Securities Code: 7956

Financial Results of Dec. 2022 (FY 66th) and8th Mid-Term Management Plan
Norimasa Kitazawa
President and CEO
February 14, 2023

FY December 2022 (FY 66th)
FY Dec. 2022 Highlights

P. 3 - 6

Review of the FY Dec. 2022 Results and the 7th MTP

P. 7 - 18

Pigeon Group Business Activity Guidelines

P. 19 - 23

The 8th Medium-Term Management Plan

P. 24 - 50

Earnings Forecast for FY Dec. 2023

P. 51 - 54

AgendaFY Dec. 2022 Highlights

#1: Selected the FTSE Russell's Investment Index
Selected for the first time in the FTSE4Good Index Series and the FTSE Blossom Japan Index, global
ESG (environmental, social and governance) investment indexes designed by FTSE Russell (UK)

# of selected companies# of selected companies

1,658 companies worldwide*.

Japan 255 companies*.
(Our company is in the top 66)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential*As of December 2022

4

#2: Improved FTSE ESG Rating (Yr 2017-2022)
The Pigeon Group's reputation has improved significantly
by strengthening "Corporate Social Responsibility (Environmental/Social)" actions and disclosures

7th MTP

6th Mid-Term Plan

•
•
•
•

5.0
4.0

3.8

3.0

2.9

2.0
1.0
0

•

TCFD Scenario analysis
Scope 3 data
Water consumption data
Responsibility of baby
food related
Compliance Policy(Anti-corruption)

2.0
1.2
0.7

2017

2018

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

1.1

2019

2020

To June2022
timechange

2021

June

Dec
emb
er

•
•

CSR Procurement policy
Supplier Assessment(Environment/ Social)2022
5#3: Commercialization from PFA project
What is the Pigeon Frontier Awards (PFA)?
PFA encourages and rewards employees for out-of-the-box ideas for our future growth. Once a year, we are gathering
any new business ideas and concepts from our passionate employees, and the proposals that are awarded as
excellent initiatives got an opportunity to commercialize.

Precious Drop

Colostrum collection support
deviceWelcomed by medical professionals
and now expanding distribution to
Perinatal Medical Centers, hospitals,
and clinics throughout Japan.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Pigeon’s Parenting(Comic Essay)

A book based on "childcare reports" written
by hundreds of Pigeon employees is now onsale from KADOKAWA Co.
6

Full Year Results of FY Dec. 2022

Changes in the External Environment and Challenges for the Pigeon Group

Global Environmental Changes
・Establishment of “With Covid” lifestyle

Challenges for Pigeon Group・Signs of stagflation(Economic Recession and Inflation)

・Decrease in the number of births
In Japan and mainland China, which
are our mainstay markets

・Rapid exchange rate fluctuations

・Slowdown in growth at Japan and
China business・Sustainability Awareness rise
・Increased geopolitical risk

・Increased competition in each market(Rise of new and local brands)

Pandemic of Covid-19 Rapidly Changes Our Business Environment©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

8FY Dec. 2022 Results : Consolidated P&L
Announced downward revision of Full-year forecast in August due to the impact of Covid-19 pandemic in mainland China.
Consolidated group net sales and operating income for the full-year of 2022 ended on par with the revised forecast.

Unit: Million JPY

Forecast for FY Dec. 2022
Original
Forecast

Revised
Forecast

FY Dec. 2022 Actual
Actual% of Total

vs Original
Forecast

vs Revised
Forecast

YoY Change

Net Sales

98,70095,00094,921100.0%

96.2%

99.9%

102.0%

Cost of Sales

50,60050,70050,087

52.8%

99.0%

98.8%

102.2%

Gross Profit

48,10044,30044,834

47.2%

93.2%

101.2%

101.7%

SG&A Expenses

33,90032,30032,638

34.4%

96.3%

101.0%

106.2%

Operating Income

14,20012,00012,195

12.8%

85.9%

101.6%

91.4%

Ordinary Income

14,30013,00013,465

14.2%

94.2%

103.6%

91.9%

Net Income
Attributable to
Owners of Parent

9,500

8,550

8,581

9.0%

90.3%

100.4%

97.7%©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[FY Dec. 2022 Currency Rates] Budget: US$1 = JPY 112.00 / CNY 1 = JPY 17.50
Full year Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50 9(Reference) FY 2021 Results: US$1 = JPY 109.85 / CNY 1 = JPY 17.03

FY Dec. 2022 Results : Consolidated P&L
In FY Dec. 2022, our business were on a recovery trend through the second half of the year, and ended the yearwith a 2% increase in net sales over the previous year.

[ FY Dec. 2022 Results - YoY performance ]Net sales

OperatingincomeFirst Half

95.8%

67.4%

Second Half

108.4%

123.2%YTD total

102.0%

91.4%[ Results of FY Dec. 2022 by half-year period]
Million JPY

60,000■ First Half
45,292■ Second Half

49,62940,00020,0005,118 7,077
0©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Net Sales
売上高

Operating
営業利益
Income10

FY Dec. 2022 Results : by Business Segment
Unit: Million JPY

FY Dec. 2021 Actual
Segment
ProfitNet sales% of Total

YoY Change

47.3%

13,336

94,921100.0%

102.0%

47.2%

12,195

41.1%

34.3%

2,065

36,323

38.3%

94.9%

32.4%

1,491

37,239

40.0%

50.9%

11,792

34,776

36.6%

93.4%

52.5%

10,408Singapore Business

12,619

13.6%

38.7%

1,811

14,15314.9%

112.2%

40.9%

2,140

Lansinoh Business

13,320

14.3%

53.5%

953

16,91717.8%

127.0%

52.9%

1,154

Elimination of intersegment transactions(8,363)(9.0%)--(7,248)(7.6%)---Net Sales% of Total

