Financial Results of FY Dec. 2021
(65th Fiscal Year)(Securities Code: 7956)

Norimasa Kitazawa
President and CEO
February 15, 2022

FY Dec. 21 (FY65)• Highlights for H2/FY Dec. 2021

P. 2–3• Results for FY Dec. 2021

P. 4–12• Earnings Forecast for FY Dec. 2022

P. 13–20• ESG Initiatives

P. 21–22

AgendaHighlights for FY Dec. 2021 (1)Named as “Winner Company” at 2021 Corporate Governance of The Year Awards
Won Minister of State Commendation at 2021 Selection of Consumer-Oriented Companies forBest Practice[Major acknowledged initiatives]• Advanced initiatives in corporate governance• Research and development activities to capture consumer requirements (observe breastfeeding of more than 250
pairs of mother and baby in a year)• Opened human milk bank on the first floor of Pigeon’s headquarters to promote activities to protect very low birthweight infants
We want to make the world more baby-friendly by furthering our commitment to understanding and addressing
babies’ unique needs. With this purpose of the Company, we operate our businesses from the long-term view,
expanding the Group businesses and maximizing enterprise value (both economic value and social value).
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential2

Highlights for FY Dec. 2021 (2) Launched a new model of nursing bottle (End of September 2021)• Ahead of any other region, launched a new model of nursing bottle, “Ziran Shigan III,” on the major Chinese EC
platforms• Expanded our market share in value of nursing bottles to 45% as of 4Q/Dec. 2021, up more than 3 points
compared to Dec. 2019.



Double 11 (Single’s Day) Shopping Festival• Sales rose by 4% from the previous year across the EC channels. When compared with 2019 (pre-pandemic), sales
increased by 28%.
• Nursing bottles and skincare products ranked as No.1 by category at JD.com. Nursing bottles also won No.1 at Tmall.

Double 11 :Ranking at JD.com

No.1

Nursing bottles
Skincare products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Market share of nursing
bottles in mainland China*
Q4 /FY Dec.2021

45%* Surveys conducted by the Company(sell-out, in value, includes Nipples)3

Results for FY Dec. 2021 (65th Fiscal Year)

Results – Consolidated PL (under New Standard)(Unit: Million JPY)FY Dec. 2021 Forecast

FY Dec. 2021
% of Total

vs Initial Plan

vs RevisedPlan

93,080100.0%

92.3%

98.7%

49,50049,008

52.7%

95.5%

99.0%

49,50044,80044,072

47.3%

89.0%

98.4%

SG&A Expenses

33,00031,60030,735

33.0%

93.1%

97.3%

Operating Income

16,50013,20013,336

14.3%

80.8%

101.0%

Ordinary Income

16,70014,60014,648

15.7%

87.7%

100.3%Net Income
Attributable to
Owners of Parent

11,100

9,100

8,785

9.4%

79.1%

96.5%

Initial Plan

Revised Plan

Net Sales

100,800

94,300

Cost of Sales

51,300Gross Profit©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Actual[Currency rates for FY Dec. 2021]
Initial Plan: US$1 = JPY 104.00 / CNY 1 = JPY 16.00
Revised Plan: US$1 = JPY 109.22 / CNY 1 = JPY 16.90
Results:
US$1 = JPY 109.85 / CNY 1 = JPY 17.03

5

Results – Consolidated PL (under New Standard)

Net sales: Almost flat compared to the last year due to the sluggish consumption amid the resurgence of pandemic
in Japan.
Operating income: Decreased YoY because of lower gross margin from a decline in sales, as well as increased
SG&A associated with reopening sales under the pandemic.
(Unit: Million JPY)FY Dec. 2020*
ActualFY Dec. 2021

% of Total

Actual% of Total

YoY Change

Net Sales

94,021100.0%

93,080100.0%

99.0%

Cost of Sales

49,45952.6%

49,008

52.7%

99.1%

Gross Profit

44,562

47.4%

44,072

47.3%

98.9%

SG&A Expenses

29,48231.4%

30,73533.0%

104.3%

Operating Income

15,08016.0%

13,336

14.3%

88.4%

Ordinary Income

16,11317.1%

14,648

15.7%

90.9%

Net Income Attributableto Owners of Parent

10,643

11.3%

8,785

9.4%

82.5%

(Results of FY Dec. 2020 under the new revenue recognition standard was estimated by Pigeon for your reference.)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[Currency rates]
Dec. 2021 Results: US$1 = JPY 109.85 / CNY 1 = JPY 17.03
Dec. 2020 Results: US$1 = JPY 106.77 / CNY 1 = JPY 15.47

