Milbon Aktie

Good afternoon, everyone. My name is Shinichiro Hyogo, Executive Officer in charge of Corporate Communication and Finance at Milbon. Thank you for joining today's briefing. Whether you are tuning in online or braved the intense summer heat to be here in person, we greatly appreciate it. We know 4:00 p.m. is getting a bit late in the day, especially right before the holiday, so thank you for making the time and for your continued interest in Milbon. Later in the presentation, President Sakashita will provide a detailed breakdown of our overseas operations and other business areas. Therefore, I will keep my segment overview brief and focus primarily on our financial figures.

Let's now move on to the key highlights of our financial results for the first half. We achieved a significant increase in profit with net sales growing by 8.3% and operating income by 72.7%. Versus the plan, net sales increased by 2.9%, while operating income was up 39.5%, exceeding our targets.

Looking at performance by region. The domestic hair salon market continues to struggle, but sales of our hair care products remained solid. We successfully met our first half domestic plan as solid sales of existing products offset the delayed launch of our new hair coloring product, PRETOWA. Overseas sales performed exceptionally well, showing strong growth of 24.7% on a yen basis and 16.7% on a local currency basis. The United States, in particular, showed strong year-on-year growth of 45.0% on a yen basis, driving our overall overseas performance. Operating income rose year-on-year and exceeded our plan, reflecting increased gross profit from higher sales and lower-than-expected SG&A expenses due to timing differences. As a result, the operating income margin improved significantly from 7.8% to 12.5%.

Based on our strong performance in the first half, we are revising our full year earnings forecast upward after factoring in anticipated cost increases for raw materials and supplies due to the situation in the Middle East. For the full year, we project JPY 55,600 million in consolidated net sales, an upward revision of JPY 800 million and JPY 6,550 million in operating income, which is a JPY 250 million increase.

Turning to shareholder returns. We declared an interim dividend of JPY 40 as initially planned, and we are maintaining our year-end dividend forecast. Furthermore, just today, the Board approved a treasury share repurchase of up to JPY 1,800 million in order to improve capital efficiency and enhance shareholder returns.

Please turn to Page 4. This slide shows the consolidated statement of earnings for the first and second quarters. Looking at the year-on-year changes, net sales, operating income and ordinary income increased by JPY 2,070 million, JPY 1,408 million and JPY 1,646 million, respectively. Versus our plan, net sales outperformed by JPY 753 million, operating income by JPY 947 million, ordinary income by JPY 1,168 million and profit attributable to owners of parent by JPY 759 million. During this first half, ordinary income grew significantly due to the recording of foreign exchange gains under nonoperating income as well as a onetime profit from equity method investments.

One specific item to note is an extraordinary loss of JPY 127 million, which represents an impairment loss associated with the studio closure. We had originally factored JPY 100 million into our full year consolidated forecast for this. This slide shows the factors behind the year-on-year changes in consolidated operating income. A key highlight here is the improved gross profit margin alongside the increase in gross profit driven by higher sales.

During the same period last year, inventory write-downs and disposal losses on cosmetics weighed down heavily on our margins. This year, a decrease in those write-downs contributed to an improved gross profit margin, which boosted operating income by JPY 339 million. Additional positive factors included a decrease in marketing expenses. Conversely, the increase in personnel expenses was driven by base salary raises, while the increase in logistics expenses was linked to higher sales, primarily overseas. All in all, operating income reached JPY 3,347 million.

This slide explains the factors behind the difference versus our targets. Our operating income exceeded the first half plan by JPY 947 million. This outperformance was driven by increased gross profit from higher sales, combined with lower-than-planned marketing and R&D expenses due to timing differences, largely tied to PRETOWA.

Page 8 shows our financial results by region, detailing net sales and operating income for both domestic and overseas markets. If you look at the third column from the right, you will see our targets for the second quarter year-to-date with the actual year-to-date figures highlighted on the left. Comparing actuals against our plan, domestic net sales exceeded the target by JPY 121 million and domestic operating income outperformed by JPY 261 million.

Overall, overseas net sales exceeded the plan by JPY 631 million and overseas operating income outperformed by JPY 685 million. Looking at the overseas results by region, net sales in the other region fell slightly short of our projections. However, in all other regions, we firmly exceeded our targets for both net sales and operating income.

Turning to Japan. Market conditions remained largely unchanged. Against this backdrop, sales of our hair care products remained resilient, increasing by 4.4% year-on-year. In our hair coloring category, the delayed launch of our new product, PRETOWA, which was moved from June to September, resulted in a negative impact of roughly JPY 300 million by the end of June. As a result, hair coloring sales fell slightly short of our plan. However, hair care sales exceeded our targets, allowing us to successfully meet our overall domestic plan for the first half. Ultimately, hair coloring sales came in nearly flat, and we are very pleased to have held our ground despite the PRETOWA delay.

Turning to South Korea. After a somewhat soft start to our sales activities in the first quarter, we mounted a strong recovery in the second quarter. By strengthening our sales activities, we successfully met the net sales plan and by strictly controlling SG&A expenses, we exceeded our operating income target.

Moving on to China. The market environment remains sluggish. Despite this, our educational activities and proposals aimed at improving hair salon management are increasingly resonating with distributors and salons. Consequently, both hair coloring and hair care products grew with both net sales and operating income exceeding the planned forecasts.

Let's now turn to our operations in the United States. In the first quarter, we saw a significant impact from a distributor switch by a competing brand, KEVIN.MURPHY. While this raised some concerns about our second quarter sales due to sell-in and sell-through dynamics, our second quarter results ultimately came in broadly in line with our plan. As a result, we maintained high year-on-year growth, and profitability continued to improve. Our local team reports that distributor sell-through continues to progress steadily, leaving us fully confident in our growth trajectory for the U.S.

Let's now take a look at our operations in the EU. Alongside expanding sales of our new hair care products, we are making solid progress in acquiring new salon accounts. High growth has continued, driven primarily by our direct sales in Germany and supported by our color ambassador initiative. Our operating income here appears to be improving, but we still consider the overall scale to be quite small Additionally, as we will naturally continue making growth investments to expand sales, we do not expect to turn an operating profit in the immediate future.

