Results Briefing for the Six
Months Ended July 31, 2019
September 3, 2019(Securities Code: 7956)
President & COO

Norimasa Kitazawa© All rights reserved by PIGEON Corporation

Title, Contents

1-2

Business Results at July 31, 20193 - 11

Forecasts for Term Ending Dec. 201912 - 20

Approach to Enhance Corporate Value

21 - 24© All rights reserved by PIGEON Corporation

Results for the Six Months
Ended July 31, 2019

© All rights reserved by PIGEON Corporation

Q2 Highlights ：618 Shopping Week (China)

Bottle and Nipple Salesat JD.com and Tmall
for the second straight yearSales growth rate at
E-commerce

Tmall Flagshipshop© All rights reserved by PIGEON Corporation

No.1

230%

(YoY basis)
4

Q2 Highlights ：Sales of China BU*LC basis, excl. Korea

8%

Sales*1
YoY

Sales ratio+*2

E-commerce

52%
YoY +

© All rights reserved by PIGEON Corporation*1:Sell-in of Pigeon Shanghai

7pt*2:Our sell-out estimate

5

Q2 Highlights ：Sales of Lansinoh BU - YoY

Stretched in our major markets
on a local currency basis+6%+1%+© All rights reserved by PIGEON Corporation

9%21%+18%+++16%

13%

6

Q2 Highlights ： Stroller category (Japan)• Released a NEW 3-wheel stroller, "Palskip"• Recorded the highest market share,
No.2 in June alone
Our market share of strollers*

30.3%© All rights reserved by PIGEON Corporation* the value share based on the research by Pigeon.

7

Q2 Highlights ：New Market Penetration (Singapore BU)• Contracted a new distributor to enter Nigerian market
Localdistributor

Number of Annual Births

7.56million*© All rights reserved by PIGEON Corporation*Euromonitor 20198

Net Sales by Business Segment (Consolidated)Jul. 2018 (Ref.)(millions of yen)Jul. 2019

Result% ofTotal

Gross
MarginSegment
ProfitResult% of
Total

Consolidated
Net Sales

52,847100.0%

51.2%

10,90752,519Domestic Baby andMother Care

18,428

34.9%

49.2%

3,516

Childcare Service

2,563

4.9%

12.3%

Health and Elder
Care

3,519

6.7%

China

17,364Singapore

YoY

YoY

ChangeGross
Margin100.0%

99.4%

50.7%

9,257

84.9%

17,964

34.2%

97.5%

48.4%

2,971

84.5%

74

1,920

3.7%

74.9%

13.6%

4258.1%

32.1%

240

3,480

6.6%

98.9%

31.3%

221

92.3%

32.9%

56.2%

6,183

17,67233.6%

101.8%

56.3%

6,291

101.7%

5,915

11.2%

49.7%

1,437

6,079

11.6%

102.8%

45.2%

1,305

90.8%

Lansinoh

6,316

12.0%

59.4%

1,005

6,572

12.5%

104.1%

59.1%

906

90.1%

Elimination ofInter-segment
Transactions(1,889)(3.6%)－－(1,895)(3.6%)

100.3%

-

628

1.2%

12.1%

725

1.4%

115.4%

9.6%

Other© All rights reserved by PIGEON Corporation

57Segment
Profit-Change4476.4%* Segment profit on a consolidated basis has been adjusted (by deducting non-allocable operating expenses) to be equal to operating income in the consolidated statement of income.
* Consolidated net sales have been presented after eliminating intersegment transactions of the China, Singapore and Lansinoh Business.