6

Results – by Business Segment (under New Standard)(Unit: Million JPY)FY Dec. 2020*
Segment
ProfitNet Sales % of Total

YoY
ChangeGP Margin

Segment
Profit47.4%

15,08093,080 100.0%

99.0%

47.3%

13,336Net Sales % of Total GP Margin

Consolidated
94,021 100.0%
Net Sales

FY Dec. 2021

Japan Business

41,231

43.9%

34.0%

2,772

38,264

41.1%

92.8%

34.3%

2,065

China Business

36,121

38.4%

52.3%

12,60037,23940.0%

103.1%

50.9%

11,792Singapore
Business
LansinohBusiness
Elimination ofinter-segment
transactions

12,184

13.0%

38.4%

1,647

12,61913.6%

103.6%

38.7%

1,811

12,473

13.3%

55.6%

1,370

13,32014.3%

106.8%

53.5%

953(7,986)(8.5)%－－(8,363)(9.0)%－－－(Results of FY Dec. 2020 under the new revenue recognition standard was estimated by Pigeon for your reference.)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

7

YoY Change Factors of Consolidated Operating Income (Full-year)(under New Standard)a. Deterioration of cost of sales ratio: Impact of a surge in logistics expenses of physical supply (Lansinoh) and achange in product mix (China)
b. Sales promotion and advertising: Associated with promotion activities of the product launched in 2021.
c. Research and Development: Future-oriented investments in the development of renewed version of our coreproducts■ Positive factor(Unit: Billion JPY)

15.0
(0.44)

Operatingincome for
FY Dec. 2020

Decrease ingross profit
caused bylower revenue©Pigeon Corporation All Rights Reserved. │ Strictly Confidential(0.10)(a)

Deteriorationof cost of
sales ratio■ Negative factor

13.3(0.70)(b)(0.27)(c)(0.42)

0.20

Sales
promotion/
advert.
expenses

R&D
expenses

Personnel
expenses

Other
expenses

Operatingincome for
FY Dec. 2021
8

Consolidated Balance Sheet (Highlight) (under New Standard)
Increased inventories caused by Lansinoh (inventories on the ocean) and the swelled balance sheet caused by China(increased percentage of E-commerce) and the cheaper yen.

(Unit: Million JPY)

End of FY Dec. 20
ActualEnd of FY Dec. 21
ActualYoY Change(Amount)

YoY Change(%)

Cash and Deposits

37,16335,218(1,944)

94.8%

Notes and Accounts Receivable Trade

15,085

16,253+1,167107.7%

Inventories

11,376

12,706+1,330111.7%

Notes and Accounts Payable - Trade

4,757

4,087

(670)

85.9%

Electronically Recorded Obligations- Operating

1,670

1,623

(47)

97.2%

Net Assets

72,62576,810+4,184105.8%

Total Assets

93,472

98,042+4,570104.9%

Equity Ratio

74.8%

75.4%

Borrowings©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

－

－

－

－

－

－

9

Summary of Results by Business Segment (Net sales at local currency)

China
BusinessJapan

Business• Sell-in results in mainland China YTD decreased by 6% year on year.
• Double 11: Slightly increased compared to the last year, but lower than expected due to a reaction to therobust demand last year. It affected sell-in in 4Q, resulting in the gaps between actual and revised plan.
• YTD sell-out decreased by 7% year on year. Online sales expanded to 67% of total sales.
(Compared with FY Dec. 2019, total sell-out and online sales increased by 3% and 29%, while offline sales
decreased by 27%).
• It took until 4Q to adjust offline distribution inventory, but we reduced it to the level of safety stock.
• In our core products, a unit price increase in “Ziran Shigan III” partly contributed. Skincare products soldwell, recording double-digit sales growth year on year thanks to the launch of new products.
• Sales of Avocado skincare series that are exclusively sold at offline shops topped 1million units within ayear from its launch.
• The market share in value of nursing bottles exceeded 45%, representing more than 3 points increase
compared to 2019.
• Amid the pandemic where the half of the year was under the state of emergency, customers continue torefrain from going out almost throughout the year.
• Net sales in the Baby Care Business declined 6% YoY. No demand from inbound tourists and easing special
demand for consumables driven by the COVID-19 affected sales.
• Products adaptable to new lifestyle, such as breast pump, oral care, electric nasal suction, andmicrowavable packed soft rice for Babies sold well.
• Core products such as nursing bottle, skincare, breast pump, and oral care expanded their market shares.
• The market share* of nursing bottles stood at 88%. (Calculation method was changed from this fiscal year.)• Health and Elder Care Business improved its gross margin by 1.9 points by streamlining the productportfolio as planned.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential* Survey conducted by the Company (sell-out, in value, includes Nipples)10Summary of Results by Business Segment (Net sales at local currency)

