Integrated Report 2023
For the Year Ended December 31, 2023

Integr a ted Repor t 2 0 2 3

Purpose ofThis
Integrated
ReportIn order that all Pigeon employees should
embody a baby-friendly world
as we strive to realize our purpose,
we have updated the Pigeon Way.

The Pigeon Group issues our Integrated Report to deepen the understanding of all stakeholders, including shareholders and otherinvestors, of the corporate value and other values we create over the short, medium, and long term. This Integrated Report 2023
reports on the performance, strategies, and sustainability (ESG) initiatives of the Pigeon Group and its business segments during
the reporting period. It also introduces the fundamental strategies and structural reforms outlined in the 8th Medium-Term Business
Plan, “Toward Sustainable Growth,” currently being implemented, along with the progress made in these endeavors.
In addition to the Integrated Report, Pigeon provides the Investorʼs Guide, which focuses on quantitative data regarding theperformance trends of the Pigeon Group, and the ESG Data Book, which includes more comprehensive sustainability-related
information. Please visit the sites below for details.
Investor ʼs Guide

https://www.pigeon.com/ir/library/inv_guid/ESG Databook

https://www.pigeon.com/sustainability/databook/■Pigeon DNA
The Pigeon DNA comprises our Corporate
Philosophy and Credo, and has been thecore of Pigeon throughout its history andwill continue so into the future.

■Pigeon Way
The Pigeon Way comprises our Purpose,
Values, and Ac tion Pr inciples. We havepositioned our Purpose as the cornerstone of
the Pigeon Way to emphasize our commitment
to achieving our reason for being.
Our Values represent the key attributes that
all Pigeon employees should embrace, and our
Action Principles serve as the basic guideline
driving all our actions.
Linking these three elements of the Pigeon
Way as shown in the diagram at right conveys
the importance of aligning our actions with our
Purpose to achieve its underlying tenets.

Employees of the Pigeon Group will uphold the Pigeon DNA and Pigeon Way during everyday activities to build an even stronger brand.

■Introduction■ Value Creation Story

Business Overview■Message from the President and CEO

Promoting Sustainable Management

32

Financial and Nonfinancial Highlights ‥‥‥‥‥‥ 64

16

Enhancing Business Competitiveness andResilience ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 34

Toward Sustainable Growth ‥‥‥‥‥‥‥‥‥‥ 18

Supporting Nursing Babies ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 36

The 8th Medium-Term Business Plan

Reducing Our Environmental Impact ‥‥‥‥‥‥‥‥ 40

Corporate Data/Consolidated Subsidiaries ‥‥‥68

Contributing to the Resolution of Social Issues ‥‥ 45

External Evaluation and Related Items ‥‥‥‥‥‥‥68

Managing Talent and Cultivating theRight Culture for Our Purpose ‥‥‥‥‥‥‥‥‥‥‥‥‥ 48

Pigeon Group Business Structure ‥‥‥‥‥‥‥‥‥‥69

Value Creation Story ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 14
Vision of a Baby-Friendly Future‥‥‥‥‥‥‥‥‥

20

Business Summaries by Segment▲

To Our Stakeholders‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 08▲

Report 2023 Contents

0612Japan Business‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥

24
28

Lansinoh Business ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥30

Establishing Solid Management Foundations ‥‥‥ 52

Directors/Audit & Supervisory Board Members/
Managing Officers ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 62

Financial Data ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 65
Nonfinancial Data‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 67
Corporate Information

Stock Data ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 70
IR Tools (Quick Reference) ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 71▲

Singapore Business‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥▲

China Business ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 26▲ ▲ ▲Pigeon Integrated‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥

Initiatives to Improve Corporate Value■ Data Section‥‥‥‥‥‥‥‥▲ ▲ ▲ ▲

History at a Glance ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 04■ Sustainability
‥‥

▲ ▲

02

▲ ▲ ▲ ▲

▲ ▲ ▲History of Pigeon and Nursing Bottles‥‥‥‥

Pigeon Integrated Repor t 2023

01

Histor y of Pigeon andNursing Bottles
1962 Glass
K-8-Type Nursing BottleWith filter valve inside nipple for milk
volume control.

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

2013 Plastic

1968

1986 Glass

Pigeon nursing bottle
Japan domestic market
share reaches 80%*1

Snoopy-Design
K-Type Nursing Bottle
Nursing bottles released withdesigns featuring popular characterslike Snoopy.

1957 Plastic

1960

L-Type Nursing Bottle

Silicone Rubber Nipple

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.

1976 Plastic
PV-8-Type Nursing Bottle

1964 Glass2005 Glass
Renamed “Flexible” in overseas markets
in 2014. Released in 2017 in Japan under
the name “Slim-Type Nursing Bottle.”

KP-8-Type Nursing Bottle

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

“Ziran Shigan”

Traditional design added for theIndonesian market.

Bonyu Sodanshitsu Nursing Bottle
Promoted transition to direct breastfeedingwith the Oketani Method.

As of 2023
Pigeon nursing bottle

No. 1 global market share*

2

201 1

2017 Glass

Released Lansinoh-brandnursing bottles mainlyin Europe and theUnited States.

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

2007 Plastic

With heat-resistantglass body.

Introduction

A-Type Nursing Bottle

1988 Glass

Batik-Print Slim-Type
Nursing Bottle “Flexible”

series expanded with
Chinese zodiac designs in China.

Slim-Neck Bottle with Peristaltic
Nipple for the Chinese market

1963 Plastic

2012 GlassPPSU* Bonyu Jikkan
Wide-Neck Nursing BottleWith superior shockand heat resistance.
*Polyphenylsulfone

1965 Plastic

F-Type Nursing Bottle

1954 Plastic

PW-Type Nursing Bottle

Japan’s first decorated
nursing bottle.

Smooth inner neck surface
prevented milk residue buildup
and improved hygiene.

S-Type Nursing Bottle

AP-4-Type and AP-8-Type Nursing Bottles
Isoprene rubber nipple resisted wear. Polycarbonate
body retained its shape even after repeated boiling.

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

Silicone Coating for Bonyu Jikkan
Wide-Neck Nursing Bottles

1979 Glass Plastic

Nursing Bottle with Wide-Neck and Cap

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

K-Type Nursing Bottle

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

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

*Released in China as “Ziran Shigan.”Released in other overseas markets as“Peristaltic PLUS.” Renamed as“SofTouch Peristaltic PLUS” in 2014.

PES* Nursing Bottle
Japan’s first environmental
hormone-free nursing bottle.
*Polyethersulfone

Bonyu Jikkan*
Wide-Neck Nursing Bottle(Second Generation)

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

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

2022 Plastic
SofTouchTM T-Ester* Nursing
BottlePigeon was the first to makea bottle from T-Ester, aninnovative material withglass-like clarity.
*T-Ester is a trademark or registeredtrademark of Mitsubishi Gas Chemical
Company, Inc., in Japan and othercountries. It was launched in
Singapore and other Southeast Asian
countries in 2022 and in Japan in
2023.

2021 Glass Plastic
Bonyu Jikkan* Wide-Neck Nursing Bottle (Third Generation)
Closer in softness to a mother’s breast and with the new Latch-on Line.
*Released in China in 2021.
Released in Japan and other markets in 2022.

Sustainability

1958 Glass

2010

Glass Plastic

Based on research on the “Three Key Factors of Sucking”

2000 Plastic

1949 Glass
Released by Pigeon’s predecessor, Dofu Boeki.

Bonyu Jikkan Wide-Neck
Nursing Bottle(First Generation)
Wide-necked bottle withperistaltic nipple allowing
infants to drink smoothly.

1962 Plastic

A-Type Nursing Bottle

2018 Glass

Value Creation Story

1950 GlassJapan’s first plastic nursing bottle—
light, portable, and perfect for outings.

2002 Glass Plastic

Message fromthe President and CEO

1956 Glass*1 Pigeon Research *2 Including products other than the “Bonyu-Jikkan®” series

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 goal

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 establishment.

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

Today, Pigeon is expanding its business globally with various products andData Section

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

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

services. At the time of our foundation, however, we were preoccupied with the

now we use ultrasound. Taking research to another level, we also recently developed a device todevelopment of our mainstay nursing bottles. In those days, direct-attached nursing

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

bottles, where the nipple is attached directly to the bottle, were mainstream.

We will never end our research into baby’s sucking behavior. In addition, we have continued pursuing

However, those nipples tended to collapse, making it difficult for babies to suck. Thereinnovation in technological fields, such as materials and manufacturing methods, which we reflect inwere also issues regarding hygiene. Our leadership at the time thought, “We should

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

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

shapes. This culture has been passed down unchanged to the Pigeon of today. Babies’ sucking

first capped nursing bottle. It was a revolutionary product with air intake holes andbehavior is universal, and our nursing bottles, which benefit from Pigeon’s strong global presence,adjustable milk output, but it was not a hit due to its high price and lack of nameare currently sold in many countries and regions. We are the No. 1 brand in China and have highrecognition. However, we continued making refinements with the aim of developing

market shares in Taiwan, Indonesia, Thailand, and many other Asian markets. Pigeon is convinced

the “best” nursing bottle, laying the foundation for Pigeon’s subsequent growth.

that 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.

02

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

03

His tor y a t a Glance
2015
Runfee (baby stroller that runs smoothly overuneven ground) launched
2021
Renewed series of “Bonyu Jikkan®” nursing
bottles (designed for use alongside direct
feeding) launched

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

Market Capitalization

1974
First overseas office established in Singapore
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

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, established

2021
First prenatal and postpartum care products
launched under the Lansinoh brand

600

100,000

80,000400

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

40,000200

2014
Overseas sales ratio
exceeds 50%

1966
Export business started

Value Creation Story

1977
P-type nursing bottle for babies with poor
sucking strength launched

1966
Name changed to Pigeon Corporation

120,000

Message fromthe President and CEO

1949
Dofu Boeki (Pigeon’s predecessor)
established1992
Baby wipes launched

Net Sales(¥ millions)Introduction

Net Sales

2002“Bonyu Jikkan®” wide-neck nursing bottle(which promotes babies’ natural sucking
peristaltic movement) launchedMarketCapitalization(¥ billions)

20,0001968
World’s first medicated compact baby
powder launched0
Jan. 1958

Jan. 1968

Jan. 1978

Jan. 1988

Jan. 1998

Jan. 2008

0Dec. 2023

Sustainability

Jan. 2019
Dec. 2019(11-month(11-monthperiod)
period)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 andled 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 forless than 10% of net sales.
Nevertheless, Matsumura identified
global markets as a future growth
driver and led the Company’s
full-fledged entry into China in 2002.
Two years later, in 2004, Matsumura
broadened the scope and territoryof Pigeon’s global business further
by adding U.S.-based Lansinoh
Laboratories, Inc., then an OEM
supplier of breast pads and otheritems, to the Pigeon Group.

In 2007, Akio Okoshi was
appointed the fourth presidentof Pigeon. Okoshi’s term would
see further acceleration of theCompany’s global business,with expansion into India,
Turkey, Malaysia, South Korea,
and other regions. In Japan,
where birth rates continued tofall, Pigeon adopted new growthstrategies, entering fields suchas baby strollers. Okoshi also
led extensive internal reforms to
the Company’s personnel andother systems, seeking newmodes of expansion.

In 2013, Shigeru Yamashita was
appointed Pigeon’s fifthpresident. Yamashita brought
extensive overseas experience inThailand, the United States, andelsewhere. This experience led
him to strongly believe in theimportance of uniting the “heartand soul” and “actions” of Pigeon
employees around the world, andin 2014 he established the Pigeon
Way. Pigeon’s global performanceremained 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 powerand strengthening 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
new generation of infants. “The fieldof nursing bottles holds dreams forthe future,” said Nakata, “and if wework hard to make exceptional
products we will undoubtedly
succeed.”04

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

Data Section

1957

05

Busines s O ver v iew

Products/Ser vices

Baby and mother care products, childcare services, operation of in-company childcare facilities, preschool
education services, aging-prevention products, elder care products and services*6

Current Status of the Pigeon Group (As of December 31, 2023)● Sales/service: 4 bases ● Production: 3 bases

Pigeon Corporation is a leading global company in baby products that has been supporting babies, mothers, andfamilies around the world for more than 60 years since its establishment in Japan.

Business Conditions and Group Strengths

Japan BusinessNet sales

Consolidated operating income

Lansinoh BusinessJapan Business

19.6%

39.0%

¥

¥

¥

36,865million

Japan Business

Consolidated
Net Sales*1¥

10,726million Margin: 11.4%¥

million¥Share of net sales(Sales)2,006million Margin: 5.4%

Products/Ser vices

8,858million Margin: 26.8%

Singapore Business
China Business

13.9%

35.0%

¥

¥

1,235million Margin: 9.4%

Baby and mother care products

China Business
China Business
Mainly China, South Korea,
and East Asia

Lansinoh Business¥

33,045million*1 The consolidated net sales figure refers to the amount after
elimination of intersegment transactions.

1,453million Margin: 7.9%

*2 The consolidated operating income figure refers to the amountafter segment profit adjustments, which mainly comprise expenses
associated with administrative departments.

Business Conditions and Group Strengths

We offer new ways of living with an emphasis on nursing
bottles, nipples, and skincare products together with thehundreds of other products in China under the Pigeon brand.
We have both production plants and sales companies
catering to core products in China and are strengthening our
initiative in the growing e-commerce field under an efficient
production and supply system.
Products/Ser vices

Baby and mother care products

9.6

％

％

(worldwide, includes
part-time employees)
Ratio of Female
Employees

61 %Ratio of Female
Managers

40 %*3 Return on equity (ROE): The denominator is the average of the figures at the beginning and end of the fiscal year.
*4 Return on invested capital (ROIC) is defined as net operating profit after tax (NOPAT) divided by invested capital.
This figure is calculated using a tax rate of 30.0%. Invested capital is calculated using the average of the beginning and year-end figures.
*5 Ratio of employees with nationality other than Japanese.

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

Business Conditions and Group Strengths

We sell baby and mother care products under the Pigeon
brand. In particular, Indonesia and India are positioned aspriority markets, and we are strengthening our production andsales systems, including collaboration with local partners, tomeet the diverse needs of each region. In addition to our goalof further business expansion in the Middle East and Oceania,
we are working to expand into Africa, and are establishing a
local subsidiary in Kenya in 2023.

