Editorial Policy / Contents: This Report

Editorial Policy / Contents 01
For the sake of better dialogue with all of our stakeholders, including our shareholders and investors, we have summarized our efforts within our
annual report to further improve corporate value over the medium-to-long term, which we have disclosed on our corporate website.
This report, Annual Report 2019 (Digest), is a compact version of the annual report that we have disclosed on our corporate website and was
created for those who wish to view a printed copy of the report. We hope that this report helps promote better dialogue with all of our
stakeholders.
Full Version (Web)

https://corp.shiseido.com/report/en/
Message from the CEO

This Report
THE SHISEIDO PHILOSOPHY
Shiseido’s Growth Strategy
Business Strategy
THE SHISEIDO PHILOSOPHY 02
Regional Strategy Message from the CEO 03
Japan Business Facts & Figures 04
China Business
Business Categories and Brands 06
Asia Pacific Business
Americas Business
Business Strategy 08
EMEA Business Regional Strategy 10
Travel Retail Business Financial Strategy 14
Financial Strategy Sustainability 18
Sources of Value Creation Research & Innovation 20
Research & Innovation
Supply Network 21
Supply Network
Messages from Brand Heads Corporate Governance 22
For a Sustainable World
Sustainability Data Section
Corporate Governance Historical Financial Summary 26

Features of Shiseido’s Corporate Governance
Financial Highlights 28
Message from an External Director
Market Data 30
About Shiseido
Business Categories and Brands Corporate and Investor Information 31
Facts & Figures
Value Chain
Beauty Innovation Model
Data Section
Financial and Non-Financial Highlights
Market Data
Consolidated Financial Statements (PDF)
Further information can be found on our corporate website.
Corporate Website https://corp.shiseido.com/en/
News Release https://corp.shiseido.com/en/news/
Investors https://corp.shiseido.com/en/ir/
Brands https://corp.shiseido.com/en/brands/
Sustainability https://corp.shiseido.com/en/sustainability/
Innovation https://corp.shiseido.com/en/rd/
About Us https://corp.shiseido.com/en/company/
For further information, please contact us at: Investor Relations Department, Shiseido Company, Limited
6-2, Higashi-shimbashi 1-chome, Minato-ku, Tokyo 105-8310, Japan Tel: +81-3-3572-5111
https://corp.shiseido.com/en/inquiry/mail/
02
THE SHISEIDO PHILOSOPHY Message from the CEO 03
Beauty Has the Power to

Change the World
Masahiko Uotani
Representative Director, President and CEO
OUR PRINCIPLES
(TRUST 8)
First of all, I would like to extend my heartfelt condolences to the families of the victims of COVID-19, and to express
my warmest sympathy to all those who have found themselves in difficult circumstances because of this pandemic.
In 2019, Shiseido achieved robust growth despite an increasingly uncertain business environment: Continuing the trend
of the previous year, our net sales, operating profit, and net profit reached record highs. Our operating margin climbed to
10.1%, hitting double digits for the first time. Our prestige brands, which we have been intensely focusing on, drove
growth. In addition, we acquired the American skincare brand Drunk Elephant and worked at strengthening the global
presence of our Japanese brands ELIXIR and ANESSA.
Crisis as a Transformation Opportunity
The impact of COVID-19 will most likely reverberate beyond 2020, reshaping consumer behavior and the entire beauty
industry. Shiseido needs to swiftly adapt to this new reality and evolve into an even stronger company with a potential
for further expansion. To that end, we position 2020 as a year to “Defend Business and Review Medium-Term Strategy”
while in 2021-2022 we will concentrate our efforts on “Fundamental Reforms” in order to realize our VISION for 2023 and
beyond with a resilient revenue base and a solid foundation for growth.
OUR DNA OUR PRINCIPLES
(TRUST 8)
View Details (Slides from 2020 Q1 financial results announcement on May 12, 2020)
OUR DNA is the very essence of Shiseido. OUR PRINCIPLES serve as the working principles
It has been passed down since our founding in 1872, that every Shiseido employee must follow.
BEAUTY INNOVATIONS FOR A BETTER WORLD
and to this day—for every employee— These eight working principles—known as “TRUST 8”—
it is at the core of everything we do. are based on the idea that mutual trust is the key to
Shiseido is strengthening its global initiatives in ESCG (environment, society, culture, and governance), which are
succeeding in OUR MISSION.
aimed at solving social issues and creating a sustainable society where people can live in happiness.
In 2020, in response to the spread of COVID-19, we promptly launched the “Relay of Love Project.” Additionally, we
implemented a variety of support initiatives, such as producing a hand sanitizer specially developed for sensitive and
PEOPLE FIRST DIVERSITY THINK BIG TAKE RISKS rough skin and distributing it to medical institutions around the world.
Beauty brings confidence and courage, joy and new energy to people. We believe that, in today’s difficult environment,
beauty can help reinvigorate society. That now more than ever it has the power to change the world.
JAPANESE
ART & SCIENCE HANDS ON COLLABORATE Aiming to “Be a Global Winner with Our Heritage,” we will research and develop beauty innovations that vigorously
AESTHETICS
build new value. With this mission in mind, we will continue to make steadfast progress towards our goal as One Shiseido.
UNCOMPROMISING We look forward to the continued support of our shareholders and investors.
OMOTENASHI BE OPEN ACT WITH INTEGRITY
QUALITY
May 2020
BE ACCOUNTABLE APPLAUD SUCCESS

Masahiko Uotani
Representative Director, President and CEO
Shiseido | Annual Report 2019 THE SHISEIDO PHILOSOPHY

04
Facts & Figures 05
Net Sales Operating Profit
¥1,131.5
YoY FX-neutral
billion
Like-for-like
¥ 113.8 YoY
billion
+3.4% +5.7% +6.8% +5.1%
Consolidated net sales grew steadily, up 3.4% year on year Although the Company increased investments in marketing,
(or 6.8% like-for-like), driven predominantly by prestige R&I, and human resources, consolidated operating profit rose
brands, in which the Company continued to step up 5.1% due to higher margins accompanying growth in sales.
investments.
Countries and Regions Served Position amongst Japan and Employees*3 *4 /
Asia Cosmetics Manufacturers Nationalities Employed*4
Operating Margin ROIC ROE
10.1 %
YoY
+0.2 percentage point 12.9 15.6

FY2018: 13.1%
%
FY2018: 14.1%
%
Approx. 120 No.1
WWD Beauty Inc TOP 10 Largest Beauty
Approx. 48,000
/Approx. 70
Manufacturers 2019
The consolidated operating margin reached double digits for Although ROIC weakened slightly due to an increase in
the first time ever, standing at 10.1%, allowing the Company interest-bearing debt that accompanied business acquisi-
to achieve its original target of 10% under the medium-to- tions, ROE came to 15.6%, reflecting an improvement in Percentage of Female Leaders*5 Awards Received at IFSCC*6
long-term strategy VISION 2020 one year ahead of schedule. capital efficiency. As a result, the Company achieved its
Congresses and Conferences*7
original VISON 2020 target ahead of schedule for two con-
52.7% 27
secutive years.
Net Sales by Business Segment*1

YoY growth (like-for-like)
8 8
7 8 1 Japan 2 China 3 Asia Pacific

Japan
33.1% 6
4
6 39.9 % 19.1 % 6.2 % 1 1
Net Sales ¥ 451.6 billion Net Sales ¥ 216.2 billion Net Sales ¥69.8 billion
67.5 %
Shiseido Competitors
YoY +0.7% YoY +19.0% YoY +5.8% Overseas
Congress Award (Podium Presentation) Conference Award (Podium Presentation)
5
Congress Poster Award Conference Poster Award
1 4 Americas 5 EMEA 6 Travel Retail Congress Award
Share of Total Sales (%)*1

11.0 % 10.5% 9.0 %
Net Sales ¥ 124.3 billion Net Sales ¥ 118.4 billion Net Sales ¥102.2 billion
YoY – 0.3% YoY +11.8% YoY +19.4% Introducing IFSCC Research Awards
4
7 Professional 8 Other*2
3 1.3 % 3.0% *1 The Shiseido Group has revised its reportable segment classification method in line with its amended internal management structure, effective from fiscal 2019. Shiseido Beauty Salon Co.,
Ltd., formerly included in the Professional Business, is now positioned in the Other segment. Shiseido Astech Co., Ltd. and Hanatsubaki Factory Co., Ltd., which previously fell under the
Net Sales ¥ 14.7 billion Net Sales ¥ 34.3 billion Japan Business, are now included in the Other segment. Effective from the third quarter of fiscal 2018, IPSA Co., Ltd., which had been included in the Japan Business, was moved to the
Other segment in accordance with the change in the Group’s internal management structure.
2 YoY +6.0% YoY –1.3% *2 T he Other segment includes head office administration departments, IPSA Co., Ltd., and manufacturing operations, as well as the activities of the Frontier Science Business (cosmetic raw
materials and pharmaceuticals), the Restaurant Business, etc.
*3 T he number of employees includes full-time employees and temporary employees. Temporary employees include part-time workers. Dispatched employees are excluded.
*4 A s of January 1, 2020
*5 As of January 1, 2020. In Japan, the definition for women in management positions is synonymous with that used by the Ministry of Health, Labour and Welfare.
*6 A bbreviation for the International Federation of Societies of Cosmetic Chemists. The IFSCC is an organization that brings together cosmetic chemists from around the world in pursuit of
cosmetic technology development that achieves greater functionality and safety.
*7 As of December 2019
Shiseido | Annual Report 2019

