Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

Summary of Results Briefing for the Q3 of the Fiscal Year Ending December 31, 2022

[Points of Attention]

This Summary is a reference for those who would like to review the session or event of theresults briefing held by Pigeon Corporation.

Please note this is not the entire text of the conference but a summary based on our judgment.
Forward-looking statements in these materials are based on management's assumptions andbeliefs in light of the information currently available to it and involve known and unknown

risks, uncertainties and other factors. Such risks, uncertainties and other factors may affect theCompany's performance.

In the event of discrepancy between the English version and the Japanese version of thesummaries, the Japanese-language version shall prevail.

Date :

Tuesday, November 8, 2022, 4:00 PM (JST)

Number of Speakers:

2
Yasuo Kanatsuka
Sho Hiratsuka

Manager, Business Strategy Department

Associate Manager, Business Strategy Department

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

Consolidated results for the third quarter ended with an increase in sales and a decrease inincome. Net sales were JPY 70,707 million, up 101.8% from the previous year, or plus JPY 1.2
billion.

Gross profit ended the year at JPY 33.1 billion, almost the same level as the previous year. The
gross profit margin deteriorated by 0.9 percentage points from the previous year, due in partto the global surge in raw material prices.

SG&A expenses were JPY 24,093 million, 106% of the previous year's level, due to an increasein personnel and other expenses mainly in overseas operations, partly affected by foreignexchange rates, as well as aggressive use of SG&A expenses due to the progress of reopening invarious countries.

Operating income was JPY 9,103 million, 87.2% of the previous year's level, and operating

margin was 12.9%.

Net income attributable to owners of parent was JPY6,948 million, 96.7% of the year-before
level, or down JPY 230 million YoY.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

This shows the 2022 Q3 results by business segment.
The largest decrease from the previous year was in the Japan business, which saw a decline ofapproximately JPY 2.5 billion, with regard to sales in the third quarter cumulative period. In thesegment, the baby care business decreased sales by some JPY 850 million, mainly due to weaksales of consumable products, such as wet tissues, and weak overseas demand for someskincare products.

Sales in the Health & elder care business also declined around JPY 600 million YoY, but this wasdue to a review of the business portfolio, and progress was generally in line with our plan.

Next, in the China business, the impact of the Shanghai lockdown that occurred in the first halfof the fiscal year remained, and net sales in JPY for the cumulative third quarter were down

approximately JPY 1.4 billion from the previous fiscal year. In the China business, both sales
and segment profit continued to decline, but due in part to the impact of foreign exchange

rates, the YoY decline in sales was just about 5%. Looking at the Q3 results alone, the China
business ended the period with increases in sales and profit.

Next is the Singapore business. In the Singapore business, sales performed well across all

major countries and recovered to pre-COVID levels, resulting in a YoY increase in sales of some3 / 18

Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

JPY 1.6 billion. Segment profit also increased, with double-digit YoY rises in both sales andprofit.

Finally, in the Lansinoh business, sales in JPY for the cumulative third quarter were up

approximately JPY 2.8 billion from the previous year, due to strong sales in North America andthe impact of foreign exchange rates. On the other hand, segment income decreased from theprevious year due to the continued rise in logistics costs in the third quarter, which has been
continuing since the beginning of the fiscal year.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

This shows a factor analysis of the YoY change in consolidated operating income.
The cumulative gross profit through Q3 increased by about JPY 600 million YoY due to theincrease in sales, but this was offset by the impact of a rise in the cost ratio. Furthermore, SG&A
expenses increased by about JPY1.3 billion, resulting in operating income of JPY9.1 billion.

Regarding the breakdown of SG&A expenses, personnel expenses posted the largest YoY

increase. The increase in personnel expenses, especially in the China and Lansinoh businesses,
due in part to foreign exchange effects, contributed to a YoY decrease in consolidated
operating income of some JPY500 million.

In the Lansinoh business, distribution costs in the U.S., where sales are strong, are still rising,and this was a factor in the approximately JPY 300 million decrease in consolidated operating

income from the previous year.