Singapore
Business

LansinohBusiness• Domestic sales in India and Malaysia continued to recover from the pandemic, up 8% and 8% YOY,
respectively.
• Among export destination, Vietnam and Australia showed strong sales throughout the year. Conversely,
net sales in the Middle East were sluggish amid the lingering effect of pandemic.
• Core products such as nursing bottles, skincare, breast pumps, and oral care experienced double-digit
sales growth from the previous year.
• Won Best Baby Bottle at Influential Brands and the Asian parent Awards 2021.
• As new skincare series (Natural Botanical) were launched, we boosted marketing activities for further
growth.
• Bolstering EC channel contributed to the resilient supply chain even under the pandemic.
• Net sales in North America increased 6% year on year. Sales through both online channel and massretailers increased.
• Sales of nipple creams, a main product, maintained robust sales. Sales of nursing pads struggled.
• Sales of the “antenatal and postpartum care” products launched in June are exceeding the plan.
• In Europe, especially Germany, Benelux, and the UK increased sales. Sales in China were below theprevious year due to an intense competition of consumables.
• In North America, nipple creams, manual breast pumps, and nursing pads maintained top market shares.
• Gross margin shrunk 3.3 points due to escalating procurement and logistics expenses, which were
included in cost of sales. Also, a surge in logistics expenses, which were recorded as SG&A, deteriorated
operating margin.
• Operating results were in line with the plan, except for the impact of the sharp rise in logistics expenses.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

11

FY Dec. 2021 Progress against 7th Medium-Term Business Plan in Terms ofCore Product Strategy and Regional Product Strategy
Our core products maintained strong growth in 2021. Under the Core product strategy and Regional strategy on
which we focus in the 7th medium-term business plan, we have marketed competitive products to various regions.

Core products: nursing bottles, skincare, breast pumps, oral care

Regional products: Product lines tailored to each market characteristics©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

12Forecast for FY Dec. 2022 (66th Fiscal Year)

Business Plan for FY Dec. 2022 (Consolidated)
Net sales: Will grow by 6% YoY due to full-scale rollout of the third generation of Bonyu Jikkan (Breast bottle realize series)
globally including Japan.
Profit: Gross margin and operating margin are expected to increase by 1.4 points and 0.1 points, respectively, due to improved
profitability through the launch of new products as well as mark-up of the existing products.

(Unit: Million JPY)FY Dec. 2021
ActualFY Dec. 2022

% of Total

Plan% of Total

YoY Change

Net Sales

93,080100.0%

98,700100.0%

106.0%

Cost of Sales

49,00852.7%

50,60051.3%

103.2%

Gross Profit

44,072

47.3%

48,10048.7%

109.1%

SG&A Expenses

30,73533.0%

33,90034.3%

110.3%

Operating Income

13,33614.3%

14,20014.4%

106.5%

Non-operating Income (Expenses)

1,311

1.4%

100

0.1%

7.6%

Ordinary Income

14,64815.7%

14,300

14.5%

97.6%

Extraordinary Income (Loss)(1,117)(1.2)%Net Income Attributable to
Owners of Parent

8,785

9.4%

9,500

9.6%

108.1%[Currency rates] FY Dec. 2022: US$1 = JPY 112.00 / CNY 1 = JPY 17.50©Pigeon Corporation All Rights Reserved. │ Strictly Confidential－－← FY Dec. 2021: US$1 = JPY 109.85 / CNY 1 = JPY 17.03－

14

Business Plan for FY Dec. 2022 (Consolidated)(Unit: Million JPY)FY Dec. 2021

Actual% of Total

Plan

FY Dec. 2022
% of Total

YoY Change

Net Sales

93,080100.0%

98,700100.0%

106.0%

Operating Income

13,33614.3%

14,20014.4%

106.5%

Ordinary Income

14,64815.7%

14,300

14.5%

97.6%

Net Income Attributable to
Owners of Parent

8,785

9.4%

9,500

9.6%

108.1%Net Assets

76,810―76,850―100.1%

Total Assets

98,042―

97,040―99.0%

EPS (yen)

73.44

―

79.41

―

108.1%BPS (yen)642.04―642.37―100.1%

ROE *

12.2%

―

12.9%

―

―

ROIC *

12.5%

―

12.9%

―

―

[Currency rates] FY Dec. 2022: US$1 = JPY 112.00 / CNY 1 = JPY 17.50← FY Dec. 2021: US$1 = JPY 109.85 / CNY 1 = JPY 17.03* ROE: Return on Equity (shareholders’ equity + accumulated other comprehensive income), calculated with equity being the average of the beginning and ending balances* ROIC: Return on Invested Capital (NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