06
Business Categories and Brands 07
Main Regions of Availability Japan China Asia Pacific Americas EMEA Travel Retail Cosmetics
Share of Total Sales
30%
Mid- and low-priced cosmetics that consumers select themselves, primarily YoY Sales Growth*1
+3%
sold in drugstores and general merchandise stores. Counseling tailored to
Prestige market, brand and channel characteristics also offered as needed
Share of Total Sales
46%
Luxury, high-value-added products sold through counseling, mainly in YoY Sales Growth*1
+10%
department stores and specialty stores
ELIXIR ANESSA MAQuillAGE HAKU
SHISEIDO Clé de Peau Beauté IPSA NARS
NEW
d program REVITAL PRIOR AQUALABEL INTEGRATE
Laura Mercier bareMinerals Drunk Elephant BENEFIQUE
*2 *2 *2
Fragrance
Share of Total Sales AUPRES urara PURE&MILD Za
10%
Luxury fragrances created through collaborations with famous designers YoY Sales Growth*1
+9%
NEW
Personal Care Professional
Low-priced skincare products, shampoo and other hair care Hair care and styling products, hair color products, perm prod-
products, as well as body care products, primarily sold in drug- ucts, and other products for hair salons
stores and general merchandise stores
Share of Total Sales Share of Total Sales
9% 1%
Dolce&Gabbana ISSEY MIYAKE narciso rodriguez Tory Burch YoY Sales Growth*1 YoY Sales Growth*1
*2 *2 *2 +6% +6%
*1 Like-for-like growth excluding the impacts of business transfers and changes in accounting standards, etc.
*2 Hong Kong only
Note: In addition to our core business categories of Prestige, Fragrance, Cosmetics, Personal Care, and Professional, “Other” makes up 4% of sales.
“Other” includes Shiseido Parlour and other businesses.
See also the Messages from Brand Heads of the major brands. SENKA TSUBAKI SHISEIDO PROFESSIONAL
Messages from Brand Heads

08
Business Strategy 09
Prestige Brands Continue to Drive Growth

The global spread of COVID-19 is causing a decline in consumption and changes in consumer purchasing behavior. Business economic activities are stagnating,
and the environment differs considerably from our initial expectations. Going forward, business results may fluctuate significantly depending on the viral spread Accounting for nearly half of our consolidated net sales, prestige brands continue to act as a significant growth driver for our global busi-
and regulatory measures taken by each country. It is therefore difficult to forecast the timing of recovery and the amount of impact on the Group’s results. ness. Among these, brand SHISEIDO is offered in 85 countries and regions around the world and has grown into an over ¥200 billion brand.
Given such circumstances, the Company has withdrawn its consolidated forecast for FY2020 on May 12, 2020. We will provide a new forecast at the time of
In addition, sales of our made-in-Japan cosmetics brands ELIXIR and ANESSA have continued to grow dramatically, particularly in Asia.
the second quarter results announcement (planned for August 6, 2020).
We will pursue further growth of our core brands through greater investments in marketing.
Consolidated Settlement of Accounts / Presentation Materials
Achieving 12% Net Sales Growth from Eight Global Brands Combined

Medium-to-Long-Term Strategy
VISION 2020 +9%
+9%
+9%
+8%
2015 – 2017 2018 – 2020
Rebuild New Strategy Be a Global Winner +14%
the Business to Accelerate with Our Heritage +16%
Foundation Growth Like-for-like*
net sales growth
+12 %
+9%
Overview of the Three-Year Plan
1 Further Selection and Concentration of

Brands and Businesses +18%
Acceleration of Digitalization /
2
New Business Development
* Excluding the impact of foreign currency exchange and the application of U.S. accounting standard ASC 606 in 2019
2018 – 2020 Five Key Strategies:
Building for the Future 3 New Value Creation through Innovation

Delivering Steady Results in China, EMEA, and Travel Retail Businesses
Talent and Organization Development to
4 Be a Global Winner: “PEOPLE FIRST”
In the Japan Business, amid reluctant consumer spending after the consumption tax hike and sluggish inbound demand, we continued
5 New Global Management Structure to focus on our “skin trinity” of skincare, base makeup, and sun care. In the China Business, prestige brands and made-in-Japan cosmetics
brands such as ELIXIR and ANESSA continued to perform remarkably despite the difficult situation in the Hong Kong market. The Travel
Retail Business, meanwhile, continued to grow mainly in Asia, owing to active investments in marketing.
Achieving Record-High Net Sales, Operating Profit, and Net Profit The EMEA Business achieved a double-digit increase in net sales on the back of robust growth in the skincare and fragrance categories,
where we stepped up investments. In the Americas Business, in light of the severe market environment, we continued efforts to improve
2019 Results profitability, including the closure of unprofitable bareMinerals boutiques.
(Billions of yen) YoY change Like-for-like*
Net Sales 1,131.5 +3.4% +6.8%
Operating Profit 113.8 +5.1%
+0.2
Operating Margin 10.1% percentage point
Ordinary Profit 108.7 – 0.7%

Extraordinary Income (Loss) –1.4
Net Profit Attributable to Owners of Parent 73.6 +19.8%
* FX-neutral, excluding the impact of withdrawals from the amenity goods business in 2018 and the FERZEA and Encron brands in
2019, the application of U.S. accounting standard ASC 606 in 2019, and the acquisition of U.S. skincare brand Drunk Elephant
Regarding our consolidated business performance in 2019, despite the drastic changes and rising uncertainty in our business environ-
ment, net sales rose 3.4% year-on-year (6.8% like-for-like*), to ¥1,131.5 billion, driven by the growth of the prestige business, where we
stepped up investments. Operating profit increased 5.1%, to ¥113.8 billion, and we achieved our target operating margin of more than 10%
ahead of the schedule established at the start of our medium-to-long-term strategy VISION 2020. Net profit attributable to owners of
parent surged 19.8%, to ¥73.6 billion, on the back of higher operating profit and reduced tax expenses, resulting in record-high net sales,
operating profit, and net profit.
Shiseido | Annual Report 2019 VISION 2020, Three-Year Plan Business Strategy (Full Version)
10
Regional Strategy 11
Region x Brand Global Matrix Organization
Enhancement of Brand Portfolio
In 2019, Shiseido concluded a long-term beauty partnership agreement for the distribution of Tory Burch, an American lifestyle brand,
and acquired the American skincare brand Drunk Elephant.
Following changes in the competitive environment and diversifying consumer needs around the globe, brand value is becoming more
important than ever. Accordingly, we are working to enhance our brand portfolio through such means as M&A and global brand
development.
Drunk Elephant Skincare Brand

In 2019, we acquired the Drunk Elephant skincare brand, which is realizing
rapid growth in the U.S.
Drunk Elephant boasts a tremendous presence in the clean market in the
U.S., which emphasizes products that are good for both people and the envi-
ronment. Furthermore, by capturing the changing values of a diverse group of
(From top left)
consumers, including Millennials and Generation Z*, Drunk Elephant garners a
Philippe Lesné Franck Marilly Chiaki Tomita Barbara Calcagni Masahiko Uotani
high level of support through close personal communication with consumers
President and CEO President and CEO Global Vice President President Shiseido Group CEO,
by the brand’s founder Tiffany Masterson as well as through digital marketing
Shiseido Travel Retail Shiseido EMEA ANESSA Global Brand Unit NARS Cosmetics Inc. President and CEO
Shiseido Japan that leverages social media.
We will further enhance our brand portfolio with the addition of Drunk Elephant, which has exceeded sales of ¥10 billion in
just seven years in the market and demonstrates a strong potential for growth. This acquisition will also help us fortify our earn-
Seika Teranishi Yoshiaki Okabe Alexandra Papazian Kentaro Fujiwara ings structure in the Americas Business, and we will utilize our cross-border network to expand this brand into global markets.
Global Vice President Corporate Officer President President and CEO
* A generation born in the second half of the 1990s and the 2000s. In addition to being known as “digital natives,” this generation has a strong interest in environmental and social issues.
ELIXIR Global Brand Unit Chief Brand Officer Laura Mercier Cosmetics Shiseido China
SHISEIDO
(From bottom left)
Audrey Briotet Yukari Suzuki Marc Rey Jill Scalamandre Tory Burch Lifestyle Brand
Global Brand Vice President Director President and CEO President We concluded a long-term beauty partnership agreement with Tory Burch
Dolce&Gabbana Executive Corporate Officer Shiseido Americas bareMinerals and Buxom through Shiseido Americas Corporation, our headquarters for the Americas
Shiseido EMEA Chief Brand Officer, Clé de Chief Growth Officer region. By doing so, we have acquired an exclusive license to globally develop,
Peau Beauté, IPSA, THE Shiseido Group
GINZA and BAUM
produce, market, and sell Tory Burch beauty products, which center on fra-
grances. Sales by Shiseido will commence in 2020.
Tory Burch is an American lifestyle brand that embodies the aesthetic and
Since 2016, we have had in place a matrix organization that cross-matches six regions with brand categories. The regional headquarters
personal style of its executive chairman and chief creative officer of the same
are responsible for and have authority over their respective businesses. Guided by a “Think Global, Act Local” approach, these headquar-
name, who launched the company in 2004. Tory Burch offers a wide range of
ters implement flexible decision-making and marketing activities attuned to the needs of local consumers.
products, including clothes, shoes, and handbags, at over 250 boutiques and
At our Centers of Excellence, which contribute to future value creation, we collect information from regions that lead the way in each
over 3,000 department stores around the world, as well as through its official online store.
domain, conduct research, and formulate global strategies accordingly. For example, Japan hosts the Center of Excellence for skincare;
By adding Tory Burch to our prestige brands, we will not only enhance our brand portfolio, but also strengthen our fragrance
the Americas, for makeup and digital technology; and EMEA, for fragrances. Moreover, we share the knowledge obtained at each Center
business in the U.S. Furthermore, with this partnership we will aim to expand our consumer contact points in Japan, other coun-
of Excellence globally.
tries in Asia, and in the Middle East, where Tory Burch has a high level of brand recognition.
Region x Brand Global Matrix Organization
Regions
Strengthening ELIXIR and ANESSA as Global Brands
Japan China Asia Pacific EMEA Americas Travel Retail
The skincare brand ELIXIR and sun care brand ANESSA have enjoyed high
Prestige
Skincare
demand from consumers, primarily in Japan, for many years, thus realizing
Makeup
continuous sales growth. Going forward, we will accelerate the expansion of
Fragrance
Brands
these brands into the Asia Pacific, EMEA, and Americas regions and turn them
into truly global brands originating in Japan.
Cosmetics &
Personal Care
HQ Corporate Functions:
HR, Finance, IT,
R&I, Supply, etc. ELIXIR ANESSA

12
Regional Strategy 13
Japan Business Americas Business

Continued Initiatives to Improve Profitability amid
Driving the Growth of the Group through Stable Profit Generation
Challenging Market Conditions
2019 Review 2019 Results 2019 Review 2019 Results

