Results Briefing for
The Six Months Ended July 31, 2015
September 9, 2016

(Securities code: 7956)

President & COO

Shigeru Yamashita© All rights reserved by PIGEON Corporation

Contents

Title, Contents

1-2

Business Results at July 31, 2015

3-6

Jan. 2016 Full-Year Performance Forecasts

17 - 21

Approach to Enhance Corporate Value

22 - 30© All rights reserved by PIGEON Corporation

Business Results at July 31, 2015

© All rights reserved by PIGEON Corporation

Financial Highlights (Consolidated)Jul. 2014(¥ millions)
AmountJul. 2015

YoY Change

AmountYoY Change

Net sales

39,229107.1%

46,522118.6%

Operating income

5,985

124.3%

7,733

129.2%

Ordinary income

5,957

115.4%

7,873

132.2%Net income

4,074

130.5%

5,282

129.7%Net assets

39,951110.7%

50,758127.0%

Total assets

63,295118.6%

76,282120.5%EPS (¥)

34.00

130.8%

44.11

129.7%BPS (¥)

326.30119.2%

414.15126.9%

ROA

―

―

21.2%

―

ROE

―

―

22.1%

―

※ ROA= Ordinary income ÷ Total assets; ROE = Net income ÷ Equity (in both cases, denominators are averaged between beginning and year-end figures)© All rights reserved by PIGEON Corporation3

Statements of Income (Consolidated)Jul. 2014

Jul. 2015(¥ millions)

Results
Net sales% of Total

39,229 100.0%

Results% of Total

YoY
ChangeRemarks

46,522 100.0% 118.6% ■ Main changes in SG&A
expenses

Cost of sales

21,52754.9%

24,72053.1% 114.8%

Gross profit

17,70245.1%

21,801

46.9% 123.2%

SG&A expenses

11,71629.8%

14,06730.3%

Personal expenses:+ ¥558m

Sales Promotion
expenses:
120.1% + ¥790m

Operatingincome

5,985

15.3%

7,733

16.6% 129.2%

Advertising expenses:+ ¥237m

Non-operating
income(expenses)(27)(0.1%)

139

0.3% 198.1%■ Main changes in
non-operating income(expenses)

5,957

15.2%

7,873

16.9% 132.2%(21)(0.1%)

2

0.0%

83

0.2%

96

0.2% 115.0%

4,074

10.4%

5,282

11.4% 129.7%

Ordinary
incomeExtraordinary
income (loss)
Less: Minority Interest in
Net Income ofConsolidated
Subsidiaries

Net income© All rights reserved by PIGEON Corporation―

Balance of financial
expences:+ ¥54m4

Net Sales by Business Segment (Consolidated)Jul. 2014(¥ millions)
Amount% of
Total

Jul. 2015

Gross
MarginSegment
ProfitAmount

% of
Total

YoY
ChangeGross
MarginSegment
ProfitConsolidated
net sales

39,229 100.0%

45.1%

5,985

46,522 100.0%

118.6% 46.9%

7,733

Domestic
Baby andMother Care
Business

12,391

31.6%

45.5%

2,029

14,21630.6%

114.7% 44.5%

2,296Child-rearing
SupportServices

3,364

8.6%

11.6%

96

3,374

7.3%

100.3% 11.0%

70

Health Careand Nursing
Care
Business

3,521

9.0%

29.1%

212

3,466

7.5%

98.4% 28.4%

127

Overseas
Business

10,522

26.8%

54.8%

2,261

11,98025.8%

113.9% 55.2%

2,625

China
Business

10,951

27.9%

43.1%

3,303

16,60035.7%

151.6% 44.5%

4,798

―

―

(3,749) (8.1%)

Elimination ofinternal trading
betweensegments(2,177) (5.5%)

Other

654

1.7%

16.3%

86

633

1.4%

―

―

96.8% 15.2%―

73※ Segment profit in the consolidated amount has been adjusted (all non-allocable operating expenses) and posted as operating income in the consolidated statements of income.
※ The consolidated amount recorded has been posted as the sum resulted from eliminating intersegment transactions in the overseas and China businesses.
© All rights reserved by PIGEON Corporation

5Overseas Business Sales by Region
China(incl. Hong Kong)
North America
Near and Middle East