15

Business Plan for FY Dec. 2022 (Business Segment PL)(Unit: Million JPY)FY Dec. 2021

FY Dec. 2022
Segment
ProfitPlan% of Total

YoY
Segment
GP Margin
ChangeProfit47.3%

13,336

98,700100.0%

106.0%

48.7%

14,200

41.1%

34.3%

2,065

38,90039.4%

101.7%

35.0%

2,350

37,239

40.0%

50.9%

11,79241,00041.5%

110.1%

53.2%

13,00012,619

13.6%

38.7%

1,811

12,400

12.6%

98.3%

36.3%

1,300

13,320

14.3%

53.5%

953

14,60014.8%

109.6%

56.2%

1,050

(8,363)(9.0)%－－(8,200)(8.3)%－－－

Actual% of Total GP Margin

Consolidated
Net Sales

93,080100.0%

Japan Business

38,264China BusinessSingapore
Business
LansinohBusiness
Elimination ofinter-segment
transactions©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

16

FY Dec. 2022: Topics by Business Segment

Group-wide

China
Business• Back to growth track by selecting nursing bottle and skincare as focus areas.
• Strengthen our No.1 nursing bottle brand through the launch of Bonyu Jikkan (third generation)
globally.
• Enhance productivity such as by reassessing the price of existing products through productrenewals and improving product mix.
• Continue to reinforce monozukuri (develop and manufacture products) by launching higher-end
products of the existing category and entering or creating new categories.
• Reduce the effect of higher material price by marking up the selling price while curbing costs.

• Sales in mainland China are expected to increase by 7% YoY.
• Plan to complete a switchover to new product “Ziran Shigan III” on the major sales channel,
aiming to capture 50% market share of nursing bottles in 2022.
• Bolster EC platforms such as Tiktok, Wechat Mall, and Pinduoduo.
• Start marketing of Pigeon products made in China to North American market• Accelerate growth by expanding product lineup: Ssence, a baby skincare brand with direct
shipment from the factory, and skincare products for babies aged 2 years or older.
• Continue to strengthen offline sales by developing products only for the offline sales channel©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

17

FY Dec. 2022: Topics by Business Segment

Japan

Business

Singapore
Business

LansinohBusiness• No sales from inbound tourists are included in the plan. We assume that annual births are around
800,000.
• Sales of Baby Care business are expected to increase by 3% YoY.
• Profitability is expected to rise from the previous year, driven by launching new Bonyu Jikkan(third generation) and expanding our market share due to the renewal of basic skincare products• Expand the current skincare category and enter into the new business area, powered by aninvestment in the factory in Fuji (expected to start operation in 2023).
• Sales to external customers will increase by 10% or more YoY by focusing on the core products(nursing bottles and skincare).
• Launch Bonyu Jikkan (third generation) into Southeast Asia markets (2H/Dec. 2022). Raise unit
price and secure a position as a premier brand.
• Expand sales of skincare products (Natural Botanical) as the next pillar after the nursing bottles
and develop them as an established brand.
• Centering around the core products and antenatal and postpartum care products, net sales are
expected to increase by 8% YoY.
• Extend the product line of antenatal and postpartum care with the aim to increase its presence to
4% of total sales.
• Launch new generation of breast pumps.
• Implement a productivity improvement strategy by streamlining product portfolio in the
struggling Chinese market.
• Logistics expenses will continue to rise even in 2022.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential* Effective FY Dec. 2022, “Domestic Baby & Mother Care” Business was renamed to “Baby Care” Business. 18

Environmental Change and the Group’s Business Opportunities
Changes in external
environment• Decline in births• Intensifying market
competition• Changes in customer
values©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Business opportunities• Expand the existing categories by deepening the Group’s understanding of whatparents consider as the most difficult part in raising children, and create newcategories such as mother care, FemTech, and the promotion of the father’schildcare.
• Strengthen and differentiate the key products (nursing bottles and skincare)• Enhance customer values in the existing categories by creating more eco-friendly
products or higher-end products.
• Tap into underserved markets and regions for both Pigeon and Lansinoh brands• Strengthen the power of brand for which the next generation of customers feels
empathy, and become the brand chosen by customers.

19

Shareholder Return and Investment Related Indicators[Shareholder return indicators under 7th Medium-Term Business Plan]

Achieving the consolidated total shareholder return ratio of approx. 55% with a year-on-year increase in dividends foreach fiscal year.

