Financial Results of Q2/2020 December
Results Briefing（Securities Code：7956）

Norimasa Kitazawa
President and CEO
August 7, 2020

Timeline Under COVID-19 Pandemic

Q2 / December 2020 Update

Page 2・Highlights

P. 3 - 8・Our Achievement Under COVID-19

P.16 - 22

・Key Results

Branding and ESG Activities

Full-Year Forecast / December 2020

AgendaP. 9 - 15

P.23 - 32

P.33 - 35

Timeline for Group Offices Under COVID-19 Pandemic (As of End of July)

In India, continued restrictions on movement, such as travel between states, have affected business activities.
●
× × ×
Shut-down(Lock-down by government)(Factory & Sales office)

Malaysia ●●●Op. ratio: 40%
Op. ratio: 70%(Lock-down by government)
∇

∇

∇

∇

●
Operation
resumed●Op. ratio: 80%●
Back to normal
operation

Operation ratio below 100%

：∇

∇

∇

∇

∇

∇

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential∇

normal operation)∇

×× ●Chinese Operation resumed(40%-70% of
New YearJapan,
Thailand, ●Indonesia

×

∇

●

● ●

×

●
Factory back tonormal operation● × × × × × × ●Op. ratio : 50%
Shut-down of business activities(Movement Control Order (MCO) by government)
∇

China

×

∇

Turkey×

June∇(Sales office)

×

May

∇

●

∇

India

April

March

February∇

Our domestic and overseas sales offices/factories are in operation while taking sufficient measures to prevent
infection with COVID-19 in accordance with requests and guidance from local governments.

∇

In China, business activities were affected most during the period from mid-February through late March but
have been on a recovery trend since Q2.

∇Factories in Japan, Thailand and Indonesia have been in normal operation even amid the COVID-19 crisis.

∇●Back to normal
operation

×：Shut-down

JulyBusiness
activities
remainaffected●
Normal operation●
Normal operation●
Normal operation●
Normal operation2

Q2 / December 2020
Highlights

618 Shopping Festival (China)
 Pigeon recorded No. 1 sales in nursing

bottles and nipples on JD.com andT-mall for three straight years.

 Pigeon’s sales on T-mall e-commerce

flagship store grew 138% year-on-year.

 Pigeon achieved sales expansion byleveraging new EC platforms, such as
Live Commerce.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

4Released Ssence, a New Line ofPremium Skincare Products (China)








Pigeon launched Ssence in China in late June.

Unique ingredients, and completely additives-freesuch as preservatives, antimicrobials, flavorings
and alcohol.
Deliver directly from the factory to consumers
within 48 hours from the date of production (Ourfirst D2C business model).

Total number of pageviews of the official Ssence
page on WeChat (Chinese social media) and otherdigital channels has exceeded 10 million!

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

5Released Bingle Fan+ Stroller (Japan)







Japan’s first baby stroller equipped with a cooling
fan that will keep your baby feel comfortable
during outings even in the hot summer season
Available on Pigeon's official online shop startingin late July (limited to 160 units only)
Planning to release new lines of FUNRIDE baby
strollers in series©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

6Nigeria the New Market (Singapore)
Number of babies
born per year

More than

7 million

Started distribution to Nigeria, a new market in
Africa, through a local partner

画像手配中Started to sell Pigeon products on high-end baby
shop and the online store "JUMIA"

Targeting to achieve annual sales of USD1 million
in 2022©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

7

Products Catering to New Customer
Needs (Lansinoh)









New products catering to “sustainability” needsof millennials and the generation Z
Organic Nipple Balm, the first-ever 100% plantbased product released by Lansinoh (meeting
consumers' demand for organic products)

Washable Nursing Pads, reusable with repeatedwashes (meeting consumers' demand for nondisposable products)
Sales expanding along with existing products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

8Q2 / December 2020
Key Results

Results - Consolidated PL(Unit: Million JPY)Net Sales

Q2 / Dec. 2019

ActualCost of Sales
Gross Profit

SG&A Expenses

Operating Income
Ordinary Income

Net Income Attributableto Owners of Parent©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