Data Section

67 %

9.3

Southeast Asia, India, Middle
East, and Oceania

3,618

90

Ratio of Non-Japanese
Employees*5

R O I C *4

Number of Employees

Countries/Regions

More thanSingapore
Business

Sustainability

R O E *3

● Sales/service: 3 bases ● Production: 2 bases

Value Creation Story¥
Singapore Business

13,085million*6 As for Pigeon Manaka Corporation, which provides elder care services, on April 1, 2024, we transferred our entire holding of
Pigeon Manaka Corporation (67.0% of voting rights) to Marumitsu Corporation.

China Business

94,461

Message fromthe President and CEO

18,480 million

Consolidated*2

Despite concerns about declining childbirths in this market,
we have developed and launched a wide range of highquality products based on more than 60 years of research
into breastfeeding and early childhood development,
resulting in widespread recognition of Pigeon as a leading
and trusted company in the industry. Leveraging this trust,
we are rigorously launching new, highly competitive products
and improving the quality of our offerings in the areas ofchild-rearing support, healthcare, and elder care.

Introduction

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.

Products/Ser vices

Baby and mother care products

LansinohBusiness
Mainly North America,
Europe, and China● Sales/service: 6 bases ● Production: 1 baseBusiness Conditions and Group Strengths

We sell breastfeeding-related products under the Lansinohbrand, and mainstay nipple care cream and breast milkstorage bags have been well received by consumers,
particularly in the key market of the United States. We arestrengthening our brand while expanding product categories
such as nursing bottles and birth preparation and recovery
products in the United Kingdom, Germany, and other
European countries, as well as China.

P.69 Pigeon Group Business Structure
06

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

07

To Our S t akeholder sMedium-Term Stability and Growth Toward
the Future

develop this range of products across all four businesssegments, considering regulatory requirements in each country.

Considering the heightened uncertainty in market outlooks,

As a strategic move looking ahead to the next decade, we

compounded by the challenges posed by the COVID-19

established a local subsidiary in Kenya in October 2023. Thispandemic, the rationale behind pursuing business restructuring

milestone marks Pigeon’s inaugural venture into Africa, withbecomes apparent. The pandemic has led to significant declines

operations overseen by our Singapore Business, as we undertakein birth rates in Pigeon’s key markets such as Japan and China,

comprehensive market development efforts. We have assigned aalongside restrictions on economic activities, thereby impacting

dynamic employee from Japan to the local subsidiary, and we are

our performance. Looking at the global perspective, the birththrilled to receive her enthusiastic reports, brimming with

rates in our targeted regions represent less than 30% of theexcitement about the opportunities she is eager to pursue.

approximately 100 million babies per year, offering significant

Business Development Meeting, comprising executives and key

business opportunities for Pigeon. However, when projecting

members from each business segment. Led by Director Kevinahead over spans of three years, five years, and beyond, it

Vyse-Peacock, who heads the Lansinoh Business, the meeting

becomes clear that solely concentrating on existing markets

regularly conducts discussions to share and evaluate ideas fromand initiatives, such as enhancing our market share ineach segment and explore the potential for mergers andnursing bottles and nipples or expanding skincare productacquisitions (M&A).

sales in primar y markets, will not suffice to propel our

Steady Achievements Amid Declining Sales
and Profit in Fiscal 2023

purpose of creating a more baby-friendly world while

As positive outcomes begin to emerge in new business areas,

maintaining our business foundation and achieving stable

we have observed year-on-year growth in sales across our

medium-term growth, we must also set our sights on theexisting areas of nursing bottles and nipples. However, in terms

future. This entails boldly transcending existing boundaries

of fiscal 2023 performance, we encountered rapid changes in

to explore and cultivate new areas of opportunity.

the business environment early on, leading to challenging

Cultivating New Areas in 2023
(Individual Issue: Creating New Business)

President and CEO

A significant factor contributing to this was the decline inpurchases of Japanese brands observed in mainland China

In the inaugural year of the 8th Medium-Term Business Plan, ourduring the fourth quarter. Until the third quarter, we werefocus was on strengthening existing domains while venturing

progressing above the levels of the same period the previous

into new areas where Pigeon’s strengths could be harnessed.

year. With the end of the pandemic, we intensified our activities

Specifically, with respect to new areas, we are pleased toby actively investing in selling, general, and administrative

witness the emergence of fresh growth opportunities, fueled by

expenses. However, our business in China was forced toa diverse array of employee ideas and fostered by thedecelerate sharply due to the impact of the Advanced Liquid

development teams within each of the four business segments.

Processing System (ALPS)‒treated water released into the

For example, baby-care appliances have seen notable

ocean in late August 2023.

success in the Japanese market. Our electric nasal aspirator,

In fiscal 2023, net sales decreased 0.5% year on year to ¥94.4

launched in August 2023, has been well-received for its suction

billion, operating income decreased 12.1% to ¥10.7 billion, ordinary

power, comparable to devices used in ear, nose, and throat

income fell 14.4% to ¥11.5 billion, and net income attributable to(ENT) clinics, enabling efficient removal of baby nasal mucus. Its

owners of parent decreased 13.5% to ¥7.4 billion. This represents a

positive reception has resulted in strong sales. Moreover, sales

challenging start toward achieving the goals of our 8th Medium-of household appliances priced above ¥10,000, including bottle

Term Business Plan. However, at present, we have no intention ofsterilizers and dryers, have also risen, further bolstering ouraltering the Plan’s objectives. As mentioned earlier, last year saw

overall performance.

the emergence of new categories within each business segment,

In the Chinese market, we have expanded our core customer

and we have implemented measures to foster their growth thistarget demographic by focusing on toddlers, introducing

fiscal year. Furthermore, we are actively working to revitalize our(Materiality) that must be resolved to realize our Purpose.

skincare products for kids aged three and older. In addition, we

operations in China, which I will elaborate on later. Therefore, weAmid a rapidly evolving global business environment, we have

have launched products to facilitate a natural and smoothremain committed to achieving our initial targets by the final year of

established three fundamental strategies—Brand Strategy,transition from breastfeeding (using nursing bottles) to weaning

the plan. I firmly believe that with the collective creativity andProduct Strategy, and Regional Strategy—to achieve

and are actively promoting their adoption through aggressive

collaboration of every employee worldwide, our goals are entirely

Purpose: “We want to make the world more baby-friendly bysustainable growth while flexibly adapting to environmental

marketing efforts.

within our grasp. In today’s unpredictable landscape, where

furthering our commitment to understanding and addressingchanges. Furthermore, alongside strengthening existing

Products for prenatal and postpartum care, targeting

unexpected events are frequent, I advocate for focusing ourbabies’ unique needs.”

Formulation of the 8th Medium-TermBusiness Plan
The Pigeon Group conducts business with a dedication to ourbusiness areas, we are committed to actively restructuringmothers before and after childbirth, have experienced notable

resources and efforts on long-term milestones rather than short-

In February 2023, the Group announced the 8th Medium-our business by focusing on exploring and cultivating newsales growth, not only in North America but also in European

term revisions. In addition, by cultivating the ability to adapt flexibly

Term Business Plan, covering three years from the fiscal year

growth areas where the insights of the Pigeon Group can bemarkets, largely driven by our Lansinoh Business. This category

to unforeseen changes in the environment, we are adopting a moreutilized to their fullest potential.

presents a promising new area for expansion. We will further

pragmatic approach.

ending December 2023, following a review of the Key Issues

Data Section

Creating New Business Areas and a Long-Term Plan to
Realize Our Purpose

results that fell short of our initial plans.

Sustainability

Norimasa Kitazawa

Value Creation Story

bolsters our business in the short term. To truly fulfill ourbusiness onto a long-term growth trajector y, even if it

Message fromthe President and CEO

To further explore new territories, we have established the New

Introduction

worldwide total, indicating a sizable untapped market of

Sustainable Growth: The 8th
P. 20- TowardMedium-Term Business Plan

08

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

09

To Our S t akeholder s

Sowing the Seeds of Future Growth

employee who was in their first year at the Company when submitting
the idea. Furthermore, a temporary employee proposed the

Despite the volatile external environment, we are steadily

repurposing of nursing bottles filled with memories, which culminatedimplementing measures within our control, with some dynamic

in the launch of Bonyu Jikkan® Parts (straw and lid for nursing bottles)

changes emerging.

in August 2023, receiving incredibly positive feedback.

products and services conceived through innovative thinking, evenorganizational culture but also, coupled with a sense of sharedgiven uncertain market conditions. High-quality and intriguing new

purpose, leads to enhanced employee engagement. Starting fromproducts, tailored to local needs, are emerging in various

2024, the Human Resource Department has been transferred fromcategories across different regions. This is partly due to theunder the umbrella of the Japan Business to the GHO. Drawing

effectiveness of having development teams for each of the four

inspiration from the initiatives of overseas Group companies thatbusiness segments, enabling the swift market entry of goodlead in areas such as diversity and the active participation of female

products and facilitating a trial-and-error approach where

employees, we aim to incorporate employee engagement

subsequent actions are determined based on market feedback.

indicators into long-term incentives for executive compensation.

This background is supported by the ability to balance in-houseproduction with external outsourcing, without being fixated on
mass production, as well as the existence of diverse sales
channels. Various avenues for distribution, including baby specialty
stores, chain drugstores, and our own website, facilitate thedissemination of our products. This diverse array of channels alsochannels when a popular product gains traction.
In addition, a more significant change we have observed is
the increased vibrancy and dynamism within our organizational
culture. Having gone through the experiences of the COVID-19
pandemic, communication within our organization is now more
active and engaged than ever. Efforts to instill the Pigeon DNA
and the Pigeon Way have been ongoing, and with the update of
our corporate philosophy, the Corporate Branding team at theoffices to ensure thorough internal education on our Purpose
and Vision of a Baby-Friendly Future. These activities are now
carried forward by the brand management departments at each
local site. As a result, even with staff changes, we haveestablished an organizational foundation that consistently

recognized for excellence in health and productivity management.

To achieve stable medium-term growth, we will continue to focus on

No. 1 market share. We will also expand product categories,

brand and product strategies in fiscal 2024, working to strengthen

including new areas, while maintaining our commitment toexisting business areas and cultivating new areas globally.

growth investments.

P. 48-

Managing Talent and Cultivating theRight Culture for Our Purpose

Sustainability as Essential for Manifesting
Our Purpose

Our primary focus will be on the recovery of our business inWhile pursuing growth in each segment, we will effectively utilize

China. We will prioritize revitalizing sales and market share in

the assets of both the Lansinoh and Pigeon brands, ensuring the

When considering the world we aspire to build based on our

mainland China, actively executing growth investments. Despite

realization of synergies without cannibalization. The sales ratio ofPurpose, sustainability initiatives emerge as essential pillars. In

a declining birth rate trend there, it remains a vast market where

nursing bottles and nipples in the Lansinoh Business, originally

recent years, we have been advancing sustainability disclosuresmore than nine million babies are born each year, making it afocused on nipple care for mothers, has already increased towhile also strengthening our internal structure through thecornerstone for Pigeon. In fiscal 2023, our mainstay nursing

around 8%. This demonstrates the strength of the Lansinoh brandestablishment and operation of the Sustainability Committee.

bottles and nipples maintained an annual market share above

and the product quality backed by Pigeon’s baby research,

We strive to reduce the environmental impact in all the

40%* and our skincare products retained their market share. We

achieved without additional marketing investments. Looking

countries and regions where we operate to leave a rich earth forwill continue to strengthen monozukuri (manufacturing) andahead, in the Japanese market, we will enhance the offering of

the future of babies born tomorrow, while also addressing

increase product unit prices in existing areas. Simultaneously, in

products supporting mothers, including prenatal and postpartums o c i e t a l c h a l l e n g e s t h at a f fe c t i n f a n t s a n d f a m i l i e s .

new business areas, we will strive for sustainable growth bycare, drawing on the expertise developed by the Lansinoh

Furthermore, within the Sustainability Committee, we havenurturing the toddler market segment. To facilitate the recovery

Business. This will drive further business growth in each market.

accelerated our efforts globally by addressing individual issuesof our business in mainland China, we will significantly* Pigeon research P. 24- Pigeon Group ʼ sbased on identified Key Issues (Materiality), monitoring thestrengthen investments in growth domains, particularly

progress of our environmental vision, the Pigeon Green Action

e-commerce, which accounts for more than 70% of our sales, as

Plan, and conducting quantitative analyses of climate-related

we aggressively pursue a comeback in fiscal 2024.

Business Strategy

Implementing Capital Policies Based on a
Solid Financial Foundation
Regarding finances, we maintain operational flexibility through debt-

In September 2023, we signed the pledge to support the UN

revisions in 2023, our mainstay nursing bottles have continued

free management. As of December 31, 2023, our cash and cash

Global Compact. In 2024, we plan to commence comprehensive

to maintain overwhelming market share, reaffirming theequivalents amounted to ¥34.3 billion. During discussions withhuman rights due diligence and strengthen our efforts in areas

strength of our brand. We are particularly delighted to have been

investors, we occasionally receive inquiries about our approach to cash

such as human rights, labor, environment, and anti-corruption.

able to leverage our strengths and uniqueness to achieve newposition. Pigeon aims to maintain reserves equivalent to two to three

In 2019, we introduced the Pigeon Frontier Awards (PFA), a program

I believe that working toward sustainability has a positive

value creation, including contributions from new business areas.

months of working capital for each business segment. In addition, as wethat recognizes innovative ideas from employees. From this

impact on Pigeon’s profitability. Moreover, engaging in

In 2024, we will continue to focus on leveraging Pigeon’s

have begun actively considering M&A opportunities, we do not currently

initiative, the “My Purpose Project” was launched, which focuses on

activities that contribute to societal sustainability is

research-and-development capabilities to generate new value,

perceive our cash position as excessive. Furthermore, our consolidated

our Purpose. This project encourages employees to engage inundoubtedly fulfilling for our employees. Our commitment toaiming to improve profitability.

payout ratio has exceeded 100% recently. We recognize the importancegroup discussions to define their individual purposes. In thesustainability has been highly praised externally, and we

Inventory levels, which posed a challenge for the Singaporeof aligning this with profit levels; thus, we are committed to further

engagement survey conducted in 2023, “empathy toward ourreceived an “AA” rating for the first time in the MSCI ESG

Business in 2023, are anticipated to normalize. We will now

improving performance in each business segment. Regarding returns to

Purpose” scored 3.8 out of 5. While there is room for improvement,

ratings, reflecting our efforts in this area. In Japan, Pigeon’s

concentrate on rebuilding via our nursing bottles, nipples, and skincare

shareholders, we plan to continue providing stable dividends in line withthis is not a poor result and reflects the success of our efforts to

educational program “Lessons for Learning About Babies,”

products. In nursing bottles and nipples, we will focus on further

the policy set forth in the 8th Medium-Term Business Plan.

promote understanding and awareness of our Purpose.

which is conducted nationwide for junior high school

expanding sales through the rebranding of high-profit wide-neck

Pigeon is dedicated to driving business growth by leveraging our

In addition, various ideas from the PFA have been linked to newstudents, received an Encouragement Award for fiscal 2023

bottles boasting exceptional functionality. In skincare, we will expand

strengths in research and development and implementing rapidbusinesses. In 2023, all three product ideas that made it to the final

in the Commendation for Companies Promoting Youththe product lineup of our Natural Botanical Baby series and enhance its

business expansion tailored to regional characteristics through ourscreening in 2022 entered the development phase. One of them is aExperience Activities organized by the Ministry of Education,

exposure. We will also utilize the official character of the Pigeon brand,brand and product strategies. We appreciate the ongoing support

mouth care product for the morning sickness period conceived by an

Culture, Sports, Science and Technology.

