Results Briefing for
Fiscal Year Ended January 2018
March 6, 2018

(Securities Code: 7956)
President & COO

Shigeru YamashitaTitle, Contents

1-2

Results for Term Ended Jan. 2018

3 - 16

Forecasts for Term Ending Jan. 201917 - 23

Approach to Enhance Corporate Value

24 - 28

Results for Term Ended
January 31, 2018

Financial Highlights (Consolidated)
Jan. 2017（millions of yen）

Results

YoY
ChangeJan. 2018
Forecast

Revised
Forecast

Results%of
Forecast% of Revised
YoY Change
Forecast

Net Sales

94,640102.6%

99,800101,200

102,563102.8％

101.3%

108.4%

Operating Income

16,015110.3%

17,00018,70019,412114.2%

103.8%

121.2%

Ordinary Income

16,462109.2%

17,00018,60020,129118.4%

108.2%

122.3%Net Income
Attributable to
Owners of Parent

11,118109.0%

11,80013,00014,515123.0%

111.7%

130.5%Net Assets

53,736105.8%

58,83061,171

62,812106.8%

102.7%

116.9%

Total Assets

78,889106.7%

78,984

82,14784,467106.9%

102.8%

107.1%EPS（¥）

92.84

109.2%

98.53

108.55121.20123.0%

111.7%

130.6%

BPS（¥）

437.43105.7%

479.12498.66506.79105.8%

101.6%

115.9%

ROE*

21.8%

―

21.5%

23.2％

25.7％

―

―

―

ROIC*

19.2%

―

19.9%

21.7％

22.2％

―

―

―

*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)

Statements of Income (Consolidated)
Jan. 2017

Jan. 2018(millions of yen)

Results% of Total

Results% of Total

YoY Change

Remarks

Net Sales

94,640100.0%

102,563100.0%

108.4%

Cost of Sales

49,95152.8%

51,99050.7%

104.1%

Gross Profit

44,68847.2%

50,572

49.3%

113.2%

SG&A Expenses

28,67330.3%

31,15930.4%

108.7% +¥510m

Operating Income

16,015

16.9%

19,412

18.9%

Promotion
121.2% Sales
expenses:447

Ordinary Income

16,462Net Income
Attributable to Noncontrolling Interests
Net Income
Attributable to Ownersof Parent

Personal expenses:+ ¥412m

Non-Operating
Income (Expenses)

Extraordinary
Income (Loss)■ Main changes in SG&A
expenses

0.5%

17.4%

716

20,129

0.7%

19.6%

160.2%

122.3%(228)(0.2%)

787

0.8%

―

224

0.2%

244

0.2%

109.2%

11,11811.8%

14,51514.2%

130.5%

Market research expense:+¥327mShipment/distribution expense:+ ¥292m

Net Sales by Business Segment (Consolidated)
Jan. 2017(millions of yen)Jan. 2018
Segment
ProfitResults

% of
Total

YoY
ChangeGross
MarginSegment
ProfitResults% of Total

Gross
MarginConsolidated
net sales

94,640100.0%

47.2%

16,015102,563100.0%

108.4%

49.3%

19,412

Domestic Baby andMother Care
Business

31,823

33.6%

47.0%

4,818

33,841

33.0%

106.3%

48.9%

5,928

Child Care Service
Business

7,393

7.8%

10.6%

211

7,541

7.4%

102.0%

10.4%

218

Health and Elder
Care Business

6,901

7.3%

31.4%

445

7,058

6.9%

102.3%

31.3%

468

Overseas
Business

23,051

24.4%

55.6%

4,861

25,42724.8%

110.3%

57.1%

5,841

China
Business

30,533

32.3%

44.6%

8,355

34,49433.6%

113.0%

47.2%

9,716

Elimination of internal
trading between
segments(6,337)(6.7%)――(7,090)(6.9%)

―

―

―

Other

1,273

1.3%

15.6%

1,289

1.3%

162

101.3%

12.8%

126*Starting from the current fiscal year, non-allocable operating expenses associated with the R&D Department, which had previously been included in the Adjustments section, have been reflected insegment profit of each reportable segment. Accordingly, the figures for the same period of the previous year have been adjusted in accordance with the calculation method after the above revision.
*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 Overseas Business and the China Business.