Consolidated
Net Sales

93,080100.0%

Japan Business

38,264China Business

Gross
MarginFY Dec. 2022 Actual
Gross
MarginSegment
Profit[Reference] Breakdown of Japan Business

FY Dec. 2021 Actual
Gross
MarginFY Dec. 2022 Actual
Segment
ProfitNet sales% of Total

YoY Change

GrossMarginSegment
Profit

Unit: Million JPY

Net sales% of Total

Baby care

25,701

-

40.4%

2,359

25,287

-

98.4%

36.8%

1,787

Childcare Services

3,504

-

16.1%

159

3,444

-

98.3%

15.8%

199

Health & Elder
Care

5,616

-

30.4%

504

5,062

-

90.1%

30.9%

497 11©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

FY Dec. 2022 Results : Operating Income YoY Changes
Operating income decreased from the previous year due to an increase in personnel expenses (Lansinoh business and China businessincluding the impact of FX rates), logistics expenses (Lansinoh business) as well as travel expenses and marketing-related expenses.

133.3(Unit: 100 Million JPY)

+8.7
(0.9)

(8.1)

■ Operating Income Increase

Operatingincome for
FY Dec. 2021

Increased
Gross Profit byhigher sales©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Impact of
Cost Ratio
Increase

(4.0)

(3.1)

(4.0)

121.9

■ Decrease

Distribution
the previous
year
Personnel
andLogistics
Expenses
Operating income

Travel expenses /MarketingOther
expenses

Operatingincome for
FY Dec. 2022

12

FY Dec. 2022 : Consolidated Balance Sheet (Highlights)
Unit: Million JPY

End of FY Dec.
2021
ActualEnd of FY Dec. 2022
ActualYoY Change(Amount)

YoY Change(%)

YoY Change (Amount)
w/o impacts of FX rates

Cash and Deposits

35,21834,283

(934)

97.3%

(2,408)Notes and Accounts
Receivable-Trade

16,253

15,975

(277)

98.3%

(1,181)Inventories

12,70615,318+2,611120.5%(1,587)

Notes and Accounts
Payable-Trade

4,087

5,066

+979

124.0%

805

Electronically Recorded
Obligations - Operating

1,623

1,542

(81)

95.0%

(81)

ー

ー

ー

Borrowingsーー

Net Assets

76,81079,952+3,142104.1%(123)

Total Assets

98,042

101,733+3,691103.8%(1,021)Equity Ratio

75.4%

75.4%

ー

ー

ー

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

13

FY Dec. 2022 : Summary by Business Segment*Sales: Sell-in on a local currencyJapanbusinessChinabusiness

Renewal of the Nursing bottles marks higher growth throughout the year and consumables struggled. Increased
procurement costs put pressure on profits throughout the year.
• Baby care YTD sales declined 1.6% yoy. But Q4 alone sales increased 7.2% yoy and see some recovery trend.
• YTD Sales of the Nursing bottles increased 23% yoy. YTD sales of Baby skincares declined yoy, but grew by double digits in
the Q4 alone because of launch of new products and successful in-store promotions. Sales of consumables struggled
throughout the year due to increased demand for low-priced products.
• Gross margin of Baby Care decreased by 3.6pt yoy in YTD driven by increased procurement costs due to yen depreciation
and raw material price hikes.
• YTD sales of Health and Elder Care declined by 0.5 billion yen yoy due to a review of the product portfolio, but grossmargin improved by 0.5 pt.

Covid spreads in mainland China in Q4 delayed market recovery, but market share of our Nursing bottles
recovered to 44%.

• Mainland sales (YTD): -19% yoy due to the impact of the Shanghai lockdown in Q2 that remained through the full year.
• Our mainstay products are #1 in the brand ranking of Double-Eleven however weak consumer spending compared toprevious years.
• Gross margin improved by 1.6 pt yoy in YTD due to increased sales mix of the Nursing bottles (complete replacement to
the new models) and Baby skincares.
• Sell-out was down 12% yoy in YTD. EC was down 8% yoy, Tiktok grew significantly however major EC channels were down.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

14

FY Dec. 2022 : Summary by Business Segment
Singaporebusiness

LansinohBusiness

Major markets performance exceeds pre-Covid level (Yr 2019). Strengthening business activities for further
growth• YTD sales in India +23% yoy, Malaysia +19% yoy, Indonesia +19% yoy, Middle East +10% yoy.
• YTD sales (JPY) of Core products (Nursing bottles, Breast pumps, Baby skincares, and Oral care) grew by more than
20% yoy. New products in Nursing bottles and Baby skincares also contributed significantly for growth.
• Gross profit (JPY) in YTD increased by 18% yoy due to increased sales by sales companies and the effect of FX rates,etc. Gross margin also improved by 2.1pt yoy.

Sales remained strong, although profits were weak due to the continued impact of rising logistics costs
throughout the year.
• Lansinoh Group sales up 5% yoy in YTD.
• Sales in North America were strong (+10% yoy), but Europe struggled due to inflation and economic downturn.
• Mainstay products performed well especially in North America. Maintained dominant market share in North
American market for four products: Nipple cream, Manual breast pump, Breast milk storage bag, and Nursing pads.
• Gross margin in YTD was down 0.6 pt yoy due to the continued impact of higher logistics costs throughout the year
and pushing down gross profit.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

15

Review of the 7th Mid-Term
Management Plan

Review of the 7th MTP: Summary

Not achieved financial targets because of the intermittent COVID-19 impacts in each region
throughout the three years. However, there were still certain achievements such as promotion of key
strategies, achievement of non-financial targets, and ESG-related awards.

