Pigeon Corporation Summary of Results Briefing for Fiscal Year Ended Dec. 31, 2020

Summary of Results Briefing for the Fiscal Year Ended Dec. 31, 2020

[Points of Attention]
This Summary is a reference for those who would like to review the results briefing held by
Pigeon Corporation.
Please note this is not the entire text of the meeting but a summary based on our judgment.

[Disclaimer]
Forward-looking statements in these materials are based on management's assumptions andbeliefs in light of the information currently available to it and involve known and unknown risks,
uncertainties and other factors. Such risks, uncertainties and other factors may affect theCompany's performance.
In the event of discrepancy between the English version and the Japanese version of thesummaries, the Japanese-language version shall prevail.

Event Summary[Date]

February 10, 2021 16:30 JST[Venue]Rising Square (Otemachi) and Web-casting[Speakers]
Norimasa Kitazawa President and CEO
Eiji Akamatsu

Director, Senior Managing Executive Officer (Head of Japan Operations)Tadashi Itakura

Director, Senior Managing Executive Officer (Head of Global Head Office)1 / 39

Presentation
Kitazawa: Thank you very much for participating in our financial results briefing today in the midstof the COVID-19 pandemic.
Now, our Japan Business was dealt the hardest blow from COVID-19. There was a big impact
on Japan because inbound consumption has totally disappeared. A decrease in the number ofbirths is also a worrisome factor. However, as we are beginning to find an initiative to offset
possible losses, I would like to highlight it first.

We have been selling large-sized products, namely strollers, for a long time. Last year, welaunched a very high-priced model, our top-of-the-line model that costs over JPY70,000.
Department stores used to be outside our conventional sales routes for large-sized products, but
we were able to successfully penetrate into this market with the new model. Traditionally,
department stores tended to sell a large number of foreign strollers, so our inclusion in this market
was a very significant move. Sales have also been strong.
In addition, we have also launched a baby carrier called “caboo”, which is a high-priced productwith a unit price of over JPY12,000. We proposed a new usage scene called “carrying at home”,
which has successfully attracted buying.
The “caboo” series won the 13th Parenting Award. Also, the electric toothbrush for babies, which
was launched this week, was off to a good start. So, I feel that we can fully offset the decline in

2 / 39the number of births by increasing the number of premium goods, namely raising unit prices, in
the Japanese market.

3 / 39In addition, one of the most significant initiatives for 2020 was the opening of a breast milk bankon the first floor of our Tokyo head office. This has resulted in a six-fold increase in the supply ofdonor milk in Japan. From September to December of last year, we delivered donor milk to 162
babies.
This means that the supply increased more than five-fold YoY. We also conducted a campaign
to donate JPY10 for every breast milk pad we sold to the Breast Milk Bank Association. In linewith the campaign, we widely distributed the news release, so the number of accesses on social
media increased dramatically, which also had a positive impact on the brand.

4 / 39

The breast milk bank has the function of saving babies' lives and raising awareness of the breast
milk bank in terms of improving social value. In terms of improving economic value, we haveachieved the highest annual market share of breast pads in Japan through the breast pad
campaign that I mentioned earlier.
In addition, we cited two examples of encouraging remarks on social media. One customer saysthat she wants to contribute even in a small way by buying Pigeon products because her own
child has been taken care of by the breast milk bank, and the other says she wants to buy
products made by a manufacturer with a philosophy like Pigeon. I believe that our brand will
become more and more powerful.

5 / 39In general, and worldwide, it is now being said that the future is an era of competition among
company purposes. Our purpose and our reason for being: We want to make the world morebaby-friendly by furthering our commitment to understanding and addressing babies’ uniqueneeds. We will continue to develop our business in line with this purpose.

