Summary of the Shiseido Group`s Businesses

Summary of
the Shiseido Group’s Businesses
1
 Now I would like to give you a summary of the Shiseido Group’s businesses.
Consolidated Income/Loss and
Property of the Shiseido Group
Fund Procurement
Investment in Fixed Assets
2
 I would like to begin with consolidated income/loss and property of the Shiseido Group, the statuses of
our fund procurement and investment in fixed assets.
Three-Year Plan (FY2011 – FY2013)
Three-Year Plan
Globalization
Phase III
Shiseido
Establish
foundation as
a global player
2005
Make a
leap forward
Globalization
Phase II
Globalization
Phase I
Shiseido
Sustained Growth as a Global Player Representing Asia
with Its Origins in Japan
Move to
a growth trajectory
Improve quality
of activities
across the board
Establish an
undisputed presence in Asia
2008
2011
Become
a global player
2014
2017
Accelerated transformation into a global company
(Integration of domestic and overseas business operations)
Customer-oriented marketing reforms
3
 We at the Shiseido Group aim for “sustained growth as a global player representing Asia with our
origins in Japan.” As a step toward this goal, we have been working on our Three-Year Plan with
the theme of “move to a growth trajectory” since fiscal 2011.
4 Growth Strategies Under the Three-Year Plan
Japan
China
Asian Countries
Global Mega-Brand
Strategy
Full-scale promotion of the masstige market
Asian Breakthrough
Strategy
Promote priority activities in each country
New Frontier
Strategy
Europe
Expanding market share in Asia
Full-scale entry to web marketing
Enhancement of initiatives in emerging countries
Refining product development
Customer-First
Strategy
Reinforcement of
management base
Americas
Improvement of brand value in the prestige market
Refining of sales activities
Optimization of production
system / Improvement of
procurement system
Establishment of
IT infrastructure
Globalization of
human resources
Deepening of
CSR activities
4
 We positioned fiscal 2011, the first year of our Three-Year Plan, as a year to improve company quality,
and aggressively invested in future growth in both Japan and overseas markets. We worked on the
following four growth strategies: “Global Mega-Brand Strategy,” “Asian Breakthrough Strategy,” “New
Frontier Strategy,” and “Customer-First Strategy”
 In addition, to reinforce our management base, we worked on:
Optimizing the production system and improving the procurement system;
Creating an IT infrastructure;
Globalizing human resources; and
Developing CSR activities.
Consolidated Net Sales
+1.7%
670.7
682.4
(Billion yen)
FY 2010
FY 2011
5
 As a result, our consolidated net sales for the fiscal year under review increased by 1.7% compared to
the previous fiscal year, to 682.4 billion yen.
 For our domestic business, we maintained almost the same level of sales as the previous year, despite
adverse market conditions.
Our overseas sales continued to be driven by China, and we achieved double-digit growth on a local
currency basis.
Consolidated Operating Income
-12.0%
44.5
39.1
(Billion yen)
FY 2010
FY 2011
6
 Operating income declined by 12%, to 39.1 billion yen.
 This is because we increased marketing costs and other expenses both in Japan and overseas in
order to “move to a growth trajectory.” The result was almost the same as what we had initially planned.
Consolidated Net Income
+13.5%
12.8
FY 2010
14.5
(Billion yen)
FY 2011
7
 Net income increased by 13.5% compared to the previous year, to 14.5 billion yen, due to the absence
of major extraordinary losses such as a loss on valuation of investments in securities, despite negative
factors including the reversal of deferred tax assets as a result of a change in the corporate tax rate,
as well as a decline in operating income.
Property of the Shiseido Group
Assets, Liabilities, and Net Assets
of the Fiscal Year Under Review
(Billion yen)
Equity Ratio
40.3%
Total
Assets
720.7
(-18.4)
Liabilities
417.0
(-2.0)
Fund Procurement
Net Assets
303.7
(-16.4)
No important fund procurement
8
 Next, I will talk about our property.
 As of the end of fiscal 2011, our total assets decreased by 18.4 billion yen compared with the end of
the previous fiscal year, to 720.7 billion yen.
 Our liabilities declined by 2 billion yen to 417.0 billion yen, while net assets decreased by 16.4 billion
yen to 303.7 billion yen. As a result, our equity ratio was 40.3%.
