Results Briefing for the Six Months
Ended July 31, 2018
September 4, 2018

(Securities Code: 7956)
President & COO

Shigeru YamashitaTitle, Contents

1-2

Business Results at July 31, 2018

3 - 17

Forecasts for Term Ending Jan. 201918 - 21

Approach to Enhance Corporate Value

22 - 26

Results for the Six Months
Ended July 31, 2018

Financial Highlights (Consolidated)Jul. 2017

Jul. 2018(millions of yen)
Results

YoY Change

Results

YoY Change

Net Sales

49,048105.9%

52,847107.7％

Operating Income

9,296

119.5%

10,907117.3％

Ordinary Income

9,380

122.3%

11,679124.5％Net Income Attributableto Owners of Parent

6,493

117.1%

8,109

124.9％Net Assets

56,779116.2%

65,035114.5％

Total Assets

75,437105.5%

85,152112.9％EPS（¥）

54.22

117.1%

67.71

124.9％

BPS（¥）

462.27115.9%

524.95113.6％

ROE*

24.1%

―

26.3％

―

ROIC*

22.4%

―

23.9％

―

*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)

Statements of Income (Consolidated)(millions of yen)Jul. 2017
Results

Jul. 2018% of Total

Results% of Total

YoY Change

Remarks

Net Sales

49,048100.0%

52,847100.0％

107.7％

Cost of Sales

25,27751.5%

25,78348.8％

102.0％

Gross Profit

23,77048.5%

27,06351.2％

113.9％

SG&A Expenses

14,47429.5%

16,15630.6％

111.6％ Personal expenses:

Operating Income

9,296

19.0%

10,90720.6％

117.3％

Non-Operating
Income (Expenses)

83

0.2%

772

1.5％

924.7％ +¥296m

Ordinary Income

9,380

19.1%

11,67922.1％

124.5％ Shipment/distribution

Extraordinary
Income (Loss)Net Income
Attributable to Noncontrolling Interests
Net Income
Attributable to Ownersof Parent■ Main changes in SG&A
expenses+¥499mMarket research expense:

47

0.1%

103

0.2％

expense:220.7％ +¥199m

110

0.2%

216

0.4％

Expense:196.4％ R&D+¥118m

6,493

13.3%

8,109

15.4％

124.9％

Net Sales by Business Segment (Consolidated)Jul. 2017(Ref.)(millions of yen)

Results

% of
Total

Gross
MarginJul. 2018
Segment
ProfitResults% of Total

YoY

YoY

ChangeGross
MarginSegment
ProfitChangeConsolidated
Net Sales

49,048100.0%

48.5%

9,296

52,847100.0%

107.7%

51.2%

10,907117.3%

Domestic Baby andMother Care

17,302

35.3%

48.8%

3,058

18,42834.9%

106.5%

49.2%

3,516

114.9%

Child Care Service

3,759

7.7%

10.0%

81

2,563

4.9%

68.2%

12.3%

74

91.0%

Health and Elder Care

3,446

7.0%

31.3%

244

3,519

6.7%

102.1%

32.1%

240

98.1%

China

15,167

30.9%

54.2%

5,134

17,36432.9%

114.5%

56.2%

6,183

120.4%

Singapore

4,799

9.8%

48.1%

1,285

5,915

11.2%

123.3%

49.7%

1,437

111.8%

Lansinoh

5,914

12.1%

55.5%

898

6,316

12.0%

106.8%

59.4%

1,005

111.8%

Elimination of Internal
Trading Between
Segments(1,994)(4.1%)－(1,889)(3.6%)

－

－

－

－

653

1.3%

12.9%

628

1.2%

96.2%

12.1%

Other

－
65

※ 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 Lasinoh Business.
※ The figures for FY Jul.2017 are based on our current estimation and presented for reference only.