9Statements of Income (Consolidated)(millions of yen)Jul. 2018
ResultJul. 2019% of Total

Result% of Total

YoY ChangeRemarks

Net Sales

52,847100.0％

52,519100.0%

99.4%

Cost of Sales

25,78348.8％

25,88649.3%

100.4%

Gross Profit

27,063

51.2％

26,632

50.7%

98.4%

SG&A Expenses

16,15630.6％

17,375

33.1%

107.5% Depreciation/Amortization

Operating Income

10,907

20.6％

9,257

17.6%

84.9% Personal expenses: +¥517m

Non-OperatingIncome(Expenses)

772

1.5％

351

0.7%

45.5%

Ordinary Income

11,679

22.1％

9,608

18.3%

103

0.2％

67

0.1%

65.0%

216

0.4％

134

0.3%

61.9%

8,109

15.4％

6,565

12.5%

81.0%

Extraordinary Income
Net Income
Attributable to Noncontrolling Interests
Net Income
Attributable to Owners© All rights reservedby PIGEON Corporationof Parent■Main Changes
in SG&A Expenses+¥545mMarket research expense:+¥189mCommission fee:+¥149m
82.3% Shipment/distribution
expense: +¥131m10

Overseas Business Sales by Region
China(including HK)

Other Asian Countries

North AmericaEurope

Near and Middle East

Other Regions

Local Currency Basis 107.7％

4,469
8.5%

16,680composition 31.8%

Jul. 2019( millions of yen )

1,280
2.4%
4,061
7.7%

28,428
1,544
2.9%

392
0.8%

Local Currency Basis 100.3％
1,272

Jul. 201816,324

4,298

3,998

27,7061,338

010,000* [Currency rates] Dec 19 US$1 = ¥110.05 1 yuan = ¥16.20;© All rights reserved by PIGEON Corporation

20,00047330,000

Jan 2018: US$1 = ¥ 108.67 1 yuan = ¥ 17.08
11FY Dec. 2019
Full-Year Performance Forecasts© All rights reserved by PIGEON Corporation

Dec. 2019 Forecast (Consolidated)
At present, the initial plan remains unchanged.
Jan. 2019(millions of yen)

ResultDec. 2019 Plan（Japan 11months )% of Total

Net Sales

104,747

100.0%

Cost of Sales

50,88948.6%

Gross Profit

53,858

51.4%

SG&A Expenses

34,246

32.7%

Operating Income

19,612

18.7%

Non-OperatingIncome(Expenses)

786

0.8%

Ordinary Income

20,39819.5%

Extraordinary Income(136)(0.2%)

Plan% of Total

106,200
50,90055,30035,30020,0000
20,000100

100.0%
47.9%
52.1%
33.2%
18.8%
0.0%
18.8%
0.1%

YoY Change-Net Income Attributableto Non-controlling
356
0.3%Interests
Net Income Attributable
14,238
13.6%
to Owners of Parent© All rights reserved by PIGEON Corporation* Calculated with our current estimation, US$1 = ¥109.00 1 yuan = ¥16.00 Japan 11 & Overseas 12months

345

0.3%

-14,300

13.5%

-13

Results and Forecast by Segment (Consolidated)
At present, the initial plan remains unchanged.
Jan. 2019(millions of yen)Result% of Total

Gross
MarginDec. 2019 Plan（Japan 11months )Segment
Profit

Plan% of Total

YoY Change

Segment
ProfitGross
MarginConsolidated
Net Sales

104,747

100.0%

51.4%

19,612

106,200

100.0%-52.1%

20,000

Domestic Baby andMother care

35,593

34.0%

48.6%

6,096

34,771

32.7%

-

48.7%

5,944

Childcare Service

4,472

4.3%

14.0%

169

3,312

3.1%

-

14.3%

138

Health and Elder
care

6,986

6.7%

32.4%

353

6,874

6.5%

-

30.5%

375

China

35,581

34.0%

56.0%

11,97237,491

35.3%

-

56.9%

12,797Singapore

12,133

11.6%

49.3%

2,744

12,656

11.9%

-

47.9%

2,650

Lansinoh

12,753

12.2%

59.5%

1,576

13,771

13.0%

-

59.2%

1,984

Elimination ofInter-segment
Transactions(4,176)(4.0%)－－(4,043)(3.8%)

---

Other

1,402

1.3%

1,368

1.3％

-

10.7%

98

© All rights reserved by PIGEON Corporation

13.1%

142

*Sales of Lansinoh Shanghai is included in Lansinoh BU.