6 / 39

Now let’s move on to the business results.
First of all, net sales ended the year at 99.4% of the previous year's level. Since we changed theaccounting period from February-January to January-December in the fiscal year ended
December 2019, the results in Japan in the previous year were based on the 11-month settlement.
This is a comparison with the 11-month results. Ordinary income ended at 93.2% of the yearbefore level.
It was affected by the continued appreciation of Japan yen. For the entire Group, Japan yen’s
appreciation reduced sales by about JPY1.8 billion. However, excluding the foreign exchange
effects, sales ended the year slightly above the previous year’s level.

7 / 39

Though there is no such comparison formally, I will show the results in the Japan Business
Segment in comparison with the previous year’s results translated into a 12-month basis.
Sales were 96% and ordinary income was 92.8% of the previous year's levels.

8 / 39By business segment, the YoY results were 92.9% for the Japan Business, 101.1% for the China
Business, 89.6% for the Singapore Business, and 94.4% for the Lansinoh Business, all in termsof Japan yen.
However, as I mentioned earlier, the appreciation of the yen has reduced the yen-denominatedvalue, so the China Business actually ended the year at 104% on a local currency basis.
There were two factors for the Lansinoh Business result. One is that the revenue recognition
standard has been changed to deduct selling expenses from net sales, which lowered the sales
amount.
In addition, Japan yen’s appreciation, as I mentioned earlier, also had an impact. In fact, on a
traditional local currency basis, Lansinoh ended the year with 106% of the previous year’s result.

9 / 39

This is a summary for each business.
The Japan Business was greatly affected by the disappearance of inbound consumption in theDomestic Baby and Mother Care Business.
The China Business was affected by COVID-19 in the first quarter, but it has since recovered
rapidly, with sales in mainland China growing 6.7% YoY on a local currency basis. Ecommerce
grew further, with the ecommerce share to total sales standing at 63%. This was a rise from theprevious year’s 54%.
In the Singapore Business, due to COVID-19, many regional countries were subject to lockdowns
and movement restrictions. India and Malaysia were particularly affected. On the other hand,sales in Singapore domestic increased slightly YoY.
Europe and the US, Lansinoh's main markets, COVID-19 have been in a serious situation, but
sales in the regions grew YoY, driven by ecommerce. The Lansinoh Business as a whole grew
4.6% in Japan yen terms, of which sales in North America rose 8.3%.

10 / 39This is the sales map of Pigeon products by sales area on a local currency basis.
The Middle East, India, and Malaysia struggled particularly. Meanwhile, in Australia, which was
not so much affected by COVID-19, sales jumped 44% YoY. In a pharmacy chain in Australia,
sales of our nursing bottles began to show quite significant growth since their market share was
ranked first.

11 / 39

The next is the sales map for Lansinoh products by area.
On a local currency basis, all regions show robust rises close to double-digit growth, with the
exception of China. Sales grew partly due to strong sales in ecommerce.

12 / 39This is a summary of last year's results in the form of accomplishments and challenges.
First, on a consolidation basis, we were able to reaffirm the solidity of demand for baby products
and the strength of our brand in emergencies.
In addition, the sales and market shares of core products, including nursing bottles, expanded inmany regions. Our market shares generally increased. Even amid the COVID-19 pandemic, sales
in Mainland China and the Lansinoh Business grew YoY, driven by ecommerce sales. We also
recognized the strength of the brand of comprehensive babycare products. I was once again
reminded of the mechanism that a wide range of products allows us to make up for any downturnin one product with sales of other products.
As a major challenge, the entire group unfortunately failed to achieve the targets for the first yearof the Medium-Term Business Plan.
In Japan and Southeast Asia, where the ratio of ecommerce sales is small, we found that sales
have not increased so much. There was also a slight delay in the development schedule of new
products due to COVID-19. Some products were delayed for several months. The businessstructure in Japan of having been dependent on inbound consumption was revealed by the
COVID-19 pandemic.