Other Asian Countries
EuropeOther Regions(¥ millions)
1,099

Local currency basis: 117.9%

Jul-15

14,963

3,488

24,813

3,689
1,077 494

Local currency basis: 107.2%

1,031
Jul-15

10,926

19,273

2,968 2,931
994

0

5,000

10,00015,000421
20,00025,000※ [Assumed rates] Jan. 2016: US$1 = ¥120.30; 1 yuan = ¥19.33[Actual rates] Jan. 2015: US$1 = ¥102.45; 1 yuan = ¥16.64© All rights reserved by PIGEON Corporation

6

Key Priorities for Year to Jan. 2016
 Domestic Baby and Mother Care Business Reliable growth of large merchandise by launching new competitive products
 Enhancement of brand loyalty through strategic PR measures and others
 Strengthening of our approach to maternity care and sales expansion in women's care
category

 Child-rearing Support Services
 Review of growth strategies and business system to raise profitability
 Maintenance and improvement of business quality through fostering and education ofhuman resources engaged in child-rearing
 Health Care and Nursing Care Business Reinforcement of our sales capacities focused on facility routes and strengthening of
joint efforts with our sales representatives
 Improvement in gross profit margin by launching new competitive products© All rights reserved by PIGEON Corporation

7

Key Priorities for Year to Jan. 2016
 China Business Building of a business management system including our Korean subsidiary Sales policy review in line with business expansion
 Steady growth in the disposable diapers business based on our commitment tosecure gains

 Overseas Business (Other than China) Growth centered on five key categories (nursing bottles and nipples, breast
pumps, skin care products, breast pads, and pacifiers) Europe and America:
Sales expansion of our core products - nursing bottles and nipples
Expansion of selling functions in areas of Central and South America bychanging the commercial distribution
Business expansion and system maintenance in Europe Asia: Review of business operation system (sales, marketing, SCM system
rebuilding) and improvement of operating results in Singapore
Raise in earnings by starting operations at a new factory in India
 New markets:
Continuation of activities paving the way for advancement
into the Brazilian market© All rights reserved by PIGEON Corporation

8

Domestic Baby and Mother Care Business Status
 Large merchandiseAddition of a new version in two different colors for winterand fall to the baby stroller “Runfee” series.

 Other new products“Baby wipes with a soft thick texture,” “Pigeon Vaseline,”“MagMag Straw Renewal,” etc.

 Direct communication

6 events for expecting mothers and health care professionals (about 670 participants)”Breast feeding Seminars" for expecting mothers, seminars for health care professionals, etc.

Market Share by Product (July 2015)※ Source: POS Nationwide Drugstore Growth Estimates, INTAGE Inc. (monthly data)© All rights reserved by PIGEON Corporation

Main new products to be launched during
this autumn (2nd half of 2015)

Aroma Lavender
Scent
Full-Body Foam
Soap

Cookware & Tableware
for Babies<Mickey & Friends>
9Child-rearing Support Services /Health Care and Nursing Care Business Status
Child-rearing Support Services
 Pigeon Hearts[New additions of facilities
One child-care facility in-company establishment → Total 187 facilities
managed] (including those of the National Hospital Organization)
Increase in child-rearing facilities that introduced the mathematical experience program called “MathProgram” launched last year

Health Care and Nursing Care Business Pigeon Tahira Strong sales in the main products such as “Wipes” and “Body Wipes” for nursingcare
 “Assister Ease,” a new product, received good reputation for its ease of use
 Pigeon Manaka
 Sano Day-Service Center was opened.

“Wipes” (up) and“Body Wipes” (down)© All rights reserved by PIGEON Corporation“Assister Ease”

Opening ceremony of
Pigeon Sano Day-Service Center(Pigeon Manaka)

10Overseas Business Status
 Europe and America
 North America: The largest share was maintained in the market of nipple carecream, breast pads and breast milk storage bags.
Share expansion in the manual breast pump market (2nd place) Europe:
Implementation of measures to increase sales channels
through expansion of the product range
A new factory to be constructed in Turkey (factory relocation)
 Asian markets
 India: Production and shipment of nursing bottles and nipples started at the new factoryfrom May Singapore: Actions to strengthen the brand power were implemented

Shop front marketing in UK

New Lansinoh factory in Turkey

Pigeon Corer in Singapore(image)© All rights reserved by PIGEON Corporation

11

China Business Status About Product Sales
 Strong sales in our main products, including nursing bottles and nipples, etc.
 Skincare: Launch of new baby skincare series
 Disposable diapers: The products were improved to enhance water absorption and the
package was also redesigned.
 Branding and Breastfeeding Awareness Programs Deployment of the newly designed Pigeon Corners to strengthen our brand activities
further Our awareness program related to caring for breastfed infants conducted jointly with
China's Ministry of Health is continually being implemented⇒ Establishment of breastfeeding consultation offices, seminars for health care
professionals, etc.