We are revising our full year earnings forecast upward, raising net sales by JPY 800 million, operating income by JPY 250 million and ordinary income by JPY 560 million. We updated this forecast to reflect our first quarter performance in the U.S., the delayed launch of PRETOWA and the impact of rising raw material and packaging costs. In the first quarter, we reaffirmed our commitment to our operating income target of JPY 6,300 million. However, based on current performance trends, we have made a modest upward revision. Moving forward, our stance remains unchanged from last year. Our entire organization is fully focused on delivering on these published targets.

Looking at the factors behind this revision, we have incorporated a JPY 500 million negative impact from the situation in the Middle East as well as an increase in personnel expenses, which includes higher bonuses. Despite these headwinds, we have revised our operating income forecast upward by JPY 250 million from JPY 6,300 million to JPY 6,550 million.

Next is a breakdown by region. Here, I will briefly explain how we formulated these full year figures. Looking at net sales, we essentially rolled our first half outperformance directly into the full year forecast. For operating income, however, we are factoring in the aforementioned Middle East impact as well as delayed promotional expenses for PRETOWA in Japan. As a result, looking solely at the second half, we have actually revised our figures downward.

I would like to draw your attention to one specific point regarding the United States. Looking at the revised plan for the U.S.A. on the right, with our first half operating income at JPY 274 million and our revised full year target at JPY 360 million, it might appear at first glance as though we are lowering second half guidance. On paper, this does look like a downward revision, but it is actually the result of a prior year accounting adjustment.

Specifically, a JPY 99 million overstatement in last year's second quarter SG&A was later reclassified as a nonoperating loss in the third quarter. This accounting shift artificially skews our year-on-year baseline, making it look like a profit decline. However, once you adjust for that JPY 99 million, we are actually expecting top and bottom line growth in the second half.

Let's turn to the Middle East. This slide covers the impact of the Middle East situation on our financial results, serving as an update to the slide we presented in the first quarter. I know the geopolitical situation has been a point of concern, but I want to assure you that our procurement and product supply remain undisrupted. With a stable supply structure now secured, we are on track to launch our new hair coloring product, PRETOWA, on September 10.

Next, let's look at inventory. As of the end of June 2026, our inventory levels have increased by roughly JPY 1,500 to JPY 1,600 million year-on-year. Please note that this is a deliberate inventory buildup, driven by our preparations for the PRETOWA launch and our proactive measures to mitigate supply chain risks in the Middle East.

This brings me to my final slide, covering shareholder returns, dividends and the acquisition of treasury shares. At today's Board of Directors meeting, we declared an interim dividend of JPY 40 and maintained our year-end dividend forecast of JPY 48. Additionally, to improve capital efficiency and enhance shareholder returns, we resolved to repurchase up to JPY 1,800 million in treasury shares. Under our policy of not holding surplus cash, we determined that we could free up JPY 1,800 million for this purpose.

Thank you for your time today. And as always, we appreciate your continued support of our corporate activities. This concludes my presentation.

Good afternoon, everyone. My name is Hidenori Sakashita, President and CEO of Milbon Co., Ltd. Today, I will be walking you through the Milbon Group's progress for fiscal 2026. First, let's take a look back at our first half business performance. In the domestic market, our hair care category is performing well. Sales of our premium Aujua and Global Milbon brands remained solid. Our distributors also aggressively drove sales of our new products, specifically Suwae for frizzy hair launched in February and the Nigelle styling spray launched in March. Together, this drove strong overall performance.

Turning to hair coloring. Our Villa Lodola gray color products continued to perform well. Within fashion color, we did face the delayed launch of our new product, PRETOWA. However, the strong momentum of Villa Lodola Color successfully offset this impact, bringing overall hair color sales back to roughly flat.

PRETOWA was originally scheduled to launch on June 10, and I had hoped to share its initial sales trends with you today. Instead, we have pushed the launch back to September 10. The key takeaway I want to emphasize for the domestic market is this. Despite delaying a highly anticipated product like PRETOWA, we successfully achieved our overall domestic sales plan for the period between January and June 2026.

Turning to our overseas markets. Starting with South Korea, both sales and profits are tracking well. In China, despite a sluggish market environment, we are generating solid organic growth. In the U.S., the temporary sales surge driven by a competing brand's distributor switch has largely run its course, but distributor sell-through to salons continues to progress steadily, allowing us to significantly exceed our overall targets.

Next is the EU, where we have launched high-quality hair coloring education through ambassador contracts with renowned colorists. These educational activities, which bring together a wide range of local stylists are now fully underway. These initiatives have contributed to continued strong growth in both hair care and hair coloring across the region.

Circling back to what we touched on earlier. We maintained our interim dividend at JPY 40 as planned. We also announced the execution of share buybacks up to a maximum of JPY 1,800 million to improve capital efficiency.

That concludes my brief review of the first half. Now I would like to review the strategic direction we announced last year, along with the challenges we currently face. As you can see, this slide outlines our framework across Japan, Asia and the U.S. and Europe. Let's begin with the domestic market and how we plan to achieve stable growth across our 3 main categories.

In hair care, Aujua and Global Milbon remain our core pillars, and we aim to drive further growth by launching products tailored to specific needs. In hair coloring, the market is increasingly polarized between low-cost and high value-added products. We face challenges in product positioning here, and we will promote premiumization to address them. Finally, in cosmetics, rather than broad expansion, we will streamline our product lineup and pursue sales with a clear focus on profitability.

With that context in mind, let's look at the domestic market environment. Looking at the historical trend of the beauty spending coefficient on the chart, the metric naturally fluctuates from quarter-to-quarter, yet we are currently seeing a slight downward trend from flat. Because rising prices are driving greater cost consciousness, adapting to shifting consumer behavior is an urgent priority, making it essential to enhance service menus, pricing structures and the product purchasing environment strictly from the customer's perspective.

In this environment, our core strategy this year centers on the small mass market, which is all about matching specific consumer needs with the specialized strengths of individual stylists. To actively target this segment, we are rolling out a series of new product launches, including our highly anticipated PRETOWA hair color and premium new offerings from our Aujua line.

We're also introducing take-home products to address specific concerns such as frizzy hair for younger demographics, along with a spray designed to recreate trendy glossy finishes. And we will round out the second half by launching Milbon's first-ever styling series for men.

Turning to the first half. PRETOWA hasn't launched yet, so let me start with Aujua. We launched a new Aujua series called Miragery, and sales have been strong, driven mainly by take-home products such as shampoos and treatments. As a result, the Aujua brand achieved solid overall revenue growth.