57

88.4%

Overseas Business Sales by Region
China(incl.Hong Kong)

Other Asian Countries

North America

EuropeNear and Middle East

Other Regions（millions of yen）

Local currency basis: 111.1％
1,272
Jul-18

4,298

16,32427,706

3,998
1,338

473

Local currency basis: 105.9％
1,034
Jul-17

14,086

3,258

3,913

23,8841,225

010,000* [Currency rates] Jul. 2018: US$1 = ¥108.67

365

20,000

1 yuan = ¥17.08;

Jul. 2017: US$1 = ¥112.33

30,000

1 yuan = ¥16.38

Key Priorities for FY Jan. 2019Domestic Baby and Mother Care Business
Strengthening six key product categories
・ Implementing comprehensive measures against competing products tosustain the present high market share in the nursing bottle/nipple category
・ Implementing measures and making necessary investments to sustain thepresent high market share in the breast pump category Implementing aggressive sales, marketing and investing activities to increase
the market share of the baby strollers and other large-sized products (market
share target for 6th MTBP: 25%)
 Getting more involved in promotional activities to achieve collaboration withhealthcare professionals
Runfee RenewalChild Care Service Business Clarify the positioning of business and streamlining business operations leading to improved profitability
 Secure quality of child-rearing service by improving employee’s compensation and by securing andtraining child-rearing staff
 Further strengthening safety measures including reinforcement of crisis management



Health and Elder Care Business Achieving growth by streamlining and strengthening the sales and distribution network
 Developing concepts and ideas of products to support the in-house care through working withprofessionals at care facilities
 Improving profitability by more efficient business system

Key Priorities for FY Jan. 2019Singapore, Lansinoh and China Businesses (common issues)
 Consistently reinforcing six key product categories primarily through:・Further increasing our share in the nursing bottles/nipples category, and・Implementing measures to expand the breast pump category.

Singapore Business Strengthening merchandizing targeted for the middle-class consumers.
 Expanding the business in India and improving profitability by increasing the capacity
utilization ratio.
 Improving production efficiency in Indonesia and preparing for production of new
products.
 Exploring feasibility of entering new markets including countries in Africa to achieve
growth for the next MTBP period and onwards
Lansinoh Business Aggressively expanding business with improved profitability in priority countries(particularly in Europe).
 Strengthening initiatives to develop new sales channels (i.e., EC and DME channels).
 Expanding sales at real stores of Lansinoh China.

China Business Sustaining the high growth rate by taking advantage of the expansion of purchasing
population
 Rebuilding the sales/distribution system in response to developments in EC channels
 Ensuring growth of the disposable diaper categories<China> Exhibition<China> Products
9Domestic Baby and Mother Care Business Status

Large-sized products
Released a new baby stroller “Runfee,” enabling a smoother push even in an opposed face hand-push state.
Increased our share in the baby stroller market to a record high of 24.8% (in Apr. 2018).

New products
Released “Medicated Foam Baby Soap (Leaves of Peach)” as a line of “Medicated Lotion (Leaves of Peach)”.
 Released four types of postpartum remodeling underwear to shape up post-birth mothers.



Direct communications
Seminars for health care professionals: 9 events/approx. 600 participantsPregnancy information events: 6 events/approx. 670 participantsMarket Share (Jul. 2018)
74%

65%

No.1

No.1
No.1

Nursingbottles

Postpartum remodeling underwear

Major new products released in Autumn 2018

73%
39%

No.1

Medicated Foam Body Soap
(Leaves of Peach)

31%
No.1

Breast Pump “Bonyu Assist®” Series

Breast pumps Breast pads Baby skincare Bottom wipes(washing type)* According to POS Nationwide Drugstore Growth Estimates, INTAGE Inc. (monthly data).
* Value share for nursing bottles, breast pumps and breast pads. Quantity share for the other products.