Howapipi, to again propel us onto a growth trajectory.

of all stakeholders as we move forward.

Commitment to Enhancing Employee
Engagement

risks and opportunities, along with reporting the results.

P. 32Pigeon Integrated Repor t 2023

Promoting Sustainability
Management

Data Section

In the Japan Business, even after implementing two priceunderstands and resonates with our Purpose.

10

In the Lansinoh Business, we will continue to focus on stable

Sustainability

Global Head Office (GHO) took the lead in visiting global group

growth in existing areas, centered on our mainstay products with

Value Creation Story

serves as a foundation for expanding sales rapidly across other

This is in our pursuit to be listed among the “White 500” companies

Priority on Recover y in Mainland China
Business in 2024

Message fromthe President and CEO

The initiative to actively incorporate ideas and concepts from
employees not only contributes to fostering a vibrant

Introduction

One aspect is the establishment of a system where employees
and development teams can continuously bring to market new

Sustainable Growth: The 8th
P. 20- TowardMedium-Term Business Plan
Pigeon Integrated Repor t 2023

11

Ini tia ti ves to Improve
C orpor a te Value

PVA — An Independent Performance Indicator Aimed at Enhancing Corporate Value

Formula: PVA = NOPAT – Cost of capital (Invested capital

WACC)

Our challenge is the recovery and growth of various PVA components
Currently, Pigeonʼs ROE is above WACC (our set value of 5%).
However, the main markets are suffering from market turmoil, a decline in the number of births, and soaring costs, among otherfactors, with the COVID-19 pandemic as the starting point. In 2023, sales in China slowed due to the release of ALPS-treated water and theCompany continues to face difficult conditions regarding business performance. Accordingly, the levels of PVA and its various constituent
indicators have been on a downward trend.
As the stock price level is generally in line with the trends of PVA and other KPIs, we recognize that the recovery and growth of PVA andits various PVA components is an important issue for improving corporate value.
(%)(¥ millions)25.0

14,00012,00010,000

15.0

8,000

10.0

6,000
4,000

5.0
0.0

2,000
2017/1

2018/1NOPAT (¥ millions)

2019/1

2019/12(11-month period)

PVA (¥ millions)

2020/12

ROE (％)

Future Initiatives

2021/12

ROIC (%)

2022/122023/120

Value Creation Story

Pigeon introduced PVA in 2013 as a tool to pursue three key elements simultaneously: profitability, efficiency, and growth acrossthe entire Group. The utilization of PVA extends not only to the overall Group but also to individual business segments andcompanies, with the achievement of PVA goals being incorporated into the compensation system for full-time Directors.
The adoption of PVA concepts and the dissemination of a PVA tree within the Pigeon Group have resulted in clearer
identification of areas for improvement and specific actions to enhance PVA. Furthermore, a common Group-wide
understanding of PVA leads to shared goals, which fosters greater collaboration among departments. In addition, the mindsetof employees, which used to be heavily focused on sales and profits, has been elevated to embrace concepts such as cash flow
management and corporate value. To promote the adoption of PVA, internal study sessions are organized not only for top
management but also for all employees, thereby ensuring their comprehension. By breaking down PVA into a tree-likestructure, as depicted in the diagram below, Pigeon aims to visualize how everyone ʼs tasks contribute to its various
components.
Pigeon utilizes the PVA tree to facilitate dialogue and discussions with stakeholders through external disclosure.

Message fromthe President and CEO

20.0

Introduction and Use of PVA

Introduction

Pigeon positions its unique Pigeon Value Added (PVA) as a key performance indicator based on added economic value.
PVA is calculated by deducting the cost of capital from net operating profit after tax (NOPAT) and expresses the financial
amount of corporate value generated through our business activities that exceeds the cost of capital. PVA is designed to assess
how efficiently limited resources such as funds and assets have been utilized to maximize returns. By evaluating the absolutevalue rather than the ratio, PVA helps prevent a diminishing equilibrium in business, ensuring a solid foundation for future growth.
Pigeon currently sets the WACC in the PVA calculation at 5%, but periodically (twice a year) the actual value is calculated. We
verify the reasonability of the set values (cost of equity is calculated on a CAPM basis). We will continue to consider theappropriate level of WACC through dialogue with investors and other parties.

Current Status Analysis

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).

Pigeon will promote the following initiatives to enhance corporate value through improvement of PVA and various KPIs, which
are important management indicators.

Improvement of PVA
Operating income

Consolidated
Top: December 2023 Target
Mid: December 2023 Results
Bottom: December 2022 Results*(¥ millions)Target 4,81 6
Results 3,480
Previous fiscal 4,6 1 7year (PFY)

Target 8,680
Results 7,508
PFY 8,537

Invested capital
Target 77,276
Results 80,559
PFY 78,38 1

Target 12,400
Results 10,726
PFY 12, 195

Income taxes

Common 5.0%
*The tax rate is 30%.
Note: Asset and liability items are averaged at the
beginning and end of the period.

Cost of sales

Target 3,720
Results 3,2 1 8
PFY 3,659

Working capital
Target 23,465
Results 23,8 1 1
PFY 23,966

Fixed assets

WACC

Target 100,000
Results 94,46 1
PFY 94,92 1

Target 51 ,800
Results 49,008
PFY 50,087

Trade receivables

SG&A expenses

Target 16,382
Results 15, 1 94
PFY 16, 1 14

Target 35,800
Results 34,726
PFY 32,638

Inventories

Target 34,872
Results 35, 1 1 5
PFY 33, 189

Target 14,050
Results 14,427
PFY 14,01 2

Cash and otherassets and liabilities
Target 18,940
Results 21,632
PFY 21,226

Target 6,967
Results 5,809
PFY 6, 1 60

Trade payables

・Utilization of PVA to examine the business portfolio and optimize the allocation of management resources
Various KPIs that are components of PVA are used to verify each businessʼs performance and examine the businessportfolio, aiming for an optimal business structure and the optimal allocation of management resources to achieve it.
・Efforts to reduce working capitalWith “invested capital,” one of the components of PVA, we will promote the optimization of capital efficiency, especiallyby properly managing inventories and reducing excess inventory, which will lead to further improvement of PVA.

Further promotion of stock price conscious management
・Incorporation of various performance and stock price indices into the calculation standards for executive compensation

The compensation calculation for directors (excluding independent outside directors) incorporates KPI progressevaluations such as PVA and ROIC and is designed to foster a high awareness of various management indicators and thecost of capital among the management team. In addition, to be in the “same boat” (sharing awareness of interests withshareholders), TSR as a stock price index is incorporated into the basis for the calculation of executive compensation, andwe will promote efforts to enhance corporate value over the medium to long term.
・Disclosure related to ESG and materiality, and enhancement of dialogue with our shareholders, investors, and other stakeholders
We will continue to enhance and improve the content of our disclosures, as well as that of our activities, to enhance thecorporate value of the Group. In addition, we will actively hold IR meetings, briefings, and other dialogues with various
investors and other stakeholders to promote a better understanding of our companyʼs situation and activities.
IR meetings with institutional investors
Status of Dialogues with Shareholders and Investors

12

Pigeon Integrated Repor t 2023

Data Section

PVA

NOPAT*Net sales

P.14 Value Creation Story

Sustainability

・Execution of various strategies (e.g., the 8th Medium-Term Management Plan) to improve profitability

PVA Tree for the Fiscal Year Ended December 2023

Total number of dialogues: 332 (fiscal 2023)
https://www.pigeon.com/sustainability/files/pdf/dialogue_shareholders2404e.pdf

Pigeon Integrated Repor t 2023

13

Value Creation Stor y

Corporate Philosophy (Foundation of Value Creation)

The Pigeon DNA and thePigeon Way practiced by
employees
Group total: 3,618 employees(As of December 31, 2023)(Materiality)

Japan
Business
Enhancing Business
Competitiveness and Resilience

Consolidated net assets:¥81.0 billion
Equity ratio: 77.2%(Fiscal 2023)
Reducing Our Environmental Impact

Know-how and intellectual property
derived from more than 60 years ofintensive research of nursing andbabyʼs sucking behaviors,
manufacturing, sales, and service
Brand value: US$564 million*

Contributing to the
Resolution of Social Issues*From Best Japan Brands 2024 (Interbrand)

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

Business foundation

Corporate governance P. 52

P. 19

billionGross profit ¥billionOperating income ¥billion

PVA

Information sharing and other activities
to support breastfeeding worldwide(including operation and support oflactation lounges and support for
promotion of human milk banks)

¥

P. 16

Babies are part ofeveryone ʼ s everyday life

billionROE% or more

ROIC% or more

Loose, friendly ties facilitating
easy cooperation around raising children

P. 20

Social Value

Singapore
Business

Creativity from babies brings
excitement to society

Environment
Realize the Pigeon Green Action Plan
Baby-friendly andeco-friendly monozukuri(manufacturing)P. 40
No barriers to raising children

SocialP. 20

Contribute to the resolution of social
issues surrounding babies and families
Support activities for babies
requiring specialized care(collaborative researchwith NICUs, products forpremature babies)

Pigeon Group ʼ s operating environment
Research and development,monozukuri (manufacturing)P. 45

Human resources
Foster human resources whoenhance corporate value

P. 18

P. 36

Quality (Pigeon
Quality Standards)

All babies are helped to develop and grow,regardless of the conditions of their birth

P. 48

A comfortable world where babies
are not troubled by environmental risks

Supply chain

Based on our Purpose, “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’

to address materiality while reducing environmental impact and solving social issues surrounding babies and their families in all the countries andunique needs,” the Pigeon Group has updated the Key Issues (Materiality) that we must address to foster a sustainable society through our

regions where we conduct business.

business activities and enhance our corporate value. Drawing upon our “sources of value creation,” which include human capital and financial
capital, we will harness our strengths to provide unique, high-quality products and services that solve areas of concern in child-rearing for babies

Data Section

Establishing SolidManagement Foundations

Net sales ¥China
Business

LansinohBusiness
Relationships of trustwith consumers,
business partners,
and medical
professionals

Final fiscal year of the
8th Medium-Term Business Plan

Unique products and services
that solve areas of concern inbaby care

Managing Talent and Cultivating
the Right Culture for Our Purpose

Vision of a
Baby-Friendly Future:
Six Faces of Society

Economic Value

Sustainability

Manufacturing capital

High-quality nursing bottles
and nipples that can be usedwith peace of mind, developed
based on intensive researchof nursing and baby ʼ ssucking behaviors

Long-Term Value
Co-Creation with Society

Value Creation Story

Intellectual capital

Corporate Value CreatedMessage fromthe President and CEO

Financial capital

Key Issues

P. 01

Introduction

Human capital

Purpose：We want to make the world more baby-friendly by furthering our commitment tounderstanding and addressing babiesʼ unique needs

Business Activities and Value Proposition

Medium-Term Business Plan

Sources ofValue Creation

Pigeon DNA•Pigeon Way

To make the world more baby-friendly, we, the Pigeon Group, aim to drive sustainable growth and enhance corporate value as a leading global
company in the niche field of baby products.

and their families worldwide. This includes providing nursing bottles and nipples, where we command the top global market share. Our mission is
14

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

15

Vision of a Baby-Friendly
FutureVision of a Baby-Friendly Future: Six Faces of Society

We want to make our world more baby-friendly.
We have depicted the “baby-friendly world” envisaged
in our Purpose in terms of the six faces of society.
We will introduce our activities working toward
the Vision of a Baby-Friendly Future in this report.

Babies are part of everyoneʼs everyday life
Create more opportunities to encounter babies in everyday life,
making everyone feel closer to them.

Loose, friendly ties facilitating easy cooperation
around raising children
Introduction

Foster more loose, friendly ties between parents and others tomake discussion and mutual aid easier, instead of leaving parents
to bear the entire burden of childrearing.

Creativity from babies brings excitement to society

Message fromthe President and CEO

Turn scenes from daily life into moments that encourage
creativity from babies, instead of seeing parenting as simply“child-minding.”

No barriers to raising children
Prepare flexible systems and career stages for employees having
and raising babies, instead of making them choose between
children and career.

Value Creation Story

All babies are helped to develop and grow, regardlessof the conditions of their birth
Reach out to ensure that all babies have the chance to develop, andthat their parents feel secure raising them, regardless of theconditions of their birth.

A comfortable world where babies are not troubled byenvironmental risks

Initiatives for Recycling Used Nursing Bottles

Lessons for Learning About Babies: For a Baby-Friendly Future
The trend toward nuclear families and an aging population, coupled with a declining birth rate, has led

fit onto “Bonyu Jikkan®” nursing bottles, eliminating the need for disposal. Thisto fewer opportunities for individuals to interact with babies from a young age, contributing to a lack ofinnovative solution enables families to preserve the cherished memories of theirunderstanding about childbirth and childcare in Japan. In response, Pigeon offers educational

baby nursing earnestly with their tiny mouths. The straw cap means babies canresources for its nationwide program, “Lessons for Learning About Babies: For a Baby-Friendly Future,”continue drinking at home with their favorite bottle using a straw, while the bottle

targeting junior high school students to cultivate their interest in and concern for babies, prompting

cap transforms the bottles into versatile containers for food, snacks, or smallreflection on their societal roles and encouraging proactive measures to create nurturing environments

items. Pigeon has received positive feedback from customers for these products.

for infants.

