Integrated Report 2020 / 12
For the Year Ended December 31, 2020

Pigeon Way / P VA Tree

VisionThe Pigeon Way
PurposeThe Pigeon Way is thecornerstone of all our activities.
It embodies our “heart and soul”
and sets the grounds for our

Corporate Philosophy

actions to stream from this core.

Credo

ValuesAction Principles
PVA Tree: Consolidated Results in FY ended Dec. 2020

Consolidated● Corporate Philosophy● Credo● Vision─ The essence and core of our company

─Our fundamental brief based on the corporate philosophy

─ The goal Pigeon Group aims to achieve

Love

Only love can beget love

To be the baby product manufacturer
most trusted by the world’s babies andfamilies: Global Number One

Top: Dec. 2020 Plan
Mid: Dec. 2020 Results
Bottom: Dec. 2019 Results(¥ millions)● Purpose● Values● Action Principles

─ Our reason for being and the role we shouldplay in society─Important attributes for all Pigeon employees─ The basic guideline for driving all of our actions

Integrity
Communication, Consent, Trust
PassionAgility
Keep sight of customers
Global collaboration among competent individuals
Leadership and logical working style
Willingness to change

We want to make the world more babyfriendly by furthering our commitment
to understanding and addressing babies’
unique needs

PVA*
Plan 9,044
Results 7,144
ÙõèùìòøöĢöæäï 8,525
year (PFY)

Operating income
NOPAT*
Plan 12,670
Results 10,721
PFY 1 1 ,95 1

Income taxes

Invested capital

Working capital

Trade receivables

SG&A expenses

Plan 72 ,548
Results 7 1,545
PFY 68,523

Plan 2 1 ,037
Results 20,462
PFY 19,986

Plan 17,086
Results 15,837
PFY 15,796

Plan 38,500
Results 34,605
PFY 33, 727

Fixed assets

統合報告書 2020/12

01

Environmental

40

Histor y at a Glance02

Governance

43

Histor y of Pigeon and Nursing Bottles

04

Business Over view

06

Board of Directors, Audit & Supervisory Board
Members, and Managing Officers

46

To Our Stakeholders

08

目次

C ontent s

14

Efforts to Improve Brand Value

16

Dialogue between Outside Directors and Internal Director

18▲

Business Summaries by Segment

24

Financial Highlights

48

MD&A

49

Financial Data

53

Nonfinancial Data

55

Company Information

56

26

Corporate Data
Consolidated Subsidiaries
Third-Party Evaluations

56

Singapore Business28

Pigeon Group Business Structure57

Lansinoh Business30

Stock Data

58

IR Tools (Quick Reference)

59

Japan Business

24

China Business

WACC*

32
34

Value Creation Story

2020 / 12

Pigeon’s ESG Activities
SocialImproving Corporate Value: PVA Tree;
Purpose of This Integrated Report▲ ▲ ▲ ▲ ▲▲ ▲ ▲ ▲

ピジョン

Integrated Repor t▲▲ ▲PigeonC2

PVA: Pigeon Value Added
NOPAT: Net Operating Profit After Taxes.
The tax rate is 30%
WACC: Weighted Average Cost of Capital

Cost of sales
Plan 52,400
Results 49,459
PFY 49, 21 6

Plan 5,430
Results 4,595
PFY 5, 1 22

Plan 28,526
Results 28,400
PFY 27,820
Pigeon Way

Net sales
Plan 109,000
Results 99,380
PFY 100,01 7

Plan 18,10 0Results 15,316
PFY 1 7,072

common 5.0%

Cash and otherassets and liabilities
Plan 22,986
Results 22,683
PFY 20,7 18

Inventories
Plan 1 1 ,069
Results 11,294
PFY 10,908

Trade payables
Plan 7, 1 1 8Results 6,669
PFY 6,7 19＊ The figures on the balance sheet used in calculation of PVA are the amounts at the beginning and end of the fiscal year. Effective the fiscal period ended December 2019, the Pigeon Group changed its fiscal year-end from January 31 to
December 31. Therefore, fiscal 2019 was a transitional period of 11 months (February 1–December 31, 2019.)

The Pigeon Group (Pigeon Corporation and its consolidated subsidiaries) seeks to maximize economic and social
value through communications with all stakeholders, including shareholders and other investors. This document,

Purpose of This

which contains reports on management strategies, as well as business and ESG activities, is designed to deepen

Integrated Repor t

your understanding of the corporate value created by the Pigeon Group. You can also learn about our pastconsolidated corporate performances (covering longer time spans) by viewing Investor’s Guide 2020 in our digital
IR Library. Please visit www.pigeon.com for details.

Pigeon Integrated Repor t 2020 / 1201

His tor y at a Glance

2015
Runfee (baby stroller that runs smoothly
over uneven ground) launched

For more than 60 years since its founding, the Pigeon Group has continued conducting R&D with the aim of bringing
happiness to babies and their families. We offer highly competitive products and services and are expanding our businessaround the world while growing as a brand supported by our customers. Through our corporate activities based on the
Pigeon Way, we will continue striving to realize a society where everyone can raise their children with peace of mind, andthus make the world more baby-friendly.

1974
First overseas office established in Singapore
1949
Dofu Boeki (Pigeon’s predecessor)
established

1975
World’s first diaper liner made using binder
free manufacturing method launched

1957
Pigeon Honyuki Honpo (Nursing Bottle
Manufacturing) Corporation
established

1976
World’s first rubber toothbrush for milk teeth
launched
1977
P-type nursing bottle for babies with poor
sucking strength launched

1966
Name changed to Pigeon Corporation

Net sales(¥ millions)
120,0002002
Bonyu Jikkan wide-neck nursing bottle(which promotes babies’ natural sucking
peristaltic movement) launched
1992
Baby wipes launched

2002
Pigeon (Shanghai) Co., Ltd. established

1982
MagMag training cup with adjustable tops fordifferent ages launched

1994
UV baby skincare (first sunscreen skincare
product for babies) released

2004
Lanshinoh Laboratories, Inc. in USA joined
the Pigeon Group1985
Fit (Japan’s first seamless breast pad)launched

1997
Listed on First Section of Tokyo Stock
Exchange2009
Pigeon India Pvt. Ltd., a sales
subsidiary established100,000

80,0004,000

60,0001987
Chibion digital thermometer for babies
launched
1988
Shares registered with the Securities Dealers
Association of Japan (present-day JASDAQ)

Marketcapitalization(¥100 millions)
6,000

Total sales

Market capitalization
40,0002,000

2014
Overseas sales ratio
exceeds 50%

1966
Export business started

20,0001968
World’s first medicated compact baby
powder launched

Jan. 1958

Jan. 1968

Jan. 1978

Jan. 1988

Jan. 1998

Jan. 2008

Jan. 2018
Jan. 2019
Dec. 201900(11-month period)

Dec. 2020

1957

1958-19691970-1982

1983-1999

2000-2006

2007-20122013-20182019-

Pigeon’s beginnings

Becoming
a comprehensive baby
care manufacturer

Crossing the ocean,launching our elder carebusiness

Listing on the Tokyo Stock
Exchange, becoming apublic company

Onward to China,
then to the world

Our global expansion
gathers pace

One global Pigeon
under the Pigeon Way

The future for Pigeon’s
brand power

In 1966, the company name wasshortened to Pigeon Corporation. By
this time, Pigeon had developed andlaunched a diverse product line,
becoming a comprehensive
manufacturer of baby care products.
In 1969, however, a small trace offormalin was detected in the nipple ofa Pigeon nursing bottle. Although theamount found was too small to cause
harm, we received protests andproduct returns from customers. The
lessons learned from this incident
helped shape the company’scommitment to quality control and led
to the establishment of the Pigeon
Customer Service Center.

Pigeon began exporting its productsìñ'$$òóèñìñêì÷öĢõö÷òùèõöèäöòĤæèìñÜìñêäóòõèìñ'%"Òñ'%#
Pigeon entered the elder carebusiness. The falling Japanesebirthrate meant that exploringoverseas markets and othercare-related industries was anesential step for the company.

In 1983, Yoichi Nakata was appointed
Pigeon’s second president, and in1988 the company registered its
shares on the over-the-countermarket. Pigeon listed on the Second
Section of the Tokyo Stock Exchange
in 1995, and then the First Section in
1997, continuing its journey toward
becoming a public company. In 1991,
Pigeon established a Central
Research Center. Two years later, in
1993, it expanded into child careservices. In 1990, Pigeon establishedì÷öĢõö÷òùèõöèäöðäñøéäæ÷øõìñêcenter in Thailand. These diverse
initiatives would drive strong growthin the years to come.

In 2000, Seiichi Matsumura becameÙìêèòñĐö÷ëìõçóõèöìçèñ÷äñç÷ëèĢõö÷not directly related to the company’s
founder. At that time, Pigeon’s
overseas business accounted for lessthan 10% of net sales. Nevertheless,Öä÷öøðøõäìçèñ÷ìĢèçêïòåäïðäõîè÷öas a future growth driver, and led theæòðóäñüĐöéøïï¢ģèçêèçèñ÷õüìñ÷ò
China in 2002. Two years later, in
2004, Matsumura broadened thescope and territory of Pigeon’s global
business further by adding US-based
Lansinoh Laboratories, Inc., then an
OEM supplier of breast pads andother items, to the Pigeon Group.

In 2007, Akio Okoshi was appointed
fourth president of Pigeon. Okoshi’s
term would see further accelerationof the company’s global business,with expansion into India, Turkey,
Malaysia, South Korea, and otherregions. In Japan, where birthrates
continued to fall, Pigeon adopted newêõòú÷ëö÷õä÷èêìèöèñ÷èõìñêĢèïçösuch as baby strollers. Okoshi also led
extensive internal reforms to thecompany’s personnel and othersystems, seeking new modes of
expansion.

In 2013, Shigeru Yamashita wasäóóòìñ÷èçÙìêèòñĐöĢé÷ëóõèöìçèñ÷
Yamashita brought extensive
overseas experience in Thailand, theUnited States, and elsewhere. This
experience led him to strongly
believe in the importance of uniting
the“heart and soul” and “actions” of
Pigeon employees around the world,
and in 2014 he established the“Pigeon Way.” Pigeon’s global
performance remained solid,
exceeding ¥100 billion in sales by
2018.

In 2019, Norimasa Kitazawa was
appointed Pigeon’s sixth president,
following his successful workoverseeing Pigeon’s expansion in
China. Kitazawa developed thePigeon Way’s “Mission” into a new“Purpos ” : “We want to make theworld more baby-friendly byfurthering our commitment tounderstanding and addressing
babies’ unique needs.” Kitazawa’s
business strategy is aimed at
improving Pigeon’s brand power andstrengthening the company’s
ESG/SDGs commitments in pursuitof still greater growth.

Pigeon entered the world in 1957 as
Pigeon Honyuki Honpo Corporation.
ÏòøñçèõäñçĢõö÷óõèöìçèñ÷âøìæëì
Nakata worked day and night on
product improvements, hoping tobring ever greater happiness to a newêèñèõä÷ìòñòéìñéäñ÷öĒÝëèĢèïçòé
nursing bottles holds dreams for the
future,” said Nakata, “and if we work
hard to make exceptional products
we will undoubtedly succeed.”

02

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 1203

Histor y of Pigeon andNursing Bottles
1976 Plastic

1962 Glass

Angled neck allowed babies÷òçõìñîèùèñöðäïïäðòøñ÷öof milk in a comfortable position.

àì÷ëĢï÷èõùäïùèìñöìçèñìóóïèéòõðìïîùòïøðèæòñ÷õòï

Glass Glass-Made Nursing Bottle
Plastic Plastic-Made Nursing Bottle

1957

1960

Plastic

L-Type Nursing Bottle

Silicone Rubber Nipple

Made of high-density polyethylene
for greater resistance to boiling.

More durable than the natural rubberøöèçóõèùìòøöïü2013 Plastic

PV-8-Type Nursing Bottle

K- 8-Type Nursing Bottle

2005

Glass

Batik-Print Slim-Type Nursing Bottle “Flexible”
Traditional design added for Indonesian market.

Slim-Neck Bottle with Peristaltic
Nipple for Chinese market

1963 Plastic

1986 Glass

KP-8-Type Nursing Bottle

Snoopy-design K-Type Nursing BottleÛèæìóìèñ÷òé"÷ëÝòîüò
Òñùèñ÷ìòñÊúäõç

Nursing bottles released with designs
featuring popular characters like Snoopy.

2012 GlassÛèñäðèçĒÏïèûìåïèēìñòùèõöèäöðäõîè÷ö
ìñ "Ûèïèäöèçìñ %ìñÓäóäñøñçèõ
the name “Slim-Type Nursing Bottle.”

1964 Glass

1988 Glass

A-Type Nursing Bottle

Bonyu Sodanshitsu Nursing BottleWith heat-resistantglass body .

Promoted transition to direct breastfeedingwith Oketani Method.

2002“Ziran Shigan”
series expanded with
Chinese zodiac designs in China.

1949 Glass“myPrecious” Bonyu Jikkan Wide-Neck
Nursing Bottle
Combined cute design with exquisite form.

PPSU* Bonyu Jikkan
Wide-Neck Nursing BottleWith superior shockand heat resistance.

Wide-necked bottle with peristaltic nipple
allowing infants to drink smoothly.

1950 Glass2017 Glass

Released Lansinoh-brandnursing bottles mainlyin Europe and theUnited States.

2007 Plastic

Glass Plastic

Bonyu Jikkan Wide-Neck
Nursing Bottle(First Generation)

1954 Plastic

201 1*Polyphenylsulfone

1956 Glass1965 Plastic

2018 Glass

F-Type Nursing Bottle

PW-Type Nursing Bottle

Silicone Coating
for Bonyu Jikkan Wide-Neck
Nursing Bottles

ÓäóäñĐöĢõö÷çèæòõä÷èç
nursing bottle.

1962 Plastic

Smooth inner neck surfaceóõèùèñ÷èçðìïîõèöìçøèåøìïçøóäñçìðóõòùèçëüêìèñè

S-Type Nursing Bottle

AP-4-Type and AP-8-Type Nursing Bottles

ÓäóäñĐöĢõö÷óïäö÷ìæñøõöìñêåò÷÷ïè¤
light, portable, and perfect for outings.

Isoprene rubber nipple resisted wear. Polycarbonateåòçüõè÷äìñèçì÷ööëäóèèùèñäé÷èõõèóèä÷èçåòìïìñêÌòä÷ìñêëèïóèçóõèùèñ÷éõäêðèñ÷ööæä÷÷èõìñêèùèñ
if bottle fell and broke.

1979 Glass Plastic

2010 Glass Plastic

A-Type Nursing Bottle

K-Type Nursing Bottle

Forerunner of current Flexible,slim-type bottles.

With rounded nipple moresuited to how babies suck,and body designed for easierformula mixing.

Bonyu Jikkan Wide-Neck Nursing Bottle(Second Generation)

Nursing Bottle with Wide-Neck and Cap

Released by Pigeon’s predecessor, Dofu Boeki.

1958 Glass
A-4-Type and A-8-Type Nursing Bottles
Based on research on how infants naturallyçõìñîÊöìêñìĢæäñ÷ìñģøèñæèòñéø÷øõèåò÷÷ïè
design.

2000 Plastic

2003 Plastic

PES* Nursing Bottle

Wide-Neck Bottlewith Peristaltic NippleÓäóäñĐöĢõö÷èñùìõòñðèñ÷äïëòõðòñè¢éõèè
nursing bottle.
*PolyethersulfoneÍèöìêñèçèûæïøöìùèïüéòõòùèõöèäöðäõîè÷ö

Based on research on “Three Key Factors of
Sucking.”*Released in China as “Ziran Shigan.”¡Ûèïèäöèçìñò÷ëèõòùèõöèäöðäõîè÷öäöĒÙèõìö÷äï÷ìæÙÕÞÜēÛèñäðèçäöĒÜòéÝòøæëÙèõìö÷äï÷ìæÙÕÞÜēìñ "Pigeon’s histor y mirrors the evolution of nursing bottles.

There is no finish line for our development of nursing bottles.

Pigeon aim is to design the best nursing bottles for babies and mothers. This thought

We pursue to design nursing bottles in which babies can suck as they do in breastfeeding, resulting in no interference with breastfeeding

has not changed since Pigeon’s founding. Today, Pigeon is expanding its business

continuity. To approach this ultimate goal, from its early days Pigeon has been conducting research into babies’ sucking behavior. Initially,

globally with various products and services. At the time of our foundation, however, we

we used cameras attached to the bottom of the bottles to observe babies’ tongue movement, but thanks to scientific advancement,

were preoccupied with the development of our mainstay nursing bottles. In those days,

now we use ultrasound. Taking research to another level, we also recently developed a device to measure the softness of a mother’s

direct-attached nursing bottles, where the nipple is attached directly to the bottle, were

nipples, and we are conducting research into nipple softness. We will never end our research into

mainstream. However, those nipples tended to collapse, making it difficult for babies tobaby’s sucking behavior. In addition, we have continued pursuing innovation in technological fields,

suck. There were also issues regarding hygiene. The founders thought, “We should work

such as materials and manufacturing methods, which we reflect in our product development. We

on improving the quality of nursing bottles!” This led to the creation of Japan’s first

constantly seek the slightest improvements in bottle and nipple shapes. This culture has been

capped nursing bottle. It was a revolutionary product with air intake holes andpassed down unchanged to the Pigeon of today.

adjustable milk output, but it was not a hit due to its high price and lack of nameBabies’ sucking behavior is universal, and our nursing bottles, which benefit from Pigeon’s strong

recognition. However, we continued making refinements with the aim of developing the

global presence, are currently sold in many countries and regions. We are the No. 1 brand in China and“best” nursing bottle, laying the foundation for Pigeon’s subsequent growth.

have high market shares in Taiwan, Indonesia, Thailand, and many other Asian markets. Pigeon isconvinced that better products lead to greater happiness for a larger number of babies and families
across the globe. This is the belief that drives our research and development for nursing bottles.

04

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 1205

Busines s O ver v iew

Products/Ser vices

Lansinoh Business

12.6%(¥12,473 million)
Singapore Business

12.3%

Baby and mother care products

Japan Business

Consolidated
Net Sales1

99,380¥

millionShare of net sales(Sales)(¥12,184 million)

45.3%(¥44,977 million)

Business Conditions and Group Strengths

China Busines s
Mainly China, South Korea,
and East Asia

We place an emphasis on nursing bottles and nipples, toiletries, and high-end skincare products.
With more than 500 products on the Chinese market, we focus on high-end demand from thegrowing number of newly wealthy people in major coastal cities. We are also strengthening ourpresence in the field of e-commerce.

China Business

38.0%(¥37,732 million)
1: The consolidated net sales figure refers to the amount after
elimination of intersegment transactions.

Effective the year under review, ended December 31, 2020, the Group has four business segments forreporting purposes: Japan Business, China Business, Singapore Business, and Lansinoh Business. Four
former business segments—Domestic Baby & Mother Care Business, Child Care Service Business, Health& Elder Care Business, and Other (manufacturing and sales handled by domestic production subsidiaries for
non-Group entities)—have been consolidated into the Japan Business.

Products/Ser vices

Baby and mother care products

Singapore Business
Southeast Asia, India,

Products/Ser vices

Middle East, Oceania

Business Conditions and Group Strengths

We sell baby and mother care products under the Pigeon brand. In particular, we have positioned
India and Indonesia as priority markets, and we are strengthening our production and sales
systems accordingly. We are also working to broaden our presence in the Middle East andOceania, and we have started expanding into Africa.

Baby and mother care products, baby strollers, child-care services, operation of in-company
child-care facilities, day-care services, event child-care services, preschool education
services, aging-prevention products, elder care products and services

Jap an Busine s sBusiness Conditions and Group Strengths

Based on over half a century of research into breastfeeding and early childhood development,
we have gained an in-depth understanding of babies’ growth processes and identified areas ofconcern in child-rearing. This has led to our development and launch of numerous high-quality
products, resulting in widespread recognition of Pigeon as a leading and trusted company in theindustry. Taking advantage of this trust, we are rigorously launching new, highly competitive
products and improving the quality of our offerings in the areas of child-rearing support,
healthcare, and elder care.

Products/Ser vices

Baby and mother care products
Business Conditions and Group Strengths

Lansinoh Business
Mainly North America, Europe,and China

06

Pigeon Integrated Repor t 2020 / 12

We sell breastfeeding-related products under the Lansinoh brand, mainly in the United States.
Spearheaded by Lansinoh Laboratories, Inc., we are also expanding our business in the United
Kingdom, Germany, and other European countries, as well as China. We are strengthening ourbrand while expanding other product categories, including nursing bottles.

Pigeon Integrated Repor t 2020 / 1207

To Our S t akeholder s

Pigeon’s strong brand demonstrated
by the COVID-19 global pandemic

Source of brand value:
Product strength backed by R&D

On February 13, 2020, about a month before the World Health

Our brand power is underpinned by our core product lines, especially

Organization (WHO) declared the COVID-19 outbreak a global

nursing bottles, which account for around 30% of net sales. A

pandemic, we announced our Seventh Three-Year Medium-Termnewborn baby’s first mouthpiece, other than the mother’s breast,

Business Plan, which focuses on our Brand Strategy, Product Strategy,requires high quality standards in every aspect. As of the fourthand Regional Strategy. With this, we took the first step on the road toquarter of fiscal 2020, Pigeon’s market share for nursing bottles wasachieving our sales target of ¥200 billion in the coming decade. In

in the mid-80% range in Japan2 and more than 40% in China3, where

fiscal 2020, the pandemic forced major changes in the Group’s

we continue to hold the overwhelming top position. Many customers

management and operating environment, including its supply chain,choose our nursing bottles and are satisfied with our products,

market, and industry. Yet, I believe we did well. I would like to express

making Pigeon a brand known for safety and reliability. This has also

my sincere gratitude to each and every one of our employees aroundhelped us earn a reputation as a strong and “comprehensive childcare

the world for their hard work and for carrying out their duties while

products brand” that is popular in other categories, including skincare

putting highest priority on the health and safety of themselves and(products applied to the skin), oral care baby food (products put into

others.

the mouth), and healthcare (products for monitoring and maintaining

With respect to our consolidated results, net sales declined

health). Since its founding over 60 years ago, Pigeon has been helping

year on year, to ¥99.3 billion, but the magnitude of the decrease

babies (who cannot speak) by conducting rigorous research into

was limited to 4.0%1. Operating income slipped 11.0%, to ¥15.3

babies’ feeding mechanism and nursing bottles while continuallybillion, and the operating margin was 15.4%, remaining in the

improving products in terms of hygiene, safety, function, and design.

mid-teen range. Ordinary income declined 7.2%, to ¥16.1 billion,

In the process, we have also conducted in-depth research inand net income attributable to owners of parent fell 8.2%, tocollaboration with maternity hospitals in our quest to help all babies¥10.6 billion. As for shareholder return, we paid annual dividends

enjoy a more comfortable feeding experience. For example, we haveof ¥72.00 per share, up ¥2.00 year on year, without changing ouractively developed specially modified bottles for babies born with cleftcommitment to having a robust financial base.

lip and/or palate, babies with low birth weight, and babies with weak
drinking ability. Our other product lines are also the culmination of

In 2002, when I was posted to China, there was the SARS epidemic, andsuch diligent research and our evidence-based approach. The

based on my experience I found there was solid demand for baby

strength of our products is the source of the value of the Pigeon

products despite unexpected deterioration in the external environment.

brand, which is not threatened by counterfeit products.

