Integrated Report 202 1
For the Year Ended December 31, 2021

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 the Fiscal Year Ended December 2021

Operating income

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● 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

Top: Dec. 2021 Plan
Mid: Dec. 2021 Results
Bottom: Dec. 2020 Results*(¥ millions)

PVA*1
Plan 7, 8 2 9Results 5,600
Previous fiscal 6, 97 9
year (PFY)NOPAT*2
Plan 1 1 ,550
Results 9,335
PFY 1 0,556

Income taxes

To Our Stakeholders

36

China Business

39

02

Singapore Business

42

Working capital

Trade receivables

SG&A expenses

Plan 74,4 3 7Results 74,718
PFY 7 1, 5 4 5Plan 20,709
Results 21,641
PFY 20,462

Plan 15 ,878
Results 15,670
PFY 15 , 83 7

Plan 33,000
Results 30,735
PFY 29,482

Message from Outside Director

06

Lansinoh Business45

7th Medium-Term Business Plan

07

Business Over view

10

Value Creation Stor y

12

Brand Enhancement Initiatives

14

Histor y of Pigeon and Nursing Bottles

16

Special Feature-Nursing bottles that embody our
Brand Promise and Purpose-

18

Our Approach to Sustainability
Our Approach to Materiality

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

Financial Highlights▲ ▲ ▲ ▲ ▲C ontent s

08▲

2 02 1

Histor y at a Glance

Plan 2 9 ,167
Results 30,015
PFY 28,400

48
52

WACC*3*1 PVA: Pigeon Value Added*2 NOPAT: Net Operating Profit After Taxes.
The tax rate is 30%.
*3 WACC: Weighted Average Cost of Capital

Plan 51 ,300
Results 49,008
PFY 49,459

Invested capital36

01▲ ▲ ▲ ▲ ▲ ▲Integrated Repor t

Business Summaries by Segment
Japan Business▲PigeonC2▲▲ ▲Improving Corporate Value: PVA Tree;
Purpose of This Integrated Report

Cost of sales

Plan 4,950
Results 4,001
PFY 4,524

Fixed assets
Pigeon Way

Net sales
Plan 100,800
Results 93,080
PFY 94,021

Plan 16,50 0Results 13,336
PFY 1 5,080

common 5.0%

Cash and otherassets and liabilities
Plan 24 , 5 61
Results 23,062
PFY 22,683

Inventories
Plan 1 1 ,427
Results 12,041
PFY 1 1 ,294

Trade payables
Plan 6,597
Results 6,070
PFY 6,669

Note : The pigeon Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the beginning of the consolidated fiscal year 2021. The figures for “December 2020 results” areestimates based on the new accounting standards.

54

MD&A

55

Financial Data

59

Nonfinancial Data

61

The Pigeon Group (Pigeon Corporation and its consolidated subsidiaries) seeks to maximize economic and social

Corporate Information

value through communications with all stakeholders, including shareholders and other investors. This document,

62

Support the healthy growth of babies

26

Pigeon Group Business Structure

63

Maximize the power of our employees

30

Stock Data

64

Leave a rich earth for the future ofbabies born tomorrow

32

IR Tools (Quick Reference)

65

▲

24

Corporate Data
Consolidated Subsidiaries
Third-Party Evaluations

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 past

▲ ▲ ▲consolidated corporate performance (covering longer time spans) by viewing Investor’s Guide 2021 in our digital
IR Library. Please visit www.pigeon.com for details.

Pigeon Integrated Repor t 2021

01

To Our S takeholder sproducts fell from the previous fiscal year, which saw extraordinarilystrong demand for these products amid the pandemic. Meanwhile,
we successfully expanded market shares across all our core productcategories (nursing bottles, baby skincare, breast pumps, and oralcare), thereby having sustained the domestic market share of ournursing bottles at as high as 88%*3 The Healthcare & Elder Care

Note 1 : The results for the previous fiscal year restated in accordance with the new
accounting standard are estimates. Pigeon has applied the AccountingStandard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020;
the “Revenue Recognition Accounting Standard”) since the beginning of fiscal
2021. For details, please refer to page 55.
Note 2 : Renamed from the Domestic Baby & Mother Care Business in December 2021
Note 3 : Survey conducted by Pigeon (bottle and nipple sell through, in value)
Note 4 : Sold under the name of “Ziran Shigan” in China

Business performed as expected with sales down year on year
primarily due to a review of product lineup.
The China Business segment for fiscal 2021 increased net sales
year on year under the new accounting standard but remained
somewhat weak in contrast to the previous fiscal year in which the

Pigeon values the type of employees who empathize with the Pigeon

business recovered quickly from the influence of the COVID-19

Way and Purpose and keep taking on challenges with “pride” in andpandemic and benefited from brisk consumer demand such as“voluntary willingness to contribute” to the company, therevenge consumption. Nevertheless, sales of core productorganization they belong to and their job. I aspire to enhance Pigeon’scategories remained solid. Notably, in September 2021 we launchedcorporate value jointly with such employees. To this end, we havethe Bonyu Jikkan*4 nursing bottle series, which held the largest

articulated the Purpose and shared it with the Group’s employees formarket share*3 both in Japan and China, on major e-commerce sites

them to more clearly understand what the Group is aiming for andin China prior to the global launch, pushing its share in the nursing

where the Group is heading. We believe this has made it easier for ourbottle market of the mainland China to 45%* . Also, we successfully

employees to empathize with and act in line with the Purpose, andlaunched new baby skincare products. On the challenging front, we

has brought tangible results to and positive impacts on our

focused on promoting sales at physical stores as such sales

businesses and brands. We also feel that this is serving as a driver ofstruggled amid a rapid consumer shift to e-commerce channels in

new businesses for the future.

6

Norimasa Kitazawa
President & CEO

the country. However, adjusted shipments to the physical store sales
channel took longer than we had anticipated.

We will change the world to be a more baby-friendly placethrough bringing into shape new ideas and proposals
generated by employees who have joined forces tofulfill our Purpose

Pigeon’s monozukuri, or craftmanship, has been evolving in amanner to place more emphasis on not only “safety and security,” theThe Singapore Business, which is in charge of the ASEAN region

fundamental prerequisites for the Group’s businesses, but also

and India, increased sales year on year. This was due to the fact thatusability. Babies sometimes refuse to drink milk if they sense that thesales in India and Malaysia outperformed the previous fiscal year,

feel of a nipple on a nursing bottle is different from that of theirbacked by double-digit year on year sales growth of nursing bottles

mothers. To relieve the discomfort and stress of babies and mitigate

and other core products despite the resurgence of COVID-19 putting

the burden on parents, Pigeon worked hard on R&D as an effort toa damper on market recovery.

produce nipples with more softness and elasticity, and such an effort

The Lansinoh Business also increased sales year on year. “Prephas paid off in the form of the new third-generation nursing bottles. As

and postpartum care” products, launched as a new category,

mentioned above, Pigeon has put the new nursing bottles on thetogether with mainstay nipple care creams, recorded far higher

Chinese market ahead of the global launch. As for skincare, Pigeon has

accounting standard.* We ended fiscal 2021 with net sales down 1.0%

sales than initially expected. However, a logistics disruption and astrengthened R&D, drawing on its knowledge and insights garnered soyear on year to ¥93.0 billion, operating income down 11.6% to ¥13.3

surge in transportation costs mainly in North America had afar, hoping to produce the skincare products catered to the needs ofDuring 2021, the second year of our 7th Medium-Term Business Planbillion, ordinary income down 9.1% to ¥14.6 billion, and net income

material adverse effect on profits.

the children who suffer from skin troubles or were born with low(the Plan), we kept struggling with the expanding COVID-19 pandemic

attributable to owners of parent down 17.5% to ¥8.7 billion.

Trends in each business segment suggest that, on the distribution

weight, as some research reports show that meticulous skincare on

throughout its business operations. Having been struck by such

Nevertheless, as for shareholder return, we paid an annual dividend aschannel side, sales remained strong even amid the COVID-19

babies from the neonatal period helps them enjoy better skinunexpected changes in the business environment since 2020, the firstplanned of ¥74.00 per share, up ¥2.00 year on year, underpinned bypandemic in regions where we are well adapted to e-commerce

conditions in their subsequent lives.

year of the Plan, we announced a revision to the Plan in February 2021.

our robust financial base.

channels, while we struggled in countries and regions where we

Looking Back on Fiscal 2021

02

Benefits of Sharing the Purpose
with Employees

1

Under the revised Plan, we have added a strategy of further reinforcing

Let us move on to performance by segment. The Japan Business

operate business primarily through distributors and physical stores. To

the spirit of monozukuri (craftmanship) as one of our key strategies,

segment for fiscal 2021 was substantially influenced by the COVID-19

take advantage of such trends, we will further strengthen sales

while continuing to focus on the three basic strategies initially set out inpandemic since 2020, and net sales for fiscal 2021 declined ¥2.9

activities to directly approach customers via the Internet. On thethe Plan: Brand Strategy, Product Strategy, and Regional Strategy. Thisbillion year on year under the new accounting standard. The

product side, sales from core product categories, including nursing

Pigeon’s brand strength built on safety and security and its productaddition is made because we have to adapt to rapidly changing market

segment consists of the Baby Care Business*2, the Child Care Service

bottles, have been growing steadily even amid the harsh businessstrength that underpins the brand strength all rely on our employees. It

environments, marked by consumers’ shift to e-commerce channels

Business, and the Health & Elder Care Business. Net sales from theenvironments. In fact, the “prep and postpartum care” products of theis no doubt that the source of growth for the Pigeon Group lies in its

worldwide and changes in their values, needs, and behaviors, all ofBaby Care Business also declined year on year for several reasons,Lansinoh Business, a new category for Lansinoh, have consistently

human capital.

which have been triggered by the pandemic. Specifically, Pigeon has

including that half the fiscal year was under the influence ofperformed well since the launch.

strengthened its product planning and development system in a bid tomeasures against the COVID-19 pandemic, such as the voluntary

As shown above, we are strongly confident that the following two

business segments, Pigeon has been delegating authority to eachcater to e-commerce markets more expeditiously, while making

restraint on going out under the state of emergency; that thestrategies have produced tangible results: the Product Strategy toarea, and the same goes for human capital. Based on its policy toefforts to expand the lineup with emergency supplies for babies andinbound tourism demand (primarily for nursing bottles and skincare

focus on core product categories and the Regional Strategy to develop

localize its business operations, each of Pigeon’s local subsidiaries has

eco-friendly products and to create a new category.

products), which amounted to a few hundred millions of yen during

products tailored to the characteristics of each market. During the 7th

been striving to build an autonomous operating structure consisting

Despite these efforts, earnings for fiscal 2021 were weaker than

the first quarter of the previous fiscal year, vanished; and that sales ofMedium-Term Business Plan, we will keep focusing on our threesolely of local employees led by a locally hired president. In fact, thethose for the previous fiscal year restated in accordance with the newconsumables such as wet wipes and cleaning and disinfecting

strategies : Brand, Product, and Regional.

Lansinoh Business, as well as the China, South Korea and otherPigeon Integrated Repor t 2021

Pigeon’s Idea About Human Capital

Since the shift to an organizational structure consisting of four

Pigeon Integrated Repor t 2021

03

To Our S takeholder sregional businesses, are already supervised by local executives.

babies*6” for junior high school students across Japan. Against thisamong its outside directors, let alone respecting the perspectives of

Unfortunately, however, we have found it difficult to achieve the

Although the Singapore Business has fallen slightly behind in

backdrop is the difficulty of giving birth to and rearing babies incustomers and investors.

medium-term targets initially announced in February 2020 due inlocalization, we have dispatched only two Japanese executives toJapan. A survey conducted in 2021*7 shows that many cited a lack of

We believe our governance system has ensured the diversity of ourpart to drastic changes in the business environment during theIndia, a country that is relatively different in culture from Japan.

understanding by people both at their workplace and in their

Board members in terms of nationality, gender, and other attributes. In

period of the 7th medium-term business plan. We will also have

Pigeon also has proved superior in gender diversity at local

community as one of the reasons for difficulty rearing children in

addition, we have made steady progress in localizing each of our four

to formulate the next Medium-Term Business Plan under a highly

subsidiaries, except in Japan where the female manager ratio is in theJapan. The class, which started with a view to solving the lack ofbusiness segments under our global business execution structure. We

uncertain market and business environment. Nonetheless, we

20% range. Gender diversity has hardly constituted a grave challenge

understanding about child-rearing as a fundamental issue, gathered

will strengthen our global business execution structure by proactively

will assess how we can achieve sustainable growth in bothto the Group in countries other than Japan.

applications from more schools than expected. From September

hiring or promoting personnel for management positions who arefinancial and non-financial terms toward realizing our clearly

It is critically important for me as a CEO to think about how to unlock

2021 to the end of March 2022, a total of 6,616 students from 69

aligned with the varying growth stages of each region.

defined Purpose―making the world more babyfriendly by

the potential of such self-motivated employees on a global stage soschools took part in the class.

that they can be given abundant opportunities to demonstrate theirNote 5 : See page 27 for details.
Note 6 : See page 17 for details.
Note 7 : Tamahiyo Pregnancy and Childbirth White Paper 2021

abilities. In the Integrated Report for the previous fiscal year, we
introduced the readers to the “Pigeon Frontier Awards (PFA),” anfurthering our commitment to understanding and addressing

Incorporation, including the reduction of the number of Directors bybabies’ unique needs.

two and shortening the term of office of Directors to one year, upon theNote 10 : Global baby bottles. Market 2021 by Manufacturers, Regions, Type andApplication, Forecast to 2026. Global Info Research.

resolution at the Ordinary General Meeting of Shareholders held ininitiative introduced in Japan in 2019 to encourage employees to make・Environment

proposals and facilitate these proposals. This initiative has been

We have regarded a sustainable reduction in environmental impacts as

and further clarified the management responsibilities of Directors,

effective in encouraging employees to voluntarily come up with

one of the materialities (key issues) that we have to solve in order tothereby strengthening our management structure to respond moreinteresting proposals linked to Pigeon’s Purpose. In fiscal 2021, the“leave a rich earth for the future of babies born tomorrow.” What we

expeditiously to changes in the business environment.

awards were given to an employee who submitted an idea to produce

can do to protect our planet could be limited compared to players innursing bottles using materials different from those for the existingother industries. However, we are poised to do whatever it takes toNote 9 : PVA = NOPAT (Net Operating Profit After Taxes) – Cost of Capital (Invested
capital x WACC)

models and a two-year employee who made a proposal to start a

protect our planet across the entire supply chain, while staying mindful

rental business, just to name a few. We are set to expand this initiativeof the influence of business activities on the global environment. Also,

to overseas business locations in the future, believing the PFA thatin December 2021, Pigeon announced its support of theunlocks the hidden potential and power of employees will help identify

March of this year. We have thus streamlined the Board of Directors

Benefits of Sharing the Purpose
with Employees
The Pigeon Group still has massive potential for growth not only inexisting markets but also in untapped markets. I will discuss our growth
opportunities both in the already entered and still untapped markets.

Growth Strategy for Fiscal 2022

Let me first talk about our growth opportunities in the already entered

recommendations of the Task Force on Climate-related Financial

During 2022, the final year of the 7th Medium-Term Business Plan, we

steadily declining, with the numbers of annual births having fallen at atalented personnel. We also plan to provide selected candidates for key

Disclosures (TCFD) and joined the TCFD Consortium. Going forward,

will continue to speedily develop and launch products tailored to thehigher pace than ever before in countries such as Japan, China, and the

managerial positions in the future with training programs to

Pigeon will analyze climate-related risks and opportunities incharacteristics of each region by unleashing the competitive advantage

United States. In the recent business environment, the declining trend

strengthen our human capital.

accordance with the TCFD recommendations to proactively discloseof the four-segment business structure to the extent possible, drivingof birth rates is obviously one of the major concerns for Pigeon, but weinformation from the perspectives of governance, strategy, and risk

sales through e-commerce channels, and increasing brand strength

also wonder if this accelerated decline in birth rates is temporary or

management.

with the aim to enhance customer engagement.

long-lasting. At the moment, we feel the outlook is highly uncertain.

markets. In the face of the COVID-19 crisis, the global birth rate has been

In the Japan Business, since February 2021, we have been affixing

On the product side, we are striving to get back on a growth trajectory

Meanwhile, Pigeon believes that both the Pigeon and Lansinoh

the Pigeon Eco-Label*8 on products that meet the environmental

through selection and focus on nursing bottles and skincare products,

brands have significant growth potential because their global share is

Pigeon has incorporated the three key perspectives of environment

standards we set forth on our own. Specifically, to determine whether

which are flagship products among our core product categories. We will

still only 11%*10 despite their leading position in the market. Although(E), social (S), and governance (G) in its day-to-day operations undera product meets such standards, Pigeon quantitatively assesses thefurther solidify our No. 1 brand position*10 in the nursing bottle markets bybirth rates have been on the decline, we still have ample room to growthe Pigeon ESG/SDGs Policy.

impacts the product will have on the environment in all stages, ranging

globally launching the “Bonyu Jikkan®” series, our new third-generation

our business. For instance, we can capture more new mothers andfrom the procurement of raw materials, manufacturing, distribution,

nursing bottles. As for skincare products, we have recently begun tofathers as customers by geographically expanding the prep andand use to disposal. As of the end of 2021, products carrying this label

deliver several unique new skincare series tailored to the varying needs of

postpartum care business, a new business category, which is currently

Among the above three fields, we believe Pigeon is best positioned toreached about 34% of all baby and maternity products handled by theeach country/region. Furthermore, in Japan, we have made new

operated in the Lansinoh Business segment, to regions where Pigeon

bring the greatest impact in the “S” field. For instance, in the one andJapan Business. We aim to affix the label on all baby and maternity

investments in our own factory in Shizuoka Prefecture with the aim ofhas delivered its baby products.

a half years since the opening of Human Milk Bank*5 on the first floor

products sold in Japan by 2025.

starting operations in 2023 to expand the product lines of our skincare

Moreover, we will strive to extend our existing businesses andAbout ESG-Oriented Management

・Socialof the Pigeon Head Office in Tokyo in the fall of 2020, the number of

Our mainstay nursing bottles are currently made from glass or

products and tap into new fields. For the Lansinoh Business, while thecreate new businesses, such as the FemCare and FemTech relatedbabies provided with donated human milk, the number of hospitals

plastic, and these lightweight and easy-to-carry plastic nursing bottles

next-generation breast pumps are scheduled for launch in the near term,businesses*11 and a business to promote/support fathers’ participation

using the Bank, and the number of registered donors have increased

use PPSU (polyphenylsulfone) and PP (polyprophylene). We will

we will further extend the lineup of prep and postpartum care products,

in child-rearing by deep-diving into the concerns of new parents andexponentially. In addition the awareness of the Human Milk Bank has

endeavor to shift all plastic-related materials used for all our products

which got off to a flying start, and drive their sales along with corenurturing expertise in these fields.

increased among parents expecting babies. The opening of the

including nursing bottles over to eco-friendly materials.

products such as nipple care cream.

Human Milk Bank traces its origin to when I visited a human milk

Note 8 : See page 36 for details

bank in Brazil in 2018 and rediscovered that breast milk is as

04

Further more, we have made partial amendments to the Articles ofRegarding our growth opportunities in still untapped markets

In addition, to expand the geographical areas where we operate, we

including countries in Southeast Asia, currently part of the Singapore

have begun to newly deliver Pigeon-branded products throughBusiness, and emerging markets such as countries in Africa, where

e-commerce channels in North America where we had previously soldPigeon has little presence, an improvement in household income isimportant as medicine for babies who are born premature. In・Governance

January 2022, Pigeon was awarded the Minister of StateIn January of this year, Pigeon was named a Winner Company at the

products only under the Lansinoh brand. We intend to drive sales byanother market driver, besides birth rates. We believe Pigeon has

Commendation at the 2021 Selection of Consumer-Oriented

2021 Corporate Governance of the Year Awards held by the Japandrawing on the resources of the China Business including the know-

significant potential to grow its business in these markets as theirCompanies for Best Practice. I am pleased to learn that one of the

Association of Corporate Directors. The Association selected Pigeon as

how on e-commerce and digital marketing accumulated in the region.

economies grow going forward.

reasons for the award being given to Pigeon is recognition of oura winner on the grounds that capital cost-conscious management

While it is difficult to predict the impact of the COVID-19 pandemic, theLastly, let me talk about our growth opportunities in e-commerce

efforts for the Breast Milk Bank.

using Pigeon Value Added (PVA*9), a Pigeon ― specific KPI, has gained

supply chain disruption, and surging raw material prices, which affectchannels. While a shift to e-commerce channels has accelerated

In addition, in October 2021, we embarked on the Baby Friendly

increased understanding and awareness among staff; that Pigeon has

everyone in the world, we will work intensively to improve profitability

globally amid the COVID-19 crisis, a similar shift is expected in Japan

Future Project, aiming to create a future that is more baby-friendly.

provided detailed criteria for dismissing a CEO; and it practices

through measures such as launching new products, improving theand Southeast Asia where the e-commerce rate is relatively low. We

As part of the project, we began to deliver a “class to learn about

corporate management by including a diverse array of expertiseproduct mix, and reducing costs.

believe the Pigeon Group will be able to gain a competitive advantage

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

05

To Our S takeholder sin these markets by leveraging the know-how accumulated by the
China Business, which has taken the lead in the e-commerce business.

Growth Strategy for Fiscal 2022

Yet, we are fully aware of the risk that we could be exposed to fiercer

In the drastically changing business environment, the Pigeon Group,competition in e-commerce channels than in physical store channels.

with the Purpose to “Make the world more baby-friendly by furthering

This is because some players in e-commerce channels do not hesitate

our commitment to understanding and addressing babies’ uniqueto do whatever it takes to increase sales even if they end upneeds,” has been transforming into an organization where new ideas

unprofitable or focus only on capturing the minds of consumers andand proposals are created continuously and actively discussed. Despite

winning over market share with novel products that are easier to placeconcerns about declining birth rates worldwide and the decelerated

on e-commerce markets. We believe that a solid lineup of high-value-

growth in China, the universe of our potential customers including

added products and a swift launch of these products are key tobabies and their families is huge. In the China Business, we will pushsurviving in e-commerce channels.

forward with new initiatives to drive both e-commerce and offline sales

7th Medium-Term Business Plan

In February 2020, the Pigeon Group announced its 7th 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.

With its Purpose as the pivot, the Pigeon Group will steadfastly capture

to ultimately reaccelerate its growth. Also, in the Lansinoh Business, wegrowth opportunities by predicting changes in the preferences of next-

have maintained highly optimistic earnings projections for 2022. We are

generation customers such as Generation Z customers. Specifically,

also confident that we can put the Singapore Business on a growth

Pigeon will upgrade its brands so that they will resonate with and be

trajectory through a range of measures such as launching andchosen by customers, while focusing on efforts to increase customer

penetrating new products, and driving e-commerce sales, amid theinto a business,” which also means getting them to empathize with our business andvalue such as delivering more eco-friendly and higher-end products.

COVID-19 crisis. We greatly appreciate your continued support.

choose our brand.

We will promote the integration of our brand and business strategies based on the Pigeon
Way, to maximize economic value while stepping up efforts to solve social issues related toBrand Strategy

Note 1 1 : FemTech is a word coined from Female and Technology, representing
products or services that solve females’ health problems with technologies.

childcare. Our aim is to progress with the consumers from “buying a product” to “buying

We will accelerate growth in core product categories where we can leverage our global

Product Strategy

advantages while further differentiating ourselves from our competitors and building asolid earnings base.

We are committed to helping rebuild investor confidence and reputation,
thereby enhancing the medium- to long-term value of Pigeon.

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 2021, Pigeon struggled with harsh business conditions, and as a

President Kitazawa’s comment above demonstrates his strong

result, recorded decreases in both sales and profits for the second

commitment to goals such as getting the Company back on aconsecutive year. The top management of Pigeon, who share thegrowth path through its own management efforts and recoveringsame incentives as all the Company’s shareholders through thethe trust and appreciation of investors without relying on the

In fiscal 2020, the first year of the 7th Medium-Term Business Plan, we pursued business activities based on the above

stock-based remuneration system and the holding of shares in

improvement of external environments. In the 8th Medium-Termstrategies, but the spread of COVID-19 had a significant impact on our performance. For this reason, we reviewed ourPigeon as individual shareholders, have taken the declines in

Business Plan scheduled for release next year, we will communicate

forecasts for the second and third years of the plan and announced a revised plan in February 2021, based on our results in

Pigeon’s share prices seriously with a sense of pain, seeing suchspecific policies and measures for achieving these goals. We, as

fiscal 2020 and the direction of the pandemic.

declines as a negative market reaction to the Company’s operating

Outside Directors, would like not only to act as the supervisors of theperformance.