Brand
strategy(Unit: Million JPY)

〇 New branding penetrates globally.
〇 Promote unique activities (Support for breast milk banks)〇 Ranked #65 in Best Japan Brands

Net sales〇 Launched new model of the Nursing bottles in major markets△ Growth of core products are not as strong as our expectation
due to the Covid

Regional
strategy〇 Launched more than 250 SKUs of new products* each year
△ Japan unable to cover the loss of inbound demand

ESG©Pigeon Corporation All Rights Reserved. │ Strictly Confidential*Includes renewed products

Operating income

Operating profit ratio

1,200

Product
Strategy〇 Non-financial KPIs were achieved〇 Reputation of our ESG activities improved due to progress ininitiatives and enhanced disclosure.
〇 Received awards in various areas of ESG[ 7th Mid-Term Business Plan ]

1,000

981

949

30%

1,086

20%

800

600

16.9%

17.3%

12.8%

400

200

0

169

2019

121

2020

Actual** Actual**

2021

Actual2022

Actual

10%

183

2022

0%

7th MTP
Revised Plan**Estimate by the New revenue recognition standard

17

Review of the 7th MTP: Key KPIs
Key management indicators such as PVA, CCC, ROE and ROIC are
ended lower than the final year of the 6th Medium-Term Management Plan
[ PVA and CCC performance trends ](Unit: Million JPY)

PVA

10,000
8,000
6,000

119.2
8,525

140
120
100

88.7

80
4,617

4,000

60
40

2,000

20

0

0

2019

2020

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

2021

ROE

(Days)

CCC

12,000[ ROE and ROIC performance trends ]

2022

ROIC

25.0%
20.0%
15.0%

17.5%

15.5%
12.2%

17.4%
14.8%

10.0%

12.5%

11.4%
10.9%

5.0%
0.0%

Note: 2019 is the old standard results

2019

2020

2021

2022
18

Pigeon Group Business Activity Guidelines
under the rapidly changing environment

Three Key Elements in our Business Activities

Pigeon Way©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

PurposeKey Issues(Materiality)20

Update of Pigeon Way••

Separate out our Corporate Philosophy and Credo as independent, unchanging
elements
Make our Purpose the core of the Pigeon Way©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

21

Update of Pigeon Way

Key Issues for Pigeon over the Mid and Long-term (Materiality)

Enhancing Business
Competitiveness andResilience

Reducing ourEnvironmental Impact

Contributing to
the Resolution ofSocial Issues

Managing talent andCultivating the Right
Culture for our Purpose

Establishing solidmanagement foundations

Becoming essential tosociety by expanding ourcorporate value over the
medium to long term

Practicing eco-friendly
monozukuri and leaving
a rich earth for the
future of babies born
tomorrow

Helping to resolve thesocial issues that affectbabies and families

Cultivating anorganizational culture inwhich all employees canshine as they embrace
new challenges

Securing a structural basis forbold and ambitious endeavorsthat will improve medium- tolong-term corporate value

Supporting nursing babies

Reducing greenhouse gas
emissions (Scope 1, 2 & 3)

Supporting healthy babyskin development

Circular manufacturing

New products andservices for babies
needing support

Working environmentsthat achieveself-fulfillment and growth

Expanding use of
products designed formaternity hospitals

Ambitious
organizational culture

Creating new businesses
Releasing productsthat exceed
customer expectations
Building resilient
distribution systems

Using sustainable
resources(paper & palm oil)

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Promoting responsible
procurement

Enriched investment
in human resource
development

Participating in andsupporting communities

PromotingDiversity & inclusion

Reinforcing
group governanceReinforcing complianceReinforcing
risk management
Dialogue withstakeholders

23

The 8th Medium-Term Management Plan
“For Sustainable Growth”

Restructuring of business structure in response to global economic, political,
and environmental changes

Current birth coverage (estimated under the Pigeon brand)
While the number of births is declining worldwide, our global coverage of births is still around 50%.
Considering income levels and other factors in each country, future market opportunities remain large
even in markets where we have already established a presence.

73 million births
in markets alreadyestablished
The World's
Annual Births
Approx.

57 million Births in
untapped markets*When income levels in each country arealso taken into account, our actual
coverage would be about 30 million

130 million
babies*45 million in the African region©Pigeon Corporation All Rights Reserved. │ Strictly Confidential*Calculated by Pigeon25

8th MTP: Themes and Key Strategy

For Sustainable Growth

Restructuring of business structure in response to global economic, political, and environmental changes

Key Strategy (deepening the ones of the 7th MTP)
Brand Strategy

Centered on “Purpose” for our business activities and strengthening brandpower through products

Product Strategy

Strengthen “Monozukuri”, focus on core categories (Nursing bottles and Skincares),and explore the “New areas”

Regional
Strategy・Strengthen autonomous business operation by each SBU.
・Implement the drastic structural reform to establish production and sales
systems tailored to market characteristics, improve efficiency and profitability,
stabilize the supply chain, and prepare for the expansion of the new markets.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

26

8th MTP: Key Actions

Implementation of structural reforms

Sustained growth in “Existing areas” and exploration and cultivation of “New areas”

Existing Business Areas
・Strengthen nursing bottles and baby skincare
which we have a strong competitive edge.
・Structural reforms in each business- Lansinoh and Singapore business: Accelerating Growth- China business: From "High-Growth" to "Stable-Growth"- Japan Business: Improve the profitability

New Business Areas

・Expansion of core customer target group- Toddlers- Mothers To Be- Fathers

・Expansion of our target market- North America (Pigeon brand)- Africa region[Common in Existing and New areas] Strengthen Brand strategy and “Monozukuri”©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

27Brand Strategy

Centered on “Purpose” for our business activities and strengthening
brand power through products

Brand Strategy: What we aim for at the 8th MTP
Centered on “Purpose” for our business activities and strengthening
brand power through products
We draw up the future community which Pigeon aim forfrom a long-term perspective and promote business activities
aimed at realizing our Purpose©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

29Brand Strategy: What we aim for at the 8th MTP
Points to be strengthen
DistinctivenessCoherence

Most important

Sharpen “distinctiveness of Pigeon”

Embody strength and distinctiveness of Pigeon through products
and services. Impress customers with distinctive brand experience.