As a result of the COVID-19 pandemic, demand from inbound tourism toJapan disappeared and sales activities in India and Malaysia were

2 : Pigeon’s estimate (12-month average for fiscal 2020), extrapolated from data onsales of baby shops and drug stores across Japan released by Intage Inc.

restricted. However, in Europe, United States, and China, where we have

3 : Pigeon’s estimate (value terms based on sell-out)been strengthening our e-commerce business, we expanded ourbusiness performance on a local-currency basis compared with theprevious fiscal year. In times of emergencies, there is a marked
tendency for consumers to purchase products sold by trusted andproven brands. In Japan, our mainstay nursing bottles and nipples
generated increased sales and market share, and sales of wipes anddisinfectant products also increased against the backdrop of growing

Norimasa Kitazawa
President & CEO

hygiene awareness among consumers. I believe that two factors
contributed to our strong performance in an unprecedentedly difficult
business environment: The brand strength of Pigeon products, which
are recognized for their safety, reliability, and high quality, and our

Making the world more baby-friendly while increasing
corporate value through speed-focused ESG management

08

Pigeon Integrated Repor t 2020 / 12

wide range of products, underscoring our reputation as a“comprehensive childcare products brand,” which is rare in the world.
1 : In fiscal 2019, Pigeon changed its fiscal year-end from January 31 to December 31.
Therefore, fiscal 2019 refers to an 11-month transitional period from February 1 to
December 31, 2019. In this paragraph, we do not consider the aforementioned
anomalies and compare our results in fiscal 2020 with a hypothetical 12-month
conversion of our fiscal 2019 results.

Pigeon Integrated Repor t 2020 / 1209

To Our S t akeholder s

Mobilizing the power of employees
to make the world more baby-friendly

more on core products that leverage our strengths in such areas

Accelerate transition
to environmentally friendly materials

Reflecting increased social value
in economic value

In fiscal 2020, we upgraded the Mission component of Pigeon Way
to our Purpose, which states: “We want to make the world morereflect the market characteristics and local needs of each country.

Beyond COVID-19, our long-term Vision is “to be the baby product

Providing products and services that address challenges faced by

Meanwhile, our e-commerce business has gathered

manufacturer most trusted by the world’s babies and families (Global

consumers, especially those raising infants, is a business with highbaby-friendly by furthering our commitment to understanding andmomentum due to the COVID-19 pandemic, and we expect the

Number One).” Key to remaining “trusted” is to adopt ESG

social value, which makes me proud. The United Nations has adopted

addressing babies’ unique needs.” In line with this, we sought tomarket to shift rapidly to e-commerce in Japan and Southeast

perspectives.

17 Sustainable Development Goals (SDGs), the third of which is titledstrengthen the Pigeon brand by announcing our Brand Promise—

Asia, where the e-commerce sales ratios are relatively low. In

With respect to the environment, we will step up environmental“Health and well-being for all” and lists the levels of neonatal and“Celebrate babies the way they are”—to people inside and outside

China, which has spearheaded the shift to e-commerce, we haveinitiatives by setting more specific numerical targets in accordance

under-five mortality that all countries should aim for. This is an area in

the Group. This easy-to-understand message has been readily

been accumulating know-how from an early stage. In that market,

with our sustainable development policy, CSR Procurement Policy,

which the Pigeon Group can leverage its accumulated expertise andaccepted by employees as well as consumers. Always keeping our

price competition is likely to be fiercer compared with physicaland other policies formulated in 2020, in order to “leave a rich earth

exert its power to eliminate preventable deaths among babies.

Purpose in mind, our employees now engage in lively discussions

stores, which poses an ongoing threat. This is due to thefor the future of babies born tomorrow.” In our Japan Business, we will

Unfortunately, around 2.5 million babies die within the first monthabout how the Brand Promise can be implemented in our products

emergence of companies that act without regard to profits, as wellquantitatively evaluate environmental impacts at each stage of theof life annually worldwide, and more than 80% of these babies areand services. They have also come up with ways to help people

as companies that deploy unique products and the simplicity of

product cycle—raw material procurement, manufacturing,born with low birth weight4. Postnatal nutritional support is important

who are suffering from anxiety and other issues caused by themarket launches to capture the hearts of consumers. To survive in

distribution, use, and final disposal—and label products that meet ourfor the survival and growth of babies born with low birth weight, but

COVID-19 pandemic, and their ideas are put into practice aroundthis environment, it is essential to have value-added products

standards with the Pigeon Eco-Label, signifying them as being

many mothers are unable to produce the necessary amount of

the world in the form of supporting activities, which are expanding

based on solid evidence and the speed to quickly introduce suchenvironmentally friendly. By 2025, all products sold in Japan will carrybreastmilk immediately after delivery, as is the case with premature

rapidly. While the heart of our Corporate Philosophy, “Love,”products to the market. However, some products, such as

this label, reflecting our efforts to reduce the amount of plastic used inbirths. The Human Milk Bank5, opened in September 2020, is anremains unchanged, the entire Pigeon Group aims to become aconsumables, are difficult to differentiate. Here, companies will bepackaging and products. Furthermore, we will also try to remove

initiative to deliver donor milk to such babies. In addition, the Pigeon

more meaningful and brand-oriented entity with the help of eachforced to engage in price competition amid the ongoing shift toplastic from our materials and make our products more compact. Our

Group is working as one to address various social issues. Together

and every employee. In the midst of this crisis caused by theprivate brand products by e-commerce and major retailers,

flagship nursing bottles are available in glass or plastic. We currently

with hospitals, for example, we have developed nursing bottles for

COVID-19 pandemic, I am very happy that we addressed thesemaking it difficult to survive in the future.

challenges, and am proud of our employees for their commitment.

as nursing bottles and skincare products. At the same time, we will
target sustainable growth by developing product lineups thatuse polyphenylsulfone (PPSU) and polypropylene (PP) as materials inbabies with weak feeding ability. We also support the Rubella ZeroIn order to maintain high profitability and a strong presence in

our lightweight and easy-to-carry plastic nursing bottles. In the future,project, which aims to eradicate the incidence of congenital rubella

the post-COVID market, we must not only speed up our processes,

however, we make all our plastic-related materials, including those

syndrome in babies. In the process of tackling these difficult issues,

from R&D and product planning to decision-making, but also takeused in nursing bottles, more environmentally friendly, which will

we often gain insights that help us differentiate our products anda bird’s eye view of our business and product portfolio, including

enhance the environmental value and brand of the Pigeon Group.

services. For example, our “Save Premature Babies” campaign6,

Looking ahead to the post-COVID era

our production systems. The key to success is the speed withlaunched in 2020 in conjunction with the establishment of Human Milk

which we can introduce evidence-based products to the market in

Bank, has resonated among many customers, leading to an increaseIn our quest for sustainable growth, it is important that weshort time periods. In this regard, it may be best to increase thein market share of our products. This made us appreciate theaccurately recognize the changes brought about by COVID-19 andlevel of outsourced production to some extent in the future.

synergistic benefit of increasing both social and economic value.

envisage the market in the post-COVID era. Annual birth numbers

Naturally, we would have to give up some of the benefits of in-have been declining not only in Japan but globally due to thehouse production, but we believe we can compensate for this andimpact of COVID-19, so the falling birthrate is indeed a matter ofachieve both speedy market launch and secure profitability

concern. On the other hand, the Pigeon Group is still in the process

through some outsourcing.

of developing a global baby care market, and there are many
babies around the world who can benefit from our services.

4 Source: UNICEF News, May 15, 2019
5 : In September 2020, we opened the Nihonbashi Human Milk Bank, the largest suchbank in Japan, on the first floor of Pigeon's head office. For details, please refer topage 34.
6 : In conjunction with the opening of Human Milk Bank, we held our “Save Premature
Babies” campaign, donating a portion of sales of our breast pads to the Japan
Human Milk Bank Association.

Therefore, we do not consider the downtrend itself to be a threatthat could directly affect our business performance. There is still
plenty of room for growth, whether in developed countries or
undeveloped areas. In the countries where we already have apresence, especially emerging markets, it is mainly wealthy
customers who purchase Pigeon products consistently. Goingforward, we will introduce products that target the upper-middle
class in order to increase the number of Pigeon-brand users. I also
believe we can increase our market share by making Pigeon
products available to more babies in emerging countries, where
economies are growing. In addition, it is important for us toembrace the challenge of untapped markets, such as countries inAfrica. In this global market, where there is significant room fordevelopment, we will further enhance our brand power and focus

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To Our S t akeholder s

Pigeon’s sustainable growth supported
by each employee

Targeting long-term growth

The strength of the Pigeon brand and the products that support it are

While improving social value, we aim to achieve economic value in theboth created by our employees, and it is our employees who underpin

form of ¥200 billion in annual net sales over the next 10 years. The

the sustainability of the Pigeon Group. Unleashing the power of ourprogress of our Seventh Medium-Term Business Plan was stalled for

employees is one of my top priorities. If our motivated and capable

about one year due to COVID-19. For this reason, we announced aemployees can fully demonstrate their abilities, they will be better able

revised plan in February 2021. Under the revised plan, we are targetingmix and share opinions and more accurately grasp world trends andthe sales growth rate that we originally envisioned, and have notsocial changes. This will enable individual employees to generatechanged our direction with respect to pursuing our three key

more and more ideas. In addition to addressing the challenges faced

strategies: Brand Strategy, Product Strategy, and Regional Strategy.

by our customers, we want create inspiring experiences for new

We also plan to continually increase year-on-year cash dividends andgenerations of customers by developing products and systems thatmaintain a consolidated total shareholder return ratio of around 55%,

go beyond their imagination. When I was young and wanted to take on

as initially expected. We will also grow and expand the scale of our fourchallenges, Pigeon gave me various opportunities. The experiencebusiness segments through the speedy introduction of products thatand knowledge I gained in the process enabled me to grow, which ismeet local needs. As we learned from the COVID-19 pandemic,

the basis of Pigeon’s approach.

meanwhile, we will strengthen overall manufacturing in various ways,

We are working to improve employee salaries, maternity

including by expanding our range of emergency preparedness baby

allowance, and other benefits while promoting health management

products across the Group, strengthening our competitiveness in theas a matter of course. Taking it a step further, we introduced the

e-commerce market, and creating environmentally friendly offerings“Pigeon Frontier Awards (PFA)” in 2019 in order to increase theand new product categories.

amount of time that employees have fun at work and help them takeTo achieve organic growth, we will aggressively expand ouron challenges without fear of failure for the future. PFA provides ainvestments in R&D, which is the source of our value, while continuingforum where employees can freely propose and realize their ideas. We

to consider growth through M&As. Compared with nursing bottles,

bestowed awards to seven idea-based projects in 2020, some ofwhich we have been researching for many years, we believe there iswhich have since started and are earmarked for commercialization inroom for increased R&D in the skincare and oral care fields, which we

2021 or later. In 2020, we also launched a new career support systemhave a identified as priority categories. In terms of our R&D facilities,

to develop “competent individuals (professionals).” This system has

we will divide R&D themes between various regions in order toproduced results in supporting employees’ work styles and careerincrease the speed of investment recovery. In skincare, for example,

development from a broader perspective, including internal

we will focus on China, which leads other countries in terms ofrecruitment for departments seeking human resources, as well as anskincare research. Meanwhile, we aim to improve return on invested

external residency program embraced by two employees. In thecapital (ROIC), a key performance indicator, from 15.0% in fiscal 2020

beginning of fiscal 2021, we introduced a new personnel system withto 16.5% or more in the final year of the medium-term plan, based on

significantly revised, core elements, including the grading system,

the new accounting standard (see note below). By swiftly introducing

evaluation system and remuneration system. By shifting to ahigh-value-added products to the market and improving gross profit,

structure in which rewards are linked to actual roles and actions lead

we aim to raise the operating margin from 16.0% in fiscal 2020 toto results, I hope that we can talk about the future of the Pigeon Group

16.9% in fiscal 2022 and 20.0% in around 10 years, based on the new

together with our employees. Therefore, I encourage them to makeaccounting standard.

full use of the system to achieve their own dreams.

when the COVID-pandemic will end. Even if it takes a prolonged period

2020, seeking to promote sustainability management whileof time, however, we are confident that we can continue growing ontransforming the workplace into one where employees can enjoy

the strength of Pigeon’s solid products and brand power, backed by its

and feel motivated to work. The new committee is chaired by the

research, against the backdrop of solid demand for baby products. I

head of Global head Office and includes the managers of eachlook forward to your continued support.

business division as well as the manager of the Business
Strategy Division. In the future, we will formulate medium- andlong-term goals and promote activities to directly achieve them.

12

As of June 2021, when this report is issued, it remains uncertain

We established the Sustainability Committee in December

Pigeon Integrated Repor t 2020 / 12

Seventh Medium-Term Business Plan
In February 2020, the Pigeon Group announced its Seventh Medium-Term Business Plan for the three-year period ending
December 31, 2022. Under the plan, we aim to expand the Group’s business and improve the quality of its management
through the three basic strategies described below: Brand Strategy, Product Strategy, and Regional Strategy.

We will promote the integration of our brand and business strategies based on the Pigeon

Brand Strategy

Way, in order to maximize economic value while stepping up efforts to solve social issues
related to childcare. Our aim is to progress with the consumers from “buying a product” to“buying into a business,” which also means getting them to empathize with our businessand choose our brand.

Product Strategy

We will accelerate growth in core product categories where we can leverage our global
advantages while further differentiating ourselves from our competitors and building asolid earnings base.

By promoting a four-segment business system and transferring authority to each

Regional Strategy

business, we will accelerate decision-making on the frontlines. In the process, we will build
a “development, production, and sales” cycle that matches the market characteristics ofeach region and operate our business in a speedy manner.

In fiscal 2020, the first year of the Medium-Term Business Plan, we pursued business activities based on the above
strategies, but the spread of COVID-19 had a significant impact on our performance. For this reason, we reviewed ourforecasts for the second and third years of the plan and announced a revised plan in February 2021, based on our results infiscal 2020 and the direction of the pandemic. Under the revised plan, we will continue our three basic strategies—Brand
Strategy, Product Strategy, and Regional Strategy—while further strengthening our monozukuri (thoughtful fabrication, fullof craftsmanship) capabilities and examining measures that will lead to our next medium-term plan.
In the revised plan, we changed our consolidated net sales forecasts to ¥100,800 million for fiscal 2021 and ¥108,600 million
for fiscal 2022. We have maintained our compound annual growth rate (CAGR) targets at the high levels of the original
medium-term plan: 7.3% CAGR for net sales and 10.2% CAGR for operating income. We also expect the overseas sales ratio,
which was 56% in fiscal 2019, to rise to around 62% in fiscal 2022.
* As a change in its accounting policy, the Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020) and other standards from the fiscal year ending December 31, 2021. The above forecasts are based on figures after the change inaccounting policy.

* As a change in its accounting policy, the Company has applied the “AccountingStandard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) andother standards from the fiscal year ending December 31, 2021. The above outlook isbased on figures after the change in accounting policy.

Pigeon Integrated Repor t 2020 / 12

13

Value Crea tion S tor y

Sources ofValue Creation

Corporate Value CreatedFiscal 2020 results

Human capital

Seventh Medium-Term Business Plan
Targets (Fiscal 2022; Revised)

Net sales

The Pigeon Way practiced
by all employees
Group total: 3,886 employees(Fiscal 2020)ÐõòööóõòĢ÷

Economic
Value

OperatingincomeFinancial capital

ROE

Consolidated net assets: ¥70.0 billion
Equity ratio: 74.8%(Fiscal 2020)

ROIC
PVA

Intellectual capital
Know-how and intellectual property derived
from 60+ years of breastfeeding-related R&D,
manufacturing, sales, and service
Brand value: US$664 million

Enhancement of businesscompetitiveness andR&D capabilities* From Best Japan Brands 2021 (Interbrand)

Sustainable reduction ofenvironmental impact

Manufacturing
capitalSocial Value

Global quality control
Production bases: 3 in Japan, 7 overseas

increasing social

Enhancement of
stakeholder responsiveness(Key issues forvalue)

Relationships of trustwith consumers,
business partners,
and medical
practitioners

Improvement in quality ofhuman resources
Creation of an ideal
working environment
Establishment ofsolid management base* As a change in its accounting policy, the Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020) and other standards from the fiscal year ending December 31, 2021. The above results for fiscal 2020 and targets for fiscal 2022
are based on figures after the change in accounting policy.

14

The above figure illustrates Pigeon’s value creation

embodies the “heart and soul” of all Pigeon employees.

Pigeon’s business model for value creation supports ababies and mothers (“S”), and building a solid

story, which is represented as a flow linking sources of

We believe that corporate value created from ourvalue chain ranging from research and productmanagement base (“G”). Leveraging the growth of ourvalue creation (including invested capital), value chain

business activities largely consists of two elements—

development to procurement, production, marketing,four businesses—Japan Business, China Business,initiatives, and corporate value created. At the core is

economic value and social value—and that the social

sales, logistics, consumer use, and consumer support.

Singapore Business, and Lansinoh Business—we are

the Pigeon Way, which is the cornerstone of all ourvalue we create will help achieve the Sustainable

Through this value chain, which is centered on Pigeon

realizing sustainable value creation while making ouractivities. It describes our Corporate Philosophy

Development Goals (SDGs) set by the United Nations

Way, we are reducing environmental impacts (“E”

value chain stronger.

(“Love”) and our Credo (“Only love begets love”) andfor 2030.

element of ESG), solving social issues surrounding

Pigeon Integrated Repor t 2020 / 12

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15

Brand Enhancement
Ini tia ti ve
Pigeon Brand S tor y
In 2020, we renewed the Pigeon brand with the aim of improving our brand power.

Every baby is born with a remarkable gift:

Since then, we have been promoting activities based on our Brand Promise—

the ability to be truly themselves.

“Celebrate babies the way they are”—which is our pledge to society. We will continue
delivering and strengthening the Pigeon brand globally and consistently at all points ofcontact with our stakeholders.

Background of Brand Reinforcement
Since its founding, Pigeon has always adopted the perspective of babies and given

Pigeon believes in preserving
and nurturing the qualities that make each baby special.
Our years of experience in serving generations of babies

deep thought to what happiness means for them. With our unique outlook, together

has taught us there’s no one-size-fits-all approach to development.

with our single minded passion, we have grown into Japan’s leading manufacturer ofEach baby deserves to progress at their own pacebaby and mother-care products. Pigeon has remained committed to the interests ofbabies, and its mission is to pursue what is important for babies’ true happiness. Withand to become whoever they want to be.

this principle in mind, we formulated the aforementioned Brand Promise. Our aim is toconvey once again our commitment to learning what it takes to make babies happy. In
other words, we want “to make the world more baby-friendly.”Things That Only Pigeon Can Do

We strive to encourage curiosity, celebrate diversity,and open horizons, because a society that treasures these things
is one that will grow up to be creative, inclusive, and free.

In its pursuit of their happiness, Pigeon rigorously studies and closely monitors thewants, needs, and habits of babies. We understand that each and every baby has
wonderful individual attributes and a hidden potential for self-development.
Moreover, all babies are born with magnificent radiance, and we believe that Pigeon,
which has worked closely with babies for many years, is uniquely positioned tohighlight that radiance.
In the modern world, people’s values are diversifying due to globalization andtechnological innovation. Rather than raising children uniformly, mothers andfathers now want to bring out the individuality of each child. Nevertheless, many
hurdles still remain in society for babies to be themselves, to be baby-like, to becarefree, and to grow. They only have one life in this world, and we want them to bethemselves. Pigeon’s aim is to create a society in which babies are cherished “asthey are” together with their mothers and fathers.

16

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Expectations of monozukuri
as consumer values change

my baby was born. When I became an outside director
last year, I learned about Pigeon Way and the Brand
Promise, and I especially loved the tagline, “Celebrate

Itakura: Fo r m o re t h a n 6 0 y e a r s , w e at P i g e o n h a v ebabies the way they are.” Since each person is bornemphasized monozukuri that delivers “safety,

under different circumstances, I believe these words are

security, and high quality,” and this has been thetruly a stronghold for mothers and families to embrace.

source of our corporate value. However, we are

When it comes to monozukuri, however, the implications

witnessing major changes in consumer purchasingof quality have certainly changed. There is always a needbehavior and value perceptions of products, partly

for good quality. But what constitutes “good quality”?

due to the COVID-19 pandemic. In light of this, will we

Take the plastic materials used in nursing bottles.

be able to continue differentiating ourselves throughNowadays, the focus is on biodegradability and ease of

our monozukuri style of delivering high-quality

recycling, more so than stability (durability), or being able

products that address childcare issues, as we have in

to withstand boiling and chemical disinfection. People are

the past? Does the balance we have between quality

placing more and more emphasis on the environmentallyand price meet the needs of customers? Shouldn’t wefriendly qualities of our products. The content of thetake into account the needs of our customers after

quality people demand is changing.

they use our products? I’ve been thinking a lot about
these questions.

Itakura: Certainly, durability is one aspect of quality that wehave always pursued.