Furthermore, we are driving circular manufacturing practices both in Japan and

By December 31, 2023, around 27,000 junior high school students had participated in this program. In

abroad by collecting and recycling used nursing bottles (glass or plastic), nipples,some schools, Pigeon employees conduct visits to provide hands-on experiences, including holding

hoods, and caps, sorting them by material. Rather than solely creating products,

baby dolls, wearing pregnancy jackets for simulated pregnancy experiences, and testing baby strollers,

we are committed to thinking and acting for the future, aiming to build aaiming to deepen students’ understanding of babies and families.

Data Section

Pigeon has recently launched in Japan a new bottle cap and straw cap designed to

comfortable world where babies are not troubled by environmental risks.

Sustainability

Review business activities to eliminate environmental burden, and alert
society to the risks babies may face during their lives in the future.

Pigeon’s efforts toward junior high school students, who will carry the next generation, havegarnered recognition from external sources. Pigeon won the Encouragement Award for fiscal 2023 in
the Commendation for Companies Promoting Youth Experience Activities organized by the Ministry of
Education, Culture, Sports, Science and Technology. We remain committed to realizing a society that
fosters loose, friendly ties facilitating easy cooperation around raising children.

16

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

17

Toward Sustainable Growth

Pigeon Sustainable Action
Pigeon’s Purpose is to make the world more baby-friendly
by furthering our commitment to understanding

Pigeon Groupʼs Operating Environment <Risks and Opportunities in Sustainable Management>
Birth rate trends- Declining birth rate in key markets (Japan, China)*1- Increasing birth rate in the Africa region*1

Environmental issues- Accelerating global efforts to achieve a decarbonized society- Escalation and increased frequency of natural disasters- Transition to a circular economy- Marine pollution caused by microplastics- Biodiversity degradation

In order to create a baby-friendly future,
we aim to grow sustainably as an indispensable
part of society by reducing our environmental impact
and resolving the social issues that affect babies
and their families across all the countries and regions
where we operate, and by embracing the challenge ofIntroduction

new business endeavors.

Social issues- One in seven babies worldwide (more than 20 million annually)
is born with a low birthweight of less than 2,500 grams*2- More than 80% of the worldʼs 2.5 million newborns who dieevery year are of low birthweight*2- Consideration of local communities and human rights- Diversification of work styles

Rapidly changing business environment

Key Issues (Materiality)
Enhancing
Business
Competitivenessand Resilience
Reducing Our
Environmental*1 Source: United Nations “World Population Prospects 2022” https://population.un.org/wpp/*2 Source: UNICEF News, May 15, 2019 https://www.unicef.or.jp/news/2019/0071.html

ImpactIndividual Issues

2025 Goals- Supporting nursing babies- Supporting healthy baby skin development- Creating new businesses- Releasing products that exceed customer
expectations- Building resilient distribution systems- Reducing greenhouse gas emissions(Scope 1, 2, and 3)- Circular manufacturing- Using sustainable resources (paper and palm oil)

Importance to society High

Economic value

Social value

Outlined the Pigeon Groupʼs operating environment

Pigeon Integrated Repor t 2023

Managing Talent
and Cultivating
the Right Culture
for Our Purpose

Establishing SolidManagement
Foundations

Key Issues approved by the Board of Directors

18

the Resolution ofSocial Issues- Working environments that achieveself-fulfillment and growth- Ambitious organizational culture- Enriched investment in human resource
development- Promoting Diversity & Inclusion- Reinforcing Group governance- Reinforcing compliance- Reinforcing risk management- Dialogue with stakeholders

Exchanged insights
in the GovernanceCommittee (multiple times)

Importance to business HighAchieve our Purpose

Contributing to- New products and services for babies
needing support- Expanding the use of products designed formaternity hospitals- Promoting responsible procurement- Participating in and supporting communities

Review the process for Key Issues (Materiality)

Exchanged insights
in the Sustainability
Committee (multiple times)

Pigeon Green Action Plan (targets for 2030 and 2050)

and their families requiring specialized support, such as those admitted to theneonatal intensive care unit (NICU)
・Implement various activities to solve the issues surrounding babies and theirfamilies needing specialized support, including those in the NICU
・Improve and expand the use of products designed for maternity hospitals
・Promote responsible procurement in collaboration with suppliers, focusing on
human rights, labor, and the environment, and conduct CSR procurement surveys
・Conduct human rights due diligence
・Engage in various social contribution activities
・Take steps to become a motivating workplace where employees resonate with
the Companyʼs direction and proactively engage in their work・Improve scores in employee engagement surveys
・Foster an organizational culture that embraces challenges where each employee

can leverage their strengths to contribute to business expansion
・Hold the Pigeon Frontier Awards (PFA)・Increase investment in human resource development to implement measures

Data Section

Medium-Term Business Planand its implementation

・Work toward achieving the medium- to long-term environmental goals of the

Sustainability

In April 2019, we identified the Key Issues (Materiality) that we must address to foster the development of a sustainable society through our businessactivities and enhance our corporate value. The specific process entailed identifying social issues based on international standards and guidelines such as
ISO 26000, the Global Reporting Initiative (GRI) standards, and the Sustainable Development Goals (SDGs), as well as evaluation criteria from major
environmental, social, and governance (ESG) rating agencies, and pinpointing issues recognized by management. Based on our understanding of the social
and business environment, we also examined risks and opportunities and collated issues in our value chain. We then identified the Key Issues (Materiality) interms of their importance in building a sustainable society and their importance in our business from the perspective of enhancing our corporate value.
In 2022, we conducted a review of materiality given significant changes in our business and the social environment. The Sustainability Committee and
the Governance Committee engaged in discussions on multiple occasions to exchange insights aimed at establishing a foundation for value creation anddriving a business that balances both economic and social value while achieving our Purpose, “We want to make the world more baby-friendly by furthering
our commitment to understanding and addressing babiesʼ unique needs.” Five Key Issues that ought to be addressed over the medium to long term were
uncovered and subsequently approved by the Board of Directors in December 2022. These Key Issues, together with the medium- to long-term
environmental goals of the Pigeon Green Action Plan, serve as the guiding principles for achieving our 8th Medium-Term Business Plan through which wewill strive to create corporate value by realizing our Purpose and secure sustainable growth by working to achieve the SDGs.

Five
Key Issues

support for babies worldwide
・Expand skincare products by supporting healthy baby skin development
・Create new businesses aimed at growing operations
・Achieve net sales of at least ¥10 billion in new domains
・Establish resilient distribution systems to support childcare worldwide

・Develop new products and services to address the challenges faced by babies

Process for Identifying and Reviewing Key Issues (Materiality)

Key Issues (Materiality)

・Expand nursing bottles and other nursing-related products through nursing

Value Creation Story- Intensifying competition due to a growing e-commerce market- Diversification and increasing complexity of supply chain risks

Key Issues (Materiality) to Be Addressed in the Medium to Long Term to Achieve Our Purpose

Message fromthe President and CEO

In Japan and China, which account for a large portion of the PigeonGroupʼs sales, the decline in birth rates has accelerated, a trend
amplified by the COVID-19 pandemic. This decline continues even as
the prevalence of the infectious disease has normalized.
Nonetheless, there were still numerous markets the Group had not
yet entered, such as the Africa region, where birth rates are on an
upward trajectory, offering substantial opportunity for businessgrowth. Moreover, as climate change advances and natural disasters
become more frequent and severe, governments around the world
are increasingly committing to achieving a carbon-neutral society,demanding that companies take decisive action toward
decarbonization. Many countries are also now enforcing stricter
regulations on single-use plastics, while there is ongoing discussion
about an international treaty for preventing plastic pollution, driving
the rapid transition to a circular economy.
In addition to addressing environmental challenges, companies
are focused on initiatives related to human capital as a critical step inachieving sustainable growth. From a risk management perspective,
there is a growing expectation for companies to undertake activities
in respect of human rights not only for their employees but also foreveryone throughout the supply chain.

and addressing babies’ unique needs.

that grow the number of highly specialized personnel capable of adapting tochanges in the external environment
・Formulate the Personnel Development Policy and the Internal Environment
Development Policy
・Promote the creation of a workplace environment where employees understand andembrace diversity, implementing measures that allow each employee to work authentically・Strengthen corporate governance (Governance Committee)
・Conduct an annual evaluation of the effectiveness of the Board of Directors
・Convene the GHO Risk Management Committee at least once a year
・Implement Group-wide risk assessments annually・Implement Group-wide compliance training
・Conduct compliance surveys once every three years
・Engage in dialogue with the capital markets and focus on the recovery andgrowth of Pigeon Value Added (PVA) to enhance corporate value

For more information about our
Sustainability initiatives, please
visit these websites.

WebsiteESG Databook

https://www.pigeon.com/sustainability/
https://www.pigeon.com/sustainability/databook/

Pigeon Integrated Repor t 2023

19

Toward Sustainable Growth
The 8th Medium-Term Business Plan

The 8th Medium-Term Business Plan (2023–2025)

Existing Areas (Core categories)

To respond flexibly to the rapidly changing global business environment and ensure sustainable growth, we have been
advancing our 8th Medium-Term Business Plan since 2023, keeping in mind the Key Issues (Materiality) to address over the
medium to long term to achieve our Purpose.

Details of the Medium-Term Business Plan

“Toward Sustainable Growth: Restructuring of the business structure in
response to global economic, political, and environmental changes”

https://www.pigeon.com/ir/management/midplan/

Environment and Key Challenges

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

Product Strategy

Strengthen monozukuri (manufacturing), focus on core categories (nursing bottles, nipples, and skincare products),
and explore new areas

Regional Strategy

Strengthen autonomous business operation in each business unit, implement drastic structural reform to establish production and sales systems
tailored to market characteristics, improve efficiency and profitability, stabilize the supply chain, and prepare for expansion into new markets

New Areas
We will also focus on exploring and nurturing new growth areas where we canleverage the expertise the Pigeon Group has developed over the years. In the final
year of the current Medium-Term Business Plan, 2025, the Group aims to achieve
an increase in consolidated sales of ¥19 billion from 2022. Of this, approximately¥10 billion is expected to come from growth in new product categories such as
toddler products and womenʼs care products.
Furthermore, as part of our expansion into the new market of Africa, we will
begin by establishing a local subsidiar y in Kenya and proceed with sales
preparations.

Data Section

Brand Strategy*2 Pigeon research (POS nationwide stores specializing in baby products and pharmacy combined growthestimates, INTAGE Inc.)*3 Refers to our share within our target market segment, based on internal research

Sustainability

Basic strategies

Despite global growth in the baby skincare market, it remains a highly competitive field withnumerous competing brands. The Pigeon Group has established research bases in Japanand China, where we have been conducting fundamental research focused on baby skin for
decades. In addition, we are concurrently engaged in research and development aimed atcommercializing and mass-producing the insights and technologies gained. We aim toenhance the presence of the Pigeon brand by swiftly developing and introducing a high-value
product lineup of skincare solutions tailored to the needs of each market, ensuring optimal
skincare for babies. Our current market share in Japan is approximately 30%* 2, whereas in
China it is around 10%* 3. As such, there is ample room for expansion in the skincare category
worldwide, including Japan and China. While the current market share in the major countries
overseen by the Singapore Business is modest, significant growth opportunities exist.

Value Creation Story

130

Skincare products

Message fromthe President and CEO

The business environment surrounding the Pigeon Group has undergone significant and rapid changes in the wake of the COVID-19 pandemic.
Amid a global decline in birth rates, including in our key markets of Japan and China, we are facing rising costs due to surges in raw material
and energy prices, shifts in customer values and consumption behaviors, increased uncertainty about the global economic outlook, andheightened geopolitical risks. The pace of change worldwide is relentless, making future predictions extremely challenging.
On the other hand, out of the approximately 130 million births worldwide* 1 annually, the Pigeon Groupʼs reach is still around 30 million* 1, or
30%, considering the income levels and other factors in each country. Although there has been a temporary decline in global birth rates due to
COVID-19, countries such as China continue to have more than nine million births annually. China remains a vast market from an economic
perspective due to its economic strength. Moreover, in various Asian
Current Birth Coverage
Actual coverage iscountries and other emerging markets with high birth rates, we anticipate (estimated under the Pigeon brand)
around 30 million
the expansion and development of e-commerce, as well as increased
birthsconsumption due to economic growth, over the medium to long term. In
Worldʼs
57 million
addition, there are many markets worldwide the Group has yet to enter. In
annual births
73 million births
births inApprox.
in establishedparticular, the Africa region accounts for approximately 45 million births
untappedmarkets
markets
annually. We believe that by strengthening and deepening our businessmillionactivities in these existing and new markets, we can expect significant
growth in the future.
*1 Pigeon research
In the 8th Medium-Term Business Plan, we aim to further strengthen our core products in existing business areas by leveraging ourstrengths and competitiveness, guided by the three basic strategies of “ Brand Strategy,” “ Product Strategy,” and “ Regional Strategy.”Specifically, we will focus on enhancing nursing bottles, nipples, and baby skincare products and services to adapt to societal changes postCOVID. Furthermore, we will actively explore and cultivate new product categories, such as toddler products and womenʼs care products withhigh customer affinity, applying our strengths to expand our customer base. We will also proactively explore entry into new markets, including
the African region, to tap into and nurture new areas that will drive growth for the next generation.

Nursing bottles and nipples, commanding top global market share, are at the heart of the PigeonGroup, representing our origins and most significant products. Drawing from extensive researchfindings and competitive advantages, along with the trust of customers and healthcare
professionals worldwide, we strive to foster their growth into even more formidable categories.
We will continue our unwavering efforts in the field of breastfeeding research, and on the sales
front, we aim to bolster Group profitability by expanding the sales ratio of our mainstay wideneck nursing bottles, particularly in the Singapore market, and continue supporting
breastfeeding in various markets. Furthermore, in markets such as China where wide-necknursing bottles are already commonplace, we will strive to further expand market share.

