ADJUVANT HOLDINGS CO.,LTD. Q4 FY2025 earnings call

• Overall 2025 March Fiscal Year Financial Performance

  • Consolidated net sales came in at 4.098 billion yen, a 7.7% year-on-year decrease, and missed the initial full-year plan of 4.64 billion yen by 11.7%.
  • Consolidated operating profit reached 126 million yen, a 127 million yen year-on-year increase, returning to net profit, but missed the initial plan of 163 million yen by 22.8%.
  • Net profit hit 40 million yen, only reaching 49% of the full-year plan target of 79 million yen.
  • Black ink profitability was achieved through large-scale cost cutting: advertising expenses fell 180 million yen, sales promotion expenses fell 51 million yen, logistics expenses fell 52 million yen, R&D expenses fell 33 million yen, and labor costs fell 32 million yen, offsetting the gross profit decline caused by lower sales.
  • The company maintained a solid financial position, with an equity ratio of 79.0% and total cash and deposits of 2.223 billion yen at period end, and a stable 96 million yen dividend was implemented for shareholders.

• Core Operational Initiatives Completed

  • Completed digital infrastructure upgrades: built out the Mite Mite education video system for partner salons, launched the AI skin diagnosis tool Mite Photo, and introduced the ADJUVANT LINK e-commerce service.
  • Launched 2 new product lines during the period, and pushed forward sales efficiency upgrades via online tools and sales management platforms.
  • Merged Sheer Professional into core subsidiary Adjuvant Cosme Japan ahead of the new fiscal year to integrate hair color product operations.
  • New business development progress: hair color new product launches were postponed to the next fiscal year for strategic reasons, and customer relationship management initiatives for the direct-to-consumer hair growth tonic e-commerce business did not deliver expected results.

• Product and Business Philosophy

  • Follows the core development principle of enhancing the skin and hair's natural self-repairing ability, produces oil-free, alcohol-free, non-colored products formulated with a proprietary balance of sugars and minerals, and prioritizes safe, high-quality products that are friendly to people and the environment.
  • Provides detailed training seminars for dealers and salon staff to improve consulting capabilities, and offers comprehensive support to both internal teams and external partners to ensure customers understand product knowledge and usage.

• Sustainability and Capital Cost Conscious Management

  • Established a formal sustainability policy this fiscal year, with four core material issues: consideration for the global environment, social contribution, sustainable business growth, and a safe and fair working environment, with specific goals set for each area.
  • Aims to achieve an 8% ROE as early as possible and maintain PBR above 1x, targeting improved corporate value through accelerated sales growth and strengthened operational structure.

1. Skincare products: This segment accounts for 34.2% of total revenue. In the 2025 March fiscal year, it recorded a 7.3% year-on-year sales decrease, with slow growth persisting throughout the reporting period. 2. Haircare products: This segment accounts for 61.6% of total revenue. In the 2025 March fiscal year, it recorded a 3.1% year-on-year sales decrease. The combined total of the two core product segments makes up 95.8% of the company's total revenue.

• For the 2026 March fiscal year, management guides for consolidated net sales of 4.365 billion yen, representing a 267 million yen (6.5%) year-on-year increase, driven by new haircare product launches and expanded digital content.
• Operating profit is guided to be flat year-on-year at 126 million yen, as planned increases in new product promotion expenses, labor costs, and logistics costs will offset the profit growth from higher sales.
• Net profit is guided to reach 73 million yen, a 33 million yen year-on-year increase.
• Key strategic initiatives to hit guidance targets include: removing the 100 thousand yen minimum initial purchase requirement for new Adjuvant Salon contract partners to expand the salon partner base, launching practical in-store sales focused seminars starting July to improve salon consulting capabilities, leveraging the ADJUVANT LINK platform to reduce repeat purchase opportunity loss and boost cross-sales, launching a dedicated salon app to centralize information management, and pursuing synergy from the completed Sheer Professional merger.

• The overall domestic beauty salon market size is 2.6496 trillion yen, growing 5.3% year-on-year, but the core hair salon segment (the company's main sales channel) was nearly flat with a 0.1% year-on-year decline. Long-term, the overall professional beauty product market is expected to shrink slightly due to population decline from falling birth rates.
• The 2025 March fiscal year missed both sales and profit targets by a large margin: sales missed by 11.7%, operating profit missed by 22.8%, and net profit only hit 49% of the plan. The new hair growth tonic e-commerce business failed to deliver expected results, indicating execution risk in new business development.
• Current ROE remains below the company's target shareholder cost of capital, and has trended downward alongside lower net profit, creating pressure to improve returns for shareholders.
• Both core skincare and haircare segments recorded year-on-year sales declines in the 2025 March fiscal year, with skincare seeing particularly pronounced stagnant growth, creating ongoing pressure to drive top-line recovery.

No question and answer section was included in the provided earning call transcript.