Company’s governance but also to provide advice contributing to

In fiscal 2021, sales of core product categories, such as nursing bottles, were strong in each country. In the Lansinohenhancing the corporate value over the medium to long term.

Business sales of prep and postpartum care products, a new category, were launched as new initiatives. On the other hand,

There is no doubt that one of the biggest factors affecting
affecteding our earnings is the novel coronavirus, which broke out
around the same time as the start of the 7th Medium-Term BusinessTakayuki Nitta

both sales and profits decreased compared with the previous fiscal year due to the continued direct and indirect impact of

Outside Director

the spread of COVID-19 on each market.

Plan. Also, it remains unpredictable how the rapid declines in birthrates, observed in countries across the globe, will play out in the

In the fiscal year ending December 31, 2022, the final year of this medium-term business plan, we expect net sales of ¥98.7

years ahead. In particular, the declining birth rates in markets thatbillion (up 6.0% year on year) and operating income of ¥14.2 billion (up 6.5%) by continuing to pursue our three basic

represent significant proportions of Pigeon’s earnings have madestrategies of brand strategy, product strategy, and regional strategy, while further strengthening monozukuri and speedily

our business outlook highly uncertain.

promoting business activities adapted to a “living with COVID-19” basis.

If we look back on the history of Pigeon, however, the Company
has been growing consistently by launching new products andNote : The Pigeon Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the

expanding market shares despite consistent declines in birth rates

beginning of the consolidated fiscal year 2021. The above forecast is based on the figures after the change in accounting standards.

for about 50 years since the second baby boom. Pigeon’s products
including nursing bottles have remained highly competitive. In fact,“Bonyu Jikkan*” nursing bottles, which were upgraded and releasedin China ahead of other markets, have been well accepted byconsumers both in China and Japan.
Note : Sold under the name of “Ziran Shigan” in China

06

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07

His tor y a t a Glance

2015
Runfee (baby stroller that runs smoothly
over uneven ground) launched
2021
Renewed series of “Bonyu Jikkan®”nursing bottles (designed for use
alongside direct feeding) 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.

Total
Total
sales
sales

MarketMarketcapitalization
capitalization

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

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

1957
Pigeon Honyuki Honpo (Nursing Bottle
Manufacturing) Corporation
established

1976
World’s first rubber toothbrush for milk teeth
launched

120,000
120,000

First “prep and postpartum” care products
launched under the Lansinoh brandMarketMarketcapitalization
capitalization
(¥100
(¥100
billions)
billions)
66

2002
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
Lansinoh 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
100,000

80,00080,00044

60,00060,0001987
Chibion digital thermometer for babies
launched
1988
Shares registered with the Securities Dealers
Association of Japan (present-day JASDAQ)

40,00040,0001977
P-type nursing bottle for babies with poor
sucking strength launched

1966
Name changed to Pigeon Corporation

NetNet
sales
sales
(¥ (¥
millions)
millions)

Note : Pre-sales launch in China

22

2014
Overseas sales ratio
exceeds 50%

1966
Export business started

20,00020,0001968
World’s first medicated compact baby
powder launched
00
Jan.
Jan.
1958
1958

Jan.
Jan.
1968
1968

Jan.
Jan.
1978
1978

Jan.
Jan.
1988
1988

Jan.
Jan.
1998
1998

00

Jan.
Jan.
2008
2008
Jan.
Jan.
2019
2019
Dec.
Dec.
2019
2019

(11-month(11-month
period)period)

Dec.
Dec.
2020
2020
Dec.
Dec.
2021
2021

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 products
in 1966, opening its first overseas
office in Singapore in 1974. In 1975,
Pigeon entered the elder carebusiness. The falling Japanese birthrate meant that exploring overseas
markets and other care-relatedindustries was an essential step forthe 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 the Central
Research Center. Two years later, in
1993, it expanded into childcare
services. In 1990, Pigeon establishedits first overseas manufacturing
center in Thailand. These diverse
initiatives would drive strong growthin the years to come.

In 2000, Seiichi Matsumura became
Pigeon’s third president and the first
not directly related to the company’s
founder. At that time, Pigeon’s
overseas business accounted for lessthan 10% of net sales. Nevertheless,Matsumura identified global markets
as a future growth driver and led thecompany’s full-fledged entry into
China in 2002. Two years later, in
2004, Matsumura broadened thescope and territory of Pigeon’s global
business further by adding
U.S.-based Lansinoh Laboratories,
Inc., then an OEM supplier of breastpads and other items, to the PigeonGroup.

In 2007, Akio Okoshi was appointed
the fourth president of Pigeon.
Okoshi’s term would see further
acceleration of the Company’s global
business, with expansion into India,
Turkey, Malaysia, South Korea, andother regions. In Japan, where birthrates continued to fall, Pigeon
adopted new growth strategies,
entering fields such as baby strollers.
Okoshi also led extensive internal
reforms to the Company’s personnel
and other systems, seeking newmodes of expansion.

In 2013, Shigeru Yamashita was
appointed Pigeon’s fifth president.
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“Purpose”: “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.
Founder and first president Yuichi
Nakata worked day and night on
product improvements, hoping tobring ever greater happiness to a newgeneration of infants. “The field ofnursing bottles holds dreams for the
future,” said Nakata, “and if we work
hard to make exceptional products
we will undoubtedly succeed.”08

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09Busines s O ver v iew
Products/Ser vices

Baby and mother care products
Business Conditions and Group Strengths

Lansinoh BusinessJapan Business

14.3%

41.1%

Consolidated
Net Sales*(¥3,320 million)
Singapore Business

13.6%(¥38,264 million)

93,080million¥

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

Share of net sales(Sales)40.0%(¥12,619 million)(¥37,239 million)● Sales/service: 3 bases ● Production: 2 bases

Note : The consolidated net sales figure refers to the amount after
elimination of intersegment transactions.

Effective from the year ended December 31, 2020, the Group has four business segments for reporting
purposes: Japan Business, China Business, Singapore Business, and Lansinoh Business. Four former businesssegments—Baby 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. Note : Previously “Domestic Baby & Mother Care Business” (renamed in December 2021).

Products/Ser vices

Baby and mother care products

Singapore Business
Southeast Asia, India,
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.

Products/Ser vices

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

Jap an Busine s sBusiness Conditions and Group Strengths

We have gained an in-depth understanding of babies’ growth processes and identified areas ofconcern in child-rearing based on more than 60 years of research into breastfeeding and earlychildhood development, despite concerns about declining childbirths in this market. This has
led to our development and launch of numerous high-quality products, resulting in widespreadrecognition of Pigeon as a leading and trusted company in the industry. Taking advantage ofsuch trust, we are rigorously launching new, highly competitive products and improving thequality of our offerings in the areas of child-rearing support, healthcare, and elder care.

● Sales/service: 4 bases ● Production: 4 bases

Products/Ser vices

Baby and mother care products
Business Conditions and Group Strengths

Lansinoh Business
Mainly North America, Europe,

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.

and China● Sales/service: 4 bases ● Production: 3 bases● Sales/service: 6 bases ● Production: 1 base
Note : For details of each business location, see “Pigeon Group Business Structure” on page 63.

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11

Value Crea tion S tor y

Sources ofValue Creation

Corporate Value CreatedFiscal 2021 results

Human capital

Fiscal 2022 targets

Net sales

The Pigeon Way practiced
by all employees
Group total: 3,935 employees(Fiscal 2021)

Gross profit

Economic
Value

OperatingincomeFinancial capital

ROE

Consolidated net assets: ¥76.8 billion
Equity ratio: 75.4%(Fiscal 2021)

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$682 million

Enhancement of businesscompetitiveness andR&D capabilities

Note : From Best Japan Brands 2021 (Interbrand)

Sustainable reduction ofenvironmental impact

Manufacturing
capitalGlobal quality control
Production bases: 3 in Japan, 7 overseas

Relationships of trustwith consumers,
business partners,
and medical
practitioners

Social Value
Material(important) issues
for increasingsocial value

Enhancement of
stakeholder responsivenessImprovement in quality ofhuman resources

Creation of an ideal
working environment
Establishment of asolid management base

The Pigeon Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the beginning of theconsolidated fiscal year 2021. The figures for “Fiscal 2021 results” and “Fiscal 2022 targets” are estimates based on the new accounting standards.

12

Pigeon generates corporate value through a Groupwide approach to business activities supported by a value chain

minimizing waste, and resolve social (S) issues surrounding babies and mothers by manufacturing products that helpthat covers everything from R&D to procurement, production, marketing, sales, distribution, consumer use, andbabies grow up healthily and happily. Fundamental to supporting these environmental (E) and social (S) activities is toconsumer support, based on its “sources of value creation,” which include human capital and financial capital. At thestrengthen governance (G) by building a robust management foundation. Corporate value created by businesscore of this value creation process is the Pigeon Way, which is the cornerstone of all our activities. It describes ouractivities can be divided into two major components: economic value and social value. With respect to economic

Corporate Philosophy (“Love”) and our Credo (“Only love begets love”) and embodies the “heart and soul” of allvalue, we will create value by achieving various performance targets set forth in the 7th Medium-Term Business Plan

Pigeon employees. Our corporate activities are guided by our Purpose: “We want to make the world more baby-

and the 8th Medium-Term Business Plan beyond that. As for social value, we will create value by resolving materiality

friendly by furthering our commitment to understanding and addressing babies’ unique needs.” To realize thisissues that we have identified as critical challenges that must be addressed, while also helping achieve the SDGs by

Purpose, Pigeon is working to reduce environmental (E) impacts, including by addressing climate change and2030. We aim to achieve sustainable growth by accomplishing these two value creation goals.

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Pigeon Integrated Repor t 2021

13

Brand Enhancement
Initiatives

Pigeon is working to integrate its brand and business strategy around its Purpose: “We want to● “Lesson for Learning about Babies ” for junior high school students

make the world more baby-friendly by furthering our commitment to understanding andWe have begun offering an educational program called “Lesson for Learning about Babies: For a More Baby-Friendly Future”

addressing babies’ unique needs.”

for junior high school students across Japan. In addition to distributing free materials for teachers at individual schools toteach the lesson. Pigeon employees visit and present classes at some junior high schools in person. By the end of March 2022,
6,616 junior high students in 69 schools had experienced the program, which began in late September 2021.

To strengthen the Pigeon brand, we made our brand promise, “Celebrate babies the way theyare”—as our pledge to society, and we consistently communicate this promise globally at every

As context for developing the program, we noted that birth and child-rearing in Japan are growing more difficult, and somemothers and fathers lament a lack of understanding toward child‐rearing from those around them. One possible reason forthis is that, due to the nuclearization of the family and the aging of the population, school-age young people have fewer

point of contact with stakeholders. By closely monitoring the changing needs of customers, we

opportunities to come into everyday contact with babies and think and learn about them. In addition, there are few

aim to progress with consumers from “buying a product” to “buying into a business,” which also

as a member of society. To embody Pigeon’s Purpose and Brand Promise, therefore, we launched the “Baby Friendly Futuremeans getting them to empathize with our business and choose our brand. The significance of
our Purpose and Brand Promise has been deeply embraced by employees. In addition to
proposals for new products and services, employee-initiated ideas and innovations havesparked the spread of multiple initiatives, which we believe will help resolve social issues related
to childcare and maximize economic value.

opportunities in Japan’s education settings to learn about babies and childcare, and to think and learn about what one can do
Project” to help realize a baby-friendly future. We also decided to offer an educational program to foster an interest in babies
from an early age, as well as to encourage students to think about what they can do as a member of society and take action.
In the first half of the lesson, students learn in an easy-to-understand manner about characteristic baby behaviors and thereasons behind them so they can develop an interest in babies. The second half is structured to give students the opportunity
to think about what actions they could take as a member of society to help babies, and to encourage them to do so.
We also conducted subsequent questionnaire-based surveys, which revealed that students’ understanding and interest inbabies had increased, with many realizing that it takes the cooperation of others to nurture a baby.

On the next page, we introduce some ways that Pigeon is translating its Purpose and Brand
Promise into action in its various business activities.

● “Life Lesson” for new employees
Our employees around the world are the driving force for achieving the Pigeon Group’s Purpose. To this end, we arecommunicating the Pigeon brand to employees in a variety of ways. In Japan, our new graduate recruitment activities include
briefings where we explain our Purpose, and many participants have cited “empathy with the Purpose” as the reason for their
desire to join the Company. To enhance the corporate value of the Pigeon Group, it is important that all employees deepen
their understanding of our Corporate Philosophy and brand, communicate it to customers at various touch points, andincrease their attachment to and trust in the Pigeon brand. With this in mind, in fiscal 2021 we launched our new “Life Lesson”
program for new employees to help them think about babies. Participants receive a “maternity-like” experience and learn theweight of real babies using fetus dolls. Through our own products and services, we help them deepen their understanding of
the babies and families they are close to, and think about the preciousness of each individual’s life.

14

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15

Histor y of Pigeon andNursing Bottles

2013 Plastic
Batik-Print Slim-Type Nursing Bottle “Flexible”
Traditional design added for Indonesian market.

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

1962 Glass

1976 Plastic

K- 8-Type Nursing Bottle

PV-8-Type Nursing BottleWith filter valve inside nipple for milk
volume control.

Angled neck allowed babies
to drink even small amountsof milk in a comfortable position.

2012 Glass
2005“Ziran Shigan”

Glass

Slim-Neck Bottle with Peristaltic
Nipple for Chinese market
Renamed “Flexible” in overseas markets
in 2014. Released in 2017 in Japan under
the name “Slim-Type Nursing Bottle.”

1957 Plastic

1960

1963 Plastic

1986

L-Type Nursing Bottle

Silicone Rubber Nipple

KP-8-Type Nursing Bottle

Snoopy-Design K-Type Nursing Bottle

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

More durable than the natural rubber
used previously.

Recipient of the 14th Tokyo
Invention Award.

Nursing bottles released with designs
featuring popular characters like Snoopy.

Glass1988 Glass

1964 Glass2017 Glass“myPrecious” Bonyu Jikkan Wide-Neck
Nursing Bottle
Combined cute design with exquisite form.

PPSU* Bonyu Jikkan
Wide-Neck Nursing Bottle

Promoted transition to direct breastfeedingwith the Oketani Method.

With heat-resistantglass body.

201 1
Released Lansinoh-brandnursing bottles mainlyin Europe and theUnited States.

2007 Plastic

Bonyu Sodanshitsu Nursing Bottle

A-Type Nursing Bottle

series expanded with
Chinese zodiac designs in China.

With superior shockand heat resistance.
*Polyphenylsulfone

1956 Glass
1954 Plastic

Japan’s first decorated
nursing bottle.

Bonyu Jikkan Wide-Neck
Nursing Bottle(First Generation)

PW-Type Nursing Bottle
Smooth inner neck surface
prevented milk residue buildup
and improved hygiene.

S-Type Nursing Bottle
Japan’s first plastic nursing bottle—
light, portable, and perfect for outings.

1962 Plastic

1950 Glass

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

A-Type Nursing Bottle

Isoprene rubber nipple resisted wear. Polycarbonate
body retained its shape even after repeated boiling.

Forerunner of the current “Flexible,”slim-type bottles.

1949 Glass1958 Glass

Nursing Bottle with Wide-Neck and Cap

A-4-Type and A-8-Type Nursing Bottles

Released by Pigeon’s predecessor, Dofu Boeki.

2002 Glass Plastic

1965 Plastic

F-Type Nursing Bottle

Based on research on how infants naturally
drink. A significant influence on future bottle
design.

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

1979 Glass Plastic

2000 Plastic

K-Type Nursing Bottle

PES* Nursing BottleWith rounded nipple moresuited to how babies suck,and body designed for easierformula mixing.

Japan’s first environmental
hormone-free nursing bottle.

2010 Glass Plastic

2018 Glass

Bonyu Jikkan Wide-Neck Nursing Bottle(Second Generation)

Silicone Coating
for Bonyu Jikkan Wide-Neck
Nursing Bottles

Based on research on “Three Key Factors of
Sucking.”*Released in China as “Ziran Shigan.”*Released in other overseas markets as“Peristaltic PLUS.” Renamed as“SofTouch Peristaltic PLUS” in 2014.

Coating helped prevent
fragments scattering even
if the bottle fell and broke.

*Polyethersulfone

2003 Plastic
Wide-Neck Bottle with Peristaltic Nipple
Designed exclusively for overseas markets.

2021 Glass Plastic“Bonyu Jikkan®” wide-neck nursing bottles
that inherit and evolve the Three Key
Factors of Sucking (third generation)*Released in China as “Ziran Shigan”

Pigeon’s histor y mirrors the evolution of nursing bottles.

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

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

We strive to design nursing bottles that enable babies to 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 todirect-attached nursing bottles, where the nipple is attached directly to the bottle, were

measure the softness of a mother’s nipples, and we are conducting research into nipple softness.

mainstream. However, those nipples tended to collapse, making it difficult for babies to

We will never end our research into baby’s sucking behavior. In addition, we have continued pursuingsuck. There were also issues regarding hygiene. The founders thought, “We should work

innovation in technological fields, such as materials and manufacturing methods, which we reflect inon improving the quality of nursing bottles!” This led to the creation of Japan’s first

our product development. We constantly seek the slightest improvements in bottle and nipple

capped nursing bottle. It was a revolutionary product with air intake holes andshapes. This culture has been passed down unchanged to the Pigeon of today. Babies’ sucking

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

recognition. However, we continued making refinements with the aim of developing theare currently sold in many countries and regions. We are the No. 1 brand in China and have high“best” nursing bottle, laying the foundation for Pigeon’s subsequent growth.

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

16

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17

Special Feature

We want to support breastfeeding:
A New Nursing Bottle Designed for Use
Alongside Direct Feeding!
–Nursing bottles that embody our Brand Promise and Purpose–

Supporting important breastfeeding for babies and mothers.
Pigeon pursues to design nursing bottles in which babies can suck as they do in breastfeeding, so that mothers can continue breastfeeding

We do not reproduce the shape and appearance of the breast, but rather the sucking action.
More than 60 years of research and the pursuit of the three key factors of sucking.

comfortably at any time. Breastfeeding is important for babies and mothers. Breast milk contains all the nutrients needed to support the

Pigeon has conducted in-depth observation and research for more than 60 years aimed at clarifying the sucking behavior of babies who cannot

growth and development of babies up to six months of age and strengthens the baby’s immune system and protects against infection.

speak for themselves. The way babies drink from the breast is different from the way adults drink through a straw. The various movements andBreastfeeding is the first choice for the baby’s growth and development. With this in mind, Pigeon commits to support breastfeeding andfunctions taking place in babies’ oral cavity cannot be seen simply by observing their external appearance. Accordingly, we continued our

encourages breastfeeding through both its products and services. The best way for a baby to receive breast milk is directly from theresearch while also creating unique techniques for observing babies. These include using an intraoral observation camera, an echo (diagnostic

mother’s breast for as often and as long as the child desires. At the same time, some circumstances might prevent babies from direct

ultrasound device) to see the movement of the oral cavity, and a device to measure the sucking vacuum pressure in the oral cavity. We thenbreastfeeding. Also, the mother’s health, postpartum recovery, or lifestyle changes could make it difficult to feed the baby directly. In suchuncovered the sucking behavior of babies to drive the “Three Key Factors of Sucking” : 1) latching on, 2) peristaltic tongue movement, and 3)

cases, mothers can choose to give expressed breast milk to their babies as the second choice. Nursing bottles offer an alternative method.

swallowing.

However, it is generally said that repeatedly alternating between the mother’s nipple and an artificial nipple may bring confusion to theAt our Central Research Laboratory, which has some rooms for observing babies’ behavior, we routinely conduct studies with thebaby’s oral response. When this confusion occurs, a baby who has been directly breastfed might refuse to drink from a nursing bottle, and acooperation of more than 250 pairs of babies and mothers living nearby each year. In the monitoring room, we ask mothers to feed their babies,

baby who has been bottle-fed might have difficulty going back to direct breastfeeding. This makes it difficult to nurse appropriately. An

whom we observe feeding as usual via video and echocardiography. We also compare and study the difference in the sucking movements

artificial nipple must be as close as possible to the mother’s nipple so that the baby can drink breast milk comfortably from either source, tobabies make when using artificial nipples rather than feeding directly from their mothers.

ensure that the nursing bottle can be used in conjunction and have no interference with breastfeeding.

Three Key Factorsof Sucking

Pigeon’s commitment to support breastfeedingThrough appropriate information, products, and services,
we support breastfeeding for as long as mother and child wish.

Product
Development

In cases where breastfeeding is difficult, for whatever reason,
we offer a full range of products and solutions for healthy child development*.
*Cases where direct breastfeeding is difficult- No milk flow.
- Mother struggles with nipple pain.
- Mother has returned to work (leaving baby in the care of another).
- Baby shows aversion to the breast.
- Baby has a cleft lip and/or palate and cannot drink smoothly.

Research

Pump

Storage

Nurse

Care

Supporting
Activities
Informational booklets
and WEB streaming
Breastfeeding
seminars and events
Human milk banks
Lactation Lounge

Latching on
The function of latching onto the nipple and sealing of
the area from the areola to
the nipple with the lips andtongue of infants.

Swallowing
Peristaltic tongue
movement

The function to transfer milk
down to the esophagus

The tongue’s wave-like motion to draw
milk

18

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19

Special Feature: Nursing bottles that
embody our Brand Promise andPurpose
Products born from close observation

TOPICS● “Bonyu Jikkan®” SofTouch series

Always Attentive

Our “Bonyu Jikkan®” series of nursing bottles overturned the conception that “all nursing bottles are the same.” We achieved this by● Sensation…Quantifying sensation to improve artificial nipples

incorporating our rigorous research into baby feeding, as well as our attention to detail in the planning and design process, into our productPigeon uses a unique method to observe sucking behavior and was the first in the world todevelopment, unparalleled in the world.

develop its own dedicated measuring device. Once monitoring is complete, we use our

Bonyu Jikkan® has been well accepted by many babies and their families since its initial launch in 2002 and has maintained theoverwhelming top market shares in Japan and China. Approximately 140 million SofTouch bottles and 290 million individual SofTouch nipples
were sold around the world over the 11 years from the release of the second generation of SofTouch products in 2010 to 2020. Pigeon products
had the No. 1 global market share of approximately 11%*1, for nursing bottles in 2020.

unique method of superimposing video on an ultrasound image to determine the angle
and depth of the baby’s mouth during suction.
In recent years, our research on depth at latching on has shown that there is a stable
position for the nipple in the baby’s mouth. Traditionally, “latching on” has been a

In Japan, Bonyu Jikkan® has been adopted by more hospitals and maternity centers than any other brand*2 and had the overwhelming top

subjective expression, such as “deep enough.” As measurement and analysis progress,

share of 88% in 2021 of the domestic market. It received the Tamahiyo Baby Goods Award 2022 (First Prize in the Nursing Bottle Category) andhowever, we believe if we can quantify these important suction-related actions, we will be

the 2021 Mothers’ Selection Grand Prize in 2021.

able to make artificial nipples easier to use, allowing babies to feed better. Measuring the

Bonyu Jikkan® was launched in China in the early 2000s under the “Ziran Shigan” name. Since then, the Pigeon-brand nursing bottles havesoftness of the mother’s nipple also helps in the development of artificial nipples. We havebeen well received by Chinese mothers and fathers of all ages for their high reliability and product safety and maintained the top share (45%*3) of

been able to successfully quantify the softness by obtaining the cooperation of a large

the mainland Chinese market in the fourth quarter of 2021. Pigeon again ranked No. 1 in nursing bottles in 2021 on both JD.com and Tmall, twonumber of mothers.

major e-commerce sites in China.
In other overseas markets, “Bonyu Jikkan” bottles are sold under the product name “SofTouch” series, and together with other types of baby
bottles, Pigeon's nursing bottles have the top market share*3 in Indonesia, Singapore, Thailand, and Vietnam. These bottles have been highly
acclaimed in many countries, winning prizes for best nursing bottle in the “Influential Brands” awards and “the Asianparents Awards 2021.”
Note 1 : Includes products other than the Bonyu Jikkan series
Note 2 : Based on our hospital visitation activities in 2020. (Based on direct-attached and capped nursing bottle total.)
Note 3 : Pigeon’s estimate (bottle and nipple sell through, in value)●Sales of Pigeon’s Nursing Bottles category

Sales
increased
13-fold● Design…Six different designs to suit the baby’s growth
When designing artificial nipples, Pigeon emphasizes the movement of the nipple
when it enters the baby’s mouth rather that replicating the shape of a mother’s

0~ months 1~ months 3~ months

nipple. We believe that reproducing similar movements in which babies can suck as●World share of nursing bottles in 2020

they do in breastfeeding will promote more natural and smooth feeding.
Babies’ sucking behavior develops as they grow. Our goal is to produce nursing
bottles that are suitable for a natural sucking motion similar to direct breastfeeding

11%

by optimizing the size, softness, and shape of the nipple and sucking holes as the9%

S o f To u c hOther nursing bottles

baby grows. Our nipples for younger babies are made of soft silicone, and the nipple
5%hole has a round design that allows breast milk or formula to flow at an appropriate

4%pace, so babies with immature feeding capabilities can drink as if they were feeding

4%

directly. Conversely, the nipples for older babies are made of a more elastic silicone

Round holeRound hole

6~ months 9~ months

Y cut hole

Weaning
15~ months

because they might be pulled at and chewed with new teeth. We have designed a
Y-shaped opening in the mouthpiece to maintain an adequate flow of breast milk or2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Internal survey of actual sales by nursing bottle category

PigeonCompany A

Company B

Company C

Company D

OthersGlobal baby bottles. Market 2021 by Manufacturers,
Regions, Type and Application, Forecast to 2026.
Global Info Research.