Provide a consistent brand experience

Ensure consistent communication at all points of contact with customers.

Engage in collaboration with customers and society
Participation

Generate dialogue with customers. Actively incorporate customers' opinion into
products and services.
Engage in collaboration with society to realize “Baby-friendly future”.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

30

Product Strategy
Strengthen “Monozukuri”, focus on core categories (Nursing bottles
and Skincares), and explore the “New areas”

Product Strategy: Strengthen our “Monozukuri”
Monozukuri expenses* in the final year of the 8th MTP are planned to increase to about 1.5 times the 2022.
Strengthen lifestyle proposals, new materials, response to local needs and new areas, etc.
*What are “Monozukuri expenses” ?
Total amount of all expenses related to our "monozukuri” activities. In addition to conventional R&D expenses, thisincludes expenses for product planning, etc.

Example of strengthen our “Monozukuri”
1) Baby bottle steam sterilization dryer
POCHItto (Japan)

2) SLIM NECK STEELFEEDING BOTTLE (India)

80[Monozukuri Expenses]

6 billion yen

60
40

4 bn.

20
▲A new proposal for sterilizing baby bottles that has never been
seen before in Japan, and the convenience of fully automatedsterilization, drying, and storage has been well received. Highly
rated 4.9 stars on a major e-commerce.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲Stainless steel tableware is widely used in India.
Stainless steel baby bottle developed with a focus on
Indian culture. Sales exceeded expectations.

02022
Actual

2025
Plan

32

Product Strategy: Nursing Bottles and Nipples
Aiming to increase global sales volume and value of wide-neck nursing bottles.
Great opportunities for growth in Indonesia and the Middle East, where we have the largest market sharein the market by expanding sales of wide-neck bottles.

High
80%+

1. Expand sales of wide-neck bottles
Strengthening the brand on the strength of "research" andContinue to create strong reasons for our products to bechosen.

market share
50%+
Marketshare

40%+

2. Improvement of WTP* through value-added increase
Adding value to the nursing bottles with attractive
design and improved usability

Standard-neckbottles

Low©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Wide-neck bottles
Profitable models

Profitability

WTP: Willingness To Pay: maximum amount consumers are willing to pay for a product or service

High
33

Product Strategy: Skincares
Still significant room for expansion of market share in the skincare category worldwide.
Each business will develop unique products by taking into account consumers’ local needs.
[Reference: Value market share of Baby skincare (Pigeon survey)

Approx.

30%
Existing areas
Expand market shareby strengthening Basic Series©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Approx.

10%Singapore
BusinessVerylittleNew areas
Capture new market opportunities throughdevelopment of new area such as Skincare for Toddlers

34

Product Strategy: Explore and Cultivate New Areas
We will also focus on exploring and nurturing new growth areas where we can leverage our expertise.
Aiming for sales in excess of approximately 10 billion yen in new areas by 2025.
[ Sales image of New Areas ]In three years
Sales growth

New Area

Existing Area

+10 billion yen+9 billion yen

New area +10

100,000

Skincare, Oral development 80,000
support, etc.

Age-up(For toddlers
and beyond)

6 billion

Women'sCare

1.5 billion Pregnancy care, etc.

Others120,000

60,000Existing Area
+9

Prenatal and postpartum care
40,000

2.5 billion©Pigeon Corporation All Rights Reserved. │ Strictly Confidential(Billion JPY)

Next-generation healthcare
and Lifestyle proposals, etc.

20,00002022
Actual

2025
Plan

35

Regional Strategy
Implement the drastic structural reform to establish production and sales systems tailored to market
characteristics, improve efficiency and profitability, stabilize the supply chain, and prepare for the expansion of
the new markets.

Regional Strategies: Japan BusinessJapan Business 3-year CAGR

+2.0%
Operating income: +8.4%
Net sales:

Priority Strategy (Baby Care)
1. Improve profitability through price revision and product portfolio review[ Japan Business plan ]Net sales
gross margin ratio

50,00040,00060%

36,32338,50040%

30,000Focus on Bottles and Nipples, Breastfeeding support, and Skincare

2. Creation of new categories (total sales over 3 years: over 5 billion yen)
New areas in baby (Next generation healthcare, age-up, etc.)
New areas other than baby (e.g., Women's care, Father care, etc.)

3. Strengthen our own e-commerce platform (Target sales in 2025: 4 times
the 2022 level)
Positioned our own EC platform as a major channel for new category products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

20,00020%

10,00002022
ActualUnit: Million JPY

2025
Plan

0%

37

Japan Business Initiatives: Completion of New Fuji plant(scheduled for August 2023)

Production capacity expansion
Strengthening of baby skin research anddevelopment system
Tackling new fields such as unique products
as well as D2C, etc.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

38

Regional Strategies: China Business
China Business 3-year CAGR

+8.4%
Operating income: +8.5%
Net sales:

Priority Strategies
1. further enhancement of baby bottle/nipple and baby skin care
Expanding products for 12+ months babies to achieve 50% market share of the
Nursing bottles.
Expansion of unique skincare product series following avocado and yuzu
2. Creation of new categories
Developing new markets such as women's care, fathercare, and age-appropriateness3. Restructuring by reviewing the supply chain
Improved profitability of factories and shift to own direct sales system in Korea©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[ China Business plan]
Net sales
gross margin ratio