The cosmetics market in Japan grew at an annual rate of about 1% Although market conditions remained challenging, primarily in
Net Sales Operating Profit Operating Margin makeup, sales of SHISEIDO and Dolce&Gabbana continued to grow. Net Sales Operating Profit Operating Margin
resulting from the consumption tax hike and stagnating demand from
inbound tourists. Our net sales in the Japan Business rose 0.7% like-
for-like*1, on par with the overall cosmetics market.
¥451.6 billion ¥ 91.1 billion 18.3% For bareMinerals, we continued to move forward with structural
reforms, including the closing of unprofitable boutiques. Additionally,
¥ 124.3 billion – ¥ 11.4 billion – 6.9%
For brand SHISEIDO, the serum Ultimune and foundation products YoY –0.6% YoY –0.3% we made efforts to fortify our brand portfolio in such ways as con- YoY –5.6% YoY +¥3.4 billion
performed well, resulting in a significant increase in sales. cluding a licensing agreement with Tory Burch, an American lifestyle FX-neutral –3.9%
Like-for-like* +0.7%
1
Like-for-like*2 –0.3%
Furthermore, HAKU and d program achieved robust performances brand, and acquiring
with the launch of Drunk Elephant, a fast-
Key Strategies Key Strategies
“Medicated Care- growing prestige skincare
As a global beauty company originating in Japan, we will strive to We will continue to reinforce the makeup brands NARS and Laura
Hybrid Foundation” brand centered on the
once again bolster the Japan Business. Mercier and accelerate the growth of the skincare brands SHISEIDO
products, which U.S. market.
We aim to enhance the profitability of the Japan Business and con- and Clé de Peau Beauté. For bareMinerals, we will remain committed
condition the skin stantly improve it in the future. To that end, we will fortify our manage- to pursuing structural reforms while promoting a further shift toward
while promoting a ment and organizational structure to spur further reforms through closer digital.
more beautiful com- collaboration between the global headquarters and the Japan Business. Additionally, to achieve net sales growth, we will begin the full-
plexion and finish. In addition, we will ensure that under this structure, challenges and scale rollout of Drunk Elephant and Tory Burch.
improvement opportunities relayed by our employees in their consumer
interactions are promptly communicated to and leveraged by manage- *2 Excluding the impact from application of U.S. accounting standard ASC 606 and the acquisition of skincare brand Drunk Elephant
ment. In these ways, we will promote business activities that are better
*1 Excluding the impact of business withdrawals aligned with the preferences of consumers. Americas Business Profit Structure P.17
China Business Accelerating Sales and Profit Growth through Made-in-Japan Brands EMEA Business Striving to Expand Growth and Steadily Improve Profits

Demand for beauty products in China overall continued to be high. Fragrance brands such as Dolce&Gabbana and narciso rodriguez
Net Sales Operating Profit Operating Margin Net Sales Operating Profit Operating Margin
We maintained high sales growth for prestige brands such as helped drive growth in the EMEA Business, with new products record-
SHISEIDO, Clé de Peau Beauté, IPSA, and NARS. The made-in-Japan
cosmetics ELIXIR and ANESSA also realized significant growth.
¥ 216.2 billion ¥29.2 billion 13.5% ing robust sales. Additionally, SHISEIDO makeup performed favorably,
and NARS continued to grow as well. In October 2019, we opened a
¥ 118.4 billion – ¥ 2.2 billion – 1.7%
In addition, we achieved substantial growth in e-commerce sales YoY +13.3% YoY +19.2% dedicated Clé de Peau Beauté boutique in London, which got off to a YoY +4.6% YoY +¥5.8 billion
channels due to proactive digital marketing. In particular, we main- FX-neutral +19.0% solid start. Going forward, we will step up efforts to roll out Clé de FX-neutral +11.8%
tained high-level Peau Beauté across Europe.
growth on Singles’ Day,
a Chinese shopping
To secure a high level of sales growth, we will concentrate invest- We will continue to invest in fragrance brands that are driving
holiday that has been
ments primarily on prestige brands such as SHISEIDO and Clé de growth, such as Dolce&Gabbana and narciso rodriguez. Furthermore,
increasing in scale in
Peau Beauté as well as on the made-in-Japan brands ELIXIR and we will focus on the cultivation of skincare brands, our area of
recent years, due in
ANESSA. Also, while working to enhance our offline channels, we will strength, such as SHISEIDO and Clé de Peau Beauté.
part to the strong
strengthen our digital marketing activities and further reinforce
performance of exclu-
e-commerce.
sive online products. EMEA Business Profit Structure P.17
Asia Pacific Business Travel Retail Business

Maintaining Solid Performance of Prestige Brands and
Driving Growth in Asia and Maintaining High Profits
Expanding Growth in Southeast Asia

Amid an uncertain economic environment, Shiseido’s prestige Travel Retail enjoyed a growing market centered on Asia following
brands Laura Mercier and Clé de Peau Beauté continued solid perfor- Net Sales Operating Profit Operating Margin an increase in tourism. In line with this growth, Shiseido actively Net Sales Operating Profit Operating Margin
mances. In addition, ELIXIR, ANESSA, and Dolce&Gabbana recorded

significant growth. Although we faced challenging conditions in South
¥69.8 billion 7.4 billion
¥ 10.2% promoted marketing investments, particularly in airport advertising
around the world. As a result, sales growth of core brands such as
¥ 102.2 billion ¥22.1 billion 21.5%
Korea, performance in Southeast Asia held firm owing to the expansion YoY +2.5% YoY –4.9% SHISEIDO, Clé de Peau Beauté, NARS, and ANESSA significantly YoY +16.6% YoY +25.5%
of free-standing stores. We also achieved robust growth in cosmetics FX-neutral +5.8% outpaced that of the previous fiscal year, primarily in South Korea, FX-neutral +19.4%
and personal care as a result of marketing strategies that cater to the China, Thailand, and other Asian countries and regions. In addition,
characteristics of each with a view to further accelerating sales growth, we expanded the
country and region. availability of IPSA and
We will work to strengthen our prestige brands as well as made-in- We will continue to pursue proactive marketing investments in
ELIXIR and worked to
Japan cosmetics and personal care brands. In terms of prestige order to further strengthen our market position in the global prestige
strategically reinforce
brands, we will further expand sales channels such as free-standing category. Additionally, in 2020 we integrated our duty-free operations
store counters. As a
stores and e-commerce. in Japan into the Travel Retail Business to create a unified global
result, net sales in the
framework. We will aim to achieve further growth by strengthening
Travel Retail Business
marketing activities for tourists through digital communication, estab-
exceeded ¥100 billion.
lishing stronger partnerships with major operators, and bolstering our
in-store service capabilities.
Shiseido | Annual Report 2019 Regional Strategy (Full Version)

14
Financial Strategy 15
Improving Capital Efficiency
Message from the CFO

ROIC*1 ROE Cash Conversion Cycle*2
Strengthening Our Real-Time Business
15.6% 143 days 149 days
Analytics Capabilities on a Global Scale
VISION 2020 12.9% VISION 2020
Original Target Original Target
12% 14%
to Further Enhance Decision-Making VISION 2020
Original Target
9.4% 100 days
Michael Coombs
Corporate Officer 4.1%
Chief Financial Officer
2015/3 2019 2015/3 2019 2015/3 2019
*1 ROIC (Return On Invested Capital) = Operating Profit × (1 – Effective Tax Rate) / (Interest-Bearing Debt + Equity)
In 2019, Shiseido was able to realize record-highs for net sales, operating profit, and net profit. In 2020, the *2 Cash Conversion Cycle (days) = Receivables Turnover Period (days) + Inventory Turnover (days) – Payables Turnover Period (days) (average of each indicator during the period is used)
final year of VISION 2020, we will push forward with our business activities while keeping a sharp focus on the
future under the tough market conditions.
In 2019, return on invested capital (ROIC) came to 12.9%, exceeding its VISION 2020 original target of 12% but representing a slight
As I commence my second year as CFO with Shiseido, I will leverage the realizations I have made over the decline from the previous fiscal year due to the higher interest-bearing debt incurred from business acquisitions. Return on equity
(ROE) was 15.6%, thereby also surpassing its VISION 2020 original target of 14%. As a result, both ROIC and ROE reached their targets
past year to further improve our business operations. Strengthening Shiseido’s real-time business analytics
ahead of schedule.
capabilities on a consolidated basis is one of the key priorities for my team in 2020. Our newly-established
Meanwhile, we recorded a cash conversion cycle (CCC) of 149 days, which was longer than that of the previous fiscal year, owing to an
Business Transformation team is driving the design and gradual implementation of a globally shared IT platform.
increase in inventory. We will continue to do our utmost to establish a flexible production and supply capacity and achieve greater precision
I can say with confidence that this new global platform, known as FOCUS, is a best-in-class system that offers
in our demand forecasts as we target a CCC of 100 days.
standardized data and optimized processes. While having such capabilities is not necessarily a competitive
advantage in today’s environment, the absence of advanced, real-time business analytics can be an impediment
to reaching our next milestone if not addressed with urgency. Unlocking Value across Our Business
Major System Transformation Under Way
Outstanding people, processes and systems are all key enablers of our success and are critical to raising
Shiseido’s overall performance and profitability to a level comparable with or ahead of our global peers. In
• Discount and pricing optimization, portfolio rationalization,
Sales
order to promote our businesses at a speed that matches that of the changes in the business environment, focused marketing capability and R&I investment
we will become a data-enabled organization that is able to grasp global conditions in real time and accu-
• Optimized demand forecasting processes
rately analyze data. COGs
• Reduced order lead times
• Inventory visibility, minimizing out-of-stocks
• Global Direct Procurement
• Insourcing of production
While forging ahead with FOCUS, we must remain conscious of the need to have a world-class team of
finance professionals. With the aim of achieving an industry-leading cost structure, Shiseido is working to opti- • Increased marketing productivity, enabled by data and
Marketing
mize its balance sheet, ensure disciplined cash allocation, and manage and improve its financial metrics. In investments
analytics
• Efficient product lifecycle management
2020, we will continue to make the utmost effort to increase shareholder value.
Brand development
R&I investments • Optimized and simplified back office processes
PEOPLE Personnel • Lower technology costs
Michael Coombs expenses • Improved headcount efficiency
• Optimized third-party spend from better visibility
Corporate Officer Other SG&A
Chief Financial Officer Operating 15%
profit 10%
2019 Long-term goal
Improved cash conversion cycle, shorter order lead times,
Working Capital efficient order-to-cash processes.
Lower borrowing requirements and interest expense with
improved FCFs
Business
Transformation
We established our new Business Transformation Department in 2019 and are proceeding with the development of a globally standardized IT
platform called FOCUS. This platform will allow us to pursue shorter order lead times, a more refined demand-forecasting process, and higher
marketing ROI.
In addition to revamping and innovating our IT systems, FOCUS will help us change all of our processes at Shiseido by merging together various
PROCESSES SYSTEMS
personnel, processes, and systems with the intent of realizing our long-term target operating margin of 15% and sustainable growth in the future.
Through FOCUS, we will fine-tune our ability to create value in all of our business.
FOCUS connecting people, process and systems