We also launched 2 new products targeting highly specific markets. In February, we launched Suwae, a hair care brand addressing concerns such as frizzy hair, along with needs like hair quality improvement. In March, we followed with Nigelle, a styling spray built around a specific trend. Young stylists describe the look as a filter-like gloss, the kind of finish you see in AI-generated hair style images. And this spray lets them reproduce it on real hair. Both products read the small mass market accurately, which created strong matching between stylists and customers, and both became major drivers of our net sales growth.

Let me turn to the hair coloring market. As I touched on earlier, this market is increasingly polarized between low-priced and high value-added products, and it divides broadly into 2 segments: gray color and fashion color. In gray color, we have positioned Villa Lodola color on the high value-added side, and it continues to perform very well. Where we're falling short is fashion color. Our high value-added lineup there is weak, and that has been holding back the category as a whole.

I had hoped to bring you good news on fashion color today. Specifically, we had planned to launch PRETOWA in June, but the situation in the Middle East led us to push that launch to September 10. Even so through concerted efforts across the company, we successfully narrowed the decline in the first half. While fashion color was still down, the strong momentum of Villa Lodola color offset that weakness, resulting in only a modest decline in overall hair color sales for the half. In September, we will finally introduce PRETOWA to address our weakness in the fashion color space.

With this launch, Milbon will firmly establish 2 strong pillars in the premium segment of this polarized market: Villa Lodola color for gray color and PRETOWA for fashion.

Looking at the specific targets for PRETOWA, we initially aimed for JPY 1,000 million based on a June launch. Pushing the release to September condenses our sales window from 7 months to 4, prompting us to revise this target to JPY 700 million. However, we actually expect sales to ramp up faster than originally planned, so this new target represents a stronger pace of sales. Given these entirely different time frames, I want to be completely clear that this does not represent a JPY 300 million downgrade to our underlying momentum. We are currently preselling PRETOWA in about 100 salons, and the initial response has been outstanding.

Stylists report that the feel, texture and shine are clearly a level above conventional products, empowering these test locations to successfully raise their color menu prices by JPY 2,000 to JPY 3,000. Furthermore, the beige-based shades are proving to be a perfect match for current trends, and consumer feedback has been equally strong. Customers are so satisfied with their first PRETOWA experience that they are specifically requesting it for future visits, including clients who had previously given up on damaged care due to aging hair. Seeing their hair restored has given these customers a new positive outlook. We are witnessing a genuine innovation in salon color consultations, marking the beginning of a new era in hair color that we are very excited for you to see.

Turning back to our strategic framework slide. Let's look at the overseas markets. In Asia, our goal remains clear: capture the #1 market share led by South Korea. For the U.S. and Europe, we are taking a targeted approach to build presence and drive profitability. High growth in the U.S. has already prompted an upward revision. Meanwhile, South Korea continues its highly profitable growth trajectory and our ongoing salon management support in China is successfully driving organic expansion.

Now let's take a closer look at each of our key markets, starting with a deeper dive into the U.S. market. This chart tracks our sales and operating profit margins from 2014 to the present. Over this period, we executed a major structural shift. We replaced our direct-to-salon model with a distributor network to scale nationwide and also launched Global Milbon to elevate our international competitiveness. This new channel successfully expanded our footprint. Naturally, wholesale pricing initially squeezed our profit margins, but we have since overcome this hurdle.

As the network stabilized around 2022, rising sales volume pulled our margins steadily back up. Most recently, we signed brand ambassador contracts as a strategic investment to expand awareness and strengthen our brand. Step by step, we are putting every necessary condition for growth into place.

This summarizes our major trajectory from 2014 to the present. Naturally, the move to distributors drove steady top line growth, though the new wholesale pricing initially compressed our margins. However, as we scaled volume through this channel, profitability recovered. I wanted to share this 10-year retrospective to provide the full context behind our current momentum. To explain what is driving this strong sales growth, I want to highlight our competitive advantages.

As a product-driven company, our growth is naturally anchored by our flagship hair care brand, Global Milbon. This brand holds 2 distinct competitive edges built directly into its product design. The first, shown on the left, is the highly unique structure of our in-salon menus. As many of you know, professional salon treatments typically rely on 3 or 4 specialized formulas to beautifully restore the hair. Milbon takes this a step further. This particular salon treatment includes a complementary 4-week take-home care kit. By providing 4 weekly single-use treatments, clients can maintain that immediate salon impact at home. This included regimen elevates customer satisfaction and creates a highly differentiated product structure.

Looking further to the right side of the slide, you can see how this system builds trust. The stylist's technique combined with Milbon's salon care offerings delivers a beautiful finish. To maintain those results, clients naturally purchase our take-home shampoos and treatments, creating a powerful revenue driver for salons.

As I mentioned earlier, this process begins with 3 or 4 specialized formulas. But ultimately, the entire sales and profit growth model is rooted in the professional technique that drives those results. To support that model, our sales teams pour everything into hands-on training. You do not get these results simply by applying the products carelessly since each one has its own method, and Milbon teaches that salon by salon in person. This is our core business model, and it is exactly what makes us hard to compete with. This is our first advantage.

The second is the distributor network we have built across North America over the past 10 years. We still have an office and studio in Manhattan, where we continue to sell directly, but everywhere else runs through distributors. The country is vast, so we divided it into territories and built this network region by region. Including Canada, we now work with 9 distributors, which puts our products within reach of salons across North America.

Our sales force has grown steadily, too, and more than 300 reps now sell our products. That is showing up in the results. Since 2025, we have ranked #1 in in-store share at our California distributor, Sweis. With TruBeauty Concepts, which covers the East Coast, we have also taken #1 in in-store share as of the first half. Similarly, SSG, interested with Texas and the Midwest has now passed 100 sales reps, making it our largest partner, and our in-store share there has risen to #2. In short, our presence is growing in every region.

To sum up where we stand in North America, this business model is delivering. Our professional in-salon menus are built to help salons and hair stylists do their best work, and carrying that through to take-home product sales is what drives their revenue and profit growth. The U.S. is, of course, the largest market in the world, and our competitors are expanding through a range of channels, so competition will only get tougher. We intend to grow further without losing our footing on the strengths we have, the trust we have built with distributors and salons, the technology and product capabilities we developed in Japan, and the headcount growth and training of both distributor sales reps and our own field person workforce.

I realize that all sounds very positive, but of course, we have challenges, too. We don't have a slide for this today, though growing our hair color business will be a major theme for the U.S. in the next medium-term management plan. We have work to do on the product lineup and on building a proper hair color education structure, and neither will happen quickly. Turning those challenges into strengths is how we aim to keep growing.