60%

50,00044,30040,00030,00034,77630%

20,00010,00002022
ActualUnit: Million JPY

2025
Plan

0%

39

Regional Strategy: Singapore BusinessSingapore Business 3-year CAGR

[ Singapore Business plan ]Net sales+7.9%
Operating income: +6.7%

30,000Priority Strategies

20,000Net sales:(*3-year CAGR for external sales is +10.0%)

14,153

1. Accelerate business growth centered on Nursing bottles and Skincare
Double-digit annual growth targeted for Indonesia, India, and other major countries
2. Strengthen manufacturing for upper-middle to premium class
Strengthen in-house planning and development systems and utilize promising local
partners
3. Business restructuring by reviewing supply chains, etc.
Review of sales structure in existing markets, restructuring of Thai plants©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

gross margin ratio

17,80010,000

0

60%

40%

20%

2022
ActualUnit: Million JPY

2025
Plan

0%

40

Regional Strategy: Lansinoh Business
Lansinoh Business 3-year CAGR

+6.4%
Operating income: +6.7%
Net sales:

Priority Strategies
1. Strengthening and fostering of anesthetics, prenatal and postpartum care
Introduced a new model of breast pump, making prenatal and postpartum care thenext growth category
2. Development of new products and categories utilizing “Bio-design”
Expansion the brand from “breastfeeding” to “Women’s Health”
3. Business restructuring through review of sales structure, etc.
Improving the efficiency of European operations, including reviewing the distribution
networks©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[ Lansinoh Business plan ]Net sales
gross margin ratio

60%

30,00050%
20,00020,40016,91740%
30%

10,000

20%
10%

0

2022
ActualUnit: Million JPY

2025
Plan

0%

41

Pigeon: Sales Growth by Area (2022 vs. 2025)
Besides Japan and China, the Middle East and Southeast Asian countries arealso expected to grow significantly.

KOR
CHN
UAE

+16%

+17% JPN(Middle East)

IND

+

52%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

+194%

+4%

(Baby Care)
MYS

+42%

IDN

*Sell-in plan (local currency basis)

THA

+31%

+65%

42

Lansinoh Sales Growth by Area (2022 vs. 2025)
In addition to the mainstay U.S. market,
impressive sales growth is planned in Europe and China.
GBR
CAN

USA

+40%

+17%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

+24%
DEU

BENELUX

+49%

+38%
TUR

*Sell-in plan (local currency basis)

CHN

+14%

+69%

43

Financial Targets and KPIs of the 8th MTP

8th Mid-Term Management Plan : Financial TargetsGroup
consolidation
3-year CAGR

Unit: Million JPY

Net Sales: +6.2%
Operating Income: +9.5%
FY Dec. 2025

FY Dec. 2022
ActualUnit: Million JPY[ Three-Year Growth Image ](Final year of the 8th MTP)

% of Total

Plan% of Total

3-year CAGRNet Sales

94,921100.0%

113,800

100.0%

6.2%

Cost of Sales

50,08752.8%

57,300

50.4%

4.6%

Net sales
150,000

113,800
100,000

Gross Profit

44,83447.2%

56,500

49.6%

8.0%

SG&A Expenses

32,63834.4%

40,500

35.6%

7.5%

Operating income

12,19512.8%

16,000

14.1%

9.5%

Ordinary income

13,46514.2%

16,000

14.1%

5.9%

Net Income Attributableto Owners of Parent

8,581

9.0%

10,400

9.1%

6.6%©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Operating income

94,92150,00012,19516,00002022
Actual2025
Plan[Currency rates] FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50
8th Mid-term Plan: US$1 = JPY 130.00 / CNY 1 = JPY 19.50

45

8th MTP : Growth Image (Group Consolidated)
Aim to achieve record-high sales and improve operating margin in the final year of the 8th MTP(*Revenue recognition standard was changed since FY Dec. 2021)(Unit: Million JPY)

Net sales

140,000

Operating income

120,000➡New Standard

100,000

94,92180,00012.8%

60,000Operating profit ratio
106,500

100,000

113,800

25%
20%

12.4%

13.1%

14.1%

15%
10%

40,00012,19520,000
0

30%

2018

Dec. 2019 2020
Jan.
2019 2019.12
2019.01

6th MTP©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

2021

7th MTP

2022

12,4002023

14,0002024

8th MTP

16,000
2025

5%
0%

46

8th MTP : Growth Image (by Business Segment)(Unit: Million JPY)

Japan Business

China BusinessSingapore Business[ Sales Plan by Segment ]150,000

Lansinoh Business[ Operating Income Plan by Segment ]30,00025,000100,000

20,40016,917

17,80014,15350,00034,77636,32302022
Actual©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

20,00015,00044,30038,500
2025
Plan

1,154
2,140

10,0005,000
010,408
1,491
2022
ActualNote: Elimination of inter-segment transactions are not included.

1,400
2,600

13,300

1,900
2025
Plan
47

8th MTP : Capital Policy and Shareholder Returns[ Cash flows ]Increase in operating cash flow (3 years): Approx. 34 billion yen

Shareholder Return Policy

Continue stable dividend payments by maintaining
current dividend levels along with further improvement
in consolidated performance and financial condition.