13 / 39

We would like to take a look at each of the business units.
In Japan, although inbound demand has disappeared, our absolute position as the top brand inJapan has not changed. Nursing bottles and skincare products were affected most greatly by thedisappearance of inbound demand. However, if we look at net demand in Japan alone, the market
share of our nursing bottles increased to 86%. The market shares of other core products also
increased.
Strollers and other products struggled a little, but the biggest reason was the shrinkage of themarket due to people refraining from going out. We believe that the demand will come back, but
the stroller market shrank about 19% YoY.
The ecommerce ratio in Japan was still low at 9%, but we see this as a major challenge for the
future.

14 / 39

The China Business. The biggest factor was that the growth of the ecommerce channels wasvery powerful in increasing sales. In the Double 11 Shopping Festival on November 11, overall
EC channel sales grew 20% YoY. On JD.com, sales of nursing bottles and skin care products
were ranked first, respectively.
In the core products of nursing bottles, skincare, and oral care, sales grew more than 20% YoY,
despite the COVID-19 pandemic, which was very impressive.
Overall online sales grew 24%, while offline sales declined 14%, and I believe this trend willcontinue. As I mentioned earlier, the percentage of ecommerce sales rose to 63%.
What was disappointing about our China Business was that our export business to nearby regions,such as Russia, Taiwan, and the Philippines, was very weak.
As for a new initiative, we launched a series of existing nursing bottles and pacifiers with a unified
design in a very simple color scheme for a limited number for the ecommerce channels, whichsold off very quickly.

15 / 39

Next is the Singapore Business. Although various activities were delayed due to the lockdown, I
think it was very significant that we were able to limit the decline in sales to about 10%. In Malaysia
and India, both the factories and offices were shut down for more than eight weeks due to the
lockdowns.
In addition, sales of nursing bottles, the main product for the business, dropped considerably due
to the disappearance of inbound demand in Japan. Since nursing bottles are originally
manufactured at the Thai plant, the decline in sales of the product had a major impact on the
Singapore Business. Important activities like breastfeeding seminars were conducted online.

16 / 39

The Lansinoh Business. As I mentioned earlier, the COVID-19 infection situation in Europe andthe US was very serious. Nevertheless, sales in North America led the whole business, which
was able to achieve significant YoY growth.
One of the main reasons for the growth in the US was that Lansinoh products were designatedas a daily necessity by the major EC platform, and we were able to deliver them to customers
even under the spread of infection. In addition, sales of nipple creams and breast pumps werestrong. The market share of nipple creams further increased to 76%.
We also launched an organic-type nipple cream, which gained a 4.7 stars in the major EC
platform, and this was also a very strong factor in boosting sales.

17 / 39

Next is the balance sheet.
The remarkable point is cash and deposits. We see many companies have seen their cash
dwindle, but in our case, on the contrary, it increased as much as 14% YoY even amid the COVID19 pandemic.
Inventories also temporarily increased due to changes in demand, but the final result was a slightincrease.
We were still free from loans.

18 / 39This is our plan for the current fiscal year.
Net sales are expected to increase 7.2% YoY. Operating income is planned to rise 9% YoY.

19 / 39

Next is the plan for the current fiscal year by business segment.
First of all, we assume that inbound demand will not come back in Japan this year, so weestimated that inbound demand at zero. There is also a concern that the number of births will
decrease. But as I mentioned earlier, we would like to maintain our performance with premium
products and a hike in the unit price.
For the China Business, we are planning to grow it by 17%. We plan to grow the Singapore
Business by around 6%. We estimated the growth rate of the Lansinoh Business at 2.6%.
The growth rate of Lansinoh appears to be low because the territory of Latin America, which
belonged to the Lansinoh business unit, will be transferred to China business. Sales in Latin
America are about JPY400 million per year, and as this is added to the China Business, its growthrate is expected to be so high. Excluding Latin America, the growth rate of the China Business isestimated at 13% YoY.