16
Financial Strategy 17
Toward an Ideal Profit Structure Achieving Steady Growth in the Americas and EMEA
2019 Profit Structure

Americas Business Profit Structure* EMEA Business Profit Structure
(%)
Like-for-like net sales +6.8%* 2018 2018
23.0 21.2 22.5 COGs
2019 2019 2019
2019
ontinuous reinforcement of investment in
C Commercial
margin Commercial
24.4 25.9 25.0 Marketing core areas High single
margin
investments -digit % Over 10%
5.4 5.8 5.8 Brand development /
R&I investments
Cost optimization in line with market
22.3 20.7
changes
23.8 Personnel (incl. POS
(1 ) (1 ) CoE costs
personnel expenses)
Commercial- Commercial- Purchase price
Total of based allocation
15.9 Other SG&A based (1 ) + (2)
15.4 14.9 profit Total of (PPA)
profit Purchase price
CoE costs (1 ) + (2) Total
allocation
8.0 9.9 10.1 Operating profit
(PPA)
2017 2018 2019 (2)
Brand holder Total (2)
costs Brand holder
* Excludes the impact of withdrawals from the amenity goods business in 2018 and the FERZEA and Encron brands in 2019, the application of U.S. accounting standard ASC 606 in 2019, and the costs
* Excluding Drunk Elephant
acquisition of U.S. skincare brand Drunk Elephant
Profitability in the Americas and EMEA Businesses, which we have Excellence climbed as a result of strengthening global service func-
been pursuing as a priority issue, is showing steady improvement. In tions such as the Technology Acceleration Hub, a research & innova-
Shiseido is placing its highest priority on maximizing profits by maintaining sales growth. Our marketing ROI has improved thanks to our efforts
the Americas Business, operating loss decreased by ¥3.4 billion year tion base for digital technologies.
in optimizing costs according to shifts in the market environment and shifting investments toward digital marketing, in addition to continuous
on year on a statutory basis. Commercial-based profit (1) rose sub- In the EMEA Business, commercial-based profit (1) improved drasti-
strategic investments in core brands. In 2019, the cost of sales ratio expanded primarily due to a rise in inventory and costs associated with the
stantially on the back of lower fixed costs due to structural reforms cally owing to the favorable sales growth of fragrances. Combining
construction of our Nasu Factory, while the proportion of costs accounted for by other SG&A expenses also climbed owing to an increase in logis-
to bareMinerals as well as higher marketing ROI stemming from this increased profit with brand holder costs (2) related to
tics costs, among other factors.
digitalization. Combining the higher aforementioned profit with Dolce&Gabbana and other EMEA-based brands, the EMEA Business
With our sights set on achieving further growth in net sales and profitability, we will continue to step up our investments in priority areas such
brand holder costs (2) related to NARS, bareMinerals, Laura Mercier, nearly reached the break-even point in terms of profitability, while
as marketing, brands, and research and innovation, and move forward with cost-control measures.
and other U.S.-based brands, the Americas Business was able to operating loss therein improved by ¥5.8 billion year on year on a
return to profitability. Meanwhile, costs related to Centers of statutory basis.
Aggressive Investment for Sustainable Growth
Shareholder Return Policy

Cash Generation & Allocation (Billions of yen) EBITDA (Billions of yen)
Realization of Total Returns Comprising Direct Income Gain and Medium-to-Long-Term Capital Gain
169.3
154.7 150.3
Dividend per Share and ROE
91.8 15.6 The global spread of COVID-19 is causing a decline in consumption and changes
Increase in
14.1 in consumer purchasing behavior. Business economic activities are stagnating, and
interest- 90.1 the environment differs considerably from our initial expectations. Going forward,
bearing debt, 80.6 business results may fluctuate significantly depending on the viral spread and
Others
etc. regulatory measures taken by each country. It is therefore difficult to forecast the
Sales of 10.2 Dividend
timing of recovery and the amount of impact on the Group’s results.
strategic 8.2 60
shareholdings 120.1 Drunk Elephant Given such circumstances, the Company has withdrawn its consolidated forecast
Cash flows
acquisition 5.6* 45 for FY2020 on May 12, 2020. We will provide a new forecast at the time of the
from operating
75.6 Capital second quarter results announcement (planned for August 6, 2020).
activities expenditures 27.5 As the Company withdrew its consolidated forecast for FY2020, it has also
20 withdrawn the interim and year-end dividend forecast. A new dividend forecast will
Cash generation Cash allocation 2015 2016 2017 2018 2019
be announced at the same time as the financial results for the second quarter.
EBITDA (Earnings before interest, tax, depreciation and amortization) = Profit (loss) before
income taxes + Interest expense + Depreciation and amortization expense + Impairment loss 2016 2017 2018 2019 Consolidated Settlement of
Strategic Shareholdings
on goodwill and other intangible assets
Accounts / Presentation Materials
■■ Annual dividend per share (yen) （%）
ROE
(Non-Consolidated, Listed Companies) * An impairment loss was recognized for Bare Escentuals, Inc.
We solidly achieved the ability to generate cash through our busi-
Market value (Billions of yen) Number of holdings nesses and realized a record-high EBITDA of ¥169.3 billion in 2019. In
35
addition, we aggressively carried out investments with the goal of To ensure that we maintain a single-A credit rating, which allows medium-to-long-term capital gain. Based on this approach, we
33 33 us to raise funds under advantageous terms, we target a debt-to- will emphasize strategic investments toward sustainable growth
29 realizing long-term growth, such as through capital expenditures to
boost our production capacity and the acquisition of U.S. skincare equity ratio of 0.3 and an interest-bearing debt to EBITDA ratio of and aim to maximize corporate value. Meanwhile, we intend to
brand Drunk Elephant. At the same time, we have been gradually 1.0. While doing so, we implement financing activities that support adopt a basic approach of enhancing invested capital efficiency
reducing strategic shareholdings to ensure more efficient use of future growth in a timely manner using optimal methods taking into while considering the cost of capital, in order to increase divi-
capital, pursuant to the Corporate Governance Code. Going forward, account the market environment and other factors. However, to dends and share price over the medium-to-long term. In deter-
20.9 18.9 19.8
based on a strict approach to cash allocation, we will continue to
realize an optimal capital structure that enables the pursuit of fur- mining dividends, we will focus on our consolidated business
13.3 6 expand our cash generation capacity while stepping up investments
ther improvements to capital efficiency, we may periodically revise results and free cash flow as we work to realize stable and con-
geared toward sustainable growth, including investments to
4.9 these targets, as well as our shareholder return policy, in consider- tinuous shareholder returns over the long term that target a
strengthen our supply structure, which has been an issue, and to
ation of profitability and our ability to generate cash flows. DOE (dividend on equity) ratio of 2.5% or higher. Also, we main-
2015 2016 2017 2018 2019 promote the standardization of our IT systems on a global basis.
In regard to the Company’s shareholder return policy, we aim tain an approach of flexibly buying back shares with consider-
for total returns that comprise direct income gain and ation for the market environment.
18
Sustainability 19
Strategies Adopted by Shiseido and Corresponding SDGs
We promote the Sustainable Beauty Initiative and contribute to the achievement of the Sustainable Development Goals.
“Sustainable Beauty Initiative”

Realizing a Better World Clean Environment Related SDGs
Striving for the ideal of a global environment that supports
Jun Aoki lives of vibrancy. Reducing our environment footprint
Executive Corporate Officer
Chief Social Value Creation Officer
In regard to environmental areas, we are focusing efforts on establish-
ing targets and timelines for reducing our environmental footprint, such as
CO₂ emissions, palm oil, paper, and water resources, as we aim to achieve
further sustainable growth. For climate change, in particular, we Sustainable packaging and formula
Since its founding in 1872, Shiseido has pursued unprecedented new value and worked to deliver it across society. The establishment of expressed our support for the recommendations of the Task Force on
Japan’s first Western-style private pharmacy, the introduction of the soda fountain, and the creation of the cosmetics business are all Climate-related Financial Disclosures (TCFD) in April 2019. In addition, we
examples of how Shiseido has incorporated Western lifestyle practices and culture into Japanese society to realize new value. are strengthening initiatives such as reducing marine pollution through
the development of eco-friendly packag-
The name “Shiseido” comes from a passage in the ancient Chinese divination text Yi Jing. The passage reads, “Praise the virtues of the Sustainable and responsible procurement
ing. Also, we continue to protect people’s
earth, which nurtures new life and brings forth significant value.” We have always felt that our ongoing business activities are only
skin and bodies from the damage of UV
possible thanks to the abundance of nature and the sustainability of the environment. To that end, we firmly believe that our business rays by leveraging our sunscreen tech-
activities must place importance on the creation of social value, in addition to economic value. We also believe that a sustainable society 2019 topic: Expressed our support for
nologies, which have garnered high praise. the recommendations of TCFD
is a prerequisite for sustainable business. Guided by these beliefs, we are engaging in a broad range of activities to create a virtuous
cycle for a better society.
This virtuous cycle is put into motion by our corporate mission, BEAUTY INNOVATIONS FOR A BETTER WORLD. Our sustainability
strategy centers on ESCG. “ESG” stands for “environment,” “society,” and “corporate governance” and is a concept on which modern Respectful Society Related SDGs
society places value, while “C” represents “culture,” a unique strength of Shiseido. Accordingly, we are working to promote the Sustainable Advancing a society that embraces diversity through respect,
Beauty Initiative, which aims to realize a better world, and have defined the following key areas that require our attention as a beauty Gender equality
and supports lives of beauty.
company. See page 19 for the goals and specific strategies in each area.
For social areas, President Masahiko Uotani has been appointed as the
Positioning these efforts as important elements of its ESCG management, Shiseido will strive to remain vital for the next 100 years and
inaugural chair of the 30% Club Japan, a chapter aiming to boost female repre-
be the world’s most trusted beauty company.
sentation on company boards. We are working together with other companies in
Empowering people
Japan to resolve issues that impede the empowerment of women.
Shiseido’s Material Issues Globally, we will expand activities to empower senior citizens and those
with serious concerns about their skin and
As a framework for creating social value unique to a beauty company, we defined the Shiseido Group’s material issues in April 2019
appearance, including changes in skin color
based on interviews and discussions with our stakeholders. caused by the side effects of cancer treat- Human rights and human resources
Categorizing issues taking into consideration their impact on our stakeholders (consumers, business partners, employees, shareholders, ment, through the power of beauty.
and society and the earth) and their impact on the Company’s businesses, we established an order of priority and selected 18 material
issues. In addition, we revised our definition of social value from the perspectives of the environment, society, and culture. The details and
2019 topic: The 30% Club Japan began
positioning of each mapped issue are reviewed as necessary through discussions by the dedicated management board called the its activities
Sustainability Committee, etc.
The Shiseido Group’s Materiality Map