Hayashi: I think that is really true. The period of time thatHayashi: True, but that means quality at the consumption level.

consumers have contact with Pigeon is very short, fromW h at t h e w o r l d n e e d s n o w i s q u a l i t y at t h e

before the baby is born to about three years old. This isexperiential level. Quality is important in the buying

because the relationship fades when the baby becomes

decision, but when you’ve finished using the product,a toddler. When I think back to my own experience,

you may wonder, “What can do with this? Can I

however, I had a sense of security and trust in the brandrestore it to its original condition?” People expect

and thought that Pigeon was the only choice by the timequality that includes these perspectives. In the future,

Dialogue between Outside Directors and Internal Director

Eriko Yamaguchi

Monozukuri : The Source of Our Corporate Value1

Ms. Chiaki Hayashi and Ms. Eriko Yamaguchi, who joined Pigeon’s management as outside directors in March
2020, and Mr. Tadashi Itakura, director and senior managing executive officer, held a dialogue on the theme ofmonozukuri, the source of Pigeon’s corporate value. In this section, we report on the content of the dialogue.

CEO and Chief Designer,
Motherhouse Co., Ltd., and memberof the Management Advisory Boardof the Japan International
Cooperation Agency. As a business
manager, Ms. Yamaguchi has
extensive experience and advanced
knowledge in developing countries,
and at the same time leads thebusiness as a product design
manager.

1 : Monozukuri means “thoughtful fabrication, full of craftsmanship” in English.

18

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19

Dialogue bet ween Out side
Dir e c tor s and Inter nal Dir e c tor

Pigeon will need to make changes at the experiential

have a certain amount of “style” in the fashion sense.

level, and Ms. Yamaguchi and I may be able to

However, Pigeon promotes monozukuri in a way that

contribute in this regard.

solves problems. So how much should we invest in

Yamaguchi: I agree. During the start-up phase of a business, thethe fashion area of fabric products? I have no answer

key factors are to focus on functions that solve

to that question. However, it is important to haveproblems and to perform a fast cycle of gathering“style,” so it would be nice to be able to articulate

customer feedback and reflecting it on the productdevelopment and manufacturing frontlines. Whencustomers pick up one of our products, they feel thatdifferent strategy. But as Kitazawa-san clearly states,

the product satisfies their functional requirements as“We want to make the world more baby-friendly bya matter of course. Having reached that stage,

furthering our commitment to understanding andhowever, the next step is to give them emotional

addressing babies’ unique needs.”2 It is important tovalue that goes beyond their expectations. There areshare these words throughout the Group.

limitations to creating products from a “market-in”
out” approach, by contrast, technologies can deliver

2 : This is Pigeon’s Purpose. In December 2019, we upgraded theMission component of Pigeon Way to Purpose, which defines ourmeaning and role in society and further clarifies the direction the
Pigeon Group should take.

surprises, and the notion of ideas and parts being

Itakura: The Human Milk Bank 3 is just one example of ourunintentionally created by the designer can evoke aefforts. We will continue increasing our focus onsense of romance. By passing that romance to theinitiatives that recognize social issues and embody thecustomer and sharing it, we can create wonderfulsignificance of Pigeon’s presence. From the perspective

products that we never thought possible. It would beof sustainability, we aim to take actions that will lead to anice if, once or twice a year, we could launch a

recycling-oriented business that include collecting

product that hits a home run with a pitch thrown fromplastic nursing bottles that are no longer needed after

the emotional perspective.

use and turning them back into nursing bottles. I also

perspective based on data analysis. With a “product-

Hayashi: Home run attempts often end with three strikes. It’swant to connect our company more closely with ourimportant for the batter and everyone to say, “It was abrand. Rather than “Pigeon’s nursing bottles are great,”good swing.” Most batters would be reluctant to get

we want people to say, “Pigeon is great.”angry at you if you said, “Why you didn’t hit a homerun?” and think of himself/herself in a passive way.
Therefore, I think that the portfolio also needs

3 : In September 2020, we opened the largest breastmilk bank inJapan, Nihonbashi Human Milk Bank, on the first floor of Pigeon’shead office (see page 34 for details).

Chairperson, Loftwork Inc., andChairperson, Hidakuma Inc. Ms.
Hayashi has a wealth of experience in
co-creative manufacturing as an
assistant director of MIT Media Lab,and also serves on various
committees to strengthen Japan’s
resilience, including the Cabinet
Office and the Ministry of Economy,
Trade and Industry.

Thinking about what “products”
will be five to 10 years from now

approach, however, I think my role is to participate ina way that can only be done from the outside. One
thing that has been bothering me in this regard is that

Itakura: I would like the two of you to embrace your businessdiscussions at Board meetings are separated

margins and play areas in order to avoid passiveness.

Hayashi: If we are going to recycle, we don’t have to stick toexperiences within the Company. As outsideaccording to our four business segments. In the case

Yamaguchi: It’s more important to evaluate the impact of thebaby bottles. I think that limiting our recycling todirectors, meanwhile, you are expected to play a roleof nursing bottles, for example, I think it would beattempt on the organization than whether it was

nursing bottles will only result in a small cycle. For

from a governance perspective in supervising the

g o o d to c h a n g e o u r p ra c t i c e a n d e n g a g e i nsuccessful or not.

example, if the plastic nursing bottle material collected

decision-making process. So, wouldn’t it be difficult

discussions globally from a product-focused

Hayashi: I agree! Of course, we need to maintain our policy ofis used to make 90% of cloth used in our baby carriers,

for you to become involved in technical matters, such

not releasing a product to the world unless it has ait would make sense for Pigeon to enter that productas product specifications?

certain level of quality. Over its long history, however,category, wouldn’t it?

Hayashi: Ideas for new products are different from specifications.

perspective.
Hayashi: I also think that nursing bottles should be discussed
globally.

Pigeon has been highly conscious of the “safety andYamaguchi: From an emotional viewpoint, consumers would feel a

The direction in which a product is launched depends

Itakura: As for nursing bottles, Pigeon’s core product category,security” aspects of quality, so the next step will begreat sense of value if the product they have becomeon the direction in which Pigeon wants to move. We

each of our outside directors are different with

important.

attached to can be returned to the manufacturer instead

respect our employees for the work they do on

respect to areas of expertise, years in office, andof being sold on the second-hand market. Designing

specifications and ask them to continue their goodlevels of understanding and thinking. For this reason,that also places importance on emotion, while

products with this in mind may be a good idea.

efforts. However, new product ideas provide an

I’d like to see an increase in opportunities to explain inemphasizing the “safety and security” aspects of

Itakura: The notion of not only reusing a product but also thinking

insight into a company’s direction, so in my position

more depth the history, features, and differentiating

quality. However, we acknowledge that such products

about its next life is interesting because not many people

as outside director, I hope I can offer opinions andpoints of our nursing bottles, as well as their impact

focus mainly on customers’ “current” feelings of joy

have thought about it.

advice in the upstream area that will help change theon Pigeon as a whole and related strategies. Thisway we think about monozukuri.

applies not only to nursing bottles, but also to other

Itakura: We have recently been focusing on product designor anxiety, and do not pay enough attention to postuse and disposal.
Yamaguchi: I have a four-month-old baby now, and I want mystroller and carrier, which I use outside the house, to20

what Pigeon-like “style” would be.
Hayashi: Getting into the fashion world certainly requires a

Chiaki Hayashi

Pigeon Integrated Repor t 2020 / 12

Hayashi: In areas of our involvement, we may be able tochange the way we think about manufacturing andYamaguchi: As someone who has been involved in manufacturingotherwise expand our roles in fields that could leadas a business, I am certainly interested in what isHayashi: Thank you. Our nursing bottles are already soldimportant categories, such as skincare.

to new product ideas.

inside a product. Rather than go in with a hands-on

globally, but our skincare business is not yet global.

Pigeon Integrated Repor t 2020 / 1221

Dialogue bet ween Out side
Dir e c tor s and Inter nal Dir e c tor

Sales have been increasing in each country, but now

Itakura: It is very encouraging to receive your suggestions andwould be a good time to have discussions from aadvice about the strategies we have developed

global perspective. The key is to balance the local andinternally at Pigeon, in light of your skills and pastglobal aspects.

experiences.

Developing human resources
who will create our products

enthusiasm there was for Pigeon’s monozukuri. This
included the ability of employees to conduct
research and interview outside advisors, which is

Hayashi: In this sense, I believe that the Pigeon Frontier Awards

something you can’t get from Board meetings alone.

Itakura: Discussions about Pigeon’s skincare business are

Yamaguchi: Manufacturing is a fairly long-term process. Especially(PFA)4 will become a very important initiative in theI think we can better communicate the value ofcurrently leaning toward localization to some extent.

when it comes to the development of materials, you

future. Rather than proceed in accordance with

Pigeon’s products if we could help employees

Certainly, some of our competitors have skincare

need to capital investments over five to 10 years. Ourpolicies set by the Company, we want each and every“visualize” the drama behind the brand, so they canbrands with universal designs and are expanding

management team is currently engaged in discussions

employee to adopt a “product-out” approach that

become the main characters. Personally, I’ve been

globally. I would like to aim for that at Pigeon, but ataimed at 2030. I’m wondering what kind of products

encompasses values and lifestyles in addition toable to see Pigeon’s strengths more clearly when I’ve

the same time I wonder how much it would cost to

are we preparing for 2030, and what will be our next

products. This means encouraging them to consider

been inside the Company rather than as an outside

make it happen, and whether it is possible withmainstay category after nursing bottles.

what kind of products or services they want to makeobserver. To bridge this gap, I would like to have

Itakura: We are also aware of this issue. In fact, the Breastfeedingwhen they think about babies. If we focus on

discussions where we can better verbalize the image

Research & Strategy Section of the Global Head Officeindividual ideas, we can build a very big asset in 10

of our organization and its products and use them as

Hayashi: Initially, brands need to be localized in order to enter(GHO) is currently steering a course for our nursing

years, I feel.

each region. If you’re looking for the best outcome,bottles and the Pigeon brand product strategy for the

however, your need to consolidate your offerings into

next 10 years. Rather than entrusting this to local

one common global product line, even if some local

employees, we are working to build a framework that

adjustments are necessary. It would be nice if theincorporates evidence-based research elements related

product managers of our four business segments

to functions required of nursing bottles.

Pigeon’s current capabilities. So right now, perhaps
localization may be the easier path.

4 : This in-house venture system was launched in 2019. We welcome
the free thinking of our employees and aim to foster a corporate
culture that allows them to embrace challenges without fear of
failure, while at the same time considering the commercializationof excellent ideas.

strengths.
Itakura: I don’t think intentions alone can make innovation
happen. It’s more difficult when members of theCompany tend to think in the same way. We have avery diverse team of outside directors, but by

Itakura: Launched last year, the Pigeon Frontier Awards havecreating more opportunities to talk with them

could share the most important aspects of theirproduced good feedback, but only a small number ofoutside of Board meetings, we can gain a lot of new

products and stories from their businesses, while also

employees have entered the program. Over the next

insights and ideas. In addition to your governancediscussing what should be shared as global products

three-to-five years, however, I believe the number ofoversight function, I hope that the two of you will be

and where they should be made.

entries will increase alongside growing enthusiasm of

a force for change at Pigeon and continue inspiring

employees and quality of ideas. It will become easierpeople at head office, development sites, andto gain empathy, involve others, and give shape toelsewhere. And I’d like to make use of your many

new ideas, making the awards a fulfilling experience.

suggestions to promote monozukuri that is different

Hayashi: I’d like to see the program grow more and more.

from the past and realize new child-rearing

Individual employees seem to find it very rewarding.

scenarios, and increase our corporate value as a

At the same time, not all proposals have the potential

consequence.

Tadashi Itakura
Joined the Company in 1987. After serving as Representative
Director and President of Thai Pigeon Co., Ltd.,Mr. Itakura helped strengthen the Company’s productdevelopment and quality control capabilities as General
Manager of the Development Division. He assumed his current
position in January 2019. He also serves as Head of the Global
Head Office, where he oversees and promotes ESG activities
and measures to strengthen Pigeon Group governance.

for commercialization. Nevertheless, I think theawards provide a good educational opportunity for
those whose entries were not selected, including withrespect to the closure process. They would feel
fortunate that the Company had given them time tocome up with proposals. Then they would be
motivated to seek the next ideas. I think it’s a very
good program.
Itakura: When I interview new employees who have justjoined the Company, I find that they all have apassion for babies. Some employees are assigned tojobs other than manufacturing, but PFA encourages
ever yone to propose ideas regardless of theiraffiliation, so anyone with a passion can take on thechallenge.
Yamaguchi: Last year, I had the opportunity to participate in a
product development meeting, and it was so
exciting that I’m still inspired. The team was
researching children’s excretion behavior around theworld, and I was really impressed by how much

22

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 1223

Business Summaries
by Segment

Japan Business
Effective the year ended December 31, 2019, manufacturing and sales operations for the non-Group handled by domestic subsidiaries—

there is normally strong inbound demand from foreign tourists. In terms of net domestic demand,

previously categorized under Domestic Baby & Mother Care Business, Child Care Service Business, Health & Elder Care Business, andhowever, our market share for nursing bottles grew to 86%, and our share for other core products

Other—have been consolidated into the Japan Business.

has also increased. Meanwhile, the market for baby strollers shrank 19% year on year as COVID-19● Business Environmen t
In 2019, the total number of births in Japan was 865,000 (confirmed number, according tostatistics released by the Ministry of Health, Labour and Welfare in 2019), a record-low figure.

Sales of Japan Business [New standards](¥ millions)
50,00044,53440,000exceeding 50% (52.2% on an all-age basis, according to the Ministry of Health, Labour and

41,500

microwave oven. Then, in October, we launched nautR, a stroller the delivers the ultimate in
comfort for both operator and passenger. We also started selling nautR, priced highly at more than

20,000¥70,000, in department stores, a new channel for our strollers, and sales have been strong.

estimate as of September 15, 2020), reflecting the nation’s ongoing aging trend.

● Our Competitive Edge
Based on more than 60 years of research into breastfeeding and infant and child development,
Pigeon conducts in-depth research into the growth processes of babies and uncovers various
problems that parents encounter when raising children. We have used these findings to develop
numerous high-quality products, which embody the strength of the Pigeon brand. We are now
widely recognized as the leading brand in the industry, and our market share is growing
significantly even for baby strollers, a relatively new introduction to our portfolio. Through ourprovision of baby and child care offerings, we have earned a reputation for safe, secure, andreliable products. Deploying this brand strength, we are building our child care service business,
which includes contracted operation of in-company child care centers, under the principle that“children’s growth is our first priority,” and we have earned the confidence of customers as aresult. Known for its unparalleled knowledge about babies, the Pigeon Group is constantly

Meanwhile, we enjoyed healthy sales of the caboo series of baby slings, originally developed in the

10,000time high of 28.7% (Statistics Bureau, Ministry of Internal Affairs and Communications;0

United Kingdom and launched by Pigeon in Japan in fiscal year 2019, as people spent more time at
Dec. 2019

Dec. 2020

Dec. 2021
Target* Due to a change in fiscal year-end, fiscal 2019 refers to an
11-month transitional period from February 1 to December
31, 2019. In the above graph, we compare our results in fiscal
2020 with a 12-month conversion of our fiscal 2019 results.

home due to COVID-19 and tended to carry their babies around the house. Our caboo slings* In fiscal 2019, the Japan Business was divided into threesegments for reporting purposes: Domestic Baby &Mother Care Business, Child Care Service Business, andHealth & Elder Care Business. Figures shown here forfiscal 2019 are based on the conversion of those segments
business into the Japan Business.

e-commerce sales, at only 9%, which we see as a challenge for the future.

* As a change in its accounting policy, the Company
has applied the “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29, March 31, 2020)and other standards from the fiscal year ending December
31, 2021. The above results for fiscal 2020 and targets
for fiscal 2022 are based on figures after the change inaccounting policy.

management at home, nursing care facilities, and the like. Going forward, we will step up sales

Number of Childbirths in Japan

medical professionals. More than 1,500 people attended these events in total. In order to alleviate

300(10 thousands)

expanding and improving the quality of its child care services. For the elderly, we offer newcompetitive products while improving the quality of our elder care services. Here, we leverage
our product planning capabilities, as well as the high-level quality control we have cultivated inbaby products, to accurately identify the unmet needs of consumers.

● Business Strategy
In baby and mother care products, our core offerings are nursing bottles and nipples, whichboast a domestic market share of over 80%. We are also working to expand our business andthis reason, we are working to raise the quality of our services, which reflect the quality of ouroral care products, and wheelchairs.

● Fiscal 2020* Performance and Highlights

In baby and mother care products, the spread of COVID-19 greatly restricted the movement ofpeople, leading to declines in sales of nursing bottles, skincare products, and other items for which
24

Pigeon Integrated Repor t 2020 / 12

In health and elder care products, we enjoyed healthy sales of products that support hygiene

Microwavable Packed Soft Rice for Babies

activities to retail stores and nursing care facilities while working rigorously to improve the quality of
our elder care services.
In fiscal 2020, we held multiple events under our direct communications program, including
Breastfeeding College for expecting mothers and seminars about breastfeeding while parenting foranxiety felt by mothers and fathers during the ongoing pandemic, we started offering support-

updating our products and making other improvements to increase convenience for customers.

supports women during pregnancy, in childbirth, and when raising children. On the site, we are* Due to a change in the fiscal year-end, fiscal 2019 was an 11-month period from February 1 to December 31, 2019. For this150

reason, year-on-year comparisons are not provided.

nautR top-end baby stroller
100

Key Strategies for 7th Medium-Term Plan

50
01958 ’68 ’78 ’88’98’08 ’17 ’18 ’19 ’20

Source: Ministry of Health, Labour and Welfare

Estimate of Future Population in Japan(age 65 and older)
40,000Capture top market share for baby strollers
Make investments to strengthen skincare category

Sales target for final year (ending Dec. 2022) (after revision; new standard)¥43,000 million (compound annual average growth rate (CAGR) of 2.1%)(thousands)

30,00020,00010,000In fiscal 2020, sales in the Japan Business segment amounted to ¥44,977 million, and segment
income totaled ¥3,008 million.

In child care services, we operated in-company child care facilities at 71 locations in fiscal 2020.
We will continue developing this business while improving the quality of its service content.

200

business, as our top priority. For elderly people, we are working to improve productcompetitiveness in the key categories of bottom wipes, body wipes, skincare products, food,premium products and increasing unit prices. In addition, Japan has a relatively low ratio ofrelated information via our website and social media. We also host “Pigeon Info,” a website thatongoing direct communication policy, while promoting information dissemination activities
trust represent real social value, which in turn leads to business growth and development. For

birth numbers will remain a future concern in Japan, we will compensate for this by offering

250

products. Meanwhile, we are stepping up our approach to the maternity market through ourtargeting collaboration with medical professionals. In child care services, our reputation andreceived the 13th Parenting Award 2020 by a prominent parenting magazine. Although declining▲ ▲increase market share in skincare products, as well as strollers and other large-scale

In August 2020, we launched Microwavable Packed Soft Rice for Babies, which makes ispossible to enjoy freshly cooked rice porridge without any additives, simply by heating it in a

30,000Welfare), there are growing expectations of our company in terms of child care support. In
addition, the ratio of people aged 65 and over to the total population (aging rate) is at an all-increases in sales of wet wipes and other consumables due to special demand arising from thepandemic.

41,231

In 2020, the figure is expected to decline even further due to the impact of the COVID-19
pandemic on childbearing sentiment. Meanwhile, with the female employment rate in Japan

prompted people to refrain from going outside. On the other hand, we reported significant

0

2000
2010
2020
Source: “Population Projection for Japan,” National
Institute of Population and Social Security Research

13th Parenting Awards 2020 ceremony

ColumnCOVID-Related Initiative

Utilizing its expertise in the production of breast pads, Pigeon Manufacturing Hyogo, a domestic manufacturingsubsidiary, has developed and is manufacturing a “mask replacement sheet” that can be attached to the insideof masks and replaced to ensure hygienic and long-lasting use of masks. We also distributed around 60,000 ofthese replacement sheets, which prevent mask contamination and have a filter effect, to staff at elder care andchild care facilities free of charge. Leveraging our production know-how in the domestic baby and mother carebusiness, as well as the networks of our health & elder care and child care businesses, we executed the entire
product, from product development to distribution, in just one month.

Pigeon Integrated Repor t 2020 / 1225

Business Summaries
by Segment

China Business● Business Environmen t

Sales of China Business [New standards]

Although there has been a downward trend in birth numbers in China over the past few(¥ millions)years, the country remains a huge market with 14.65 million births in 2019 (National Bureau

40,000Chinese market amid ongoing growth in disposable income and rising consumer interest inincreasing every year as people born in the 1980s and 1990s, some of who are digital native,

Pigeon’s products is the “new rich” market, and we are developing that market with morethan 500 products, centering on our mainstay nursing bottles/nipples and skincare
products. Since 2009, Pigeon has opened breastfeeding consultation rooms in major
hospitals across the country in collaboration with China's Ministry of Health. We also hosteducational forums on breastfeeding in cooperation with maternity hospitals. Accordingly,
Pigeon has become widely recognized as a safe, reliable, high-quality brand in China.

from the factory. By delivering our products directly to customers within 48 hours of
production, we are able to provide offerings that are free of preservatives, antibacterial
agents, fragrances, alcohol, and other additives, and the brand has been well received as aresult.

10,000Amid rapid growth of e-commerce in China in general, the ratio of Pigeon’s e-commerce0

Dec. 2019

Dec. 2020

Dec. 2021
Target* In fiscal 2019, Pigeon changed its fiscal year-end fromJanuary 31 to December 31. Therefore, fiscal 2019 refers
to an 11-month transitional period from February 1 to
December 31, 2019. In this graph, we compare our results infiscal 2020 with a hypothetical 12-month conversion of our
fiscal 2019 results.
* As a change in its accounting policy, the Company has
applied the “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020) and otherstandards from the fiscal year ending December 31, 2021.
The above results for fiscal 2020 and targets for fiscal 2022
are based on figures after the change in accounting policy.