Event to announce launch of the
new baby skincare series© All rights reserved by PIGEON Corporation

New Pigeon CornerWorkshop for healthcare professionals atmaternity- and generalhospitals

12Reference: Consolidated Balance Sheet (Highlights)
Jan. 2014

Jul. 2015(¥ millions)

AmountAmountYoY Change(Amount)

YoY Change(%)

Cash and deposits

21,59022,750+1,159105.4%

Notes and accounts
receivable

15,27816,389+1,111

107.3%

Inventories

8,498

9,278

+779

109.2%

Notes and accounts
payable

4,462

5,107

＋644

114.5%

Borrowings

8,018

8,255

＋236

103.0%Net assets

47,29750,758+3,461

107.3%

Total assets

72,36776,282+3,915105.4%

Equity ratio

63.8%

65.0%

－

＋1.2 pt© All rights reserved by PIGEON Corporation

13

Reference: Cash Flow(¥ millions)

5,363 (2,217)(2,252)266

22,75021,5902,596 (1,713)

2,414

(458)
15,94013,102Acquisition of PPE:¥(2,062m)(Jul. 2015: ¥(1,607m))

Loan income/repayments:¥205m(Jul. 2014: ¥(5,148m))

Income before income taxes:¥7,876m(Jul. 2014: ¥5,936m)
Decrease (increase)in trade receivables:¥(948m)(Jul. 2014: ¥(2,134m))

Payment of cash dividends: ¥(2,394m)(Jul. 2014: ¥(2,198m))

Jul. 2014

Jul. 2015

Balance at
Beginning

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Activities

Balance atEnd

Balance at
Beginning

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Activities

Balance at
End

13,1022,596(1713)

2,414

(458)

15,94021,5905,363(2217)(2252)

266

22,750© All rights reserved by PIGEON Corporation14

＜参考＞投資関連指標等（連結）Jan. 2014

Jan. 2015(¥ millions)Interim(Results)

Full Year(Results)

Interim(Results)

Full Year(Forecast)

Capital investment ※1

1,672

3,204

1,610

4,327

Depreciation(tangible fixed assets)

780

1,705

1,018

2,166

Research and development

938

1,932

1,181

2,243

※2
※1 Refers to purchase of tangible fixed assets.

※2 Refers to total R&D expenditures, including personnel-related.

© All rights reserved by PIGEON Corporation15

Forecasts for Term Ending Jan. 2016

© All rights reserved by PIGEON Corporation

Jan. 2015 Results and Jan. 2016 Forecast (Consolidated)
Jan. 2015(¥ millions)Jan. 2016

Amount% of Total

YoY
ChangeForecast

Net sales

84,113100.0%

108.6%

95,500 100.0% 113.5%

Operatingincome12,78015.2%

123.3%

15,00015.7%

117.3%

Ordinary
income13,29915.8%

120.9%

15,10015.8%

113.5%Net income

8,451

10.1%

121.0%

9,600

10.0%

113.6%Net assets

47,297－118.3%

49,653－105.0%

Total assets

72,367－124.9%

75,795－104.7%EPS (¥)

70.55－

121.3%

80.16－

113.6%BPS (¥)

385.46－118.3%

404.65－105.0%

ROA

20.4%

－

－

20.4％

－

－

ROE

19.8%

－

－

20.3％

－

－

% of Total

YoY
Change※ ROA= Ordinary income ÷ Total assets; ROE = Net income ÷ Equity (in both cases, denominators are averaged between beginning and year-end figures)© All rights reserved by PIGEON Corporation

17

Results and Forecast by Segment (Consolidated)
Jan. 2015 (Results)(¥ millions)