New Series“Bonyu Jikkan® Coating”
10Child Care Service Business / Health & Elder Care Business Status
Child Care Service Business

Pigeon HeartsNew additions of facilities under management: Launched four in-company child-care facilities → 75 in total

Health & Elder Care Business

Pigeon TahiraReported strong sales of “Bottom Wipes,” “Body Wipes,” and “Oral Cavity Care for Nursing of Senior Citizens” series.
 Reported strong sales of new products “Medicated Aloe Lotion” and “Additive free Vaseline” in retail routes.



Pigeon ManakaImplemented training for newly hired care workers and practitioners.

Keywords for nursing care products

Health & Elder care productsChildcare facilities opened
11China Business Status


Product sales
 Enjoyed growing sales for the main products including nursing bottles and nipples.
 Reported strong sales of Disney series products (incl. nursing bottles, pacifiers, cups, and skincare
products).
 Released “Medicated Lotion (Leaves of Peach)” and “my Precious” series of Bonyu Jikkan®, of whichsales expanded in inbound demand by foreigners visiting Japan.
 Strengthened sales through EC channels and at flagship stores (with an EC ratio of 44%).
Series of “Leaves of Branding and breastfeeding awareness programs
Peach” skincare products
 Implemented consumer participation type events to further strengthen branding activities.
 Promoted direct communications with customers by utilizing SNS and other digital marketing tools.
 Introduced AI Chatbot to provide 24-hour customer service for product inquiries.
 Continuing to implement the breastfeeding awareness program conducted jointly with the Ministry of
Health of China primarily through establishing breastfeeding consultation offices and holding seminars
Gift set products
for health care professionals.

Shopfronts

24-hour customer service
by using AI Chatbot

CBME Exhibition

Disposable diapers soldthrough EC channels12

Singapore Business Status


Status by market
 Singapore: Released a Pigeon Singapore 40th anniversary nursing bottle.
Gained the No. 1 market share of nursing bottles.
Reported strong sales through EC channels. Strengthened digital marketing in the market.
 Malaysia:
Reported strong sales of nursing bottles and nipples.
Enhanced communication with mothers through events and SNS for brand penetration.
 India:
Achieved 38,000+ drug store coverage. Reported strong sales through EC channels.
 Indonesia:
Reported strong production and sales of both domestic and export-oriented products.
Continuing to further strengthen marketing in Indonesia.

Singapore

Malaysia

India
13

Lansinoh Business Status


Status by market
 North America:

Reported strong sales of electric breast pumps through newly developed
channels including the DME(Durable Medical Equipment) channel.
Continued to gain top share in categories: nipple care cream and breast pad.
 Europe:
Expanded sales in France and Germany.
Reported strong sales of nursing bottles in Germany.
Reported a high capacity utilization ratio at the factory in Turkey.
Strengthened product development.
 Lansinoh Shanghai: Continued to strengthen sales through EC channels.


Smartpump™

Branding and breastfeeding awareness programs Implemented digital campaigns to reinforce brand penetration.
Market Share in US (Jul. 2018)
78.4%
64.5%
46.9%
34.3%

No.1
No.1
No.1

乳首クリームNipplecream

No.2

Breastpumps
さく乳器（手動）
Promotion activities in Germany(manual)storage bags
* The percentages indicate the value share based on the research by Lansinoh.

母乳パッド
Breastpads

Breast milk
母乳保存バッグ

Lansinoh China
14

<Ref.>Consolidated Balance Sheet (Highlights)
Jan. 2018

Jul. 2018(millions of yen)

Results

YoY Change(Amount)

Results

YoY Change(%)

Cash and Deposits

31,34628,275(3,071)

90.2%

Notes and Accounts
Receivable

16,44017,902+1,461108.9%

Inventories

8,713

10,093+1,380115.8%

Notes and Accounts
Payable

5,194

5,587

+393

107.6%

Electronically Recorded
Obligations – Operating

1,797

2,188

+390

121.7%

Borrowings

00

Net Assets

62,812

Total Assets
Equity Ratio--

65,035+2,222103.5%

84,467

85,152+684

100.8%

71.9%

73.8%

－

+2.0pt<Ref.>Cash Flow（millions of yen）
5,712

(887)