20 / 39

These are the themes for each business segment for the current fiscal year.
In the Japan Business, we will further develop our domestic business and expand our large-sized
products. We would also like to rebuild the foundations of our three domestic businesses. In termsof the external environment, there are concerns about the sharp decline in the number of births,
the uncertain future of inbound demand, and the sluggish economy.
As a priority strategy, we plan to develop new products and new categories, enhance appeal of
new values for customers and propose new usage scenarios to them, and finally start a structuralreform of the Health & Elder Care Business.
Although we have quite a few new products, we would like to improve the quality and increase
the unit price of the new “magmag” series and wipes, as they belong to a category where pricecompetition is fierce.

21 / 39

The theme for our China Business is “selection and concentration”. The direction is to concentrate
more on our strong products and to maintain sales and profits because our strong products havehigh profit margins.
One concern is the number of births, which has already been in the news. Some report says that
number of births will drop by 15% than last year. The competition in the market has become quite
fierce, especially in ecommerce. More and more new local brands have come out and challenged
us to price competition.
Despite these concerns, our key strategy is to further strengthen our nursing bottles and skin careproducts with high market shares and high sales and to further strengthen our R&D and design
activities. Also, in Canada, we have already signed a distributor agreement and are waiting forshipment. The key is how they can move, depending on the COVID-19 situation.
Besides, we would like to start with sales on E commerce only for the US. If all goes well, salesof products made in China will start to be sold around October, but depending on the situation, it
could be next year.
In terms of other products, we will finally launch a new model of nursing bottles, which we call
WN3, in China around the beginning of fall. The unit price will be about 5% to 10% higher thanthat of conventional products.
We are also planning to launch a string of skincare series of a new concept. In China as a whole,
we are planning to launch more than 80 items other than these nursing bottles and skin careproducts.

22 / 39

The Singapore Business. I think the focus here will be on how to recover the market damaged by
COVID-19.
Sales of nursing bottles, our mainstay product, are still over 50%, so we are working to recover
the sales. We also have Thai Pigeon, which plays the role of our technology center. There, they
are working on IT penetration and automation of the factory. We are also thinking about ESG andother issues, and are considering a variety of new initiatives, such as a skincare product whose
container includes 80% recycled materials.

23 / 39

The Lansinoh Business. The theme here is “re-strengthening core products and creating new
categories”.
Starting around May of this year, it will be launching postpartum self-care products that Lansinoh
has never offered before. The series is called Pericare (Perineal care) and is designed formothers. We have high expectations for this project.
In addition, Lansinoh had a hard time in the Chinese market last year, due to the fierce price war
for consumables, and they are now facing the major challenge of how to get them back on track.

24 / 39

Next, is our dividend policy.
Year-end dividend will be JPY36 as planned. In the current fiscal year, since we have promised
to increase the dividend every year during this Medium-Term Plan, we plan to increase the interim
dividend to JPY37 for the year ending December 2021.
The capital investment amount will increase YoY. Depreciation and amortization expenses willbe almost flat. We plan to increase R&D expenses by 24% YoY, in a bid to further strengthen our
manufacturing system.

25 / 39

Finally, I would like to talk about the revise of the Medium-Term Business Plan.
Since we unfortunately couldn’t achieve the targets for the first year of the Medium-TermBusiness Plan, partly due to the unexpected impact of COVID-19, we are reviewing the plan forthe second year and later. We have not changed at all our original three basic strategies of brandstrategy, core product strategy, and regional strategy. We will continue the strategies.
At the same time, we would like to further strengthen our manufacturing and formulate measuresthat will lead to the next medium-term plan. Although Japan is a kind of exception, thedevelopment of each brand's products on ecommerce is very fast, including that in Southeast
Asia. In order to catch up with the moves, we are going to prepare our system. Also, from theperspective of ESG, we will certainly expand our range of environmentally friendly products.

26 / 39This is the revised plan for the Seventh Medium-Term Business Plan.
In my mind, this year we are starting the new Medium-Term Plan anew. In the original Seventh
Medium-Term Business Plan announced in February last year, the CAGR of sales was 6.8%, but
we will accelerate this up to 7.3%. The CAGR of operating income is maintained at 10%, which
was the target of the original Medium-Term Plan.