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

Other Asian Countries

North America

EuropeNear and Middle East

Other Regions

Local currency basis: 112.1％(millions of yen)
2,019

Jan-187,215

31,902

52,828

8,109
2,666

917

Local currency basis 111.4％
2,382
Jan-1727,985

6,569

47,238

7,061
2,262

0

10,00020,000* [Currency rates] Jan. 2018: US$1 = ¥112.16

30,000

1 yuan = ¥16.62;

40,000Jan 2017: US$1 = ¥108.77

979

50,000

1 yuan = ¥16.35

Key Priorities for FY Jan. 2018
Domestic Baby and Mother Care Business
Strengthening six key product categories
・ Implementing comprehensive measures against competing products to sustain the presenthigh market share in the nursing bottle/nipple category
・ Implementing measures and making necessary investments to sustain the present highmarket 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: 16%)
 Getting more involved in promotional activities to achieve collaboration with healthcare
professionals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 and training 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 with professionals at carefacilities
 Improving profitability by more efficient business system

Key Priorities for FY Jan. 2018
Overseas and China Businesses (common issues) Reinforcement of six key product categories
・ Further increasing the market share of the nursing bottles/nipples category
・ Implementing measures to expand the breast pump categoryOverseas Business (except China)
 Aggressively expanding Lansinoh (particularly in the European market) with improved
profitability
 Expanding business in India and improving profitability primarily through improvementin capacity utilization rate Exploring feasibility of entering new markets including countries in Africa to achieve
growth for the next MTBP period and onwards

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

Large-sized products
Released “fino,” the premium single-tire baby stroller.

Increased our share in the baby stroller market to a record high of 20.7% (in Sept. 2017).

New products
Released “Baby Milk Lotion Moisture Plus” formulated with shea butter.

Released “Fit up® Dry Touch, Super-Absorbent Breast Pad.” Released “my Precious” series of Bonyu Jikkan® nursing bottles featuring beautiful shapeand lovely design.

Direct communications
 Seminars for healthcare professionals: 20 events/approx. 2,000 participantsPregnancy information events: 18 events/approx. 1,300 participantsMarket Share (FY Jan/2018)
73%

No. 1

Nursingbottles

64%

70%

No. 1

No. 1

Major new products released in Spring 2018

37%

32%

No. 1

No. 1

Breast pumps Breast pads Baby skincare Baby wipes(cleaners)

Medicated Foam Body Soap
(Peach Leaves)* 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.

Petit Ice Cream for Babies
Pumpkin & Sweet Potato
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→ Total of 54 facilities (excluding those of the National Hospital Organization)

Health & Elder Care Business

Pigeon TahiraReported strong sales of “Bottom Wipes” and “Kaigo no Koku Care” seriesReported strong sales through retail channels

Pigeon ManakaHome-visit Care, and Day Service Center in Sano has continued a steady growth.

Keywords for nursing care products

New products

A scene at childcare facilities

11

Overseas Business Status


Asia






India:
Achieved a 30,000+ drug store coverage, contributing to improvement in capacity utilization ratio.
Indonesia:
Made Pigeon Indonesia into Pigeon’s subsidiary, to strengthen marketing in Indonesia.
Lansinoh China: Reported strong sales mainly through EC channels (which account for approx. 80% in total sales).

North America and EuropeNorth America: Reported strong sales of electric breast pumps through a newly developed DME channel.
Continued to gain top share in categories: nipple care cream and breast pad.
Europe:Expanded sales in Benelux and Germany.
The new factory in Turkey enjoying a high capacity utilization ratio.

Market Share (FY Jan/2018)
79.7%
64.3%

47.0%

US

32.0%

No.1
No. 1

No. 2

No. 2

Nipple Care
Breast Pads
Breast Milk Breast Pumps
Cream
Storage Bags
(Manual)* The percentages indicate the value share based on the research by Lansinoh.

<India> Shopfront images
12China Business Status

Product sales
 Continued enjoying strong consumer demand for the main products including nursing bottles andnipples.
 Increased sales with 81 SKUs of products released in 2017.
→ Specifically, Disney series products (incl. nursing bottles, pacifiers and cups) sold well.
 Strengthened sales through EC channels and at flagship stores (with a 75% YoY increase in sales).

<China>Silicone coating
nursing bottles

Branding and breastfeeding awareness programs
 Further strengthened the branding activities by renewing the Pigeon Corners.
 Promoted direct communications with customers by strengthening online activities utilizing SNS and other digitalmarketing tools.
 Continued to implement the breastfeeding awareness program promoted jointly with the Ministry of Health of China
primarily through establishing breastfeeding consultation offices and holding seminars for healthcare professionals.