Introduction

Theme for the 8th Medium-TermBusiness Plan

Nursing bottles and nipples

Strengthen Our Monozukuri

Implementation of structural reforms Sustained growth in existing areas and exploration and cultivation of new areas
Existing Areas
・Further strengthen nursing bottle, nipple, and baby skincare

product categories where we have a competitive edge
・Structural reforms in each business- Lansinoh and Singapore Businesses: Accelerate growth- China Business: Shift from high growth to stable growth- Japan Business: Improve profitability

New Areas・Expansion of core customer target groups-Toddlers, mothers to be, fathers
・Expansion of the target market- North America (Pigeon)- Africa region

Common to existing and new areas: Strengthen brand strategy and monozukuri

20

Pigeon Integrated Repor t 2023

For the Pigeon Group, which provides various types of value to babies andtheir families through our products, monozukuri (manufacturing) is afoundation for growth in both existing and new business areas, and it is a
crucial means of embodying the brand. Under the 8th Medium-TermBusiness Plan, to flexibly respond to the rapidly changing consumer values
and competitive market environment in the wake of the COVID-19
pandemic, we will further invest and strengthen our management
resources into a series of monozukuri activities, which includes enhancing
product planning and accelerating the product development process.
Pigeon Integrated Repor t 2023

21

Toward Sustainable Growth
The 8th Medium-Term Business Plan

Financial Targets and KPIs

Results of Initiatives in Fiscal 2023 (Plan Year 1)
Although the consolidated performance for the first year of the 8th Medium-Term Business Plan, fiscal 2023, fell short of expectations, results for the Japan
Business and the Lansinoh Business exceeded projections. While the performance of the China Business and the Singapore Business did not meet initialplans, we have seen solid progress in each segment regarding the initiatives to further strengthen existing business areas and explore and cultivate newareas based on the fundamental brand, product, and regional strategies of the Plan. In existing business areas, Group sales of mainstay nursing bottles andnipples grew year on year. In new business areas, sales exceeded ¥3 billion in the first year, focusing on childcare appliances in the Japanese market, toddler
products in the China Business, and womenʼs care products such as prenatal and postpartum items in the Lansinoh Business.
Regarding shareholder returns, we have maintained stable dividends, with the annual dividend for fiscal 2023 set at ¥76 per share (ordinary dividend of ¥76).

Group consolidated 3-year CAGR(¥ millions)

Net sales2022+6.2 %

Operating income

3-Year Growth Image

2025 (Final year of 8th MTBP)% of Total

Target% of Total

3-Year CAGR

Net sales

94,921100.0%

113,800

100.0%

6.2%

Cost of sales

50,08752.8%

57,300

50.4%

4.6%

Gross profi t

44,83447.2 %

56,500

49.6%

8.0%

SG&A expenses

32,63834.4%

40,500

35.6%

7.5%

Operating income

12 ,195

1 2 .8%16,00014.1 %

9.5%

Ordinary income

13,465

14. 2%

16,00014.1 %

5.9%

Net income attributableto owners of parent

8,581

9.0%

10,400

9.1%

6.6%(¥ millions)
150,000

Net Sales

Product Strategy

Existing areas: Sales of nursing bottles and nipples increased throughout the GroupNew areas: Launch of new categories and expansion of product lineups in eachbusiness (e.g., baby care appliances, age-up, and womenʼs care)

Regional Strategy

・Japan Business achieved improved profitability through price revisions
・Established our own subsidiary to develop the African market

2023
Sales in new areas

More than

3¥ billion

Operating Income

113,800
94,921

100,000

50,000Currency rates—FY12/22 results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50; 8th MTBP (assumed): US$1 = JPY 130.00 / CNY 1 = JPY 19.50

0Value Creation Story

Actual+9.5%

・Promoting activities to realize our Purpose on a global scale
・Baby-Friendly Future Vision Workshop (in-company)
・Selected as one of the “Best Japan Brands” for four consecutive years

Message fromthe President and CEO

8th Medium-Term Business Plan Targets

Brand Strategy

Introduction

Under the 8th Medium-Term Business Plan, the Pigeon Group aims for financial targets of a 6.2% CAGR (compound annual
growth rate) in net sales and a 9.5% CAGR in operating income over the three-year period, emphasizing both sales growth andsteady improvement in the operating margin.
In 2025, the final year of the Plan, we aim to achieve an operating margin of 14% or higher by implementing optimal tailoredprofit improvement measures to address the specific challenges of each business. We are also committed to investing inenhancing our manufacturing capabilities, which will serve as the foundation for sustained growth. Moreover, we will focus on
initiatives to improve operational efficiency in production and logistics and optimize the sales mix by emphasizing high-margin
product categories to boost the gross margin.
Regarding financial KPIs, we aim to achieve ROE of 14% or higher, ROIC of 15% or higher, and PVA of ¥7 billion or more in the
final year of the Plan. With this in mind, we will work on improving capital efficiency and cash flow through initiatives such as
reviewing inventory levels to reduce working capital.

Baby care appliances

12,19516,0002022 Results

2025 Target

Womenʼs care products

Age-up products

Forecast for Fiscal 2024

Shareholder Return Policy
Under the 8th Medium-Term Business Plan, our basic policy is to continue stable dividend payments by maintaining current dividendlevels along with further improvement in consolidated performance and financial condition. In addition to strengthening our financial
position, we effectively use retained earnings in several ways to fortify our operational base, improve future Group earnings, andfurther enhance corporate value. These include investing in new businesses and research and development, as well as investing in
production facilities to raise production capacity, reduce costs, and boost product quality, all aimed at driving greater growth.

Sustainability

In fiscal 2024, we will continue to strengthen existing business areas while exploring new opportunities globally. A key objective for this period is torevitalize sales in the China Business, necessitating significant investments for growth. Our overarching aim is to drive revenue and profit growthacross the Group. Furthermore, we are committed to sustaining the momentum achieved by our Japan and Lansinoh businesses in the initial yearof the 8th Medium-Term Business Plan, as they continue to implement strategies aligned with their targets for the second year. The Singapore
Business will concentrate on maximizing its core product offerings and implementing various initiatives to regain a growth trajectory in 2024.
Regarding shareholder returns, we plan to maintain stable dividends in fiscal 2024, with an expected annual dividend of ¥76 per share (ordinary
dividend of ¥76).

Please refer to the following document for the performance outlook and business strategies for 2024.
https://www.pigeon.com/ir/files/pdf/kessan20240215_e.pdf

Data Section

WebsiteFinancial Indicators and Shareholder Returns
Net Sales(¥ billions)
120
100

Operating Income/Operating Margin

101.0
94.9

113.8

（%）

(¥ billions)
20

12.8

94.4
15

80

12.1
10

60

Return on Equity (ROE)

14.1
11.4

11.3

10.7

11.4

16

(%)
15

Return on Invested Capital (ROIC)
14.0

11.4
16.0

12

9.6

10

10.0

15.0

(%)
15

9.3

10.0

8
5

40

22

Pigeon Integrated Repor t 2023

0

（%）

120

122.6

119.8

100

80

76

76

76

80

60

38

38

38

60

20

2023 result 2024 forecast 2025 target

106.1

Dividend Payout Ratio (Year-end)

40

40

5

20

2022 result

Dividend per Share (Year-end)
Dividend per Share (Interim)

4

5

0

(¥)
120
100

10.9
10

Cash Dividend per Share/Dividend Payout Ratio

2022 result 2023 result 2024 forecast 2025 target

002022 result

2023 result 2024 forecast 2025 target

02022 result

2023 result 2024 forecast 2025 target

0

38

38

38

2022 result

2023 result

2024 forecast

20
0

Pigeon Integrated Repor t 2023

23

Business Summaries by Segment
Japan BusinessJapan Business

Our Competitive Edge

This segment consists of baby care, childcare services, health & elder care, and others.

Market Trends and Business Environment

Fiscal 2023 Performance and Highlights

Pigeon Integrated Repor t 2023

PIGEON HOME PRODUCTS CORPORATIONʼS New Factory

Looking Ahead
Data Section

24

POCHItto Bottle
Sterilizer and Dryer

Pigeon Home Products Corporation, responsible for producing key product categories for
the Pigeon Group, such as skincare products, has completed a new factory in Fuji City,
Shizuoka Prefecture. This new facility consolidates the previous Factory No. 1 and FactoryNo. 2 and began full-scale operations in September 2023. Aiming to create customer
value with new skincare products and other items, the new factory will focus on
strengthening its development system, increasing production capacity, andimplementing environmental measures. Efforts will be made to enhance thedevelopment system by expanding new research-and-development facilities andincreasing the number of development personnel, enabling the development andproduction of better products for customers. In addition, consolidating the previously
separate factories into one will improve production efficiency and increase profitability.
Moreover, the factory will be open to the community through tours, aiming to enhancecommunication with customers, thereby increasing brand presence and driving further
growth in the baby skincare category.

Sustainability

SHUPOT Electric Nose Cleaner

Completion of New Pigeon Home Products Factory

Value Creation Story

Net sales increased 1.5% year on year to ¥36,865 million and segment income increased 34.5% to ¥2,006 million due to pricerevisions that boosted profits despite higher procurement prices and other factors. In the Baby Care Business (childcare andwomenʼs care), net sales grew year on year, buoyed partly by price revisions implemented in February and September on babyrelated products such as nursing bottles and nipples. Sales of core products such as nursing bottles, nipples, and baby skincare
products, as well as of consumables such as baby wipes, were favorable, benefiting from reinvigorated sales efforts. In August
2023, the Baby Care Business launched SHUPOT, an electric nose cleaner that quickly draws out mucus that can collect at the backof babiesʼ noses, and Bonyu Jikkan® Parts, a product series that enables mothers to repurpose the nursing bottles that are so filledwith memories. These products were extremely well received by customers. Also, for our official online shop, we are working tofurther invigorate sales by improving convenience through strengthened collaboration with online shopping malls, and by
expanding our lineup of limited edition products. Furthermore, as part of our efforts for direct communication, we held online
events such as breastfeeding seminars for mothers who are about to give birth and a Pigeon seminar for medical professionals on
the theme of “ breastfeeding childcare as part of intimate childrearing for mothers and children.” More than 2,000 people
participated in the seminars. For the general public, we held online and offline exhibitions on “babies and families requiring
specialized care” in an effort to raise awareness on this topic. For Pigeon Info, aSales of the Japan Businesswebsite supporting women during pregnancy, childbirth, and childcare, in addition to(¥ millions)
50,000
updating product information, we are continuing to make improvements aimed atbringing even greater convenience to customers.
40,00036,86536,44036,323
In products for health and elder care, we implemented price revisions in February
30,000and September for some products. Pigeon also continued to revitalize its Habinurse
elder-care brand. The brand launched products such as Liquid Thickener—Simply Add,
20,000a product that adjusts the viscosity of foodstuffs and can be used even in carbonated
10,000beverages. Regarding childcare service, we currently provide services at 61 in-company
childcare facilities and will continue to further develop this business while striving to0
Dec.
Dec. 2024
Dec.
improve the quality of the service content.
2022
Target2023

Message fromthe President and CEO*1 According to National Vital Statistics Reports for 2023 (approximate)*2 Summary of Statistics Bureau of Japanʼs “Labor Force Survey (Basic Tabulation), Average for 2023”*3 White Paper on Aging Society 2023, Cabinet Office, Government of Japan

Introduction

In Japan, the birth rate hit a record low of 727 thousand births in 2023* 1, and it is expected to continue gradually declining. At the sametime, with the overall female employment rate in Japan at 53.6%*2, there are growing expectations in Pigeon for childcare support.
Furthermore, the proportion of the population aged 65 and older (aging rate) has reached 29.0%*3, indicating the ongoing trend of
population aging.

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 in Japan. We have used
these findings to develop numerous high-quality products. Pigeon is widely recognized as a leading brand in the industry and enjoys
overwhelming customer support with a market share of more than 85% of the nursing bottle market in Japan. Leveraging this robust
brand influence, we have successfully diversified our product offerings across various categories, securing and sustaining top market
positions. As a result, despite the continuous decrease in birth rates since the 1970s, we have been able to steadily grow ourperformance in the Japanese market. We have earned a reputation for safe, secure, and reliable products through our baby andchildcare offerings. Deploying this brand strength, we are building our childcare service
business, which includes contracted operation of in-company childcare centers, under
the principle that “childrenʼs growth is our first priority.” Known for our unparalleledknowledge concerning babies, the Pigeon Group is constantly expanding and improving
the quality of its childcare services, earning the trust of our users. To support the elderly,
we are enhancing our efforts through the development and active market penetration of
new competitive products. Leveraging our product planning capabilities and high-level
Bonyu Jikkan® Series
quality control honed in baby products, we aim to accurately address unmet needs.

In the Japanese market, where a declining birth rate is expected to continue, we will continue efforts to enhance profitability
through the creation of new value by leveraging our strengths and uniqueness. In childcare and womenʼs care, we are focused on
two categories: breastfeeding support centered on nursing bottles and nipples, the Groupʼs core offerings where we command top
global share, and baby skincare, where significant market opportunities continue to exist. We are committed to expanding ourbusiness by boosting sales and improving market share. In addition to introducing new value propositions such as My Bonyu
Jikkan®, which offers 150 customizable options for nursing bottles and nipples, we are deepening our research into baby skin toenhance our skincare capabilities. We are also further strengthening our research-and-development system centered on the
newly completed factory by Pigeon Home Products. In addition, in response to the increasing number of dual-income households
in recent years, we will continue to create new product categories such as childcare appliances to alleviate the burden on busy
families raising children. By consistently offering innovative childcare solutions that meet the needs of the times, we aim toenhance profitability in the Japan Business.

The Tiny Birth Cry Support Project

Pigeon Integrated Repor t 2023

25

Business Summaries by Segment
China Business

China Business

Our Competitive Edge

The China Business includes our operations in mainland China, Hong Kong, and Taiwan, as well as other countries and regions such as
South Korea, the Philippines, and Mongolia. Approximately 90% of total sales in this segment come from mainland China.

Market Trends and Business Environment

Source: Compiled and created by Pigeon based on Statista data

26

Pigeon Integrated Repor t 2023

Skincare Products for Kids

Natural Weaning Series*2 Pigeon research (Sell through, in value, of nursing bottles and nipples)

Looking Ahead
The annual birth rate in mainland China peaked at 17.86 million in 2016 and has since continued to decline. However, amid a medium- tolong-term trend of increasing disposable income across China, consumer concerns about selecting the best childcare products fortheir precious babies have intensified. Short-term performance fluctuations have occurred due to factors such as the spread of
COVID-19 and the impact of Japanʼs ALPS-treated water release on consumer sentiment toward Japanese brands. Nevertheless,significant long-term growth opportunities persist, and our positioning of this market as one of the most crucial for the Group remains
steadfast. Against this backdrop, to ensure sustained growth, we will first focus on investing rigorously in growth areas to revitalize our
performance in mainland China. We will strive to solidify our position as a top brand and further strengthen our foothold in the market.
Specifically, we will focus on executing growth investments and strategies in our core categories of nursing bottles, nipples, andskincare. Our aim for nursing bottles and nipples is to achieve a 50% market share, while actively pursuing the creation anddevelopment of new categories, including those catering to older babies, to further expand our business. In terms of sales, in addition
to proactive investments in emerging platforms within the expanding e-commerce landscape, we will focus on direct communication
with consumers through social media platforms such as live streaming. This approach will enable us to explore local needs, enhancebranding, and improve sales effectiveness. Furthermore, as we continue to strengthen in-store promotions, expedite the placement of
new products, and sustain our activities in maternity hospitals, we remain committed to driving growth in the China Business.
In addition, in the South Korean market where our Double Heart brand is widely recognized and e-commerce sales constitute themajority, following the fundamental revisions to our distribution system in 2023, we will continue to enhance e-commerce sales
alongside expanding our product lineup to grow our business. Meanwhile, we are leveraging the expertise and resources gained frommarketing and e-commerce in the Chinese market to strengthen efforts aimed at enhancing brand awareness and value in the North
American market, where we commenced sales in 2022.