27 / 39This is what we are expecting for the Medium-Term Business Plan. The goal for the final year of
the current Medium-Term Plan is to be achieved in the first year of the next Medium-Term Plan.

28 / 39This is the two-year plan for each business.
In Japan, we estimated the growth rate at a low level because we estimated Zero inbounddemand in the revised plan. In the Singapore Business, the impact of COVID-19 is likely to remain
until around the first half of 2021, but I believe that the growth rate will gradually accelerate toward2022.
In the Lansinoh Business, we plan to invest heavily in product-oriented areas such as sales of
new categories and development of new products in 2021, so we plan to gradually increase
growth toward 2022.
In terms of the sales composition between Japan and overseas, overseas sales accounted for
56% of total sales at the end of 2019. By the end of 2022, the overseas ratio is expected toincrease to 62%.

29 / 39

Operating income. As you can see in the graph below, sales growth in China, where profit margins
are high, will continue to be high, and the China Business will account for an ever-increasing
share of the Group's overall income. We believe this is a positive factor for the Group as a whole
because its profit margins will be boosted.

30 / 39

Next is about the change in our earnings disclosure from 2021.
Starting next year, we will change our revenue recognition standard for our Japan and China
Businesses. The change is similar to the one applied to the Lansinoh Business in 2020, where a
portion of SG&A expenses is deducted from sales.
In Japan, the rule is to be applied from April this year or later, so in principle it should be applied
from the fiscal year ending December 2022. But in order to unify the entire Group with the same
standard, we will bring it forward to the current fiscal year ending December 2021 in both Japanand China.
This will result in a decrease of about JPY3.5 billion in sales for the Japan Business and about
JPY2.1 billion in sales for the China Business, but this is just a difference in how they appear in
the disclosure.

31 / 39

If the new revenue recognition standard is applied, the sales growth rate for the current fiscal
year will be only 1.4%. However, in terms of the old standard, the growth rate would be 7%, or
almost 8%, so it is just a matter of how it looks in accounting, and there is no significant impact
on operating income and the following items to the bottom line.

32 / 39

Finally, our ESG initiatives. In the area of reducing the environmental impact, we are creating asystem to contribute to the reduction through the manufacture.
In the past year, we have completed the formulation of clear policies on the environment,
biodiversity, sustainable development, and CSR procurement. We have also joined the RSPO
because our Group has factories that manufacture detergent products.
In terms of resolving social issues surrounding babies and mothers, we are working on the breast
milk bank that I mentioned earlier, as well as providing special products to support prematurebabies and underweight babies at birth, and in China, we have established a fund to support
premature babies. In Thailand, we are involved in activities to support children with cleft palates.
In the area of establishing a strong management base, both our plants and company operations
have hardly been affected by COVID-19, which was a global topic this time. I believe that we are
already a very strong organization.

33 / 39

I would like to show you one of our most recent initiatives for the “E” part of ESG. We are goingto put the Pigeon Eco-Label on our product packages in the future.
Our goal is to have this label on all of our products sold in Japan by 2025. Of course, this policy
is not limited to Japan, but we plan to expand it globally.
My presentation is over. Thank you very much.