 We also did not make any important fund procurements during the fiscal year under review.
Investment in Fixed Assets by the Shiseido Group
The “Shiseido-Ginza Future Planning” Project
(Expenses for constructing the company
building in Ginza, etc.)
34.3
(Billion yen)
21.6
New Business Model
(System development expenses, etc.)
8.2
4.5
Total Amount
of Investment
Tangible
Fixed Assets
Intangible
Fixed Assets
Long-term
Prepaid
Expenses
9
 I will now move on to discuss our investment in fixed assets.
 In fiscal 2011, we invested a total of 34.3 billion yen in fixed assets. To give you specific examples of
these investments, we renewed our production facilities and improved overseas store counters. We
also invested in the “Shiseido-Ginza Future Planning” Project, which involves building an office in
Ginza. Another example is organizational development related to our new business model for the
domestic market, which I will describe later.
Progress and Achievements of Businesses
Issues to Tackle
10
 Next, I will report on the progress and achievements of businesses and issues to tackle.
Domestic Cosmetics Business
11
 I will begin with the domestic cosmetics business.
Domestic Cosmetics Business: Net Sales
-1.3%
358.4
353.8
(Billion yen)
FY 2010
FY 2011
12
 During fiscal 2011, we moved away from a traditional marketing style that relies on launching new
products and conducting sales promotions for them. Instead, we strived to increase product value and
thoroughly refine our process for suggesting beauty solutions to customers.
As a result, although the entire market was shrinking, our net sales declined by only 1.3% compared
with the previous fiscal year, to 353.8 billion yen.
Domestic Cosmetics Business: 1) Increasing Product Values
Bringing Carefully Selected, Highly Competitive New Products to Market
Fostering Existing Core Products
MAQuillAGE
clé de peau BEAUTÉ
TSUBAKI
13
 From the viewpoint of increasing product value, we reduced our number of new product launches by half and
released carefully selected products that would be highly sought after by customers. At the same time, we
focused on supporting existing core products.
 As a result, we enjoyed a hit release for the MAQuillAGE Essence Glamorous Rouge, a product that
achieved record sales, with more than one million items sold since its launch. We also enjoyed favorable
results for clé de peau BEAUTÉ and TSUBAKI, and worked to gain repeat orders and create longtime
sellers.
 In fiscal 2012, we will continue to bring carefully selected, highly competitive new products to market and will
strive to support existing core products.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
季節×社会背景を捉えた、共同取組み
涼活のススメ
Suggesting Beauty Solutions for Eliminating Discomfort and Dissatisfaction
and Enabling Comfortable Lives
癒しのススメ
身体と心の「不」を涼しくする
Copyright©2011 Shiseido Co., Ltd. All Rights Reserved.
No reproduction without permission.
8
今年の秋と冬は
身も心も
美しく、あたたまる
Copyright©2011 Shiseido Co., Ltd. All Rights Reserved.
No reproduction without permission.
51
Utilizing products and product variety
Preparing solutions to suit the
beauty needs of each season
14
 In our efforts to suggest beauty solutions to customers, we focused on changes in customer lifestyles
and their potential needs. We suggested solutions that would eliminate discomfort and dissatisfaction
and enable comfortable lives.
 Specifically, we started with “Ryokatsu No Susume (keep cool and active)”, a beauty solution for
staying cool and comfortable in the summer, when we need to save on electricity. This was followed
by “Iyashi No Susume (be healed)” in the autumn, and “Fuyu Onkatsu no Susume (keep warm and
active)” in the winter. In this way, we offered solutions for the beauty needs of each season through
the use of our various products.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
Enhancing Beauty Solutions for Each Season and
Preparing Beauty Solutions for the Senior Market
Newspaper ad
targeting the
senior market
published on
March 29
45 newspapers
across Japan
A full-color,
double-page ad
15
 In fiscal 2012, we will continue to enhance our beauty solutions for each season. We will also develop
and suggest these beauty solutions for the senior market, which is large and promising.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
Department Stores and Cosmetic Voluntary Chain Stores
A comprehensive approach to basic in-store activities (promoting the use of
direct touch on customers’ skin and using beauty equipment, etc.)