52,51925,886
26,632
17,375% of Total

100.0%

48,431

49.3%

24,021

33.1%

16,377

50.7%

9,257

17.6%

6,565

12.5%

9,608

ActualQ2 / Dec. 2020

18.3%

24,409% of Total

100.0%
49.6%
50.4%
33.8%

YoY Change

92.2%

92.8%
91.7%
94.3%

8,031

16.6%

86.8%

5,855

12.1%

89.2%

8,532

17.6%

88.8%

【Currency Rates】
Dec. 2020 : US$1 = JPY 108.26 / CNY1 = JPY 15.39
Dec. 2019 : US$1 = JPY 110.05 / CNY1 = JPY 16.20

10

Results - by Business Segment(Unit: Million JPY)

Consolidated
Net SalesJapan

Business

China

Business

Singapore
Business

LansinohBusiness*

Elimination ofinter-segment
transactions

Actual

52,51925,23018,058

7,104
6,572

(4,447)

Q2 / Dec. 2019
% of Ttl

Gross
Margin100.0%

50.7%

48.0%

40.6%

34.4%

54.2%

13.5%

36.6%

12.5%

59.1%

(8.5%)

ー

Segment
Profit

9,257

2,656
6,313
1,204

925

Overseas Sales Ratio : 56.6%（54.1% in Q2/2019）

Q2 / Dec. 2020

Actual% of Ttl

48,431

YoY
ChangeGross
Margin100.0%

92.2%

50.4%

46.6%

89.5%

39.5%

36.0%

96.7%

54.5%

13.3%

90.7%

39.8%

13.0%

96.0%

56.6%

(9.0%)－－

22,584
17,4566,443

6,312*(4,364)

Segment
Profit

8,031

1,580
6,118
1,257

907

*The Lansinoh business has a different revenue recognition standard of the earnings in Q2/Dec. 2020 and Q2/Dec. 2019. Under the new standard,©Pigeon Corporation All Rights Reserved. │ Strictly Confidential
rebates, incentives, and other expenses that were previously recorded in SG&A expenses are now deductible from sales in this fiscal year.

11Results - by Business Segment (Local Currency)
Japan Business

Net Sales YoY : 89.5％[Ref.] Net Sales YoY by Former Seg.

Singapore Business

Net Sales YoY : 93.0％

Domestic Baby and Mother Care : 85.0%Child Care Service : 94.4%
Health and Elder Care : 106.7%[Ref.] Net Sales YoY (Main markets)
Singapore domestic : 107.3%
India : 54.3%
Malaysia : 65.5%

Net Sales YoY : 101.0％

Net Sales YoY : 99.3％*

China Business[Ref.] Net Sales YoY (Mainland China) : 105.4%
E-Commerce Growth YoY : 134.0%
E-Commerce Ratio in total sales : 61.0%

Lansinoh Business[Ref.]Net sales (YoY) under the same revenue recognition
standard

Lansinoh Business : 107.5％
US : 113.5%*The Lansinoh business has a different revenue recognition standard of the earnings in Q2/2020 Dec. and Q2/2019 Dec. Under the new standard,
rebates, incentives, and other expenses that were previously recorded in SG&A expenses are now deductible from sales in this fiscal year.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

12Pigeon

Sales by Regions* (Q2 YTD / YoY / Local Currency)

+2 %

（中東）

+5 %

- 46 %©Pigeon Corporation All Rights Reserved. │ Strictly Confidential+10 %- 34 %+7 %*：Sell-In（Local Currency）

-13 %
- 8%

13

Lansinoh

Sales by Regions*

+25 %

+13 %

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential(Q2 YTD / YoY / Local Currency)

+8 %

+5 %

-1%
*：Sell-In（Local Currency）

+19 %

+2 %

14

Consolidated Balance Sheet (Highlight)(Unit: Million JPY)
Cash and deposits

Notes and accounts
receivable - trade
Inventories

Notes and accounts payable- tradeElectronically recorded
obligations - operating
Borrowings

End of Dec. 2019
Actual

32,416
16,588
11,211
4,900
2,009

0

ActualYoY Change

YoY Change (%)

15,400(1,187)

92.8%

5,122

+221

33,603
12,1342,070

0Net assets

70,463

71,033Equity ratio

74.8%

75.7%

Total assets©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

90,491Q2 / Dec. 2020

90,315+1,187103.7%+923

108.2%+61

103.0%

ー

104.5%
ー+570

100.8%

ー+0.9Pt

(176)

99.8%

15

Q2 / December 2020

Our Achievement Under COVID-19 Pandemic

Recent Situations amid COVID-19 Crisis (Malaysia and India)

Pigeon has almost fully restored its operations byutilizing online sales negotiations and otheralternative measures.