Annual GDP Growth Rate in China

12● Business Strategy
In addition to face-to-face sales at physical stores, the ratio of e-commerce sales is
expanding year by year (accounting for 63% of Pigeon’s sales in China in fiscal 2020). In

10

the production side, Pigeon Manufacturing (Shanghai) Co., Ltd. makes and assembles

2

nursing bottles, silicone nipples, detergents, and toiletries. Meanwhile, Pigeon Industries

0

（％）

●

● ● ● ●

’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20

our in-store sales promotions, new product distributions, and activities at hospitals andmaternity centers, while increasing our contact with customers to expand our business.
* Due to a change in the fiscal year-end, fiscal 2019 was an 11-month period from February 1 to December 31, 2019. For thisreason, year-on-year comparisons are not provided.
* As a change in its accounting policy, the Company has applied the “Accounting Standard for Revenue Recognition”(ASBJ Statement No. 29, March 31, 2020) and other standards from the fiscal year ending December 31, 2021. The above
forecasts are based on figures after the change in accounting policy.

Key Strategies for 7th Medium-Term Plan
▲ ▲ ▲Source: These figures are compiled by Pigeon Corporation
with data from the International Monetary Fund(IMF) (to 2006) and the Organization for Economic
Cooperation and Development (OECD) (from 2007).

Nursing bottles (core Pigeon product category)

Achieve higher product prices through uncompromising commitment to manufacturing
Build new business model based on new Ssence brandEstablish Shenzhen Creative Studio to monitor latest trends

Ssence (new baby skincare brand with direct
shipment from factory)

Sales target for final year (ending Dec. 2022) (after revision; new standard)¥46,000 million (compound annual average growth rate (CAGR) of 12.9%)
Pigeon Manufacturing (Shanghai) office

Columnspread of COVID-19 at the beginning of the period. However, this only lasted until the end of

COVID-Related Initiative

To combat the spread of COVID-19 in the Chinese market, we disseminated information via
medical specialists to pregnant women and families with newborns, including advice on
developing habits to boost the immunity of newborns. We also used social media to provide
information on how to use Pigeon products during COVID-19. In addition, we switched to live
streaming for all our planned sales events, enabling us to continue our business despite thepandemic. We also provided support to essential workers by donating baby items to thehomes of doctors and nurses, as well as antibacterial hand gels and medical gowns to
medical institutions.

the first quarter, with the economy subsequently recovering strongly, especially inmainland China, and we continued to enjoy healthy sales of our mainstay nursing bottles
and nipples, as well as skincare products, for which we are focusing on basic research.
On November 11 each year, China holds “Double 11,” the largest e-commerce shopping
event of the year. At the most recent event, Pigeon’s e-commerce sales jumped 20% year
on year, and our brand ranked No. 1 in nursing bottles and baby skincare products on
China’s leading e-commerce site JD.com. Amid intensifying competition in the child care

Pigeon Integrated Repor t 2020 / 12

provide child care information related to COVID-19. In addition, we will continue reinforcing●

were weakened by the COVID-19 pandemic. The segment was significantly affected by the26

direct communication with consumers through social media and live streaming and●¥12,600 million. On a local-currency basis, sales in mainland China grew 6.7% year on year

market as a whole, Pigeon’s core offerings—nursing bottles and skincare and oral carevarious initiatives centered on the e-commerce market. At the same time, we will stimulate●

In fiscal 2020, sales in the China Business totaled ¥37,732, and segment income was

e-commerce. On the other hand, exports from China to Russia, Taiwan, and the Philippines

Children Baby Maternity Expo (CBME) 2020

14% year on year. This trend is expected to continue, and in response Pigeon will step up●●● Fiscal 2020* Performance and Highlights

thanks to strong sales of nursing bottles and skincare products, mainly throughsales to total segment sales rose to 63% in fiscal 2020, while sales at physical stores fell

● ●

● ●
6

response, we are using social medial to step up direct communication with consumers. On

disposable diapers, which Pigeon does not sell in Japan.

●

●
8

4

(Changzhou) Co., Ltd. makes disposable nursing pads and baby wipes and also produces

In June 2020, we launched Ssence, a new baby skincare brand with direct shipment

36,121

20,000create new families.

coverage across the entire nation, from coastal to interior regions. The main target for

35,87330,000product safety. In addition, the percentage of purchases made through e-commerce isSince our full-scale entry into the Chinese market in 2002, we have broadened our sales

share for nursing bottles continued growing.

42,000of Statistics of China). Moreover, there is enormous growth potential for Pigeon in the● Our Competitive Edge

items—generated double-digit year-on-year growth despite the pandemic, and our market

50,000Avocado skin care series (released in 2020)

Pigeon Integrated Repor t 2020 / 1227

Business Summaries
by Segment

Singapore Business● Business Environment● Priority Market: Indonesia

Approximately 140 million babies are born each year around the world, and the regions covered

Sales of Singapore BusinessPigeon is expanding its business in Indonesia. In 2017, for example, we converted PT Pigeon

by our Singapore Business segment represent a major proportion of this total. This segment(¥ millions)

Indonesia, our manufacturing subsidiary, into a consolidated subsidiary, and we also

15,000encompasses Southeast Asia (including Singapore, Indonesia, and Malaysia), India, the Middle
East (including United Arab Emirates), Oceania, and others (including South Africa), as well as

markets. In regions covered by our Singapore Business, the middle class (with annual disposable

observations aimed at identifying “matters that concern our customers.” Another strength isteamwork with high-quality business partners. To develop our overseas business, it is extremely
important that we build good relationships with local partners—including distributors andretailers—with excellent local knowledge. From time to time, we may reassess someThailand for import to Indonesia, to an outstanding local supplier in Indonesia. This enabled
us to enhance the product’s price-competitiveness while upholding its high quality, a key
Pigeon strength, leading to a significant increase in sales. We have also started making new

3,000

targeting this market (including the upper-middle class, with incomes of US$12,000 and higher),appeal of our products. This is the result of intensive fundamental research and behavioral

we switched the sourcing of Liquid Cleanser, which we had been making at our factory in

6,000

incomes of US$5,000–35,000) is expanding in line with economic growth. Pigeon is also

Our competitive advantage in overseas markets derives from two key strengths. One is theLiquid Cleanser, developed for middle-class consumers, continue to increase. In particular,

9,000

million childbirths annually, and Indonesia, with about 4.8 million—which we regard as priority● Our Competitive Edgeestablished a new sales company there in 2019. Sales of Go mini breast pumps and our

12,90012,18412,000emerging nations. We are expanding our business in two of those nations—India, with around 24

which is tipped for further growth.

13,600products targeting the middle class in Indonesia.

0Dec. 2019
Dec. 2020
Dec. 2021
Target* In fiscal 2019, Pigeon changed its fiscal year-end fromJanuary 31 to December 31. Therefore, fiscal 2019 refers
to an 11-month transitional period from February 1 to
December 31, 2019. In this graph, we compare our results infiscal 2020 with a hypothetical 12-month conversion of our
fiscal 2019 results.

ASEAN: Real GDP Growth Rate (10 countries)（％）

6

Although we launched new offerings in core categories, such nursing bottles and nipples andoral care products, this segment faced multiple challenges. In Southeast Asia, the Middle East,and India, for example, the COVID-19 pandemic had a major impact on our business, while
lockdowns in Malaysia and India caused factories and offices to suspend operations for morethan eight weeks. Our Singapore Business, which mainly sells products via physical stores, was
led to an inevitable decline in segment revenue. On the local-currency basis, however, the year-5

on-year decrease was limited to around 10%. Moreover, the disappearance of inbound demand in

Since entering Southeast Asia in the 1970s, customer recognition of the Pigeon brand has
grown steadily, to the extent that our nursing bottles occupy the top market shares in Indonesia,

Sales in this segment amounted to ¥12,184 million, and segment income was ¥1,647 million.

also affected by the suspension and closure of retail outlets. Delays in sales and other activities

distributors depending on their performance, but thanks to the support of our reliable local
partners, our overseas business development is accelerating.

● Fiscal 2020* Performance and Highlights

Japan led to declines in sales and income of our Thai manufacturing facility, which makes many
nursing bottles for export to Japan.

4Singapore, Thailand, and Vietnam. In India, we started production of nursing bottles and nipples

Despite the spread of COVID-19, we increased our emphasis on communication withat our local factory in 2015, and we are also exporting those products to Japan and elsewhere. In

customers by actively providing information and support. We also switched to online

2017, we converted our affiliated company in Indonesia into subsidiary to further expand ourbusiness. In the Middle East as well, we are enjoying sales growth in Saudi Arabia and the United

0

2013

2014

2015

2019

communication for important activities, such as breastfeeding seminars. In addition, we

Source: ASEAN Secretariat

strengthened our digital marketing resources and took other steps to increase sales via the

2016

2017

2018

Arab Emirates, especially for our nursing bottles and nipples, and we have also started exports to

e-commerce channel.

Nigeria, a new market for Pigeon.

* Due to a change in the fiscal year-end, fiscal 2019 was an 11-month period from February 1 to December 31, 2019. For thisreason, year-on-year comparisons are not provided.

● Business Strategy

Key Strategies for 7th Medium-Term Plan

We manufacture nursing bottles and nipples at our local factories in Thailand, India, and▲ ▲Indonesia. These are sold locally and also exported to other countries, including Japan. The
Singapore Business covers many nations with comparatively low levels of income and regionswith diverse ethnicities, languages, religions, and cultures. For this reason, it is important that we
deepen our understanding of consumers in each region and respond quickly to their needs.

Pigeon Singapore’s official social media accountStore in Malaysia

Generally, it is said that consumer activity in a country or region will take off when its per-capita

Indonesian plant: Increase production capacity and number of items handled
Increase number of locally procured products in emerging markets, such as India and Indonesia

Sales target for final year (ending Dec. 2022) (after revision)¥14,300 million (compound annual average growth rate (CAGR) of 8.3%)

GDP surpasses US$3,000. Anticipating future market expansion, Pigeon will target renewed
growth by developing and releasing products for the middle class in each of its categories.

Column● Priority Market: India
India has a population of 1.36 billion people (according to 2019 World Bank data), about half ofwhom are under the age of 25, and an annual birthrate of 24 million, which is far greater thanChina. By 2030, moreover, India is projected to overtake China to become the world’s mostpopulous nation. Therefore, we are working to raise recognition of Pigeon in India as a quality
mother and baby care brand. In addition to expanding mainly in major cities, such as Delhi andMumbai, we are developing outlets linked closely with local communities. We are alsoestablishing and reinforcing our distribution system, expanding our sales network with a focus
on pharmacies, and reinforcing our e-commerce business.
28

Pigeon Integrated Repor t 2020 / 12

Store inSaudi Arabia

COVID-Related Initiative

As cross-border traffic was restricted due to the COVID-19 pandemic, many Malaysian
mothers working in Singapore were unable to return home. In some cases, they left theirbabies in their home countries and were unable to breastfeed for a long period of time. In
response, Pigeon offered free breastmilk storage bags and breast pumps to enable thesemothers to deliver breastmilk to their babies. In addition, logistics companies that
sympathized with our activities transported the breastmilk for free, thus expanding the circleof support. We also held our first online breastfeeding seminar in order to continue providing
breastfeeding support in Malaysia even during the pandemic.

Pigeon Integrated Repor t 2020 / 1229

Business Summaries
by Segment

Lansinoh Business● Business Environment
The Lansinoh Business is handled by Lansinoh Laboratories, Inc., which became a wholly
owned subsidiary in 2004. This business covers North America (including the United States
and Canada), Europe (including the United Kingdom, Germany, and Belgium), China, Turkey,
Latin America, and elsewhere. Lansinoh is highly recognized as a brand of breastfeedingrelated products, including its mainstay nipple care cream, breast pads, breast pumps, andbreastmilk storage bags. In addition to North America and Europe, Lansinoh is expanding
its business globally, entering the Chinese market through the newly established Lansinoh
Shanghai in 2016.

● Business Development in Europe
Sales of Lansinoh Business
15,000Demand for breastfeeding-related products is increasing amid the spread of worldwide
campaigns promoting the benefits of breastfeeding. Lansinoh Laboratories wasestablished in 1984, and customers in more than 85 countries and regions now embrace its

Turkey. France has the highest fertility rate in Europe, and although the rate slipped to 1.88
13,207

12,47312,80012,000in 2018, it remains at a stable level. Meanwhile, Germany experienced a baby boom around2016, due in part to its government’s expanded support for childcare and the welcoming of
immigrants and refugees, but the number of births has continued to decline since 2019. In

9,000France, Germany, and elsewhere, the ratio of e-commerce sales to total sales has been
increasing recently. In Turkey, meanwhile, sales at major baby product retail chains have

6,000

been increasing. We are working to expand our market share by developing different

3,000
0

● Our Competitive Edge

In the European market, we are enjoying sales growth in Germany, France, Belgium, and(¥ millions)business strategies for each country and region in Europe.
Dec. 2019

Dec. 2020

Dec. 2021
Target* In fiscal 2019, Pigeon changed its fiscal year-end fromJanuary 31 to December 31. Therefore, fiscal 2019 refers
to an 11-month transitional period from February 1 to
December 31, 2019. In this graph, we compare our results infiscal 2020 with a hypothetical 12-month conversion of our
fiscal 2019 results.

products. Lansinoh is recognized and strongly supported for its high brand power and the● Fiscal 2020* Performance and Highlights

Lansinoh products that have won numerous awards
around the world

In this segment, sales amounted to ¥12,473 million, and segment income was ¥1,370
million. In North America, e-commerce sales are strong, and the ratio of e-commerce sales
in the United States is also rising. Local-currency sales grew in all regions except China,
with North America increasing 8% year on year. Since major e-commerce companies havesuperior quality of its core products, which include nipple care creams, nursing pads,

designated Lansinoh products as “daily necessities,” we were able to avoid running out ofbreastmilk storage bags, and breast pumps. In January 2014, Lansinoh made a full-scale

stock and deliver products reliably to our customers. We did this by increasing inventories

entry into the nursing bottle market, strengthening its brand as a breastfeeding and baby-

and taking other measures, especially during the second wave of COVID-19 toward the end

support company that provides comprehensive solutions related to breastmilk pumping,of the year, which also saw a sharp rise in logistics costs.

storing, and feeding.

In the United States, we reported healthy sales of nipple care creams and breast pumps,
and the market share of our nipple care creams grew to 76% in spite of the pandemic. We
also posted growth in e-commerce sales, but sales of breast pumps through the DME and● Business Development in the United States

hospitals channels continued to struggle due to the effects of the pandemic.

In the United States, the total fertility rate is 1.73 (in 2018), and the average number ofOrganic Nipple Balm

* The Pigeon Group changed its fiscal year-end in the fiscal period ended December 2019. Therefore, that period
was a transitional period of 11 months (February 1 to December 31, 2019). For this reason, year-on-yearcomparisons are not provided in this report.

annual births is 3.75 million (in 2019), which is relatively stable among economicallyadvanced countries. However, there are reports that United States will record a significant
decrease in births from 2020 onwards due to a decline in fertility rate caused by the
COVID-19 pandemic. In that nation, where breastfeeding is recommended, specialist“lactation consultants” provide general support for women around the time of birth byemphasizing the importance of breastfeeding and providing guidance and advice related to

Key Strategies for 7th Medium-Term Plan

suckling and breastfeeding. Accordingly, demand for breast pumps and other
More than 50,000 stores in the United States already handle our products. In addition toLansinoh-brand product lineup

this network, we recently started selling electric breast pumps through the durable medical▲ ▲breastfeeding-related products is rising.

Expand and evolve from a “breastfeeding” brand into a “maternal health” brandEstablish leadership position for breast pumps by expanding product lineup for hospitals and clinical research centers

Sales target for final year (ending Dec. 2022) (after revision)equipment (DME) channel, and sales are growing as a result. This is because breast pumps¥14,000 million (fiscal 2020– 2022 CAGR of 5.9%)

purchased via DME providers may be covered by insurance under the Affordable Care Act(“Obamacare”). Thanks to our various efforts, our nipple care creams and nursing pads
have garnered the top share of the U.S. market, and our breast pumps are also increasing

Columnmarket share.

Smartpump 2.0 electric breast pump from Lansinoh

30

Pigeon Integrated Repor t 2020 / 12

COVID-Related Initiative

During the year, we provided extra support for the lives of babies and their families by posting a
special page on the Lansinoh website about childcare in the COVID era and how to spend thepregnancy period in comfort. In Spain, we have been donating lanolin cream (nipple care cream)
to medical professionals to care for mask scars, and in Europe and the United States, we
provided support to frontline workers by regularly issuing messages of appreciation to essential
workers on social networking sites.

Pigeon Integrated Repor t 2020 / 1231

Pigeon’s ES G Ac ti v i ties
The international community is changing as it increases it emphasis on sustainability, highlighting the need for companies toèðåõäæèÎÜÐìñì÷ìä÷ìùèöÒñÊóõìï 'úèéòõðøïä÷èç÷ëèÙìêèòñÎÜÐ§ÜÍÐöÙòïìæüäñçìçèñ÷ìĢèç÷ëèðä÷èõìäïìööøèö÷ëä÷úèñèèçto address. Together with our stakeholders, we are working to make the world more baby-friendly under the Pigeon Sustainability
Vision: “Celebrate Babies with All.”● Materiality Initiatives in FY2020

Pi g eo n S u s t a in a b le Vis io n

" C ele b r a t e B a b i e s w i t h A l l "We want to make the world more baby-friendly by furthering our commitment tounderstanding and addressing babies’ unique needs.

Development of
next-generation businessesäñçóõòçøæ÷ö÷ëä÷òğèõ
solutions to society

We aim to achieve sustainable growth as a company by reducing environmental

Together with our stakeholders, we strive to encourage curiosity, celebrate diversity,and open horizons, because a society that treasures these things is

Sustainablereduction ofenvironmental
impactCarrying out sustained pursuitof reduced environmental
impactone that will grow up to be creative, inclusive, and free.

Number of births worldwide:
140.2 million per year 1

Climate change

Global environmental
issues- One in seven babies (more than 20 million people)
born with low birth weight (less than 2,500g)2.

- Aiming for decarbonization throughout the supply chain- Marine plastic problem- Increasingly severe and frequent natural disasters- Resource depletion- Of the 2.5 million newborns who die worldwide each year,
more than 80% are born with low birth weight2- Impact on procurement- Biodiversity problem

1 Source: The State of the World’s Children 2019, UNICEF (https://www.unicef.org/reports/state-of-worlds-children-2019)
2 Source: UNICEF News, May 15, 2019 (https://www.unicef.or.jp/news/2019/0071.html)

Reduce environmental impacts

Leave a rich earth for the future of babies born tomorrow- Address global warming: Reduce CO2 emission intensity
by 10% compared with FY2018 * Scope 1 and 2 (see pages 41 and 55)- Prevent pollution: Reduce industrial waste volume intensity
by 1% or more per year (see pages 41 and 55)

Create a world that celebrates babies the way they are- Create new products and services that solve issues surrounding babies
who need special support (such as NICU hospitalization)and their families (see page 34)

Build a strong managementfoundation

Support sustainable growth to stay close to the baby
- Responsible dialogue with shareholders and other investors:
More than 300 IR meetings per year (see page 44)

32

Pigeon Integrated Repor t 2020 / 12

Promote CSR procurement
Respond in a responsible manner toconsumers● Engage in social contribution activities● Engage in dialogue with shareholders andinvestors in a responsible mannerContinuing to be loved bystakeholders- Formulated CSR procurement policy- Continued activities based on consumer-focused voluntarydeclaration- Provided support for nursing and breastfeeding rooms- Held tree planting campaign

Improvement inquality ofhuman resources

Developing professional
human resources that can be
active on a global basis

Articulate HR development policy
Promote HR development and hiring on a
global basis● Reinforce expertise of each department- Established education program based on new personnel system- Creating global human resource development program (in progress)

Creation of
an ideal working
environment

Carrying out thoroughworkplace development thatwill make people want tocontinue to work at Pigeon

Promote diversity
Take initiatives toward diverse working
styles● Promote work-life balance- 100% childcare leave uptake among male employees- Held meetings for mothers returning to work
- Promoted health management

Establishment ofa solid management
base

Building a strong
management foundation to
support sustainable growth

Introduce a new personnel system
Put risk management in place● Strengthen compliance● Strengthen brand power● Enhance ESG responsiveness- Established new personnel system established (January 16, 2021)- Reviewed risk maps and scenarios- Conducted compliance monitoring checks for all employees¢ÖòçèõñìýèçëèäçòĤæèöëòúõòòð
- Established Sustainability Committee

●
●

●
●

●
●

Quantitative Targets of Seventh Medium-Term Business Plan (FY2022)

Solve social issues surrounding babies
and mothers

Governanceance- Formulated environmental policy- Started examining long-term environmental vision- Installed new solar panels (Indonesia)- Purchased new renewable energy (hydroelectric power) (Japan)- Formulated Pigeon Eco-Label- Became an ordinary member of RSPO
- Implemented nursing bottle recycling campaign (Singapore)¢ÊæôøìõèçÒÜØ"æèõ÷ìĢæä÷ìòñéòõäïïóõòçøæ÷ìòñöì÷èö

●Enhancement of
stakeholder
responsiveness

Seventh Medium-Term Business Plan: Priority Issues

SocialArticulate environmental policy andenvironmental vision● Respond to global warming● Develop environment-friendly products andpackaging● Reduce plastics● Prevent pollution● Share knowledge on reduction ofenvironmental impact● Introduce an environmental management
system● Earmark funds for environmental costs●

Operating Environment

Environment- Human milk bank support
Tokyo Financial Award 2020
- Published support book for mothers of late-preterm infants- Disseminated general information on childcare (social media,
webinars)- Reviewed our product development process- Continued implementing quality improvement activities●

impacts and solving social issues surrounding babies and mothers in all countries andregions where we conduct our business activities.

Develop products and services to help
solve social issues● Increase productivity with AI and IoT● Improve productivity by streamlining the
product development process● Maintain and improve product quality●

Enhancement ofbusiness
competitiveness andR&D capabilities

For more information on ESG activities,
please visit our corporate website(https://www.pigeon.com/sustainability/).

Awarded Tokyo Financial Award 2020in the ESG Investment Section (SDGs Category)Øøõèğòõ÷ö÷òöøóóòõ÷ëøðäñðìïîåäñîöúòñ÷ëèìñäøêøõäïäúäõçìñ÷ëèÜÍÐöÌä÷èêòõü(new category introduced in 2020 in the ESG Investment Section) of the Tokyo Financial
Awards 2020, sponsored by the Tokyo Metropolitan Government. The award
recognizes Pigeon’s practical application of SDG-related management.