[ Investment ]Investment for growth (3 years): Approx. 12 billion yen[ KPI targets at final year of the 8th MTP ]ROE
14.0% or more
ROIC
15.0% or morePVA
7 billion yen or more

[ Dividend per share ]

(Yen)
90
70

72

74

76

76

2019
19/12期

2020
20/12期

2021
21/12期

2022
22/12期FY
Dec. 2023
23/12期*ROE:
Calculatedwithequitybeing
the average of the beginning and ending balances©Pigeon Corporation
All Rights
Reserved.
│ Strictly
Confidential*ROIC: NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances

48

60

30

(Scheduled)(Forecast)Final Draft of Key Issues (Materiality) & Individual Issues
5 Key Issues(Materiality)

What We Aim to Achieve

1. Enhancing businesscompetitiveness andresilience

Building a resilient distribution systems that can 'create','produce' and 'deliver', expand our corporate value over the
medium to long term, and become essential to society

2. Reducing ourenvironmental impact

Implementing the Pigeon Green Action Plan, which aims for
decarbonization, circular society and coexistence with naturein order to leave a rich earth for the future of babies born
tomorrow

3. Contributing to
the resolution ofsocial issues

Helping to resolve the social issues that affect babies andfamilies

4. Managing talentand cultivating theright culture for our
PurposeManaging talent and cultivating the right culture in which
diverse human resources share the Pigeon Way and Purpose,are proud of the company, organization and their work, aremotivated to contribute voluntarily, and continue to take onchallenges to be themselves

5. Establishing solidmanagementfoundations

Reinforcing the GHO/4SBU structure and Enhancing corporate
governance system capable of taking on aggressive
challenges in order to increase corporate value over the
medium to long term

20 Individual issues to be realized

Supporting
nursing babies

Supporting healthy baby skindevelopment

Releasing products thatexceed customer expectations
Reducing
greenhouse gas
emissions(Scope 1, 2 & 3)

Promoting responsible
procurement©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Building resilient
distribution systems

Circularmanufacturing

New products and services
for babies needing support

Reinforcing
group
governanceReinforcing
compliance

Using sustainable
resources (paper &palm oil)

Expanding use of products designed
for maternity hospitals
Participating in andsupporting communities

Working environments that achieveself-fulfillment and growth
Enriched investment in humanresource development

Creating new
businesses

Ambitious organizational
culturePromoting Diversity & inclusion

Reinforcing risk
management

Dialogue withstakeholders

49©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

50Forecast for FY Dec. 2023 (FY 67th)

FY Dec 2023 Business Plan : Consolidated P&L
In FY Dec. 2023 (the first year of the 8th MTP), we strengthen “Monozukuri” and implement key structural reforms
in each business segment that will lead to improve profitability in 2024 and beyond

Unit: Million JPY

FY Dec. 2022
ActualFY Dec. 2023 Outlook% of Total

Forecast% of Total

YoY Change

Net Sales

94,921100.0%

100,000

100.0%

105.4%

Cost of Sales

50,08752.8%

51,80051.8%

103.4%

Gross Profit

44,83447.2%

48,20048.2%

107.5%

SG&A Expenses

32,63834.4%

35,80035.8%

109.7%

Operating income

12,195

12.8%

12,40012.4%

101.7%

Ordinary income

13,46514.2%

12,400

12.4%

92.1%

Net Income Attributableto Owners of Parent

8,581

9.0%

8,100

8.1%

94.4%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[Currency rates] FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50
FY Dec. 2023 Budget: US$1 = JPY 130.00 / CNY 1 = JPY 19.50

52

FY Dec 2023 Business Plan : by Business Segment
Unit: Million JPY

FY Dec. 2022 Actual
Net Sales% of Total

Consolidated
Net Sales

94,921100.0%

Japan Business

36,323China Business

Gross
MarginFY Dec. 2023 Forecast
Segment
ProfitGross
MarginSegment
ProfitNet sales% of Total

YoY Change

47.2%

12,195 100,000

100.0%

105.4%

48.2%

12,400

38.3%

32.4%

1,491

36,80036.8%

101.3%

33.4%

1,200

34,776

36.6%

52.5%

10,40837,70037.7%

108.4%

54.4%

11,300Singapore Business

14,153

14.9%

40.9%

2,140

15,40015.4%

108.8%

40.3%

2,100

Lansinoh Business

16,917

17.8%

52.9%

1,154

18,20018.2%

107.6%

52.2%

1,300

Elimination of intersegment transactions(7,248)(7.6%)ーー(7.3%)

ーーーー[Reference] Breakdown of Japan Business

FY Dec. 2022 Actual
Unit: Million JPY

Net Sales% of Total

Baby care

25,287

Childcare Services

3,444

ー

Health & Elder
Care

5,062

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

ー
ー

Gross
MarginFY Dec. 2023 Forecast
Segment
ProfitNet sales% of Total

YoY Change

36.8%

1,787

25,552101.0%

38.5%

1,834

15.8%

199

3,200

ー

92.9%

17.0%

170

30.9%

497

5,269

104.1%

29.5%

374 53ーー

Gross
MarginSegment
ProfitFY Dec 2023 : Shareholder Returns and Investment
Dividends
Dividend per Share (yen)Dec. 2021

Dec. 2022

Dec. 2023

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

37

37

38

38

38

38

Dividend payout ratio

100.9%

106.1%

112.4%<Ref.>
Investment-related
Indicators (Consolidated)

Dec. 2021

Dec. 2022

Dec. 2023

Interim(Actual)Year-end(Actual)Interim(Actual)Year-end(Actual)Full-year(Forecast)Capex (*1)

2,013

6,735

2,814

7,259

5,600

Depreciation (*2)

1,986

4,161

2,381

4,947

5,100

R&D Expenses (*3)

1,709

3,603

1,802

3,792

4,800 (*4)

*1: Property, plant and equipment and intangible assets (including long-term prepaid expense)*2 : Depreciation (including amortization of goodwill)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential*3 : Total expenses of R&D activities, including personnel costs*4 : Monozukuri expense is planned for FY Dec., 2023

54

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.