In addition to this, the reopening of economic activities further advanced in various countries,
boosting transportation and sales promotion expenses. All of these resulted in operating
income of JPY 9.1 billion for the cumulative Q3 period.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

Summary by segment.
In the Japan business, the third quarter from July to September coincided with the seventh

wave of COVID-19, when the daily number of newly infected patients exceeded 200,000 every
day.

Baby care sales were down 4.4% YoY on a cumulative basis. Sales of bottles were up 23% YoY

on a cumulative basis, continuing to benefit from the renewal effect. Sales of baby skin careproducts fell below the previous year's level due to weak overseas demand for the Peach

Leaves series since the beginning of the current fiscal year. Consumables such as wet wipes

and breast pads continued to struggle due to growing consumer demand for low-priced
products.

In baby care, we are expanding new product categories, such as the "Sonaetta" series of baby

emergency supplies and the "POCHItto" nursing bottle steam sterilizer and dryer.

The gross profit margin for Baby Care deteriorated by approximately -4 points YoY on a

cumulative basis. This was mainly due to an increase in procurement costs resulting from aweaker yen and higher raw material prices.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

In the Health Care and Nursing Care segment, net sales declined approximately JPY 600 million

YoY on a cumulative basis due to a product portfolio review, but the gross margin improved

approximately 1.4 percentage points YoY.

Next is our China business. China is still in a difficult situation, with sales in mainland China inlocal currency terms down 19% YoY in the third quarter year-to-date, due to a series of zero-

COVID-19 policies, including the spread of new COVID-19 virus infections that began aroundthe end of March this fiscal year and the Shanghai lockdown that occurred in the second

quarter of this fiscal year. The company's sales in mainland China in local currency terms
remained in a severe situation, down 19% YoY in the third quarter.

Meanwhile, in the third quarter alone, sales in mainland China were up 8% from the previous

quarter on a local currency basis. Although sales of baby feeding bottles and baby skin care,

our mainstay products, are on the road to recovery, sales of consumable products such as wet
wipes and disposable diapers continue to be weak due to intensifying price competition.

The gross margin ratio of the China business in the cumulative third quarter improved by plus
0.4 percentage points from the previous quarter, thanks to contributions from new models of

nursing bottle and baby skin care products.

As a new product in China, we began selling in September a skincare product for kids aged 3
and older, which was developed based on baby skin research. Through these products, we

intend to expand the lifetime value of the products by Age-Up.

Sellout was down 11% YoY in the third quarter. E-commerce and offline sales were down 10%

and 14%, respectively. E-commerce accounted for 68% of total sales in the third quarter, andwhile e-commerce as a whole was sluggish, new e-commerce channels such as TikTok haveseen significant growth.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

The Singapore business is also performing well on a local currency basis, especially in majorcountries, with sales of the sales company recovering to the pre-COVID-19 expansion level of

2019. By major country in the first nine months, sales in India, Malaysia, and Indonesia were up
31%, 27%, and 20%, respectively, on a local currency basis, compared to the previous quarter.

Sales of core categories also continued to grow at a high rate, with new nursing bottle models
launched in Singapore, Malaysia, Vietnam, and other countries in August. In addition, the newskincare series "Natural Botanical," a focus of this business, is currently expanding both online

and offline.

Gross profit increased 25% YoY in the cumulative third quarter, partly due to an increase insales at sales companies and the effect of foreign exchange rates, and the gross profit margin

improved by 2.7 percentage points YoY.

On a local currency basis, Lansinoh business sales increased by 9% YoY in the third quarter

cumulative period. Sales in North America were particularly strong, up 15% YoY. While sales inNorth America have been strong, the trend continues as soaring logistics costs continue toaffect the business, pushing down profits.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

In Europe, Benelux and Turkey continued to perform well on a year-to-date basis, while theUnited Kingdom and Germany experienced a year-to-date decline due to the economic
slowdown caused by inflation and shortages of some products.

By category, sales of nipple creams and breast pumps, our mainstay categories, increased

from the previous year. Sales of breast milk storage bags grew substantially, partly due to theshortage of powdered milk supply in North America, which continued until around September.

Sales of prenatal and postpartum care products, which Lansinoh began selling last June, areexpanding with progress exceeding that of the previous fiscal year, especially in North
America.