Dividends

Dec. 2019

Dec. 2020

Dec. 2021

Interim(Actual)Year-end(Actual)Interim(Actual)Year-end(Actual)Interim(Actual)Year-end(Actual)

35

35

36

36

37

37

Dividend per Share (JPY)Dec. 2022
InterimYear-end(Forecast) (Forecast)

38

38

Dividend Payout Ratio

72.7%

81.0%

100.9%

95.8%<Ref.>
Investment-related
Indicators(Consolidated)

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Interim(Actual)Year-end(Actual)*4Interim(Actual)Year-end(Actual)Interim(Actual)Year-end(Actual)Full-year(Estimate)

Capex(*1)

1,980

4,059

1,690

4,185

2,013

6,735

7,600

Depreciation(*2)

1,965

3,587

1,967

3,972

1,986

4,161

4,300

R&D Expenses(*3)

1,536

3,059

1,430

3,115

1,709

3,603

3,700

*1: Property, plant and equipment and intangible assets (including long-term prepaid expense)*2 : Depreciation (including amortization of goodwill)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential*3 : Total expenses of R&D activities, including personnel costs*4 : FY Dec. 2019; 11 months actual for Japan Domestic

20

ESG Initiatives

Major initiatives in 2021
Reduce environmental impact“Leave a rich earth for the futureof babies born tomorrow”

Our own eco label2021 Actual:

115 SKU(34% of all our products offered in Japan*)

Solve social issues surrounding babies
and mothers“Create a world that celebrates babies
the way they are”
Products as a solution of social issues
 Created new products• Launched disposable bottles forbreastmilk storage & pasteurization

 Promoted our current solution
products

 Reduced package
size by 30%

 Used 100% recycled
PET bottles for clear
cases & blister
packaging©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

See Appendix for other ESG activities.

 Adopted FSC®certified paper forour core productlines*Baby and mother care products

22Disclaimer on Forward-Looking Statements
This material includes certain forward-looking statements about the Pigeon Group.
To the extent that statements in this material do not related to historical or current
facts, they constitute forward-looking statements.
These forward-looking statements are based on the current assumptions andjudgments of the Pigeon Group in light of the information currently available to it,
and involve know and unknown risks, uncertainties and other factors, which may
affect the statements made in this material.

P
Head Office
4-4, Nihonbashi-Hisamatsucho, Chuo-ku, Tokyo
103-8480, Japan©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

URL http://www.pigeon.co.jp/
http://www.pigeon.com/

24

Appendix

Financial Highlights (Consolidated)(under New Standard)(Unit: Million JPY)FY Dec. 2020
Actual% of Total

ActualFY Dec. 2021
% of Total YoY Change

Net Sales

94,021100.0%

93,080100.0%

99.0%

Operating Income

15,08016.0%

13,336

14.3%

88.4%

Ordinary Income

16,11317.1%

14,648

15.7%

90.9%

Net Income Attributable to
Owners of Parent

10,643

11.3%

8,785

9.4%

82.5%

Net Assets

72,625

Total Assets

93,472

EPS (yen)

88.93

BPS (yen)607.06

ROE *

15.5%

ROIC *

14.8%－

76,810

－

73.44

－

98,042－642.04

－

12.5%

－

12.2%

－

105.8%

－

82.6%

－

104.9%－

105.8%－－－－* ROE: Return on Equity (shareholders’ equity + accumulated other comprehensive income), calculated with equity being the average of the beginning and ending balances* ROIC: Return on Invested Capital (NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

26

Pigeon Sales by Region* (Full-year / YoY) (under Previous Standard)

KOR
CHN

-6%
VNM

IND

+8%

MYS

JPN

+24%

+8%
SGP

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

-6%

-4%

-6%

(Baby Care)
IDN

+1%

* Net sales: Sell-in (at local currency)

27

Lansinoh Sales by Regions* (Full-year / YoY) (under Previous Standard)

GBR
CAN

USA

+1%

+6%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

DEU

BENELUX+6%+14%TUR

+26%

CHN

+27%

-43％

* Net sales: Sell-in (at local currency)

28

Results for FY12/2021: Sales by Geographic Area (under Previous Standard)
China (Incl. HK)

Other Asia

North America

EuropeMiddle East

Others

1,001

3,709
8,183

36,271

FY12/2021(13.7%)(Composition 60.6%)

8,669

2,007

(3.4%)
2,855

35,701

FY12/2020

7,750

59,840(14.5%)+6.3% on a local currency basis-7.7% on a local currency basis(1.7%)(6.2%)

857

7,924

57,2042,117

0

10,00020,000Currency rates
FY12/2021: US$1 = JPY 109.85 CNY 1 = JPY 17.03©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