14

2nd Half New Product (China BU)• New Category - Deliver new skincare product straight fromfactory to consumers• Estimated +10% growth YoY on a local currency basis

Dedicated production equipment installedin our factory© All rights reserved by PIGEON Corporation15

2nd Half New Product (Asia & Others)••

Launch new products targeting middle-income groups in emerging markets
Go Mini Electrical Breast Pump：Attractive products in every aspect function, design and price© All rights reserved by PIGEON Corporation16

2nd Half New Product（Lansinoh BU）• Planning a launch of a new model as a further evolution of
Smart Pump (Electrical Breast Pump)

Smart Pump
Current Model© All rights reserved by PIGEON Corporation

Smart PumpNew Model**Image is for illustrative purposes only.

2nd Half New Product (Domestic Baby and Mother care)
New skin care product based on skin research

Examples of new products
to be marketed

Peach Leaves
New moisturizing skin careproduct for Fall & Winter© All rights reserved by PIGEON Corporation

New Foods

18

2nd Half New Product (Domestic Baby and Mother care)••

CaBoo, a new baby carrier was launched on 21st Aug.
Entering domestic market with a size of 10 billion yen to aim for further growthin this category© All rights reserved by PIGEON Corporation

19

Shareholder Return and Investment-Related Indicators
Shareholder return indicator under our 6th Medium-Term Business Plan
We adopt a flexible approach (incl. through share buybacks) to increasing shareholder return with a target to achieve a year-on-yearincrease in dividends and approximately 55% of the consolidated total shareholder return ratio in each fiscal year.

FY Jan/17

Dividends
Dividend per share(Yen)Interim(Actual)FY Jan/18

Year-end(Actual)2528(includingcommemorative
dividend of 3 yen)(includingcommemorative
dividend of 3 yen

FY Dec/19

Year-end(Actual)

Interim(Actual)

Year-end(Actual)

Interim(Plan)

Year-end(Estimate)

3135

34

34

35

35

57.1%

Dividend payout ratio

FY Jan/19

Interim(Actual)

54.5%

57.2%

58.6％

<Reference> Investment-related indicators
FY Jan/18(millions of yen)Interim(Actual)

FY Jan/19

Full-year(Actual)

Interim(Actual)FY Dec/19

Full-year(Actual)

Interim(Actual)

Year-end(Estimate)

Capital Expenditures (*1)

1,252

3,546

2,795

5,376

2,009

6,100

Depreciation (*2)

1,206

2,451

1,383

2,804

1,966

3,000© All rights reserved by PIGEON Corporation*1 Property, plant and equipment and intangible assets (including long-term prepaid expense)*2 Depreciation (including amortization of goodwill)

20

Approach to Enhance Corporate Value© All rights reserved by PIGEON Corporation

6th Medium-term Business Plan: 12 tasks
ESG

Logical work
process

Salary increase

Global humanresource
development© All rights reserved by PIGEON Corporation

Global sharing ofcorporate
philosophy & values

World-classbrand power

Sustainable growth

World-class Business
Excellence
Nurture employees’ motivation, satisfaction,
confidence, sense of pride and belonging to thecompany

Diversity/
women inmanagement

Global SCM

Development
capabilities

Business modelfor success

Cash flow
management(PVA)

Global cash
management※SCM: Supply Chain Management

22

ESG Activities (Environment)
Environmentally friendly products

Solar panels installed at ourmanufacturing facilities(China and India)

Foam Body Soap Refill etc.
Paper container is easy todisassemble and recycle after use.
Contributes to the reduction ofplastic usage.