Next is South Korea, where we hold the #2 position on an estimated share basis. This covers net sales and operating profit margin between 2019 and 2026. The operating profit margin line, the red line, makes the point. We have held consistently high margins throughout.

Now allow me to direct your attention to the pie charts on the right. As you can see, in South Korea, hair color accounts for 71% of Milbon's sales. Conversely, the market as a whole looks quite different. Hair care, including styling, is about 40% with hair color and perms each around 30%. This tells us that our room to grow in South Korea is in hair care and perms. Hair color is where we are strongest, and we will keep driving it hard. At the same time, we will fill out the product portfolio to go after the #1 spot.

Next is China. Consumers are still spending cautiously, especially at the higher end, but you could call it a shift toward healthier habits. People are not buying what they do not need, and they buy what they do need when they need it. What's more, this change is permanent, and you also hear far less about bulk buying these days. Times have changed. So our job now is to work with salons on management strategies and initiatives that suit the new environment and to grow together with them.

Milbon currently ranks fourth in terms of market share in the country and the strategic initiatives we are rolling out in China are generating more interest every year as evidenced by these photos taken at past events. Our strategy centers on delivering high-value salon services. We execute this through hands-on training stylist by stylist. Worldwide, we host educational events designed to turn stylists into highly sought-after top-tier performers. In China, over 300 stylists have registered for these programs, our highest turnout of any country outside Japan. Driven by this momentum, our regional performance is steadily recovering and operating profit margins are trending upward.

Our final priority region is the EU. Our strategy here relies on direct sales in Germany and an exclusive single distributor model for other countries. We actively partner with education-driven distributors. Business is already underway in Greece and Norway, and strong inbound interest from other countries will drive our steady expansion across the region. Germany remains our most critical focus, where driven by a highly experienced commission-based sales team, we are seeing strong results across both hair care and color.

Lastly, as I mentioned at the beginning, we recently signed an ambassador contract with a young but fast-rising colorist. Through this partnership, premium hair color education is now fully underway.

This concludes our regional breakdown, which brings us to today's summary. In the first half, despite the delayed launch of PRETOWA, our performance in Japan exceeded our targets. Driven by equally strong results across our key overseas markets, we have revised our full year forecast upward. We are currently executing on 2 simultaneous fronts: stable growth in Japan and expanding scale and profitability overseas. Lastly, our interim dividend and share buyback plans remain exactly as reported earlier.

Here is the revised full year forecast. We have raised our net sales target by JPY 800 million, operating income by JPY 250 million and profit attributable to owners of parent by JPY 300 million. We project an ROE of 9.3%. Looking ahead, Milbon will launch a new medium-term management plan starting next fiscal year.

We are still finalizing the exact details. Today, however, I want to outline our high-level direction. The business environment is rapidly evolving. And as we enter our next stage of growth, our primary task in Japan is to make our stable growth even more durable. Moving forward, productivity and profitability will be our defining metrics. Naturally, our own internal productivity is important, but elevating the productivity of salons and stylists is our true priority as their success means Milbon's success as well.

Finally, we must tailor our marketing activities to the ongoing diversification of salon business models. As I noted earlier, our overseas strategy centers on 4 key regions: the U.S., the EU, South Korea and China. We intend to rapidly accelerate our growth across these markets. Beyond that, future growth investments will be carefully balanced with shareholder returns. We will allocate cash with a strict focus on capital efficiency, managing the overall business based on ROE and ROIC.

To be clear, we are not yet satisfied with our current share price. Our focus in fiscal year 2026 is delivering reliable results that build investor confidence. Building on that momentum, we will launch our new medium-term management plan next year.

Thank you to everyone joining us today, both here in the room and online.

Good afternoon, everyone. My name is Shinichiro Hyogo, Executive Officer, in charge of Finance, Investor Relations and Corporate Communication at Milbon. Thank you for taking the time out of your busy schedules to attend today's financial results briefing, especially late in the afternoon, like is the case today.

Given our limited time today, let's jump straight into the financials. I will now discuss the key highlights of the financial results for fiscal year 2025. On a year-on-year basis, net sales increased while profits declined. Regarding the initial plan, we had to revise the initial full year forecast downward in August 2025, primarily due to sluggish domestic sales and inventory losses. We sincerely apologize for the concern this caused our stakeholders. However, both net sales and operating income reached our revised targets. Specifically, against the revised plan, net sales were driven by steady performance in domestic hair care products, including the new brand Ow Bye Tori. Furthermore, overseas sales in the United States significantly exceeded the target Operating income decreased year-on-year. While domestic sales remained solid, the bottom line was impacted by lower gross margins caused by inventory losses recorded mainly in the first half and higher SG&A expenses.

Looking at the revised plan, results were adversely affected by a weak Korean won and a strong Thai baht. However, we ultimately achieved the revised targets, thanks to higher-than-expected domestic and overseas sales and cost control. Lastly, while the price adjustments implemented in May 2025 led to an immediate initial sharp decline in sales volume, the negative impacts continue fading away gradually.

Full year consolidated net sales rose 3% to JPY 52,863 million, driven by steady hair care product sales domestically and strong performance in our key U.S. market. Operating income, however, declined 17.4% to JPY 5,652 million. Ordinary income fell 21% to JPY 5,455 million, reflecting a JPY 223 million allowance for doubtful accounts. Net income totaled JPY 3,437 million, a 31.5% decrease. While we recorded a JPY 292 million gain on the sale of noncurrent assets, this was offset by an JPY 801 million valuation loss on investment securities. Notably, lower-than-anticipated corporate income taxes due to tax effect accounting served to buoy the final net income figure. Looking specifically at the fourth quarter, sales grew 5% to JPY 15,035 million, and operating income rose 8.9% to JPY 2,162 million, marking a successful turnaround to profit growth. Detailed quarterly trends, both against the prior fiscal year's baseline and the plan are available on Pages 34 and 35 for your later review.

This slide illustrates the factors behind year-over-year changes in operating income. Higher sales volume contributed an additional JPY 383 million to gross profit, while higher selling prices resulting from price adjustments provided a significant JPY 595 million uplift. However, these gains were partially offset by a JPY 270 million inventory write-down, a JPY 250 million foreign exchange headwind and a JPY 400 million contraction in gross margins. Combined with rising labor costs and promotional spending for initiatives like the Expo 2025 Osaka, Kansai, operating income ultimately totaled JPY 5,652 million.