Many retail stores are operating for shorter hours.
Major retailers focused on their own e-commerce
sales platform during the lock-down period to offset a
decrease in offline sales with online sales.

×

×

May

Jun.

×

×

×

● × × ×Shut-down of business activities(MCO by government)

×

×

× ●
Op. ratio: 50%∇∇©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Operation ratio below 100%●
Operation
resumed∇(Sales office)×

E-commerce sales have recovered to the level before thelock-down, while the areas under movement restrictions
remain affected by the pandemic.

●
Factory functions
back to normal∇

Malaysia ●∇(Factory & Sales office)●× ×Shut-down(Lockdown by government)
∇

●

Apr.

Mar.

Pigeon has restarted its operations by first visiting major
customers and also utilizing phones and messaging apps
for sales negotiation.

∇

India

Feb.



The pace of infections with COVID-19 has accelerated, andas a result, the number of new cases has surged to 50,000
or more per day, making India one of the toughest
situation in the world.

∇





∇



The number of new cases has decreased to 10 or lessper day. Under the "new normal" lifestyle, people are
returning to life as usual before the lock-down.

India

：∇



Malaysia

×：Shut-down

Jul. -

Business
activities
remainaffected●
NormalOperation

17

Changes in Pigeon Group's Business Activities amid COVID-19 Crisis

Pigeon is well prepared to stay relevant in the "society coexisting with
the novel coronavirus," while retaining its brand strength.
What have remained unchanged

Brand strength of Pigeon
and Lansinoh Steady e-commerce andonline sales growth©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

What have changed

Workstyle of the Group's
employees
 Method of communications
with customers
18

Pigeon Group's Market Share amid COVID-19 Crisis (Japan)
The Group has maintained/expanded its market share,
supported by more than 60 years of customer trust in the
Pigeon brand.

Inbound demand has vanished due to 99.9%
year-on-year decrease in foreign travelers toJapan.

From Nursing bottles to disposables such as
Baby wipes, our products have continued toperform strongly even amid the COVID-19
crisis, underpinned by the trust it has nurtured
with customers.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential85%

Nursing bottles market share in Japan*(monthly average in 1H of FY2020)

The market share has increased
6pt from 79% of the same period
last year.

*Based on the company research (POS Nationwide Drugstore Growth Estimates, INTAGE Inc.)

19

Pigeon Group's Market Share amid COVID-19 Crisis (China, North America) Pigeon nursing bottles' market

40%

share in China*(as at the end of June 2020)

The market share has increased
3pt from the annual average of
37% in 2019.
* Based on the company research (sell-out, value basis)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Pigeon lanolin-based nipple cream’s
market share in the U.S.**74%(as at the end of June 2020)

The market share remained as high asthat during the same period last year andhas been expanding with the release of
new Organic Nipple Balm.
** Based on the company research (July 2020 IRI MULO Report, Multi
Outlet + Amazon, value basis)

20

Pigeon Group's Market Share amid COVID-19 Crisis (US) Market shares* and positions of core products, other than nipple cream, in

the U.S. (during the last 52 weeks)
Disposable
Nursing Pads

66%

Breast milk
Storage Bags

Manual Breast Pump

No.1

No.1

No.2

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

44%

36%

* Based on the company research (July 2020 IRI MULO Report, Multi Outlet + Amazon, value basis)

21

New Initiatives amid COVID-19 Crisis (with Parties Outside the Company)
Further promote online communications with customers incollaboration with medical professionals and experts in each country[Japan]Providing advice of experts,
such as pediatricians, via
social media platform©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[China]Live streaming using
apps, such as WeChat
and Weibo[Malaysia]

Online breastfeeding
seminar[US]

Opening a special
feature page on thebrand website

22

Branding and ESG Activities

Brand Enhancement Initiatives

Pigeon was ranked 64th among 100 “Best Japan Brands 2020” byInterbrand Japan.

Reasons for being awarded (excerpt):
Pigeon defined its “purpose” in 2019 to enhance customer satisfaction.
High customer trust in Pigeon’s mainstay nursing bottles, its ability to cater
to customer needs, and its strong presence have helped enhance its brandvalue not only in Japan but also in other Asian countries.