As for gross profit, the gross profit margin for the cumulative third quarter was minus 3.3

percentage points from the previous year. Soaring ocean freight costs (included in cost of

goods sold) due to logistics disruptions continued to affect gross profit, pushing down grossprofit.

In addition, sales and distribution costs (included in SG&A expenses) in the U.S. remained high,affecting operating income.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

The following is the YoY sales comparison of the Pigeon brand by major region for the ninemonths ended December 31, 2012.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

The following is a comparison of Lansinoh brand sales by major geographic region in the third

quarter year-to-date period.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

E-commerce ratio in major regions for the nine months ended December 31, 2012.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

This is the third Quarter Highlights. A total of four products from the Company recently

received the Good Design Award for 2022, two of which were awarded for the "Sonaetta" seriesof disaster prevention products for babies. This new category of "Sonaetta" is currently beingrolled out in the Japanese market and was developed with the aim of establishing baby

disaster preparedness in society by increasing the number of households that are prepared for"what if" situations, especially in Japan, where natural disasters are common.

Among them, this disaster nursing cup, which includes a special lid and paper cup developed
to enable babies to drink milk even when the use of water is limited or when there is no baby
bottle itself in a disaster, was selected for the Good Design Best 100 and Good Focus Award(disaster prevention and recovery design). The Good Focus Award is given especially to designs
that contribute to natural disaster prevention or recovery from damage caused by natural
disasters.

The Sonaetta series is also currently working with local governments and companies toestablish a social awareness of baby disaster prevention.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

As for our Japan business, we will continue our efforts to create new customer value at all

times as a leading company in baby care products, even in the business environment hasremained difficult since the COVID-19 disaster.

This is a summary of the third quarter financial results. Thank you very much.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

Question & Answer

Q&As are summarized by Business segment.

[Consolidated]

Q. How did the results for the third quarter, 3 months, compare with your internal
assumptions?

A. Compared to the revised plan disclosed in August, sales are almost in line with expectationsin the Japan business, Singapore business, and Lansinoh business.

While the Japan business is seeing sales growth mainly from new nursing bottle, overseas
demand for skin care products continues to be sluggish. The Singapore business continues totrend toward recovery from COVID-19 in the second quarter, and both sales and profits arefavorable. The Lansinoh business continues to see strong sales, but the trend of high logistics
costs also remains unchanged from the second quarter.

On the other hand, in the revised plan announced in August, we had assumed that 2H alone sales
in mainland China on a local-currency basis would be 12% YoY growth in the second half, but inthe third quarter alone they were 8% YoY growth. While it was good to end the period with apositive YoY growth, we feel that the YoY growth of 8% was weaker than expected, taking into
account the reactionary increase after the Shanghai lockdown in the second quarter.

Q. Please tell us about the impact of foreign exchange rates and raw material price hikes.

A. Foreign exchange effects increased net sales by approximately JPY 5.2 billion and gross profit

by approximately JPY 2.0 billion in the cumulative third quarter, and increased net sales byapproximately JPY 2.3 billion and gross profit by approximately JPY 0.8 billion in the third
quarter alone, compared with the previous year.

With regard to the sharp rise in raw material prices (excluding the impact of foreign exchange
rates), cost of sales increased by approximately JPY 700 million YoY in cumulative Q3, and by

approximately JPY 350 million YoY in Q3 alone.

Q. What is the probability of achieving the JPY 12 billion in operating income presented in
the revised plan?

A. The fourth quarter is not a time for optimism, and there is a risk of a sales decline in the fourth
quarter due to the economic slowdown in mainland China and a decline in consumer sentiment.
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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

On the other hand, we currently believe that it is possible to achieve operating income of JPY 12

billion for the full year. We have factored in a certain degree of risk in our revised plan announcedin August, and with the recent further depreciation of the yen.

[China Business]

Q. The gross profit margin for the China business in the third quarter alone was about 57%,
a significant improvement from 46% in the second quarter alone. What are the factors
behind this?

A. Compared to the second quarter, the third quarter saw a significant improvement in factory
capacity utilization on the factory side as sales recovered after the lockdown, and on the sales

company side, an increase in the sales composition of high margin nursing bottles and nipples
and baby skin care products contributed to the improvement in gross profit margin of the China

business. This contributed to an improvement in the gross profit margin of the China business.