● Nursing bottles for babies who require specialized support

Nursing bottle forlow birthweightbabiesNursing bottle forbabies with cleft
lips and/or palates

data. Our monitoring activities during the development phase revealed that babies
respond to even the slightest change in nipple thickness or hole size. Even though theyexpressions, the angle of their mouths, and the movement of their tongues on the monitor

Milk Banks*4. The expertise we have accumulated through our constant support for babies inscreen.

maternity wards and hospitals is a great reserve of strength for Pigeon, as that is reflected even in

Pigeon Integrated Repor t 2021

nipple to the base to achieve both softness and durability, based on accumulated researchcannot speak, babies let us know the difference in ease of drinking by their facial

storage and pasteurization to enable safer and more hygienic storage of breast milk in Human

20● Combining ease of drinking and durability…
Pursuing raw material development and processing technology

formulations for each age group. We also adjusted the thickness of the silicone from thePigeon is developing specialized products that enable babies with low birth weight or other

our general product development.

Y cut holeresearch and trial production aimed at developing silicone nipples with different

the baby feed itself for babies who require specialized support.

Note 4 : Please refer to page 29.

with or tamper with the bottle.

result. In response, Pigeon joined forces with raw material manufacturers to conduct

baby’s body are causing difficulties and which functions can be supported by our products to help

cleft lips and/or palates. In 2021, we developed a new disposable bottle exclusively for breast milk

Y cut holenatural the sucking motion is to direct breastfeeding, but durability is compromised as a

hospitals’ newborn intensive care units (NICUs.) We constantly ask ourselves which parts of theweight babies, nipples for babies with weak suckling strength, and nursing bottles for babies with

Y cut hole

Silicone is durable but difficult to soften. The softer and more pliable the material, the more

Pigeon hopes to “enable all babies to enjoy better suckling” and conducts joint research withphysical issues to drink breast milk with minimal effort. These include nipples for low-birth-formula and prevent spillage, based on the assumption that older babies will also playNursing bottle for babies
with weak sucking

Pigeon Integrated Repor t 2021

21

Special Feature: Nursing bottles that
embody our Brand Promise andPurposeEvolving nursing bottles

Making the world a more baby-friendly place

Pigeon’s nursing bottles are already highly acclaimed in many countries. We launched the new Bonyu Jikkan® series in

Pigeon’s nursing bottles are highly acclaimed around the world. Unsatisfied with the status quo, however, we continue making every effort toChina in September 2021 and in Japan in February 2022, in pursuit of higher goals. The nipples are made of newly

further evolve our products. Our aim for the future is to supply Pigeon nursing bottles for all babies in need. The Pigeon Group is still in thedeveloped silicone with improved softness. However, silicone is a material that tends to tear as it gets softer, so we must

process of developing the global baby care market, and there are many babies around the world with whom Pigeon can engage.

take care to ensure that it does not tear when a baby chews on it.

We continue to further deepen our R&D to develop new products and services that enable each and every baby to progress at their own

Supporting our development of nipples with both “ideal softness” and “durability” were the efforts and ingenuity of ourpace and to become whoever they want to be. We will continue embodying Pigeon’s aforementioned commitment to nursing bottles, as welldevelopers, who made prototype after prototype. As babies grow, moreover, their sucking, drinking, and chewing abilities

as know-how and ideas derived through rigorous observation of and research into babies’ feeding movements. We will also develop newchange, so we make small changes both in the size of the nipple hole and the hardness of the nipple itself. For example,

materials from a sustainability perspective, create unique products with social value, and develop products that reflect regional

nipples for older babies are designed to be strong enough for teething babies to chew on. Also, if the baby does not firmly

characteristics. In both countries where we have a presence and markets yet untapped, there is ample room for the Pigeon Group to grow its

latch on during feeding, breast milk or formula might leak from the corner of the baby’s mouth, and the nipple could getbusiness. With this in mind, Pigeon, with an unparalleled commitment to babies, will deliver unique, carefully designed products to more anddamaged. With this in mind, we designed a new “Latch-on line” that guides mother and baby to the appropriate depth

more babies and thus make the world more baby-friendly.

when latching on. The line is presented in a wave shape instead of a straight line so the person feeding the baby does nothave to stress about being too precise, and so babies do not lose their own individual feeding styles.
Pigeon manufactures more than 100 million artificial nipples annually. To ensure the safety of each product, we haveestablished our own strict quality control standards in addition to official standards such as the EU and Japaneseindustrial standards. For example, each artificial nipple undergoes more than 15-point quality inspection at the factory. We
use dedicated measuring instruments for function-related inspections of size, suction hole, ventilation valve, elasticity,and the like. Items such as foreign matter contamination, dust adhesion, and resin overflow or loss are checked visually
and with a magnifying glass, without relying solely on inspection equipment. The artificial nipple delivers nourishment tobabies and keeps them alive. So, we continue striving to ensure the highest product quality at all of our factories. We arealways mindful of the fact that each artificial nipple is for a baby who is irreplaceable.

3rd generation
Launched in 2021

2nd generation
Launched in 2010

1st generation
Launched in 2002

1.0

Focus on the softness of themother’s nipple and the depth oflatching on to the nipple during
breastfeeding

0.5

Focus on the behaviour of baby sucking during breastfeeding

Focus on the stretch of mother’s nipple

The smaller, the softer

Newton［N］
1.5

Compartion of softness of nipple

0

SofTouch II(SS size)

SofTouch III(SS size)

Mother’s nipple
Souce: Pigeon

Intellectual property rights
Pigeon believes that intellectual property rights are indispensable for sustainable corporate development and that the legitimate
creation, protection, and utilization of such rights contribute to sound corporate development. We are also stepping up
intellectual property activities so we can deliver our products to customers with peace of mind. We have a policy ofstrengthening the acquisition of intellectual property rights for important items in our business strategy. In cooperation with theProduct Development Department, we are taking measures based on the assumption that we will utilize such rights after
acquisition. With the development of e-commerce in recent years, meanwhile, more and more products are distributed acrossborders. Accordingly, our Intellectual Property Department is strengthening its monitoring of potential brand abandonment. As
we develop the third-generation Bonyu Jikkan® series, for example, we are working to obtain design and trademark rights over awide geographical area so that we can effectively deal with counterfeit products.

22

Pigeon Integrated Repor t 2021

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23

Our A pproach to
Sus tainabilit y

Our A pproach toMaterialit y

The Pigeon Group’s fundamental approach to sustainability is “continuing to exist as an integral part of society” by
improving social and economic value and, in turn, enhancing the sum of these values-corporate value. Also, we
have set forth the Pigeon Sustainable Vision, and by reducing our environmental impact and solving social issues,
we are pursuing initiatives for sustainable corporate growth.

Pigeon Sustainable Vision: “Celebrate Babies with All”
We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies' uniqueneeds. We aim to achieve sustainable growth as a company by reducing environmental impact and solving social issues
surrounding babies and mothers in all countries and regions where we conduct business activities. Together with our
stakeholders, we strive to create a future, full of joy and freedom, that treasures the amazing brilliance inherent in every baby, thatencourages curiosity, and that celebrates diversity.

● 7th Medium-Term Business Plan: Priority Issues and Progress
Environment

SocialGovernance

Reduce environmental impacts

Solve social issues surrounding babies
and mothers

Build a strong management foundation

Leave a rich earth for the future ofbabies born tomorrow

Create a world that celebrates babies
the way they are

Support sustainable growth tostay close to the baby

7th Medium-Term Business Plan Targets

7th Medium-Term Business Plan Targets

7th Medium-Term Business Plan Targets

Address global warming

Create new products and services that solve issues
surrounding babies who need special support(such as NICU hospitalization) and their families

Engage in responsible dialogue with shareholders
and other investors:
More than 300 IR meetings per year

- Target: Reduce Scope1 and 2 CO2 emissions per unitof sales by 10% versus FY2018- FY2021 progress: 11.7% reduction

Prevent pollution- Target: Reduce volume of industrial waste per unitof sales by 1% per year
- FY2021 progress: 35% reduction versus FY2020
See pages 32 and 35

Number ofbirthsClimatechangeresponse- 1 in 7 babies (more than 20 million) is born with low
birthweight, weighing less than 2,500 grams*2- More than 80% of the 2.5 million newborn babies who
die worldwide each year are born with low birthweight*2- Aiming for a decarbonized society throughout our supply chains- Natural disasters becoming increasingly severe and frequent

See page 29-Marine plastic litter
Globalenvironmental - Resource depletion
protection- Biodiversity

materialities (key issues) that we must address, which were approved by the Board of Directors in April 2019. In the process, we identified

Sustainable - Responsible procurement based on social andprocurement
environmental considerations

examined risks and opportunities and collated issues in our value chain. We then identified six materialities (key issues) based on their

Response toinfectious
diseasessocial issues based on international standards and guidelines, such as ISO 26000, the Global Reporting Initiative (GRI) standards, and theSDGs, and pinpointed issues recognized by management. Based on our understanding of the social and business environment, we also
importance in building a sustainable society and their importance in our business from the perspective of enhancing our corporate value.

- Take appropriate measures in accordance with government
and municipal requirements and guidance, prioritizing healthand safety of employees and all other stakeholders
Develop products and services to help
solve social issues● Increase productivity with AI and IoT● Improve productivity by streamlining the productdevelopment process● Maintain and improve product quality- Developed disposable bottles exclusively for breast milk storage andpasteurization (Japan)
Received the 2021 Good Design Award- Held event to commemorate the first anniversary of the opening of the Human Milk
Bank in Pigeonʼs head office (Japan)- Launched the Baby Friendly Future Project- Provided guidance on management principles to business units and delegatedsome authority for development processes- Continuously implemented quality improvement activities●

Articulate environmental policy andenvironmental vision● Respond to global warming● Develop environment-friendly products and packaging● Reduce plastics● Prevent pollution● Share knowledge on reduction ofenvironmental impact● Introduce an environmental management system● Earmark funds for environmental costs- Discussed long-term environmental vision with the Sustainability Committee- Endorsed the TCFD recommendations and started analyses in line with the TCFD
recommendations- Started Scope 3 GHG emissions calculation for the Japan Business, following
the Lansinoh Business (Japan)- Installed new solar panels (Thailand) and expanded existing ones (Indonesia)- Purchased renewable energy (electricity) (Japan)- Joined CLOMA*1- Launched products using RSPO*2 credits (Japan, Singapore)- Launched campaign to recycle nursing bottles (Singapore, China)

Promote CSR procurement
Respond in a responsible manner to consumers● Engage in social contribution activities● Engage in dialogue with shareholders and otherinvestors in a responsible manner- Conducted a CSR procurement assessment (223 companies responded)- Continued activities based on consumer-focused voluntary declaration
Received the Minister of State Commendation at the 2021 Selection ofConsumer-Oriented Companies for Best Practice- Started Corporate-led volunteer activity (Japan)●

Articulate HR development policy
Promote HR development and hiring on a global basis● Reinforce expertise of each department- Formulated Personnel Development Policy (Japan)- Implemented global personnel development program (Japan)- Established specialized skills/education system for each department (Japan)

Promote diversity● Take initiatives toward diverse working styles● Promote work-life balance- 100% childcare leave uptake among male employees
Received Forbes JAPAN WOMEN AWARD 2021
- Increased the ratio of female managers (Japan)- Established the Occupational Health Management Declaration (Japan)
Recognized the Health & Productivity Management Outstanding Organization 2022
(Large Enterprise Category)Introduce a new personnel system
Put risk management in place● Strengthen compliance● Strengthen brand power● Enhance ESG responsiveness- Started operation of a new personnel system (Japan)- Updated risk maps and scenarios- Held a meeting of the Risk Management Committee- Sustainability Committee met 4 times- Enhanced information disclosure on the Sustainability page of the website●

Enhancementof businesscompetitiveness andR&D capabilities

Pigeon ESG/SDGs Policy
Based on its Corporate Philosophy, Credo, and Purpose, Pigeon formulated a set of three Values that each and every employee should
embrace in the course of their work, as well as five Action Principles to guide our actions. We also established the Pigeon Way as our
medium- to long-term Vision and set the Pigeon ESG/SDGs Policy as our policy for embodying the Pigeon Way and contributing to thedevelopment of a sustainable society. In addition to pursuing sustainable operations from environmental, social, and governance
perspectives, we will create new value through the provision of products and services and advance our business activities to help resolve
social issues represented by the SDGs. Going forward, we will strive to build relationships of trust with our stakeholders through our businessactivities, while improving overall corporate value to foster the development of a sustainable society.

Philosophy System Positioning

Sustainablereduction ofenvironmental
impact●

The Pigeon ESG/SDGs Policy is positioned as a subordinate structure of the Pigeon Way in terms of philosophy, and its counterpart
in the Medium-Term Business Plan is the Business Policy, which defines financial elements.

Pigeon Way

Management Policy
PigeonESG/SDGs Policy

Financial KPIs

Financial KPIs

Medium-Term Business Plan

Single-year plans

Nonfinancial KPIs

Nonfinancial KPIs

Enhancementof stakeholder
responsivenessImprovement inquality of humanresources
Creation of
an ideal working
environment

●

●

●

●

For more information about our ESG initiatives,
please visit the site below.
(https://www.pigeon.com/sustainability/)24

See page 51

To foster the development of a sustainable society through our business activities and enhance our corporate value, we have identified* 1 Source: The State of the World’s Children 2021 (UNICEF) https://www.unicef.org/reports/state-worlds-children-2021* 2 Source: UNICEF News, May 15, 2019 https://www.unicef.or.jp/news/2019/0071.html

Corporate
Ethics
Policies- FY2021 progress: 370 meetings● Materiality (Key Issues) and Status of Initiatives

Environment Surrounding the Pigeon Group139.97 million/year*1- FY2021 progress: Developed new disposable bottles
exclusively for breast milk storage and pasteurization

Establishment of asolid managementbase●* 1 Japan Clean Ocean Material Alliance: Platform to accelerate innovation by strengthening collaboration among a wide range of stakeholders across industries to solve the problem ofmarine plastic litter* 2 Roundtable on Sustainable Palm Oil
Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

25

Suppor ting the healthy
grow th of babies

1.

Pigeon Quality

Enhancement ofbusiness
competitiveness andR&D capabilities

Individual issue- Maintain and improve product quality

Pigeon Quality in Practice

To deliver safe and reliable products to babies and their families around the world, the Pigeon Group is committed to improving the quality of
its products in two stages: design quality (at the product development stage, including the selection of raw materials and product design)and production quality (at the manufacturing stage). In these two initiatives to improve quality, the processes are managed according to ISO

Nursing bottles, pacifiers, etc.

9001 standards and are checked and reviewed every six months. Even after a product is launched, we receive feedback from customers to

All plastic and rubber used in our nursing bottles, pacifiers, and breast pumps are

improve the product design and manufacturing processes.

made from only the safest and most hygienic materials available. We also investigate

Product development stage (= design quality)

Manufacturing stage(= production quality)

Communication withcustomers
4. After product launch

1. Raw material selection

2. Product design

3. Manufacturing stage- Safety/hygiene verification- Our knowledge and accumulated test data
- Papers and reports from public institutions- Databases- Pesticide residues, microorganisms,
allergens, foreign substances, etc. (food)- Design/product evaluation by PQS- Past customer inquiries, analyses ofsimilar products- Design reviews, negative check- Trial monitoring, safety tests, etc.

- Independent standards (PPM) for manufacturing
facilities and production environment at each plant- Quality control/assurance through various mass
production tests- Quality assurance audits of factories- Maintenance and improvement of production
environment through GMP- Customer feedback- Feedback from healthcare
professionals/distributors- Improvement meetings to discusscountermeasuressafety risks by understanding the characteristics of all raw materials used andchecking for potentially harmful properties. In safety evaluations, we conduct safety
tests at external institutions using evaluation methods based on official domestic andinternational standards and criteria to ensure objective evaluation of our productsafety.
In the development process, we verify safety through our own in-house review
system, which includes design reviews. We also conduct comparative analyses andtrial monitoring tests with competing and similar products to prevent product defects,
and we perform multifaceted, objective evaluations of usability.

Product improvement

Production process improvement● Pigeon’s “Design Quality”

Skincare products, shampoo, etc.

The Pigeon Group has established the Pigeon Quality Standards (PQS), which embody an original product-design approach and criteria that build

For ingredients used in skincare products, shampoos wipes, and other products, we

safety, ease of use, and durability into products from the product development stage onward. By applying PQS globally, we are working to support

investigate and verify safety risks using the test data obtained through our accumulated

and improve the design quality of our products manufactured worldwide. From the product development stage, we select and use only raw

raw material evaluations. We also reference a wide range of external information frommaterials confirmed to be safe, and at the development and design stage we conduct an in-house review process that includes design reviews

published papers, reports from public institutions, databases, and the like.

and verifications of wide-ranging risks in various life scenarios (“negative check”). Through this review process, we predict and analyze potential

In verifying the safety of our products, we conduct various evaluation tests,

risks in advance, such as defects, injuries, and accidents that could occur when using our products, and reflect them in our designs to prevent

including those using cells and skin models, tests of the product on human skinthem from occurring in the first place. We also evaluate and verify design quality by using trial monitor tests to check whether developed(human patch tests), component analyses to confirm the absence of harmful

products are of sufficient quality to meet customer needs and whether there are any points that need to be improved.

ingredients, and aging tests to confirm changes in properties over time. We also take● Pigeon’s “Production Quality”

into consideration the conditions in each sales region. During the development

Pigeon Productive Management (PPM) is an original set of criteria for the manufacturing equipment and production environments at each plant,
and our products are manufactured only in plants that meet those standards. In addition to quality assurance (QA) audits at our production
plants, which regularly check various aspects of our products, we strive to achieve stable quality by complying with the Good Manufacturing

process, we reflect past customer feedback through our internal review system,
which includes design reviews, and confirm the quality of product design by verifying
functions and identifying areas for improvement through trial monitor tests.

Practice (GMP) established for each country. The system is designed to ensure that only products that have passed the inspection process, fromincoming material inspection to in-process inspection during production and outgoing inspection of the final product, will be shipped. In theunlikely event of a manufacturing-related problem or a claim from a customer, we promptly provide feedback to the production department toBaby food, baby snacks, etc.

determine whether the manufacturing process can be improved.

For baby food and snacks, we strictly check the quality control status of pesticide● Connecting Customer Feedback to Quality Improvement

residues, microorganisms, allergens, and foreign substances that might pose a food

The Pigeon Group has a system in place to collect market information on launched products, including customer feedback and inquiries
from medical institutions, and we reflect this information in our safety evaluations of raw materials and products. In the unlikely event ofa safety concern, the relevant department holds a kaizen (improvement) meeting to determine the cause and promptly take necessary
countermeasures. We always evaluate and verify our products from the consumer’s perspective and are always conscious of safety as
we strive to maintain higher levels of safety and quality.

safety risk, and we use only safe, high-quality ingredients. All information on raw
materials used in our products is managed in our database. This system enables us toprovide prompt and accurate information when we receive inquiries from customers.
To ensure that our products are safe to consume, we carefully consider the shapeand physical properties of the contents during the development and design stages,
then confirm quality stability through storage tests. We also strive to reduce risk by● Review of Quality Control Standards and Improvement of Product Development Flow
In 2021, we conducted a voluntary recall of baby strollers due to insufficient product durability, and there were issues to consider and verify indesigning and ensuring the strength of critical parts in anticipation of defects after long-term use. Taking this situation seriously, we reviewed ourquality control standards and improved our product development flow to prevent recurrence, develop better products, and ensure the safety andpeace of mind of our customers.

Review of quality control standards

Improvement of product development flow

We further tightened our quality control
standards with the addition of items focusedon durability.

We strengthened our internal checking system by managing the design review stage(examining concerns from multiple perspectives at the design and prototype stages)
and the “negative check” stage (verifications of wide-ranging risks in various life
scenarios at the pre-production stage) as independent stages.

examining the contents, containers, and packaging of our products from multiple
perspectives to pinpoint any possibility of injury or accident during use. In addition, we
conduct regular audits of our subcontracted manufacturers to maintain proper levelsof quality control and work continuously with them to further improve the quality ofour products.

We will continue strengthening our product development and quality control systems to deliver products that customers can use with peace of mind.
26

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

27

Suppor ting the healthy
grow th of babies

Complaint Response
Management System

Pigeon considers customer feedback to be a valuable asset.
Since the 1970s, we have operated the Customer Service Centerto obtain customer feedback for reflection in our business,underscoring our customer-focused management approach. In
2016, we established a complaint response management
system that conforms to ISO 10002 international standards(guidelines for quality management, customer satisfaction, andPlan：
Define customer response
Quality; set targets
and plans
Do：
Implement the process
Check：
Monitor and analyze
Act：
Make further
improvements

3.

Enhancement of
stakeholder
responsivenessIndividual issue- Develop products and services
to help solve social issues
Individual issue- Promote CSR procurement- Respond in a responsible manner to consumers- Engage in social contribution activities

Tiny Birth Cry Support Project▲

Improving Customer Satisfaction

1.

Enhancement ofbusiness
competitiveness andR&D capabilities

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

Customer Service Center
Sales & Marketing
Dept.

Productenhancement

Product Development
Dept.

Legal Affairs &Compliance Dept.

Service
improvement
Business
process
improvement

Quality Control
Dept.

● Products for Babies Who Need Special Care
Committed to enabling all babies to enjoy better sucking, Pigeon conducts joint research withneonatal intensive care units (NICUs) at hospitals and clinics and works in other ways todevelop exclusive products so that infants with low birth weight or disabilities can drink

handling complaints in an organization). Seeking to further
Senior management

improve customer satisfaction, the Company issued its

breast milk and packaged milk with minimal effort. These include nursing bottles for low
birthweight babies, a nursing bottle specially designed for babies with cleft lips and/or

Consumer-Oriented Declaration in 2018.

palates, and nursing nipples for babies with weak sucking. We also offer a special pacifier for

Nipple shields improved thanks to customer feedback
We received some comments of concern about our
nipple shields, including misalignment during
breastfeeding and size issues. Using this feedback,we adopted a new butterfly shape, thinned the partthat adheres to the breast, and improved thedegree of adhesion to reduce deviation. We also
reviewed our size range and increased it to threesizes (small, medium, and large).