Pigeon Integrated Repor t 2023

Data Section

Training Master Series

PIGEON MANUFACTURING (SHANGHAI) Factory

Sustainability

Net sales in this segment amounted to ¥33,045 million, down 5.0% year on year, and segment profit decreased 14.9% to ¥8,858 million.
In mainland China, particularly in the second half of the year, net sales in local currency terms were down year on year because ofdeteriorating economic confidence, increased awareness for saving, and a tendency to refrain from purchasing Japanese products dueto the release of ALPS-treated water into the ocean. On the other hand, in addition to core baby products, we made concerted efforts toextend the utility of many products to older children, which Pigeon is working on as part of our efforts to respond to the declining numberof births and to expand our customer base. These efforts are already producing good results, with strong sales including increased salesof the Natural Weaning Series of nursing bottles for older babies, launched in June 2023, and skincare products for children, rolled out at
the end of 2022. In consumer communications, the Group took several steps to drive
Sales of the China Businesssustained business growth. The Group strengthened sales through Douyin, the mainland(¥ millions)
50,000China version of the short-video platform TikTok, and made active use of digital marketing
tools such as social media and live broadcasts. The Group also reinforced sales
40,00037,70034,77633,045promotions at brick-and-mortar stores and activities at hospitals and maternity clinics.
30,000In South Korea, where Group operations are managed through this segment, thePigeon Group began reorganizing its distribution framework during the fiscal year. Using
20,000local sales subsidiaries as its base, the Group is strengthening sales and marketing
10,000efforts in South Korea, seeking to attract new customers and reinforce relationships withexisting customers. Finally, the Group continued to strengthen efforts to boost sales of0
Dec.
Dec. 2024
Dec.
baby products under the Pigeon brand in the North American market.
2022
Target2023

Breastfeeding Consultation

Value Creation Story

Fiscal 2023 Performance and Highlights

Message fromthe President and CEO*1 Sell through, in value

Maternity Class

Introduction

Although there has been a downtrend in the number of births in China since 2016, which has been further exacerbated by the COVID-19
pandemic, the country remains a huge market with 9.02 million births in 2023, according to the National Bureau of Statistics of China.
We recognize that the growth opportunities for our business in the Chinese market remain large, as Chinaʼs overall disposable income
continues to increase over the medium to long term, and consumer interest in the functionality and safety of products continues togrow. Furthermore, as a new generation of families in a digital-native
Chinaʼs Live Commerce Market(Yuan billions)era emerges, we are witnessing a significant shift in consumer
6,000
behavior toward e-commerce. Recently, with the substantial growth
4,914.4
5,000of the live commerce market—which merges e-commerce with live
4,000
3,487.9
streaming — Pigeon is adapting flexibly to this trend. The
3,000
2,269.7
e-commerce channel in mainland China for this business has further
2,000
1,237.9
increased through the COVID-19 pandemic, accounting for
1,000
416.8
120.5
0
approximately 70% of total sales there in 2023*1.
2018
2019
2020
2021
2022
2023 (year)

Since entering the Chinese market at scale in 2002, Pigeon has fortified its businessfoundation, outpacing competitors. Through various strategies such as enhancing
branding, developing products tailored to local consumer needs, establishing an end-toend supply chain within China, and fostering trust in the brand through engagements inmaternity hospitals and collaboration with healthcare professionals, we have driven
business expansion here as a growth driver for the Pigeon Group. Our strength in the
Chinese market stems not only from our strong reputation as a safe, reliable, high-quality
brand for baby products but also from our extensive sales force offering more than 500
diverse products, including nursing bottles and skincare items, across the entire country,
from coastal to inland regions. Furthermore, our establishment of breastfeeding
consultation rooms in major hospitals nationwide and partnerships with maternity
hospitals have effectively raised awareness of the benefits of breastfeeding. As a result,
our nursing bottles have secured the top brand position in mainland China*2, contributing
to the widespread recognition of Pigeon as a leading brand in the country. Despite therapid advancement of e-commerce, facilitating market entry for competitors in the baby
products segment, our position as the leading brand has been further solidified throughendorsements from healthcare professionals and specialists who acknowledge thesuperior functionality and quality of our products, as well as positive feedback fromsatisfied users.
This segment is characterized by having both production facilities and sales
companies for core products within China. This allows us to establish an efficient
production and supply system, resulting in high profit margins within the Group. Our
self-owned factories in Shanghai and Changzhou City, Jiangsu Province, incorporate
the latest technologies to streamline operations and improve product quality,
ultimately enhancing profitability. We are also addressing the increased costs
resulting from our manufacturing activities and prior investments in e-commerce
through production improvements.

27

Business Summaries by Segment
Singapore BusinessSingapore BusinessLooking Ahead

The Singapore Business oversees operations in various regions, including ASEAN nations such as Singapore, Indonesia, and Malaysia; India;
Middle Eastern countries including the United Arab Emirates; Oceania; and others, including South Africa, as well as emerging nations.

Market Trends and Business Environment
Birth Rate by Country (2021)* 1
23,114

India
Indonesia

4,496
1,463

Vietnam

644

Malaysia

511
0

5

25

(Thousandsof births)*1 Source: Prepared by Pigeon based on UNICEFʼs core report “The State of the Worldʼs Children 2023 (executive summary)”

Fiscal 2023 Performance and Highlights

20,00014,15313,08514,00012,000
8,000
4,000
0

Dec.
2022

Dec.
2023

Dec. 2024
TargetPigeon has been promoting business in India since 2009, establishing sales companies andfactories locally. Besides concentrating on major cities, we have been flexibly evolving oursales and distribution system in response to changes in consumer purchasing behavior andmindset resulting from the COVID-19 pandemic, including the implementation of localized
sales strategies. We are also focusing on raising awareness of the Pigeon brand throughcollaborations with maternity hospitals. On the production front, we have developed andlaunched stainless steel baby bottles that cater to the cultural preference for stainless steel
tableware in India, as a unique initiative of our local factory. This is just one example of ourefforts to expand business while strengthening our local manufacturing capabilities tosupport mothers in their breastfeeding journey.

Sustainability

Hospital Activity

Indonesia
Website of PIGEON SINGAPORE PTE. LTD.

Our Competitive Edge
In Southeast Asia and the Middle East, 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 our research into feeding and infant development in Japan, as well as the cooperation of local
partners with whom we have built relationships of trust over many years. Our nursing bottles command top market share*3 in Indonesia, Singapore,
Thailand, Vietnam, and Saudi Arabia. Nursing bottles are one of the first products acquired for childcare, and the strong brand presence established inthis category is highly effective for expanding into other product categories. In the Singapore Business, we have production facilities in two locations inThailand as well as in Indonesia and India. These factories adhere to the strict quality standards set by the Pigeon Group to enable the production of safeand high-quality products. They also serve as production and supply hubs for the entire Group, not only focusing on safety but also continuously striving
to improve production efficiency. They play a significant role in enhancing our cost competitiveness in the markets where we operate. In recent years,
we have been steadily enhancing our product development capabilities to address local needs, alongside strengthening our workforce, by launching
new skincare series that respond to increasing environmental consciousness. Furthermore, in this segmentʼs sales areas, we are progressing withchannel strategies that can adapt to the increasing demand for e-commerce, including strengthening digital marketing efforts.

Pigeon entered Indonesia in the 1980s and has built a distribution network covering almost theentire country with the support of local partners. By entering the childcare products market at
an early stage and establishing successful collaborations with multiple national hospitals, ourbrand awareness in Indonesia has significantly increased. On the sales front, we established a
new sales company in 2019 with the aim of creating procurement and sales processes tofurther expand our product lineup and boost profitability, as part of our initiatives to increasebusiness in the Indonesian market. In the nursing bottle category, Pigeon has already captured
more than 40% market share in Indonesia*4, and we have continued to see growth in sales ofour higher-priced premium wide-neck bottles. In other product categories, we are working on
developing products targeting the upper-middle to premium class sectors by enhancing pricecompetitiveness through collaborations with reputable local suppliers who meet our stringent
quality standards. In production, we consolidated the factory established in a joint venturewith a local partner in 2017 as a subsidiary. In 2021, we further strengthened production
capabilities and expanded our lineup through facility upgrades and expansions. We willcontinue to focus on improving production efficiency and ensure business growth in Indonesia
as one of our key markets in this segment.

Data Section*2 T-Ester is a registered trademark of Mitsubishi Gas Chemical Company, Inc.

India

Sales of the Singapore Business(¥ millions)

16,000

Value Creation Story

In this segment, net sales amounted to ¥13,085 million, down 7.5% year on year, and segment profit
was ¥1,235 million, down 42.3% year on year. This segment is primarily responsible for operations in
the ASEAN region and India. Net sales declined year on year amid a rebound due to the rising demand
from the rapid recovery of the previous year, along with continued shipping adjustments, as
COVID-19-related restrictions were lifted in major markets. In the core product categories that thisbusiness is focusing on, the Group introduced new nursing bottles, which are already available in the
Chinese and Japanese markets, and then expanded the sales area. The Group also worked to further
expand the product lineup and to strengthen sales and distribution with a focus on nursing bottles
made with T-Ester*2 , a new plastic as transparent as glass, and on the Natural Botanical Babyskincare series, produced with natural ingredients to be gentle on babiesʼ skin and friendly to theenvironment. We continue to advance the development and launch of products that meet the needsof each market for the upper-middle class and higher-income brackets; for example, we renewed
manual and electric breast pumps and launched products tailored to market characteristics. With
the aim of achieving market penetration and strengthening Group brands, we will implement
proactive sales and marketing activities, including improving in-store appeal, strengthening social
media response, and expanding communication with hospitals and maternity clinics.

Message fromthe President and CEO

ThailandIntroduction

Approximately 130 million babies are born worldwide every year. The Singapore Business
operates primarily in Indonesia, which has an annual birth rate of around 4.5 million* 1, andIndia, which surpassed China in 2023 to become the worldʼs most populous country and has
an annual birth rate of around 23 million*1. Due to the expected economic growth in addition
to the high birth rates in these countries, we have positioned Indonesia and India as key
markets to focus on, aiming to make them growth drivers for the Group following the Chinese
market. In addition, in the regions where the Singapore Business operates, there is an
expanding middle class with annual disposable income ranging from $5,000 to $35,000
owing to economic growth. This suggests that the target demographic for Pigeon, including
the upper-middle class (with income levels exceeding $12,000), is poised to grow further.

In our sales areas for this segment, we encounter a diverse range of ethnicities, languages, religions, and cultures, as well as a significant
presence of emerging markets. This results in varied consumer price categories that hold substantial market volume. Given this context, wehave positioned the upper-middle to premium tiers in each market as priority targets, focusing our management resources on the Groupʼscore products of nursing bottles, nipples, and baby skincare, to drive business growth. In the nursing bottle category, while we are currently
gaining market share, in many emerging countries, sales of slim-type nursing bottles, which tend to be relatively low-priced, have become
mainstream. We intend to strengthen various activities to increase the sales ratio of higher-priced and functionally superior wide-necknursing bottles. We will further promote and ensure that more customers understand the added value, such as the quality and functional
advantages, derived from more than 60 years of research. By strengthening support for breastfeeding in each market, we aim to improve
the profitability of this segment. Furthermore, for baby skincare, which we expect to be another pillar following nursing bottles, we arefocusing on nurturing the category to acquire market share primarily by strengthening the development of products tailored to local needs
and expanding the product lineup. In addition, we are continuously strengthening our product development capabilities in this segment. We
are deepening our understanding of consumers in each market and steadily building a production system that can swiftly release productsthat meet their needs. Moreover, given the increasing demand for e-commerce in each country, we are advancing marketing strategies thatcan finely adapt to changes in consumer behavior and regional characteristics. This includes strengthening our digital marketing efforts.
Furthermore, as mentioned earlier, the four factories in this segment also produce goods for other businesses within the Pigeon Group.
Therefore, the operational status and cost improvements at each factory are important issues for the entire Group. By improving production
efficiency at the factories and optimally restructuring the supply chain, we aim to flexibly respond to fluctuations in raw material prices andlogistics costs, thereby achieving stable production and improving profit levels.

Natural Botanical Baby skincare series*4 Pigeon research*3 Pigeon research

28

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

29

Business Summaries by Segment
Lansinoh Business

Lansinoh Business

Our Competitive Edge

Market Trends and Business Environment
Birth Rate by Country (2021)*2
UnitedStates3,723

Turkey1,245
763

UnitedKingdom

677

France

677
0

20

40

(Thousandsof births)*1 Source: The National Center for Health Statistics (NCHS) in the United States*2 Source: Prepared by Pigeon based on UNICEFʼs core report “The State of the Worldʼs Children 2023 (executive summary)”

Message fromthe President and CEO

Germany

Introduction

In the United States, the main market for the Lansinoh Business, demographics haveremained relatively stable. However, with many choosing to postpone their plans ofstarting a family due to the COVID-19 pandemic, the number of births in 2023 reached thelowest level since 1979. The number of births decreased 2.1% from the previous year*1 witha total fertility rate of 1.62 (provisional)*1, showing a downward trend.
In Europe, although the total fertility rate in major countries is declining, certain
countries are focusing on measures to address the issue of low birth rates. In addition, notonly in the United States and Europe but also globally, awareness of the importance ofbreastfeeding and its medical and economic benefits is increasing every year.
Consequently, demand for breastfeeding-related products is steadily rising. There is alsoa growing awareness of womenʼs care, including during pregnancy and childbirth,
indicating that the market where this segment can contribute is expanding further.