Enriched Culture Related SDGs
Creating new value to enrich culture by transforming beauty.
High
Deforestation
Environment Inheriting corporate culture
Responsible procurement
Society In areas related to culture, we will pass on our
Culture long-cultivated corporate culture and DNA to future
Group employees, as we strengthen our unity
Importance to Stakeholders
Governance
Development of eco-friendly formulas Diversity & Inclusion through shared value and evoke our power to inno-
Climate change vate that has enabled us to constantly transform in Inspiring a new sense of beauty
Water usage Waste reduction
Sustainable packaging
Quality assurance Occupational health and safety Quality of life
response to changing times. By doing so, we will
explore and discover new aesthetic sensibilities and
Respect for human rights
create new value through collaboration with our
Information security and privacy Responsible marketing and advertising
businesses. 2019 topic: Began issuing
Strengthening of governance and accountability Human resource development an English version of the
Shiseido corporate culture
magazine, Hanatsubaki, in
Europe and the U.S.
Fair business transactions Art & Heritage
Importance to Shiseido’s Business High
Shiseido | Annual Report 2019 Sustainability (Corporate Website) Sustainability (Full Version)
20
Research & Innovation Supply Network 21
Continue to Create Value Going Beyond From Supply Chain to Supply Network:
Cosmetics through Research & Innovation Realizing Further Sustainable Growth
Yoichi Shimatani Norio Tadakawa
Representative Director Director
Executive Vice President Executive Corporate Officer
Chief Innovation Officer Chief Supply Network Officer
Shiseido has consistently pursued research & innovation activities Progress of the Three-Year Plan (2018 to 2020) Evolution from Supply Chain to Supply Network Strengthening Production Capabilities in Japan, Optimizing
on the latest technologies. Going forward, in addition to leveraging its Inventories, and Eliminating Lost Business Opportunities
long-cultivated cosmetic technologies that prioritize safety, Shiseido Over the past three years, we have implemented strategic Amid expanding business scale, strengthening our supply chain has
will continue to offer products with value exceeding that of investments with a particular focus on reinforcing our fundamental become one of the most important issues for management. Therefore, In our efforts to improve product supply capabilities, we started
conventional cosmetics. By doing so, we will realize Beauty Innovations research capabilities and fortifying our ability to develop cosmetics we are making joint efforts with our raw material suppliers and out- operations at the Nasu Factory at the end of 2019. Going forward,
that lead to new lifestyles for people around the world. at overseas bases. Since 2019, we have been further evolving our sourced manufacturing partners to reinforce the supply chain and we plan to gradually commence operations at the Osaka Ibaraki
conventional hub-and-spoke network*, transforming it into a multi- improve our product supply capabilities in the market. Furthermore, Factory and the Fukuoka Kurume Factory, expanding our domestic
hub network where our eight research bases around the world, we believe that, in the ever-changing market environment, the ability production base network to six facilities. While closely monitoring
Strengths Cultivated Over Our 100-Year History
including the Global to build an agile supply structure will be of crucial importance going demand levels in each country, we will strive to establish a stable
Since establishing the Testing Room in 1916, which handled product Innovation Center (GIC) forward. To that end, while precisely capturing the needs of consum- global production network over the medium-to-long term.
development and improvement, Shiseido has promoted research & established in April 2019, ers around the world, we will strengthen collaboration with our busi- Meanwhile, in order to realize an agile supply structure, we will
innovation activities that combine Eastern and Western science with a roll out their respective ness partners, build a supply structure that is fast and flexible, and reduce lead times through collaboration with our raw material
focus on beauty. Throughout this history, we have cultivated three core insight and research evolve our supply chain into a supply network. suppliers. At the same time, we will enhance the accuracy of our
strengths that cannot be easily imitated by our competitors. results on a global basis. demand forecasts by leveraging AI and other technologies.
The first strength is safety. We endeavor to research, develop, and Shiseido's Supply Network By stepping up investments in such areas, we will stabilize our level
* A network where fundamental
manufacture products and services that truly satisfy our consumers research is primarily handled at of supply and, as a result, establish a more agile supply structure. This
and offer outstanding levels of safety, always with the consumer in
laboratories in Japan and the We have four strengths in our supply network. will allow us to adjust our inventory levels and reduce the number of
results are extended overseas
mind. In addition to laws and regulations, we adhere to strict,
Global Innovation Center The first strength is the high level of quality recognized by consum- lost business opportunities due to out-of-stock products.
independent safety standards to offer products that guarantee safety ers, resulting from the use of high-quality raw materials carefully
Efforts to Realize Further Innovations
without compromise. selected based on Shiseido’s quality standards as well as from our Medium-to-Long-Term Strategies for Our Global Supply Network
Another strength is our holistic anti-aging care technologies that Our innovation strategy going forward will focus on the following stringent inspection processes.
The second strength is sharing the technology and culture of crafts- We have determined six key initiatives that will form the core of our
focus substantially on inner beauty. For many years, we have been three points. The first is engaging in thorough R&D activities focused
manship cultivated in Japan with our overseas production bases. With global supply network’s medium-to-long-term strategies (see the chart
engaging in research based on Western science in a quest to clarify on consumers to spur innovation. This will be done by leveraging the
this strength, we aim to enable production that meets the needs of below). Among these, we will identify initiatives with a high level of
the cause-and-effect relationship between the inner body and skin, a special features of the GIC, which is located in a major urban area, to
each region as well as achieve flexible and stable production even in priority to be shared on a global basis in accordance with our future
relationship that closely pertains to the concepts of Eastern medicine. promote co-creation initiatives and understand the latent needs of
the event of an emergency or a significant fluctuation in demand. supply network vision. We will then work each year to realize such
This kind of approach, which combines Eastern and Western ideas, has consumers regarding beauty.
The third strength is our technological capabilities that contribute initiatives. By doing so, we will steadily advance the evolution of our
helped support our core skincare brands and enabled us to provide The next point of our innovation strategy is to provide products
to a sustainable society. Through this strength, we will pursue various global supply network.
value that fundamentally differs from that offered by our competitors and services that contribute to a sustainable society in order to
environmentally focused efforts, including the production of eco-friendly Additionally, we aim to realize these key strategies by enhancing
in Europe and the Americas. deliver the true value of beauty. This will be realized through unique
packaging. At the same time, we will actively develop technologies that cross-boundary communication. As we strive to increase our ratio of
The third strength is our sensibilities. Unlike pharmaceuticals, technological development and external collaboration, including in
can steadily turn innovative raw materials into products. overseas sales and accelerate global M&A, we will continue to
cosmetics need to establish a deep connection with the people who terms of developing packaging with minimal environmental impact,
Our human resources constitute the final strength. Human resources strengthen cooperation worldwide to generate various synergies.
use them, including the comfort and enjoyment that comes from using procuring eco-friendly raw materials, and developing new formulas.
who take pride in their work at the Company and their ability to create Amid an uncertain business environment, we will undertake all of
cosmetics every day. Accordingly, we have placed importance on The final point is the promotion of open innovation and the
high-quality products serve as the source of our value creation. these six key initiatives in a flexible and swift manner to support
painstaking research into sensibilities to enhance product value. We are development of new products and services realized through such
steady growth going forward.
currently working from a neuroscientific and psychological perspective innovation. To create synergistic effects by combining our core
to establish technologies capable of creating high-quality textures that strengths of safety, holistic anti-aging care technologies, and Global Supply Network
will enhance consumer desire to continue to use our products. sensibilities with the insight and technologies of external
・Product quality ・Consumer orientation
organizations, we will take on challenges in new domains. ・Responsible sourcing ・Agility to market opportunities
Additionally, we will focus on integrating digital technologies ・ESG & sustainability Non-negotiables Service ・Implementation of production and logistics strategies
with the research we conduct at the GIC in order to respond to the
personalization domain, which is expected to grow even further ・COGs (manufacturing + procurement)
・End-to-end smart supply network
going forward. ・Value creation for customers in supply network People ・Indirect costs
We ask that you continue to look forward to the research & ・Inventory/logistics costs
Innovation Cost & Cash
・Waste management
innovation activities of Shiseido as we work to realize BEAUTY ・End-to-end business integration and tools
INNOVATIONS FOR A BETTER WORLD. ・Global macro approach
・Lean processes Operation
・Unified operational rules Excellence
・Transparent organization and R&R ・Global talent management
Basic actions
Streamline KPI Collaborate with RHQ & Brand Holders Streamline IT, infrastructure & processes
Shiseido | Annual Report 2019 Research & Innovation (Full Version) Supply Network (Full Version)
22
Corporate Governance 23
Directors and Audit & Supervisory Board Members Skills and Expertise Required of Directors and Audit & Supervisory Board Members
Given that the Company requires directors and Audit & Supervisory Board members to supervise business execution and conduct deci-
sion-making on critical matters, it selects candidates based on their personality and insight, regardless of attributes such as gender, age,
and nationality, as they must possess various viewpoints and backgrounds, in addition to diverse and sophisticated skills.
Marketing /
ESG
Global Experience Finance /
Technology / (Environment, Legal affairs /
management / of the Company’s Accounting /
Innovation Society, Risk management
Business strategy business and the M&A
Governance)
industry
Masahiko Uotani
Representative Director,
President and CEO
Yoichi Shimatani
Representative Director,
Executive Vice President
Career Summaries Yukari Suzuki