● Sustainability Committee EstablishedC o m m i t t e d t o d e e p e n i n g i t s E S G -f o c u s e d m a n a g e m e n t f r o m amedium-to-long-term perspective, the Pigeon Group established theSustainability Committee in December 2020. The new committee is chairedåü÷ëèÑèäçòé÷ëèÐïòåäïÑèäçØĤæèäñçìñæïøçèö÷ëèÍìùìöìòñÖäñäêèõöòéeach Business as well as the Business Strategy Division Manager. Its duties
include setting medium- and long-term targets, identifying materialities,
conducting regular reviews, and reviewing the progress of measures taken.
We also established the Corporate Sustainability Department as a dedicatedèñ÷ì÷ü÷òöèõùèäööèæõè÷äõìä÷éòõñèúæòððì÷÷èèÝëèæòððì÷÷èèëèïçì÷öĢõö÷
meeting on March 1, 2021 and presented a report at the Board of Directors on
March 30, 2021.

Board of Directors
Appoint/Dismiss

ReportSustainability Committee
Chair: ÑèäçòéÐïòåäïÑèäçØĤæè
Members: Division Managers of each Businessand the Business Strategy
Division Manager
Secretariat: Corporate Sustainability Department

Pigeon Integrated Repor t 2020 / 1233

S ocial

Solve social issues surrounding babies
and mothers● Tiny Birth Cry Support Project● Lactation Research

Through our Tiny Birth Cry Support Project, we support the healthy growth of babies born
prematurely, babies with low birth weights, and babies born with medical conditions that
require special treatment, and we are working in various countries to help families feel
more secure and happy.

In March 2015, we launched the Pigeon Smile Lactation Research Institute, which aims to

Pigeon“Create a society that values more babies growing up healthy and more mothers and

The Tiny Birth Cry
Support Project

産後 3ヵ月
親子の授乳
スタイルの確立

Happy♪

はじめてのラッチオン感覚

Happy♪

Happy♪

景色がいいね。
もう少しで次の頂上だ！

ど
さく乳器など

一緒に
進もう！

妊娠

中 のママとパ パ に 読 んで

ほし

母乳
外来など

ゆっくり、
ゆっくり

先輩ママ

ママ友

い

しあわ せ授 乳K
サポ ート BOO

道に迷ったら
相談してね

頼ってね！

Aさん

パパ

幸せ授乳の道は人それぞれ

祖母
次ページ以降で
休憩
しよう㽈

Bさん

先輩ママの具体的な体験談を見てみよう

Cさん

授乳を軌道にのせる第一歩！

3 ラッチオン感覚
はじめての

おっぱい

ラッチオンの感覚を探して、ちょっとでも感じ取れたら自信を持とう詳しくは9 ページヘ詳し
詳しくは17 ページヘ

詳しくは22 ページヘ

4

入院中の過ごし方
自分のおっぱいの状 態と赤ちゃんの様子を観 察し、
専 門 家へ具 体 的に質 問をしよう
詳しくは

26 ページヘ

5 カラダとココロの 回 復
産後のママのパパや周囲の人にサポートをしてもらおう

詳しくは29 ページヘ

34)Happy Breastfeeding Support Book

● Lactation Lounges
We have set up breastfeeding/pumping rooms called Lactation Lounges at Head Office with theaims of creating comfortable working environments for employees with small babies andand measurement conducted at the Central Laboratory, home visit observation, andcontributing to local communities. In addition to employees, the rooms are available for use by

ultrasonic (echo) tomography.

mothers working in the vicinity, as well as mothers and babies living nearby. In other nations as
Nursing bottle
for babies withlow birth weight

well, we provide support to establish Lactation Lounges in various locations, including plants andNursing bottle forbabies with cleft
lips and/or palates

offices, with the aim of helping female employees return to work after giving birth. As of
December 31, 2020, we have supported 9,465 such rooms in 21 countries around the world.

disabilities can drink breastmilk and packaged milk with minimal effort. These include●Support for foundation providing scholarships to medical students

nursing nipples for infants with low birth weight, nursing nipples for babies with weak sucking
function, and a nursing bottle specially designed for babies with cleft lips and/or palates. We

Lactation Lounge at Pigeon Head Office

The Pigeon Scholarship Foundation, a public interest incorporated foundation, aims toalso offer a special pacifier for babies born prematurely as a way to ease the pain of

activities and directly linked to the superior performance of Pigeon-brand products.

産後 2ヵ月

はじめてのおっぱい

中期の安定期
中期

we have distributed around 620,000 copies of this booklet free of charge.

various perspectives, including observation of babies’ oral cavities through monitoring

support for breastfeeding babies in hospitals, in reflected in our general product development

産後 1 ヵ月

入院

出産

おめでとう！

道具もうまく使ってcomprehensive compilation of information on nursing for mothers. As of December 2020,and nipples are the result of ongoing research into babies’ sucking behaviors fromtreatments and procedures. Our accumulated expertise, gained through our constant

出産

出産前の
最後の急坂

propose solutions to them. In 2016, we produced the Happy Breastfeeding Support Book, afeedback from customers raising children. For example, the Company’s nursing bottles

work in other ways to develop exclusive products so that infants with low birth weight or

妊娠
妊娠

breastfeeding mothers and infants to identify issues during the breastfeeding period andPigeon’s product development is based on more than 60 years of infant research andconduct joint research with neonatal intensive care units (NICUs) at hospitals and clinics and

妊娠中

おめで
おめでとう
でとう
う！

Products for Babies Who Need Special Care

Pigeon is committed to “enabling all babies to enjoy better sucking.” To this end, we

妊 娠 〜 産 後 3 ヵ 月 の「 し あ わ せ 授 乳 マ ップ 」

fathers finding happiness in childrearing.” The Institute works with specialists researchingrealize a society in which all mothers can give birth and raise children with peace of mind,
Nursing bottle
for babies withweak sucking

while fostering the healthy lives and growth of mothers and babies. The Foundation

Pacifier for babies
born prematurely

provides scholarship support, with no repayment required, to students in the neonatal,
pediatric, and obstetrics departments of universities (students majoring in medicine atdomestic general universities or medical universities). Since the foundation’s
establishment, Pigeon has made financial donations and provided human resources

Activities for Babies Needing Special Care and Their Families
Support for Human Milk Banks
Since April 2020, we have provided support for establishing Human Milk Banks. As partof this effort, we provided full support for the opening of the Nihonbashi Human Milk
Bank at Pigeon Head Office in September 2020, the second such bank in Japan. The
bank is capable of supplying donated human milk to 600 babies a year. In China, Pigeon
has become the first main partner in the Beijing Chunmiao Charity Foundation’s “Human
Milk Bank Special Fund” project. In the initial year of 2021, we will provide active support

support. In the fiscal year ended December 2020, the foundation provided financial support
to 101 students at 25 universities (total of new fifth-year and sixth-year students).

What is a human milk bank?

● Human Resource Development

A facility that provides “donor milk”(processed from donated breastmilk) forbabies born prematurely or with extremely
low birth weight (less than 1,500g) who
cannot obtain breast milk from theirmothers. At the human milk bank, the donor
milk is inspected and pasteurized and storedsafely according to international standards.

to help the foundation establish new human milk banks and operate existing facilities.

Pigeon Preterm Infant Health Insurance (China)
In November 2018, Pigeon (Shanghai) Co., Ltd partnered with Ping An Insurance
Company of China, Ltd. to establish “Pigeon Preterm Infant Health Insurance.” Neonatal
care for babies born small is making progress in China, but there are still many families
who discontinue treatment for financial reasons. By providing health insurance forpreterm babies, we help alleviate the financial burden of medical expenses for families
with preterm babies.

Nihonbashi Human Milk Bank on the first floor of
Pigeon Head Office

Supporting Children’s Creativity (Japan)

In China, we have been building and donating

For more than 40 years, Pigeon has been a supporter of the Tomorrow’s Scienceto schools in areas with inadequate

Children’s Art Exhibition, which encourages children, our future world leaders, toeducational infrastructure. Following thefreely express their visions of future science. The exhibition is hosted annually by

Sichuan Earthquake of 2008, our local

the Japan Institute of Invention and Innovation (JIII). Our involvement stems from

Chinese subsidiary Pigeon (Shanghai) Co., Ltd.

an endowment made to JIII by Pigeon founderopened the Pigeon Hope Elementary School

Yuichi Nakata in order to help foster children’sin Meishan District of Sichuan Province increativity. The endowment funds prize money that2009. We subsequently donated schoolis presented by the Institute to kindergartens

buildings at the pace of one building per year,

attended by children who win the JIII Chairman’s

and the total reached 10 schools by 2018.

Award or the Excellence Award.

Psychological Support for Late Preterm Infants and Their Families(Pigeon Smile Lactation Research Institute)● Newborn Baby Commemorative Tree-Planting Campaign

Since 2018, the Pigeon Smile Lactation Research Institute has been conducting research

For more than 30 years, we have continuously held our annual Newborn Baby Commemorative Tree-

into the thoughts and feelings of mothers of late preterm infants in NICUs or growing care

Planting Campaign, which began in 1986. Under the slogan “Raising Children, Raising Trees: The
Spirit Is the Same,” the campaign celebrates children born in each particular year. The campaign isunits (GCUs), and we have presented our findings at academic conferences. Our research
revealed the need to provide emotional support to mothers of babies born prematurely.
As part of our support efforts, we worked with members of our research team to produce
a booklet for the families of late preterm babies and distributed it free of charge.

34

Improving Educational Environments (China)

Pigeon Integrated Repor t 2020 / 128Support booklet for fa
families of late preterm infants in
NICUs/GCUs

held at the “Pigeon Miwa no Mori” site, a combination of national forest and Pigeon-owned land near
Hitachi-Omiya, Ibaraki Prefecture. To date, we have planted trees on behalf of 186,399 babies under
the campaign. We will continue working to create memories for parents and children.

Pigeon Integrated Repor t 2020 / 1235

S ocial

Create environments where employees canwork comfortably

In order to continuously develop more value-added products, we need to provide environments in which employees can work comfortably. If
we do not value our employees, we will not succeed in our business. Based on this belief, we strive to build a comfortable workplace culture
by refining our systems to enhance our working environments.

our Three-Year Action Plan for Promoting Advancement of Women. The plan has threepillars: “Expand support systems for balancing work and family life,” “Raise awareness in

One of our Corporate Ethics Policies is that “Pigeon shall respect its employees’ human

the workplace,” and “Provide support for women’s feelings and skills.” In these ways, werights and individuality at all times, ensuring them discrimination-free, equal job

continue to enhance our systems and support the mindsets of our employees. We also

opportunities and rewarding work environments, and offering them fair merit ratings tofocus on training for female management prospects. In the fiscal period ended December

help their self-fulfillment.” We respect, welcome, and utilize the fundamental differences in

2020, women accounted or 21.3% of Head Office management and 38.8% of overall Pigeon

our employees’ backgrounds—in such areas as gender, nationality, age, and employment
needs. We respect the civil and political rights of employees—including freedom ofYear 120 people → 15 people

Year 210 people

career courses before the enactment of the Equal Employment Opportunity Law. At ouroverseas bases, the employee turnover rate has remained low thanks to our early
implementation of career advancement systems.
Every six years, we run a two-year training course for selected next-generation

DevelopmentÒçèñ÷ìĢæä÷ìòñ Program
Program

Deployment
ProgramYear 30–5 people

Advancement
Program❶ Increase the number of men using
the work-family balance support
system (for child care leave and leavefor school events) to 20 or more

● Work-Life Balance❷ Increase awareness aboutwork-family balance support
regardless of gender

100status and outcomes of thework-from-home systemestablished by legislation and labor agreements, we are implementing measures to60

the workplace by 7:00 p.m. and setting one day per week as a “no-overtime day.” We also

40

resourcefulness and continuously increase the Company’s corporate value based on the

introduced teleworking in April 2019. As a company involved in child-rearing, we arevalues of the Pigeon Way.” In 2020, we launched the Pigeon AMC (Accelerate My Career)

expanding our employee support systems for parenting and focusing on helping

Program at Pigeon’s headquarters. This is an open recruitment program to help people shapeemployees return to the workplace quickly after childbirth, with programs that include One

their own careers and experiences. In addition to internal recruitment, internal internship, andMonth Together (parental leave for male employees), Women’s Early-Reinstatement

internal pro bono work (short-term work support in other departments), the program

Support System, and Financial Assistance System for Parents with Children on Waiting

includes external volunteer leave and an external residency program that allows employees

Lists. At Pigeon, we have created workplace environments where anyone can taketo work at another company for three months to gain new experiences and skills. In fiscal

childcare and nursing care leave as a matter of course. We are also working to develop

2020, the first year of the program, two employees took advantage of the external residency

employees who can talk about their childcare experiences, and we reflect their feedback inprogram to work at venture companies. In January 2021, meanwhile, we shifted to a new

our product development and other operations.

personnel system that clarifies the roles of individual employees by setting up positions

In Japan, the Ministry of Health, Labour and Welfare gives “Kurumin” certification toaccording to their career aspirations and aptitudes and eliminating age, seniority, and othercompanies that have met certain standards for measures to address declining birthrates

factors, so that each employee can become a professional with deep expertise.

and support child-rearing. In 2018, Pigeon received “Platinum Kurumin” accreditation,

Realizebehavioral
changeSeeking to become “a company where employees can work lively in good health,” we take
Buildfoundation for
healthInternallydisseminate health management:
Healthmanagement
Management
policy (topDeclaration
management)
2020

2021

Implement
Improved labor
healthproductivity andmanagement corporate value
measures
Company withenergized
workers2022

include eliminating smoking, reducing lifestyle-related disease risks, and tackling mental
health issues.

Pigeon Rubella Zero Action
We are implementing the Pigeon Rubella Zero Action project as part of our corporate
responsibility related to health management and babies. To elevate the rubella antibody
retention rate among employees, Pigeon pays for antibody tests and vaccinations and provides
in-house education to deepen understanding of rubella. On February 4, 2020 (Rubella Day), ouractivities were recognized by an award from the Rubella Zero Project Executive Committee,
which is promoted by the Japan Association of Obstetrics and Gynecologists.
Pigeon Integrated Repor t 2020 / 12

Dec. 2019

Dec. 2020

69.5%
63.6%

60.7%
53.4%

30
20
10
0

FY endedJan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

which recognizes companies that have made considerable progress and engage in high-● Health Management

industrial physicians and health insurance associations to tackle various challenges. These

Jan. 2019❹ Establish frameworks enabling
women to give birth, raisechildren, and return to work withpeace of mind

（%）
70

50

promotion system under the direct supervision of the President and collaborate with

FY endedJan. 2018

Paid Leave Usage Rate (Head Office)Head Officepromote work-life balance and labor productivity. These include establishing a rule to leave

dynamic and supportive work environments. We also established a health management

21.3％

16.9%

15.4%

cultivate next-generation managerial personnel as “Human qualities that can enhancecare to support the maintenance and promotion of their health and strive to provide

19.7%

20

❸ Grasp and improve theIn addition to complying with domestic regulations on worker protection and work hours

Training program for selected next-generation
management personnel

managerial human resources. To ensure the continuous growth of the Group, we work to

36

（%）
30

Three-Year Action Plan for Promoting Advancement of Women (February 2020 to December 2022)

expression, association, and religion—and engage in dialog with them about these rights.

education, and practical training. We stopped setting gender differences in job types andFemale Manager Ratio (Head Office)Group management.

status—in order to address ever-changing business conditions and diversifying customer

Pigeon gives all employees opportunities to participate in technology development,

Pigeon considers the creation of environments in which female employees can play aneven more active role to be a particularly important issue. With this in mind, we formulated● Diversity and Human Rights● Training Professional and Managerial Human Resources● Supporting the Advancement of Women

In-house lecture (December 2019)

level initiatives to introduce and deploy systems that support both work and family life.
Use of Systems Related to Child Care Services and Work-Life Balance
Name

One Month
TogetherDetails

1-month parental leave system
for male employees

Usage status

Uptake rate: 100%

(100% consistently since FY Jan. 2016)

Users: 55 persons(cumulative over6 years since FY Jan. 2016)

Leave the workplace(go home)by 7:00 p.m. rule

Rule to leave the workplace by
7:00 p.m. in principle, even when
doing overtime

No overtime day(1 day per week)

Every Wednesday designated as“no overtime day” to promoteconsistent departures

Life Design Leavea n d Te m p o r a r y
Retirement

System enabling up to 2 years of leaveor temporary retirement for fertility
treatment and adoption processes

Provided in 2015, 2016, and 2017,2019, and 2020

Telework

System available to all employees towork at home or at a satellite office

System implemented in
April 2019

Average overtime per month:
6.7 hours(FY Dec. 2020)

Materials explaining One Month Together

Pigeon Integrated Repor t 2020 / 1237

S ocial

Work with stakeholders to ensure safe andsecure manufacturing▲● Resolving Consumer Issues
Feedback from customers is a valuable asset for our company. Since the1970s, Pigeon has operated a Customer Service Center to obtain customer

Customer Service Center

Customerfeedback for reflection in its business. In December 2016, we established a
Product
development

international standards (guidelines for quality management, customer

commit Pigeon to participate in fair and open competition and carry out fair transactions
and responsible procurement in its corporate activities for sound growth. Pigeon also
maintains healthy relationships with politics and the administration of government. UnderÕèêäïÊğäìõö ÌòðóïìäñæèÍèó÷

Productenhancement

satisfaction, and handling complaints in an organization). Seeking to further
Declaration in July 2018.

To ensure fair business practices, we established our Corporate Ethics Policies, which
Senior management

Sales & Marketing Dept.

complaint response management system that conforms to ISO 10002

improve customer satisfaction, the Company issued its Consumer-Oriented● Fair Business Practices

Complaint Response Management System

Product Development Dept.

Service
improvement

Quality Control Dept.

Business process
improvement

our Corporate Ethics Policies and in accordance with our Code of Conduct, we strive toÍèĢñèæøö÷òðèõõèöóòñöèPlan : quality; set targets andplans

Do : Implement the process
Check : Monitor and analyze
Act : Make further improvements

prevent bribery and corruption by undertaking procurement in accordance with our fairtransaction policy. We also ensure compliance with competition laws, refrain from giving or
receiving entertainment or gifts for the purpose of gaining unfair profits or preferential
treatment, and do not perform any act that arouses suspicion among political or● Quality and Safety Initiatives

administrative authorities. In addition, we actively cooperate with investigations by the

The Pigeon Group is passionate about providing safe and reliable products to babies andrelevant authorities. We work to prevent collusion with governments and involvement intheir families all over the world. To accomplish this task, we have built an original quality

To enhance design quality

We apply our original approach and criteria
globally through Pigeon Quality Standards (PQS)

assurance system that improves quality in two stages: Design quality (at the productdevelopment stage) and production quality (at the manufacturing stage).

anti-competitive activities, by instituting a system for complying with competition laws andrigorously educating employees through compliance training and other programs.

Management and Use of Intellectual Property Rights for Fair Business Practices

To support and improve design quality, the Pigeon Group specifies the Pigeon Quality
Standards (PQS). These standards embody an original product-design approach and

To enhance production quality

criteria that build safety, ease of use, and durability into products from the productdevelopment stage onward. By applying PQS globally, we are working to support andimprove the design quality of our products manufactured worldwide. In production, we
strive to achieve stable quality through key standards and practices. One of these is Pigeon
Productive Management (PPM), our original set of criteria for the manufacturing equipment
and production environments at each plant. Another is Good Manufacturing Practice (GMP),At Pigeon, we believe that intellectual property rights are essential for sustainablecorporate development and that the legitimate creation, protection, and exploitation of

Manufacturing
Management Criteria

intellectual property rights contribute to the development of sound industry. Based on thisPigeon Productive Management (PPM)
QA audits
Various Good Manufacturing Practices (GMPs)

activities, while creating systems and an internal culture that respect the intellectual

ISO 9001 (international standard)

concept, we strive to protect and utilize rights so we can conduct legitimate businessproperty rights of others.

managed according to ISO 9001 and are checked and reviewed every six months.

Whistle-Blowing System and Contact Point for Business Partners to Report or Seek
Consultation on Compliance● Promoting CSR Procurementand “Pigeon Partners Line” for business partners and others outside of the Group. Theseestablished for each country. In these two initiatives to improve quality, the processes aremindset and approach to procurement activities, and our CSR Procurement Guidelines,
which serve as guidelines for our activities with suppliers. Based on the policy andguidelines, we maintain fair business practices with strict compliance and a strong ethicaloutlook. We also pursue stable supplies of high-quality products and materials and build
win-win relationships with suppliers.
To fulfill our social responsibilities in each process of the value chain, we emphasize
mutual communication with suppliers. Going forward, we will ask new suppliers to comply
with the guidelines based on the items set forth in the CSR Procurement Policy, andconduct annual CSR procurement assessments to evaluate them. We will also use our CSR
Procurement Self-Assessment Questionnaire to assess the status of our existing suppliers,and promote initiatives for continuous improvement.

▲

In December 2020, we announced our CSR Procurement Policy, which describes our basic

We operate two whistle-blowing systems: “Speak-Up Desk” for Pigeon Group employees
Communication with Suppliers

systems encourage parties to report real or suspected corporate ethics violations

To deepen mutual understanding with

the Pigeon Group. In fiscal 2020, three (3) reports were made to Speak-Up Desk and zero

our suppliers, we hold an annual(0) reports to Pigeon Partners Line.

(compliance violations) occurring in the course of business activities or transactions with

“Pigeon Report Meeting” to explain ourpolicies. In February 2021, we invited 56
suppliers from Japan and overseas toparticipate in the online meeting, where
we explained our CSR Procurement
Policy and asked for their cooperation in
our CSR procurement assessments.