Beforeimprovement

After
improvement

Received the Minister of State Commendation at the 2021
Selection of Consumer-Oriented Companies for Best Practicebabies born prematurely as a way to ease the pain of treatments and procedures. In 2021, we

In the 2021 Selection of Consumer-Oriented Companies
for Best Practice, sponsored by the Consumer Affairs
Agency, Pigeon received the Minister of State
Commendation. This was in recognition of our proactive
approach to embracing consumer needs and opinions
and the linking such feedback to product development
in a way that differentiates us from our competitors.

enable safer and more hygienic storage of breast milk in Human Milk Banks.
Our accumulated expertise, gained through our constant support for breastfeeding
babies in hospitals, is reflected in our general product development activities and directly
linked to the superior performance of Pigeon-brand products.

● Activities for Babies Needing Special Careand Their Families

Promoting CSR Procurement
In December 2020, we announced our CSR Procurement Policy, which describes our basic mindset and approach to procurement activities, and our
CSR Procurement Guidelines, which serve as guidelines for our activities with suppliers. Based on the policy and guidelines, we maintain fair businesspractices with strict compliance and a strong ethical outlook. We also pursue stable supplies of high-quality products and materials and build win-win
relationships with suppliers.

Pacifier for babies born
prematurely

As part our activities for babies and families in need of specialized care, we support Human

Disposable bottle exclusively
for breast milk storage andpasteurization

Milk Banks* in Japan, China, Indonesia, and elsewhere. In September 2020, we provided
comprehensive support for the Nihonbashi Human Milk Bank, which opened on the firstfloor of our head office. This is the second such bank in Japan. In 2021, we engaged inpromotional activities to raise awareness of human milk banks, including support of the“Roundtable Meeting of Donor Milk* Recipient Families.(*Provided by Human Milk Bank.)”● CSR Procurement Assessment

hosted by the Japan Human Milk Bank Association.

In 2021, the Pigeon Group conducted a CSR procurement assessment survey of its Japan Business, China Business, and Singapore Business inorder to understand the status of ESG-related initiatives at suppliers and issues in the Group’s supply chain.
2021 s ur vey s umm ar y

Surveyed suppliers and number of respondents*A facility that provides “donor milk” (processed from donated breast milk) for babies with very low birthweight (lessthan 1,500 g) who cannot obtain breast milk from their mothers.

Pigeon is committed to creating environments where mothers can continue breastfeeding with

Survey method

within general companies, and provide products to facilitate breastfeeding. As of December 31,

CSR-related
corporate governanceCoexistence with local
communities

Human rights

60

set up breastfeeding/pumping rooms called Lactation Lounges at various locations, including

We also contribute to the community and society by operating Lactation Lounges at our head
office and the Central Laboratory. In addition to employees, the rooms are available for use by40

Supplychain

peace of mind and helping them return to work after childbirth. With this is mind, we have helped

2021, we had supported 11,005 such rooms in 23 countries around the world.

100
80

Nihonbashi Human Milk Bank at the Pigeon Head OfficeLactation Lounges

We sent questionnaires to all primary suppliers in our Japan Business, China Business, and Singapore Business (excluding Group companies) and to
suppliers of major raw materials at our domestic and overseas production subsidiaries, for a total of a total of 235 suppliers. We received responses
from 223 companies (response rate: 94.9%).

Using the CSR Procurement Self-Assessment Questionnaire developed by Global Compact Network Japan,
we asked suppliers to self-assess nine items: CSR-related corporate governance, human rights, labor,
environment, fair corporate activities, quality and safety, information security, supply chain, and coexistencewith local communities.

Nursing bottle
for babies withweak sucking

Nursing bottle forbabies with cleft
lips and/or palates

Nursing bottle forlow birthweightbabiesdeveloped a new disposable bottle exclusively for breast milk storage and pasteurization, to

20

Labor

mothers working in the vicinity, as well as mothers and babies living nearby.

Lactation Lounge at the Pigeon Head Office

Survey results
The overall average score was 78%, with high scores for “quality and safety” and “labor,” but relatively lowscores for “supply chain,” “coexistence with local communities,” “human rights,” and “CSR-related corporate
governance.” For items with low scores, we will strive to improve the scores in the future by providing
feedback to suppliers and supporting their improvement efforts.

Information
security

Environment

Quality and safety

Fair corporate
activities

Lactation Research
In 2015, we launched the Pigeon Smile Lactation Research Institute, where we work with妊 娠 ～ 産 後 3 ヵ 月 の「 し あ わ せ 授 乳 マ ップ 」
妊娠中

specialists involved with mothers, fathers, and babies to identify issues during the breastfeeding
授乳のperiod and provide solutions to them. Seeking to “Create a society that values more babies
しあわせ授 乳サポート

BOOK

っぱい
授乳を軌道にのせる第一歩！

し方回復
ラダとココロのproduced the Happy Breastfeeding Support Book, a comprehensive compilation of information
5 産後のママのカ

パパや周囲の人

報をWebでも発、中 のママとパ パ に 読 んでほしい

しあ わせ 授乳
OK
サポ ート BO

もらおう

◆先輩ママ座談会

MOVIE～しあわせ授乳への道

～

～公開中～

relationships with our suppliers.

on nursing for mothers. As of December 2021, we had distributed around 760,000 copies of this
産後の具体的な計画を立てておこう会

にっこり授乳期研究

booklet free of charge.

28

Pigeon Integrated Repor t 2021

ピジョン株式会社〒103-8480

さく乳器など
一緒に
進もう！

妊娠

の様子を観察しにサポートをして応援ツール※授乳期の応援お願い
web版です。

検索.smile-lactat

橋久松町4番4号

Happy♪

ion.com/jp/m

TEL : 03 (3661)

ama/

パパ

5

つの
ポイント

1 おっぱい準備2

妊 娠中からおっぱい準 備をしよう

まずは抱き合って、おっぱいを含ませてみましょう
心 配しないで、焦らず取り組みましょう

3

9 ページヘ

詳しくは

17 ページヘ

3

先輩ママ
道に迷ったら
相談してね

休憩
しよう♫

次ページ以降で先輩ママの具体的な体験談を見てみよう

Cさん

はじめての
ラッチオン感覚

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

ゆっくり、
ゆっくり

祖母

Bさん

授乳を軌道にのせる第一歩！

はじめての
おっぱい

母乳
外来など

ママ友

頼ってね！

Aさん

幸せ授乳の道は
人それぞれ

授乳の

詳しくは

る
先輩ママと専門家によ れ動画
授乳についてのあれこ

シートのhttps://www

東京都中央区日本

親子の授乳
スタイルの確立

景色がいいね。
もう少しで次の頂上だ！

道具もうまく使って中期の安定期

初期のつわり信中！

◆授乳期準備応援お願いシートう
ぱい準備をしよの状態と赤ちゃん
自分のおっぱいに質問をしよう専門家に具体的4 入院中の過ご◆みんなの授乳期の5

産後 3ヵ月

はじめてのラッチオン感覚

Happy♪
出産前の最後の急坂

覚を探して、
ラッチオンの感
持とう
取れたら自信をちょっとでも感じ

3 はじめてのラッチオン感覚

パパに役立つ情

Happy♪

て、おっぱいを含ままずは抱き合っましょう
焦らず取り組み心配しないで、

2 はじめてのお産後 2ヵ月

はじめてのおっぱいせてみましょうgrowing up healthy and more mothers and fathers finding happiness in childrearing,” in 2016 we
妊娠中のママと産後 1 ヵ月

入院

出産

おめでとう！

つのポイント

妊娠中からおっ1 おっぱい準備

By working together with suppliers to make improvements to issues identified by the survey, we will help resolve social issues and build stronger

出産妊娠おめでとう！

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
44200(大代表)

Happy Breastfeeding Support Book

Pigeon Integrated Repor t 2021

29

Maximizing the s trengthsof our employees

4.

Improvement inquality of humanresources

5.

Creation of an ideal
working environment

reward and fulfillment while shining in their own way, and to provide comfortable working environments to support
our employees. The Pigeon Group believes in the potential of its employees and is committed to maximizing their

At Pigeon, we believe that if we cannot take care of our employees, we will not be

strengths. Accordingly, we strive to create rewarding work experiences and comfortable work environments by

successful in our business. To maximize the strengths of our employees, we launched theestablishing new systems and improving existing ones.

-Articulate HR development policy-Promote HR development and hiring on a global basis
Individual issue

Pigeon Frontier Awards:
Encouraging Employees to Embrace Challenges

To continuously develop more value-added products, we need to enable all employees to work with a sense of

Individual issue- Promote diversity- Take initiatives toward diverse working styles- Promote work-life balance

Pigeon Frontier Awards (PFA) in 2019 to support and recognize future-oriented employees
who embrace challenges without fear of failure. Once a year, we solicit free ideas and new
business concepts from all employees, and proposals that are commended as excellent

Human Resource Training

initiatives are earmarked for development with a view to future commercialization.

The Pigeon Group gives all employees opportunities to participate in technical development,

The PFA has three main features. First, it increases the amount of time employees enjoy

training, and practical training, and has been developing human resources without any genderworking. Second, it encourages employees to challenge themselves without fear of failure

differences in job titles or courses since before the Equal Employment Opportunity Law wasabout the future. And third, it encourages employees to flesh out ideas with a sense ofenacted in Japan. We strive to develop human resources by supporting individual career

speed, because it has the direct support of the president. All employees who have a strong

development while respecting diverse perspectives and values. As our business becomes moredesire to realize their ideas and the passion not to give up are eligible to apply. Until fiscal

global in nature, each Group company takes the initiative in designing human resource

2021, the system targeted all Pigeon Corporation employees (regular, temporary, casual,development and personnel systems in each region in accordance with local conditions.

and part-time employees), but in fiscal 2022 it will be expanded to include employees of● Personnel Development Policy

domestic Group companies, and later will be extended to cover all Group employees,

In December 2021, Pigeon Corporation established its Personnel Development Policy: “We will provide each and every member of the company withthe development opportunities they need to contribute as autonomous professionals through highly specialized skills and knowledge, continuously
raising their value as human resources.” Based on this policy, we will implement education and training tailored to the role of each employee.

Year 120 people → 15 people

We are committed to developing human resources who can continue to enhance corporate

In fiscal 2020, the inaugural year of the PFA, we received 23 applications, seven of whichwere selected as projects under the direct control of the president. One project officiallyadopted in fiscal 2020 was called “Care for babies the way they are at NICUs.” We have

For details about our Personnel Development Policy, please visit the following website: https://www.pigeon.com/sustainability/social_top/employee_development/■ Future executive leader candidate development

including those at overseas Group companies.

since put a project advisor in place and completed checklists and algorithms for products

Year 210 people

targeting neonatal intensive care units (NICUs), and we are currently developing products

Year 30–5 people

related to colostrum, an ideal source of nutrition for newborn babies to build immunity. In
fiscal 2021, the second year of the program, we selected seven projects from a pool of 19

value by honing their human skills based on the values of the Pigeon Way. Every six years, werun a three-year training course for selected next-generation managerial human resources.
The course consists of programs to identify, develop, deploy, and promote participants, andthe curriculum is designed to select and develop participants in each program process. Many

Development
Identification
Program
Programof our past participants have gone on to become key personnel and managers.

Deployment
Programapplications. Through the PFA, a platform for conceiving and shaping Pigeon’s future, we

Advancement
Programwill create environments that encourage employees to enjoy their jobs while helping them
identify their work aspirations and the people they want to become, while encouraging theTraining program for selected
future executive leader candidates

creation of new products and services with high added value.

■ Global Player and Supporter development
To continuously produce human resources who can promote and contribute to the expansion of the Pigeon Group’s business beyond
national and regional boundaries, we recruit and selectively train global human resource candidates every three years. These candidates
are organized into two categories, “Global Player” and “Global Supporter,” and candidates in both categories are given education andChild-rearing support system for employees

training in accordance with their individual record for one to three years. They also receive official certification as global human resources
Aiming to be a company where both men and women can freely talk about childcare,

if they meet the respective certification criteria.

Pigeon upgraded its systems for supporting employees’ childbirth and child rearing

Global Player

Global Suppor ter

Human resources who in the future wish to work at overseas affiliates as seconded
employees and perform their duties in a global environment. In addition to crosscultural adaptability, candidates are required to be tough and possess goodcommunication and leadership skills. Training is tailored to their individual level.

Human resources who are based in Japan but work incollaboration with overseas offices. Candidates are required tohave language and communication skills to interact with overseas
offices. Training is provided at each level to improve these skills.

from an early stage. We have a variety of systems to help employees balance child-

Pigeon GroupTo address ever-changing business conditions and diversifying customer needs, we need to create
work environments in which diverse employees can work with vigor and enthusiasm. One of our
Corporate Ethics Policies is that “Pigeon shall respect its employees’ human rights andpersonalities at all times, ensuring them discrimination-free, equal job opportunities and rewarding

FemaleEmployee
male – female
ratio

62%

Managermale – female
ratio

0

20

Pigeon Corporationthat working together while respecting fundamental differences in employees’ backgrounds—inEmployee
male – female
ratiosuch areas as gender, nationality, age, and employment status—will lead to the growth of both
employees and the Pigeon Group. Under such circumstances, we work to promote women’s
activities with the goal of actively involving women in management, taking into consideration thecharacteristics of our business, in which many of our customers are women.

Managermale – female
ratio

0

Male

In 2006, for example, we established One Month Together, which allows employees
to take one month of paid childcare leave without worrying about finances. Today,

ended January 31, 2016.

57%
40

60

In 2021, we launched the Childcare System Project Created by Employees, in which
80

100%

28 employees raising children participated for one year. Our renewed childcare system
is based on the ideas proposed in the project. It includes First-Time Together Leave,

41%

which allows spouses to take up to 10 days of leave before and after childbirth. We also

59%

24%

extended the period for working reduced hours due to child-rearing from “until

76%
20

department is often “When are you going to take One Month Together?” The uptake ofchildcare leave among male and female employees has been 100% since the fiscal year

38%

43%

work environments, and offering them fair merit ratings to help their self-fulfillment.” We believe

40

60

80

100%

As of December 31, 2021

Scope of aggregation: Pigeon Corporation and its domestic and overseas consolidated subsidiaries
Managers are defined as those who have subordinates, as well as those who do not have subordinates but hold equivalent positions (excluding directors).
Pigeon Integrated Repor t 2021

design leave system for infertility treatment.

when a male employee finds out that his spouse is pregnant, the conversation in the

Promoting Diversity

30

rearing and work after pregnancy, giving birth, and returning to work, including a life

entering first grade of elementary school” to “until entering fourth grade of elementary
school.” In these and other ways, we have created a child-rearing support system that

One Month Together

can flexibly accommodate the diverse lifestyles of our employees.

Pigeon Integrated Repor t 2021

31

Leaving a rich earth for the futureof babies born tomorrow

Individual issue

2.

Basic Approach to Global Environmental Protection (Environmental Policy)

Sustainable reductionof environmental
impact- Articulate environmental policy andenvironmental vision- Develop environment-friendly products and packaging- Reduce plastics- Prevent pollution

Pollution Prevention

The Pigeon Group is committed to forming a sustainable society in the finite global environment and “leaving a rich earth for the future of babies born
tomorrow” by acting based on the Pigeon Way. In addition to complying with environmental laws and regulations, we recognize the relationshipbetween our business activities and the environment, while energetically tackling the environmental issues as a common challenge for humanity.
In that spirit, we pursue maximum efficiency in the use of natural resources and energy and reducing emissions of greenhouse gases, waste,harmful chemicals, and other substances that impact the environment, thereby contributing to mitigating global warming, preventing pollution, andpreserving biodiversity.
In advancing these various efforts, we strive to form appropriate partnerships and cooperative relations with the diverse range of stakeholders inour supply chain, including customers, business partners, and local communities, to have a beneficial effect on the global environment of the future.

● CLOMA Membership
In September 2021, we became a member of the Japan Clean Ocean Material Alliance (CLOMA), a platform toaccelerate innovation by strengthening collaboration among a wide range of stakeholders across industries tosolve the problem of marine plastic litter. We will continue striving to reduce the use of plastic while stepping
up cooperation with various companies and organizations.

● Chemical Management
As part of our activities to sustainably reduce environmental impact, we work with suppliers on the management of chemicals contained in
products to ensure that all products delivered to Pigeon customers are safe, considering to protect the environment. These efforts cover

Sustainable Development Policy

Make products thatchemicals regulated under international regulations and agreements, such as the Stockholm Convention on Persistent Organic Pollutants and theplay their part

The Pigeon Group formulated its Sustainable Development Policy

Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulations. Pigeon divides its management of chemicals into two

in February 2021 as a policy for manufacturing that takes intolevels, “procurement-prohibited substances” and “procurement-controlled substances,” in consideration of regulations in countries where its

consideration the future environment of childcare and the global

products are sold and other regulations that are internationally influential. We define the chemical substances to be controlled and manage theenvironment.

chemical substances contained in our products at the design and development stage and for continuously purchased products.

We aim to carry out monozukuri (manufacture products) withdue consideration to the future environment for parents and the

Act with
Watch over products

natural world. This begins with every Pigeon employee thinking

Avoid

for their whole

an eye tooverengineering

lifetime

the futureand overdesign

about the environmental impact of their actions.

Initiatives for Biodiversity
The Pigeon Group recognizes that biodiversity is the foundation for the survival of society as a whole and is an essential element of sustainable

With this in mind, we develop products based on ourbusiness activities. We pursue initiatives to protect nature in order to conserve biodiversity, giving full consideration to how our business activities

Sustainable Development Policy, which sets out the following key

affect biodiversity in various situations, such as raw material procurement, water resources used and wastewater discharged in manufacturingrules: “Act with an eye to the future,” “Make products that playprocesses, and product disposal.

● Use of Sustainable Resources

their part,” “Avoid overengineering and overdesign,” “Seekempathy, share progress,” and “Watch over products for theirSome of the skincare and detergent products manufactured and sold by the Pigeon Group contain

Seek empathy,

whole lifetime.”

ingredients made from palm oil and palm kernel oil. To promote the sustainable use of palm oil products,

share progressin December 2020 Pigeon became an ordinary member of the Roundtable on Sustainable Palm Oil (RSPO),
a nonprofit organization that encourages the production and use of sustainable palm oil, including

Industrial Waste

through the conservation of tropical rainforests and biodiversity. In 2021, The Japan Business and

The Pigeon Group is committed to minimizing non-recyclable industrial waste generated by its business activities. Under our 7th Medium-Term

Singapore Business purchased and claimed RSPO credits for some detergents and skincare products

Business Plan, our goal is to reduce the volume of industrial waste per unit of sales by 1% per year. At our production subsidiaries, we are working tothrough the book & claim model.*reduce raw material losses by improving productivity and yield. We are also making other improvements, such as reviewing the design of productpackaging to minimize the volume of materials discarded during the production process. For industrial waste that is not recycled, we reviewed our
disposal vendors and entered into contracts with those who can properly recycle such waste.
7th Medium-Term Business Plan:
FY2022 target

Reduce volume of industrial waste per unit of sales by 1% per year

Industrial waste per unit of sales
Non-recycled industrial waste volume (kg)/Net sales (¥ millions)

物量（t)

047

968

10

10.6

10.3

3,500
2,500

6
420
4

2

9/1期
ʼ19/12期
18年) (2019年)

Recycled

3,000

8

2.9

270

0
FY endedJan. Dec. 2019
ʼ20/12期
ʼ21/12期
2019 (2021年)(2018)(2019)(2020年)

Dec. 2021(2021)FY2021 progress

2,856

Not recycled
Recycling ratio（tonne-CO2）
30,000
93％
100%
89%
3,198
2,959
74% 25,000

20,000
2,694

1,500

0

15,0003,415
10,0001,000
500Dec. 2020(2020)

73%

2,000

4.5

Type
35% reduction (VS. FY2020)

Industrial waste generated(tonnes)
4,000

12

1,048

969

FY ended Jan. Dec. 20192019 (2018)(2019)

25,005

3,500*A system that supports the production of certified sustainable palm (kernel) oil by allowing end-users to purchase credits issued by RSPOcertified producers based on the amount of certified palm (kernel) oil they produce.

50%
23,972

5,000
271
0 420
0%
ended Jan.
Dec. 2019
Dec.FY
2020
Dec. 2021
2019(2018)(2019)(2020)(2021)

Scope 1

2,911

Scope 2

2,855
Scope of data collection: Pigeon Corporation and its
domestic and overseas consolidated subsidiaries
Notes:
20,65522,062
1. Calculations for domestic operations for
December 2019 are based on the 11-month period
from February 1 to December 31, 2019 due to a
the fiscal
Dec. change
2020 inDec.
2021 year-end.
(2020)
2. Recycling(2021)
includes reuse and thermal recycling.

Total palm oil/palm kernel oil used (2021) *Check our progress at www.rspo.org

RSPO credits purchased and claimed (2021)

Palm oil1 76 tonnes

CSPO: 25 tonnes

Palm kernel oil

346 tonnes

CSKPO: 28 tonnes

Scope of data collection: Pigeon Home Products Corporation, Pigeon Singapore Pte. Ltd., Pigeon Industries (Thailand) Co., Ltd., and PT Pigeon
Baby Lab Indonesia. For Pigeon Home Products Corporation, raw materials used for only products manufactured by itself are covered. Items
covered are detergents, cleaning products, and skincare products.
*Figures obtained by converting the amount of palm oil-derived components of the raw material to palm oil or palm kernel oil.

● Planting Mangroves
As part of its environmental conservation activities, PT. Pigeon Indonesia formed a partnership with the
Lindungi Hutan Foundation, an Indonesian forest conservation organization, to plant and monitor a totalof 5,000 mangrove trees in 2021. By planting mangroves, we seek to not only mitigate climate change but
also preserve the north coast of Java, Indonesia. Together with the Lindungi Hutan Foundation and local
residents we conducted two tree-planting sessions: June and November 2021.

Water Conservation
We are working to reduce water consumption through saving, the effective use of water for manufacturing, and the reuse of wastewater. Please see our
ESG Data Book (https://www.pigeon.com/sustainability/databook/) regarding our progress in water use.

32

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

33

Leaving a rich earth for the futureof babies born tomorrow2.

Sustainable reductionof environmental
impactIndividual issue- Respond to global warming

Declaration of Support for the TCFD Recommendations andthe Disclosure of Climate-Related Financial Information● Metrics and Targets

In December 2021, Pigeon Corporation publicly declared its support for the recommendations of the Task

from the fiscal 2018 level. The Sustainability Committee assesses our performance progress against the target, which is one of the non-financial

Force on Climate-related Financial Disclosures (TCFD). Our aim is to understand business risks andperformance indicators linked to stock remuneration for directors (excluding independent outside directors).

In the 7th Medium-Term Business Plan (2020–2022), we set a Groupwide target to reduce Scope 1 and 2 CO2 emissions per unit of sales by 10%

opportunities arising from changes in the natural and business environments due to climate change, as well as
the potential financial impacts of such changes, and to manage key risks and opportunities appropriately.

7th Medium-Term Business Plan:
FY2022 target

Reduce CO2 emissions per unit of sales by 10% VS. FY2018

Scope 1 and 2 CO2 emissions per unit of sales

Scope 1 and 2 CO2 emissions

FY2021 progress

11.7% reduction (VS. FY2018)

In 2021, conducted qualitative analyses of climate-related risks and opportunities in our core Japan
Business and China Business, focusing on nursing bottles and nipples and skincare products, which accountrelatively significant proportion of sales among our core products. The results of theseanalyses are
CO2 emissions (kg-CO2)/Net sales (¥ millions)Non-recycled industrial waste volume
CO2 emissions(kg)/Net sales(kg-CO(¥2millions))/Net sales (¥ millions)summarized in the Pigeon Group TCFD Report 2022, which is disclosed on our corporate website.

12

300

286.1

285.8

● Governance and Risk Management of Climate-Related Risks and Opportunities
265.6
Among climate-related issues, our GHO Risk Management

250

Committee spearheads the management of risks that are highly
probable in the short and medium terms and are directly related to

252.6

Board of Directors

0from a cross-business perspective, the Sustainability Committee

FY ended Jan. Dec. 20192019 (2018)(2019)

Dec. 2020(2020)

Dec. 2021(2021)

sets medium- and long-term Group targets for environmental

Sustainability Committee

GHO Risk Management Committeeconservation, including climate change, and evaluates progress.