16
 Next, I would like to describe our initiatives for each channel.
 In fiscal 2011, we took a comprehensive approach to basic in-store activities, such as directly touching
customers’ skin and using beauty equipment, at department stores and voluntary chain stores.
 As a result, more customers came back to our stores. Our department stores had better results than the
previous fiscal year despite the adverse market conditions, which included a significant decline in the number
of foreign tourists and a reduction in the number of days of operation in order to on electricity after the Great
East Japan Earthquake.
 Our efforts also led to achievements at voluntary chain stores. For example, at more than 250 stores across
the country, sell-through was 110% or more compared with the previous fiscal year.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
Department Stores and Cosmetic Voluntary Chain Stores
<FY2012>
Enhance basic in-store activities further
A comprehensive approach to basic in-store activities (promoting the use of
direct touch on customers’ skin and using beauty equipment, etc.)
17
 In fiscal 2012, we will further enhance our basic in-store activities, such as directly touching customers’
skin and using beauty equipment, at department stores and voluntary chain stores.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
Drug Stores and General Merchandise Stores
Bolstering self-selection skincare products and
cosmetics for men were among the issues.
18
 Meanwhile, at drug stores and general merchandise stores, the promotion of self-selected skincare
products and cosmetics for men were among our issues.
Domestic Cosmetics Business:
2) Refining Activities for Suggesting Beauty Solutions to Customers
Drug Stores and General Merchandise Stores
<FY2012>
Strengthen store promotion for
each chain and leverage lines
in the self-selection category
Bolstering self-selection skincare products and
cosmetics for men were among the issues.
19
 In fiscal 2012, we will aim to increase sales by strengthening store promotion for each chain and
leveraging product lines in the self-selection category.
Domestic Cosmetics Business: 3) Introducing a New Business Model
Taking advantage of the
characteristics of both websites
and bricks-and-mortar stores
Meeting
customers
*Note:
Japanese-only.
To watch the video, please push the “Play
Video” button on the webpage:
http://group.shiseido.com/ir/shareholder/e
1206shm/html/index.html
Introduction
Deepening
Relationship
with customers
Introduction
Having
customers
feel effects
Store
Mechanism to attract greater
numbers of regular customers
by creating opportunities for
“customers seeking beauty”
to encounter Shiseido
The English translation of the narration of
this video is posted on the same webpage.
20
 The main pillar of our initiatives for fiscal 2012 in the domestic cosmetics business is introducing a new
business model through websites.
 This is not just providing Internet shopping capabilities. It is a mechanism to attract greater numbers of
regular customers by creating opportunities for those customers seeking beauty to encounter Shiseido,
which will be enabled by taking advantage of the characteristics of both websites and brick-and-mortar
stores.
 We started this initiative in April of this year.
 We will show you a video* about its specific content.
Domestic Cosmetics Business: 3) Introducing a New Business Model
21
 How did you find us?
 Two months have passed since this new business model was launched.
 Users of “Beauty & Co.” have given us such comments as “This is interesting because it provides not
only beauty information but also information about lifestyles in general” and “The feature articles are
worth reading and are very interesting.” We expect a further increase in the number of users.
Domestic Cosmetics Business: 3) Introducing a New Business Model
22
 “watashi+” receives more than 1 million page views a day. We feel that attracting that many customers
is a very good start.
 We will continue to refine these websites to keep responding to the diverse beauty needs of our
customers, and help them enjoy the process of applying makeup.
Domestic: Healthcare Business
Expanding the lineup of collagen-related products
The Collagen
BENEFIQUE COLLAGEN ROYAL RICH
23
 Next, I would like to describe our healthcare business.
 In fiscal 2011, amid increasingly fierce competition among collagen-related products, we expanded our
lineup of these products. In addition to launching our mainstay line, The Collagen, we also released
BENEFIQUE COLLAGEN ROYAL RICH, an exclusive line for voluntary chain stores.
 In fiscal 2012, we will continue our efforts to increase sales, mainly by taking advantage of the strength
of The Collagen as a “patented beauty food” that only Shiseido offers.
Global Business
24
 Next, I would like to move on to describe our global business.