34 / 39

Question & Answer
Q&As are summarized by Business segment.
[Consolidated]
Q. What are the factors for the upturn in the fourth-quarter profit?
A. We had a conservative estimate of P&L because COVID-19 pandemic was very uncertain.
Originally, in the announcement of the third-quarter results, we showed the revised forecast of
JPY14 billion in operating income. At that stage, we received forecasts from each business unit,
and we inserted further negative factors as the pandemic got worse in Asia, Japan, and Europe
in the third quarter. The total amount of JPY14 billion reflected our prospect that we would achieve
around JPY14.5 billion.
There is a difference of JPY800 million between the JPY14.5 billion and the result of JPY15.3
billion. We forecast that operating income in the Japan and China Businesses will incur adownswing of around JPY300 million in terms of operating income due to the impact of COVID19, but actually there was no such downswing.
In addition, sales mainly in the Health & Elder Care Business in Japan grew as we had expected,
boosting operating income by around JPY100 million.
Of the remaining JPY400 million, we estimated the reduction of JPY200 million on the cost aspect
as the capacity utilization rates at the plants in Thailand and Japan will fall further as well in
expectation of the decline in sales.
The remaining JPY200 million is related to Turkey's reserve currency. We were expecting a
related exchange loss of around JPY500 million, but actually there was a loss of less than JPY400
million. These were the factors behind the JPY800 million gap between the JPY14.5 billion
forecast and the result of JPY15.3 billion.
Q. In terms of increasing R&D expenses in 2021, any breakdown of R&D budget bybusiness segment or any prospects after 2021?
A. All business segments will increase R&D investment which includes product design, sample
development, and labor for example. Lansinoh business will invest more for R&D as they will befocusing on new categories. But other business segments will also invest for R&D as well. As
new products are finally coming to take shape, we can invest in such areas. Our current R&D
expense is about 3% of net sales, and we will keep this 3% or slightly increase the percentage of

35 / 39investment. The amount of R&D investment will increase as the sales grow, but we don’t expect
the percentage of investment will drastically increase.

[Japan Business]
Q. What are the reasons of decreasing the operating margin of Japan business in therevised Seventh Medium-Term Business Plan?
A. Domestic Baby and Mother Care Business accounted for roughly 70% of the total sales of theJapan Business in the previous year, and its sales declined by JPY2.6 billion YoY. And JPY2.4
billion out of JPY2.6 billion was due to the decline in inbound-related sales. About 60% of theinbound-related products were high-margin products, such as nursing bottles, nipples, and skincare products. Due to these factors, operating income decreased to JPY3 billion as a result.
And we revised the plan of Yr 2021 based on this JPY3 billion and operating margin looks lower.
But we plan to raise the amount to JPY3.4 billion in two years. We are working on such highly
profitable products and premium products, so there will be such products in the current fiscal year
but pleased to look forward to seeing some more in the next year and beyond. And we don’t
include any inbound demand in the revised plan.
Q. What’s your prospects and assumptions of 2021 for Covid-19 and birth rate in Japan?
A. Last year, the market for large-sized products dropped around 20% amid the self-restraint
from going out and our sales dropped similarly. So, if the self-restraint continues, there will besuch effects. However, we experienced sales activities amid the COVID-19 pandemic for a wholeyear in 2020. This year, as we have various product categories, we intend to achieve our plan forsales by proposing timely products or different values to customers.
For the current fiscal year, we expect that the number of births will drop by about 10% YoY to alevel above 750,000.
Actually, the markets for nursing bottles, nipples, and some other categories will see declines inproportion to the fall in the number of births. For other categories, such as consumables like wipes
and detergents, we assume that even if the number of births falls by 10%, the market for themwill not fall that much, and that the market will fall by around 6%, the same level of decline as thatin 2020.
In contrast, we intend to grow by about 10% in our plan. As the measures to do so, we plan, forexample, to propose new categories and create premium products.

36 / 39

In fact, looking at retailers by category last year, it is true that retailers that had had a highpercentage of inbound sales saw a sharp decline. On the other hand, stores that had not been
involved in inbound demand did not see a drop in sales. This means that even though people arerefraining from going out, there are drugstores that are very close to their homes, so the frequency
of customers shopping at the stores is certainly decreasing, but the amount of money spent bycustomers at shopping is not affected much.
Q. Revised plan of Japan business still seems very high target. How do you see the market
opportunities?
A. We have increased our share of nursing bottles to 86% of the market in Japan. So it will bedifficult to increase it further.
But for example, more women go out for work, more working mothers cannot feed their babies
with breast milk if they want to do so. In this respect, although there is almost 100% recognitionof breast pumps in Japan, the purchase rate is still not high, at around 40%. On that point, weshould encourage more moms to use breast pumps and other similar products. By doing so, there
is still room for us to explore an unknown market, such as meeting the need for pumping breast
milk, reserving it, and feeding babies with it in the workplace.
We would like to achieve this 10% increase through such efforts for the information campaign
and other measures. Also, the number of births dropped last year as well. However, if we look atpure domestic demand, there has been no decline. So, we believe we still can grow Japan market
with developing premium products and new products.