- Deliberates on and set medium- tolong-term targets- Identifies material issues and periodicallyreviews them
- Reviews the progress of Groupwide initiatives- Analyzes and assesses climate-relatedrisks and opportunities over the long term

- Collects, analyzes, and evaluatescomprehensive risk information for eachbusiness segment, and considers andimplements countermeasures- Establishes systems enabling rapid
responses to incidents; takes measures tominimize loss and facilitate recovery

Both the GHO Risk Management Committee and the Sustainability
Committee are chaired by the director in charge of the Global Head
Office (GHO), who reports the results of deliberations of bothcommittees to the Board of Directors.

● Strategies

285.8
265.6

8

250

25,000252.6

200FY ended Jan. Dec. 20192019 (2018)(2019)

10,0002.9

0Dec. FY
2020
endedDec.
Jan.2021
Dec. 2019(2020)(2021)(2019)2019 (2018)

12
3,198

2,959 10

Dec. 2021(2021)

0

2,911

10.3
2,855

6
25,00523,972

4

22,062

20,6552

5,000
Dec. 2020(2020)

10.6

8

20,00015,000

4.5

2
0

286.1

10.3

4

Director in Charge of Global Head Office (Chair)

due to flooding. For issues to be addressed over a longer frame and300

6Report200

business continuity, such as the risk of suspension of operations

10

10.6

Non-recycled
Scopewaste 2volumeScope(kg)/Net
salescollection:(¥ millions)Pigeon Corporation and its
Scope industrial
1of data（tonne-CO2）
30,000FY ended Jan. Dec. 20192019 (2018)(2019)

0

Dec.
2019
FY endedDec.
2020 Jan.Dec.
2021(2019)
2019 (2018) (2021)(2020)To reduce the Pigeon Group’s greenhouse gas emissions, we have been installing solar

Electricity consumption and renewable energy utilization ratio*1, *2

panels at our production subsidiaries to generate solar power for our own consumption.

（MWh）50,000In 2019, two Group companies in China and one in India began on-site power generation
with solar panels, followed by one company in Indonesia in 2020 and two companies in

40,000

The Pigeon Group delivers a variety of products and services to customers in more than 70 countries around the world. In using climate scenarios

Thailand in 2021.

30,000In addition to our own solar power generation, we purchase electricity fromproducts in the Japan Business and China Business. We assumed two scenarios for the world in 2030 (2050 for physical impacts): a world moving

renewable sources. Since August 2021, 100% of purchased electricity to power Pigeon’s

toward decarbonization aiming to limit the increase in the global average temperature to 1.5˚C (1.5˚C scenario) and a world with high carbon

head office building has come from renewable sources. In 2021, some of our domestic

emissions and an increase in global average temperature of 4˚C (4˚C scenario).

production subsidiaries purchased electricity using feed-in tariff (FIT) non-fossil

Risks and opportunities related to nursing bottles/nipples and skincare products

certificates and J-Credits derived from renewable energy, while some of our overseas

Consumer market changes

the use of renewable energy, we are switching to LED lighting to save electricity andNursing bottles and nipples, which are core products for Pigeon, are essential for babies who need these products regardless of climate conditions andpolicies. Under the 4˚C scenario, however, great changes in climate conditions are expected, and we expect that anxiety about the future of babies could
be a reason for the decline in the number of births, which might affect sales of nursing bottles and nipples. Under the 1.5˚C scenario, we believe in theimportance of product strategies, such as environmentally conscious products throughout the value chain and consumer appeal, as consumers havegreater preference for ethical choices. Under both scenarios, we expect the climate to change and natural disasters to become more frequent. As a result,
we expect increased demand for products that can protect babies from high temperatures and humidity and drier conditions, as well as products that are
more water-efficient than conventional items or can be used without water during droughts or when water is cut off due to flood damage.

（tonne-CO2）
30,00025,00020,00015,00010,0005,000
0Promoting the Use of Renewable Energy and Energy Conservation

Climate scenario analysis
to analyze risks and opportunities, we first analyzed our core business of manufacturing and marketing nursing bottles and nipples and skincare

domestic and overseas consolidated subsidiaries
Notes:
1. Calculations for domestic operations for
December 2019 are based on the 11-month period
from February 1 to December 31, 2019 (due to a
4.5 in the fiscal year-end). Figures for CO 2changeemissions per2.9
unit of sales for January 2019,
December 2019, and December 2020 have beenrecalculated to reflect the new AccountingStandard
RevenueDec.
2020 forDec.
2021 Recognition, which was(2020) in fiscal(2021)
applied2021.

subsidiaries purchased international renewable energy certificate (I-REC). In addition topromoting energy conservation in our facilities.

Electricity consumption
Renewable energy utilization ratio
40,95639,9730

20%

39,29015%
9%20,00010,00039,630

10%

5%
5%

2%
FY ended Jan. Dec. 20192019 (2018)(2019)

Dec. 2020(2020)

Dec. 2021(2021)

0%*1 Scope of data collection: Pigeon Corporation and its
domestic and overseas consolidated subsidiaries*2 Figures for the renewable energy utilization ratio do notinclude renewable energy certificates purchased.

Changes in policies and regulations
The 1.5˚C scenario assumes the introduction of strict policies and regulations targeting decarbonization. For Pigeon, there is a risk that a carbon tax will be
imposed on greenhouse gas emissions or that an emissions trading scheme will be applied. In addition, we expect the global tightening of decarbonization
policies to result in higher prices for purchased electricity, transportation, palm oil-derived raw materials and petroleum-derived plastic materials, as well as
restrictions on the use of petroleum-derived plastics. Because these factors will increase our manufacturing costs, development costs, and capital
expenditures, we will conduct a quantitative financial impact analysis in the future.

Increased frequency of natural disasters
Under both the 1.5˚C and 4˚C scenarios, global average temperatures would be expected rise even higher than today, resulting in more frequent extreme
weather events, disruption of supply chains and logistics networks, and suspension of operations due to floods, droughts, and the spread of infectious
diseases, which would incur repair costs when damage occurs. To ensure stable production, we are taking various measures, such as establishing asystem to enable temporary switching of production bases within the Group and purchasing key raw materials from two or more suppliers. Manufacturing
skincare products entails consumption of water for ingredient formulation, equipment cleaning, and steam production. Accordingly, we will conduct
analytical risk assessments of potential future water shortages in factories that manufacture skincare products.

34

Pigeon Integrated Repor t 2021

PIGEON INDUSTRIES (THAILAND) CO., LTD.

THAI PIGEON CO., LTD.

Pigeon Integrated Repor t 2021

35

FY e
20

Business Summaries
by Segment● Business Strategy
There are three business under the segment: baby & women’s care, childcare services, and health & elder care. In baby and women’s care

Japan Businessproducts, our core offerings are nursing bottles, which boast a domestic market share of more than 80%. We are also working to expand ourbusiness and increase market share in skincare products, as well as strollers and other large-scale products. Meanwhile, we are stepping up
our approach to the maternity market through our ongoing direct communication policy, while promoting information dissemination
activities targeting collaboration with medical professionals. In childcare services, our reputation and trust represent real social value, which
in turn leads to business growth and development. For this reason, we are working to raise the quality of our services, which reflect thequality of our business, as our top priority. In the area of products for the elderly, we are working to improve competitiveness by focusing on● Business Environmen t
In 2020, the total number of births in Japan was 840,000 (according to statistics releasedby the Ministry of Health, Labour, and Welfare in 2020), a record low figure. In 2021, thefigure was expected to decline even further due to the impact of the COVID-19 pandemic onchildbearing motivations. Meanwhile, with the female employment rate in Japan exceeding
50% (51.8% on an all-age basis, according to the Ministry of Health, Labour, and Welfare),there are growing expectations of our company in terms of childcare support. In addition,
the ratio of people aged 65 and older to the total population (aging rate) is at an all-timehigh of 29.1% (Statistics Bureau, Ministry of Internal Affairs and Communications; estimate
as of September 15, 2021), reflecting the nation’s ongoing aging trend.

Sales of the Japan Business [New standards](¥ millions)Pigeon conducts in-depth research into the growth processes of babies and uncovers
various problems that parents encounter when raising children, based on more than 60
years of research into breastfeeding and infant development. We have used these findings

40,00041,231

38,26438,90030,000income fell 31.3% to ¥2,065 million, mainly due to the decrease in revenue.

20,000

Sales of baby and women’s care products declined year on year due to various factors. These included the absence of inbound demand
10,0000from foreign visitors to Japan; the dissipation of special demand for cleaning and disinfection products, wet wipes, and other COVID-related
products; and the impact of new COVID-19 outbreaks around Japan. Sales of baby care*2 products were down 5.8% year-on-year. On the
Dec. 2020

Dec. 2021

Estimate of the Future Population in Japan(age 65 and older)(thousands)

products through our provision of baby and childcare offerings. Deploying this brandstrength, we are building our childcare service business, which includes contracted
operation of in-company childcare centers, under the principle that “children’s growth isour first priority,” and we have earned the confidence of customers as a result. Known foraspirators, and packaged rice. Also, our core products (nursing bottles, skincare products, breast pumps, and oral care products) expanded
their market share across the board, For example, with an 88%*3 domestic market share for nursing bottles.
In July 2021, we launched the Wuggy bouncer, which makes family time at home happier and fosters a circle of happiness in the family. In
September, we released BASIS Polka Dot Denim as the fifth edition of the extremely popular BASIS stroller series, which can only bepurchased at select stores. Both products have been extremely well received. In December 2021, we launched My Home Torisetsu, achildcare and housework sharing support app that uses videos, images, and texts to share with partners the different childcare andcommunication initiatives, we held joint seminars with our business partners and conducted livestreaming sessions via social media to

30,000convey the features of our products in an easy-to-understand manner. The streamed content was viewed by more than 5,000 people. We
also streamed our Breastfeeding College seminar for pregnant mothers, which attracted more than 1,300 attendees. We are continuing to

20,000enhance support content through our website and social networking services to ease the anxieties of mothers and fathers during thepresence in such categories as baby strollers, carriers, and bouncers, where we were a latemarket entrant, in recent years. We have earned a reputation for safe, secure, and reliable

other hand, some products matched to new lifestyles performed well, for example, breast pumps, baby tooth care products, electric nasal

housework methods of each household. In these and other ways, we worked to enhance our products and services. As part of our direct

40,000increasing market share. As a result, we have performed well even in the Japanese market,
which has experienced declining birth rates since 1975. We have also increased our● Fiscal 2021 Performance and Highlights
The Japan Business reported a 14.9% year-on-year decline in sales to ¥38,264 million, based on the new accounting standard* 1. Segment

to develop numerous high-quality products. Pigeon is widely recognized as a leading brandin the industry, and its strength lies in its ability to develop diverse product categories whileother institutional products.

50,000Dec. 2022
TargetNote :The Company has applied the “AccountingStandard for Revenue Recognition” (ASBJ Statement
No. 29, March 31, 2020) and others, effective fiscal 2021,
as a change in its accounting policy. The above figure for“FY20/12” is an estimate based on the new accounting
standard.

● Our Competitive Edge

products developed and manufactured in-house, such as wipes; body wipes; skin care, and oral care products, as well as wheelchairs andongoing pandemic. We will also further improve the content of “Pigeon Info,” a website that supports women during pregnancy, in childbirth,

10,000and when raising children.
Sales of health and elder care products declined year on year, mainly due to the dissipation of special demand for hygiene-related

0

2010
2020
2030
Source: “Population Projection for Japan,” National
Institute of Population and Social Security Research

products seen in the previous fiscal year, as well as the revision of our product portfolio as planned. However, this category’s gross profit
margin improved 1.9 percentage points. We aggressively introduced new products during the year. In February 2021, for example, we
renewed and started selling our oral care products under the Clean Smile Series name. In August, we released a new food-thickening agent

its unparalleled knowledge about babies, the Pigeon Group is constantly expanding andcalled Liquid Thickener—Simply Add, which allows customers to enjoy original meals without sacrificing flavor or appearance. Going forward,

improving the quality of its childcare services. For the elderly, we offer new competitive

we will continue strengthening our sales activities to retailers and elder care facilities while working rigorously to improve the quality of our

products while improving the quality of our elder care services. Here, we leverage ourelder care services.

product planning capabilities, as well as the high-level quality control we have cultivated in

In childcare services, we operated in-company childcare facilities at 64 locations in fiscal 2021. We will continue developing this businessbaby products, to accurately identify the unmet needs of consumers.

while improving the quality of its service content.

Number of Childbirths in Japan and Sales of Pigeon’s Former Domestic Baby & Mother Care BusinessNote1 : The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and others, effective fiscal 2021, as a change in its accounting policy.
Note2: Name changed from the Domestic Baby & Mother Care Business in December 2021.
Note3: Pigeon’s estimate (bottle and nipple sell through, in value)

Sales of Pigeon’s former Domestic Baby & Mother Care Business

Number of childbirths in Japan (millions)

1.58

0.98
0.84

Electric toothbrush

1980

2000

2016

2020 2022 Target

Electric nasal aspirator

Wuggy bouncer

Baby stroller RunfeeRB2
Relaxing Ivory

Clean Smile Series

Liquid Thickener—Simply Add

Source: Based on research by Pigeon

36

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

37

Business Summaries
by Segment

Japan Business

China Business● Medium- to Long-Term Value Creation● Business Environment

Environmentally conscious manufacturing (Pigeon Package Act 2025)
Committed to leaving a rich earth for the future of the babies born tomorrow, the Pigeon Group pursues environmentally friendly
manufacturing. In February 2021, we began affixing the Pigeon Eco-Label on products that meet our own environmental standards to help
customers choose environmentally friendly products. We also set quantitative annual targets in the Pigeon Package Act 2025 and areworking to ensure that the packaging for all baby and maternity products sold in Japan will be designed to meet Pigeon Eco-LabelStandards by 2025.

Although there has been a downward trend in birth numbers in China since 2016, theSales of the China Business [New standards]

country remains a huge market with 10.62 million births in 2021 (National Bureau of(¥ millions)market amid ongoing growth in disposable income and rising consumer interest in productsafety. In addition, there is a progressive shift toward e-commerce as people born in the

40,000accounting for a growing proportion of its sales each year.

Dec. 2020

Dec. 2021

41,00030,00020,0000● Our Competitive Edge

Use of forest-certified paper

Use of recycled materials

Since our full-scale entry into the Chinese market in 2002, we have broadened our sales

All packaging and instructions

90% of the paper packaging forcoverage across the entire nation, from coastal to interior regions. The main target forfor the new Bonyu Jikkan

our KIPPOI baby tableware sets is

Pigeon’s products is the “new rich” market, and we are developing that market with more

series of nursing bottles are

made from recycled paper, andthan 500 products, centering on our core nursing bottles and skincare products. For more

m a d e o f fo r e s t- c e r t i f i e d

80% of the plastic packaging isthan 10 years, moreover, we have opened breastfeeding consultation rooms in major

paper.

made from recycled PET.

hospitals across the country. We also host educational forums on breastfeeding in
Pigeon Eco-Label

37,23910,000The number of products displaying the Pigeon Eco-Label has reached 34% of all eligible products.

Products with the Pigeon Eco-Label

36,121

1980s and 1990s, many of whom are digital native, create new families. Pigeon is
responding flexibly to this trend, with the e-commerce channel in mainland China

FY2021 initiatives

50,000Statistics of China). Moreover, there is enormous growth potential for Pigeon in the Chinese

Dec. 2022
TargetNote: The Company has applied the “Accounting Standard
for Revenue Recognition” (ASBJ Statement No. 29, March
31, 2020) and others, effective fiscal 2021, as a change in
its accounting policy. The above figure for “FY20/12” is an
estimate based on the new accounting standard.

cooperation with maternity hospitals. Accordingly, Pigeon has become widely recognized
as a safe, reliable, high-quality brand in China.
Number of Childbirths in China and Sales of Pigeon’s China Business
Sales of Pigeon’s China Business (local currency)

SDGs training for new employees
We provided SDGs training for new employees who joined the Company in fiscal 2021 with the aim of helping them gain a deeper

Number of childbirths in China (millions)

17.9
16.1

understanding of environmental and social issues and embrace them as their own personal concerns. Using “2030 SDGs,” a card-based
game offered by the nonprofit corporation Imacocollabo, we helped participants deepen their understanding of the SDGs by simulating the
10.6

path from the present to 2030 in order to achieve the 17 goals of the SDGs. According to feedback, participants learned the significance ofembracing the SDGs and realized that social issues, previously assumed to be unrelated, are actually connected. The training provided an
opportunity for new employees to think about how they can help resolve social issues and increase corporate value through their businessactivities.
2008

2016

2021 2022 Target
Source: Based on research by Pigeon

PIGEON MANUFACTURING (SHANGHAI) factory38

Pigeon Integrated Repor t 2021

Breastfeeding consultation

Maternity class

Pigeon Integrated Repor t 2021

39

Business Summaries
by Segment

China Business● Business Strategy● Medium- to Long-Term Value Creation

The ratio of e-commerce sales is expanding year by year and accounted for 67% of Pigeon’s sales in China in 2021. In response, we are usingsocial medial to step up direct communication with consumers and keep abreast of their needs. Meanwhile, sales at brick-and-mortar storesare declining, partly due to the accelerated closure of smaller retail stores stemming from COVID-19. Nevertheless, we are stepping up efforts
to halt the decline in sales by introducing items exclusive to brick-and-mortar stores, such as the Avocado Skin Care Series.
​On the production side,PIGEON MANUFACTURING (SHANGHAI) CO., LTD., makes and assembles mainstay nursing bottles, silicone nipples,and skincare products. Meanwhile, PIGEON INDUSTRIES (CHANGZHOU) CO., LTD., makes breast pads, baby wipes, and disposable diapers. In
2022, we plan to start selling Pigeon-brand products in the North American market by leveraging the marketing and e-commerce know-how
and resources of our China Business.

Supporting babies with a cleft lip and/or palate through volunteer activities and the donation of dedicated products
Committed to enabling all babies to enjoy better feeding, PIGEON(SHANGHAI) CO., LTD. is
working with Operation Smile, a nonprofit organization, to help children with a cleft lip
and/or palate. In addition to donating specially designed nursing bottles (for babies witha cleft lip and/or palate) and baby food, in May 2021 Pigeon (Shanghai) employees
assisted more than 60 babies undergoing free cleft lip and/or palate surgery in a hospitalin Yunnan Province, China, with the help of Operation Smile. It also helped guide thebabies and their families to the examination and operating rooms. This activity gave us
an opportunity to deepen our understanding and knowledge by communicating withfamilies and healthcare professionals to discuss feeding and childcare challenges and©Operation Smilethe issue of cleft lip and/or palate.

● Fiscal 2021 Performance and Highlights
The China Business posted a 1.3% year on year decrease in sales to ¥37,239 million, based on the new accounting standard*1. Segment
income declined 6.4% to ¥11,792 million, mainly due to the decrease in revenue.
​Sales on a local-currency basis decreased around 6% year on year as demand in mainland China, which was strong in the previous year,

Collecting used nursing bottles for recycling into trays and giving them to customers as gifts

subsided, while COVID-19 continued to impact sales at brick-and-mortar stores. As a result, our share of China’s nursing bottle market

Aiming to reduce plastic waste and achieve a sustainable society, we started collecting and recycling nursing bottles in December 2021.

surpassed 45%* at the fiscal 2021 year-end. In September 2021, we released a renewed series of “Ziran Shigan” nursing bottles (productSpecifically, we collect polyphenylsulfone (PPSU) nursing bottles that have been used by customers and played their part from collection

name in Japan: “Bonyu Jikkan®”), which occupies the largest market shares in Japan and China. We started pre-sales of the new series via

boxes located at baby product specialty stores and by post from customers. The collected bottles are shredded by PIGEON

major e-commerce sites. Sales of skincare products remained strong, reporting double-digit growth, thanks mainly to the launch of a series

MANUFACTURING SHANGHAI CO., LTD. and recycled into trays that are given to customers as gifts. Committed to resource recycling, we

focusing on hot spring minerals and the renewal of existing products, as well as steady growth of the Avocado Skin Care Series, with sales

will continue studying and experimenting with the collection and recycling of our products.

2

topping one million units in the first year after launch. At “Double Eleven,” one of the largest China's annual e-commerce shopping event,
held in November 2021, overall sales of Pigeon products rose 4% year on year. Pigeon again ranked No. 1 in nursing bottles and skincare
products on JingDong Mall (JD.com) and in nursing bottles on Tianmao (Tmall), two major e-commerce sites China.
​Segment income declined year on year. However, this was due to a change in our product sales mix, efforts to strengthen brand power,
and aggressive activities to strengthen sales in the rapidly expanding e-commerce market and promote new products, as well as the
allocation of future-oriented expenditures. The percentage of sales through the e-commerce channel in mainland China has grown to 67%,
while sales at brick-and-mortar stores have declined. Expecting this trend to continue, we will step up efforts centered on e-commerce whileleveraging social media and livestreaming to invigorate direct communication with consumers. In addition, we will continue strengthening instore promotions at brick-and-mortar stores, conduct new product distribution promotions, and engage in maternity hospital-related
activities, while increasing our points of contact with customers and further expanding our business.
Note 1 : The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and others, effective fiscal 2021, as a change in its accounting policy.
Note2: Pigeon’s estimate (bottle and nipple sell through, in value)

Hot spring skincare series

40

Pigeon Integrated Repor t 2021

Yuzu skincare series

Renewed “Ziran Shigan” series

Pigeon Integrated Repor t 2021

41

Business Summaries
by Segment

Singapore Business● Business Environment● Priority Market: India

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

Sales of the Singapore BusinessIndia has a population of 1.38 billion according to 2020 World Bank data, about half of whom are younger than 25, and an annual birth rate ofcovered by our Singapore Business segment represent a major proportion of this total. This(¥ millions)

24 million, which is far greater than China. By 2027, moreover, India is projected to overtake China to become the world’s most populous

segment encompasses Southeast Asia (e.g., Singapore, Indonesia, and Malaysia), India, theMiddle East (United Arab Emirates and so on), Oceania, and others (including South Africa),
as well as emerging nations. We are expanding our business in two of those nations—India,
with around 24 million childbirths annually, and Indonesia, with about 4.8 million*—which
we regard as priority markets. In regions covered by our Singapore Business, the middle

15,00012,00012,184

12,619nation. Since 2009, we have been promoting our business in India to increase awareness of Pigeon as a safe, reliable, and high-quality baby

12,400product brand. In addition to developing sales areas in major cities, such as Delhi and Mumbai, we are reinforcing our distribution system totap sales areas that are closely linked to local communities. At the same time, we are increasing the number of sales outlets, mainly

9,000

pharmacies, while strengthening our e-commerce capabilities. In 2015, we began producing nursing bottles and nipples at a local plant andexporting them to Japan and elsewhere.

6,000

class (with annual disposable incomes of US$5,000–35,000) is expanding in line witheconomic growth. Pigeon is also targeting this market (including the upper-middle class,● Priority Market: Indonesia

3,000with incomes of US$12,000 and higher), which is a tipped for further growth.

0

Note : Source: Our World in Data

Dec. 2020

Dec. 2021

In Indonesia, where we have operated since the 1980s, we have established a sales network that covers almost all the country with theDec. 2022
Targetsupport of local partners. Having successfully entered the Indonesian childcare product market before it reached maturity, we have alsoachieved very high brand recognition thanks to our work with multiple national hospitals.
​We have been expanding our business in the Indonesian market, including by establishing PT Pigeon Baby Lab Indonesia, a new sales● Our Competitive Edge
In Southeast Asia, where we have been operating since the 1970s, customer recognition of
the Pigeon brand has grown steadily thanks to our high-quality products, derived from ourASEAN: Real GDP Growth Rate (10 countries)（％）
6

have continued to increase sales of high-priced wide-neck bottles. In other categories, we are developing new products with a focus on
quality and affordability. Our product strategy also targets the upper-middle class. As required, we use competent local suppliers, who areresearch into feeding and infant development, as well as the cooperation of reliable local
partners. Our nursing bottles occupy the top market shares in Indonesia, Singapore,company, in 2019. In our core category of nursing bottles, we have already gained a high market share in Indonesia, and in recent years wecapable of meeting the stringent quality standards demanded by Pigeon, to improve our price competitiveness.
On the production side, we jointly established PT Pigeon Indonesia in 1995 to manufacture nursing bottles, nipples, and other childcare-

5

Thailand, and Vietnam.

related products. That company became a consolidated subsidiary in 2017 and expanded its factory in 2021 to increase production capacity● Business Strategy

and expand its range of products. Going forward, we will leverage the manufacturing capabilities of our Singapore Business to promote

4synergies with other operations.