Features of Shiseido’s Corporate Governance Director, Executive Corporate Officer
Shiseido’s basic policy on corporate governance defines governance as the “platform to realize sustainable growth by fulfilling the
Norio Tadakawa
corporate mission.” We strive to maximize medium-to-long-term corporate and shareholder value by implementing and reinforcing corpo-
Director, Executive Corporate Officer
rate governance to maintain and improve management transparency, fairness, and speed, and through dialogue with all stakeholders, from
consumers, business partners, employees, and shareholders to society and the earth. At the same time, by fulfilling its responsibilities as
a public entity of society, Shiseido works to optimize the value it delivers to respective stakeholders. Yoshiaki Fujimori
External Director (Independent)
Shiseido’s Governance in Numbers

Yoko Ishikura
8 Directors External Director (Independent)
Extensive From Independent

careers
outside of
inside
the
external
directors
Shinsaku Iwahara
Percentage of Percentage of Shiseido Company
External Director (Independent)
external directors and female directors and
Internal External
Audit & Supervisory Audit & Supervisory
Board members Board members
53.8% 46.2% 5 Audit & Supervisory Board Members Kanoko Oishi

(7 of 13) (6 of 13) Full-time Audit & Independent External Director (Independent)
Supervisory external Audit &
Board members Supervisory
(from inside Board members
the Company)
Takeshi Yoshida
Internal External
Audit & Supervisory Board Member
Current Structure Akiko Uno

Audit & Supervisory Board Member
The Company has adopted a company with an audit & providing necessary support, while many of the responsibilities
supervisory board organizational structure with double-check and authorities that used to be retained by the Company are
functions for business execution: supervision by the Board of delegated to respective regional headquarters of Japan, China, Yasuko Gotoh
Directors and audits by Audit & Supervisory Board members. In Asia Pacific, the Americas, EMEA, and Travel Retail. The Board of External Audit & Supervisory Board
Member (Independent)
order to maintain and improve management transparency, fairness, Directors held repeated discussions with regard to an ideal state
and speed as per the Basic Policy for Corporate Governance, the of the Company’s corporate governance system under this matrix
Ritsuko Nonomiya
Company has reinforced the supervisory function of the Board of organization, including composition and operation of the Board of
External Audit & Supervisory Board
Directors by incorporating outstanding functions, including those of Directors. As a result, it concluded that adopting the monitoring Member (Independent)
a company with nominating committee and company with audit board-type structure would ensure sufficient and effective
and supervisory committee, etc. supervisory functions over the Shiseido Group overall, and Hiroshi Ozu
Effective January 2016, the Shiseido Group has launched a resolved to implement the monitoring board-type corporate External Audit & Supervisory Board
global matrix organization which cross-matches six regions with governance while leveraging advantages of a company with an Member (Independent)
brand categories. Under this matrix organization, the global audit & supervisory board structure. mark indicates principal areas of expertise (maximum 3 areas per person)
　
headquarters is responsible for supervising the overall Group and

24
Corporate Governance 25
Executive Remuneration—A Remuneration System That Strikes a Balance between Performance Evaluation Indicators for the
Short-Term and Long-Term Incentives Long-Term Incentive Plan
The Company regards the remuneration policy for directors, Audit & Supervisory Board members, and corporate officers as a matter of The Company has set the long-term targets of net sales Net sales (Billions of yen)
2,000
the utmost importance for corporate governance. of ¥2 trillion and operating profit of ¥300 billion and recog- Operating profit (Billions of yen)
Remuneration for directors and corporate officers comprises basic remuneration and performance-linked remuneration. The Company nizes that continuous and constant growth in sales and
300
sets appropriate executive remuneration levels by making comparisons with those of companies in the same industry or of the same scale profits is necessary to achieve those targets. For this
reason, we have established compound average growth 1,131.5
in Japan and overseas, taking the Company’s financial condition into consideration. 1,005.1
rate (CAGR) as a performance indicator to improve eco-
113.8
Composition of Executive Remuneration nomic value. We have also set internal and external perfor- 80.4
mance indicators to improve and advance performance
continuously from an ESG perspective, and we use these
2017 2019
Basic Remuneration Annual Bonus Long-Term Incentive indicators as a mechanism for evaluating performance over Base reference
year
a three-year period.
Furthermore, we have added consolidated return on
46–64% 18–27% 18–27%
earnings (ROE), an important indicator for shareholders, as
The Company designs remuneration level in accordance with Performance evaluation on Performance evaluation on Performance indicator Evaluation ratio
role grades based on the level of responsibility of each achievement of goals for achievement of long-term goals a performance indicator for determining the payment rate
director and corporate officer and the size of the impact on a single fiscal year threshold. If performance falls below the threshold, the
business management of the Group
・Consolidated net sales, consolidat- ・Economic value indicators: CAGR Company does not pay the performance-linked compo- CAGR of net sales 45 %
ed operating profit, performance of of consolidated net sales, CAGR nent. Through these measures, we will ensure profits Economic
respective businesses, individual of consolidated operating profit value
above a certain level while implementing investments for
strategic goals ・Social value indicators: ESG indicators
・Performance indicator as the ・Performance indicator as the
growth and robust decision-making. We also expect these CAGR of operating profit 45 %
payment rate threshold: Net profit payment rate threshold: ROE measures to further heighten awareness among directors
Key Points of the Remuneration System and corporate officers of the common interests we have
Internal and external Social value
with our shareholders. indicators related to ESG 10 % indicators
• Comprises basic remuneration, which is offered as fixed remuneration, and annual bonuses and long-term incentives, which are offered as
performance-linked remuneration
• Introduces a role grade system designed so that the higher the role grade the greater the ratio of the performance-linked component
of remuneration
• Deems the achievement of performance targets in a single fiscal year and in the medium-to-long term to be of equal importance and sets Performance Share Units
performance indicators for annual bonuses and long-term incentives consistent with their respective objectives. The Company has designed • Performance share units serve as a type of performance-
these performance indicators to motivate directors and corporate officers to realize growth over not only a single fiscal year but also the linked stock remuneration whereby the Company allots a
Shiseido’s Performance Share Units
reference share unit to eligible parties and increases or
medium-to-long term
decreases the number of units in accordance with the Number of share units paid Number of shares paid
• With particular emphasis on long-term incentives, sets indicators that can evaluate performance from the perspectives of both economic
achievement rate for performance evaluation indicators Maximum
and social value, in order to maintain and improve corporate value Maximum number
during the evaluation period. The Company then pays to number of
of share units
allotted shares
eligible parties shares of the Company’s stock or an equiv-
Shiseido’s Long-Term Incentive Plan for Motivating Management to Promote Growth over the Medium-to-Long Term alent monetary amount corresponding to the number of
determined units. In this way, the system is suitable for Performance
Number of reference evaluation
Aim of Introducing the Long-Term Incentive Plan fostering awareness of the Company’s share price and share units
period
reflecting performance results in remuneration.
To establish effective incentives for creating and maintaining Promote value
long-term corporate value and foster an awareness of the common • The Company’s performance share units comprise two parts:
creation by achieving Minimum number of
Minimum
our long-term vision a performance-linked component and a fixed payment number of
interests we have with our shareholders, we have introduced share units
allotted shares
and strategic goals component for the three-year performance evaluation Fixed payment component
performance share units, a type of performance-linked stock
period. As part of the performance-linked component, the
remuneration. Company pays shares after increasing or decreasing the 0%
number of reference share units in accordance with the
Attract and retain Maintain corporate compound average growth rate of both consolidated net
competent talent value created over
sales and consolidated operating profit and with the
the long term
achievement rates for ESG-related targets as a non-finan-
cial indicator. The fixed payment component is not linked
to performance and is designed to foster an awareness of
Realize a “Global One the common interests we have with our shareholders and
Team” and sense of
secure and maintain superior personnel.
solidarity among the
entire Group Share unit: units equivalent to shares after the evaluation period
Shiseido | Annual Report 2019 Message from an External Director Corporate Governance
26 Data Section 27
Historical Financial Summary

Shiseido Company, Limited and Subsidiaries
For the fiscal years ended March 31, 2011 to December 31, 2019
Millions of yen Thousands of U.S. dollars

(Except per share data) (Except per share data)
2011/3 2012/3 2013/3 2014/3 2015/3 2015/12 2016/12 2017/12 2018/12 2019/12 2019/12
Operating Results:
Net sales 670,701 682,385 677,727 762,047 777,687 763,058 850,306 1,005,062 1,094,825 1,131,547 10,425,161
Cost of sales 168,692 162,989 166,783 189,559 196,433 196,009 207,553 231,327 231,928 254,844 2,347,927
Selling, general and administrative expenses 457,550 480,260 484,898 522,843 553,640 529,388 605,972 693,298 754,545 762,871 7,028,477
Operating profit 44,458 39,135 26,045 49,644 27,613 37,660 36,780 80,437 108,350 113,831 1,048,747
EBITDA 65,576 76,974 61,463 91,285 90,703 80,635 90,078 154,741 150,318 169,348 1,560,235
Net profit (loss) attributable to owners of parent 12,790 14,515 (14,685) 26,149 33,668 23,210 32,101 22,749 61,403 73,562 677,740
Financial Position:
Total assets 739,120 720,707 715,593 801,346 823,636 808,547 934,590 949,425 1,009,618 1,218,795 11,228,993
Short-term interest-bearing debt 16,361 9,734 39,394 64,054 75,615 18,996 16,557 10,662 15,202 144,949 1,335,443
Long-term interest-bearing debt 181,155 175,418 145,274 91,864 31,281 67,617 104,022 70,801 60,574 103,159 950,423
Interest-bearing debt 197,517 185,153 184,669 155,918 106,897 86,613 120,580 81,463 75,776 248,108 2,285,866
Equity 307,269 290,494 287,069 338,561 386,860 391,664 392,963 423,447 448,580 496,437 4,573,770
Cash Flows:
Cash flows from operating activities 67,586 52,599 42,040 84,320 32,134 60,529 59,129 95,392 92,577 75,562 696,167
Cash flows from investing activities (30,303) (20,668) (25,534) (16,799) 11,538 (23,137) (70,640) (1,061) (103,112) (202,823) (1,868,647)
Cash flows from financing activities (39,571) (35,482) (24,745) (47,462) (58,419) (30,151) 22,378 (53,117) (29,722) 113,678 1,047,337
Cash and cash equivalents at end of year 88,592 82,974 80,253 110,163 100,807 104,926 113,122 156,834 111,767 97,466 897,973
Per Share Data (In yen and U.S. dollars):