Our Sustainable Actions● Chemical Management
We work with suppliers on the management of chemicals contained in products, to ensurethat all products delivered to Pigeon customers are safe and environmentally friendly. These
efforts cover all chemicals regulated under international regulations and agreements, such as
the Stockholm Convention on Persistent Organic Pollutants and the Registration, Evaluation,
Authorisation and Restriction of Chemicals (REACH) regulations. Pigeon divides its
management of chemicals into two levels, “procurement-prohibited substances” andThe website below introduces the Pigeon Group's activities invarious nations. Please visit it.
https://www.pigeon.com/sustainability/activity/“procurement-controlled substances,” in consideration of regulations in countries where its
products are sold and other regulations that are internationally influential. We define thechemical substances to be controlled and manage the chemical substances contained in our
products at the design and development stage and for continuously purchased products.
38

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 12

39

Env ironment

Leave a rich earth for the future of babies
born tomorrow● Basic Approach to Environmental Protection(Environment Policy )● Climate Change

The Pigeon Group is committed to form a sustainable society in the Earth’s finite

emissions in order to mitigate climate change. For example, we are installing solar panels

environment and 'leave a rich earth for the future of babies born tomorrow' by acting basedat our factories. In 2019, our two production companies in China and one in India put solar

on Pigeon Way. In addition to complying strictly with environmental laws and regulations,panels into full-fledged use, followed by Indonesia in 2020 and Thailand in January 2021. In

we recognize the relationship between its business activities and the environment,

addition, we are purchasing renewable energy (hydroelectric power generation) for some ofenergetically tackle the environmental issues faced by all humanity.

our factories, using photocatalytic paints, and switching to all-LED lighting to save

The Pigeon Group is working to identify and reduce direct and indirect greenhouse gas

electricity.

In that spirit, we pursue maximum efficiency in the use of natural resources and energy
and reduce emissions of greenhouse gases, waste, harmful chemicals and other

CO2 Emission Intensity (Scope 1 & 2)

substances that impact the environment. Thereby contributing to the reduction of global

CO2 emissions (kg)/Net sales (¥ millions)warming, preventing pollution and conservation of biodiversity. In advancing these various

300

efforts, we strive to form appropriate partnerships and cooperative relations with thediverse range of stakeholders in its supply chain, including customers, business partners

260.3

257.8

Solar panels on the roof of PT Pigeon Indonesia

250.8

200

and regional communities, to have a beneficial effect on the global environment of the
future.

CO2 emission
intensity
10% reduction from
FY2018100● Sustainable Development Policy0

In order to develop products with full consideration to the future environment of childcare
and the global environment, it is important for each of us to think about the environmental
Development Policy, which sets out the following key rules: “Act with an eye to the future,”“Make products that play their part,” “Avoid overengineering and overdesign,” “Seekempathy, share progress,” and “Watch over products for their whole lifetime.”

its business activities. Our goal is to reduce the volume of industrial waste per unit of2021 the Pigeon Group began affixing the Pigeon Eco-Label on products that meet its own

production by 1% per year. We are also working in other ways to prevent pollution at ourenvironmental standards. Products carrying the label are those that meet at least one ofplants, such as improving productivity and yield and closing waste incinerators. In addition,

the Pigeon Environmental Standards set by Pigeon at each stage, covering raw material

we have reviewed our disposal vendors to ensure that industrial waste that had beenprocurement, manufacturing, distribution, use, and disposal. By 2025, we aim to display thedisposed of without being recycled has since been recycled.
Eco-Label

Plant-derived ink

Industrial Waste Volume Intensity
Volume of industrial waste (kg)/Net sales (¥ millions)
10.0
9.7
10
8

Clear cases and trays used inpackaging are made of 100%
recycled PET bottles.

Downsizing to reduce paper usage
Compact products that can bestacked enable us to reduce thesize of individual boxes. The sizeof such boxes can be reduced bymore than 30% compared withconventional products, lowering
the amount of paper used.

Inks used in our packaging

Pigeon Integrated Repor t 2020 / 12

6

are made of environmentally4

friendly plant-derived raw

2materials.

0

Forest-certified paper
The cardboard we use is madefrom FSC®-certified paper. The
FSC® certification system is aninternational forest certification
scheme for responsibly managed
forests and forest products
procured in such a way that limited

5.2

FY ended Jan. 2019〔2018〕

Dec. 2019〔2019〕

Target for final year of
Seventh Medium-TermBusiness Plan (FY2022)

Dec. 2020〔2020〕

Pigeon Manufacturing Hyogo Corporation provides cat
litter manufacturers with breast pads and non-woven
fabrics that are discharged during the production
process. Around 225 tons of such items are recycled
by the manufacturers each year.

Industrial waste
volume intensity
1% reduction
per year* Scope: Pigeon Group total, excluding Pigeon (Shanghai) Co., Ltd. and the Pigeon Osaka Branch* Calculations do not include general business waste or waste that is recycled (such as through thermal recycling).
* Calculations for domestic operations for December 2019 are based on the 11-month period from February 1 to December 31,
2019 (due to a change in the fiscal year-end).
* There was an error in past data, and the figures have been corrected.

● Sustainable use of resources
To promote the sustainable use of palm oil, in December 2020 Pigeon became an ordinary
member of the Roundtable on Sustainable Palm Oil (RSPO), a non-profit organization thatencourages the production and use of sustainable palm oil, including through theconservation of tropical rainforests and biodiversity.

forest resources will remain
available in the future.

40

Solar panels on the roof of Thai Pigeon Co., Ltd.

Dec. 2020〔2020〕The Pigeon Group is committed to minimizing non-recyclable industrial waste generated by

To assist customers in choosing products that are gentle to the environment, in February

Use of recycled materials

Dec. 2019〔2019〕● Pollution Prevention

Environmental Label

Products with Pigeon Eco-LabelFY ended Jan. 2019〔2018〕* Scope: Pigeon Group total (Scope 1 & 2)
* At some sales bases, CO2 emissions are calculated based on electricity usage as reflected in electricity charges, and others
are based on emission coefficients published by the Ministry of the Environment.
* Calculations for domestic operations for December 2019 are based on the 11-month period from February 1 to December 31,
2019 (due to a change in the fiscal year-end).
* There was an error in past data, and the figures have been corrected.

impact of their actions. With this in mind, we develop products based on our Sustainablelabel on all baby and maternity products sold in Japan.

Target for final year of
Seventh Medium-TermBusiness Plan (FY2022)

Please check our progress at www.rspo.org.

Pigeon Integrated Repor t 2020 / 12

41

Env ironment

Governance

Leave a rich earth for the future of babies
born tomorrow

Support sustainable growth to stay close
to the baby

the like, Audit & Supervisory Board Members listen to directors, view
important resolution documents, examine the current status ofbusiness and financial assets, and otherwise conduct meticulous● Initiatives for Biodiversity● Corporate Governancesupervision and oversight in accordance with Pigeon’s policies on

The Pigeon Group recognizes that biodiversity is the foundation for the survival of society

We are organized as a company with an Audit & Supervisory Board. The

as a whole and is an essential element of sustainable business activities. Based on fullPresident and CEO, receive reports on matters such as important

Audit & Supervisory Board Members’ auditing to ensure strict adherencecompany issues, and carry out frank exchanges of opinions.

consideration for how our business activities affect biodiversity in various situations suchto the law, forms the cornerstone of our compliance management. Our

Under the current management structure, centered on the Board

as raw material procurement, water resources and wastewater used in manufacturing

current top management structure (meeting bodies) consists of theof Directors, Audit & Super visor y Board, and Management

processes, and product disposal, the Pigeon Group implements initiatives for protecting

Board of Directors, chaired by the Chairman and consisting of 12 Directors

Committee, Pigeon is working to improve corporate governance by

nature in order to conserve biodiversity.

(9 males and 3 females; 11 Japanese nationals and 1 foreign national),increasing the number of Outside Directors and Audit & Supervisory

including 5 Outside Directors; the Audit & Supervisory Board, consisting ofBoard Members, establishing the Nominating Committee,

Pigeon Miwa no Mori Tree-Planting Activities

4 members (3 males and 1 female; 4 Japanese nationals), including 2

Remuneration Committee, and Governance Committee as advisory

Outside Audit & Supervisory Board Members; and the Management

panels to the Board of Directors, and by actively exercising theCommittee meetings, chaired by the President and consisting ofsupervisory function of the Audit & Supervisory Board.

Forests help prevent global warming by absorbing carbon dioxide and also help preserve
biodiversity. In addition, they play a role in preventing floods and erosion while preserving

Executive Officers and Audit & Supervisory Board Members. For all bodies,high water quality, to the extent that they are referred to as “green dams.” Over the past 34

we strive to increase diversity of membership. We have also introduced ayears, we have planted around 150,000 seedlings on 46.15 hectares of land (both national

managing officer system. The aims of this system are to provide forforest and private land) at the Pigeon Miwa no Mori site, a combination of national forest

mutual partnership between the decision-making/management

and Pigeon-owned land near Hitachi-Omiya, Ibaraki Prefecture. In the national-forest
portion, covering 25.37 hectares, the “green dam” benefits equate to storage andpurification of 5.98 million two-liter PET bottles. Through these forestry efforts, we are also
contributing in a small way to educational activities related to global environmental
protection.

Øéúëìæë
Total area:

Pigeon Miwa no Mori siteàä÷èõö÷òõäêèäñçóøõìĢæä÷ìòñèôøìùäïèñ÷

46.15

ha

25.37ha ofnational forest(More than 9 times the areaòéÝòîüòÍòðè¥åäöèåäïïĢèïç¦¦2L

5.98 million
two-liter
PET bottles

CO2 absorptionäñçö÷òõäêè148

auditing and allotment of duties. They also meet regularly with thetons(Equivalent to annual emissions of"$!óèòóïè¦Restoring Forests in Indonesia
PIGEON SINGAPORE PTE.LTD. is partnering with WWF-Singapore to support forest
restoration efforts in Indonesia. We support the rehabilitation of 50 hectares of land with● Evaluating the Effectiveness of

the Board of Directors

functions (governance) and execution of business and to clarify the

Seeking to increase corporate value and achieve sustainable growth over

operating responsibilities of Directors.

the medium and long terms, the Board of Directors conducts annual

The Board of Directors has the authority to supervise the execution ofevaluations of its effectiveness and works to maintain and improve suchduties of Directors and Managing Officers . It meets to make decisions on

effectiveness. In fiscal 2020, we addressed issues related to the operation

matters (management objectives and important business-executionof the Board of Directors and provided training opportunities for Directors

strategies, such as management strategy) prescribed in laws andand Audit & Supervisory Board Members identified in the effectivenessregulations, in the Articles of Incorporation, and in the “Board of Directors

evaluation conducted in fiscal 2019. Regarding the operation of the Board

Rules.” Furthermore, the Board of Directors endeavors to elicit the lively

of Directors, for example, we allocated sufficient time for deliberation by

opinions of Outside Directors, as well as internal and Outside Audit &providing and explaining reporting materials in advance and shortening theSupervisory Board Members, thereby strengthening the business-time spent on reporting at Board of Directors’ meetings. We also reviewed

execution supervision function.

agenda items for the Board of Directors’ meetings by revising the rules of

In addition to the Nominating Committee and Remuneration

the Board of Directors. As for training opportunities, we provided training

Committee, on March 30, 2021 we established a new Governanceand content, mainly related to corporate governance and finance, toCommittee to serve as an advisory panel for the Board of Directors. The

Directors and Audit & Supervisory Board Members, as well as briefings on

aim of the new committee is to further enhance corporate governance atour business activities. As a result, our effectiveness evaluation conducted

the Pigeon Group, which is based around Pigeon Corporation. It is chaired

from November to December 2020 revealed some improvements,

by an Outside Director and a majority of its members are Outside Directors

including in the issues mentioned above. As in fiscal 2019, it was confirmed

and Outside Audit & Supervisory Board Members.

that the Board of Directors is making effective decisions through open andthe planting of 5,000 seedlings in West Sumatra, Indonesia under the NEWtrees program

Audit & Supervisory Board Members attend meetings of both thewhich is a planting project for forest trees and fruit trees in key biodiversity areas that are

Board of Directors and the Management Committee, where they deploy

long-term corporate value. Meanwhile, the need to further enhance efforts

threatened by deforestation.

their experience in the field to swiftly resolve issues. In addition to

towards ensuring the internal control system’s effectiveness andenhancing the supervisory function through expression of opinions andcoordination with auditors was identified.

● Water Conservation

General Meeting of Shareholders©WWF-Indonesia

for manufacturing, water conservation, and wastewater reuse. For example, Pigeon(Outside Directors: 2,
Outside Audit & Supervisory Board Members: 2)

Industries (Changzhou) Co., Ltd. generates industrial wastewater at its baby wipe

Voluntary Nominating
Committee with 5 Directors

production lines and its laboratories, but it uses an industrial wastewater treatment system(Outside Directors: 3)

to turn the wastewater into water that can be used in aquariums.

Voluntary Remuneration
Committee with 5 Directors(Outside Directors: 3)

As a company that advances its business globally, the Pigeon Group seeks to obtain ISO
14001 certification for environmental management systems. By the end of 2020, all of our
production facilities had obtained certification. In addition, we are working on
environmental activities not just as temporary measures to reduce environmental impact,
but also as an upward-moving management system based on the PDCA cycle.

Aquarium at Pigeon Industries (Changzhou) that reuses
treated industrial wastewater

ISO 14001 certification rate
at Pigeon Group
production sites

100%

Appoint/Dismiss

Decision-Making Functions /Supervisory Functions
Governance Committee with
5 Directors and 2 Audit &Appoint/
Supervisory Board Members
Dismiss/

Business Execution Functions

Advisory Panels for the
Board of Directors

We are working to reduce water consumption through the effective use of water resources● Environmental Management Systems

lively discussion and playing an influential role in improving medium-to-

Consult

Board of Directors
with 12 Directors(Outside Directors: 5)

Advise/ProposeSustainability
Committee

Appoint/
Dismiss

Appoint/
Dismiss

Audit & Supervisory
Board with 4 members

Audit

Appoint/
Dismiss/
Supervise

ReportRisk Management
Committee

Appoint/
Dismiss

Audit Functions

Representative Director
InstructManagement
Committee(Outside Audit &Supervisory Board Members: 2)

Audit

Accounting
Audit

Internal

ReportAccounting Auditors

Audit Department

Place matters on
the agenda/Report Audit"Îûèæø÷ìùèÖäñäêìñêØĤæèõö ÖäñäêìñêØĤæèõö
Instruct

Business Departments and Group Companies

Corporate Governance Organization Chart
42

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 1243

GovernanceSupport sustainable growth to stay close
to the baby

Independent Outside Directors, one whom serves as Chairman. In addition

the spread of COVID-19. For example, we used a virtual format so that

Risk Management Committee convenes and takes steps to minimize

to human-resource requirements for CEO (responsibilities and authority,even shareholders who were not present at the meeting could view thedamage and effect recovery, based on the Rules for Risk Management

main duties and expected results, and required competencies), theproceedings. We also asked speakers and management staff to wear

and the Business Continuity Plan (BCP). Furthermore, information on

executive nomination policy sets out standards for appointment andmasks at the meeting venue, and shareholders in attendance had to wear

consultations and reporting through the internal whistle-blowing system

dismissal, successor plans, terms of office, and the like. The ideal humanmasks and sit apart.

are collected and sent to the GHO Risk Management Committee. The Risk

Remuneration for Directors (excluding Independent Outside Directors)

qualities necessary for the role of Chief Executive Officer (CEO) of theCompany are “Human qualities that can enhance resourcefulness andResponsible Dialogue with Shareholders and Other Investors

Management Committee or a department nominated by the Risk

consists of “basic remuneration” commensurate with position, “bonuses”
provided as a short-term incentives, and “stock remuneration” provided

continuously increase the Company’s corporate value (social andas a medium-to-long-term incentive designed to share interests witheconomic value), based on the values of the Pigeon Way.”● Executive Remuneration System andRemuneration Committee

shareholders. The retirement allowance system for directors wasabolished at the conclusion of the 62nd Ordinary General Meeting of
Shareholders held on April 25, 2019. Basic remuneration amounts are now
determined for each role and responsibility. Bonuses vary (0–150%)
according to the level of achievement of the Group’s consolidated
performance targets (net sales, operating income, and Pigeon Value

For details of the executive remuneration and nomination policies,
please refer to the sites below:
・Executive Remuneration Policy:
https://www.pigeon.com/sustainability/files/pdf/Executive_remuneration_policy.pdf
・Executive Nomination Policy:
https://www.pigeon.com/sustainability/files/pdf/Executive_nomination_policy.pdf

Added (PVA), our original performance indicator). Stock remunerationconsists of two components: performance shares (60%) and restricted
stock (40%). In principle, the performance shares portion varies (0–150%)
according to the level of achievement of performance targets andnonfinancial indicators stated in the Medium-Term Business Plan.

Basic remuneration
60%

Bonuses20%

Stockremuneration
20%● Internal Audits
We established the Audit Office, an independent organization under the
direct control of the President, as an internal auditing body. Each year, theand domestic and overseas group companies and conduct internal audits
accordingly. In conducting the audits, it focuses mainly on theeffectiveness and efficiency of operations, reliability of financial reporting,compliance, and asset protection, and makes suggestions for

Fixed
[60%]

Performance-linked
[32%]

Fixed
[8%]

improvement as necessary. The results of the audits are shared with all
Directors and Audit & Supervisory Board Members at audit reportmeetings. In addition, the Audit Department established the J-SOX

To increase the independence, objectivity, and transparency of theSecretariat to conduct evaluation tests on Groupwide internal controls

executive remuneration system, the Company established aand the financial process for closing accounts, pursuant to the basic plan

Remuneration Committee to serve as an advisory body to the Board offor internal controls over financial reporting under the Financial

Directors. More than half of the Committee’s members are Independent

Instruments and Exchange Act, and to monitor the appropriateness of theOutside Directors, one of whom serves as chairman. The Remuneration

development and operation of these controls.

Committee meets at least four times a year in principle to discuss thenecessity of revising the basic executive remuneration policy andindividual executive remuneration levels, and the Committee also provides
advice and recommendations to the Board of Directors.
Based on the Company’s business environment, as well as surveys
and analyses produced by external databases of other companies in thesame industry (manufacturing) and major companies of similar size, thetotal remuneration amount for directors is set at a maximum of ¥800
million per year for Directors and a maximum of ¥100 million for Outside
Directors. (These figures do not include the employee salary portion for
those directors who serve concurrently as employees). Directors can also
receive a performance-linked stock-based bonus, with total remuneration
set at a maximum of ¥600 million over three business periods. (However,a maximum of ¥200 million was set for the fiscal period ended December
2019.) In order to further strengthen their independence frommanagement, Outside Directors and Audit & Supervisory Board Members

44● Responsible Dialogue with

Shareholders and Other Investors

The Company actively engages in responsible dialogue with shareholders

Total number ofcorrespondences: 424 (fiscal 2020)* We also held an interactive virtual shareholders' meeting.

by using the Web and teleconferences to host IR meetings and financial
results briefings. We recognize that the Ordinary General Meeting of
Shareholders is the Company’s highest decision-making body and is also

Risk Management, which systematically stipulate the Group’s riskmanagement responses, the GHO Risk Management Committee ischaired by the Director for GHO, under the supervision of the President
and CEO. Directly below the GHO Risk Management Committee are theRisk Management Committees of each business segment, which are
chaired by the heads of operations in each segment. This framework
enables information about risk to be collected across the entire Group,
provides necessary controls, and empowers each segment to respondrapidly to risk issues. The GHO Risk Management Committee
systematically collects, analyzes, and evaluates the risk information it
gathers throughout the Group, centered on the risk information it collectsfrom each business segment. On its own or through the respective
business segments, the GHO Risk Management Committee thenexamines and implements response measures. The Risk Management
Committees of each business segment collect, analyze, and evaluate risk
information from their respective business segments and the Group
companies under them. These Committees then examine and implement
response measures.
In addition to addressing normal situations, in the event that the Groupis confronted with a crisis, such as a disaster or other major incident, theBoard of Directors

a forum for constructive dialogue with shareholders. Accordingly, we
ensure a sufficient period of time and a good environment soshareholders can properly exercise their rights. Each year, we post the
convocation notice in Japanese and English on the Company’s corporatewebsite and other media around one month before the Ordinary General● Executive Nomination Process andfor electronic exercise of such rights. We also provide sign language

enabling them to exercise their voting rights via the Internet or a platform
interpreters at the venue of the Ordinary General Meeting of Shareholders,
as well as a special child-care room. Moreover, beneficial shareholders

To increase the independence, objectivity, and transparency of the

who hold the Company’s shares in the name of trust banks and the likeprocess of selecting and dismissing Directors, the Company established a

are allowed to observe the Ordinary General Meeting of Shareholders after

Nominating Committee in September 2019 to serve as an advisory panel

completing the prescribed procedures. At the 64th Ordinary General

to the Board of Directors. More than half of the Committee’s members are

Meeting of Shareholders held on March 30, 2021, we took steps to prevent

The Pigeon Way is the cornerstone of all our activities. On this basis, wethe “Corporate Ethics Policies,” which are ethical standards that Pigeon
should always have and hold to continue existing as a corporation trusted
and supported by society, and the “Code of Conduct,” which is a set of
guidelines for each and every employee to help materialize the Corporate
Ethics Policies in various company activities. The Corporate Ethics
Guidelines stipulate Pigeon’s basic compliance policy for winning theconfidence of all stakeholders (interested parties) involved in practicing
compliance in our corporate activities. To ensure that each and every
employee is keenly aware of the Pigeon Way and compliance efforts, we
believe it is vital to continue disseminating to all Group employees
Pigeon’s corporate philosophy and the sense of values of its
management. For this reason, our representative directors and all otherexecutives lead by example in rigorously promoting our spirit of ethics andcompliance.
With respect to compliance-related education, we conduct e-learningand other training sessions on such topics as the Corporate Ethics
Guidelines at the Company and domestic and overseas Group companies
in order to spread compliance to all employees. We also distribute our“Pigeon Compliance Report” newsletter each month to all employees of
the Company and domestic Group companies to help them understandand address compliance-related matters that could arise in the course of
their daily work. This newsletter provides overviews of laws related to theGroup’s business, including the Act on Prohibition of Private

harassment and other compliance-related issues. In addition, we conductperiodical questionnaire-based compliance surveys to raise awarenessand knowledge about compliance among all Group employees, and weChair: Director for GHO
Committee member: Business Strategy Division Manager
Observers: Persons nominated by the chair
Secretariat: Legal Department
In normal times: Reporting and consultation regarding
collection, analysis and evaluation of risk information andregarding examination and implementation of response
measures
When incidents occur: Reporting

Meeting of Shareholders and send out paper copies three weeks prior. In● Compliance

Unjustifiable Premiums and Misleading Representations, as well as

Reports on the risk-management activities of Pigeon Group,
including responses to incidents

GHO Risk Management Committee

Whistle-blowing
systemreports to the Board of Directors at least once each year.