The regions covered by our Singapore Business include many emerging nations, which
often have different consumption price ranges in the high-volume zone compared to otherbusiness areas. Because there is also diversity in ethnicity, language, religion, and culture, it

0

2013

2014

2015

2016

2017

2018

2019

Source: ASEAN Secretariat

is important to deepen our understanding of consumers in each region and respond to their● Fiscal 2021 Performance and Highlights
In this segment, sales rose 3.6% to ¥12,619 million and income grew 10.0% to ¥1,811 million.
​In the ASEAN Countries and India, where this segment operates, the impact of COVID-19 remained significant, evidenced by emergency

needs in a speedy manner. Recently, we have steadily reinforced our product development

declarations and urban lockdowns in various locations, which restricted business activities. On a local-currency basis, however, sales in both

capabilities to meet local needs, including the llaunch of a new skincare series in response

India and Malaysia increased around 8% year on year, indicating a recovery trend. Meanwhile, export sales to the Middle East and Southeast

to growing environmental awareness. We are also promoting strategies to address the

Asia slowed, but full-year sales to Vietnam and Australia were strong.

e-commerce channel, demand for which has been rising in recent years, including the​Sales of core category products (nursing bottles, breast pumps, skincare products, and oral care products) posted double-digit growth. In

strengthening of our digital marketing efforts.

skincare products, an area of focus, we released the new Natural Botanical Baby skincare line in August 2021. At least 90% of the ingredients​We also ship nursing bottles and nipples produced at our local factories in Thailand,

used in these environmentally friendly products are derived from plants, and recycled materials are used for some of the containers.

India, and Indonesia to local markets and export them to other countries, including Japan.

Moreover, our SofTouch™ nursing bottle, which has an air ventilation system to help reduce colic*, won “Best Baby Bottle” prizes in the“Influential Brands” awards and “the Asianparent Awards 2021.” We will continue developing and launching products for the upper-middle
class while strengthening e-commerce to further penetrate the market for our brand. At the same time, we will build a stable supply chain ineach country while aggressively advancing our sales and marketing activities.
Note: Infant colic: Uncontrollable crying by infants of unknown causes. Colic is defined by episodes of crying that continue for more than three hours a day (accumulated), for more than
three days a week, for three weeks. It is observed in otherwise healthy infants between two weeks and three months old.

Natural Botanical Baby skincare line

Store in Singapore
Protéqua Baby skincare products

42

Pigeon Integrated Repor t 2021

Electric toothbrush

Comfy Feel breast pads

Store in Saudi Arabia

Launch online event

Pigeon Integrated Repor t 2021

43

Business Summaries
by Segment

Singapore Business

Lansinoh Business● Medium- to Long-Term Value Creation● Business Environment

Support for cleft lip and/or palate surgery through the saleof batik-patterned nursing bottles

In the United States, the main market for the Lansinoh Business, the demographics have

Pigeon Singapore Pte. Ltd., PT Pigeon Indonesia, and our business partner in Indonesia,
PT. Multi Indocitra Tbk, are working to help babies who have difficulty feeding due to cleft
lips and/or palates. Since 2016, we have been donating part of the proceeds from the saleof nursing bottles designed with batik patterns, a traditional Indonesian dyeing
technique, to Yayasan Pembina Penderita Celah Bibir dan Langit-langit (YPPCBL), a
nonprofit Indonesian organization that supports people with a cleft lip and/or palate. The
funds are used help families and children receive surgery that they otherwise cannot

remained relatively stable. Although the number of births reached its lowest level since
1979, due to restraint in conception caused by the COVID-19 pandemic, the National Centerfor Health Statistics (NCHS) announced that the number of births in 2021 was 3.66 million,
up 1.3% from the previous year and the first increase in seven years. The total fertility rate
is 1.66 (provisional figure). Meanwhile, awareness of the importance of breastfeeding andthe associated medical and economic benefits is growing year by year, both in the UnitedStates and worldwide, and demand for breastfeeding-related products is also risingsteadily.

Sales of the Lansinoh Business(¥ millions)14,60015,00012,473

13,32012,000
9,000
6,000
3,000
0

Dec. 2020

Dec. 2021

Dec. 2022
Targetafford.

● Our Competitive Edge
The Lansinoh Business is handled by Lansinoh Laboratories, Inc., which became a wholly

Launch of Natural Botanical baby skincare line

owned subsidiary in 2004 and now offers Lansinoh-brand products to customers in more

In August 2021, we launched our new Natural Botanical Baby skincare line in Singapore,than 85 countries and regions. Since its establishment in 1984, Lansinoh has gained

Indonesia, and other countries. At least 90% of the ingredients used in these products

strong customer support as a breastfeeding-related brand, recognized in the market forare derived from plants, an ideal formula for protecting babies’ sensitive skin.

its strong brand power and the high quality of its mainstay products, which include nipple

Furthermore, we use recycled materials for the bottles, which helps reduce plastic usage

care cream, breast pads, breast milk storage bags, and breast pumps. In the main U.S.

and promote resource recycling. The new series of sustainable products is based on themarket, we have an overwhelming No. 1 market share* for nipple care cream, breast pads,

concept, “Derived from nature, and kind to both baby’s skin and the environment.” Inand breast milk storage bags. In addition to North America and Europe, Lansinoh has

cooperation with the World Wide Fund for Nature (WWF), we gave the first 1,000

expanded its business globally in recent years to include China and elsewhere in Asia, whilepurchasing customers a certificate of ownership of a sapling as part of our reforestation

increasing market share in each country.

activities. The WWF also engages in various other efforts to reduce the environmental*Source: Based on research by Pigeon

impact in a sustainable manner, including by producing educational materials to helppreschool children learn about the importance of nature.

● Business Strategy
The Lansinoh Business covers North America (e.g., the United States, Canada), Europe(e.g., the United Kingdom, Germany, and Belgium), China, Turkey, Latin America, andBottle recycling activities
We have set up collection spaces at various locations in Singapore, including storefronts,
preschools, and community centers, to collect used nursing bottles from our customers,
regardless of brand. Since the campaign began in 2019, we have collected a total of
35,702 nursing bottles* over the three years through 2021. Collected baby bottles arecollected and crushed at a processing facility in Singapore, then reused as raw materials
for plastic products made by other companies.
*Converted by weight per 160-ml polyphenylsulfone (PPSU) bottle

elsewhere. To help mothers and babies around the world get the best start in life, Lansinohoffers a comprehensive range of breastfeeding solutions, from nipple care creams
recommended by many doctors to electric breast pumps with Bluetooth connectivity, as
well as products used in hospitals to support the first few days of life. In addition toLansinoh-brand product lineup

breastfeeding-related items, we are currently working to expand and develop Lansinoh as a“pregnancy and childbirth care” brand. In 2021, for example, we started selling Birth Prep &postpartum care products as a new category.
In addition to selling to major pharmacies, baby specialty stores, and massmerchandisers in each country, the Lansinoh Business has seen a rising e-commerce sales
ratio in recent years. We will continue expanding our product lineup and strengthening our
e-commerce solutions, while stepping up marketing and brand enhancement activities tofurther grow our business.
In 2010, we established LANSINOH LABORATORIES MEDICAL DEVICES DESIGN INDUSTRYAND COMMERCE LTD.CO. in Turkey to manufacture maternity and baby products. In recent
years, it has also been making Pigeon-brand products as part of our efforts to increase

Smartpump 2.0 electric breast pump from Lansinohsynergies with other businesses.

44

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

45

Business Summaries
by Segment

Lansinoh Business● Business Development in Europe
In Europe, our second-largest market after the United States, sales are growing inGermany, France, Belgium, Turkey, and elsewhere. France has maintained the highest
fertility rate in Europe. Although the rate declined to 1.84 children in 2020 (“French Total
Fertility Rate,” Knoema World Data Atlas), it remains stable. In Germany, the number ofbirths has continued to decline since 2019. This was despite a baby boom around 2016, inpart due to the government’s expansion of childcare support and acceptance ofimmigrants and refugees. We are working to expand market share by developing different
business strategies for each country and region. While our e-commerce sales are growing
in France, Germany, and other countries, in Turkey, for example, sales to major baby
product retail chains are growing.

● Fiscal 2021 Performance and Highlights● Medium- to Long-Term Value Creation
S a l e o f “c l i m a t e - n e u t r a l p r o d u c t s ” w h e r e b u s i n e s sactivities have no net impact on the climate
Taking responsibility for the climate impact of its activities, the Lansinoh Business sells“climate-neutral products” that have been certified by a third-party organization.
Climate-neutral products should have zero net impact on the climate. We achieve this by
reducing greenhouse gas emissions throughout the product life cycle, from raw material
procurement to final disposal. Then, we offset any remaining emissions by investing inenvironmental projects that are certified to reduce greenhouse gases. We launchedthree certified climate-neutral products in fiscal 2021.

In the Lansinoh Business segment, sales increased 6.8% year on year to ¥13,320 million andPromoting the advancement of women

segment income fell 30.4% to ¥953 million.

Our factory in Turkey has received official certification as a “Great Place to

Despite the spread of COVID-19 in North America and Europe, sales remained strong, mainlyWork®.” We provide support in various ways for employees who arein the e-commerce channel, while the yen’s depreciation had a positive impact on foreign

pregnant or have recently given birth. For example, we have installed aexchange rates. Our business in North America continued to be affected by intermittent delays

separate breastfeeding room and offer medicinal assistance andin product arrivals and shipments stemming from disruptions in logistics. However, we reported

consultation during breastfeeding. These activities are summarized in astrong sales of nipple care creams and offerings in the new category of “Prep and Postpartum

special handbook for pregnant employees. In 2021, our Turkish Factory wasCare” products launched in June 2021. As a result, sales in North America rose around 6% on aawarded “2021 Turkey Best Workplaces for Women” in the category of 100 -local-currency basis. We also maintained the top market share for nipple care cream, manual

249 employees.

breast pumps, and breast pads in North America. Meanwhile, sales in China declined year on
year due to intensified competition for consumables, but in Europe we posted increased sales inGermany, the United Kingdom., Belgium, Turkey, and elsewhere.
Segment income declined year on year as supply chain disruptions, particularly in the UnitedStates, led to ongoing increases in marine transportation and other logistics costs, which had asignificant impact on this segment’s profit margin. Another factor in the income decline was ouraggressive deployment of R&D expenditures and SG&A expenses for new product launches.
In addition to North America, we will target further business growth in Europe, China, andother markets by expanding our product lineup, strengthening e-commerce and marketing
activities, and reinforcing our brand.

● Pigeon Groupʼs First Line of “Prep and Postpartum Care” products
In June 2021, we launched a series of products for the delicate regions of pre-natal andpost-natal mothers. Sales of postpartum wash bottles, pain relief spray, hot & cold therapy
packs, and other products have been strong in major Lansinoh markets, including theUnited States and Germany. Immediately after the launch, we conducted a product review
campaign, which revealed high evaluations of these products by customers on major
e-commerce sites. In the future, we will promote R&D and marketing activities and further
expand our product lineup to establish and solidify this new category of “Prep andPostpartum Care” products.

46

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

47

Gover nanceSupporting sustainable growth to stay close
to the baby

● Corporate Governance● Evaluating the Effectiveness of the Board of Directors

We are organized as a company with an Audit & Supervisory Board. The Audit & Supervisory Board Members’ auditing, conducted to ensure

Seeking to increase corporate value and achieve sustainable growth over the medium and long terms, the Board of Directors conducts

strict adherence to the law, forms the cornerstone of our compliance management. Our current top management structure (meeting bodies)annual evaluations of its effectiveness and works to maintain and improve such effectiveness. In fiscal 2021, we established the Governanceconsists of the Board of Directors, chaired by the Chairman and consisting of 10 Directors (7 males and 3 females; 9 Japanese nationals and 1

Committee to ensure the effectiveness of the internal control system, recognized as an issue in the fiscal 2020 evaluation. The newforeign national), including 5 Outside Directors; the Audit & Supervisory Board, consisting of 4 members (3 males and 1 female; 4 Japanesecommittee identified issues related to the governance of the Company, including the effectiveness of the internal control system, andnationals), including 2 Outside Audit & Supervisory Board Members; and the Management Committee, chaired by the President andreviewed and discussed matters that need to be improved. We paid particular attention to clarifying the ideal form and role of eachconsisting of full-time Directors and Senior Managing Officers. For all bodies, we strive to increase the diversity of membership. We have also

committee, collaborated and shared information among the committees, and reviewed structures and systems for how each committee

introduced a managing officer system. The aims of this system are to provide for mutual partnership between the decision-making/reports to the Board of Directors. As a result, our effectiveness evaluation conducted from October to November 2021 revealed somemanagement functions (governance) and execution of business and to clarify the operating responsibilities of Directors.

improvements in the effectiveness of the internal control system, as well as in Outside Directors’ understanding of the Company and

The Board of Directors has the authority to supervise the execution of duties of Directors and Managing Officers. It meets to makeopportunities for them to play active roles. Accordingly, it was confirmed that the Board of Directors is making effective decisions throughdecisions on matters (management objectives and important business-execution strategies, such as management strategy) prescribed inopen and lively discussion and playing an influential role in improving medium- to long-term corporate value. Meanwhile, the evaluation also

laws and regulations, in the Articles of Incorporation, and in the “Board of Directors Rules.” Furthermore, the Board of Directors endeavors to

identified issues that need to be addressed, including the need to step up efforts to fulfill the role and function of the Board of Directors andelicit the lively opinions of Outside Directors, as well as internal and Outside Audit & Supervisory Board Members, thereby strengthening thethe need for better coordination between Outside Directors and auditors.

business-execution supervision function.
In addition to the Voluntary Nominating Committee and Voluntary Remuneration Committee, in March 2021 we established theGovernance Committee to serve as an advisory panel to the Board of Directors. All three committees are chaired by Outside Directors, and amajority of their members are Outside Directors who spearhead discussions.
Audit & Supervisory Board Members attend meetings of both the Board of Directors and the Management Committee, where they deploy
their experience in the field to express opinions and resolve issues swiftly. They also listen to the directors, view important resolution
documents, examine the current status of business and financial assets, and otherwise conduct meticulous supervision and oversight inaccordance with Pigeon’s policies on auditing and allotment of duties. In addition, they meet regularly with the President and CEO, receive
reports on matters such as important company issues, and carry out frank exchanges of opinions.
Under the current management structure, centered on the Board of Directors, the Audit & Supervisory Board, and the Management
Committee, Pigeon is working to improve corporate governance by increasing the number of Outside Directors and Audit & Supervisory Board
Members, establishing and operating the Voluntary Nominating Committee, the Voluntary Remuneration Committee, and the GovernanceCommittee as advisory panels to the Board of Directors, and actively exercising the supervisory function of Audit & Supervisory Board Members.

● Governance Committee
In March 2021, we established the Governance Committee as an advisory panel to the Board of Directors, with the aim of further strengthening

corporate governance. The new committee is chaired by an Outside Director and a majority of its members are Outside Directors and Outside
Audit & Supervisory Board Members. It deliberates on various issues related to the Group’s corporate governance, including evaluating theeffectiveness of the Board of Directors, with an emphasis on organic coordination and integration and proactive implementation. The
Committee also provides advice and recommendations to the Board of Directors. In its first year of operation, it identified issues related tocorporate governance through its evaluation of the effectiveness of the Board of Directors and examined and discussed matters that need to
be improved. As a result of these efforts, it clarified the ideal form and role of each committee, collaborated and shared information among thecommittees, and reviewed structures and systems for how each committee reports to the Board of Directors.

● Executive Remuneration System and Voluntary Remuneration Committee
Remuneration for Directors (excluding Independent Outside Directors) consists of “basic remuneration” commensurate with position,“bonuses” provided as a short-term incentive, and “stock remuneration” provided as a medium- to long-term incentive designed to shareinterests with shareholders. The retirement allowance system for directors was abolished at the conclusion of the 62nd Ordinary General

General Meeting of Shareholders
Appoint/Dismiss(Outside Directors: 2,
Outside Audit & Supervisory Board Members: 2)

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

Voluntary Remuneration
Committee with 5 Directors

Advisory Panels for
the Board of Directors

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

Audit Functions

Board of Directors
with 10 Directors(Outside Directors: 5)

Advise/ProposeReportAppoint/
Dismiss

President & CEO
InstructManagement
Committee

3 Executive Managing Officers
10 Managing Officers

Business Departments and Group Companies
Corporate Governance Organization Chart

Pigeon Integrated Repor t 2021

Audit

Meeting of Shareholders held in April 2019. Basic remuneration amounts are now determined for each role and responsibility. Bonuses vary
(0–150%) according to such factors as the level of achievement of the Group’s consolidated performance targets (net sales, operating
income, and Pigeon Value Added (PVA), our original performance indicator). Stock remuneration consists of two components: performance(Outside Audit &Supervisory Board Members: 2)of performance targets and nonfinancial indicators stated in the Medium-Term Business Plan.
To increase the independence, objectivity, and transparency of the executive remuneration system, the Company established a Voluntary
Remuneration Committee to serve as an advisory panel to the Board of Directors. More than half of the Committee’s members are
Independent Outside Directors, one of whom serves as chairman. The Remuneration Committee meets at least four times a year in principle

Audit

Reportto discuss the necessity of revising the basic executive remuneration policy and individual executive remuneration levels, and the Committee
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 the

Accounting
Audit

Internal
Place matters on
the agenda/Report Audit

Instruct

48

Audit & Supervisory Board
with 4 members

Appoint/
Dismiss/
Supervise

Business Execution Functions

Sustainability
Committee

Appoint/
Dismiss

shares (60%) and restricted stock (40%). In principle, the performance shares portion varies (0–150%) according to the level of achievement

Dismiss/
Consult(Outside Directors: 3)

Risk Management
Committee

Appoint/
Dismiss

Accounting Auditors

same industry (manufacturing) and major companies of similar size, the total remuneration amount is set at a maximum of ¥800 million peryear 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

Audit Department

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.) To further strengthen their independence from management, Outside Directors and Audit & Supervisory Board Members
receive only “basic remuneration.”
Remuneration Structure for Directors (excluding Independent Outside Directors)

Basic remuneration
60%
Fixed
[60%]

Bonuses20%

Stockremuneration
20%

Performance-linked
[32%]

Fixed
[8%]
Pigeon Integrated Repor t 2021

49

Gover nanceSupporting sustainable growth to stay close
to the baby

● Executive Nomination Process and Voluntary Nominating Committee● Responsible Dialogue with Shareholders and Other Investors

To increase the independence, objectivity, and transparency of the process of selecting and dismissing Directors, the Company established

The Company actively engages in responsible dialogue with shareholders and other investors, using the Web and teleconferences to host IR

the Voluntary Nominating Committee to serve as an advisory panel to the Board of Directors. More than half of the Committee’s members aremeetings and financial results briefings even during the COVID-19 pandemic.

Independent Outside Directors, one whom serves as Chairman. In addition to human-resource requirements for CEO (responsibilities andWe recognize that the Ordinary General Meeting of Shareholders is the Company’s highest decision-making body and is also a forum forauthority, main duties and expected results, and required competencies), the executive nomination policy sets out standards for appointment

constructive dialogue with shareholders. Accordingly, we ensure a sufficient period of time and a good environment so shareholders can properly

and dismissal, successor plans, terms of office, and the like. The ideal human qualities necessary for the role of Chief Executive Officer (CEO) of

exercise their rights. Each year, we post the convocation notice in Japanese and English on the Company’s corporate website and other media

the Company are “Human qualities that can enhance resourcefulness

around one month before the Ordinary General Meeting of Shareholders and send out paper copies three weeks prior. In addition, we strive to
For details of the executive remuneration and nomination policies,
please refer to the website below:

and continuously increase the Company’s corporate value (social andeconomic value), based on the values of the Pigeon Way.”

https://www.pigeon.com/sustainability/governance_top/governance/

ensure convenience for shareholders, including by enabling them to exercise their voting rights via the Internet or a platform for electronic
exercise of such rights. We also provide sign language interpreters at the venue of the Ordinary General Meeting of Shareholders, as well as a
special childcare room. Moreover, beneficial shareholders who hold the Company’s shares in the name of trust banks and the like are allowed to● Internal Auditsobserve the Ordinary General Meeting of Shareholders after completing the prescribed procedures. At the 65th Ordinary General Meeting of

We established the Audit Office, an independent organization under the direct control of the president, as an internal auditing body. Each year, the Office
formulates an audit plan based on a risk approach for the Company and domestic and overseas group companies and conducts internal audits accordingly.

Shareholders held on March 30, 2022, we took steps to prevent the spread of COVID-19. For example, we used a virtual format, as we did in theprevious year, so that even shareholders who were not present at the meeting could view the proceedings.

In conducting the audits, it focuses mainly on the effectiveness and efficiency of operations, the reliability of financial reporting, compliance, and asset

Responsible Dialogue with Shareholders and Other Investors

protection, and making suggestions for improvement as necessary. The results of the audits are shared with all Directors and Audit & Supervisory Board
Members at audit report meetings. In addition, the Audit Department established the J-SOX Secretariat to conduct evaluation tests on Groupwide internal
controls and the financial process for closing accounts, pursuant to the basic plan for internal controls over financial reporting under the Financial
Instruments and Exchange Act, and to monitor the appropriateness of the development and operation of these controls.

The risk management system of Pigeon is headed by the Global Head Office (GHO) Risk Management Committee. Governed by the Rules for
Risk Management, which systematically stipulate the Group’s risk-management responses, the GHO Risk Management Committee is chairedby the Director for GHO, under the supervision of the President and CEO. Directly below the GHO Risk Management Committee are the Risk
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
respond rapidly 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 collects from each business segment. On its own or through the respective
business segments, the GHO Risk Management Committee then examines and implements response measures. The Risk Management
Committees of each business segment collect, analyze, and evaluate risk information from their respective business segments and theGroup companies under them. These Committees then examine and implement response measures.
In addition to addressing normal situations, in the event that the Group is confronted with a crisis, such as a disaster or other major incident,
the Risk Management Committee convenes and takes steps to minimize damage and effect recovery, based on the Rules for Risk Management
and the Business Continuity Plan (BCP). Furthermore, information on consultations and reporting through the internal whistle-blowing system arecollected and sent to the GHO Risk Management Committee. The Risk Management Committee or a department nominated by the Risk
Management Committee responds as necessary based on the details of the consultations and reporting. The GHO Risk Management Committee
reports to the Board of Directors at least once each year.

Reporting and consultation

業ト

ランシノ事業
リスクマネジメント
委員会

社

50 Pigeon Integrated Repor t 2021
グループ会社

Total number ofcorrespondences: 370 (FY2021)● Compliance
The Pigeon Way is the cornerstone of all our activities. On this basis, we established a basic policy on compliance called the “Corporate Ethics
Guidelines.” The Corporate Ethics Guidelines are composed of two parts: the “Corporate Ethics Policies,” which are the ethical sensibility that Pigeon
should always have and hold to earn the trust and support of society, and the “Code of Conduct,” which comprises guidelines that spell out how each
employee embodies the Corporate Ethics Policies in business activities. The Corporate Ethics Guidelines are designed to help Pigeon win theconfidence and support of all stakeholders (interested parties) involved in practicing compliance in our corporate activities. To ensure that each andevery employee is keenly aware of the Pigeon Way and compliance efforts, we believe it is vital to convey to all Group employees Pigeon’s corporate
philosophy and the sense of values of its management. For this reason, our representative directors and all other executives lead by example inrigorously promoting our spirit of ethics and compliance. We have established compliance policies in three areas where considered particularly highrisk: “Anti-bribery and Corruption,” “Antitrust Compliance,” and “Information Management” that outline specific actions to be taken and thenecessary systems and mechanisms.
With respect to compliance-related education, we conduct e-learning and 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 Communication” newsletter each month to all employees of the Company and domestic Group companies to help themunderstand and address compliance-related matters that could arise in the course of their daily work. This newsletter provides overviews of laws
related to the Group’s business, including the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade and the Act against

Board of Directors

compliance training, all employees of the Group viewed a video message from the President & CEO on the importance of compliance, the Pigeon Way,

President & CEO

and the Corporate Ethics Guidelines (including anti-bribery and corruption and antitrust compliance). We also explained the “Speak-Up Desk” whistle-

Management Committee

認、指示IR meetings withinstitutional investors

Unjustifiable Premiums and Misleading Representations, as well as harassment and other compliance-related issues. As part of our fiscal 2021

応を含む当社グループ
ント活動に関する報告の収集・分析／評価、の検討／実施に関する談
発生時）報告Number of attendees: 81*
Voting rights exercised: 82.0%*We also held an interactive virtual shareholders’ meeting.