Global Business: Net Sales
+5.6%
(+12.2% on a local currency basis)
319.7
302.6
(Billion yen)
FY 2010
FY 2011
25
 We continued to enjoy significant growth in the United States and Europe, and maintained a high rate
of growth in Asia, including China.
 As a result, our net sales increased by 5.6% compared to the previous fiscal year, to 319.7 billion yen.
 On a local currency basis, our rate of sales increase was 12.2%.
Global: Prestige Market of the Cosmetic Business
Superior Performance in Countries around the World
Global Brand
High Growth
in Overseas Markets
clé de peau BEAUTÉ
26
 In the prestige market, products of the global brand SHISEIDO, including the Future Solution LX
premium skincare line, continued to be strong in each country.
 In fiscal 2012, we will enhance the prestige image of the brand, with American actress Jennifer
Connelly as our spokesperson, for example.
 For clé de peau BEAUTÉ, we will further improve its brand value and enhance its presence in North
America. In China, we will increase the number of stores. We will thus continue to aim for high growth
in overseas markets.
Global: Prestige Market of the Cosmetic Business
Strengthening Measures for Fostering Bare Mineral
Launch of READY,
a new makeup products
Operation of a large-scale campaign
27
 For Bare Mineral, we launched READY, a new makeup line, in September of last year. We achieved
excellent results by launching a large-scale campaign, “Be a force of beauty.”
Global: Prestige Market of the Cosmetic Business
Creating Synergy between Bare Mineral and SHISEIDO
Expanding the categories to skincare
Further growth in Europe
Growth in Japan and Hong Kong
Entry into growth areas including Brazil
28
 In fiscal 2012, we will undertake a full-scale initiative to create synergy by using Shiseido’s
technologies and sales capabilities.
We will promote the expansion of skincare categories and at the same time aim for further growth in
Japan, Hong Kong, and Europe, as well as in the US, our main market. In addition, we will aim for
even higher growth by aggressively entering into growth areas, such as Brazil, where we started to sell
our products on June 12.
Global: Prestige Market of the Cosmetic Business
High Growth of NARS
NARS
Maintaining the Superior Performance of the
Designer Fragrance and Travel Retail Businesses
Elie Saab
Airport duty-free shop
(Hong Kong)
29
 Other than that, in overseas markets, our makeup artist’s brand, NARS, achieved high growth, mainly
in North America.
 Our designer fragrance also grew steadily, and travel retail businesses, including airport duty-free
shops, continued to show superior performance.
 In fiscal 2012, we will continue to expand both NARS and our fragrance business to more countries.
Above all, we will strengthen our marketing of NARS by making use of social networking.
Global: Cosmetics Business in the Chinese Market
Highest Priority for Injecting Management Resources
Quality improvement
Reinforcing approach
to the prestige market
Sustainable growth
of specialty stores
Strengthening and expanding
masstige businesses and new markets
Highest priority for injecting marketing costs and human resources
Quantity expansion
30
 Next, I will describe our cosmetics business in China.
Our highest priority for injecting management resources was the Chinese market, where competition
with our competitors has been increasingly fierce.
 In fiscal 2012, we will continue to increase our marketing costs and other costs. We will thus give
priority to investing in measures for reinforcing our approach to the prestige market, which are aimed at
enhancing the image of the Shiseido brand, and masstige business, targeting the middle-income group,
which will expand in Asia in the future.
 As a result, our net sales in China will finally reach the milestone of 100 billion yen.
Global: Cosmetics Business in the Chinese Market
Growth of Sales in the Department Store Channel
AUPRES
clé de
peau Beauté
Global Brand
31
 At department stores, AUPRES, the global brand SHISEDO, and clé de peau Beauté continued to be
strong and achieved increases in sales.
 In fiscal 2012, we will introduce the premium line of AUPRES in stores ranked high in sales, in
response to the growing needs of the higher prestige market, and improve beauty consultants’
capabilities in in-store activities.
In addition, we will renovate store counters for the global brand SHISEIDO and increase the number of
clé de peau Beauté stores.
Global: Cosmetics Business in the Chinese Market
Sustainable Growth of the Specialty Store Channel
URARA
PURE & MILD
32
 At cosmetics specialty stores, dedicated brands URARA and PURE & MILD continued to be strong
and achieved increases in sales.
