo Project

Facial
Feb 28th expression

Product Launch
June 21st
Points of Sale
15,000 stores
15.06.2017
PRIORITY 3: Travel Retail and Borderless Marketing
Sales & OP of TR Shiseido TR Counter

+60%

+23%
OPM
22%

2014 2015 2016

15.06.2017
Triangle Touch Points as Competitive Advantage

Focus On Chinese Consumers

Japan China
Inbound Stores 120M Went Overseas
Cross-border E-commerce
E-commerce
6.4M Traveled to Japan

Travel 88% Purchased Cosmetics

Retail
Airport duty free 50% Repurchase Rate in China
Downtown duty free
Inflight sales
2 Billion USD in Sales
15.06.2017
PRIORITY 4: Global Management & Capabilities

Matrix Centers of Excellence

JAPAN CHINA AP Americas EMEA TR

PRESTIGE
BRANDS

FRAGRANCE

COSMETICS

PERSONAL
CARE

PROFESSIONA
L

Corporate/
Shared Functions

15.06.2017
 GLOBAL LEADERSHIP
CHINA
TR
APAC

JAPAN

EMEA
AMERICAS

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PRIORITY 5: Innovation to Create New Value
R&D Expenditure Global Innovation
1.8%
In 2014
2.5% By 2020
Center
2018

Number of Researchers
1,000
In 2014
1,500 By 2020

Global Innovation
Center
Opens in 2018
15.06.2017
SCIENCE AT THE CORE
u 24 IFSCC* Awards
*International Federation of Societies of Cosmetic Chemists

8 8
6 4 1
Company Company Company Company Company
Shiseido
A B C D E

u Collaboration with MGH-Harvard

CBRC in dermatology for over 20
years
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PRIORITY 6: Digital and E-commerce
E-Commerce Growth in China MATCHCo x Brands
EC to Total Sales 23%

15%

10%

5%

2013 2014 2015 2016

15.06.2017
PRIORITY 7: People & Organization Development

Diversity Development Organizational

Culture
Women Empowerment Performance Management Hierarchy Breakdown
66 Nationalities Mobility One Shiseido
HQ Internationalization Shiseido University English Mandate

15.06.2017
PRIORITY 8: Productivity & Efficiency
Cost Structure Reforms Productivity Plan
2015-2017 2018-2020

SKU Reduction

Brand Divestiture

Shared Services Efficiencies

Value per Head Improvement

Work Style Change

Planned Results
15.06.2017
Production Technology to Drive Costs Down
Humanoid Robots Production Facility

15.06.2017
Cost Structure that Improves Profitability

Cost of Goods Sold

Marketing & Selling Investment

Brand Development
Other Personnel

Other SGA Expenses

Operating Profit
2014 2016 2017
(Forecast) 15.06.2017
PRIORITY 9: M&A to Build on Organic Growth

M&A POLICY
Portfolio Strategy

Regional Accountability

PMI Capability

Never Be Too Optimistic

(No High Multiple )

15.06.2017
PRIORITY 10: ESCG Drives Sustainable Growth
ENVIRONMENT SOCIETY CULTURE

Board of Directors Audit & Supervisory Board

External (Independent) Internal Internal External (Independent)

GOVERNANCE 15.06.2017
Aiming at Growth Beyond 2020
VISION 2020 Sustainable Leadership
Rebuilding the Business
Accelerating Growth
Foundation

Net Sales
CAGR
Operating Income 5-7% 1,000+

CAGR
6.5%
940 OP
850 100+
778 46
28 37
billion yen
2014 2016 2017 2018-20 2030
Forecast Target 15.06.2017
Execution of Key Priorities Will Take Us There
THE 10 PRIORITIES
1: Global Prestige First 6: Digital & E-Commerce

2: Asia Cosmetics and Personal Care 7: People & Organization Development

3: Travel Retail & Borderless Marketing 8: Productivity & Efficiency

4: Global Management & Capabilities 9: M&A on Top of Organic Growth

5: Innovation to Create New Value 10: ESCG for Sustainable Growth

15.06.2017
WE WILL BE A GLOBAL WINNER
WITH OUR HERITAGE

The Journey has Begun!

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Inspire a life of beauty and culture