Shopfronts

Postnatal activities
at confinement centres

Exhibition13

<Ref.>Consolidated Balance Sheet (Highlights)
Jan. 2017

Jan. 2018(millions of yen)

Results

YoY Change(Amount)

Results

YoY Change(%)

Cash and Deposits

30,052

31,346+1,294104.3%

Notes and Accounts
Receivable

16,103

16,440+337

102.1%

Inventories

7,603

8,713

+1,109114.6%

Notes and Accounts
Payable

4,857

5,194

+336

106.9%

Electronically Recorded
Obligations – Operating

1,693

1,797

+104

106.1%

Borrowings

5,699

0

(5,699)-Net Assets

53,73662,812+9,075116.9%

Total Assets

78,88984,467+5,578107.1%

Equity Ratio

66.4%

71.9%

－

+5.5pt<Ref.>Cash Flow
17,094 (3,586)(millions of yen)
(12,812)

14,810 (1,854)(6,223)Acquisition of PPE＆IA:¥(3,254m)(Jan2017 ¥(2,635m))(978)30,052599

30,052

31,34624,297

Income before income taxes: ¥20,916m(Jan2017 ¥16,234m)

Loan income/repayments: ¥(5,673)(Jan2017 ¥(531))
Payment of cash dividends: ¥(7,066)(Jan2017 ¥(5,622))

Jan. 2017

Jan. 2018

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Adjustm ent

Balance atEnd

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

24,297

14,810▲ 1,854 ▲ 6,223▲ 97830,05230,052

17,094▲ 3,586 ▲ 12,812

Translation
Adjustm ent

Balance at
End

599

31,346

<Ref.>Investment-Related Indicators (Consolidated)

Jan. 2017

Jan. 2018（millions of yen）

Interim(Results)

Full Year(Results)

Interim(Results)

Full Year(Forecast)

Capital Investment (*1)

1,250

2,498

1,252

3,546

Depreciation (*2)

1,191

2,357

1,206

2,444

Research and Development (*3)

1,085

2,263

1,221

2,670

*1
*2
*3

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

Forecasts for Term Ending Jan. 2019

Jan. 2018 Results and 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%

－

－

ROIC*

22.2％

―

―

21.7%

－

－

*[Assumed rates] Jan. 2019: US$1 = ¥107.00; 1 yuan = ¥17.00[Actual rates] Jan. 2018: US$1 = ¥112.16; 1 yuan = ¥16.62*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)Jan. 2019

% of
Total

Gross
MarginSegment
ProfitForecast% of Total

102,563100.0%

49.3%

19,412

107,000

100.0%

33,841

33.0%

48.9%

5,928

35,452

7,541

7.4%

10.4%

218

Health and Elder
Care Business

7,058

6.9%

31.3%

China
Business

34,494

33.6%

Singapore
Business

10,286

LansinohBusiness
Elimination ofInternal Trading
Between Segments

Gross
MarginSegment
Profit104.3%

51.1%

20,40033.1%

104.8%

49.1%

6,116

4,309

4.0%

57.1%

13.7%

69

468

7,228

6.8%

102.4%

32.1%

424

54.7%

11,64338,74236.2%

112.3%

54.5%

12,776

10.0%

47.0%

2,415

11,781

11.0%

114.5%

46.8%

2,341

12,532

12.2%

56.4%

1,365

13,11812.3%

104.7%

57.9%

1,717

(4,479)(4.4%)--(4,926)(4.6%)

-

-

-

1,289

1.3%

12.8%

126

1,296

1.2%

100.5%

11.5%

110

Results

Consolidated
Net Sales
Domestic Baby andMother Care
Business
Child Care Service
Business

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

YoY
ChangeForecast of Overseas Business Sales by Region
China (incl. Hong Kong)
EuropeOther Asian Countries
Near and Middle East

North America
Other Regions

Local Currency Basis: 110.0％(millions of yen)

1,854

Jan. 2019

8,744

35,90658,711

8,323
2,797

1,087

Local Currency Basis: 107.6%

2,019
Jan. 2018

31,902

7,215

52,8288,109
2,666 9170

10,000* [Estimate rates] Jan. 2019: US$1 = ¥107.00

20,00030,000

1 yuan = ¥17.00;