Acquired as a subsidiary in 2004, LANSINOH LABORATORIES, INC. (“Lansinoh”), has been
providing comprehensive solutions for breastfeeding for more than 35 years through a rangeof unique and innovative products backed by research and trusted by professionals since its
founding in 1984. Today, Lansinoh-brand products are enjoyed by customers in more than 85
countries and regions, including North America (United States, Canada, and others), Europe(United Kingdom, Germany, Belgium, and others), China, Turkey, and Central and SouthAmerica. In the United States, Lansinohʼs primary market, the brandʼs nipple care cream,
breast pads, breast milk storage bags, and other products have achieved the No. 1 market
share*3 in their categories, earning strong support from customers as a leading brand ofbreastfeeding products. Leveraging this strong brand power, we have actively expanded ourbusiness in recent years not only in North America and Europe but also in Asia, including China,
aiming to increase market share in each country. Lansinoh is particularly proactive indeveloping new areas within the Pigeon Group, with prenatal and postpartum care products
planned and developed by Lansinoh seeing growth in sales in the United States and Europe,and being introduced to the Japanese market under the Pigeon brand.
In production, our in-house factory in Turkey is dedicated to the development andproduction of Lansinohʼs mainstay breast pumps, enabling us to establish a flexible supply
system tailored to the needs of markets in North America, Europe, and various Asian
countries.

LANSINOH LABORATORIES MEDICAL DEVICESDESIGN INDUSTRY AND COMMERCE LTD. CO.
(In-house factory in Turkey)

Value Creation Story*3 Pigeon researchFiscal 2023 Performance and Highlights

30

Pigeon Integrated Repor t 2023

Lansinoh has established a strong position globally as a leading brand in breastfeeding-related products. It is widely supported
by mothers and healthcare professionals across the United States, particularly for its nipple care cream. In addition, essential
products such as breast pads and breast milk storage bags, as well as innovative items including wearable breast pumps forhands-free pumping and products for hospitals and maternity clinics, contribute to Lansinohʼs esteemed reputation. We willcontinue to focus on the value and tradition of Lansinoh breastfeeding productsʼ brand, which has been widely supported over
the years, and work on expanding these existing business areas. We will also extend the Lansinoh brand into new areas such as
womenʼs health and continue to invest in growth through product development. By doing so, we aim to evolve the brand to alignwith changing customer values and contemporary needs. As part of these initiatives, we are already working on the prenatal
and postpartum care category, expanding the product lineup and exploring new markets to nurture it into a future businesspillar. Moreover, Lansinoh will lead the Pigeon Group in the research and development of womenʼs care products, significantly
contributing to the creation of synergies.

Data Section

Wearable Breast Pump

Looking Ahead

Sustainability

Net sales in this segment amounted to ¥18,480 million, up 9.2% year on year, while segment profit surged 25.9% to ¥1,453
million. North America and Europe, two vital markets for the segment, saw some calming in the disruption that had continued inmarine logistics. Even so, there was still impact from persistently high logistics costs
related to land transportation, especially in North America. In North America, net
Sales of the Lansinoh Businesssales fell year on year in local currency terms, as market competition for consumables(¥ millions)such as breast pads intensified and special demand for our products ran its course,
19,40020,00018,480following the end of a shortage of powdered milk supplies in the United States that
16,917
16,000
had occurred intermittently since 2022. Meanwhile, sales were strong in Europe,
notably in Germany and the United Kingdom, paced by nipple care creams, a core
12,000product line. As a result, net sales for the entire segment were up year on year. In
8,000
addition, in North America and Europe, sales of the new category of birth preparation
and recovery products have been performing well, benefiting from proactive
4,000
promotional activities and investment efforts. Furthermore, sales of nursing bottles
0and nipples, which incorporate more than 60 years of Pigeon ʼs research-andDec.
Dec.
Dec. 2024
2022
2023
Targetdevelopment expertise, have been steadily increasing under the Lansinoh brand.

Prenatal and Postpartum Care Products

Pigeon Integrated Repor t 2023

31

Promoting Sustainability
Management

Pigeon ESG/SDGs Policy

Key Issues (Materiality)

Director, Senior Managing
Executive Officer
Head of Global Head OfficeOutside Director
Chairman of the Board

Reducing Our
Environmental Impact

Implementing the Pigeon Green Action Plan aimed at realizing decarbonization, a circularsociety, and coexistence with nature, to leave a rich earth for the future of babies born
tomorrow

Contributing to the
Resolution of Social
IssuesHelping to resolve social issues affecting babies and their families

Managing Talent andCultivating the Right
Culture for Our Purpose

Cultivating an organizational culture in which diverse individuals resonate with the Pigeon Way and
our Purpose; feel pride in the Company, their department, and their work; have an intrinsic motivation
to contribute; and can embrace new challenges and express themselves to drive personal growthEstablishing SolidManagement
Foundations

Reinforcing our GHO/4SBU structure and enhancing our corporate governance framework
to encourage ambitious endeavors to boost corporate value over the medium to long term

President and CEO

Sustainability Committee
Task setting/instruction

Singapore
Business Unit
Sustainability
Committee

LansinohBusiness Unit
Sustainability
Committee

Business Divisionsand Group Companies
in the SBUGroup Companies
in the SBUGroup Companies
in the SBUGroup Companies
in the SBU

2023 (Two sessions)
Plan (2020–2022)

Agendadecarbonized society, a circular economy, and coexistence with nature
・Discussion on new Key Issues (Materiality) toward formulation of the 8th Medium-Term Business
Plan (2023–2025)
・Initiatives for 2023 and beyond (shifting from target setting to the implementation phase)(Establishment of an operating framework for achieving targets, procurement of RSPO-certified
sustainable palm oil, decarbonization, and human rights due diligence)・Report on the status of achievements under the 7th Medium-Term Business
・Report on the progress of initiatives in each business division
・Report on the results of Scope 3 GHG emission calculations for fiscal 2021

and the sharing of case studies on efforts to reduce Scope 3 GHG emissions
in the Lansinoh Business toward the realization of a decarbonized society
・Report on the analysis of the quantitative impact of climate-related risks
and opportunities
・Progress report on the RSPO Working Group

Hatoyama: In 2023, Pigeon appears to have made considerable
progress in its sustainability efforts.
Itakura:Yes, we diligently proceeded with gathering and analyzing
information in preparation for TCFD disclosure. In addition,
the Sustainability Committee conducted a progress reviewof the Pigeon Green Action Plan, which was announced in
February 2023, confirming that initiatives are advancing
across the Group.
Hatoyama: During my visit to a Pigeon factory in China in October 2023,
I was pleasantly surprised to see the clear progress indecarbonization and recycling efforts. This gave me asense of anticipation that there will be even further
advancements in the future. As efforts progress, how does
the Sustainability Committee perceive future challenges?
Itakura:Our focus is on continuing to promote understanding andawareness of sustainability on the front line. In addition to
decarbonization, we aim to strengthen initiatives such asenhancing human capital, which includes improving
h um a n r i g h t s a n d e m p l o y e e e n g a g e m e n t . T h e

implementation of new products, services, and initiatives
that contribute to solving societal issues relies on
employees . As such, we remain committed to discoveringand nurturing talent, as well as fostering engagement thatcultivates empathy.
Hatoyama: Considering that products and services are the primary
touchpoints with customers, I encourage the continuous
development of offerings that foster environments
supportive of childbirth and child-rearing. Just looking at
nur sing bot tles, we have w itnes sed signif icant
advancements in recent years. While it’s understood that
Pigeon alone has its limitations, I hope the Company
continues its efforts to address societal issues.

Balancing Social and Economic Value
Itakura:What do you think is necessary to enhance social value
while pursuing economic value?
Hatoyama: Economic value and social value are not binary opposites
but rather differences in perspective between short-termand long-term views. There is also growing momentum forethical consumption in regions such as Europe. Over the
medium to long term, societal norms and regulations arealso likely to evolve, and companies that fail to consider the
future will be phased out. I believe we are entering an era
where companies will be challenged to justify their
existence if they do not adapt, including addressing cost
structures.
Itakura:We pride ourselves on being a company that faces the
future with a focus on babies, and we believe there are nocompanies that surpass Pigeon in this regard. It will be an
unprecedented and challenging endeavor, but for Pigeon
to continue generating value in the future, it is essential forboth management and employees to be aligned, deepen
their understanding of sustainability, and persist in theirefforts with a medium- to long-term perspective.
Hatoyama: Indeed. It is crucial to foster an organizational culture where
each employee resonates with Pigeon’s Purpose and canfully unleash their potential, enabling the company to drive
innovation through new products and services. I also hopethat all stakeholders support Pigeon over the medium andlong term in realizing a baby-friendly future.

Pigeon Integrated Repor t 2023

Data Section

China Business Unit
Sustainability
Committee

・Report on the progress of initiatives in each business division
・Discussion by outside experts
・Discussion on formulating medium- to long-term environmental targets for the realization of a

Hatoyama: Considering that a baby born today will grow up and havetheir own child in approximately 30 years, Pigeon must
envision the future of the company, society, and theenvironment 30 years from now, starting today. Moreover,with the expected increase in average life expectancy, ababy born today could potentially live for the next 100
years. In this context, Pigeon’s vision of a baby-friendly
future also encompasses a perspective that looks 100
years ahead. The challenge lies in creating an environment
where babies can be born and raised safely and securely,
even a hundred years from now. From this forward-looking
standpoint, I believe that addressing both business andsocietal challenges defines Pigeon’s sustainability efforts.
Itakura:Absolutely. Pigeon, with its focus on babies, stands at theforefront of the future, not only addressing the well-beingof infants but also tackling issues such as declining birthrates. We aspire to be a company that solves parenting
challenges and sustains its business as a force for the
future of the planet. Our goal is to garner empathy fromstakeholders while involving other companies and society
as a whole in our journey.

Initiatives of the Sustainability Committee

Progress reportJapan Business Unit
Sustainability
Committee

2022 (Three sessions)

Driving management with a view to the next 100 years,
envisioning a baby-friendly world

Sustainability

Board of Directors

Sustainability Roundtable

Value Creation Story

Becoming an indispensable company by building a robust framework for the creation,
production, and delivery of products and enhancing our corporate value over the medium
to long term

The Sustainability Committee was established in 2020 to further
enhance the Pigeon Groupʼs ESG management from a medium- tolong-term perspective. Chaired by the Director in charge of the
Global Head Office (GHO) and consisting of the Business Strategy
Division Manager and other business division managers, theCommittee sets medium- to long-term targets related to issues insustainability, identifies and periodically revises the Key Issues(Materiality), and provides progress reports on initiatives to resolvethese challenges. The Committee had convened nine times as ofDecember 2023, conducting reviews of materiality anddiscussions toward the formulation of environmental targets
covering medium- to long-term time frames among other matters.
The medium- to long-term targets have been incorporated into thegoals of each business division, with each division taking
responsibility for implementing corresponding measures. The
Committee monitors and reviews the progress of each divisionʼs
initiatives individually. In addition, details of discussions held by theCommittee are provided to the Board of Directors.

AgendaRehito Hatoyama

Message fromthe President and CEO

Enhancing Business
Competitiveness andResilience

Pigeon Integrated Repor t 2023

Tadashi Itakura

What We Aim to Achieve

Sustainability Committee

32

Sustainability
Committee Chairman

Introduction

Together, the Pigeon DNA and the Pigeon Way comprise Pigeonʼs philosophy that every employee upholds in the course of their duties. The
Pigeon ESG/ SDGs Policy embodies this philosophy, serving as a guideline for contributing to the development of a sustainable society.
We will pursue sustainable operations from the perspective of the Key Issues (Materiality) that the Pigeon Group must address, as well
as from the standpoint of environmental (E), social (S), and governance (G) considerations. We will also look to create new value through theprovision of products and services with the aim of helping solve social issues, including those highlighted by the Sustainable Development
Goals (SDGs). We will strive to build relationships of trust with our stakeholders through our business activities, while improving overall
corporate value to foster the development of a sustainable society.

33Enhancing Business Competitivenessand Resilience

Key Issue(Materiality)
Enhancing Business
Competitivenessand Resilience

What We Aim to Achieve

Becoming an indispensable company by building a robust framework forthe creation, production, and delivery of products and enhancing ourcorporate value over the medium to long term

Supporting healthy
baby skin development

Creating new
businesses

PP. 36-39

P. 34

PP. 34-35

Releasing productsthat exceed customer
expectations

Age-up Products

Under the Lansinoh brand, we have launched prenatal and postpartum care productsthat focus on the delicate needs of pregnant and postpartum women. We sell organic
massage oils for perineal massage during pregnancy, gel pads to protect scars after acesarean section, and wash bottles for gently washing delicate areas in the shower.
Sales in North America and Europe have been progressing well. In addition, in Japan, we
have launched a new series called ME. by Pigeon aimed at women experiencing
concerns about their delicate areas during pregnancy and postpartum. The womenʼscare category aims for total Group sales of ¥1.5 billion by 2025.

Lansinoh-brand Prenatal
and Postpartum Care Products

Expansion into Africa

At the end of 2023, the Pigeon Group established its first local subsidiary in Africa in
Kenya. The Kenyan subsidiary will engage in the sale of Pigeonʼs core products,
including nursing bottles, nipples, and baby oral care products.

Data Section

Pigeon Integrated Repor t 2023

ME. by Pigeon

Sustainability

34

Skincare Products for Kids

Women’s Care Products

Website of the local subsidiary
PIGEON BABY LAB KENYA LIMITEDChildcare Appliances

In Japan, we began selling the electric nose cleaner SHUPOT (priced at ¥15,400 including tax) in 2023, which quickly suctions mucus that tends
to accumulate deep in the nose. SHUPOT features Pigeonʼs proprietary pump, which is optimized for mucus suction by focusing on two key
parameters: suction pressure and suction flow rate. This design ensures optimal suction power for effectively clearing nasal mucus. In addition,
by redesigning the internal structure of the mucus catcher, we have reduced the number of parts that require maintenance compared toprevious models. In 2022, responding to customer feedback expressing a desire to savetime and reduce hassle in sterilizing and drying baby bottles, we launched POCHItto, a bottle
sterilizer and dryer (priced at ¥17,380 including tax), which fully automates the sterilizationand drying process. POCHItto uses the power of steam and can sterilize in approximately 12
minutes with just the addition of water. Childcare appliances that help reduce the burden ofhousehold chores and childcare have been well received in Japan, where the proportion ofdual-income households is increasing. These products have also been awarded the Kids
SHUPOT Electric Nose Cleaner
POCHItto Bottle
Sterilizer and Dryer
Design Award by the Kids Design Association, a nonprofit organization.