Gross
MarginJan. 2016 (Change of Forecast)Amount% ofTotal

Consolidated
net sales

84,113100.0%

45.5% 12,780

95,500 100.0% 113.5% 46.3% 15,000

Domestic
Baby andMother Care
Business

24,432

29.0%

46.0%

3,752

27,631

28.9% 113.1% 44.2%

4,181

Child-rearing
SupportServices

6,722

8.0%

11.2%

189

6,778

7.1% 100.8% 10.9%

180

Health Careand Nursing
Care
Business

6,761

8.0%

28.7%

260

7,202

7.5% 106.5% 28.4%

227

Overseas
Business

23,373

27.8%

53.7%

4,969

25,29726.5% 108.2% 54.7%

5,514

China
Business

26,301

31.3%

43.7%

7,525

35,62037.3% 135.4% 43.2%

9,601

Elimination ofinternal trading
betweensegments(4,754)(5.7％)――(7,899) (8.3%)

Other

1,276

1.5%

16.6%

Segment
Profit173

Amount

868

% of
Total

0.9%

YoY
Change―Gross
MarginSegment
Profit

―68.0% 13.1%―
113※ Segment profit in the consolidated amount has been adjusted (all non-allocable operating expenses) and posted as operating income in the consolidated statements of income.
※ The consolidated amount recorded has been posted as the sum resulted from eliminating intersegment transactions in the overseas and China businesses.
© All rights reserved by PIGEON Corporation

18

Overseas Business Sales by Region
China(incl.Hong Kong)
North America
Near and Middle East

Other Asian Countries
EuropeOther Regions

Local currency basis:108.0％

2,390
Jan-1531,86052,995

7,864

7,569

(¥ millions)

2,277 1,032
Local currency basis:108.2％

2,262
Jan-15

26,38444,9006,800 6,376
2,090 986

0

10,00020,00030,00040,00050,000※ [Assumed rates] Jan. 2016: US$1 = ¥120.59; 1 yuan = ¥19.19[Actual rates] Jan. 2015: US$1 = ¥105.78; 1 yuan = ¥17.17© All rights reserved by PIGEON Corporation

19

Shareholder Return and Investment-Related Indicators[Shareholder return indicator under our 5th Medium-Term Business Plan]
Adopt flexible approach to upgrading shareholder return (incl. through share buybacks), aiming at
a goal of increasing dividends compared with the previous term and of the total shareholder return
ratio by approximately 45 to 50% in each business term.
Jan. 2013

Cash Dividends

Dividend per share(¥)
Payout ratio

Jan. 2014

Jan. 2015

Jan. 2016

InterimYear-EndInterimYear-EndInterimYear-EndInterimYear-End(Results)(Results)(Results)(Results)(Results)(Results)(Plan)(Forecast)（7.3） （11.8） （11） （18.3） （15）

（20）

20

20

44

71

66

50.3%

55

45

50.4%

60

49.6%

49.9%

※ Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013.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 numberof shares after the stock split.

Reference: Investment-Related Indicators
Jan. 2014

Capital expenditures ※Depreciation(tangible fixed assets)

Jan. 2015

Jan. 2016

InterimYear-EndInterimYear-EndInterimYear-End(Results)(Results)(Results)(Results)(Results)(Forecast)

2,092 3,091 1,672 3,204 1,610 4,327
733 1,663

780 1,705 1,018 2,166※ Refers to the amount accounted for purchasing of tangible fixed assets.

© All rights reserved by PIGEON Corporation

20

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

12 Tasks to achieve “World-Class Business Excellence”
Globalinformation
systemGlobal sharingof corporate
philosophy &valuesWorld-classbrand power

Sustainable growth
Logical work
process

Salaryincrease

Global humanresource
development© All rights reserved by PIGEON Corporation

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

Diversity/
women inmanagement

Global SCM

TechnologicalcompetitivenessBusinessmodel forsuccess

Cash flow
management（PVA）

Global cash
management22

World Class Brand Power

Shanghai© All rights reserved by PIGEON Corporation

23

World Class Brand Power

Indonesia

India© All rights reserved by PIGEON Corporation

VietnamTaiwanMiddle East

Malaysia24

World Class Brand Power

New Pigeon Website

Room for Breastfeeding(Pigeon HQ Office)© All rights reserved by PIGEON Corporation

Global CM in Shops

Breastfeeding Consultation
Room in China

Breastfeeding Consultation
Room in Russia
25

PVA Tree: Consolidated Results in Jul. 2015
Consolidated

Net sales

Operating profit

Top: Jan. 2016 2Q Plan
Mid: Jan. 2016 2Q Results
Bottom: Jan. 2015 2Q Results(\millions)NOPAT
2Q Plan 3,617