P
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/

56

Appendix

Vision of a Baby-Friendly Future

Six specific faces of society
Babies are part ofeveryone’s everyday life

Loose, friendly ties facilitating
easy cooperation aroundraising children
Creativity from babies
brings excitement to society
No barriers toraising children

All babies are helped to develop
and grow, regardless ofthe conditions of their birth
A comfortable world
where babies are not troubled
by environmental risks

We formulated Vision of a Baby-Friendly Future by describing, in terms of six specific faces of society, the “baby-friendly” world envisaged in that
Purpose. In order to realize its Vision of a Baby-Friendly Future, Pigeon will move forward step by step, seeking to increase the number of people
in society who empathize with the vision and co-creating and taking action with a diverse range of stakeholders.
Vision of a Baby-Friendly Future website: https://www.pigeon.com/vision-of-a-baby-friendly-future/
58©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Appendix - FY Dec. 2022 Results

FY Dec. 2022 Results : Financial Highlights (Consolidated)
Unit: Million JPY

FY Dec. 2021 Actual
ActualFY Dec. 2022 Actual% of Total

Actual% of Total

YoY Change

Net sales

93,080100.0%

94,921100.0%

102.0%

Operating Income

13,33614.3%

12,195

12.8%

91.4%

Ordinary Income

14,64815.7%

13,465

14.2%

91.9%

Net Income Attributableto Owners of Parent

8,785

9.4%

8,581

9.0%

97.7%

Net Assets

76,810ー

79,952

ー

104.1%

Total assets

98,042

ー

101,733

ー

103.8%EPS (yen)

73.44

ー

71.72

ー

97.7%

BPS (yen)617.59ー

640.96ー

103.8%

ROE *

12.2%

ー

11.4%

ー

ー

ROIC *

12.5%

ー

10.9%

ー

ー

*ROE: Calculated with equity being the average of the beginning and ending balances*ROIC: NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances©Pigeon Corporation All Rights Reserved. │ Strictly Confidential60

FY Dec. 2022 Results : Pigeon Sales by Region* (YoY)

CHN
UAE

+10%

-19%

VNM

(Middle East)

IND

KOR

+23%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

+25%
MYS

-12%

JPN

(Baby Care)

+19%
SGP

-2%

±0%

IDN

AUS

±0%

+19%

*Sell-in results (local currency basis) 61

FY Dec. 2022 Results : Lansinoh Sales by Region* (YoY)
GBR
CAN

USA

-3%

+10%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

DEU

BENELUX

-13%
-8%

+26%

CHN
TUR

+114%

+7%

*Sell-in results (local currency basis) 62

FY Dec. 2022 Results : Overseas Sales by Region
China (including Hong Kong)

Other Asia

North America

EuropeNear and Middle East

Other areas
3,632

FY Dec.
2022
22/12期
4Q

32,1299,521-18.4% in local currency

60,68911,4862,550+10.6% in local currency
3,650

21/12期
4Q
FY Dec.
2021

34,392

8,092

57,767

8,669
2,007

(Unit: Million JPY)

0

10,000©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

20,00030,000[Currency Rates]

40,00050,00060,000FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50
FY Dec. 2021 Results: US$1 = JPY 109.85 / CNY 1 = JPY 17.03 63

FY Dec. 2022 Results : Consolidated Cash Flow Comparison(Unit: Million JPY)

Purchase of tangible and intangible fixed assets : ¥(5,565)[FY Dec. 2021 ¥(5,894)]

13,21010,893( 5,593 )37,0501,560

35,218( 5,659 )35,2181,180( 8,693 )34,283( 9,666 )Dividends paid : ¥(8,974)[FY Dec. 2021 ¥(8,741)]

Income before income taxes: ¥13,143[FY Dec. 2021 ¥13,531]

Q4 / Dec. 2021

Q4 / Dec. 2022

Balance at

Operating

Investing

FinancingTranslation

Balance atBalance at

Operating

Investing

FinancingTranslation

Beginning

Activities

Activities

Activities

Adjustment

End

Beginning

Activities

Activities

Activities

Adjustment

End37,05010,893(5,593)(8,693)

1,560

35,21835,21813,210(5,659)(9,666)

1,180

34,283©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Balance at64

FY22/12 (66th period) PVA tree (Group consolidated)
Consolidated

Net sales

Operating profit

Top: Dec. 2022 Plan
Mid: Dec. 2022 Results
Bottom: Dec. 2021 Results(Unit: Million JPY)NOPATPlan 9,940
Results 8,537
LY 9,335

Plan 14,200
Results 12,195
LY 13,336

Plan 98,700
Results 94,921
LY 93,080

Tax

Cost of sales

Plan 4,260
Results 3,659
LY 4,001

PVA

Plan
Results
LY

6,099
4,617
5,600

Capital invested

Working capital

Trade receivables

SG&A expenses

Plan 76,831
Results 78,381
LY 74,718

Plan 21,311
Results 23,966
LY 21,641

Plan 15,512
Results 16,114
LY 15,670

Plan 33,900
Results 32,638
LY 30,735

Fixed asset

Inventory asset（参考）Plan 32,956
Results 33,189
LY 30,015

WACC

common 5.0%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Plan 50,600
Results 50,087
LY 49,008

Cash and otherasset and liability
Plan 22,563

Results 21,226
LY 23,062

Plan 12,027
Results 14,012
LY 12,041

Trade payables
Plan 6,227

Results 6,160
LY 6,070

研究開発費

見込 0
前期 0

発送費

見込 0
前期 0

Starting from the 60th term (fiscal year ended January 31, 2005), the average of the beginningand the end of the term is used for the B/S items when calculating CCC.