Microwavable Steamed Cupcake
The cooking cup is made mostly ofcorn starch.
© All rights reserved by PIGEON Corporation23

Corporate Structure (Governance)：Four Business Units
BU : Business Unit

PresidentGHO

Japan BU

Singapore BU

Lansinoh BU

China BU

Subsidiaries

Subsidiaries

Subsidiaries

Subsidiaries

Organizational operation （Succession plan & Organization)© All rights reserved by PIGEON Corporation24

Appendix© All rights reserved by PIGEON Corporation

Financial Highlights (Consolidated)(millions of yen)Jul. 2018
ResultJul. 2019

YoY Change

ResultYoY Change

Net Sales

52,847107.7％

52,51999.4%

Operating Profit

10,907117.3％

9,257

84.9%

Ordinary Profit

11,679124.5％

9,608

82.3%

Net Income Attributableto Owners of Parent8,109

124.9％

6,565

81.0%

Net Asset

65,035114.5％

68,681105.6％

Total Asset

85,152112.9％

88,714104.2％EPS（¥）

67.71

124.9％

54.83

81.0％

BPS（¥）

524.95113.6％

553.29105.4％

ROE

26.3％

―

20.1％

―

ROIC

23.9％

―

19.2％

―

*ROE = Net income ÷ Equity (in both cases, denominators are averaged between beginning and year-end figures)*ROIC: Return On Invested Capital (NOPAT/Capital Invested, calculated with a tax rate of 30%, Capital Invested is averaged between beginning and year-end figures)© All rights reserved by PIGEON Corporation

26

<Ref.>Consolidated Balance Sheet (Highlights)
Jan. 2019

Jul. 2019(millions of yen)

ResultResultvs Jan 2019
(Amount)

vs Jan2019（％）

Cash and Deposits

30,94929,745(1,204)96.1%

Notes and Accounts
Receivable

15,004

18,442+3,437122.9%

Inventories

10,605

11,009+404

103.8%

4,567

5,624

+1,056123.1%

1,960

2,471

+511

126.1%Net Assets

66,582

68,681+2,098103.2%

Total Assets

85,61888,714+3,095103.6%

Equity Ratio

75.0%

74.7%

Notes and Accounts
PayableElectronically Recorded
Obligations – Operating© All rights reserved by PIGEON Corporation－(0.3pt)
27

<Ref.>Investment-Related Indicators (Consolidated)

FY Jan/19(millions of yen)

*1
*2
*3

Interim(Result)

FY Dec/19

Full Year(Result)Interim(Result)

Full Year(Forecast)

Capital Investment (*1)

2,795

5,376

2,009

6,100

Depreciation (*2)

1,383

2,804

1,966

3,000

Research and Development (*3)

1,479

3,119

1,536

3,300

Property, plant and equipment and intangible assets (including long-term prepaid expense)
Depreciation (including amortization of goodwill)
Total amount of expenses incurred for research and development activities including personnel expenses© All rights reserved by PIGEON Corporation

28

PVA Tree: Consolidated Results in Jul. 2019(millions of yen)

© All rights reserved by PIGEON Corporation※From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.

29

PVA (Ratio): Consolidated Results in Jul. 2019

© All rights reserved by PIGEON Corporation

30

CCC Tree: Consolidated Results in Jul. 2019(millions of yen)

※From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.

© All rights reserved by PIGEON Corporation

31

Key Priorities for FY Dec. 2019
 Domestic Baby and Mother Care BusinessStrengthening six key product categories
・ Implement comprehensive measures against competing products to maintaina high market share in the nursing bottle/nipple category
・ Study the competitive landscape in the breast pump category and implement
effective measures to compete in the category based on the results of such study
Enhance product line-up, strengthen marketing activities and reinforce sales anddistribution network to improve market share in the baby strollers and otherlarge-sized products (market share target for 6th MTBP: 25%)
Get more involved in promotional activities to achieve collaboration withhealthcare professionals(Domestic Baby and Mother Care Business – 2019 new products)

 Heath & Elder Care Business

Bingle BA9: A baby stroller far easier to push and maneuver

Achieve topline growth and improve profitability through launch of "Profit Care" and "Hygiene Care" series
Further penetrate new sales channels and put new marketing approaches into action