Let's now compare the factors behind the difference between realized results and the targets within the scope of the revised plan. Our gross profit margin fell short of projections due to currency headwinds, specifically the weak yen and strong Thai baht, which negatively affected our cost of goods sold. Despite this, the upside in operating income was driven by an increased gross profit, thanks to strong domestic and overseas sales growth as well as inventory write-downs coming in approximately JPY 120 million lower than our estimates. Ultimately, we actually exceeded our operating income target by JPY 352 million compared to the revised plan.

Allow me to provide a detailed explanation regarding the impact of our May 2025 price adjustment as this is a frequent topic of interest. Please refer to the charts on Page 7. The left side breaks down the gross profit impact from May to December into volume decline and selling price unit gains. Because of significant front-loaded demand in April ahead of the price increases, we saw a sharp volume contraction in May and June. Consequently, the aggregate benefits for the May-December period appears somewhat muted. However, as shown on the right, the impact of volume decline has been steadily moderating since the October-December quarter.

Our flagship Elujuda line, which accounts for the largest share among items subject to the price adjustment has seen volume recover to near previous levels. In fact, items subject to price adjustment as a whole are now showing a net positive contribution. While the final benefit of the price hike was approximately JPY 100 million compared to our revised estimate of JPY 200 million, the data from the October-December period confirms that these revisions are now consistently driving profit growth.

Turning to our results by region. The third column from the right shows the revised targets. Looking at realized results in Japan, net sales rose 1.3% to JPY 39,206 million, though operating income declined 17.9% to JPY 4,757 million. Overseas, sales grew 8.1% year-over-year to JPY 13,657 million, representing a 10% increase on a local currency basis. On the other hand, operating income there finished at JPY 895 million, down 14.2% due to ForEx headwinds and higher expenses. Notably, the EU, a key focus within our other region showed strong momentum. Net sales reached JPY 525 million, representing 58% growth in local currency terms. Even looking at fourth quarter results in isolation, growth remained at a strong 23.5%. Given the strategic importance, we are considering disclosing the EU as a stand-alone segment starting in the first quarter.

Allow me to provide more color on the regional operating income figures. I want to clarify that the operating income here is after shared corporate and overseas costs. So it's not purely a reflection of regional performance. Moving to the domestic market. Hair care performance was bolstered by our Ow Bye Tori brand of styling products, which exceeded our initial projections as noted in the third quarter. Additionally, Aujua saw consistent momentum through the end of the year, bolstered by various promotional campaigns. On the hair coloring front, despite a decrease in overall sales, our great coverage products, particularly the Villa Lodola color brand remained robust. As a result, net sales exceeded our revised targets. This top line growth, combined with disciplined cost management allowed operating income to also finish ahead of our revised plan. In the Cosmetics segment, while sales are up, we see no fundamental shifts in the performance of Imprea or IM. To provide specific figures, Ow Bye Tori significantly outperformed its JPY 120 million target, ultimately finishing at JPY 282 million.

Moving on to South Korea. Performance remained robust through the third quarter, driven by the distribution of government-issued consumption coupons starting in July. However, as anticipated, we saw a pullback in the fourth quarter following the end of these government measures. On a local currency basis, net sales grew by 2.5%, representing a deceleration compared to the momentum we saw in previous quarters. specifically higher than 0.8% growth in the first quarter, but lower than the 10% growth in the second quarter and the 19.5% surge in the third quarter. Operating income declined and fell short of company expectations, primarily due to significant foreign exchange headwinds and increased event-related expenses. However, from a management perspective, we maintained a high operating margin of 19.5%, while absorbing strategic upfront investments. We believe our business is growing stably, and we are making steady progress toward achieving market leadership in South Korea.

Let's now turn to China, where the market environment has remained rather challenging. That said, despite these headwinds, our salon support activities continue earning Milbon a strong reputation and positive brand equity, resulting in steady growth on both the net sales and operating income front. Looking at the category breakdown, we saw robust growth across hair care and hair coloring. Lastly, in terms of operating income, while we saw an increase in sales promotion expenses in the fourth quarter, which was aligned with our plan, we ultimately finished the full year with both net sales and operating income exceeding our initial guidance.

Next, let's look at the United States, Driven by strong product reception and a deeper collaboration with distributors, we are seeing healthy robust sales growth across all categories, both on a local currency and Japanese yen basis. The fourth quarter was poised to be a challenging quarter due to a high comparison baseline following a distributor change last year and large initial stocking orders associated with this transition. However, despite this high bar, we nevertheless delivered strong growth in both hair care and hair coloring. From a management perspective, we believe the U.S. business continues to be on a very strong trajectory.

I would now like to cover the full year financial targets for fiscal year 2026. We are guiding for JPY 54,800 million in net sales, a 3.7% increase, JPY 6,300 million in operating income, up 11.4% JPY 6,180 million in ordinary income, up 13.3%. Last, we are targeting JPY 4,500 million in profit attributable to owners of parent, an increase of 25.1%.

Please refer to Page 37 for the net sales forecast by region. In Japan, we project a 1.7% increase in net sales. Specifically, we anticipate that accelerating top line growth in hair care and hair coloring will allow us to grow the bottom line as well, driven in part by new product launches. We also expect sales and profit growth across all overseas regions on a local currency basis. In terms of ROE, we expect an improvement of 1.6 percentage points year-over-year, reaching 8.6%.

Regarding the midterm plan targets for 2026, we announced back in February of last year. As you may recall, we aimed for JPY 58,000 million in sales, split between JPY 43,700 million in the domestic market in Japan and JPY 14,300 million overseas, coupled with JPY 8,400 million in operating income. However, due to a significant shortfall in domestic sales and lower-than-anticipated gross profit margin results and despite our efforts to offset this through SG&A reductions, we have thus revised our targets for the final year of the plan.

This waterfall chart illustrates the factors behind year-over-year changes in our plan for the ongoing fiscal year. We anticipate an increase in gross profit in fiscal year 2026, driven by improved gross margins specifically resulting from higher sales, a reduction in inventory write-downs and benefits from price adjustments. Conversely, our forecast incorporates rising costs. Specifically, we are factoring in higher personnel expenses, including base pay increases, inflationary pressures from things like logistics expenses, higher R&D spend and higher sales promotion expenses, excluding costs related to the Expo 2025 Osaka, Kansai.