 In fiscal 2012, we will continue to strengthen these brands. In addition, we will introduce a collagen
drink and a skin brightening drink, our healthcare products. We will thus deepen the relationship
between customers and stores, thereby aiming for steady growth.
Global: Cosmetics Business in the Asian Masstige Market
Enhancing Our Presence in China and Other Asian Countries
Thailand
Za
TSUBAKI
SENKA
33
 Next, I will explain our cosmetics business in the Asian masstige market.
 In this market, the total skincare and makeup brand Za grew significantly, mainly in China.
We also took actions for TSUBAKI, including improving content and shifting to local production, in
response to the needs of local customers in China.
And we also launched SENKA, a brand of low-price skincare products, in Taiwan and Hong Kong,
thereby realizing a broader Asian launch of the brand.
 In fiscal 2012, we will take further measures for Za and TSUBAKI in supermarkets and other channels,
as well as drug stores. We will also aim to launch SENKA in more countries.
Global: Cosmetics Business in Emerging Countries
Changes in the Number of Overseas Countries and Regions
where We Operate (Accumulated Total)
89
1991
2001
2012
34
 Next, I will move on to describe the business in emerging countries.
 We expanded our business in Russia and proactively entered new markets such as Panama.
As of the end of May 2012, the number of countries and regions where we operate had increased to 89.
Global: Cosmetics Business in Emerging Countries
Creating the Next-generation Growth Engine
Russia
Brazil
35
 In fiscal 2012 in Russia, we will strengthen measures for TSUBAKI, which we launched in the country
in fiscal 2011, while steadily promoting the global brand SHISEIDO.
 Also, we will newly launch Bare Mineral and NARS in Brazil as a promising market following Russia.
We will thus start operating multiple brands in earnest.
Global: Professional Business
Mega Hit in Japan
THE HAIR CARE
ADENOVITAL
Superior Performance in Overseas Markets
CARITA
DECLÉOR
Zotos
36
 Next, I will describe our professional business.
 In Japan’s hair product market, the HAIR CARE ADENOVITAL, a hair-growing agent that contains
adenosine as an active medical ingredient, became a mega hit.
In overseas markets, superior results were achieved by Zotos International, Inc., which operates globally with
a focus on North America, as well as CARITA International S.A. and Laboratories Decléor S.A.S., which offer
our products in beauty salons and operate esthetic salons.
 In fiscal 2012, we will increase the strength of each brand and increase efforts to expand ADENOVITAL and
the Joico brand of Zotos International, Inc. in Asia, for example.
Deepening CSR Activities
Our Corporate Activities
for Putting into Practice Our Corporate Philosophy
• Dialogue and cooperation with our all stakeholders
• Activities for achieving a sustainable society through activities
that address the issues and expectations of society
37
 Next, I will explain our CSR activities.
At the Shiseido Group, we regard CSR activities as putting our corporate philosophy into practice
through our corporate activities. We help achieve a sustainable society by engaging in activities that
address the issues and expectations of society through dialogue and cooperation with our
stakeholders. We therefore work to create health and beauty for people.
 Today, I will describe the activities we are focusing on, which are “environmental activities,” “initiatives
to abolish animal testing,” “support for affected areas,” and the “MIRAI TSUBAKI Project.”
CSR Activities: Environmental Activities
Use of Containers Made of Sugar
Cane-based Polyethylene (SUPER MiLD)
Use of Wind-power Generation Facilities
at a Plant of Zotos International, Inc.
in the United States
Activities of Planting and Maintaining
Camellia at Goto Islands, Nagasaki
Tree-planting Activities
in Gansu Province, China
38
 I will begin with our environmental activities. In fiscal 2011, we adopted containers made of sugar
cane–based polyethylene for SUPER MiLD. We were the first to use this material for containers for
cosmetics products or daily commodities.
 Also, a Zotos International plant in the United States uses wind-power generation facilities.
We engaged in activities to plant and cultivate camellia on the Goto Islands in Nagasaki Prefecture,
where camellia oil, or Tsubaki oil, is produced. We also continued our activities to plant trees in China’s
Gansu Province.