30,000⇐40,00050,00060,000FY12/2020: US$1 = JPY 106.77 CNY 1 = JPY 15.47(Million JPY)

29

Plan for FY12/2022: Sales by Geographic Area (under Previous Standard)
China (Incl. HK)

Other Asia

North America

EuropeMiddle East
4,055
(6.1%)

FY12/2022

40,183(Composition 60.8%)+7.9% on a local currency basis

9,219(14.0%)

9,566(14.5%)

Others1,918 1,105(3.3%) (1.7%)

66,046+8.2% on a local currency basis
3,709 1,001

FY12/2021

36,271

8,183

59,840

8,669
2,007

0
10,00020,00030,00040,00050,00060,00070,000Assumed currency rates
FY12/2022: US$1 = JPY 112.00 CNY 1 = JPY 17.50 ⇐ FY12/2021: US$1 = JPY 109.85 CNY 1 = JPY 17.03©Pigeon Corporation All Rights Reserved. │ Strictly Confidential(Million JPY)

30

Comparison of Cash Flows (Consolidated)

Purchase of tangible and intangible fixed assets：¥(5,894)[FY Dec. 20 : ¥(3,823) ]Million JPY

18,40010,893▲3,815▲9,231 ▲718

32,41637,050▲5,59337,0501,560

35,218▲8,693

Dividends paid: ¥(8,741)[FY Dec. 20 : ¥(8,517)]

Income before income taxes : ¥13,531[FY Dec. 20 : ¥15,836]
Dec. 2020

Dec. 2021

Balance at

Operating

Investing

FinancingTranslation

Balance atBalance at

Operating

Investing

FinancingTranslation

Balance at

Beginnig

Activities

Activities

Activities

Adjustment

End

Beginnig

Activities

Activities

Activities

Adjustment

End32,416

18,400(3,815)(9,231)(718)

37,05037,05010,893(5,593)(8,693)

1,560

35,218©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

31Results for FY12/2021 (Breakdown of Japan Business Segment)(under New Standard)(The breakdown of Japan business segment was estimated by Pigeon for your reference.)(Unit: Million JPY)FY Dec. 2020
Actual% of Total GP Margin

FY Dec. 2021
Segment
ProfitActual% of Total

YoY
Segment
GP Margin
ChangeProfitJapan
Business

41,231

43.9%

34.0%

2,772 38,264

41.1%

92.8%

34.3%

2,065

Baby Care(*)

27,277

29.0%

40.5%

2,994

25,701

27.6%

94.2%

40.4%

2,359

Child Care Services

3,592

3.8%

14.5%

109

3,504

3.8%

97.6%

16.1%

159

Health & Elder
Care Business

6,958

7.4%

28.5%

671

5,616

6.0%

80.7%

30.4%

504

* Effective FY Dec. 2022, “Domestic Baby & Mother Care” Business was renamed to “Baby Care” Business.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

32

Business Plan for FY12/2022 (Breakdown of Japan Business Segment)(under New Standard)(The breakdown of Japan business segment was estimated by Pigeon for your reference.)(Unit: Million JPY)FY Dec. 2021
Actual% of Total GP Margin

FY Dec. 2022
Segment
ProfitActual% of Total

YoY
Segment
GP Margin
ChangeProfitJapan
Business

38,264

41.1%

34.3%

2,065 38,900

39.4% 101.7%

35.0%

2,350

Baby Care(*)

25,701

27.6%

40.4%

2,359

26,61527.0%

103.6%

41.5%

3,048

Child Care Services

3,504

3.8%

16.1%

159

3,580

3.6%

102.2%

16.1%

188

Health & Elder
Care Business

5,616

6.0%

30.4%

504

5,225

5.3%

93.0%

30.8%

469

* Effective FY Dec. 2022, “Domestic Baby & Mother Care” Business was renamed to “Baby Care” Business.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Updated on March 25, 2022

33

≪New Standard≫ PVA Tree: Consolidated Results in FY12/2021 (FY65)
Consolidated

Net sales

Operating profit

Top: Dec. 2020 Plan
Mid: Dec. 2020 Results
Bottom: Dec. 2019 Results(Unit: Million JPY)NOPATPlan 11,550
Results 9,335
LY 10,556

Plan 16,500
Results 13,336
LY 15,080

Plan 100,800
Results 93,080
LY 94,021

Tax

Cost of sales

Plan 4,950
Results 4,001
LY 4,524

PVA

Plan
Results
LY

7,829

5,600
6,979

Capital invested

Working capital

Trade receivables

SG&A expenses

Plan 74,437
Results 74,718
LY 71,545

Plan 20,709
Results 21,641
LY 20,462

Plan 15,878
Results 15,670
LY 15,837

Plan 33,000
Results 30,735
LY 29,482

Fixed asset

Inventory asset（参考）Plan 29,167
Results 30,015
LY 28,400

Plan 11,427
Results 12,041
LY 11,294

見込 0Cash and otherasset and liability

Trade payables

Results 23,062

Results 6,070

WACC

common 5.0%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Plan 51,300
Results 49,008
LY 49,459

Plan 24,561
LY 22,683

Plan 6,597
LY 6,669

研究開発費

前期 0

発送費

見込 0
前期 0

* From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.
* Results of FY Dec. 2020 was estimated figures under the new revenue recognition standard.