4,342

(9,093)(2,519)(4,258)31,34630,052

(635)
(206)

28,27525,577
Acquisition of PPE:¥(2,840m)（Jul. 2017: ¥(1,065ｍ）

Income before income taxes :¥11,783m（Jul. 2017:9,427m）

Loan income/repayments : ¥0m（Jul. 2017: ¥(5,674m))

Decrease (increase)in trade receivables: ¥(2,002m）（Jul. 2017:¥174m)

Payment of cash dividends:¥(4,188m)（Jul. 2017: ¥(3,355m))

Jul. 2017

Jul. 2018

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 at
End

30,052

5,712

(887)

(9,093)(206)

25,57731,346

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

28,275

<Ref.>Investment-Related Indicators (Consolidated)

Jan. 2018

Jul. 2018（millions of yen）

Interim(Results)

*1
*2
*3

Full Year(Results)

Interim(Results)

Full Year(Forecast)

Capital Investment (*1)

1,252

3,546

2,795

5,000

Depreciation (*2)

1,206

2,451

1,301

3,000

Research and Development (*3)

1,221

2,670

1,479

3,150

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

FY Jan. 2018
Full-Year Performance Forecasts

Jan. 2019 Forecast (Consolidated)
Jan. 2018(millions of yen)

Results% of Total

Jan. 2019
YoY Change

Forecast% of Total

YoY Change

Net Sales

102,563100.0％

108.4%

107,000

100.0%

104.3%

Operating Income

19,41218.9％

121.2%

20,40019.1%

105.1%

Ordinary Income

20,12919.6％

122.3%

20,40019.1%

101.4%Net Income
Attributable to
Owners of Parent

14,51514.2％

130.5%

14,100

13.2%

97.1%

Net Assets

62,812―116.9%

68,648－109.3%

Total Assets

84,467―107.1%

90,996－107.7%EPS (¥)

121.20―130.6%

117.73－

97.1%

BPS (¥)

506.79―115.9%

554.68－109.5%

ROE*

25.7％

―

―

22.2%

－

－

―

21.7%

－

－

22.2％
―
ROIC*
※ROE：自己資本当期純利益率、分母はいずれも期首･期末平均*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)

Results and Forecast by Segment (Consolidated)
Jan. 2018(Ref.)(millions of yen)

Results

Jan. 2019

% of
Total

Gross
MarginSegment
ProfitResults% of Total

YoY
ChangeGross
MarginYoY

Segment
ProfitChangeConsolidated
Net Sales

102,563100.0%

49.3%

19,412

107,000

100.0%

104.3%

51.1%

20,400105.1%

Domestic Baby andMother Care

33,841

33.0%

48.9%

5,928

35,45233.1%

104.8%

49.1%

6,116

103.2%

Child Care Service

7,541

7.4%

10.4%

218

4,309

4.0%

57.1%

13.7%

69

31.7%

Health and Elder Care

7,058

6.9%

31.3%

468

7,228

6.8%

102.4%

32.1%

424

90.6%

China

34,494

33.6%

54.7%

11,64338,74236.2%

112.3%

54.5%

12,776109.7%

Singapore

10,286

10.0%

47.0%

2,415

11,781

11.0%

114.5%

46.8%

2,341

96.9%

Lansinoh

12,532

12.2%

56.4%

1,365

13,11812.3%

104.7%

57.9%

1,717

125.8%

Elimination of Internal
Trading Between
Segments(4,479)(4.4%)－－(▲4,926)(▲4.6%)

－

－

Other

1,289

1.3%

12.8%

1,296

1.2%

126

※ The figures for FY Jan. 2018 are based on our current estimation and presented for reference only.