I would now like to address our financial strategy and long-term capital allocation policy. There are no changes to the capital allocation framework outlined during our first half results with one exception. The expansion of the Yumegaoka factory previously planned for 2026 has been temporarily suspended and is currently under reconsideration in light of domestic sales trends. We intend to reevaluate this investment within the scope of the next midterm plan, specifically in the context of optimizing our global production structure. Details of the capital allocation policy for 2027 and beyond will be announced together with the next midterm plan.

In terms of shareholder returns, we are targeting a dividend payout ratio of 50%, coupled with progressive dividends. That said, absolute profit levels remain depressed relative to historical standards. So, under the current formula, raising the dividend remains difficult even with sequential year-over-year growth. While no final decisions have been made, we are actively discussing the possible adoption of new metrics such as dividend on equity, DOE, to put in place a shareholder return policy that allows investors to truly track and understand our corporate growth.

Turning to the final page. I would like to outline our shareholder return policy for the ongoing fiscal year. In accordance with our shareholder returns policy, we plan to maintain a dividend of JPY 88 for fiscal year 2026. Our initiatives to improve capital efficiency also remain unchanged. Naturally, we will work to drive profitability. And beyond that, we are also actively considering flexible share repurchases based on share price trends and cash needs. Our top priority for this year, just as it was for the second half of fiscal year 2025, is to hit our disclosed targets with precision that is without any surprises. We believe that this type of reliable execution is exactly what you expect from us, and we intend to deliver on that front. We also remain committed to reducing our cost of capital.

Thank you for your attention. This concludes my presentation.

My name is Hidenori Sakashita, President and CEO of Milbon Company Limited. Thank you for taking the time off your busy schedules to view today's financial results presentation. Allow me to use this opportunity to discuss the Milbon Group's initiatives in fiscal year 2026.

I have three key messages to share with you today. First, I would like to discuss growth opportunities in the domestic hair salon market. Here, we believe there is a clear winning formula for salons that successfully adapt to diversifying consumer needs. In line with this, we intend to support salon productivity by aligning our professional products, service menus and take-home product lineup with this winning formula. Second, in the hair coloring category, while price competition remains fierce and a growth strategy is difficult to formulate, we are launching a new generation brand designed to deliver an unparalleled customer experience. Our goal is to revitalize this market. Third, we posted a strong performance overseas. Building on our stable growth foundation in Asia, we see significant upside in the U.S. and European markets, where expansion is currently outpacing our expectations.

Before detailing our initiatives for 2026, I would like to briefly review our performance in 2025. Focusing first on the domestic market, the first half of last year presented an extremely challenging environment. Rapidly rising inflation and higher prices for daily necessities, epitomized by last year's rice shortages led to a trend of constrained beauty spending among consumers. These headwinds weighed on Milbon's results performance, ultimately forcing us to announce a downward revision in August following the close of the first half. However, a closer look at our portfolio in Japan reveals a more encouraging picture.

Looking at the hair care category, we maintained a solid performance, supported by a robust lineup that includes our Aujua flagship as well as Elujuda and new products like Ow Bye Tori. Conversely, the hair coloring category faced difficulties. While Villa Lodola color performed well due to its unique value proposition, overall sales declined due to intense price competition. Lastly, in cosmetics, we faced a challenging year-over-year comparison. Following the exceptional commercial success of our makeup category in 2024, while we did carry out a launch in 2025, this wasn't a comparable success, resulting in a year-over-year revenue decline. That said, lotions, which drive recurring purchases remained solid.

Let's now look at the overseas side, starting with South Korea. The first quarter got off to an unstable start due to political instability and an economic contraction. While Milbon Korea did face significant headwinds initially, momentum subsequently recovered, allowing us to meet our full year sales and profit targets on a local currency basis. Next is China. As many of you are aware, consumption among the urban affluent segment remains more or less stagnant. Despite the wider macroeconomic backdrop, we achieved growth by providing salons with management strategies specifically designed to adapt to these shifting consumer trends. In the United States, we have deepened our collaboration with distributors nationwide. Hair care products are performing outstandingly and hair coloring, our growth engine going forward, is also expanding. We also saw robust growth in the EU, and we continue liking our prospects here. For the Milbon Group overall, while we fell short of the initial targets set at the start of the year, we successfully achieved the revised targets for the metrics of sales and operating income announced in August.

Last, I would like to highlight a significant milestone for our company shown here at the bottom of the page. In August, we initiated our first-ever share buyback program with an upper limit of JPY 2,000 million, the shares which were subsequently canceled in December. Looking ahead, we remain committed to a management approach that prioritizes capital efficiency and the company's stock price.

Now I would like to outline our initiatives for 2026. As shown on this slide, which many of you will recognize, I want to reexamine the core structure that drives growth for both our salon partners and for Milbon itself. Our revenue consists of two primary streams: one, the sale of professional brands to salons, which become part of service menus such as hair coloring and in-salon treatments performed by stylists; and two, take-home products, which include hair care products and cosmetics sold directly to customers through salons.

As the domestic market faces demographic headwinds with a shrinking population and declining customer counts, a salons' growth strategy must rely on the two pillars of salon services with a strong value proposition and priced adequately and the pillar of take-home products. Both are absolutely indispensable. Milbon is committed to providing robust product and educational support within our salon service menus to facilitate an exceptional customer experience. Our strategy focuses on connecting the dots between the service level engagement and excellence and take-home product sales.

While maintaining a high value-added product lineup is fundamental for all manufacturers, Milbon's distinct advantage lies in our deep understanding of consumer behaviors and psychology. By focusing on infrastructure, specifically enhancing trial and purchase environments for hair care products, both inside and outside the salon, we aim to maximize salon revenues. To reiterate, we drive value through salon service menus and then seamlessly transition those exceptional customer experiences into an increase in take-home product sales, advancing a sustainable and growing sales and profit model for our partners.

I would now like to walk you through the evolving consumer landscape, the corresponding salon responses and Milbon's specific initiatives. Beginning with the consumer data on the left, as noted earlier, inflation and rising costs have led to a tightening in discretionary beauty spending. The line graph shows the beauty spending coefficient over time, which is defined as the ratio of combined household spending on hair dressing services and products. While we saw a dip from the 2.9% range to around 2.7% in the first quarter of last year, a recovery is now underway. Naturally, a recovery trend is positive, but perhaps more important is understanding that the very nature of consumer purchasing behavior is changing.