● Risk Management者

65th General Meeting of Shareholders(March 30, 2022)

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

In normal times: Reporting and consultation regarding collection,
analysis, and evaluation of risk information and regarding
examination and implementation of response measures
When incidents occur: Reporting

In normal times: Confirmation and direction regarding collection, analysis, and evaluation of risk information
and regarding examination and implementation of response measures
When incidents occur: Direction of responses

Japan Business Unit
Risk Management Committee

China Business Unit
Risk Management Committee

Singapore Business Unit
Risk Management Committee

Lansinoh Business Unit
Risk Management Committee

Business Divisions andGroup Companies in the SBUGroup Companies
in the SBUGroup Companies
in the SBUGroup Companies
in the SBU

Risk Management Organization Chart

conduct a survey of participants and use the results to improve the content. 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, the Legal Department, and a consulting

GHO Risk Management Committee

Whistle-blowing
systemblowing system, using our own materials to instill a sense of compliance that employees should be familiar with in their daily work. After training, we

lawyer) and “Pigeon Partners Line” for business partners and others (two points of contact: the Legal Department and a consulting lawyer). When aproblem is discovered within the Group or outside it, the Risk Management Committee considers appropriate responses and examines the facts,
taking every precaution to protect whistle-blowers and consultants. In this way, the Risk Management Committee arranges to make the responses
necessary to resolve the problem in a timely manner. If necessary, the advice of a consulting lawyer may be sought to weigh the legal propriety of
responses. In fiscal 2021, there were three (3) reports to the Speak-Up Desk and zero (0) reports to the Pigeon Partners Line. The Risk Management
Committee reports to the Board of Directors regarding the contents of the compliance education and the matters reported through the in-house
whistle-blowing system.

Pigeon Integrated Repor t 2021

51

Gover nanceSupporting sustainable growth to stay close
to the baby

Directors (As of March 30, 2022)● 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 PigeonWay), and the six priority materialities (key issues) the Company must address to realize the Pigeon Way from the perspective ofChairman of the Board

President and CEO

Shigeru Yamashita

Norimasa Kitazawa

Director, Senior Managing
Executive Officer

Director, Managing
Executive Officer

Tadashi Itakura

Yasunori Kurachi

Head of Global Head Office,Supervision of Accounting & Finance Div.

Head of Japan Operations

sustainability management. We have also taken into account the key strategies of the 7th Medium-Term Business Plan to ensure that ourselection is consistent with the expectations of not only the Company but also the shareholders who elected our top officers.

Expertise demanded of the Board of Directors
Name/Position

Shigeru Yamashita
Chairman of the Board

Director, Executive Officer

Outside Director

Outside Director

Outside Director

Chiaki Hayashi

Norimasa Kitazawa

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

(Appointed in April 2015)(Appointed in April 2016)(Appointed in March 2020)

President and CEO

Kevin Vyse-Peacock

Takayuki Nitta

Rehito Hatoyama

Experience inManagement,
the company,
businessindustry
strategy
experience

○

○

○

○

○

○

Tadashi Itakura○

Director, Senior Managing Executive Officer

Yasunori Kurachi

Directors

Director, Executive Officer

Takayuki Nitta
Outside Director

Outside Director

Eriko Yamaguchi(Appointed in March 2020)

Outside Director

Rehito Hatoyama

Yumiko Miwa

Outside Director

Design,R&D,
product
development

SCM*

○

○

○
○

○

Outside Director

Audit & Supervisory Board Members (As of March 30, 2022)

Eriko Yamaguchi
Outside Director

○

○

○

○
○

○

○

○

○

○

Yumiko Miwa

Kouji Ishigami

Outside Audit & Supervisory
Board Member

Koichi Otsu

Outside Audit & Supervisory
Board Member

Atsuko Taishido(Appointed in April 2019)

Notes: 1. Takayuki Nitta, Rehito Hatoyama, Chiaki Hayashi, Eriko Yamaguchi, and Yumiko Miwa are Outside Directors as defined in Article 2–15 of the Companies Act.
2. Koichi Otsu and Atsuko Taishido are Outside Audit & Supervisory Board Members as defined in Article 2–16 of the Companies Act.

Managing Officers (As of March 30, 2022)

○

○

○

○

Audit & Supervisory Board Member

Kouji Ishigami
Audit & Supervisory Board Member

Koichi Otsu
Outside Audit & Supervisory Board Member

Atsuko Taishido
Outside Audit & Supervisory Board Member

○

○

○
○
○

○

○
○
○

○
○

○

*SCM: Supply chain management

Ryo Yano

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.

Nobuo Takubo

Business Strategy Division Manager

Yuko Ohara

Customer Communication Division Manager

Katsushi Tsutsui

Research & Development Division Manager

Kazuyuki Tajima

Supply Chain & Quality Management Division Manager

Takatoshi Urakari Baby Care Business Division Manager

Takanori Tsuru

Administration Division Manager

Ken Kaku

Kouji Matsutori

Deputy Division Manager of Lansinoh Business Division
Director of LANSINOH LABORATORIES, INC.

Representative Director of PIGEON MANUFACTURING(SHANGHAI) CO., LTD.

Audit & Supervisory Board
Members

Audit & Supervisory
Board Member(Appointed in April 2019)

Pigeon Integrated Repor t 2021

○

○

○

Hiroshi Nishimoto

52

○

○

Outside Director

Hiroshi Nishimoto

○

○
○

○

○

○
○

Solvingsocietalissues(Appointed in March 2022)

Chiaki Hayashi

Audit & Supervisory
Board Member

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

Kevin Vyse-Peacock

Globalbusiness

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.
Voluntary Nominating Committee: Takayuki Nitta (Chair), Shigeru Yamashita, Norimasa Kitazawa, Eriko Yamaguchi, Yumiko Miwa
Voluntary Remuneration Committee: Takayuki Nitta (Chair), Shigeru Yamashita, Norimasa Kitazawa, Eriko Yamaguchi, Yumiko Miwa
Governance Committee: Rehito Hatoyama (Chair), Shigeru Yamashita, Norimasa Kitazawa, Tadashi Itakura, Chiaki Hayashi, Koichi Otsu, Atsuko Taishido

Pigeon Integrated Repor t 2021

53

MD&A

F inancial Highlight s

Management Discussion and Analysis

Consolidated Statements of Income (Dec. 2020 figures basedon old standard; Dec. 2021 figures based on new standard)
FY ended
Dec. 2020(¥ millions)

Annual Sales Trend by Segment
Japan
Singapore
Lansinoh
China（ Domestic Baby & Mother Care
Child Care Service(¥ millions)
Other ）
Health & Elder Care
Overseas120,000
Previous Standard
1,289
1,402
1,343
12,753
12,473100,000
13,21334,494
12,133
12,184
11,482

FY ended Dec. 2021

ResultResultYoy change

Net sales

99,38093,080

99.0%

Cost of sales

49,45949,00899.1%

Gross profit

49,92144,07298.9%

60,00025,427

SG&A expenses

34,60530,735104.3%

40,000

7,058
7,541

6,986
4,472

Operating income

15,316

13,33688.4%

20,00033,84135,593

Ordinary income

16,113

14,64890.9%

Net Income attributable to owners ofparent10,643

8,785

82.5%

80,0000(¥ millions)

Jan.
2019

Dec.
2019

Dec.
2020

0

Dec.
2021

EPS

FY endedJan. 2018

Jan.
2019

(¥)

Dec.
2019

Dividend per Share

80

150

120

Dec.
2020

10

73.44

0

74

100.9%

Dec.
2019

Dec.
2020

0

Dec.
2021

Net Income Attributable to Ownersof Parent/Net Income Margin (%)(¥ millions)

16,00014,000

Dec.
2019

Dec.
2020

Dec.
2021

Total Assets/Net Assets(¥ millions)

Net Income Attributable to Owners of Parent(%)
50
Net Income Margin Previous
New
Standard
Standard*

100,000

40

80,00030

60,00012,00010,000

Jan.
2019

8,785

Total Assets

Net Assets

98,042
76,810

40

30

20

15.7%

Jan.
2019

Dec.
2019

Dec.
2020

Dec.
2021

10

0

ROIC/ROE
(%)

ROE

ROIC

4,000
（％）
15

2,000

12

0

FY endedJan. 2018

Jan.
2019

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2021

Pigeon Integrated Repor t 2021

16.0%

93,080 100.0%

99.0%

44,072

47.3%

13,336

14.3%

Japan Business

41,231

43.9%

14,021

34.0%

2,772

6.7%

38,264

41.1%

92.8%

13,142

34.3%

2,065

5.4%

China Business

36,121

38.4%

18,87752.3%

12,60034.9%

37,23940.0%

103.1%

18,971

50.9%

11,792

31.7%

Singapore Business

12,184

13.0%

4,680

38.4%

1,647

13.5%

12,61913.6% 103.6%

4,887

38.7%

1,811

14.4%

Lansinoh Business

12,473Elimination of internal▲7,986
trading between segments

13.3%

6,930

55.6%

1,370

11.0%

13,32014.3%

106.8%

7,125

53.5%

953

7.2%

▲8.5%

－

－

－

－ ▲8,363

▲9.0%

－

－

－

－

－

Notes: 1.Both the Japan Business and the China Business applied the new revenue recognition standard from the current fiscal year (ending December 31, 2021).
2. Results of FY20 /12 in the new revenue recognition standard were estimated by Pigeon for your reference.3. Sales for Lansinoh Shanghai are included in the Lansinoh Business segment.

Change in Accounting Policy (Application of Accounting Standard for Revenue Recognition)

Business Environment and Performance

The Company has applied the “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29, March 31, 2020) andIn the fiscal year under review, the Japanese economy showed

others from the beginning of fiscal 2021 to recognize revenue assome signs of recovery as the severe situation caused by

the amount expected to be received in exchange for promised

COVID-19 gradually eased. The global economy (including Japan)

goods and/or services when control of said promised goods and/saw gradual progress in the normalization of socioeconomic

or services is transferred to the customer. As a result, a portion

activities. Due to intermittent new outbreaks of infections andof sales promotion expenses and other expenses (previously

urban lockdowns, however, there was no end in sight for the

included in “Selling, general and administrative expenses”), as

pandemic, and the economic outlook remained uncertain.

Business Conditions in Fiscal 2021

well as sales discounts (previously included in “Non-operating​F iscal 2021 was the second year of our 7th Medium-Term

expenses”), has been deducted from sales. Also, the reserve for

Business Plan (covering the period from January 1, 2020, tosales returns (previously included in “Current liabilities” based

December 31, 2022), which sets forth three key strategies (Brand

on gross profit equivalent) has been changed to a method that

Strategy, Product Strategy, and Regional Strategy). Based onwant to make the world more baby-friendly by furthering ourcommitment to understanding and addressing babies’ uniqueassets.”needs.”

0

10

12.2

5
0

FY endedJan. 2018

Jan.
2019

Dec.
2019

Dec.
2020

Dec.
2021

​In accordance with the transitional treatment stipulated​C onsolidated net sales amounted to ¥93,080 million, down

in Paragraph 84 of the “Accounting Standard for Revenue

6.3% year on year due to the application of the “Accounting

Recognition,” the cumulative effect of retrospective application

Standard for Revenue Recognition,” as well as the continued

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.

of the new accounting policy prior to the beginning of fiscal

direct and indirect impact of COVID-19 on our markets. While2021 was added to or subtracted from retained earnings at thesales declined, we actively deployed sales promotion expenses,

Equity Ratio

beginning of fiscal 2021. Also, the new accounting policy was

advertising expenses, and the like in conjunction with the launch

applied from the balance at the beginning of fiscal 2021 and hadof new products, and incurred higher R&D expenses aimed at

no impact on that balance.

enhancing the appeal of our products in the future. As a result,

(%)

100

75.4

80

0

​D ue to the application of the new accounting standard,

operating income declined 12.9% to ¥13,336 million, ordinary

consolidated net sales in fiscal 2021 decreased ¥5,219 million,

income decreased 9.1% to ¥14,648 million, and net income

cost of sales increased ¥1 million, SG&A expenses decreased

attributable to owners of parent fell 17.5% to ¥8,785 million.

¥4,981 million, non-operating income decreased ¥0 million, andFY endedJan. 2018

Jan.
2019

Dec.
2019

Dec.
2020

Dec.
2021

Note : The Pigeon Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the beginning of the consolidated fiscal year 2021. The “Previous Standard”
in the above graph refers to actual results based on the accounting standards as of fiscal 2020, while the "New Standard" refers to actual results after the change in accounting standards. Effective from thefiscal 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).

54

15,080liabilities” and returned assets in “Other” under “Current

12.5

20

Dec.
2020

47.4%

while refund liabilities are included in “Other” under “Current

15

20,000Dec.
2019

44,562

realize not only business growth but also our Purpose: “We

10

Jan.
2019

94,021 100.0%

20

75

New
Standard*

60

At year-end
Jan. 2018

Grossprofitthese strategies, in fiscal 2021 we took various measures to

40

0

% of
growthof sales of goods and/or products expected to be returned,

40,0000Consolidated total

GP margin Segment OP margin(%)(%)
income% of total

105

20

9.4

GP margin Segment OP margin
Net sales(%)
income(%)

does not recognize the amount equivalent to sales and cost

PreviousStandard

8,000
6,000

Gross
profit25

15

FY endedJan. 2018

Ordinary Margin（%）
50
Previous
New
Standard
Standard*

14,648FY endedJan. 2018

Net sales % of total

30

40

20

Jan.
2019

Dec. 2021

FY21/12 — New Standard

120

45

FY endedJan. 2018

Ordinary Income
21,000

0

（%）

60

30

Dec. 2020

3,000

0

Dec.
2021

Payout Ratio

60

90

Dec. 2019

38,264

9,000

Cash Dividend per Share/Dividend Payout Ratio(¥)

Jan. 2019

6,000

14.3

3,000

FY endedJan. 2018

44,977

12,00020

6,000

20,000
0

30

9,000

40,000

6,546
3,492

15,00013,336

12,00060,00037,23930,813(¥ millions)
FY20/12 — New Standard

12,61918,00040

15,00080,00013,32037,73236,824the application of the new accounting standard.
[Reference] Results by Segment

Ordinary Income/Ordinary Margin

Operating Margin （%）
50
Previous
New
Standard
Standard*

18,00093,080100,000

Operating Income

21,000NewStandard*

New Standard*▲

Operating Income/Operating Margin(¥ millions)
PreviousStandard

Statement No. 29, March 31, 2020) and others, effective fiscal 2021. The figures for “FY20/12” in the table below are estimates based on

Notes:
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, theMiddle 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.
2. Effective from 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.

Net Sales
120,000

FY ended Jan. 201835,581

Note: Reflecting a change in its accounting policy, the Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ

non-operating expenses decreased ¥239 million, resulting in​T he main exchange rates used in the financial statements

decreases in gross profit and operating income of ¥5,220 million(income and expenses) of overseas consolidated subsidiariesand ¥239 million, respectively, with no impact on ordinary

are as follows: US$1.00 equals ¥109.85 (¥106.77 in fiscal 2020)

income and income before income taxes.

and 1 CNY equals ¥17.03 (¥15.47 in fiscal 2020).

Pigeon Integrated Repor t 2021

55

MD&A
Management Discussion and Analysis

Income Statement Analysis▲

Cost of sales amounted to ¥49,008 million, resulting in grossPartly due to the application of the Accounting Standard for▲

production facilities. The Group’s financial policy is to maintainprofit of ¥44,072 million, down 11.7% year on year, and a gross

Revenue Recognition, sales in this segment edged down 1.3% toAs of December 31, 2021, Pigeon had consolidated total assets

sound balance sheets and adequate liquid assets for businessmargin of 47.3%, down 2.9 percentage points. Selling, general,¥37,239 million and segment income declined 6.4% to ¥11,792

of ¥98,042 million, up ¥4,570 million from a year earlier. Over theactivities. The Group’s primary funding needs, namely working

and administrative (SG&A) expenses declined 11.2% to ¥30,735

million.

China Business

Financial Position
Assetsand other fixed assets associated with the acquisition of

period under review, current assets increased ¥1,023 million tocapital and capital equipment, are generated mainly by internal

million. Consequently, operating income decreased 12.9% to​S ales on a local-currency basis decreased year on year as¥66,254 million, and fixed assets rose ¥3,547 million to ¥ 31,88

funds derived from cash flows from operating activities. Any¥13,336 million, and the operating margin slipped 1.1 percentage

demand in mainland China, which was strong in the previous

million. The main factors boosting current assets were a ¥1,167

shortfall of funds among Group companies in Japan is covered

points to 14.3%.

year, subsided, while COVID-19 continued to impact sales at

million increase in notes and accounts receivable-trade, a ¥466

by loans from the company, while demand for funds among​Among non-operating items, we recorded a foreign exchange

brick-and-mortar stores. In September 2021, we released amillion increase in merchandise and finished goods, and a ¥590

overseas Group companies is met mainly by foreign-currency

gain in fiscal 2021 versus a foreign exchange loss in the previous

renewed series of “Shizen Jikkan” nursing bottles (productmillion increase in materials and supplies, which contrasted withloans from the Company. In addition, we place top priority on

period, leading to ordinary income of ¥14,648 million, down 9.1%.

name in Japan: “Bonyu Jikkan®”), which occupies the largesta ¥1,944 million decrease in cash and time deposits. The main

ensuring liquidity and safety in managing our cash reserves

Net income attributable to owners of parent declined 17.5% tomarket shares in Japan and China (according to Pigeon’s

reasons for the rise in fixed assets were a ¥1,913 million increaseon the premise that they serve as standby funds for business¥8,785 million, due to an extraordinary loss related to a voluntaryresearch) and are born from more than 60 years of baby-feedingin buildings and structures, a ¥565 million increase in furnitureinvestments.

product recall.

research. (We started pre-sales of the new series in the Chineseand fixtures, and a ¥1,262 million increase in land (all under​W ith its sound financial position and the ability to generatemarket.) Sales of skincare products increased steadily thanks

tangible fixed assets), which contrasted with a ¥282 million

cash flows from operating activities, the Group believes that,mainly to the launch of a series focusing on hot spring minerals

decrease in software (under intangible fixed assets).

in order to secure future growth particularly of its overseas

Performance by Segment

and the renewal of existing products.

businesses, it will be able to procure the necessary funds even▲

if demand for investment funds exceeds the current liquidity▲

Total liabilities at the fiscal year-end stood at ¥21,232 million, up

on hand. In the fiscal year ending December 31, 2022, the GroupIn this segment, sales rose 3.6% to ¥12,619 million and segment¥385 million from a year earlier. Over the period under review,plans to use internal funds to cover capital expenditures andincome grew 10.0% to ¥1,811 million.

current liabilities decreased ¥592 million to ¥15,072 million andother long-term capital needs.

​In the ASEAN countries and India, where this segment operates,

fixed liabilities rose ¥978 million to ¥6,159 million. The decline​T he Group does not have any borrowings from financial​T he Group has four business segments for repor tingthe impact of COVID-19 remained significant, evidenced byin current liabilities was mainly due to a ¥670 million decrease

institutions. As of December 31, 2021, the Group had cash andpurposes: Japan Business, China Business, Singapore Business,

emergency declarations and urban lockdowns in various

in notes and accounts payable-trade, a ¥474 million decreasecash equivalents of ¥35,218 million, and its equity ratio remainedand Lansinoh Business. Overviews of each segment are given

locations, which restricted business activities, while exportin accrued payables, and a ¥725 million decrease in accrued

high at 75.4%.

below. Due to the application of the Accounting Standard forsales to the Middle East and Southeast Asia also slowed. In

income tax, which contrasted with a ¥360 million increase in

Revenue Recognition at the beginning of fiscal 2021, year on

skincare products, an area of focus, we released the new

accrued expenses and a ¥1,067 million increase in other current

year comparisons for the Japan Business and China Business“Natural Botanical” series in August 2021. At least 90% of theliabilities. The main factors boosting fixed liabilities were a ¥178

segments use numbers based on different calculation methods.

ingredients used in these environmentally friendly products are

million increase in deferred tax liabilities and a ¥654 million rise▲

Liabilities

derived from plants, and recycled materials are used for some ofin other fixed liabilities.

Net cash provided by operating activities amounted to ¥10,893

Our business segments for reporting purposes have separate
financial information available from the constituent units in theGroup. These segments are subject to regular review by the
Board of Directors to determine the allocation of management
resources and evaluate performance.

Cash Flows
Cash Flows from Operating Activities

million, compared with ¥18,400 million in the previous fiscal year.

the containers.
▲

The main factors boosting cash flows included ¥13,531 million▲

Net Assets▲

Business Environment and Performance

Singapore BusinessNet assets at the fiscal year-end amounted to ¥76,810 million,

in income before income taxes, ¥3,997 million in depreciation,

This segment consists mainly of the Domestic Baby & MotherIn the Lansinoh Business segment, sales increased 6.8% yearup ¥4,184 million. This was mainly due to a ¥43 million rise in

and a ¥469 million increase in notes and accounts receivable-

Care Business, Child Care Service Business, and Health & Elderon year to ¥13,320 million, but segment income fell 30.4% toretained earnings and a ¥3,935 million increase in foreign-trade. Contrasting factors included a ¥1,511 million decrease in

Care Business. In fiscal 2021, segment sales declined 14.9% year

¥953 million, due to soaring distribution costs and aggressive

currency translation adjustment.

notes and accounts payable-trade, a ¥466 million increase inon year to ¥38,264 million, partly reflecting application of theallocation of SG&A expenses.

Japan Business

Lansinoh Businessincome fell 31.3% to ¥2,065 million, mainly due to a decline insales remained strong, mainly in the e-commerce channel.

gross profit associated with the decrease in segment sales.

In particular, our business in North America continued to beinventories, and ¥5,565 million in income taxes paid.
Cash Flows from Investing Activities

Information and Financial Policies on Capital Resources and▲​Despite the spread of COVID-19 in North America and Europe,
Capital Liquidity

Net cash used in investing activities totaled ¥5,593 million,▲

Accounting Standard for Revenue Recognition, and segment​S ales of childcare and feminine products declined year on

affected by delays in product arrivals and shipments stemming

There are two main types of capital demand for the Group:compared with ¥3,815 million in the previous year. The main

year due to various factors. These included the absence offrom disruptions in logistics. However, we reported strong sales

working capital demand and equipment capital demand. Major

factors were ¥5,659 million in purchase of tangible fixed assets

inbound demand from foreign visitors to Japan; the dissipationof nipple care creams and offerings in the new category of prepsources of working capital demand are related to the purchaseand ¥234 million in purchase of intangible fixed assets.

of special demand for cleaning and disinfection products, wet& postpartum.

of raw materials for manufacturing the Group’s products, aswell as manufacturing costs and operating outlays for selling,▲

Cash Flows from Financing Activities

wipes, and other COVID-related products; and the impact of
new COVID-19 outbreaks around Japan. On the other hand, sales

general, and administrative expenses. Equipment capital

Net cash used in financing activities was ¥8,693 million,

remained strong for breast pumps, which is an area of focus

demand relates mainly to the purchase of buildings, machinery,compared with ¥9,231 million in the previous fiscal year. Thisfor the Group. In July 2021, we launched the “Wuggy” bouncer,

was mainly due to ¥8,741 million in payment of cash dividends.

and in September we launched our fifth specialty stroller for
specific company stroller, both of which were well received bycustomers.

56

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

57

MD&A

F inancial Da t aManagement Discussion and Analysis

Other Performance Indicators

strategies. In addition to strengthening our financial position,■ Consolidated Balance Sheets(¥ millions)▲ROE

we effectively use retained earnings in a number of ways to

Pigeon uses return on equity (ROE) as a key performance

fortify our operational base and improve future Group earnings.

indicator in its effor t to improve profitability and capital

These include investing in new businesses and research andefficiency. As of the fiscal year-end, ROE stood at 12.2%, down

development, as well as investing in production facilities to raise

Cash and Deposits

31,34630,94932,416

37,16335,2183.3 percentage points from a year earlier.

production capacity, reduce costs, and enhance product quality.