Q. I would like to know the status of sell-ins and sell-outs in mainland China on a
cumulative and 3-month-basis for the third quarter.

A. Sell-in in mainland China was -19% YoY in the cumulative third quarter and +8% in the third
quarter alone. Sell-outs ended the same cumulative period at -11% YoY and -13% on a stand-alone basis.

Q. Sellout in the third quarter alone was minus 13% compared to the previous year. Has
there been any change in Pigeon's market share for nursing bottles in mainland China?

A. Our estimated market share for nursing bottle, which we announced in the second quarter,

was about 43%, and we expect to have maintained the same level in the third quarters. We guessthat there may be some decline in consumer confidence in the market and a move to wait forthe double-eleven in November, among other factors, considering that sell-outs decreased

while market share was maintained.

Q. Please tell us how you view the Chinese market in the fourth quarter, including
consumption trends in China.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

A. The consumption trends for the fourth quarter are very difficult to read. The market itself has

experienced double-digit percentage declines in births every year for the past couple of years,

and with the Shanghai lockdown due to the zero-COVID policy this year. Considering the weaker-

than-expected sales in the third quarter alone, we do not think that we can place excessive
expectations on the fourth quarter, but since there will be a double-eleven in November, we

hope to increase sales mainly of nursing bottles and baby skin care products, which are our coreproducts.

Q. Please tell us about the competitive environment on the EC platforms.

A. The competitive environment for consumables such as wet wipes and disposable diapers is

becoming increasingly severe with the rise of local brands and private brand (PB) products, as

we have reported before.

Since consumables do not account for a high percentage of our mainland China sales, we intend

to continue to grow by focusing on categories where we can leverage our strengths and havehigh profitability, such as nursing bottles and skin care products.

Q. What is the outlook for the Chinese market next year and beyond?

A. We plan to disclose the details of our 8th Mid-Term Management Plan in February next year.
We need to be cautious about the market, which is no longer as stable as before, and it may bedifficult to achieve double-digit YoY sales growth at the pace we have in the past, looking at the

speed of the decline in the number of births in recent years, the lockdown in Shanghai due tothe Zero COVID-19 policy this year, and recent market trends. Nevertheless, we believe thatsustainable growth in both sales and profits can be expected while further strengthening coreproducts, such as by further promoting new models of nursing bottle and implementing age-enhancing measures such as products for children in the skin care category.

[Japan Business]

Q. What are the factors behind the significant improvement in profits in the third quarter
alone compared to the second quarter? Also, what is the progress in the cumulative third
quarter?

A. Although Q3, three months profits improved compared to the Q2, three months results,

mainly in the baby care business, as returns of previous model settled down following thelaunch of a new nursing bottle, cumulative sales have remained below the previous year's level.

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Pigeon Corporation Summary of Results Briefing for Q3 of the FY December 2022

In terms of sales, while sales of baby bottles increased by double digits YoY in cumulative Q3 as

expected at the beginning of the term, price competition in consumables such as wet wipes andbreast pads was more severe than expected at the beginning of the term. In addition, overseas
demand for baby skin care products has been weak since the beginning of the period, and these

are the main reasons for the year-to-date sales and profits falling below the previous year's
levels.

Q. What are the factors behind the YoY decline in baby skin care?

A. The most important factor is that overseas demand for the Peach Leaves series manufactured
in Japan at our plant in Japan has declined, but it is very difficult to estimate the timing ofrecovery regarding overseas demand. On the other hand, sales of the Peach Leaves series

produced at our factory in China and sold in mainland China have been strong.

As for demand for baby skin care products in Japan, price competition in the market forcleansing products such as shampoos and body soaps is intensifying, but we have been able tosteadily increase sales of moisturizing products such as lotions and creams, which are easy topromote as high value-added products.

Q. Please tell us about the status of inbound demand.

A. As far as our estimation is concerned, there is no significant change in "inbound demand-

related" sales in both Q3 alone and cumulative Q3 compared to the previous quarter. We do
not see inbound demand recovering at present.

[End]

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