Specifically, driven by inflation and negative real wage growth, consumers increasingly have a desire to limit their per visit spending. A client accustomed to a JPY 20,000 service, including cut, coloring and in-salon treatment may now opt for a lower-priced treatment menu item or defer purchases of take-home hair care products to manage their total checkout cost. This psychological holding back is the primary headwind salons are facing. However, something interesting happens. We see the same consumer who hesitates at the salon counter then going and spending JPY 20,000 for a three-item regimen consisting of shampoo, treatment and leave-in treatment products via our Milbon ID e-commerce platform. The demand is there because these are necessary items, but the timing has shifted. Consumers are cautious, yet they remain willing to invest in essentials, even spending significant amounts if they can control the timing of the expenditure.

To address this, we must provide a broader range of price points for ins salon services like hair coloring and treatment solutions and varied value propositions, giving the customer some flexibility regarding how much they are willing to pay on a per visit basis. Concurrently, we also need to ensure the existence of a seamless e-commerce environment where purchases can be made post visit. Furthermore, in a tight economy, consumers are increasingly risk-averse. They are no longer willing to purchase products without first try. The traditional buy-to-experience model has been replaced by a more defensive trial-first mentality, making sampling and trial environments a strategic necessity. In essence, consumers are seeking to eliminate the risk of an unsatisfactory purchase, a tendency that intensifies as the price point rises.

To meet this demand, we are positioning product trials as our utmost strategic priority. Basically, a critical factor for our growth is how effectively we can establish the infrastructure for these trial experiences. By deeply understanding these psychological shifts, we need to refine our service menus, optimize our pricing tiers and structure the entire product purchase environment to align with the new consumer journey paradigm.

Against this backdrop, I would like to discuss the initiatives taken by high-growth salons. The determining factor is their ability to strategically capture the small mass market, which is originally a marketing term introduced by Kao Corporation. This concept differs from the traditional mass market in that it refers to segments where specialized expertise is used to address specific customer needs, thereby driving high satisfaction. Naturally, this concept is applicable far beyond the beauty industry.

For us, the central question is how the salon business model and the profession of the salon stylist can effectively capture these specialized small mass segments. Consumers today are constantly engaged with and rely on social media and beauty-related information is a particularly good fit for this medium with a constant stream of information and content being produced and disseminated on these platforms on a daily basis. We have entered an era where social media facilitates a matching process between stylists who showcase their specific expertise and consumers who want to find a hair professional.

For salons and stylists, specializing in a distinct niche and broadcasting that expertise is now essential. This includes high-demand areas such as hair texture refinement, high lift blonding and the use of vivid colors, South Korean inspired aesthetics, layered cuts and gray blending as well as brand-specific certifications like our Aujua Sommelier. By utilizing keywords that resonate with consumer interests, stylists can attract their ideal clientele. However, this online matching process is only the beginning because in order to ensure customer satisfaction upon arrival, we are committed to strengthening our in-person technical and hospitality training to ensure that a stylist's real-world skill matches their social media presence. Within this framework, it is also critical that we foster an environment conducive to accelerated professional development. Our plan is to effectively capture this information ecosystem, allowing Milbon to launch new products and assist stylists.

I would now like to discuss specific initiatives and our road map for fiscal year 2026. To capture the small mass market, which offers high growth potential to salons, we aim to support stylists information dissemination and to help salons through clearly targeted professional and take-home products. In the hair coloring category, we are launching PRETOWA, which we position as a next-generation brand that represents a paradigm shift in hair coloring. Additionally, within our hair care portfolio, we are pushing into new frontiers with a new Aujua product line designed to manage the actual silhouette and structure of the hair style through care alone. We're also preparing a suite of new take-home offerings in the hair care and styling markets. These products are tailored to highly segmented needs, including specific trend-driven styles, specific use cases and the men's market.

Turning to the hair color market. As we've discussed over the years, this market is seeing increasing commoditization, making product differentiation more challenging. On the left-hand side, you see the pressure from low-cost brands, which make up a sizable portion of the market. While on the right, we have high value-added brands like Milbon's organic brand, Villa Lodola color. These products avoid price competition, allowing salons to command a premium of between JPY 1,000 and JPY 2,000 per service, thereby protecting and raising their margins. As we've discussed on previous occasions, our core fashion color brand, Addicthy has been squeezed in the middle, making growth difficult. To address this, we are launching PRETOWA, a next-generation hair coloring offering into the high value-added segment on the right.

Let me explain what makes this product so unique. PRETOWA transcends the traditional boundaries of traditional hair coloring products. The initial impact is immediate. Clients are struck by the vibrancy of the shade and the premium quality of our product with a resulting visible shift in hair quality. What's more, beyond the initial result, the longevity is exceptional. Perhaps even more important is how PRETOWA offers a cumulative benefit that is the more a client colors their hair, the more the structural quality of the hair improves. For salons, this is a powerful driver for higher hair coloring ticket premiums and higher repeat rates. We will work on promoting our new PRETOWA brand. To reiterate, this product offers a unique cumulative benefit with the quality of the hair improving with continued use.

This innovative proprietary technology features a cross-linking active agent that received the top award at a prestigious global scientific congress. This allows us to bind proteins during the dyeing process, fundamentally enhancing the hair's texture. We have also successfully resolved long-standing industry challenges, namely damage, longevity and unpleasant chemical odors, resulting in a revolutionary leap in core performance. This means the very baseline of care has also gone up, coupled with a number of other more advanced functional improvements. This product is truly free from any unpleasant chemical odors.

Conventional hair coloring products almost inevitably carry a sharp pungent chemical scent. I have personally sensory tested PRETOWA and confirm can there is zero detectable odor. By targeting beige colors, the main market for hair color, this is the highest peak of hair coloring. In short, our PRETOWA hair color is the hair coloring product for the new era. We are proposing this as a concrete tool for stylist client matching and have set an annual sales target of JPY 1,000 million.

In 2026 spearheaded by this powerful new launch, we intend to restore growth in the hair color category. As we've discussed on previous occasions, our growth strategy for the hair color market rests on three pillars: starting with innovation in the form of a highly differentiated new product. PRETOWA is a category-defining color product that allows us to bind proteins during the dying process, fundamentally enhancing the hair texture. This cumulative benefit ensures that hair integrity improves with every application, providing salons with a concrete mechanism to justify premium ticket pricing and drive repeat salon visits. Additionally, we continue to leverage Villa Lodola color, our organic brand to offer safety and peace of mind. By providing a diverse portfolio, we empower salons to implement tiered pricing strategies that cater to each individual client's hair coloring needs.