CSR Activities: Environmental Activities
Use of Containers Made of Sugar
Cane-based Polyethylene (SUPER MiLD)
Use of Wind-power Generation Facilities
at a Plant of Zotos International, Inc.
in the United States
Activities of Planting and Maintaining
Camellia at Goto Islands, Nagasaki
Tree-planting Activities
in Gansu Province, China
39
 In fiscal 2012, we will continue to promote the use of environmentally friendly materials for our
products. At the same time, we will strive to reduce the amount of CO2 emissions from our plants and
offices in Japan and overseas by installing environmentally friendly facilities and implementing energysaving measures.
CSR Activities: Initiatives to Abolish Animal Testing
Ended In-house Animal Testing (on March 31, 2011)
Promoting development of new values
Development and establishment of alternatives to animal testing
Taking further steps to phase out all animal testing by FY2013
40
 Next, I will describe our initiatives to abolish animal testing.
 We aim to abolish animal testing in our cosmetics product development. We had discussions based on
diverse opinions from people in the field. As a result, on March 31, 2011, we abolished in-house animal
testing.
 From now on we will promote diverse initiatives to create new values, and develop and establish
alternatives to animal testing, aiming to phase out all animal testing in cosmetics product development
by fiscal 2013.
CSR Activities: Support for the Affected Areas
Provision of Cosmetics Sets
Beauty Volunteer Activities
by Our Employees
Hand massage
Makeup
41
 Next, I will explain our support for afflicted areas.
 At the Shiseido Group, we have been engaged in a variety of support activities since the Great East Japan
Earthquake.
 Immediately after the earthquake, we provided emergency support for those affected by the disaster. In
addition to relief funds, we provided them with relief supplies such as shampoo that could be used without
water.
 We later provided support to prolong their life as evacuees. Our employees engaged in beauty volunteer
activities, such as giving hand massages, applying makeup, and providing evacuees with cosmetics kits.
CSR Activities: Support for the Affected Areas
Provision of Cosmetics Sets
Beauty Volunteer Activities
by Our Employees
Hand massage
Makeup
42
 We also provided information support. For example, we submitted articles on beauty to community-based
newspapers and provided information to FM community stations and others.
 In December 2011, we gave cosmetic kits to people living in temporary housing, so they could spend the New
Year radiantly.
 We learned a lot through these activities. We learned that the products and services we offer at the Shiseido
Group not only make customers look beautiful, but also contain a tremendous energy that enables them to
deliver a “joie de vivre” and vitality to the people who use them.
 I think it will take a lot of time for people to recover from the disaster.
At the Shiseido Group, we will continue to provide support to those in affected areas, hoping and believing
that they will again smile with heartfelt pleasure some day.
CSR Activities:
MIRAI TSUBAKI Project – Deepening Ties with Society and Customers
Social Contribution Activities by Approx. 46,000 Group Employees Worldwide
Cleaning up flowerbeds in Ginza
Shiseido Parlour
Environmental conservation activities
at Yuigahama
Technology & Engineering Center
The “Earth Day Poster Contest”
for raising environmental awareness
Shiseido America Inc./Davlyn Industries, Inc.
Women
&
Cosmetics
Culture
Environment
Beauty seminar for senior citizens
Taiwan Shiseido Co., Ltd.
43
 Next, I will move on to explain the MIRAI TSUBAKI Project.
 Thanks to your support, we have entered the milestone year of the 140th anniversary since Shiseido was
founded in 1872 as Japan’s first western-style pharmacy in Ginza, Tokyo.
 All the employees of the Shiseido Group worldwide express their gratitude to our customers and society for
their 140 years of support. We plan on strengthening our ties with them further.
 To symbolize our gratitude, we will work on our MIRAI TSUBAKI Project. In this project, a total of 46,000
Group employees from all our business facilities and departments worldwide will engage in social contribution
activities in three fields-”women and cosmetics,” “culture,” and “the environment”-where we can show our
strength under the theme of “Create beauty.”
Tasks for Achieving Targets
Under the Three-Year Plan
44
 Finally, I will summarize tasks for achieving targets under the Three-Year Plan.