PurposeMake the world more baby-friendly
by furthering our commitment tounderstanding and addressing
babies’ unique needs.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

24Brand Enhancement Initiatives

Refresh a diverse range of contents, works and promotional materials in order
to communicate Pigeon brand's message and story to all stakeholders

 Office design

Pigeon Manufacturing Ibaraki©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Pigeon Manufacturing Hyogo

25

Brand Enhancement Initiatives – Office Design
Pigeon Singapore©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Pigeon India

26

Brand Enhancement Initiatives – Space Design
Brand banners for events©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

27Brand Enhancement Initiatives – Space Design
Brand display for exhibition©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

28Brand Enhancement Initiatives – Online Communication
New website©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Official online shop

29

Brand Enhancement Initiatives – Digital Content
Brand movie©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Corporate movie

30

ESG Initiatives

Implement a range of new initiatives in each country

Activities to promote recycling(Singapore)

Industry-academia collaboration
Project (Thailand)

Chulalongkorn University developed a breast
cancer self-diagnosis kit.
Thai Pigeon provided waste silicone.

The project was announced on the university's
website in June 2020.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential“Nursing bottles recycling boxes” were installed at
exhibitions and other events (available also forother brands' nursing bottles).
More than 3,500 nursing bottles have beencollected so far. Collected nursing bottles arerecycled into transportation palettes, etc.

31

Initiatives During 2H of Fiscal Year Ending December 2020

Strengthen efforts to ensure the safety of employees under “emergencies,” suchas pandemic and natural disasters, to continue stable operations.









Expansion/renovation of factories in China and Indonesia

Full-fledged market entry of the Pigeon brand into North America (Canada)

Release of new products totaling 150 SKUs or more (including refreshedproducts) worldwide

Planning/development of emergency supplies and products catering tolocal consumer needs in each country

ESG activities including the opening of a breast milk bank (on the first floor of

the headquarters building in Tokyo) and the installation of solar panels atfactories in Indonesia and Thailand©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

32

Full-Year Forecast / December, 2020

Forecast for the Fiscal Year Ending Dec., 31, 2020 (Consolidated)(Unit: Million JPY)Net Sales
Operating Income
Ordinary Income
Net Income Attributableto Owners of Parent

Net Income per
Share

BudgetDec. 2020 Full-Year Forecast

Revised Forecast

ChangeChange(%)

109,000

98,500 to 102,400(10,500) to (6,600)

18,10013,900 to 16,000(4,700) to (2,600)(26.0) to (14.4)(4,200) to (2,100)(23.2) to (11.6)(3,000) to (1,700)(23.8) to (13.5)(25.05) to (14.20)(23.8) to (13.5)

18,10012,600105.23©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

13,400 to 15,500
9,600 to 10,900

80.17 to 91.03(9.6) to (6.1)

34

Shareholder Return and Investments[Shareholder return policy under the 7th Medium-Term Business Plan]

Aim to increase dividends in each fiscal year and achieve a consolidated total shareholder return ratio of approximately 55%.

Dividends
Dividend per share(Yen)

Dividend payout ratio

Jan. 2018

Interim(Actual)31

Year-end(Actual)

35

54.5%

Jan. 2019

Interim(Actual)34[Reference] Investments (Consolidated)(Unit: Million JPY)

Capex (*1)

Depreciation (*2)

R&D expenses(*3)

Jan. 2019

1st Half(Actual)

2,795
1,383
1,479

Full-year(Actual)

5,376
2,804
3,119

Year-end(Actual)

34

57.2%

Dec. 2019

Dec. 2019

Interim(Actual)35

Year-end(Actual)

35

72.7％

FY
(Actual)*４

1H(Actual)FY(Forecast)

1,966

3,372

1,968

3,800

1,536

3,869
3,059

*1 : Property, plant and equipment and intangible assets (including long-term prepaid expense)
Corporation All Rights Reserved. │ Strictly Confidential*2©Pigeon: Depreciation(including amortization of goodwill)

36

36

79.1% - 89.8%

Dec. 2020

1H(Actual)2,009

Dec. 2020

InterimYear-end(Scheduled) (Estimate)

1,690
1,430

3,600
3,200

*3 : Total expenses of R&D activities, including personnel costs*4 : 11-months actual for Japan Domestic

35

Disclaimer on Forward-Looking Statements

This material includes certain forward-looking statements about the Pigeon Group.
To the extent that statements in this material do not related to historical or current
facts, they constitute forward-looking statements.