Monopolization and Maintenance of Fair Trade and the Act against

President

Reporting andconsultation

the consultations and reporting. The GHO Risk Management Committee

Guidelines.” The Corporate Ethics Guidelines are composed of two parts:

Office (GHO) Risk Management Committee. Governed by the Rules forManagement
Committee meeting

Management Committee responds as necessary based on the details of

established a basic policy on compliance called the “Corporate Ethics● Risk Management

increased the number of contact points compared with the previous year

addition, we strive to ensure convenience for shareholders, including by

Pigeon Integrated Repor t 2020 / 12

IR meetings withinstitutional investors

and other investors. During the COVID-19 pandemic, for example, we

receive only “basic remuneration”.

Nominating Committee

Number of attendees: 55*
Voting rights exercised: 88.57%

The risk management system of Pigeon is headed by the Global Head

Office formulates an audit plan based on a risk approach for the Company

Remuneration Structure

64th General Meeting of
Shareholders (March 30, 2021)Òññòõðäï÷ìðèöÌòñĢõðä÷ìòñäñççìõèæ÷ìòñõèêäõçìñêæòïïèæ÷ìòñäñäïüöìöäñçèùäïøä÷ìòñ
of risk information and regard ing examination and implementation of response measures
When incidents occur: Direction of responses

Japan Business
Risk Management
Committee

China Business
Risk Management
Committee

Singapore Business
Risk Management
Committee

Lansinoh Business
Risk Management
Committee

Each Division andGroup company

Group company

Group company

Group company

use the results to improve compliance measures.
As for internal reporting, we operate two whistle-blowing systems:“Speak-Up Desk” for Pigeon Group employees (three points of contact:
Audit & Supervisory Board Members, Legal Department, and a consulting
lawyer) and “Pigeon Partners Line” for business partners and others (twopoints of contact: Legal Department and a consulting lawyer). When aproblem is discovered within the Group or outside it, the Risk
Management Committee considers appropriate responses as necessaryand examines the facts, taking ever y precaution to protect
whistleblowers and consultants. In this way, the Risk Management
Committee arranges to make the responses necessary to resolve theproblem in a timely manner. If necessary, the advice of a legal adviser may

Risk Management Organization Chartbe sought to weigh the legal propriety of responses. Reports on thecontent of compliance education and the whistle-blowing systems are
submitted at meetings of the Board of Directors each year.

Pigeon Integrated Repor t 2020 / 1245

GovernanceSupport sustainable growth to stay close
to the baby

Board of Directors, Audit & Supervisory Board Members, and Managing Officers(As of May 13, 2021)● Areas of Expertise Required of the Board of Directors
To ensure the effectiveness of the Board of Directors and Audit & Supervisory Board, we believe it is necessary to clarify the expertise of theindividual Directors and Audit & Supervisory Board Members who make up each collegial body. For this reason, we have clarified the areas ofexpertise of each individual in the following table (skills matrix). Each area of expertise has been selected based on the relationships between the
Pigeon Way (the cornerstone of all our activities, centered on our Corporate Philosophy of “Love”), our Purpose (set forth in the Pigeon Way), and thesix priority materialities (key issues) the Company must address to realize the Pigeon Way from the perspective of sustainability management. We
have also taken into account key strategies of the Seventh Medium-Term Business Plan to ensure that our selection is consistent with the

Executive Advisor &Member of the Board

Yoichi Nakata

Chairman of the Board

Shigeru Yamashita

President & CEO

Norimasa Kitazawa

Director, Senior Managing
Executive Officer

expectations of not only the Company but also the shareholders who elected our top officers.

Eiji Akamatsu

Head of Japan Operations(In charge of Administration Division,
Domestic Baby & Mother Care Business
Division, and Related Business Division)Expertise demanded of the Board of Directors
Name/Position

Yoichi Nakata
Executive Advisor & Member of the Board

Shigeru Yamashita
Director, Senior Managing
Executive Officer

Tadashi Itakura

Head of Global Head Office(In charge of Business Strategy Division
and Accounting & Finance Division)

Director, Managing
Executive Officer

Yasunori Kurachi
Deputy Head of Japan Operations(In charge of Research & Development Division,
Supply Chain & Quality Management Division,and Customer Communication Division)

Director, Executive Officer

Outside Director

Lansinoh Business Division Manager,
CEO of Lansinoh Laboratories, Inc.

(Appointed in April 2015)

Kevin Vyse-Peacock

Chairman of the Board

Takayuki Nitta

Norimasa Kitazawa
President & CEO

Experience inManagement,
the company,
businessindustry
strategy
experience

○

○

○

○

○

○

○

○

Eiji Akamatsu
Tadashi Itakura
Yasunori Kurachi
Directors

Outside Director

Outside Director

Outside Director

Outside Director

Outside Director

Eriko Yamaguchi

Rehito Hatoyama(Appointed in April 2016)(Appointed in April 2018)(Appointed in March 2020)(Appointed in March 2020)

Outside Director

Rehito Hatoyama

Erika Okada

Chiaki Hayashi

○

○

○

○

○

Eriko Yamaguchi
Outside Director

Tsutomu Matsunaga

Audit & Supervisory
Board Member

Hiroshi Nishimoto

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member(Appointed in April 2019)(Appointed in April 2019)

Koichi Otsu

Atsuko Taishido* Takayuki Nitta, Rehito Hatoyama, Erika Okada, Chiaki Hayashi, and Eriko Yamaguchi are Outside Directors as defined in Article 2–15 of the Companies Act.
* Koichi Otsu and Atsuko Taishido are Outside Audit & Supervisory Board Members as defined in Article 2–16 of the Companies Act.

Ryo YanoManaging
Officers

46

Senior Managing Officer
China Business Division Manager
Representative Director of Pigeon (Shanghai) Co., Ltd.

Yusuke Nakata

Senior Managing Officer
Singapore Business Division Manager
Chairman of the Board of Pigeon Singapore Pte. Ltd.

Business Strategy Division Manager
Nobuo Takubo
Administration Division Manager
Koji Ishigami
Katsushi Tsutsui Research & Development Division Manager
Takatoshi Urakari Domestic Baby & Mother Care Business Division Manager

Hiroyasu Maki Accounting & Finance Division Manager
Customer Communication Division Manager
Yuko Ohara
Kazuyuki Tajima Supply Chain & Quality Management Division Manager
Takanori Tsuru Related Business Division Manager

Koji Matsutori

Ken Kaku

Pigeon Integrated Repor t 2020 / 12

Deputy Division Manager of Lansinoh Business Division
Director of Lansinoh Laboratories, Inc.

President of Pigeon Hearts Corporation
Representative Director of Pigeon Manufacturing (Shanghai)Co., Ltd.

Audit & Supervisory Board
Members

Audit & Supervisory
Board Member

Tsutomu Matsunaga
Audit & Supervisory Board Member

Hiroshi Nishimoto
Audit & Supervisory Board Member

Koichi Otsu
Outside Audit & Supervisory Board Member

Atsuko Taishido
Outside Audit & Supervisory Board Member

○

○

○

○
○

○

○
○

○

○

○

○

○

○

○
○

○
○

○

Outside Director
Outside Director

○

○

○
○

○

○
○

Solvingsocietalissues○Erika Okada
Chiaki Hayashi

Human
Law,
resource
Marketing,
Finance,compliance,development,
branding
accounting
risk
corporate
management
culture○○Director, Managing Executive Officer

Takayuki Nitta

SCM*

○

○

Director, Senior Managing Executive Officer

Kevin Vyse-Peacock

Design,R&D,
product
development○

Director, Senior Managing Executive Officer

Director, Executive Officer

Globalbusiness

○

○

○

○

○
○
○
○

○

○

○

○

○

○

* SCM: Supply chain management

Committee Members
The Company has established the three committees shown below as advisory panels to the Board of Directors. Each committee is chaired byan outside director, and outside officers constitute the majority of members.
Nominating Committee: Takayuki Nitta (Chair), Shigeru Yamashita, Norimasa Kitazawa, Erika Okada, Eriko Yamaguchi
Remuneration Committee: Takayuki Nitta (Chair), Shigeru Yamashita, Norimasa Kitazawa, Erika Okada, Eriko Yamaguchi
Governance Committee: Rehito Hatoyama (Chair), Shigeru Yamashita, Norimasa Kitazawa, Tadashi Itakura, Chiaki Hayashi, Koichi Otsu, Atsuko Taishido

Pigeon Integrated Repor t 2020 / 12

47

MD&A

F inancial Highlight s

Management Discussion and Analysis

Net Sales and Gross Margin by Segment

Annual Sales Trend by Segment(¥ millions)

China
Japan
Singapore
Lansinoh（ Domestic Baby & Mother Care
Child Care Service(¥ millions)
Other ）
Health & Elder Care
Overseas120,000

FY ended Dec. 2020
AmountPercentage
Gross
(%)
Margin(%)

1,273

1,402

1,289

100,000

Consolidated AmountJapan Business

99,380100.0%

50.2%

44,977

45.3%

39.5%

37,73238.0%

34,305

13,213

12,13330,533

11,48280,00060,00054.3%

35,581

23,05122,809

6,986
4,472

Singapore Business

12,184

12.3%

38.4%

40,000

6,901
7,393

Lansinoh Business

12,473

12.6%

55.6%

20,00031,82333,84135,59330,813Eliminations△7,986△8.0%

ー
FY ended Jan. 2017

Jan. 2018

Jan. 2019

Dec. 20190

Net Sales(¥ millions)(¥ millions)

120,000

21,00099,380100,000

Operating Income

50

18,000differentiating ourselves from our competitors and building a

February 1 to December 31, 2019. For this reason, year-on-

solid earnings base.

12,184

year comparisons are not provided.
(3) By promoting a four-segment business system and

6,546
3,492
44,977

Dec. 2020

Ordinary Income(¥ millions)

Ordinary Margin

21,00018,00015,31615,00080,000consolidated fiscal year was the 11-month period from

Ordinary Income/Ordinary Margin

Operating Margin (%)

16,113

40

(%)

9,000
40,000

20

6,000
3,000

0

0

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

EPS

10

Dec.
2020

0

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Cash Dividends per Share/Dividend Payout Ratio
(¥)

(¥)

150

80

120

Dividends per Share

Payout Ratio
72

60

Jan.
2019

Dec.
2019

20

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

(¥ millions)(%)
50

As a result, in the year under review we posted consolidated

there have been intermittent resurgences of the virus and city

net sales of ¥99,380 million, operating income of ¥15,316

lockdowns in various regions, and it is impossible to predict

million, ordinary income of ¥16,113 million, and net income

when the pandemic will end. Accordingly, the economic

attributable to owners of parent of ¥10,643 million.

Under these circumstances, the Group sought to expand
its business and improve the quality of management by

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

(¥ millions)

Total Assets

93,472are as follows: US$1.00 equals ¥106.77 (¥109.02 in fiscal 2019)
and 1 CNY equals ¥15.47 (¥15.77 in fiscal 2019).

steadily implementing the following three basic strategies set
forth in its Seventh Medium-Term Business Plan (covering the

Dec.
2020

period from January 31, 2020 to December 31, 2022). In fiscal

Cost of sales amounted to ¥49,459 million, resulting in gross2020, the first year of the new plan, we implemented various

profit of ¥49,921 million and a gross margin of 50.2%. Selling,

Income Statement Analysis

measures to achieve not only business growth but also ourgeneral, and administrative expenses (SG&A) totaled ¥34,605

Purpose: “We want to make the world more baby-friendly by

million, resulting in operating income of ¥15,316 million and an

80

25

furthering our commitment to understanding and addressing

operating margin of 15.4%.

ROE

ROIC

20

15.5

babies’ unique needs.”

Despite a foreign exchange loss, we benefited fromsubsidy income (around the same amount as the previous

15.0
10

(1) We will promote the integration of our brand and businessyear), resulting in ordinary income of ¥16,113 million. Net

5strategies based on the Pigeon Way, in order to maximize

income attributable to owners of parent totaled ¥10,643

economic value while stepping up eff orts to solve social

million.

00

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

issues related to childcare. Our aim is to progress withthe consumers from “buying a product” to “buying into abusiness,” which also means getting them to empathize with（%）

Net Assets(income and expenses) of overseas consolidated subsidiaries

0

Equity Ratio

100,000

Main exchange rates used in the financial statements

30

20

Total Assets/Net Assets

Net Income Attributable to Owners of Parent
Net Income Margin

taking measures to prevent the spread of COVID-19. However,10

Note: ROE is return on equity, where the denominator is the average of the
beginning and end of the period. ROIC is return on invested capital (NOPAT÷ invested capital). The tax rate is 30.0%. Invested capital is the averageof the beginning and end of the fiscal year.

Net Income Attributable to Ownersof Parent/Net Income Margin (%)

gradually increase the level of socioeconomic activities while

15

30

FY endedJan. 2017business in a speedy manner.

(%)

40

0

global economy, including Japan, countries are moving to

16.2%

ROIC／ROE

60

60

16,000Jan.
2018

the market characteristics of each region and operate our

(%)

40

0

FY endedJan. 2017

COVID-19, despite signs of recovery in some areas. In the

100

81.0%

88.93

90

20

3,000
0

a “development, production, and sales” cycle that matches

being.

6,000

15.4

continued facing tough conditions due to the impact of▲

20,0009,000

decision-making on the frontlines. In the process, we will build

40

60,000transferring authority to each business, we will accelerate

In the fiscal year under review, the Japanese economy

outlook is also expected to remain uncertain for the time30

12,000Business Conditions in Fiscal 2020

50

15,00030

12,000where we can leverage our global advantages while further

12,473Note 1: In the fiscal year ended January 2019, the Pigeon Group changed the name of its Overseas Businessto the Singapore Business in view of its focus on Pigeon-brand operations in Southeast Asia, India, Middle
East, and Oceania. At the same time, the Lansinoh-brand operations of the Overseas Business, whose
focus is on North America and Europe, was made into a separate business, the Lansinoh Business.
Note 2: Effective the fiscal year ended December 31, 2020, the Domestic Baby & Mother Care Business,
Child Care Service Business, Health & Elder Care Business, and Other segments have been consolidated
into the Japan Business.

Operating Income/Operating Margin

Due to a change in the fiscal year-end, the previous

37,73236,824

7,058
7,541

Note: The figure for consolidated net sales refers to the figure after elimination of inter-segment transactions.

(2) We will accelerate growth in core product categories▲

Eliminations

1,343

12,753Business Environment and Performanceour business and choose our brand.

100

14,00012,00040

80,00030

60,00060

20

40,00040

1020,00020

0072,625

10,643

10,000

74.8

80

8,000
6,000
4,000

10.7

2,000
0

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

0

FY endedJan. 2017

Jan.
2018

Jan.
2019

Dec.
2019

Dec.
2020

Effective the fiscal period ended December 2019, the Pigeon Group changed its fiscal year-end from January 31 to December 31. Therefore, fiscal 2019 was a transitional period of 11 months (February 1–December 31, 2019.)

48

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 12

49

MD&A

Management Discussion and Analysis▲

Effective the year under review, ended December 31,

Sales in the China Business segment amounted to ¥37,732

Total liabilities at fiscal year-end stood at ¥20,846 million, up

cash flows from operating activities, the Group believes that,

2020, the Group has four business segments for reporting

million, and segment income was ¥12,600 million. The¥818 million. Over the period under review, current liabilities

in order to secure future growth particularly of its overseas

purposes: Japan Business, China Business, Singapore

segment was significantly affected by the spread of COVID-19

increased ¥25 million, to ¥15,664 million, and fixed liabilities

businesses, it will be able to procure the necessary funds evenBusiness, and Lansinoh Business. As shown in the figure

at the beginning of the period. However, the economy

rose ¥792 million, to ¥5,181 million. Main factors boosting

if demand for investment funds exceeds current liquidity on

below, manufacturing and sales operations for the non-Group

subsequently recovered strongly, especially in mainland

current liabilities were a ¥66 million increase in accrued

hand. In the fiscal year ending December 31, 2021, the Grouphandled by domestic subsidiaries (previously categorized

China, and we continued to enjoy healthy sales of ourpayables and a ¥633 million rise in accrued income tax, whichplans to use internal funds to cover capital expenditures andunder Domestic Baby & Mother Care Business, Child Caremainstay nursing bottles and nipples, as well as skincare

contrasted with a ¥142 million decrease in notes and accounts

other long-term capital needs. The Group does not have any

Service Business, Health & Elder Care Business, and Other)products, for which we are focusing on basic research.

payable-trade, a ¥338 million decrease in electronicallyborrowings from financial institutions. As of December 31,

recorded obligations, and a ¥229 million decrease in other

2020, the Group had cash and cash equivalents of ¥37,163

current liabilities. The main factors boosting fixed liabilities

million, and its equity ratio remained high, at 74.8%.

China Businesshave been consolidated into the Japan Business.
▲

Singapore Business▲

Performance by Segment

Liabilities

Reporting segments¥øñ÷ìïĢöæäï '¦Reporting segments¥éõòðĢöæäï  ¦In the Singapore Business, we reported segment sales

were a ¥389 million increase in deferred tax liabilities and a

Domestic Baby &Mother Careof ¥12,184 million, and segment income of ¥1,647 million.

¥272 million rise in other fixed liabilities.

Japan

In Southeast Asia, the Middle East, and India, there wereNet cash provided by operating activities amounted toup ¥2,162 million from a year earlier. This was due mainly to¥18,400 million, compared with ¥14,098 million in thea ¥2,140 million rise in retained earnings and a ¥442 million

previous fiscal year. Factors boosting cash flows included

increase in foreign-currency translation adjustment.

¥15,836 million in income before income taxes, ¥3,815 million

Lansinoh Businessmillion and segment income of ¥1,370 million. During the year,

Singapore

America, but sales of breast pumps via the durable medical

in depreciation, and a ¥1,351 million decrease in notes and▲Singapore

China

▲

Net assets at fiscal year-end amounted to ¥72,625 million,

we enjoyed robust sales via the e-commerce channel in North

China

Cash Flows from Operating Activities

activities due to the large impact of COVID-19 pandemic.

In the Lansinoh Business, we posted segment sales of ¥12,473

Other

Net Assets

numerous cases in which we were forced to refrain from sales▲

Health & Elder Care

Cash Flows▲

Child Care Service

With its sound financial position and the ability to generate

Information and Financial Policies on Capital Resources

accounts receivable-trade. Contrasting factors included a

and Capital Liquidity¥260 million decrease in notes and accounts receivable-

equipment (DME) channel and the hospital channel continued

There are two main types of capital demand for the Group:

trade, a ¥42 million increase in inventories, and ¥4,322 million

to be affected by COVID-19.

working capital demand and equipment capital demand.

in income taxes paid.

Major sources of working capital demand are related to the
Cash Flows from Investing Activities

purchase of raw materials for manufacturing the Group’s
products, as well as manufacturing costs and operating

Net cash used in investing activities totaled ¥3,815 million,

outlays for selling, general, and administrative expenses.

compared with ¥3,995 million in the previous year. Main

As of December 31, 2020, Pigeon had consolidated total

Equipment capital demand relates mainly to the purchase offactors were ¥3,601 million in purchase of tangible fixedThis segment consists of the Domestic Baby & Mother Careassets of ¥93,472 million, up ¥2,980 million from a year earlier.

buildings, machinery, and other fixed assets associated withassets and ¥222 million in purchase of intangible fixed assets.

Business, Child Care Service Business, Health & Elder Care

Over the period under review, current assets increased ¥3,297

the acquisition of production facilities. The Group’s financial

Business and Other. In fiscal 2020, segment sales amounted

million, to ¥65,231 million, and fixed assets rose ¥317 million,

policy is to maintain sound balance sheets and adequate liquid▲

Lansinoh▲Lansinohto ¥44,977 million, and segment income was ¥3,008 million.

to ¥28,241 million. Main factors boosting current assets

assets for business activities. The Group’s primary funding

Net cash used in financing activities was ¥9,231 million,

Sales of products for babies and mothers were greatly

were a ¥4,747 million increase in cash and time deposits andneeds, namely working capital and capital equipment, arecompared with ¥8,734 million in the previous year. This wasaffected by the absence of foreign visitors to Japan and othera ¥111 million increase in merchandise and finished goods,

generated mainly by internal funds derived from cash flows

mainly due to ¥8,517 million in payment of cash dividends.

factors, with particular sales declines for product groups withwhich contrasted with a ¥1,502 million decrease in notes andfrom operating activities. Any shortfall of funds among Grouplarge inbound demand. In the Child Care Service Business, inaccounts receivable-trade. The main reason for the decrease

companies in Japan is covered by loans from the company,

the year under review we operated 71 in-company childcare

in fixed assets was a ¥437 million decline in software (underwhile demand for funds among overseas Group companies

facilities. In the Health & Elder Care Business, we posted

intangible assets). This was despite a ¥153 million increase inare met mainly by foreign-currency loans from the company.

strong sales to private residences, nursing-care facilities, andbuildings and structures (under tangible fixed assets).

In addition, we place top priority on ensuring liquidity and

Financial Position▲▲

Japan Businessthe like of products that support health management.

AssetsCash Flows from Financing Activities

safety in managing our cash reserves on the premise thatthey serve as standby funds for business investments.

50

Pigeon Integrated Repor t 2020 / 12

Pigeon Integrated Repor t 2020 / 12

51

MD&A

F inancial D a t aManagement Discussion and Analysis

Other Performance Indicators■ Consolidated Balance Sheets

ways to fortify our operational base and improve future Group

Item

Pigeon uses return on equity (ROE) as a key performanceearnings. These include investing in new businesses andAssetsindicator in its effort to improve profitability and capitalresearch and development, as well as investing in production

Cash and Deposits

30,052

31,34630,94932,416

37,163efficiency. As fiscal year-end, ROE stood at 15.5%.

facilities to raise production capacity, reduce costs, andNotes and Accounts Receivable - Trade

16,103

16,44015,004

16,58815,085enhance product quality.