－

100.5%

11.5%

－

110

87.3%

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. 2016

FY Jan. 2017

FY Jan. 2018

Dividends

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

Year-end(Estimate)

Dividend per Share
(yen)

20

22

25

28

(including(includingcommemorative
dividend of 3 yen)commemorative
dividend of 3 yen)

31

35

34

34

Dividend Payout
Ratio

49.3%

Year-end(Actual)57.1%

FY Jan. 2019

54.5%

57.8％

Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013. It also carried out a 3-for-1 stock split with respect to its common stock, effective as of May 1, 2015.
The values given in the parentheses for dividend per share above are reference values converted based on the number of shares after the stock split.

<Reference> Investment-related indicators
FY Jan.2017（millions of yen）

Interim(Actual)Year-end(Actual)FY Jan. 2018
Interim(Actual)Year-end(Actual)FY Jan. 2019
Interim(Actual)Year-end(Estimate)

Capital Expenditures (※1)

1,250

2,498

1,252

3,546

2,795

5,000

Depreciation (※2)

1,191

2,357

1,206

2,451

1,301

3,000

*1 Property, plant and equipment and intangible assets (including long-term prepaid expense)*2 Depreciation (including amortization of goodwill)

Approach to Enhance Corporate Value6th Medium-term Business Plan: 12 tasks
ESG

Logical work
process

Salary increase

Global humanresource
development

Global sharing ofcorporatephilosophy & 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 model
for success

Cash flow
management(PVA)

Global cash
management※SCM: Supply Chain Management

PVA Tree: Consolidated Results in Jul. 2018
Consolidated

Net sales

Operating profit

Top: Jan. 2019 2Q Plan
Mid: Jan. 2019 2Q Results
Bottom: Jan. 2018 2Q Results(\millions)NOPAT
2Q Plan 6,685

2Q Plan 9,550
LY 2Q

2Q Results 7,635
LY 2Q

2Q Plan 51,400

2Q Results 10,907

6,508

2Q Results 52,847

9,296

LY 2Q

Cost of sales

Tax
2Q Plan 2,865

2Q Plan 25,350

2Q Results 3,272
LY 2Q

PVA
2Q Plan
2Q Results
LY 2Q

5,042

6,037

5,055

49,0482Q Results 25,783

2,789

LY 2Q

25,277

Capital invested

Working capital

Trade receivables

SG&A expenses

2Q Plan 65,731

2Q Plan 18,003

2Q Plan 16,711

2Q Plan 16,500

2Q Results 63,924
LY 2Q

58,108(Reference)
Capital invested 2Q
2Q Plan 32,865

2Q Results 31,962
LY 2Q

2Q Results 19,191
LY 2Q

common 5.0%

2Q Results 17,172
LY 2Q

15,914

Fixed asset

Inventory asset

2Q Plan 27,389

2Q Plan 8,341

2Q Results 26,532
LY 2Q

29,054WACC

17,52923,495

Cash and otherasset and liability

2Q Plan 20,338

2Q Results 18,201
LY 2Q

17,084

2Q Results 9,403
LY 2Q

8,323

Trade payables
2Q Plan 7,048

2Q Results 7,384
LY 2Q※From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.

6,708

2Q Results 16,156
LY 2Q

14,474

（参考）

研究開発費
見込 0
前期 0

発送費
見込 0
前期 0

PVA (Ratio): Consolidated Results in Jul. 2018
Consolidated
Top: Jan. 2019 2Q Plan
Mid: Jan. 2019 2Q Results
Bottom: Jan. 2018 2Q Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC
PVA
spread2Q Plan
2Q Results
LY 2Q