[China Business]
Q. What’s the quarterly overview of 2021 plan of China business?
A. There will be some trade promotions for big e-commerce events such as June 18 and the
Double Eleven on November 11, so the profitability will deteriorate on these months or so later.
But we will not see sharp change in other quarters. We will expect a YoY increase in the firstquarter as last year we had some negative impact due to COVID-19 spread in China. However,in 2020, sales recovered rapidly from April onward, so the sales growth will slightly slow in Q2 anlater.

37 / 39

Q. What are the background of such high expectations of sales growth of China?
A. First, we've prepared a large number of new products. Moreover, we will also launch new
nursing bottles in the second half of the year. In addition, the Latin America market will be added
to the China business. Furthermore, China’s overseas business was very sluggish last year. In
2020, our export business in China dropped as much as 40% YoY, but we are sure that thebusiness will come back. We can expect that good number this year with all of these factors.
Actually, the expansion into US market was not part of our original Medium-Term Plan though.
Q. How much sales growth do you expect in Mainland China on a local currency basis forfiscal 2021?
A. We are expecting about 12% - 13% growth YoY.
Q. What is your expectation or strategy of On-line / Off-line ratio?
A. We don’t intend to control On-line / Off-line ratio. We are implementing our measures in linewith the market trends. From the current trend, the shift to e-commerce ill accelerate further due
to the strong impact of COVID-19.
Q. How is the “Ssence” skincare products going? How will you strengthen skincare
category?
A. Some of the skincare products are also shown in photos in the presentation materials. The
avocado skincare series was launched late last year. The product is developed based on a totallydifferent concept. We will introduce more skincare series and expect sales growth. The Ssence
skincare has been well received by our customers. However, as we initially decided to limit thesales area to the flagship store, so we could reach very limited number of customers. We are
now considering measures to expand the sales area and continue product sampling. Sales arestill small, but they are growing.
Q. Can you give us the detail of “selection and concentration” strategy?
A. The products we are concentrating on are our core products such as nursing bottles, skin care,oral care, and breast pumps. We will focus on our resources on these categories to prevail overcompetitors. Actually, there is no particular product we will stop selling. However, in the
consumables market, international brands are losing market shares to local brands as thecompletions gets fierce. So we have to defend and grow core products that is our most important
categories.

38 / 39

Q. How much is the size of Latin America (Latam) market which will be transferred to China
business?
A. Annual sales is about JPY4 million. We expect about 10% sales growth YoY in Fiscal 2021.
Q. What are the reasons for handling Canada and Latam market by China business?
A. First of all, opening a new market requires a certain amount of money and China business cantake care of it. And when we see people in Canada, Asian people make up about half of the
population. We believe we can utilize a network of Chinese community and China business would
be the perfect one to tap Canadian market. The US market is an extension of Canada. Also, since
the China business is taking the Latam market from Lansinoh, China business will take care of
Pigeon brand business across North and South America.

[Singapore Business]
Q. Singapore business did not show much profit in Q4. What are the reasons for this?
A. Singapore business had a tough year in terms of sales. However, in order to prepare for thegrowth of next fiscal year, we invested for sales promotion and R&D especially in Q3 and Q4.

[Lansinoh Business]
Q. CAGR of Lansinoh business seems lower than original Mid-term plan. What are thereasons for?
A. First, Latam market (JPY4 million) is transferred to China business. Also, competition for
consumables, such as breast pads and milk storage bags has become fierce. It is hard to expect
sharp growth in these categories. And we will need some time to see the new products to grow,so the revised plans for the current year are a little low. Also, we see some FX impact.

End.

39 / 39