Merchandise and Finished Goods

5,328

6,059

7,360

8,144

8,256

Other Current Assets

3,761

4,333

4,888

4,785

4,727

▲

position, we effectively use retained earnings in a number ofROE▲

Pigeon Value Added (PVA), Return on Invested Capital

During the year, we strove to further upgrade andJan. 2017

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020(ROIC), and Cash Conversion Cycle (CCC)

strengthen our policy of returning profits to our shareholders.

Total Current Assets

55,244

58,17858,201

61,933

65,231

Seeking to increase enterprise value, we are mindful of freeWith respect to specific shareholder-return goals, under our

Tangible Fixed Assets

20,263

21,11621,12722,49423,262

cash flow when conducting internal controls, and we set

Seventh Medium-Term Business Plan, announced in February

Intangible Fixed Assets

1,106

3,307

4,223

3,863

2,957

our own unique indicator called Pigeon Value Added (PVA),

2020, we are targeting a consolidated dividend payout ratio

Investment Securities

1,481

1,020

889

950

687

which is based on economic added value, to make variousof around 55%, as well as year-on-year increases in cash

Total Investments and Other Assets

2,273

1,865

1,729

2,200

2,020

investment and other decisions and to make performance

dividends for each fiscal period.

Total Fixed Assets

23,644

26,28927,41728,55828,241

Total Assets

78,88984,46785,61890,491

93,472

evaluations of each business segment. In fiscal 2020, invested

During the year, we paid an interim cash dividend of ¥36.00

capital totaled ¥71,545 million, compared with the fiscal 2019per share (¥36.00 regular dividend) and a year-end dividend

amount of ¥68,523 million and our target of ¥72,548 million,of ¥36.00 per share (¥36.00 regular dividend). This brought

Notes and Accounts Payable - Trade

4,857

5,194

4,567

4,900

4,757

resulting in a PVA spread of 10.0%, compared with the fiscal

total annual dividends to ¥72.00 per share (¥72.00 regular

Accounts Payable

2,477

3,141

3,363

2,660

2,727

2019 figure of 12.4% and our target of 12.5%. The PVA for

dividends), up ¥2.00 year-on-year. The consolidated dividend

Income Taxes Payable

2,324

2,578

1,951

1,272

1,906

fiscal 2020 was ¥7,144 million, compared with the fiscal 2019

payout ratio was 81.0%.

Outlook for the Next Fiscal YearNet operating profit after tax (NOPAT) amounted to ¥10,721

In fiscal 2021 (ending December 31, 2021), we are targeting

million, compared with the fiscal 2019 figure of ¥11,951 million

consolidated net sales of ¥100,800 million (up 1.4% year

and our target of ¥12,670 million, and return on invested

on year), operating income of ¥16,500 million (up 7.7%),

capital (ROIC, with tax rate of 30.0%) was 15.0%, comparedordinary income of ¥16,700 million (up 3.6%), and net income

with the fiscal 2019 figure of 17.4% and our target of 17.5%.

attributable to owners of parent of ¥11,100 million (up 4.3%).

In addition, the cash conversion cycle (CCC) in fiscal 2020
was 92.3 days, which was 3.6 days worse than fiscal 2019

(These are our forecasts as announced at the financial results
briefing held on February 10, 2021.)(88.7 days) and 7.3 days above our target (85.0 days).
* For the previous fiscal year, figures for Japan are based on an 11-month period due to achange in the fiscal year-end date.

Shareholder Return Policy and Measures
The Pigeon Group regards the return of prof it s toshareholders as an important management priority. Our basic
policy is to actively return profits to shareholders through theappropriation of retained earnings and other means, while
reinforcing our financial position based on considerations of
medium-term changes in business conditions and the Group’sbusiness strategies. In addition to strengthening our financial
Pigeon Integrated Repor t 2020 / 12

Accrued Bonuses to Employees

929

1,035

972

928

952

10,794

5,725

4,770

5,878

5,320

21,381

17,673

15,623

15,63815,664Long-term Borrowings

̶

̶

̶

̶

̶

Other Fixed Liabilities

3,770

3,982

3,412

4,389

5,181

Total Fixed Liabilities

3,770

3,982

3,412

4,389

5,181

Total Liabilities

25,152

21,65519,03620,02820,846

Capital Stock

5,199

5,199

5,199

5,199

5,199

Capital Surplus

5,179

5,179

5,179

5,179

5,179

Retained Earnings

42,28049,72955,70458,97961,120Treasury Stock

△ 948

△ 949

△ 951

△ 1,088△1,478

47

44

21

25

13

Total Current Liabilities

figures for fiscal 2020 fell below previous-year figures and ourtargets.

Liabilities

Other Current Liabilities

figure of ¥8,525 million and our target of ¥9,044 million. All

52

F Y ended(¥ millions)* The figures shown here are the forecasts contained in our financial results
announcement, released on February 10, 2021. As a change in its accounting policy,
the Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ
Statement No. 29, March 31, 2020) and other standards from the fiscal year ending
December 31, 2021. The above forecasts are based on figures after the change inaccounting policy, and comparisons with the previous year are based on figures calculatedusing a different standard.
(In this Integrated Report, statements other than historical or present-day facts are
regarded as forecasts. Such forecasts reflect the Pigeon Group’s hypotheses andjudgments based on information currently available, and thus contain known and unknown
risks, uncertainties, and other factors that may impact on the Group’s performance andfinancial position.)

Net Assets

Valuation Dif ference on Available-for-Sale
Securities
Foreign Currency Translation Adjustment

628

1,490

△ 910

△ 572

△129

1,349

2,119

2,339

2,741

2,722

Total Net Assets

53,73662,812

66,582

70,46372,625

Total liabilities and Net Assets

78,88984,46785,61890,491

93,472

Non-Controlling Interests

Figures less than one million yen are truncated.

■Equity Ratio, ROE, and ROICItem

F Y ended（％）

Jan. 2017

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Equity Ratio

66.4

71.9

75.0

74.8

74.8

ROE

21.8

25.7

22.8

17.5

15.5

22.2

21.2

17.4

15.0

ROIC

16.3
19.2

* ROE is return on equity, where the denominator is the average of the beginning and end of the fiscal year. ROIC is return on invested capital. It is calculated using a tax rate of 30% for the second (bottom) of the two figures forthe year ended January 31, 2017 and for the year ended January 31, 2018 and thereafter; and using a tax rate of 40.7% for the first (top) of the two figures for the year ended January 31, 2017. Invested capital is the average of the
beginning and end of the fiscal year.
Pigeon Integrated Repor t 2020 / 1253

F inancial D a t aNonf inancial Da t a■ Consolidated Statements of IncomeItem

F Y ended(¥ millions)Jan. 2017

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020■ Employee Data
FY ended

Item94,640102,563

104,747

100,017

99,380

Number of employees(persons)

Cost of Sales

49,951

51,99050,88949,21649,459Female employee ratio

Gross Profi t

44,68850,57253,85850,80049,921

47.2

49.3

51.4

50.8

50.2

Selling, General and Administrative Expenses

28,67331,15934,24633,72734,605

Operating Income

16,015

19,412

19,612

17,072

15,316Gross Margin (%)

Operating Margin (%)

16.9

18.9

18.7

17.1

15.4

Non-operating Income

945

1,263

1,295

1,136

1,406

Non-operating Expenses

498

547

509

924

608

16,462

20,12920,39817,284

16,113

Ordinary Margin (%)

17.4

19.6

19.5

17.3

Extraordinary Income

122

1,058

243

Extraordinary Loss

350

271

16,234

Income Taxes - Current

Pigeon GroupNet Sales

Jan. 2019

Dec. 2019

Dec. 2020

3,875

3,954

3,886

(%)

ー

63.6%

62.3%

Number of managers(persons)

ー

ー

467

Japan

(persons)

ー

ー

160

Overseas(persons)

ー

ー

307

(%)

ー

ー

38.8%

(%)

ー

ー

26.9%

Female management ratio
Japan

(%)

ー

ー

45.0%

(%)

ー

ー

8.6%

Number of employees(persons)

359

361

373

16.2

Female employee ratio

(%)

37.0%

38.2%

39.4%

121

38

Number of managers(persons)

71

76

75

379

300

315

Female manager ratio

(%)

16.9%

19.7%

21.3%

20,916

20,262

17,104

15,836

Voluntary turnover of regular employees

(%)

3.3%

2.8%

1.3%

5,165

5,931

5,794

5,067

4,715

Average length of service(years)

15.7

15.5

15.0

Income Taxes - Deferred

△ 273

225

△ 127

267

261

Average age(years)

43.3

43.1

42.6

Net Income

11,342

14,75914,594

11,76910,860

Number of new-graduate hires(persons)

9

9

8

224

244

356

230

216

Number of mid-career hires(persons)

19

17

16

11,11814,515

14,238

11,538

10,643(persons)

11

10

12

(%)

9.1%

10.0%

25.0%

(%)

9.1%

10.0%

8.3%

Ordinary Income

Net Income Attributable to
Non-Controlling Interests
Net Income Attributable to
Owners of Parent

Pigeon Corporation

Income before Income Taxes

Overseas
Voluntary turnover of regular employees■ Officer Data

Figures less than one million yen are truncated.

Number of directors■ Consolidated Statement of Cash FlowsItem

F Y ended(¥ millions)Jan. 2017

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Ratio of female directors
Ratio of non-Japanese directors

Cash Flows from Operating Activities

14,81017,094

13,632

14,09818,400Cash Flows from Investing Activities△ 1,854△ 3,586△ 4,704△ 3,995△ 3,815

Cash Flows from Financing Activities△ 6,223△ 12,812△ 8,338△ 8,734△9,231

Effect of Exchange Rate Changes on Cash and Cash Equivalents

△ 891

599

△ 986

98

△718

Net Increase (Decrease) in Cash and Cash Equivalents

5,840

1,294

△ 397

1,467

4,634

Cash and Cash Equivalents at Beginning of Period

24,29730,052

31,34630,94932,416■ Occupational Health and Safety

Cash and Cash Equivalents at End of Period

30,052

31,34630,94932,41637,050

Number of occupational accidents(Of which) occupational accidents requiring leave from work

■ Data Per ShareItem

F Y ended

Jan. 2017

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

92.84

121.20118.89

96.37

88.93

Cash Dividends (yen)

53.00

66.00

68.00

70.00

72.00

57.1

54.5

57.2

72.7

81.0

437.43506.79536.43565.64607.06

BPS (yen)

Number of managing officers
Ratio of female managing officers

4

4

4

(%)

0.0%

25.0%

25.0%

(persons)

14

13

13

14.3%

7.7%

7.7%

(cases)ーー

75(cases)ーー7(t-CO2)

27,26625,78524,922(kg-CO2 /¥ million)

260.3

257.8

250.8

(t)

1,047

967

520

(%)

1

1 :Includes cases that do not require first aid

EPS (yen)

Dividend Payout Ratio (%)(persons)

Ratio of female Audit & Supervisory Board Members

PigeonGroup

Figures less than one million yen are truncated.

Number of Audit & Supervisory Board Members■ Environmental Data
1

CO2 emissions

1

CO2 emission intensity (per unit of sales)
2

Industrial waste volume

2

Industrial waste volume intensity (per unit of sales)(kg/¥ million)

10.0

9.7

5.2

3

(thousand m )

ー

217.7

219.2

3

(thousand m )

ー

164.1

169.7

Amount of water withdrawn

Amount of water discharged33

Note: Figures for domestic operations in FY ended Dec. 2019 refer to actual results for 11-month period (February–December 2019) due to change in fiscal year-end.
1: Scope: All Group companies (Scope 1 & 2). For some sales offices, electricity consumption is calculated from electricity usage rates (based on emission factors published by the Ministry of the Environment).
2: Scope: All Group companies except Pigeon (Shanghai) Co., Ltd. and Osaka Branch. Calculations are based on industrial waste, excluding business-related general waste, and do not include waste that is recycled (such as thermal recycling).
3: Scope: All Group companies

54

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C orpor a te Infor ma tion

Pigeon Group Business Structure (As of December 31, 2020)

Corporate Data (As of December 31, 2020)
Company Name……

Global Head Office (GHO)

Pigeon Corporation

Pigeon Corporation Head Office: Tokyo 1957

Address …………… 4-4, Nihonbashi Hisamatsu-cho, Chuo-ku,Tokyo 103-8480, Japan

Phone +81-3-3661-4200 Fax +81-3-3661-4320
URL https://www.pigeon.com (global)
https://www.pigeon.co.jp (japan)

Japan Business (Domestic Baby & Mother Care Business, Related Business)
Pigeon Corporation

Established ………… August 15, 1957
Capital Stock ……… ¥5,199,597 thousand
Fiscal Year-End …… December 31

Note: At the 62nd Ordinary General Meeting of Shareholders convened April 25, 2019, a partial
amendment to the Articles of Incorporation was approved, changing the fiscal year-end from January 31
to December 31, from FY2019 onward.

Our Business ……… Manufacture, sale, import and export of baby and child-care products, maternity items, women’s careproducts, home healthcare products, elder care products, etc.; operation of child-minding centers

Number of …………
373 (Japan, Full-time employees) / 3,886 (Worldwide, Includes Part-time employees)
Employees

Pigeon Home Products Corporation

Pigeon Industries (Changzhou) Co., Ltd.

Pigeon Hearts Corporation

Lansinoh Laboratories, Inc.

Pigeon Manufacturing Hyogo Corporation

Lansinoh Laboratories Medical Devices
Design Industry And Commerce Ltd. Co.

Pigeon Tahira Corporation

Lansinoh Laboratories Benelux
Laboratories (Hongkong) Co., Ltd.

Pigeon Singapore Pte. Ltd.

Pigeon Tahira Corporation
Tokyo 2004
Sale of elder care products

Pigeon Home Products
Corporation

Pigeon Manufacturing Hyogo
Corporation

Pigeon Manufacturing Ibaraki
Corporation

Shizuoka 1985
Manufacture and sale of toiletries

Hyogo 2002
Manufacture and sale of non-woven products

Ibaraki 1996
Manufacture and sale of non-woven products

Pigeon (Shanghai) Co., Ltd.

Pigeon Industries (Changzhou) Co., Ltd.

China 2002
Sale of maternity and baby products

China 2009
Manufacture of maternity and baby products

Pigeon Manufacturing (Shanghai) Co., Ltd.

Doubleheart Co. Ltd.

China 2006
Manufacture of maternity and baby productsSouth Korea 2012
Sale of maternity and baby products

Singapore Business

Lansinoh Laboratories UK Ltd.

Pigeon Malaysia Trading Sdn. Bhd.
PT Pigeon Indonesia
PT Pigeon Baby Lab Indonesia
Pigeon Manufacturing (Shanghai) Co., Ltd.

Pigeon Singapore Pte. Ltd.

Lansinoh Laboratories, Inc.

Pigeon India Pvt. Ltd.

Singapore 1978
Sale of maternity and baby products

United States 2004
Sale of maternity and baby products

Pigeon Malaysia (Trading) Sdn.Bhd.

Lansinoh Laboratories Medical Devices
Design Industry And Commerce Ltd. Co.

Thai Pigeon Co., Ltd.

Malaysia 2011
Sale of maternity and baby products

PT Pigeon Indonesia

Third-Party Evaluations (As of May 31, 2021)
MSCI Japan Empowering
Women Index

Indonesia 2017
Manufacture of maternity and baby products

S&P/JPX Carbon Efficient
Index

TOKYO FINANCIAL AWARDPT Pigeon Baby Lab Indonesia
Indonesia 2019
Sale of maternity and baby products

Pigeon India Pvt. Ltd.

THE INCLUSION OF PIGEON CORPORATION IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR
INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF PIGEON CORPORATION BY MSCIOR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVEPROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOSARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

IR Prime Business Award

Lansinoh Business

Doubleheart Co. Ltd.
Pigeon Industries (Thailand) Co., Ltd.

Pigeon (Shanghai) Co., Ltd.

LISTED COMPANY AWARD

Pigeon Manaka Corporation
Tochigi 2000
At-home elder care services, sale of eldercare products

Lansinoh Laboratories Shanghai

Pigeon Manaka Corporation

JPX NIKKEI INDEX 400

Pigeon Hearts Corporation
Tokyo 1999
Child-minding and daycare services,
babysitter dispatch services, preschool
education services

China Business

Consolidated Subsidiaries (23 companies) (As of December 31, 2020)

Pigeon Manufacturing Ibaraki Corporation

Maternity and baby products: Sales, R&D, etc.
Branches and other offices: Sapporo, Sendai, Tokyo, Nagoya, Osaka, Hiroshima, Fukuoka, Tsukuba
Office, Central Research Laboratory, Hitachiota Distribution Center,
West Japan Distribution Center

India 2009 (sales company) and 2015 (factory)
Manufacture and sale of maternity and baby products

Forbes JAPAN WOMENAWARD2018

Platinum Kurumin

Pigeon Industries (Thailand) Co., Ltd.
Thailand 1996
Manufacture of maternity and baby products

Thai Pigeon Co., Ltd.

Turkey 2010
Manufacture of maternity and baby products

Lansinoh Laboratories Benelux
Belgium 2015
Sale of maternity and baby products

Lansinoh Laboratories Shanghai
China 2016
Sale of maternity and baby products

Laboratories (Hongkong) Co., Ltd.
Hong Kong 2020
Sale of maternity and baby products

Lansinoh Laboratories UK Ltd.
United Kingdom 2020
Sale of maternity and baby products

Thailand 1990
Manufacture of maternity and baby products●Sales / Service offices ●Factories
56

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C orpor a te Infor ma tion

■IR Tools (Quick Reference)
The purpose of this Integrated Report is to describe management strategies aimed at conveying the vision of the Pigeon Group, as well as details of the Group’sbusiness and ESG activities. It also designed to deepen understanding of the corporate value created by the Pigeon Group. In addition, we provide a variety ofother information through our Investors Guide and our corporate website, which give qualitative and quantitative details of the Pigeon Group’s history.

Integrated Report 2020/12

Stock Data (As of December 31, 2020)● Shares Authorized ………………
● Shares Issued ……………………

360 million● Total number of shareholders ………………………

121,653,486● Number of shareholders with voting rights

11,576………… 10,163● Treasury Stock …………………………………… 1,893,080

P.48 Financial Highlights

Purpose⬅

To see Pigeon's Key Performance
Figures.

Corporate Site➡

Investors

Major Shareholders (As of December 31, 2020)
Numberof shares

Ownership*

The Master Trust Bank of Japan, Ltd. (Trust Account)

10,801

9.0

Custody Bank of Japan, Ltd. (Trust Account)

6,286

5.2

STATE STREET BANK AND TRUST COMPANY 505223

4,961

4.1

Shareholder name(Thousand)(%)

BNYMSANV RE MIL RE FIRST SENTIER INVESTORS ICVC - STEWART INVESTORS ASIA PACIFIC LEADERS SUSTAINABILITY FUND

3,643

3.0

THE BANK OF NEW YORK MELLON 140042

3,148

2.6

RBC ISB S/A DUB NON RESIDENT/TREATY RATE UCITS-CLIENTS ACCOUNT

2,998

2.5

Y.N Corporation

2,378

2.0

THE BANK OF NEW YORK MELLON 140044

2,233

1.9

BBH FOR MATTHEWS ASIA DIVIDEND FUND

2,048

1.7

Custody Bank of Japan, Ltd. (Trust Account)

2,037

1.7

Investors
Our BusinessP.06 Business Overview
P.24 Business Summaries by
Segment⬅

To see Pigeon's business bysegment.

➡

P.49 MD&A
P.53 Financial Data
P.55 Nonfinancial Data⬅

To see the financial data andearnings structure
as a reference forinvestment decisions.

➡

・Chart Generator

P.58 Company Information(Stock Data)⬅

To find Pigeon's stock information.

➡

Stock Information* Ownership percentage fi gures are based on 119,760,406 shares (121,653,486 shares issued, minus 1,893,080 shares of treasury stock).

Share Breakdown by Shareholder Type (As of December 31, 2020)
Individuals andOthers9.0%

Treasury Stock

1.6%
Financial Institutions

121,653(thousands ofshares)31.4%
Securities Companies

1.7%
Non-JapaneseCorporations

51.6%

Japanese Corporations

4.7%

P.02 History at a Glance
P.04 History of Pigeon andNursing Bottles
P.56 Company Information(Corporate Data)

Number of shares

Non-JapaneseCorporations 62,756 (thousands of shares)
Financial
38,228 (thousands of shares)
Institutions
Individuals and10,922 (thousands of shares)
OthersJapanese
5,763 (thousands of shares)
Corporations
Securities
2,089 (thousands of shares)
Companies
Treasury
1,893 (thousands of shares)
Stock

Cover2 Pigeon Way
P. 1 4 Value Creation Story
P. 1 6 Efforts to Improve Brand
Value

Pigeon Stock Price

To learn about Pigeon's history andcorporate profile.

➡

Corporate History

The Pigeon Way⬅

To learn about Pigeon's corporate
philosophy, culture andmanagement vision.

⬅

To understand Pigeon's
management teamand their views and opinions
on business.

➡

Figures in Number of Shares are truncated.

Stock Price Range/Turnover of Common Stock（¥）⬅

Investors

Pigeon Stock Turnover (Monthly Total)（¥）
60,000,000

7,000
6,500

50,000,000

6,000
5,500
5,000

P.08
P. 1 4
P. 1 6
P.1 8

To Our Stakeholders
Value Creation Story
Efforts to Improve Brand Value
Dialogue between Outside
Directors and Internal Director
P.46 Board of Directors, Audit &Supervisory Board Members,
and Managing Officers➡

Investors
・Top Message
・Medium-Term Business Plan
Management

40,000,000

4,500

Sustainability

4,000
3,500

30,000,000

3,000
2,500

20,000,000

2,000
1,500
10,000,000
1,000

P.32 Pigeon’s ESG Activities⬅

To understand Pigeon's ESG
initiatives which drive
the sustainable growthof business and corporate values.

➡

・Pigeon ESG / SDGs Policy / ESG
・Data Book
・Approach to ESG

Corporate
Governance500
0

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2017
2016
2018
2019
2020
2021

58

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Pigeon Corporation(Securities Code: 7956)

Address 4-4, Nihonbashi Hisamatsu-cho,Ìëøò¢îøÝòîüò!¢&"&Óäóäñ¥ÑèäçØĤæè¦+81-3-3661-4200
Tel+81-3-3661-4204 (Business Strategy Sect.)+81-3-3661-4320
Fax
www.pigeon.com
URL