These forward-looking statements are based on the current assumptions andjudgments of the Pigeon Group in light of the information currently available to it,
and involve know and unknown risks, uncertainties and other factors, which may
affect the statements made in this material.

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

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

36

Appendix

Financial Highlights (Consolidated)(Unit: Million JPY)Net Sales

Operating Income
Ordinary Income

Net Income Attributable to
Owners of Parent

Q2 / Dec. 2019

Actual

52,519

9,257
9,608
6,565

Net Assets

68,681

EPS (Yen)

54.83

Total Assets

88,714% of Total

100.0%

17.6%
18.3%
12.5%

Actual

48,431

8,031
8,532
5,855

―

71,033

―

48.91

―

90,315

Q2 / Dec. 2020
% of Total

100.0%YoY Change (%)

92.2%

16.6%

86.8%

12.1%

89.2%

17.6%

88.8%

―

103.4%

―

89.2%

―

101.7%BPS (Yen)

553.29―593.75―107.3%

ROIC

19.2%

―

15.9%

―

―

ROE
ROE:

20.1%

―

17.2%

―

Return on Equity (shareholders’ equity + accumulated other comprehensive income), calculated with equity being the average of the beginning and ending balances©PigeonAll Rights
Reserved.Capital│ Strictly(NOPAT/Invested
Confidential
ROIC:Corporation
Returnon Invested
capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances―
39[Reference] Breakdown of Japan Business(Unit: Million JPY)

ActualJapan Business

25,230Child Care Service

1,920

Domestic Babyand Mother Care

Health and ElderCare17,9643,480

Q2 / Dec. 2019
% of Ttl

Gross
MarginSegment
Profit

34.2%

48.4%

2,971

48.0%

3.7%
6.6%

40.6%

13.5%
31.3%

% of Ttl

YoY
ChangeGross
MarginSegment
Profit15,272

31.5%

85.0%

46.7%

1,658

22,58442

1,813

Breakdown of Japan Business (Compared to the former business segment)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Actual2,656

221

Q2 / Dec. 2020

3,712

46.6%

3.7%
7.7%

89.5%

94.4%

106.7%

39.5%

14.3%
33.5%

1,580

44

340

40

[Reference] Comparison of Cash Flows (Consolidated)
30,9495,331(2,147)

8,172(4,295)(93)

29,745(1,717)(4,867)32,416(Unit: Million JPY)

(513)

33,489Purchase of tangible and intangible fixed assets: ¥(1,747)[Dec. 2019 (¥2,294)]

Income before income taxes: ¥8,340[Dec. 2019 ¥9,675]©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Dividends paid: ¥(4,207)[Dec. 2019: ¥(4,072)]

41

PVA Tree: Consolidated Results for Q2 / Dec. 2020

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

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

42

PVA Tree: Consolidated Results for Q2 / Dec. 2020

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

43

PVA Tree: Consolidated Results for Q2 / Dec. 2020

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Note: From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning andyear-end figures. The figures for Dec. 2019 are those for 11 months for Japan.

44

Sales by Regions (Q2 YTD / Dec. 2020)
China (incl. Hong Kong)

Other Asia

North America

3,890(14.2%)

16,367(Composition: 59.8%)

Q2 / Dec. 2020

103.3% on a Local Currency

Q2 / Dec. 2019

5,000

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

10,000

Middle East

4,111
(15.0%)

4,469

15,00020,000

Others451(1.6%)

1,363(5.0%)

1,208(4.4%)

102.9% on LC

16,6800Europe

1,544
4,061

25,000394

1,280

27,39028,42830,000 (百万円)【Currency Rates】
Dec. 2020 : US$1 = JPY 108.26 / CNY1 = JPY 15.39
Dec. 2019 : US$1 = JPY 110.05 / CNY1 = JPY 16.20

45

[Reference] E-Commerce Sales Ratio in Key Markets (Q2 YTD / Dec 2020)
E-Commerce Sales Ratio of Pigeon and Lansinoh

Korea*

China - Pigeon*
India*

44%

UK
US

Singapore*Japan*: Sell-Out

12%

43%

7% （Exclude Cross-Border E-commerce）

Others: Sell-In©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

36%

61%

81%

46