Net profit (loss) 32.1 36.5 (36.9) 65.7 84.4 58.2 80.4 56.9 153.7 184.2 1.70
Net assets 772.1 729.9 721.2 849.4 970.0 981.4 984.1 1,059.8 1,123.2 1,242.9 11.45
Cash dividend 50.0 50.0 50.0 20.0 20.0 20.0 20.0 27.5 45.0 60.0 0.55
Weighted average number of shares outstanding during
the period (thousands) 397,864 397,974 398,007 398,300 398,704 399,026 399,227 399,466 399,409 399,411
Financial Ratios:
Operating margin (%) 6.6 5.7 3.8 6.5 3.6 4.9 4.3 8.0 9.9 10.1
Return on invested capital (%) 4.5 3.5 3.4 5.9 4.1 4.6 5.0 10.4 13.1 12.9
Return on equity (%) 3.9 4.9 (5.1) 8.4 9.4 6.0 8.2 5.6 14.1 15.6
Equity ratio (%) 41.6 40.3 40.1 42.2 47.0 48.4 42.0 44.6 44.4 40.7
Interest-bearing debt to EBITDA ratio (times) 3.1 2.5 3.0 1.9 1.4 1.2 1.2 0.7 0.5 1.0
Debt-equity ratio (times) 0.64 0.64 0.64 0.46 0.28 0.22 0.31 0.19 0.17 0.50
Interest-bearing debt ratio (%) 39.1 38.9 39.1 31.5 21.6 18.1 23.5 16.1 14.5 33.3
CCC (Cash Conversion Cycle) (days) 109 109 133 139 143 146 123 114 126 149
Payout ratio (consolidated) (%) 155.5 137.1 — 30.5 23.7 34.4 24.9 48.3 29.3 32.6
Dividend on equity (%) 6.1 6.7 6.9 2.6 2.2 2.1 2.0 2.7 4.1 5.1
Number of employees at year-end 31,310 32,595 33,356 33,054 33,000 33,783 36,549 37,438 38,640 40,000
Net sales per employee 21.4 20.9 20.3 23.1 23.6 22.6 23.2 26.8 28.3 28.3
Notes: 1. The fiscal year ended December 31, 2015 is the nine months from April 1, 2015 to December 31, 2015 for Shiseido and its consolidated subsidiaries in Japan and the 12 10. Cash Conversion Cycle (days) = Receivables turnover period (days) + Inventory turnover (days) – Payables turnover period (days) (average of each indicator during the period)
months from January 1, 2015 to December 31, 2015 for all other subsidiaries. In this report, it is referred to as “the year ended December 2015” in the text and as “2015/12” 11. Dividend on equity = Return on equity × Payout ratio (Consolidated)
in tables, charts, and graphs. 12. The number of employees at year-end does not include temporary employees.
2. Amounts less than one million yen are omitted. 13. Shiseido Group subsidiaries in Americas formerly recognized free samples and promotional items associated with marketing activities in stores as assets when acquired and
3. U.S. dollar amounts are converted from yen, for convenience only, at the rate of ¥108.54 = US$1 prevailing on December 31, 2019. expensed them after shipped to customers. However, effective from the fiscal year ended March 31, 2012 these subsidiaries began to expense these items when acquired in order
4. EBITDA (Earnings before interest, taxes, depreciation and amortization) = Net income (loss) before income taxes + Interest expense + Depreciation and amortization expense to conform with the Group’s accounting policies. As a result, the Shiseido Group retrospectively restated the consolidated financial statements for the fiscal year ended March 31,
+ Impairment loss on goodwill and other intangible assets 2011, accordingly.
5. Net profit (loss) per share (primary) is based on the average number of shares outstanding during the fiscal year. Net assets per share is calculated using the number of shares 14. Effective from the fiscal year ended March 31, 2014, certain subsidiaries of the Shiseido Group retrospectively adopted a new standard for Employee Benefits (IAS 19, amended
outstanding as of the balance sheet date. Net profit (loss) per share is calculated before dilution. June 16, 2011) and changed the method for recognizing changes in net defined benefit obligation. The Shiseido Group applied this change retrospectively and restated the
6. Return on invested capital = Operating profit × (1 – Tax rate*) / (Interest-bearing debt + Equity)** consolidated financial statements for the fiscal year ended March 31, 2013, accordingly.
* Tax rate = Total income tax / Profit before income tax ** (Interest-bearing debt + Equity) is the average of the beginning and the ending balances. 15. From the fiscal year 2016, Shiseido has been recognizing payables associated with Dolce&Gabbana. For the fiscal year ended December 2019, the interest-bearing debt ratio
7. Interest-bearing debt to EBITDA ratio = Interest-bearing debt* / EBITDA * Interest-bearing debt is the average of the beginning and the ending balances. including these payables was 37.5 percent, the debt-equity ratio was 0.60, and interest-bearing debt was ¥298,475 million.
8. Debt-equity ratio = Interest-bearing debt / Equity* * Equity = Total net assets – Stock acquisition rights – Non-controlling interests in consolidated subsidiaries 16. In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-17, “Income Taxes (Topic 740): Balance Sheet
9. Interest-bearing debt ratio = Interest-bearing debt / Invested capital* * Invested capital = Interest-bearing debt + Equity Classification of Deferred Taxes” (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as non-current on the balance sheet rather than being
separated into current and non-current. Effective from the first quarter of 2017, affiliates in the Americas have adopted ASU 2015-17 on a retrospective basis. Accordingly, the
Company reclassified the current deferred taxes to non-current in the consolidated balance sheet as of December 31, 2016.
Shiseido | Annual Report 2019 Consolidated Financial Statements (Full Version)

28 Data Section 29
Financial Highlights
Financial Value Shareholder Value
Net Sales, Operating Profit, and Operating Margin*1 Net Profit (Loss) per Share*2 and Return on Equity*3 Shiseido Share Price*10 and Nikkei Stock Average Price Earnings Ratio (PER)*11 and Price Book Value Ratio (PBR)*12
(Billions of yen) (Billions of yen) (%) (Yen)(%) (Yen) (Yen) (Times) (Times)
1,200 200 20 200 20 10,000 25,000 100 95.6 10.0

1,131.5 184.2
1,094.8
1,005.1
153.7 15.6 8,000 20,000
900 850.3 150 15 150 15 75 7.5
777.7 763.1 14.1
6.1 6.3
113.8 6,000 15,000
108.4
84.4 5.1
600 100 10 100 10 50 5.0
8.0 9.9 10.1 9.4 80.4 43.5
8.2 44.8
4,000 10,000 42.3
80.4 58.2 56.9 36.8
4.3 6.0 5.6 25.3
300 4.9 50 5 50 5 25 3.0 2.5
2,000 5,000 2.6
3.6 37.7 36.8 2.2
27.6
0 0 0 0 0 0 0 0 0
2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019
Net sales (Left scale) Operating profit (Right scale) Net profit (loss) per share (Left scale) ROE Return on equity (Right scale) Shiseido share price (Left scale) Nikkei stock average (Right scale) Price earnings ratio (PER) (Left scale) Price book value ratio (PBR) (Right scale)
Operating margin (Far right scale)
Cash Dividends per Share, Consolidated Payout Ratio and

Interest-Bearing Debt and Interest-Bearing Debt Ratio*4 EBITDA*5 and Free Cash Flow Dividend Yield*13
(Billions of yen) (%) (Billions of yen) (Yen) (%) (%)
248.1 60.0
250 40 180 169.3 60 120 12
154.7 150.3
150
33.3 50 100 10
200 32 45.0
120
90.7 90.1 94.3 40 80 8
23.5 90 80.6
150 24
21.6
18.1 120.6 60 30 60 6
106.9 27.5
16.1 14.5 43.7
100 16 37.4 48.3
86.6 81.5 30 20.0 20.0 20.0
75.8 20 40 4
34.4 29.3 32.6
0
50 8 –10.5 23.7 24.9
–11.5 10 20 2
–30 0.7
–127.3 0.9 0.8 0.7 0.5 0.8
0 0 –150 0 0 0
2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019
Interest-bearing debt (Left scale) Interest-bearing debt ratio (Right scale) EBITDA Cash dividends per share (Left scale) Consolidated payout ratio (Right scale)
Free cash flow (Cash flows from operating activities + Cash flows from investing Dividend yield (Far right scale)
activities)
Net Sales by Reportable Segment*1 *6 *7 *9 Operating Margin by Reportable Segment*1 *6 *8 *9