40,00050,00060,000[Actual Rates] Jan 2018:US$1 = ¥112.16, 1 yuan = ¥16.62

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> Disposable diapers
22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-onyear increase in dividends and approximately 55% of the consolidated total shareholder return ratio in each fiscal year.
FY Jan/2016

FY Jan/2017

Dividends

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

20

22

25

28

Dividend per share (Yen)(includingcommemorative
dividend of 3 yen)(includingcommemorative
dividend of 3 yen)

49.3%

Dividend payout ratio

Year-end(Actual)FY Jan/2018

FY Jan/2019

Interim(Actual)Year-end(Scheduled)Interim(Estimate)Year-end(Estimate)

31

35

34

34

57.1%

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
Interim(Actual)FY Jan/2018

Full-year(Actual)Interim(Actual)FY Jan/2019

Full-year(Actual)Full-year(Forecast)

Capital Expenditures (*1)

1,773

3,036

1,252

3,546

6,400

Depreciation (*2)

1,216

2,474

1,206

2,444

4,200

*1
*2

Property, plant and equipment and intangible assets (including long-term prepaid expense)
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 Jan. 2018
Consolidated

Net sales

Operating profit

Top: Jan. 2018 Plan
Mid: Jan. 2018 Results
Bottom: Jan. 2017 Results(\millions)

NOPAT
Plan 11,900
Results 13,589
LY 11,211

Plan 17,000
Results 19,413
LY 16,015

Plan 99,800
Results 102,563
LY 94,640

Cost of sales

Tax
Plan 5,100
Results 5,824
LY 4,805

PVA
Plan
Results
LY

8,918

10,533

8,297

Plan 52,200
Results 51,991
LY 49,952

Capital invested

Working capital

Trade receivables

SG&A expenses

Plan 59,633
Results 61,124
LY 58,269

Plan 17,613
Results 17,659
LY 17,260

Plan 15,600
Results 16,272
LY 14,987

Plan 30,600
Results 31,160
LY 28,673

Fixed asset

Inventory asset

Plan 24,981
Results 24,967
LY 24,337

Plan 8,267
Results 8,158
LY 8,231

WACC
common 5.0%

Cash and otherasset and liability
Plan 17,039

Results 18,499
LY

16,672

Trade payables
Plan 6,254

Results 6,772
LY※From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.

5,959

（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 Jan. 2018
Consolidated
Top: Jan. 2018 Plan
Mid: Jan. 2018 Results
Bottom: Jan. 2017 Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC
PVA
spreadPlan
Results
LY

Plan
Results
LY

19.9%

22.2%

Plan
Results
LY

28.5%

31.8%

Plan
Results
LY

17.0%

18.9%
16.9%

27.5%

Plan
Results
LY

52.8%

SG&A expenses ratio
Plan
Results
LY

19.2%

52.3%

50.7%

30.7%

30.4%
30.3%

Working capital ratio

15.0%
17.2%
14.2%

Capital invested t/otax rate
WACC
common5.0%

common30.0%

Plan
Results
LY

Plan
Results
LY

1.7

1.7
1.6

17.6%

17.2%
18.2%

Fixed asset ratio
Plan
Results
LY

25.0%

24.3%
25.7%

Cash and otherasset and liability ratio

Plan
Results
LY

17.1%

18.0%
17.6%

CCC Tree: Consolidated Results in Jan. 2018
Consolidated
Top: Jan. 2018 Plan
Mid: Jan. 2018 Results
Bottom: Jan. 2017 Results(\millions)

Working capital
Plan 17,613

Results 17,659
LY

17,260CCC

Trade receivables
Plan 15,600

Results 16,272
LY

14,987

Plan
Results
LY

71.1
67.6
74.4

Inventory asset
Plan 8,267

Results 8,158
LY

8,231

Trade payables
Plan 6,254

Results 6,772
LY

5,959

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

Receivable turnover periodPlan
Results
LY

57.1
57.9
57.8

Inventory turnover period
Plan

57.8
57.3
60.1

Results
LY

Payables turnover periodPlan
Results
LY

43.7
47.5
43.5

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

Summary of Pigeon’s Initiatives(in relationship with SDGs based on ISO26000）• Tree-planting campaign• Fostering children’s creativity• Supporting women during
breastfeeding stages• Providing scholarships tostudents• Donating elementary schoolbuildings

Community
Involvement &Development• Policy of respecting human rights• Discrimination and the sociallyvulnerable; civil and political rights;
economic, social, and cultural rights• Basic workplace principles and rights