2Q Plan 6,100
LY 2Q

2Q Results 4,586
LY 2Q

2Q Plan 43,450

2Q Results 7,733

3,550

2Q Results 46,522

5,986

LY 2Q

Cost of sales

Tax
2Q Plan 2,483

2Q Plan 23,550

2Q Results 3,148
LY 2Q

PVA
2Q Plan
2Q Results
LY 2Q

2,213

3,111

2,338

Capital invested
2Q Plan 56,178

2Q Results 59,014
LY 2Q

48,465

2Q Plan 16,500

2Q Results 18,965
LY 2Q

16,734

2Q Plan 14,700

2Q Results 16,389
LY 2Q

14,256

2Q Plan 26,821

2Q Plan 9,000

22,854

Cash and otherasset and liability

2Q Plan 12,857

2Q Results 14,077
LY 2Q© All rights reserved by PIGEON Corporation

Trade receivables

Inventory asset

LY 2Q

common 5.0%

LY 2Q

Fixed asset
2Q Results 25,972

WACC

2Q Results 24,721

2,436

Working capital

8,877

39,2292Q Results 9,278
LY 2Q

8,493

Trade payables
2Q Plan 7,200

2Q Results 6,703
LY 2Q

6,015

21,527

SG&A expenses
2Q Plan 13,800

2Q Results 14,068
LY 2Q

11,716

（参考）

研究開発費
見込 0
前期 0

発送費
見込 0

前期 1,152

26

PVA (Ratio): Consolidated Results in Jul. 2015
Consolidated
Top: Jan. 2016 2Q Plan
Mid: Jan. 2016 2Q Results
Bottom: Jan. 2015 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

12.9%

15.5%

2Q Plan
2Q Results
LY 2Q

21.7%

26.2%

2Q Plan
2Q Results
LY 2Q

14.0%

16.6%
15.3%

24.7%

2Q Plan
2Q Results
LY 2Q

54.9%

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

14.6%

54.2%

53.1%

31.8%

30.2%
29.9%

Working capital ratio

7.9%
10.5%
9.6%

Capital invested t/otax rate
WACC
common5.0%

common40.7%

2Q Plan
2Q Results
LY 2Q

2Q Plan
2Q Results
LY 2Q

1.5

1.6
1.6

19.0%

20.4%
21.3%

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

30.9%

27.9%
29.1%

Cash and otherasset and liability ratio

2Q Plan
2Q Results
LY 2Q© All rights reserved by PIGEON Corporation

14.8%

15.1%
11.3%

27

CCC Tree: Consolidated Results in Jul. 2015
Consolidated
Top: Jan. 2016 2Q Plan
Mid: Jan. 2016 2Q Results
Bottom: Jan. 2015 2Q Results(\millions)

Working capital
2Q Plan 16,500

2Q Results 18,965
LY 2Q

16,734

2Q Plan 14,700

2Q Results 16,389
LY 2Q

14,256

2Q Plan
2Q Results
LY 2Q

Receivable turnover period

75.7
83.3
87.3

2Q Plan
2Q Results
LY 2Q

61.7
64.3
66.3

Inventory asset

Inventory turnover period

2Q Plan 9,000

2Q Plan

2Q Results 9,278
LY 2Q

8,493

Trade payables
2Q Plan 7,200

2Q Results 6,703
LY 2Q© All rights reserved by PIGEON Corporation

CCC

Trade receivables

6,015

69.7
68.5
72.0

2Q Results
LY 2Q

Payables turnover period
2Q Plan
2Q Results
LY 2Q

55.8
49.5
51.0

28

Corporate Overview
PIGEON CORPORATIONHead office
4-4, Nihonbashi-Hisamatsucho, Chuo-ku, Tokyo
103-8480, Japan
Tel: +81-3-3661-4200+81-3-3661-4188 (Investor Relations)
Fax: +81-3-3661-4320
E-mail address
InvestorRelations＠pigeon.com

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

In this document, statements other than historical facts related to plans, forecasts, andstrategies are based on information available at the time of writing.
The Corporation cannot provide guarantees or commitments for these forward-looking
statements.
Due to various factors, actual results may differ significantly from those anticipated inthis document.

© All rights reserved by PIGEON Corporation

29