(Billions of yen) (%)
1,200 34.3 30 27.6 *1 The fiscal year ended December 31, 2015 is the nine months from April 1, 2015 to December 31, 2015 for Shiseido and its consolidated subsidiaries in Japan and the 12 months from
34.7 Other
14.7 January 1, 2015 to December 31, 2015 for all other subsidiaries.
14.3 14.1
Professional
102.2 20.0 *2 Net profit (loss) per share is calculated before dilution based on the average number of shares outstanding during the fiscal year.
48.0 87.6
Travel Retail
22.1 21.5 Travel Retail
20 *3 Consolidated ROE for the fiscal period ended December 31, 2015 is calculated using consolidated net income attributable to owners of parent for the year as the numerator and the average
17.5 18.0
900 44.5 113.2 118.4 EMEA
18.8 18.3 Japan of equity at March 31, 2015 and December 31, 2015 as the denominator.
14.6
24.8 128.4 12.8 13.5 *4 Interest-bearing debt ratio = Interest-bearing debt / Invested capital* * Invested capital = Interest-bearing debt + Equity
10.5 85.2 131.7 124.3 Americas 11.1 10.3
China
*5 EBITDA (Earnings before interest, tax, depreciation, and amortization) = Income (loss) before income taxes + Interest expense + Depreciation and amortization expense + Impairment loss on
17.5 12.6
140.4 69.8 Asia Pacific 10 11.1 10.2 Asia Pacific goodwill and other intangible assets
162.6 68.1 7.8
8.8 *6 Domestic Professional Division sales are included in the Global Business segment.
600 54.2 3.5 6.1 2.7 *7 Net sales by reportable segment represent sales to external customers only and do not include intersegment/interarea sales or transfers.
427.9 49.6 190.8 216.2 China
0.4 2.2 Professional
478.8 144.3 0 2.2 *8 Operating margin by reportable segment does not include eliminations/corporate.
120.5 –2.3 *9 The Shiseido Group has revised its reportable segment classification method in line with its amended internal management structure, effective from fiscal 2019. Shiseido Beauty Salon Co.,
–1.1 –3.9 –1.7 EMEA
–6.8 Ltd., formerly included in the Professional Business, is now positioned in the Other segment. Shiseido Astech Co., Ltd. and Hanatsubaki Factory Co., Ltd., which previously fell under the
–6.5 –6.9 Americas
300 –6.4 –7.1 Other
Japan Business, are now included in the Other segment. Effective from the third quarter of fiscal 2018, IPSA Co., Ltd., which had been included in the Japan Business, was moved to the
431.0 454.5 451.6 Japan –10 –8.1 –8.7 Other segment in accordance with the change in the Group’s internal management structure. Segment data for fiscal 2018 reflect the above-mentioned change.
407.6
339.3 *10 Closing stock price at month-end
266.8
–13.9 *11 Price earnings ratio = Closing stock price at fiscal year-end / Net profit per share
*12 Price book value ratio = Closing stock price at fiscal year-end / Net assets per share
0 –20
2015/3 2015/12 2016/12 2017 2018 2019 2015/3 2015/12 2016/12 2017 2018 2019 *13 Dividend yield = Cash dividends per share / Closing stock price at fiscal year-end
Years ended March 2015 Domestic Cosmetics Business Global Business Other Years ended March 2015 Domestic Cosmetics Business Global Business Other
Year ended December 2015 Japan Business ■ Global Business ■ Other Year ended December 2015 Japan Business Global Business Other
Year ended December 2016 Japan Business China Business Asia Pacific Business Year ended December 2016 Japan Business China Business Asia Pacific Business
Americas Business EMEA Business Americas Business EMEA Business Travel Retail Business
Travel Retail Business Years ended December 2017–2019 Japan China Business Asia Pacific Business
Years ended December 2017–2019 Japan Business China Business Asia Pacific Business Americas Business EMEA Business
Americas Business EMEA Business Travel Retail Business Travel Retail Business Professional Business Other
Professional Business Other
Shiseido | Annual Report 2019 Financial and Non-Financial Highlights (Full Version)
30 Data Section Data Section 31
Market Data Corporate and Investor Information (As of December 31, 2019)
Beauty and Personal Care Market Scale by Country Head Office Number of Shareholders
Shiseido Company, Limited 61,402
Size of Cosmetics Market and CAGR 2015-19 5-5, Ginza 7-chome, Chuo-ku
Common Shares Issued and Outstanding
Tokyo 104-0061, Japan
400,000,000 (including 564,455 in treasury stock)
(%) Tel: +81-3-3572-5111
China Composition of Shareholders by Number of Shares

12 Founding
(excluding Hong Kong)
India
September 1872
Indonesia
Other Japanese Securities Companies
Vietnam 1.54%
Incorporation Companies
9
June 1927 4.41% Treasury Stock
Thailand Individuals 0.14%
Philippines Capital 12.53%

Brazil
6 Foreign Investors
CAGR
¥64,506 million 42.60%

Russia United States
Spain South Korea Number of Employees Financial Institutions
3
United Kingdom Japan 38.77%
40,000 (8,130)
Italy Germany
Note: The number of employees shown denotes full-time employees. Composition of Shareholders
Annual average number of temporary employees is shown in
UAE parentheses. Temporary employees include part-time workers.
By number of shares 2018/12 2019/12
0
Dispatched employees are excluded. Foreign Investors 39.50% 42.60%
France
Financial Institutions 39.94 38.77
Fiscal Year-End Individuals 13.62 12.53
–3 Other Japanese Companies 5.14 4.41
0 12,500 25,000 37,500 50,000 December 31
Securities Companies 1.62 1.54
Market size (Millions of U.S. dollars)
The Ordinary General Meeting of Treasury Stock 0.15 0.14
* Euromonitor International 2019. Combined total of skin care, sun care, color cosmetics, fragrances categories. Figures based on local currencies for each country and region and translated Shareholders By number of shareholders 2018/12 2019/12
into U.S. dollars at the average exchange rate for 2019 Foreign Investors 1.53% 1.68%
Held in late March.
Financial Institutions 0.16 0.16
Stock Listings Individuals 96.97 96.85
Prestige: Market Size and Composition in 2019 Other Japanese Companies 1.24 1.19
Common Stock: Tokyo Stock Exchange
Securities Companies 0.09 0.10
(Code: 4911) Treasury Stock 0.00 0.00
■ Skincare ■ Makeup ■ Fragrance
American Depositary Receipts:
U.S. Over-the-Counter (Code: SSDOY) Principal Shareholders
Japan 68 % China 73 %
Number of Percentage
¥ 1.6 trillion 29 % ¥2.4 trillion 20 %
Accounting Auditors Shareholders shares held of
Global 3% 7% (Thousands) shareholding
13.0
KPMG AZSA LLC The Master Trust Bank of Japan, Ltd.
45,436 11.37
(Trust Account)
Approx. ¥ trillion Share Registrar
Asia Pacific 61 % Americas 34 % Japan Trustee Services Bank, Ltd.
23,330 5.84
(excluding Travel Retail) (Trust Account)
23 % 35 %
¥ 1.5 trillion ¥ 3.7trillion Sumitomo Mitsui Trust Bank, Limited
BNYM TREATY DTT 15 12,189 3.05
16 % 31 %
48 % Mizuho Trust & Banking Co., Ltd. re-trusted
26 % to Trust & Custody Services Bank, Ltd.
Employees Pension Trust for Mizuho Bank
10,000 2.50
26 % EMEA 33 % Travel Retail 47 % Japan Trustee Services Bank, Ltd.

8,876 2.22
¥ 3.7 trillion 20 % ¥ 3.2trillion 24 % (Trust Account 7)
47 % 29 % Japan Trustee Services Bank, Ltd.
8,061 2.01
(Trust Account 5)
THE BANK OF NEW YORK 134104 7,537 1.88
* Euromonitor International 2019 (excluding Travel Retail). Premium (skin care, sun care, color cosmetics, fragrances). Figures based on local currencies for each country and region and trans-
lated into Japanese yen at the average exchange rate for 2019. Travel Retail: Generation Research (2018 data) SSBTC CLIENT OMNIBUS ACCOUNT 6,770 1.69
JP MORGAN CHASE BANK 385151 6,258 1.56
STATE STREET BANK WEST

6,228 1.55
CLIENT - TREATY 505234
Note: Calculations of percentage of shareholding are based on the total number of issued and
outstanding shares excluding treasury stock.

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Editorial Policy / Contents 01

Full Version (Web)

Message from the CEO

Corporate Governance Historical Financial Summary  26

Further information can be found on our corporate website.

Corporate Website https://corp.shiseido.com/en/

News Release https://corp.shiseido.com/en/news/

Beauty Has the Power to

Crisis as a Transformation Opportunity

BE ACCOUNTABLE APPLAUD SUCCESS

Shiseido | Annual Report 2019  THE SHISEIDO PHILOSOPHY

Net Sales Operating Profit

+3.4% +5.7% +6.8% +5.1%

+0.2 percentage point 12.9 15.6

Net Sales by Business Segment*1

7 8 1 Japan 2 China 3 Asia Pacific

6 39.9 % 19.1 % 6.2 % 1 1

Share of Total Sales (%)*1

Shiseido | Annual Report 2019

ELIXIR ANESSA MAQuillAGE HAKU

SHISEIDO Clé de Peau Beauté IPSA NARS

d program REVITAL PRIOR AQUALABEL INTEGRATE

Laura Mercier bareMinerals Drunk Elephant BENEFIQUE

Share of Total Sales Share of Total Sales

 Messages from Brand Heads

Shiseido | Annual Report 2019

Prestige Brands Continue to Drive Growth

Achieving 12% Net Sales Growth from Eight Global Brands Combined

VISION 2020 +9%

Overview of the Three-Year Plan

1 Further Selection and Concentration of

Building for the Future 3 New Value Creation through Innovation

Ordinary Profit 108.7 – 0.7%

Region x Brand Global Matrix Organization

Enhancement of Brand Portfolio

Drunk Elephant Skincare Brand

(From bottom left)

Region x Brand Global Matrix Organization

Shiseido | Annual Report 2019

Japan Business Americas Business

2019 Review 2019 Results 2019 Review 2019 Results

2019 Review 2019 Results 2019 Review 2019 Results

Asia Pacific Business Travel Retail Business

2019 Review 2019 Results 2019 Review 2019 Results

mances. In addition, ELIXIR, ANESSA, and Dolce&Gabbana recorded

Shiseido | Annual Report 2019  Regional Strategy (Full Version)

Improving Capital Efficiency

Message from the CFO

Shiseido | Annual Report 2019

FOCUS connecting people, process and systems

2019 Profit Structure

Aggressive Investment for Sustainable Growth

Shareholder Return Policy

Strategies Adopted by Shiseido and Corresponding SDGs

“Sustainable Beauty Initiative”

The Shiseido Group’s Materiality Map

Importance to Shiseido’s Business High

・Transparent organization and R&R ・Global talent management

 Career Summaries Yukari Suzuki

Corporate Governance Historical Financial Summary 26

Shiseido | Annual Report 2019 THE SHISEIDO PHILOSOPHY

Messages from Brand Heads

1 Further Selection and Concentration of

Shiseido | Annual Report 2019 Regional Strategy (Full Version)

The Shiseido Group’s Materiality Map

Career Summaries Yukari Suzuki

Shiseido | Annual Report 2019 Consolidated Financial Statements (Full Version)

Net Sales by Reportable Segment1 6 7 9 Operating Margin by Reportable Segment1 6 8 9