34

≪New Standard≫ PVA Tree: Consolidated Results in FY12/2021 (FY65)
Consolidated
Top: Dec. 2021 Plan
Mid: Dec. 2021 Results
Bottom: Dec. 2020 Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC

PVA
spreadPlan
Results
LY

Plan
Results
LY

15.5%

12.5%

Plan
Results
LY

22.2%

17.8%

Plan
Results
LY

16.4%

14.3%
16.0%

21.1%

Plan
Results
LY

52.6%

SG&A expenses ratio
Plan
Results
LY

14.8%

50.9%

52.7%

32.7%

33.0%
31.4%

Working capital ratio

10.5%
7.5%
9.8%

Capital invested t/o

WACC

common5.0%

tax ratecommon30.0%

Plan
Results
LY

1.4

1.2
1.3

Plan
Results
LY

20.5%

23.3%
21.8%

Fixed asset ratio
Plan
Results
LY

28.9%

32.2%
30.2%

Cash and otherasset and liability ratio©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Plan
Results
LY

24.4%

24.8%
24.1%

35

≪New Standard≫ PVA Tree: Consolidated Results in FY12/2021 (FY65)
Consolidated
Top: Dec. 2021 Plan
Mid: Dec. 2021 Results
Bottom: Dec. 2020 Results(Unit: Million JPY)

Working capital
Plan 20,709

Results 21,641
LY 20,462※17/1期（60期）より、CCC算出時B/S項目の各数値は期首・期末平均を使用しております。
※20/12期（64期）は新会計基準ベースでの試算値

Plan 15,878

Results 15,670
LY 15,837

Inventory asset
Plan 11,427

Results 12,041
LY 11,294

Trade payables
Plan 6,597

Results 6,070
LY 6,669©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

CCC

Trade receivables
Plan
Results
LY

Receivable turnover period
91.9

105.9

95.6

Plan
Results
LY

57.5
61.4
61.5

Inventory turnover period
81.3
89.7
83.3

Plan
Results
LY

Payables turnover periodPlan
Results
LY

46.9
45.2
49.2

* From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.
* Results of FY Dec. 2020 was estimated figures under the new revenue recognition standard.

36

E-Commerce Ratio in Key Countries (FY12/2021)
EC sales ratio of Pigeon / Lansinoh products
85%

Korea*
67%

China - Pigeon*
53%

UK
US

36%

India*

34%
23%

Singapore*
Japan

9%
*: Sell-out©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Others: Sell-in
37

Pigeon Sustainable Vision“Celebrate Babies with All”
Our purpose is to make the world more baby-friendly by furthering our commitment at all times tounderstanding and addressing babies’ unique needs.
We aim to achieve sustainable growth as a company by reducing environmental impact and solving social
issues surrounding babies and mothers in all countries and regions where we conduct business activities.
Together with our stakeholders, we strive to create future, full of joy and freedom, that treasures the amazing
brilliance inherent in every baby, that encourages curiosity, and celebrates diversity.

Reduce environmental
impactSolve social issues surrounding
babies and mothers

Build a strong
management foundation“Leave a rich earth for the futureof babies born tomorrow”“Create a world that celebrates babies
the way they are”

“Support sustainable growth tostay close to the baby”

Three Major Goals in Sustainable Vision “Celebrate Babies With All”
Three Major Goals
Reduce environmental impact“Leave a rich earth for the futureof babies born tomorrow”

Commitment

Prevent global warming• Reduce CO2 emissions.
• Create new Eco-friendly products andpackages.
Response to marine pollution incidents• Reduce plastic use.
Resource conservation• Reduce waste.
• Adopt sustainable resources.

7th MTBP
targets• CO2 emission intensity (Scope 1 & 2)
10% reduction compared to FY2018• Industrial waste
1% reduction per unit per year

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Solve social issues surrounding
babies and mothers

Build a strong managementfoundation“Create a world that celebrates babies
the way they are”

“Support sustainable growth tostay close to the baby”

Develop the products and services as asolution of social issues• Solve issues surrounding babies who needspecial support such as hospitalization in
NICU and their families.
(i) Develop new products and services.
(ii) Promote our current solution
products/services.
• Enhance activities to solve issues
surrounding babies and their families.
(i) Promote ongoing activities (such as
setting up nursing rooms).
(ii) Consider and implement new activities.