 Child Care Service Business

Streamline business operations to improve profitability
Enhance activities to win new contracts for the in-company childcare business(Heath & Elder Care Business – 2019 new products)
Further strengthen safety measures including crisis management"Hygiene Care" series aimed at more hygienic and simple© All rights reserved by PIGEON Corporation

nursing care32Key Priorities for FY Dec. 2019
 China Business

Initiatives towards double-digit growth (local currency basis) Launch new products in key product categories: Release 63 SKUs of new products in 2019
 Conduct intensive sales promotion activities at EC events.
 Show 3D images of products on smartphone displays to let customers feel more convinced
when selecting products.

 Singapore BusinessSingapore: Reinforce development organizational structure to enhance products
for middle-class consumers.
Singapore: Further strengthen brand power through digital marketing.
India: Achieve topline growth through improvement in brand recognition, strengtheningof local product development structure and other measures.
Indonesia: Achieve double-digit topline growth and further improve production functions.
Study feasibility of entering new markets to achieve growth for the next MTBP period and beyond.

 Lansinoh Business
<China>Strengthening branding activities<India>TV commercial for improving brandrecognition

New product development: Strengthen development structure and innovate core breastfeeding products.
Create new values and expand business through collaboration with outside parties.
Enter new markets including countries in Europe, Asia and Central and South America.
Expand new channels including EC and DME.

© All rights reserved by PIGEON Corporation33

＜Ref.＞Consolidated Cash Flow
4,342

5,331

(2,519)(2,147)（million of yen）

(4,295)(4,258)31,34630,949(635)(93)

29,74528,275

Payment of cash dividends ¥(4,072)
LY ¥(4,188)
Income before income taxes¥9,675
LY ¥ 11,783
Increase/decrease in trade receivables (3,842)（negative means increase）
LY(2,002）

Acquisition of PPE＆IA ¥(2,295)
LY ¥(2,840）

Jul. 2018

Jul. 2019

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Adjustm ent

Balance atEnd

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Adjustm ent

Balance atEnd

31,346

4,342(2,519)(4,258)(635)

28,27530,9495,331(2,147)(4,295)(93)

29,745© All rights reserved by PIGEON Corporation34

The Accounting Period Revision (Final Day of the Fiscal Year)As part of efforts to promote global business management, the Company is working to achieve furthertransparency through timely and precise disclosure of management information.
In addition, the International Financial Reporting Standards (IFRS) which are being considered for future
implementation require consistent accounting periods for all consolidated companies. For these reasons, theaccounting period is being changed as follows:YearMonth201812345672019
8910 11 1212345678910 11 12Company closing in January
Pigeon Corporationand Japan Domestic Subsidiaries

Company closing in December
Oversea Subsidiaries

Quarter
Fiscal year-end

1Q

2Q

3Q

Jan. 2019 (62nd)

４Q

1Q

２Q

3Q

４Q

Dec. 2019 (63rd)【Measures for the transitional period (current period)】・Pigeon Corporation and its subsidiaries in Japan: 11 months from Feb. 1, 2019 to Dec. 31, 2019
・Overseas Affiliates: 12-month period from January 1, 2019 to December 31, 2019 (as usual)・For purposes of preparing the consolidated financial statements, the 63rd term of Pigeon Corporation and its subsidiaries in Japanconsists of the same first three quarters as in the past and the two-month 4th quarter (from November 1 to December 31, 2019).
© All rights reserved by PIGEON Corporation35

Corporate Overview

Head Office4-4, Nihonbashi-Hisamatsucho, Chuo-ku, Tokyo
103-8480, Japan
URL http://www.pigeon.co.jp/
http://www.pigeon.com/
Disclaimer on Forward-Looking Statements
This material includes certain forward-looking statements about the Pigeon Group. To the extent thatstatements in this material do not related to historical or current facts, they constitute forward-lookingstatements.
These forward-looking statements are based on the current assumptions and judgments of thePigeon 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.

© All rights reserved by PIGEON Corporation36