One thing to note is that hair coloring products are dependent on stylists skill and execution level, which makes technical training vital. Milbon has the best technical training and education capabilities, which we intend to use to assist our salon partners. The third pillar is the enhancement of consumer awareness. Within the scope, we intend to elevate PRETOWA's brand visibility across social media and booking platforms. In 2025, our domestic hair coloring product sales saw a decline of 3.9%. That said, the foundations for our hair coloring market growth strategy are now fully in place for 2026.

We are committed to halting this downward trend and reversing the trajectory of our performance. So allow me to use this opportunity here today to ask for your continued confidence as we execute this strategy in 2026. We will continue our efforts to establish cosmetics as a pillar of new revenue for salons. As noted earlier, our overall cosmetics revenue saw a significant decline in 2025 following tough year-over-year comparisons following the 2024 success of our eyebrow products. However, sales of facial lotions, which offer high repeat purchase potential have remained strong. To build on this momentum, we are launching Crystal Tuner, a next-generation upgrade of our original 2019 lotion offering. By combining this with two other lotion products launched last year, we are creating a new lineup focused on recurring revenue from loyal customers.

Moving on to our overseas markets. I am pleased to share some positive developments. We are raising our 2026 overseas sales forecast from the JPY 14,300 million previously announced in February last year to JPY 14,920 million. Specifically, stronger-than-expected sales performance in the U.S. and the EU is driving results. Particularly noteworthy is the shift in our market composition. The U.S. share shown here in red, has grown from 16.4% to 19.1%, while the EU's share shown in pink, has increased from 3.4% to 4.5%.

As a Japanese company, Milbon is fundamentally an Asian brand. For such a brand to achieve significant growth in Western markets represents a major breakthrough, particularly as beauty trends and products have historically flowed from the West to the East as we see so clearly in the fashion and apparel industries.

Why has Milbon succeeded? It comes down to our rigorous R&D and the uncompromising quality and value proposition of our products. In Japan, we have always prioritized the quality of the hair itself. Our singular focus has been on protecting and enhancing the hair through specialized hair care, and it is this care and dedication that are the bedrock of our product performance. Furthermore, our business model centers on on-site professional education to stylists. Although on a smaller scale, our teams in the U.S. and the EU operate under the same philosophy we established in Japan, combining human connection with technical excellence to deliver a very satisfying customer experience. This is a relationship-driven model that is remarkably difficult for competitors to replicate, at least not over the short term, and it is the foundation of our sustainable growth.

Let's look at the breakdown by region, starting with the U.S. We currently have nine distributor contracts, right regional partners across the U.S. and one in Canada. Last year, we achieved a significant milestone as Milbon achieved the top annual in-store share within our primary West Coast distributor based in Los Angeles, which is the heart of the U.S. beauty industry. Our presence in Los Angeles is growing undeniably stronger, and we intend to use this momentum as a blueprint to drive growth across other regions, leveraging both hair care and hair coloring products as our dual engines for expansion.

Turning to the EU. Our commission-based sales model in Germany, our regional hub is performing well. As you can see from the pink and purple bars on the chart, while hair care remains our core strength, our coloring to care sales ratio in the EU is notably higher than in the U.S. Hair color is a category deeply rooted in regional culture and developing a nuanced understanding of these local markets typically requires a significant time investment before these efforts end up materializing in the company's financial performance. However, in Germany and the wider EU, we have successfully accelerated this time line by onboarding commission-based sales professionals with proven track records at our competitors, meaning we have already begun to see early growth in the hair coloring category. Looking ahead, we intend to further expand our footprint across the EU by exploring collaborations with distributors in each country.

Turning to South Korea. Building on our strong support from younger stylists, we will remain relentless in our pursuit of share expansion in the hair coloring market, which we position as a core pillar of our business. Another growth lever is hair care. Given that hair types and beauty sensibilities in South Korea closely mirror those in Japan, we will deploy a comprehensive targeted and network-wide strategy featuring our flagship brands, Aujua and Global Milbon, thus gaining market share. 2026 will, therefore, be dedicated to preparing for our goal of becoming the #1 player in the South Korean market as we set our sight on the next medium-term management plan.

Moving on to China. The market continues to face headwinds due to the prolonged real estate downturn and the abrupt end to an era of, for the lack of a better word, consumer speculation on bulk memberships. Consumer sentiment remains weak, particularly among high net worth individuals in major hubs like Shanghai and Beijing. However, our business operates within the salon industry, a sector deeply integrated into everyday life. And depending on individual salon strategies, we believe there are still significant opportunities for growth. As many of you know, the Chinese salon market has historically relied on a prepayment model involving bulk vouchers and memberships. However, this speculative style of consumption is no longer the norm in China as the market is shifting rapidly toward the standard and more common paper service model.

Furthermore, foot traffic is now flowing to salons and stylists who provide genuine value through professional education. In other words, we have moved into an era where customers only spend on what they truly value, which is obviously how a healthy market should function. We anticipated this trend early on. Since the pandemic, we have been working closely with individual salons to guide their management strategies through this transition. As a result, salons following our lead are seeing a turnaround and tailwinds, delivering a growth of 6.6% last year. If you look at the blue bars on the chart, representing our hair coloring products, you will see that after bottoming out in 2024, this category returned to growth in 2025. Naturally, hair care products continue on a steady upward trend. Our goal is to become the leading foreign player in the Chinese market as we will continue carrying out disciplined and consistent initiatives with an eye toward the next medium-term management plan.

Domestically, we will continue targeting the small mass market driven by our new flagship hair color line, PRETOWA, while also driving growth in the hair care market. Overseas, we are focused on converting our opportunities in the U.S. and Europe into tangible results. In Asia, we are pushing forward to become the #1 player in South Korea, while leveraging beauty trends originating in this country to gain a competitive edge across the broader region, including Japan. In China, we have successfully built the capacity for self-sustaining growth.

Regarding our fiscal year 2026 targets, we are fully committed to delivering JPY 54,800 million in net sales and an operating income of JPY 6,300 million. As we move forward, we will remain highly attentive to capital efficiency and our stock price, striving for continuous improvement in ROE. We invite you to have high expectations for Milbon in 2026. Thank you for your time today.