2Q Plan
2Q Results
LY 2Q

20.3%

23.9%

2Q Plan
2Q Results
LY 2Q

29.1%

34.1%

2Q Plan
2Q Results
LY 2Q

18.6%

20.6%
19.0%

32.0%

2Q Plan
2Q Results
LY 2Q

51.5%

SG&A expenses ratio
2Q Plan
2Q Results
LY 2Q

22.4%

49.3%

48.8%

32.1%

30.6%
29.5%

Working capital ratio

15.3%
18.9%
17.4%

Capital invested t/otax rate
WACC
common5.0%

common30.0%

2Q Plan
2Q Results
LY 2Q

2Q Plan
2Q Results
LY 2Q

1.6

1.7
1.7

17.5%

18.2%
17.9%

Fixed asset ratio
2Q Plan
2Q Results
LY 2Q

26.6%

25.1%
24.0%

Cash and otherasset and liability ratio

2Q Plan
2Q Results
LY 2Q

19.8%

17.2%
17.4%

CCC Tree: Consolidated Results in Jul. 2018
Consolidated
Top: Jan. 2019 2Q Plan
Mid: Jan. 2019 2Q Results
Bottom: Jan. 2018 2Q Results(\millions)

Working capital
2Q Plan 18,003

2Q Results 19,191
LY 2Q

17,529CCC

Trade receivables
2Q Plan 16,711

2Q Results 17,172
LY 2Q

15,914

2Q Plan
2Q Results
LY 2Q

68.6
73.6
70.9

Inventory asset
2Q Plan 8,341

2Q Results 9,403
LY 2Q

8,323

Receivable turnover period
2Q Plan
2Q Results
LY 2Q

59.3
59.3
59.2

Inventory turnover period
2Q Plan
2Q Results
LY 2Q

60.0
66.6
60.1

Trade payables

Payables turnover period

2Q Plan 7,048

2Q Plan

2Q Results 7,384
LY 2Q

6,708

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

2Q Results
LY 2Q

50.7
52.3
48.4

Appendix

6th Medium-term Business Plan: 12 tasks
ESG

Logical work
process

Salary increase

Global humanresource
development

Global sharing ofcorporatephilosophy & 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 model
for success

Cash flow
management(PVA)

Global cash
management※SCM: Supply Chain Management

ESG

To Enhance Corporate Value: ESG Core Issues
ESG

Increasing Corporate ValueDevelop environmentally friendly products

SocialGovernance
















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Address climate change/biodiversity challenges
Promote CSR-oriented procurement
Prevent pollution
Protect the global environment (environmental
opportunities)
Introduce environmental management system

Improve human capital
Boost Diversity
Foster global human resources andmanagerial human resources
Establish goal management system
Increase support of women’s advancement
Enhance child-rearing support
Promote work-life balance
Engage in regional activities
Resolve social issues
Resolve consumer issuesPromote occupational health and safety
Develop human resources
Entrench fair business practices

Executive remuneration
Commissioned operating officer system
Responsible dialogue with shareholders andother investorsStrengthen corporate governance
Strengthen internal audit
Strengthen compliance

EnvironmentReducing Risk

To Enhance Corporate Value: Initiatives for Greater Social Value
Environmentally Friendly Products
Pigeon Group is committed to preventing global warming
and realizing a sustainable society. In addition tocomplying with relevant laws, such as the Energy Saving
Act and Law Concerning the Promotion of Measures to
Cope with Global Warming, we undertake Groupwide
environmental initiatives, such as establishing energyefficient systems. As a manufacturer of daily
commodities, the Group is committed to ensuring that its
products do not have a bad effect on the global
environment, not only while in use but also after they are
discarded. To this end, we pay meticulous attention ateach stage of manufacturing -including selection of raw
materials and ingredients- and have created a lineup of
numerous environmentally friendly products.

<Microwavable
Steamed Cupcake>We modified the material of
our cooking cup, which are
now mainly composed ofcornstarch<Foam Body Soap Refill>
Paper container that is easy
to dismantle and recycle
after use; big enough for
two refills<Fluoride Dental Treatment>
Usage of FSC certified
packagingTo Enhance Corporate Value: Initiatives for Greater Social Value

Climate Change and Biodiversity
Pigeon Group gives full consideration to climate change
mitigation and biodiversity. To this end, we have specified
the volume of our greenhouse gas emissions, both direct
and indirect, and we are working to save electricity. We
have also established a consistent method for calculating
reductions in greenhouse gas emission volumes at all ofour production facilities and strengthened our management
systems. At our Chinese production facilities, though on asmall scale, we are working to maximize solar and wind
power generation under the theme or “environmentallyfriendly factories,” and we are promoting all-LED lighting tosave electricity.