Roadmap towards FY2017
Three-Year Plan
Globalization
Phase III
Globalization
Phase I
Shiseido
Improve quality
of activities
across the board
Establish
foundation as
a global player
2005
2008
Shiseido
Sustained Growth as a Global Player Representing Asia
with Its Origins in Japan
Make a
leap forward
Globalization
Phase II
Move to
a growth trajectory
Establish an
undisputed presence in Asia
2011
Become
a global player
2014
2017
Aiming to achieve net sales exceeding ¥1 trillion, an operating margin of
12.0% or higher, and consolidated ROE of 15% or higher in FY2017
45
 At the Shiseido Group, we aim for “sustained growth as a global player representing Asia with our
origins in Japan.” Our target is to achieve net sales exceeding 1 trillion yen for the entire Group, an
operating margin of 12% or higher, and a consolidated ROE of 15% or higher in FY2017.
 The three years from fiscal 2011 is the second phase of our globalization. The theme for this phase is
“Move to a growth trajectory.”
Overview of the Plan for FY2012
2011
Improve the
company quality
2012
2013
Feel the growth
Accelerate the growth
Aggressive marketing investment toward growth
4 Growth Strategies
• Global Mega-Brand Strategy
• Asian Breakthrough Strategy
• New Frontier Strategy
• Customer-First Strategy
Refining activities that have
clearly produced results
Starting the new business model
46
 In fiscal 2012, the second year of the phase, as I told you today, we will continue to work on our four
growth strategies by making aggressive marketing investments toward future growth, both in Japan
and overseas countries.
 We will also refine the activities we carried out in fiscal 2011 that clearly produced results. At the same
time, we will start new activities such as introducing a new business model in order to “feel the growth”
in fiscal 2012.
Targets of the Three-Year Plan: Net Sales
Sales: Achieving 6% annual growth, Operating margin: Achieving 10%
Towards average growth in net sales of 6% on a local currency basis
Accelerating
growth
+6.0%
+4.7%
FY2011 Results
FY2013
FY2012 Plan
47
 Under the current Three-Year Plan, we aim to achieve average growth in net sales of 6% and a 10%
operating margin.
 Our growth rate on a local currency basis was 4.7% in fiscal 2011. We will continue to make
aggressive marketing investments to achieve 6% in fiscal 2012. And in fiscal 2013, the final year, we
will accelerate growth further to achieve average growth in net sales of 6%, which is our target in the
Three-Year Plan.
Targets of the Three-Year Plan: Operating Margin
Sales: Achieving 6% annual growth, Operating margin: Achieving 10%
Toward an operating
margin of 10%
Promoting growth
strategies boldly
＋
Initiatives for
cost structure reform
Operating margin at 8.0% expected
5.7%
FY2011 Results
6.0%
FY2012 Plan
FY2013
48
 However, regarding the other target, an “operating margin of 10%”, the economic environment and
other elements have changed greatly since we formulated our Three-Year Plan. Because we need to
make aggressive marketing investments to achieve average growth in net sales of 6%, we currently
expect our operating margin to not exceed 8.0%.
 Considering current conditions in the global economy and Japanese society, I believe that the
important thing for the Shiseido Group now is to achieve growth, which will eradicate a sense of
stagnation.
Targets of the Three-Year Plan: Operating Margin
Sales: Achieving 6% annual growth, Operating margin: Achieving 10%
Toward an operating
margin of 10%
Promoting growth
strategies boldly
＋
Initiatives for
cost structure reform
Operating margin at 8.0% expected
5.7%
FY2011 Results
6.0%
FY2012 Plan
FY2013
49
 Toward this end, we will take measures toward a fundamental “cost structure reform,” and boldly
promote our four growth strategies, instead of just concentrating on marketing investments. This will
allow us to get as close as possible to a 10% operating margin.
 There is no doubt that the environment is very severe. All of us must work together to confront and
overcome this situation.
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 Our share price has been declining since we announced our financial results on April 27, in tandem
with the decline of the stock market. I believe this has been of great concern to you.
 I think that the key way to increase our share price is to increase our growth potential and profitability
by steadily carrying out the initiatives in our Three-Year Plan, instead of relying on a rise in the stock
market.
 I want to realize sustainable growth by any means possible to respond to the expectations of our
shareholders!
 I will keep this strong desire in mind in my daily work.
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 We will continue to work toward being a company that can provide value that exceeds customer
expectations in all our corporate activities, not just our products and services.
 We appreciate your continued support.
 Thank you very much.