65

FY22/12 (66th period) PVA tree (Group consolidated)
Consolidated

Top: Dec. 2022 Plan
Mid: Dec. 2022 Results
Bottom: Dec. 2021 Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC

PVA
spreadPlan
Results
LY

Plan
Results
LY

12.9%
10.9%
12.5%

Plan
Results
LY

18.5%
15.6%
17.8%

Plan
Results
LY

14.4%
12.8%
14.3%

Plan
Results
LY

51.3%
52.8%
52.7%

SG&A expenses ratio
Plan
Results
LY

34.3%
34.4%
33.0%

Working capital ratio

7.9%
5.9%
7.5%

Capital invested t/o

WACC

common 5.0%

tax ratecommon 30.0%

Plan
Results
LY

1.3
1.2
1.2

Plan
Results
LY

21.6%
25.2%
23.3%

Fixed asset ratio
Plan
Results
LY

33.4%
35.0%
32.2%

Cash and otherasset and liability
ratio

Plan
Results
LY©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

22.9%
22.4%
24.8%

66

FY22/12 (66th period) PVA tree (Group consolidated)
Consolidated

Top: Dec. 2022 Plan
Mid: Dec. 2022 Results
Bottom: Dec. 2021 Results(Unit: Million JPY)

Working capital

Trade receivables

Plan 21,311
Results 23,966
LY 21,641

Plan 15,512
Results 16,114
LY 15,670

Inventory asset

CCC
Plan
Results
LY

Receivable turnover period
99.2

119.2
105.9

Plan
Results
LY

57.4

62.0

61.4

Inventory turnover period
86.8
102.1

Plan 12,027
Results 14,012
LY 12,041

Plan
Results
LY

Trade payables

Payables turnover periodPlan 6,227
Results 6,160
LY 6,070

Plan
Results
LY©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

89.7

44.9
44.9
45.2

Starting from the 60th term (fiscal year ended January 31, 2005), the average of the
beginning and the end of the term is used for each B/S item in the CCC calculation.

67

FY Dec. 2022 Results : E-Commerce Ratio in Key Markets[ E-commerce sales ratio of Pigeon Lansinoh products ]87%

Korea*
70%

China - Pigeon*
51%

UK
36%

US

32%

India*
21%

Singapore*Japan©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

9%*: Sell-out

Others: Sell-in
68Appendix : 8th MTP

8th MTP : Financial Targets (Consolidated / three years)
Unit: Million JPY

FY Dec. 2022
Actual

FY 2023
Forecast

FY 2024Plan

FY 2025
Plan

Net Sales

94,921

100,000

106,500

113,800

Cost of Sales

50,08751,80054,60057,300Gross Profit

44,834

48,20051,90056,500

SG&A Expenses

32,63835,80037,90040,500Operating Income

12,195

12,40014,00016,000Net Income Attributable to
Owners of Parent

8,581

8,100

9,100

10,400EPS (yen)

71.72

67.70

76.05

86.92

Gross Margin

47.2%

48.2%

48.7%

49.6%

Operating Margin

12.8%

12.4%

13.1%

14.1%

Net Income Attributable to
Owners of Parent Margin

9.0%

8.1%

8.5%

9.1%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[Currency rates] FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50
8th Mid-term Plan: US$1 = JPY 130.00 / CNY 1 = JPY 19.50

70

8th MTP : Financial Targets (by Segment / three years)
Unit: Million JPY

Net sales

FY 2023
Forecast

FY 2024Plan

FY 2025Plan

3-yearCAGR

Growth in Amount(FY25 vs. FY22)

Consolidated

94,921

100,000

106,500

113,800+6.2%+18,879

Japan Business

36,32336,80037,00038,500+2.0%+2,177China Business

34,77637,70041,40044,300+8.4%+9,524Singapore Business

14,153

15,40016,20017,800+7.9%+3,647

Lansinoh Business

16,917

18,20019,30020,400+6.4%+3,483Elimination ofintersegment transactions(7,248)(8,100)(7,400)(7,200)ーー

Unit: Million JPY

Operating
IncomeFY Dec 2022
ActualFY Dec 2022
Actual

FY 2023
Forecast

FY 2024Plan

FY 2025Plan

3-yearCAGR

Growth in Amount(FY25 vs. FY22)

Consolidated

12,195

12,40014,00016,000+9.5%+3,806

Japan Business

1,491

1,200

1,600

1,900

+8.4%

+409

China Business

10,40811,30012,40013,300+8.5%+2,892Singapore Business

2,140

2,100

2,200

2,600

+6.7%

+460

Lansinoh Business

1,154

1,300

1,300

1,400

+6.7%

+246

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[Currency rates] FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50
8th Mid-term Plan: US$1 = JPY 130.00 / CNY 1 = JPY 19.50

71

8th MTP : Financial Targets (by Region / three years)
Unit: Million JPY

FY Dec 2022
Actual

FY 2023
Forecast

FY 2024Plan

FY 2025
Plan

Overseas Total

60,68965,433

71,614

77,208+8.4%

127.2%

China (incl. Hong Kong)

32,12932,95935,56437,286+5.1%

116.1%

Other Asia

9,521

11,992

13,917

15,963+18.8%

167.6%

North America

11,486

11,911

12,89914,005+6.8%

121.9%

Europe

3,632

4,371

4,859

5,146

+12.3%

141.7%

Near and Middle East

2,550

2,647

2,784

2,995

+5.5%

117.4%

Others

1,371

1,553

1,592

1,813

+9.8%

132.4%

2022 Actual

2025
2025年
Plan

3-year
CAGR

3 yr Growth(FY25 vs. FY22)

2025 Plan

77,2082022
Actual36%

60,6892022年

020,00040,000©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

60,00064%
80,000100,000

32%
68%

日本
■ Japan
海外■ Overseas

FY Dec. 2022 Results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50[Currency rates] 8th Mid-term Plan: US$1 = JPY 130.00 / CNY 1 = JPY 19.50

72