Responsible dialogue withshareholders and investors• Creation of new products and services• Reinforcement of dialogue andcommunication with investors

Risk management
Promotion of work-life balance*
Promotion of diversity**Applicable in Japan only39

[Specific Efforts] Support for Human Milk Banks (2021)
NICUs using donor milk
: 36 NICUs (up 14 from 2020)
Donor milk recipients: Forecast to be over 500
babies (up 297 from 2020)

AnnualExpected to bepasteurization delivered to:capacity:
1,000 babies
1,600 ℓ The Nihonbashi Human Milk Bank was opened in Sept. 2020 on the first floor of ourheadquarters in Tokyo.
 The Japan Human Milk Bank Association operates the facility.
 Our support activities attracted the attention of many Japanese media such as public
NHK TV, newspapers and web sites, which contributed to raising awareness of humanmilk bank, increasing the number of donors and enhancing the visibility of Pigeon’s
activities.
Won the inaugural award in the ESG Investment Section (SDGs Category)of the Tokyo Financial Award, sponsored by the Tokyo Metropolitan©Pigeon Corporation All Rights Reserved.
│ Strictly Confidential
Government,
in Feb. 2021 for practicing SDG-oriented management.

Initiatives in 2021

▶ Event celebrating the 1st anniversary of
our bank
We reported on the actual usage of the
Nihonbashi Human Milk Bank after its
opening, introduced use cases of donor milk,
and invited recipient families to ask how theyfelt when their doctor mentioned donor milk.

▶ Round-table talk with recipient families
We supported the operation of an online roundtable talk between 11 families who used thedonor milk system and 13 neonatologists andnurses. This first round table was aimed forlearning how to provide better care to recipientfamilies in healthcare settings and raising the
profile of human milk bank.

40

[Specific efforts] Initiatives for employees (2021)
If we do not value our employees, we will not succeed in our business. Based on this belief, we strive to build acomfortable and rewarding workplace culture by refining our systems to enhance our working environments.
Pigeon Frontier Awards 2021

New personnel system

Forbes JAPAN WOMEN AWARD 2021

The Pigeon Frontier Awards is an initiative
to commend employees’ ideas with futurecommercialization into mind. The conceptof this initiative is to “support andrecognize employees who have more fun
at work and take on challenges without
fear of failure for the future.”

In January 2021, we shifted to a new
personnel system that clarifies the roles ofindividual employees by setting up
positions according to their career
aspirations and aptitudes and eliminating
age, seniority, and other factors, so thateach employee can become a professionalwith deep expertise.

We were awarded 9th place in the Forbes
JAPAN WOMEN AWARD 2021 (Corporate
Category: 300 to 1,000 employees), which
recognizes companies that have createddiverse and comfortable workplaces
through the "true success of women."

Health management declaration
We established a health management promotion
system under the direct supervision of the
President and collaborate with industrial
physicians and health insurance associations totackle various challenges. These include
eliminating smoking, reducing lifestyle-relateddisease risks, and tackling mental health issues.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

41Key Theme : 7th Medium-Term Business Plan
Expand the Key Success Factors (KSF) of Chinese market globallyand achieve healthy business growth and profitability in all regions.

Brand strategy:

Develop a brand “chosen by consumers who buy into a business”
rather than a brand “chosen by customers who buy a product.”

Product strategy:

Accelerate growth in our Core products
which we can have a unique competitive advantages in global market.

Regional strategy:

Develop and implement agilely a cycle of “Product development, production and sales” that fitsmarket characteristics and consumer preference of each region.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

42

Purpose

Our reason for being and the role we should play in society

We want to make the world morebaby-friendly byfurthering our commitment
to understanding and addressing babies’
unique needs©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

43The Pigeon Group seeks to maximize economic and social value through communications with all
stakeholders, including shareholders and other investors.
For information on Pigeon’s latest management strategies, business and ESG activities, please visit
our corporate website.

・Integrated Reporthttps://www.pigeon.com/ir/library/factbook/
Pigeon’s “Integrated Report 2020” issued last year was selected as an “excellent
integrated report” by GPIF’s asset managers entrusted with domestic equity.
* GPIF: Government Pension Investment Fund・Sustainability

https://www.pigeon.com/sustainability/

・ESG Data Book

https://www.pigeon.com/sustainability/databook/©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

44