Human
RightsGovernance• Customer-focusedmanagement; products
derived from research• Customer consultation
management system• For All Babies

Consumers
Issues• Corporate governance• Board of Directors and outside
directors• Audit & Supervisory Board andoutside corporate auditors• Compliance/compliance system• Considering introduction of
officers‘ compensation system andboard of directors evaluation

組織
Organization

Fair
Operating
Practices

Labor
Practices

Environment• Pigeon Partners Line• Respect for property rights• Responsible political involvement
and fair competition

•
•
•
•
•
•

• Building motivating work
environments andcorporate culture• Overtime measures• Goal management system• Embracing diversity• Global human resource
development• Strengthening support foradvancement of women• Child-rearing support
activities• Worker health and safety

Environmental management systems
Climate change mitigation, biodiversity
Sustainable use of resources
Pollution prevention
Environmental opportunities
Development of eco-conscious
products
32

To Enhance Corporate Value: Initiatives for Greater Social Value
Community
Involvement & Development 【Providing Scholarships to Students】
The Pigeon Scholarship Foundation, established as a
general incorporated foundation in 2014, was certified as apublic interest incorporated foundation in July 2016. The aimof the Foundation is to realize a society in which everyone
can give birth and raise children with peace of mind, while
fostering the healthy lives and growth of mothers and babies.
Going forward, we offer non-refundable scholarships tostudents in the neonatal, pediatric, and obstetrics
departments of universities (those majoring in medicine atdomestic general universities or medical universities). The
cumulative number of scholars from 2015 to 2017 reached
91 students from 12 schools. In 2018, we will increase thenumber of eligible schools and accept applications from a
total of 22 schools to select 45 scholars.
33

To Enhance Corporate Value: Initiatives for Greater Social Value
Consumers
Issues【For All Babies】

Pigeon is committed to “enabling all babies enjoy bettersucking.” To this end, we are conducting joint research with thehospital and clinic neonatal intensive care units (NICUs) andworking in other ways to develop exclusive products so that
infants with low birth weight or special needs can also suck milkwith limited effort required. Regarding “nipples for infants withlow birth weight,” we reduced the size of the teat so that evenbabies with small lips may hold naturally the nipple in theirmouth. Also, we created “nipples specially designed for babies
with cleft lips and/or palates” by providing them with aningenious selection of structure, shape, and even bottle. Among
babies with low birth weight, especially those with weak sucking
and swallowing functions, we have developed a special nursing
bottle nipple with adjusted softness enabling them to easily
drink mother’s milk and packaged milk.

Nipple forweak sucking
babiesNursing bottle forlow-birthweightbabiesNursing bottle forbabies with cleft
lips and/or palates
34

To Enhance Corporate Value: Initiatives for Greater Social Value
Labor Practices【Mosaic Art Project to enhance camaraderie among employees】

1. Trees for wooden
blocks were
trimmed as partof forest
maintenanceactivities.

2. The wooden
blocks werepainted by all
the employees.

3. A 113.11 sqm mosaic
art was created,consisting of 45,000
pieces of wooden
blocks.

Make!

Paint!

Create!

4. Following the completion, theart was disassembled andrepackaged into a small set ofwooden blocks for donation tochild-care centers.

Deliver!

<Sept. 9th, 2017>
Certified by the Guinness
World Records as theworld’s largest painted
wooden block mosaic!

35

To Enhance Corporate Value: Initiatives for Greater Social Value
Labor Practices 【Child-Rearing Support Activities】
As a company involved in child rearing, Pigeon has sought toexpand and upgrade its support systems for child-rearing
employees. For example, we implemented a 12-monthparental leave system before Japan’s Child Care and Family
Care Leave Act was enacted in 1990. In 1999, we received
the “Work Life Balance Award” from the Tokyo Metropolitan
Government acknowledging this initiative. In 2006, we
adopted a new parental leave scheme, called “One Month
Together,” offering one month’s paid leave for male
employees as a means of encouraging more men to takeparental leave. This underscores the major changes we havemade to provide workplace environments where both men
and women can take parental leave as a matter of course.
The utilization rates of “One Month Together” were 100% for
the last three consecutive years in 2015, 2016 and 2017 witha three-year total of 32 male employees who were eligible forand took up the scheme.

Reports on male participation under the “One Month
Together” parental leave system

36

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=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.