Notes and Accounts Receivable — Trade16,44015,004

16,58815,085

16,253

With respect to specific shareholder-return goals, under our 7th

Merchandise and Finished Goods

6,059

7,360

8,144

8,256

8,723

Other Current Assets

4,331

4,887

4,783

4,724

6,059

Total Current Assets

58,17858,201

61,933

65,231

66,254

Medium-Term Business Plan we are targeting a consolidated

and Cash Conversion Cycle (CCC)

dividend payout ratio of around 55%, as well as year on year▲

Pigeon Value Added (PVA), Return on Invested Capital (ROIC),Item

F Y ended

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

AssetsSeeking to increase enterprise value, we are mindful of freeincreases in cash dividends for each fiscal period. Accordingly,

cash flow when conducting internal controls, and we set our

we have sought to further enhance and strengthen measures to

Tangible Fixed Assets

21,11621,12722,49423,262

27,093own unique indicator called Pigeon Value Added (PVA), which isreturn profits to our shareholders.

Intangible Fixed Assets

3,307

4,223

3,863

2,957

2,572

Investment Securities

1,020

889

950

687

532

Total Investments and Other Assets

1,865

2,065

2,200

2,020

2,122

based on economic added value, to make various investment

In fiscal 2021, we paid an interim cash dividend of ¥37.00

and other decisions and to make performance evaluations

per share (¥37.00 regular dividend) and a year-end dividendof each business segment. In fiscal 2021, invested capitalof ¥37.00 per share (¥37.00 regular dividend). This brought

totaled ¥74,718 million, compared with the fiscal 2020 amountthe total annual dividend to ¥74.00 per share (¥74.00 regular

Total Fixed Assets

26,28927,41728,55828,241

31,788of ¥71,545 million and our target of ¥74,437 million, resulting

dividends), up ¥2.00 year on year. The consolidated dividend

Total Assets

84,46785,61890,491

93,472

98,042in a PVA spread of 7.5% compared with the fiscal 2020 figure

payout ratio was 100.9%.

Notes and Accounts Payable — Trade

5,194

4,567

4,900

4,757

4,087

of 10.0% and our target of 9.8%. The PVA for fiscal 2021 was¥5,600 million, compared with the fiscal 2020 figure of ¥7,144

Liabilities

million and our target of ¥7,829 million. All figures for fiscal 2021

Outlook for the Next Fiscal Year

Accounts Payable

3,141

3,363

2,660

2,727

2,253

fell below previous-year figures and our targets.

2,578

1,951

1,272

1,906

1,180

In fiscal 2022 (ending December 31, 2022), we are targeting

Income Taxes Payable

Net operating profit after tax (NOPAT) amounted to ¥9,335

consolidated net sales of ¥98,700 million (up 6.0% year on year),Accrued Bonuses to Employees

1,035

972

928

952

882

million, compared with the fiscal 2020 figure of ¥10,721 million

operating income of ¥14,200 million (up 6.5%), ordinary income

and our target of ¥11,550 million, and return on invested capitalof ¥14,300 million (down 2.4%), and net income attributable to

Other Current Liabilities

5,723

4,768

5,876

5,320

6,668

(ROIC, with a tax rate of 30.0%) was 12.5%, compared with theowners of parent of ¥9,500 million (up 8.1%).

17,673

15,623

15,63815,664

15,072Long-Term Borrowings

—

—

—

—

—

Other Fixed Liabilities

3,982

3,412

4,389

5,181

6,159

Total Fixed Liabilities

3,982

3,412

4,389

5,181

6,159

Total Liabilities

21,65519,03620,02820,846

21,232

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

49,72955,70458,97961,12061,163

Treasury Stock

(949)

(951)

(1,088)(1,478)(1,479)

44

21

25

13

16

Foreign Currency Translation Adjustment

1,490

(910)

(572)

(130)

3,805

Non-Controlling Interests

2,119

2,339

2,741

2,722

2,925

Total Net Assets

62,812

66,582

70,46372,62576,810Total Liabilities and Net Assets

84,46785,61890,491

93,472

98,042

fiscal 2020 figure of 15.0% and our target of 15.5%. In addition,
the cash conversion cycle (CCC) in fiscal 2021 was 105.9 days,
which was 13.6 days worse than fiscal 2020 (92.3 days) and
14.0 days above our target (91.9 days). The main reason for thechange in CCC was deterioration in days inventory outstanding(DIO), stemming mainly from an increase in in-house inventories
resulting from a higher online sales ratio in the China Business,
as well as an increase in offshore inventories in the Lansinoh
Business due to logistics disruptions associated with COVID-19.
Note: Figures for the previous fiscal year are before taking into account the new revenue
standards, while those for the current fiscal year and planned figures are after taking into
account the new revenue standards.

Shareholder Return Policy and Measures
The Pigeon Group regards the return of profits to shareholders
as an important management priority. Our basic policy is toactively return profits to shareholders through the appropriationof retained earnings and other means, while reinforcing ourfinancial position based on considerations of medium-termchanges in business conditions and the Group’s businessNote: These figures are the forecasts contained in our financial results announcement,
released on February 15, 2022.
(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 could impact the Group’s performance andfinancial position.)

Total Current Liabilities

Net Assets

Valuation Difference on Available-forSale Securities

Notes:1. Figures less than one million yen are truncated.
2. Effective from 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).

■Equity Ratio, ROE, and ROICItem

F Y ended（％）

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

Equity Ratio

71.9

75.0

74.8

74.8

75.4

ROE

25.7

22.8

17.5

15.5

12.2

ROIC

22.2

21.2

17.4

15.0

12.5

Notes: 1. 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%. Invested capital is the average of the
beginning and end from the fiscal year.
2. 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).

58

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

59

F inancial Da t aNonf inancial Da t a■ Consolidated Statements of IncomeItem

F Y ended(¥ millions)Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021■ Employee Data
FY ended

Item102,563

104,747

100,017

99,38093,080

Number of employees

Cost of Sales

51,99050,88949,21649,45949,008

Ratio of female employees

Gross Profit

50,57253,85850,80049,92144,072

Ratio of non-Japanese employees

49.3

51.4

50.8

50.2

47.3

Selling, General and Administrative Expenses

31,15934,24633,72734,60530,735

Operating Income

19,412

19,612

17,072

15,316

13,336

18.9

18.7

17.1

15.4

14.3

Gross Margin (%)

Operating Margin (%)

Pigeon GroupNet Sales(persons)

ー

160

153

Overseas(persons)

ー

318

339

Ratio of female managers

924

608

115

Overseas

20,12920,39817,284

16,113

14,648

19.6

19.5

17.3

16.2

15.7

300

315

1,182

Income before Income Taxes

20,916

20,262

17,104

15,836

13,531

Income Taxes — Current

5,931

5,794

5,067

4,715

4,690

Income Taxes — Deferred

225

(127)

267

261

(138)

14,75914,594

11,76910,860

8,979

244

356

230

216

193

14,515

14,238

11,538

10,6438,785

Net Income
Net Income Attributable to
Non-Controlling Interests
Net Income Attributable to
Owners of Parent

Notes: 1. Figures less than one million yen are truncated.
2. Effective from 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).

■ Consolidated Statement of Cash FlowsItem

F Y ended(¥ millions)Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

Voluntary turnover of regular employees

20%

21%

24%

(%)

ー

44%

42%

(%)

3%

1%

2%

Average length of service(years)

15.5

15.0

14.8

Number of new-graduate hires(persons)

98

8

Number of mid-career hires(persons)

17

16

5

(persons)

10

12

12

Ratio of female directors

(%)

10%

25%

25%

(%)

30%

42%

42%

(%)

10%

8%

8%

4

4

4

(%)

25%

25%

25%

(persons)

13

13

11

(%)

8%

8%

9%

Occupational accidents(persons)

ー

65

74

(Of which) occupational accidents requiring leave from work

(persons)

ー

12

15

(tonne-CO2)

26,931

24,97323,510

Scope 1 and 2 CO2 emissions per unit of sales(kg-CO2 /¥ million)

285.8

265.6

252.6

Non-recycled industrial waste generated＊2(tonnes)

969

420

271

(kg/¥ million)

10.3

4.5

2.9

(%)

74%

89％

93％

Mid-career hires at management positions*Ratio of mid-career hires in management positions to the number of mid-career hires in each period.
Note: The number of managers and the ratio of female managers in the Pigeon Group for FY2020 have been restated.

■ Officer Data (As of December 31 in each year)
Number of directors

Ratio of non-Japanese directors
Number of Audit & Supervisory Board Members

(397)

1,467

4,634

(1,832)

Cash and Cash Equivalents at Beginning of Period

30,052

31,34630,94932,41637,050Cash and Cash Equivalents at End of Period

31,34630,94932,41637,05035,218Notes: 1. Figures less than one million yen are truncated.
2. Effective from 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).

■ Data per Share
Item

Number of managing officers
Ratio of female managing officers(persons)■ Occupational Health and Safety

Note: The number of occupational accidents and occupational accidents requiring leave from work for FY2020 have been restated.

F Y ended

Jan. 2018

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

EPS (yen)

121.20118.89

96.37

88.93

73.44

Cash Dividend (yen)

66.00

68.00

70.00

72.00

74.00

Dividend Payout Ratio (%)

54.5

57.2

72.7

81.0

100.9

506.79536.43565.64607.06642.04

BPS (yen)

Ratio of female Audit & Supervisory Board Members

Pigeon
Group

1,294

＊

Voluntary turnover of regular employees(5,593)Net Increase (Decrease) in Cash and Cash Equivalents

15%

(%)

Ratio of female managers(3,815)

1,560

9%

71

(3,995)

(718)

ー

75

(4,704)

98

(%)

76

(3,586)

(986)

49%

(persons)

Number of managers

Cash Flows from Investing Activities

599

47%

368

Ratio of Outside Directors

Effect of Exchange Rate Changes on Cash and Cash Equivalentsー41%

10,893(8,693)(%)

373

18,400(9,231)29%

39%

14,098(8,734)

43%

27%

361

13,632(8,338)

40%

ー

38%

17,094(12,812)

ー

(%)

(%)

Ratio of female employees

Cash Flows from Operating Activities

Cash Flows from Financing Activities(%)(persons)

Number of employees

Pigeon Corporation

379

62%

Japan

509

271

62%

492

547

Extraordinary Loss

64%

67%

Non-operating Expenses

65

(%)

ー

1,427

38

3,935

478

1,406

121

3,886

ー

1,136

243

3,954

ー

1,295

1,058

(persons)

(%)

1,263

Extraordinary Income

Dec. 2021(persons)

Non-operating Income

Ordinary Margin (%)

Dec. 2020

Number of managers

Japan

Ordinary Income

Dec. 2019

Note: Effective from 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).

■ Environmental Data
Scope 1 and 2 CO2 emissions＊1＊1＊2

Industrial waste per unit of sales
Reuse and recycling ratio

Notes: 1. Figures for domestic operations in the Fiscal year ended Dec. 2019 refer to actual results for an 11-month period (February–December 2019) due to a change in the fiscal year-end.
2. Scope 1 and 2 CO2 emissions per unit of sales and Industrial waste per unit of sales for FY2018, FY2019 and FY2020 have been restated as a result of recalculation of net sales according to the revised Accounting Standard for Revenue Recognition.
*1 Scope of data collection: Pigeon Corporation and its domestic and overseas consolidated subsidiaries (Scope 1 & 2)
For some sales locations, electricity consumption is estimated from electricity consumption charge. For details on the calculation method of CO2 emissions, please refer to our corporate website (Responding to Climate Change). The CO2 emissions
for FY2018, FY2019, and FY2020 have been restated.
*2 Scope of data collection: Pigeon Corporation and its domestic and overseas consolidated subsidiaries
The calculation covers industrial waste, excluding general waste from business operations, and does not include recycled waste (including thermal recycling). Non-recycled industrial waste volume for FY2018, FY2019, and FY2020 have been restated.

60

Pigeon Integrated Repor t 2021

Pigeon Integrated Repor t 2021

61

C orpor a te Infor ma tion

Corporate Data (As of December 31, 2021)
Company Name……

Pigeon Group Business Structure (As of December 31, 2021)

Pigeon Corporation
Location

Percentage of voting
rights in the stock of
a subsidiary held by aparent corporation

Business

GHO Pigeon Corporation

Japan

ー

ー

● Pigeon Corporation

Japan

ー

Maternity and baby products: Sales, R&D, etc.

● Pigeon Home Products Corporation

Japan

100%

Manufacture and sale of toiletries● Pigeon Hearts Corporation

Japan

100%

Child-minding and daycare services, babysitter
dispatch services, preschool education services

＊2

Japan

100%

● Pigeon Manufacturing Ibaraki Corporation

＊2

Japan

100%

● Pigeon Tahira Corporation

Japan

100%

Sale of elder care products● Pigeon Manaka Corporation

Japan

67%

At-home elder care services, sale of elder careproducts

China

100%

Sale of maternity and baby products
Nursing Bottle, Skincare, Cleaning andDisinfecting products, etc.

UnitedStates100%(100.0%)● PIGEON MANUFACTURING (SHANGHAI) CO., LTD.

＊2

China

100%

● PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

China

100%

● DOUBLEHEART CO. LTD.

South
Korea

100%

Singapore

100.0%

Malaysia

100%（100.0%）Indonesia

65%（65.0%）

Manufacture of maternity and baby products
Nursing Bottle, Nipple Care products, etc.

Indonesia

100%（100.0%）

Sale of maternity and baby products
Nursing Bottle, Skincare products, Breast Pump, etc.

India

100%
（0.1%）

Manufacture and sale of maternity and baby products
Nursing Bottle, Breast Pump, etc.

Thailand

97.5%

Thailand53%

Manufacture of maternity and baby products
Nursing Bottle, Wet wipes, Nipple Care products,
etc.

UnitedStates100%

Sale of maternity and baby products
Nipple Care products, Breast Milk Storage Bag,
Breast Pump, etc.

Turkey100%（99.9%）

Manufacture of maternity and baby products
Nursing Bottle, Breast Pump, etc.

Belgium

100%（100.0%）

China

100%
（100.0%）

China

100%
（100.0%）＊1,＊2

UnitedKingdom

100%（100.0%）＊1

France100%（100.0%）Address …………… 4-4, Nihonbashi Hisamatsu-cho, Chuo-ku, Tokyo 103-8480, Japan

Company namePhone +81-3-3661-4200 Fax +81-3-3661-4320
URL https://www.pigeon.com (global)
https://www.pigeon.co.jp (Japan)
Established ………… August 15, 1957
Capital Stock ……… ¥5,199,597 thousand

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 childcare products, maternity items, women’s careproducts, home healthcare products, elder care products, etc.; operation of child-minding centers
Number of………… 368 (Japan, full-time employees) / 3,935 (Worldwide, includes part-time employees)
Employees

Japan Business＊2

Fiscal Year-End …… December 31● Pigeon Manufacturing Hyogo Corporation

Consolidated Subsidiaries (25 companies) (As of December 31, 2021)

Manufacture and sale of non-woven products＊2,＊3

PIGEON HOME PRODUCTS CORPORATIONPIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

PIGEON HEARTS CORPORATIONLANSINOH LABORATORIES, INC.

PIGEON MANUFACTURING HYOGO CORPORATIONLANSINOH LABORATORIES MEDICAL DEVICESDESIGN INDUSTRY AND COMMERCE LTD. CO.

PIGEON TAHIRA CORPORATIONPIGEON MANAKA CORPORATIONPIGEON SINGAPORE PTE. LTD.
PIGEON MALAYSIA (TRADING) SDN. BHD.
PT PIGEON INDONESIAPT PIGEON BABY LAB INDONESIAPIGEON (SHANGHAI) CO., LTD.
PIGEON AMERICA INC.
PIGEON MANUFACTURING (SHANGHAI) CO., LTD.

LANSINOH LABORATORIES BENELUXLANSINOH LABORATORIES SHANGHAILANSINOH LABORATORIES (HONGKONG) CO.,LIMITEDLANSINOH LABORATORIES UK LIMITED＊2

DOUBLEHEART CO. LTD.
PIGEON INDIA PVT. LTD.
PIGEON INDUSTRIES (THAILAND) CO., LTD.
THAI PIGEON CO., LTD.

Main External Evaluation (As of May 31, 2022)
JPX NIKKEI INDEX 400

MSCI Japan Empowering
Women Index

S&P/JPX Carbon
Efficient Index

TOKYO FINANCIAL
AWARD

＊1

● PIGEON AMERICA INC.

● PIGEON SINGAPORE PTE. LTD.

LANSINOH LABORATORIES FRANCE SAS

Singapore Business

PIGEON MANUFACTURING IBARAKI CORPORATION

China Business● PIGEON (SHANGHAI) CO., LTD.

Corporate
Governance of
the Year＊1● PIGEON MALAYSIA (TRADING) SDN. BHD.
＊1,＊2

● PT PIGEON INDONESIA＊1● PT PIGEON BABY LAB INDONESIA＊1,＊2●● PIGEON INDIA PVT. LTD.

＊2

● PIGEON INDUSTRIES (THAILAND) CO., LTD.
＊2

● THAI PIGEON CO., LTD.

＊3

THE INCLUSION OF PIGEON CORPORATION IN ANY MSCIINDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICEMARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE ASPONSORSHIP, ENDORSEMENT OR PROMOTION OF PIGEONCORPORATION BY MSCI OR ANY OF ITS AFFILIATES. THE MSCIINDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND
THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS ORSERVICE MARKS OF MSCI OR ITS AFFILIATES.

IR Prime Business Award

Forbes JAPAN WOMENAWARD 2021

Platinum Kurumin

Consumer-Oriented
Companies selectedby Minister of State
Commendation

Forest × Decarbonizing
Challenge 2022 ExcellenceAward

Lansinoh Business● LANSINOH LABORATORIES, INC.

● LANSINOH LABORATORIES MEDICAL DEVICESDESIGN INDUSTRY AND COMMERCE LTD. CO.＊1,＊2＊1● LANSINOH LABORATORIES BENELUX＊1● LANSINOH LABORATORIES SHANGHAI＊1● LANSINOH LABORATORIES (HONGKONG) CO.,LIMITED● LANSINOH LABORATORIES UK LIMITED● LANSINOH LABORATORIES FRANCE SAS

Sale of baby products
Nursing Bottle, etc.
Manufacture of maternity and baby products
Nursing Bottle, Skincare products, Breast Pad,
etc.
Sale of maternity and baby products
Nursing Bottle, Skincare, Cleaning andDisinfecting products, etc.
Sale of maternity and baby products
Nursing Bottle, Skincare products, Breast Pump,
etc.

Sale of maternity and baby products
Nipple Care products, Breast Milk Storage Bag,
Breast Pump, etc.

Sales / Service offices ●Factories

62

Pigeon Integrated Repor t 2021

*1 In the Percentage of Voting Rights column, numbers in parentheses ( ) represent the percentage of indirect holdings and are included in the total percentage of voting rights held by ●the Company.
*2 The company is classified as specific subsidiaries.
*3 PIGEON (SHANGHAI) CO., LTD., and LANSINOH LABORATORIES, INC., account for more than 10% of consolidated net sales (excluding inter-company sales among consolidated companies).

Pigeon Integrated Repor t 2021

63

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 is 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 2021

Stock Data (As of December 31, 2021)● Shares Authorized ………………

360 million● Total number of shareholders ……………………… 22,486● Shares Issued ……………………

121,653,486● Number of shareholders with voting rights● Treasury stock………… 20,221

P.54…………………………………… 1,893,272

Financial Highlights

Purpose⬅

To see Pigeon's Key Performance
Figures.

Corporate Site➡

Investors

Major Shareholders (As of December 31, 2021)
Numberof shares

Shareholder name

Investors
Our Business

Ownership*(Thousand)(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

19,825

16.6

Custody Bank of Japan, Ltd. (Trust Account)

5,864

4.9

STATE STREET BANK AND TRUST COMPANY 505223

4,579

3.8

STATE STREET BANK CLIENT OMNIBUS OM04

3,743

3.1

SMBC Nikko Securities Inc.

3,444

2.9

BNYMSANV RE MIL RE FIRST SENTIER INVESTORS ICVC - STEWART INVESTORS ASIA PACIFIC LEADERS SUSTAINABILITY FUND

3,307

2.8

RBC ISB S/A DUB NON RESIDENT/TREATY RATE UCITS-CLIENTS ACCOUNT-MIG

3,097

2.6

JPMorgan Securities Japan Co., Ltd.

2,958

2.5

Y.N Corporation

2,378

2.0

The Nomura Trust & Banking Co., Ltd. (Investment Equity)

2,071

1.7

⬅

To see Pigeon's business bysegment.

➡

MD&A
Financial Data
Nonfinancial Data⬅

To see the financial data andearnings structure
as a reference forinvestment decisions.

➡

P.64

Company Information(Stock Data)⬅

To find Pigeon's stock information.

➡

Stock Information

P.8
P.16

History at a Glance
History of Pigeon andNursing Bottles
Special Feature –Nursing
bottles that embody our
Brand Promise and Purpose–
Company Information(Corporate Data)⬅

To learn about Pigeon's history andcorporate profile.

➡

Corporate History⬅

To learn about Pigeon's corporate
philosophy, culture, andmanagement vision.

⬅

To understand Pigeon's
management teamand their views and opinions
on business.

P.10
P.36

Business Overview
Business Summaries by
Segment

P.55
P.59
P.61

Investors
・Chart Generator*Shareholding ratio is calculated deducting treasury stock (1,893,272 shares). Treasury stock does not include the number of shares held by the Board Incentive Plan for Directors (BIP) Trust Account (124,800 shares).

Share Breakdown by Shareholder Type (As of December 31, 2021)
Individuals andOthers13.0%

Treasury Stock

1.6%

Financial Institutions

30.8%

121,653(thousands ofshares)Non-JapaneseCorporations

42.0%

Securities Companies

7.6%

Japanese Corporations

5.0%

Number of shares

Non-JapaneseCorporations
Financial
Institutions
Individuals andOthersJapanese
Corporations
Securities
Companies
Treasury
Stock

P.18

51,089（thousands)
37,487（thousands)

P.62

15,864（thousands)
6,058（thousands)
9,260（thousands)

Cover2 Pigeon Way

1,893（thousands)

Figures in Number of Shares are truncated.

Stock Price Range/Turnover of Common Stock（¥）

Pigeon Stock Price

Pigeon Stock Turnover (Monthly Total)（¥）
60,000,000

7,000

P.12
P.14
P.24

Value Creation Story
Efforts to Improve Brand Value
Our Approach to Sustainability

P.2
P.12
P.14
P.52

To Our Stakeholders
Value Creation Story
Efforts to Improve Brand Value
Board of Directors, Audit &Supervisory Board Members, andManaging Officers

6,500
50,000,000

6,000
5,500
5,000

40,000,000

4,500
4,000
3,500

30,000,000

3,000
2,500

20,000,000

2,000
1,500

10,000,000

1,000
500
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
2018
2017
2019
2020
2021
2022

64

Pigeon Integrated Repor t 2021

P.12
P.25
P.32
P.28
P.30
P.48

Value Creation Story
Our Approach to Materiality
Leaving a rich earth for the futureof babies born tomorrow
Supporting the healthy growthof babies
Maximizing the power of ouremployees
Governance

The Pigeon Way➡
➡

Investors
・Top Message
・Medium-Term Business Plan
Management

Sustainability⬅

To understand Pigeon's ESG
initiatives, which drive
the sustainable growthof business and corporate value.

➡

・Pigeon ESG/SDGs Policy
・ESG Data Book
・Approach to ESG

Corporate
Governance

Pigeon Integrated Repor t 2021

65

Pigeon Corporation(Securities Code: 7956)

Address 4-4, Nihonbashi Hisamatsu-cho,
Chuo-ku, Tokyo 103-8480, Japan (Head Office)+81-3-3661-4200
Tel+81-3-3661-4204 (Business Strategy Sect.)+81-3-3661-4320
Fax
www.pigeon.com
URL