To Enhance Corporate Value: Initiatives for Greater Social ValueCSR Oriented Procurement

Raw Materials
Procurement Volume

SiliconPPSU

Pigeon Manufacturing(Shanghai) Co., Ltd.

516

189

Thai Pigeon Co., Ltd.

420

208

Pigeon India Pvt. Ltd.

32-

PT Pigeon Indonesia

368

-

(ton)

Pigeon is committed to the sustainable use of resources.
Among chemically derived materials that we handle, we
use rubber as the raw material for our nursing bottle
nipples. Here, we do not use any natural rubber, butrather silicon and silica gel.

Pollution Prevention
Since practically all of our end-users are babies, we are very
stringent and cautious when selecting raw materials andingredients to ensure that they are based upon food additives
that have no impact on the human body. For our body soaps andother liquids and detergents, we strive to prevent pollution byidentifying sources of pollution and waste related to our
production activities while working to reduce the volume of waste
and minimize the operation time of our waste incinerators.

To Enhance Corporate Value: Initiatives for Greater Social Value
Environmental Opportunities
For the past 32year we have been continuously held our annual Newborn Baby Commemorative Tree-Planting
Campaign, which begin in 1986. This campaign is held at the “Pigeon Miwa no Mori” site, a combination ofnational forest and Pigeon-owned land near Hitachi-Omiya City, Ibaraki Prefecture. In addition to providing
parents with memories of their babies’ birth the campaign contributes in a small way to educational awarenessabout environmental protection. Forests help prevent global warming by absorbing carbon. In addition, theyplay a role in preventing floods and erosion while preserving high water quality, to the extent that they arereferred to as “green dams.”

To Enhance Corporate Value: Initiatives for Greater Social Value
Work-Life Balance
As a matter of course, we comply with domestic
regulations on worker protection and work hours
established by legislation and labor agreements.
We are also implementing various measures toincrease labor productivity by discouraging
excessively long working hours ad fostering agood work-life balance. These include
establishing a rule to leave the workplace by
7pm and setting one day per week as a “noovertime day.”We are also focusing on helping employees
return to the workplace after childbirth, including
introduction of a “Life Design Leave” system, awomen’s early-return support system, and asystem to help subsidize future child care costs.

To Enhance Corporate Value: Initiatives for Greater Social Value
Community Activities: Lactation Lounges
We have set up a breastfeeding/pumping rooms called
Lactation Lounges with the aims of creating comfortableworking environments for employees with small babies
and contributing to local communities. In addition toemployees, the rooms are available for use by mothers
working in the vicinity, as well as mothers and babies
living nearby. In other nations, as well, we provide
support to establish breastfeeding/pumping rooms invarious locations, including within general corporations,with the aim of helping female employees return to work
after giving birth. As of January 2018, we had more that
7,000 Lactation Lounges in 15 countries around theworld.

China

Singapore

United States

Our Definition of Corporate Value
Social Value
To be indispensable for thesociety and our customers
Provision of solutions
and new values
Corporate philosophy
shared by all employees and otherstakeholders

Economic Value
Sum of present values of
future free cash flows
Free cash flows= NOPAT + Depreciation- Investments- Incremental working capital（WTP*-Cost）× Volume=Profit

Development capabilities andbrand power

Business models and competitive
advantages that are hard to copy

Competency of each employee

Marketing capabilities

Reduction of our environmental
impact and contribution to society inthe fields other than our own business

KPIs (PVA, CCC, ROE, ROIC)
and actions for their improvement*WTP: willingness to payCorporate Overview

Head Office
4-4, 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-looking
statements.
These forward-looking statements are based on the current assumptions and judgments 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.