Natural Weaning Series

Value Creation Story

In China, as part of our strategy to expand our customer base, we are actively
working to strengthen our range of age-up products by increasing sales of the
Natural Weaning series for older babies and skincare products for kids, andproactively exploring new markets.
The Natural Weaning series is a range of nursing bottles designed for older
babies, featuring a newly developed nipple to facilitate a smooth transition frombottle feeding to straw drinking. This strengthens our lineup of nursing bottles, acore product. Meanwhile, our skincare products for kids are aimed at children aged
three and older, leveraging the results of our long-standing research on baby skin.
Sales of these products are progressing smoothly. We will continue efforts aimed atachieving total Group sales of ¥6 billion by 2025 in the age-up category.

Creating New BusinessIn pursuit of sustainable growth, the Pigeon Group is focused not only on further strengthening existing areas but also on exploring and cultivating
new growth areas where we can leverage our expertise. Our goal is to increase consolidated Group sales in the final year of the 8th Medium-TermBusiness Plan (fiscal 2025) by ¥19 billion compared with 2022, with approximately ¥10 billion coming from new areas and ¥9 billion from existingareas. In fiscal 2023, the first year of the plan, sales exceeded ¥3 billion, primarily driven by childcare appliances in the Japanese market, age-up
products in the Chinese market, and womenʼs care products such as birth preparation and recovery products in the Lansinoh Business.

Building resilient
distribution
systems

Message fromthe President and CEO

A newborn babyʼs skin is about half the thickness of an adultʼs, making it more susceptible toexternal stimuli, while having a similar number of sweat glands to adults, which makes babies
prone to sweating. In addition, from around three months of age, babies have less sebum toprotect their skin from dryness, making them the most susceptible to dry, flaky skin throughout
their lifetime. It is well-known that many children develop atopic dermatitis, commonly known
as eczema, during the period when their skin barrier is immature. Pigeonʼs baby skincare
products are designed based on the mechanisms of a babyʼs skin health and development.
Considering moisturizing capabilities and sensitivity, they are formulated to complement andnurture the healthy development of the skin barrier, aiding its growth and function. Moreover, inPigeon Home Products Corporationʼs New Factory
addition to ensuring quality and safety, we focus on customer satisfaction by consideringfactors such as ease of pumping, rinsing, and spreading, so that skincare does not become burdensome for parents. In 2023, Pigeon Home Products
Corporation, which is responsible for manufacturing skincare products and other items, completed the construction of a new factory in Fuji City,
Shizuoka Prefecture, consolidating its first and second factories, which were previously located separately. This consolidation aims to increase
production efficiency and profitability. Also, expanding research-and-development facilities and increasing the number of development personnel
serves to strengthen development capabilities. This will enable delving into new areas such as research on skin microbiota, collaborative researchwith universities, and the development of proprietary ingredients using plants sourced from Shizuoka Prefecture. The factory is open to thecommunity, with tours for the public starting in April 2024, making it a venue for community engagement activities involving private organizations,
government agencies, and others in the region. Explanations of the processes involved in completing a product, from development andmanufacturing to inspection, as well as interactive exhibits where customers can enjoy learning about babies and childcare, enhance communication
with customers, thereby boosting the brand presence in the baby skincare category and driving the growth of the category.

Supporting nursing
babiesIntroduction

Supporting Healthy Baby Skin Development

Individual Issues

In 2023, the Pigeon Group established the New Business Development Meeting, led by the Lansinoh Business Division Manager andcomprising the president and CEO along with division managers from the Japan Business, China Business, and Singapore Business.
The meeting aims to explore new business opportunities through ongoing discussions. The Pigeon Group will pursue continuous
growth in existing business areas while focusing on the exploration and nurturing of new growth opportunities, with the goal ofachieving sustainable growth overall.

P. 22 Efforts to Enhance Financial Performance

Pigeon Integrated Repor t 2023

35

Enhancing Business
Competitiveness and Resilience
Supporting Nursing Babies

We focus on replicating the sucking action rather than the shape andappearance of the breast. Our approach is backed by more than 60 years of
research, dedicated to perfecting the three key factors of sucking.

Special Feature

Aiming to Design the Worldʼs Best Nursing Bottles to Celebrate Every Individual Baby

Product
Development
Research

Pump

Storage

Nurse

Care

Supporting
Activities
Informational booklets
and Web streaming
Breastfeeding
seminars and events

Three Key Factorsof Sucking

Human milk banks
Lactation Lounge

Value Creation Story

Through appropriate information, products, and services,
we support breastfeeding for as long as the mother and child wish.
In cases where breastfeeding is difficult, for whatever reason,
we offer a full range of products and solutions
for healthy child development*.

Message fromthe President and CEO

Pigeonʼs commitment to support
breastfeeding

Introduction

Commitment to Breastfeeding: Bottles andNipples Designed to Help the Transition from
Breastfeeding to Bottle Feeding and Back

Pigeon has conducted in-depth observation and research for more than 60 years aimed at clarifying the sucking behavior ofbabies who cannot articulate their needs. The way babies suckle at the breast differs significantly from the way adults drink
through a straw. The intricate movements and functions occurring in a babyʼs oral cavity are not readily apparent throughexternal observation alone. To delve deeper into this phenomenon, we developed unique techniques for observing babies.
These include using an intraoral observation camera, utilizing echography (diagnostic ultrasound), and designing devices tomeasure the vacuum pressure during sucking. Through these methods, we unveiled the intricate sucking behavior of babies,
focusing on the “Three Key Factors of Sucking”: 1) latching on, 2) peristaltic tongue movement, and 3) swallowing.
At our Central Research Laboratory, which includes rooms for observing babiesʼ behavior, we routinely conduct studies
with the cooperation of more than 250 pairs of mothers and babies living nearby each year. In the monitoring room, mothers
are asked to feed their babies while we observe the feeding process via video and echography. We also compare and analyze
the difference in the sucking movements of babies using artificial nipples versus those feeding directly from their mothers.
In addition, we actively disseminate our research findings through academic conferences and publications, contributing to
the global field of breastfeeding research. Pigeonʼs research initiatives have sparked collaborative studies with hospitals,
fostering partnerships between academia and industry.

＊ 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 has a cleft lip and/or palate and cannot drink smoothly- Baby shows aversion to the breast

Latching on

Continuing breastfeeding, which is important for babies and mothers

WHO and UNICEF have pointed out that repeatedly allowing the baby to suck on the motherʼ s nipple and an
artificial nipple can lead to confusion in the babyʼs oral response*1.
When this confusion occurs, it is possible that a baby who has been breastfed directly might refuse bottle
feeding, and a baby who has been bottle-fed might resist direct breastfeeding, making proper feeding difficult.
*1 WHO and UNICEF Implementation Guidance: Protecting, promoting, and supporting breastfeeding in facilities providing maternity and newborn services. From
the revised Baby-friendly Hospital Initiative 2018.

36

Pigeon Integrated Repor t 2023

Peristaltic tongue
movement
Described as “peristaltic-likemovement,” the tongue moves
in a wave-like motion to drawout milk from the nipple

TOPICS

Commitment to Quality
Data Section

What is nipple confusion?

Published with permission

Swallowing
Smoothlyswallowing witha gulpSustainability

Pigeon is dedicated to designing nursing bottles that replicate the natural sucking motion of breastfeeding, allowing mothers
to comfortably continue breastfeeding whenever necessary. Breast milk contains all the nutrients needed to support thegrowth and development of babies up to six months of age while boosting the immune system and protecting against
infection. Breastfeeding is the first choice for the babyʼs growth and development. Understanding the importance ofbreastfeeding, Pigeon is committed to supporting and promoting it through both our products and services.
The best way for a baby to receive breast milk is directly from the motherʼs breast for as often and as long as the child desires. At
the same time, circumstances such as maternal and baby health issues, postpartum recovery, or lifestyle changes mightnecessitate alternative feeding methods. In such cases, expressing breast milk and using nursing bottles provide a viable option.
However, it is often suggested that frequent switching between the motherʼs nipple and an artificial nipple canpotentially confuse the babyʼs oral instincts. When this “nipple confusion” occurs, a bottle-fed baby might struggle withdirect breastfeeding, whereas a baby who has been directly breastfed might refuse a nursing bottle, making it
challenging to continue direct breastfeeding. An artificial nipple should closely resemble the motherʼs nipple to ensurethat the baby can comfortably drink breast milk from either source, allowing the nursing bottle to be used alongsidebreastfeeding with no interference.

Grasping and tightly
adhering the mouthto the nipple or areola

Sensation…Quantifying sensation to improve artificial nipples
Pigeon uses a unique method to observe sucking behavior and was the first in the world to develop its own dedicatedmeasuring device. Once monitoring is complete, we use our unique method of superimposing video on an ultrasoundimage to determine the angle and depth of the babyʼs 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 thebabyʼs mouth. Traditionally, “latching on” has been a subjective expression, such as “deep enough.” As measurement
and analysis progress, however, we believe if we can quantify these important suction-related actions, we will be able
to make artificial nipples easier to use, allowing babies to feed better. Measuring
the softness of the motherʼs nipple also helps in the development of artificial
nipples. We have been able to successfully quantify the softness by obtaining
the cooperation of many mothers.

Please refer to our website for details.
Websitehttps://www.pigeon.com/about/quality/

Pigeon Integrated Repor t 2023

37

Enhancing Business
Competitiveness and Resilience
Supporting Nursing Babies

Nursing bottles born from close observation Bonyu Jikkan®series / SofTouchTM series

Nursing bottles for babies who require specialized support

Focus on the stretch of the motherʼs nipple

38

0.5

Focus on the babyʼs sucking behavior

Bonyu Jikkan®
2nd generation

Bonyu Jikkan®
3rd generation

Mother ʼs nipple

0.0

Resilience (Newton [N])1.0

Focus on the softness of the motherʼs nipple
and the depth of latching on to thenipple during breastfeeding

The smaller the value, the softer it is.

3rd generation
Launched in 2021

Pigeon believes that intellectual property rights are indispensable for sustainable corporate development and that thelegitimate 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 apolicy of strengthening the acquisition of intellectual property rights for important items in our business strategy. In
cooperation with the Product 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 moreproducts are distributed across borders. Accordingly, our Intellectual Property Department is strengthening its
monitoring of potential damage to our brand. As an example, in developing business for the Bonyu Jikkan® series, we are
actively securing design and trademark rights over a wide geographical area to effectively deal with counterfeit
products.

Note: Pigeon research
Pigeon Integrated Repor t 2023

Data Section

Intellectual property rights

Bonyu Jikkan® Nipples (SS size)
1.5

Sustainability

Pigeonʼs nursing bottles are highly acclaimed around the world. Not satisfied with the status quo, however, we continue
making every effort to 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 the process of developing the global baby care market, and there are many babies
around the world with whom Pigeon can engage.
We continue to further deepen our R&D to develop new products and services that enable every baby to progress attheir own pace and to become whoever they want to be. We will continue embodying Pigeonʼs commitment to nursing
bottles, as well as know-how and ideas derived through rigorous observation of and research into babies ʼ sucking
behavior. We will also develop new materials from a sustainability perspective, create unique products with social value,and develop products that reflect regional characteristics. In both countries where we have a presence and markets yet
untapped, there is ample room for the Pigeon Group to grow its business. With this in mind, Pigeon, with an unparalleledcommitment to babies, will deliver unique, carefully designed products to more and more babies and thus make theworld more baby-friendly.

Aiming to develop the worldʼs best nursing bottles to ensure the well-being of all babies, Pigeon continues to pursue its
ideals. In September 2021, we launched the third generation of the Bonyu Jikkan® series in China, followed by its release inJapan in February 2022. These nipples are made of newly developed silicone with improved softness. However, silicone is amaterial that tends to tear as it gets softer, so we must take care to ensure that it does not tear when a baby chews on it.
Supporting our development of nipples with both “ideal softness” and “durability” were the efforts and ingenuity of ourdevelopers, who made prototype after prototype. As babies grow, moreover, their sucking, drinking, and chewing abilities
change, so we make small changes both in the size of the nipple hole and the hardness of the nipple itself. For example,
nipples for older babies are designed to be strong enough for teething babies to chew on. Also, if the baby does not firmly
latch on during feeding, breast milk or formula might leak from the corner of the babyʼs mouth, and the nipple could getdamaged. With this in mind, we designed a new “Latch-on line” that guides mother and baby to the appropriate depth
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 European and Japaneseindustrial standards. For example, each artificial nipple undergoes a 15-point quality inspection at the factory. We use
dedicated measuring instruments for function-related inspections of size, suction hole, ventilation valve, elasticity, and thelike. Items such as foreign matter contamination, dust adhesion, and resin overflow or loss are checked visually and with amagnifying glass, without relying solely on inspection equipment. The artificial nipple delivers nourishment to babies andkeeps them alive. So, we continue striving to ensure the highest product quality at all our factories. We are always mindfulof the fact that each artificial nipple is for a baby who is irreplaceable.
Comparison of Softness between Mother ʼs Nipple and

1st generation
Launched in 2002

Nipple for Babies
with Weak Sucking

Making the world a more baby-friendly place

Evolution of nursing bottles

2nd generation
Launched in 2010

Silicone Long
Nipple Feeder
240 mlValue Creation Story

Source: Global Nursing Bottle Market
2024 by Manufacturers, Regions, Typeand Application, Forecast to 2030,
Global Info Research

Nursing Bottle
for Babies with
Cleft Lips and/or Palates

Message fromthe President and CEO*1 Includes products other than the Bonyu Jikkan® series*2 Pigeon research (average of 12 months in 2023, based on expanded estimates from nationwide baby shops and drugstores using
Intage POS data)*3 Pigeon research (based on sell-out data of nursing bottles and nipples, in terms of sales value)

Pigeon hopes to “enable all babies to enjoy better suckling” and conducts joint researchwith hospitalsʼ newborn intensive care units (NICUs.) We constantly ask ourselves whichparts of the babyʼs body are causing difficulties and which functions can be supported byour products to help the feeding for babies who require specialized support.
Pigeon is providing specialized products that enable babies with low birthweight or otherphysical issues to drink breast milk with minimal effort. These include nursing bottles forbabies with cleft lips and/or palates and nipples for babies with weak suckling strength. In
2022, we launched “Precious Drop,” a device that supports the collection of colostrum frommothers to ensure that premature and low birthweight babies get as much of the motherʼs
precious colostrum as possible, specifically for clinics and maternity wards. In 2024, welaunched the “Silicone Long Nipple Feeder,” a renewed version of the nursing bottle with anelongated nipple, designed for babies experiencing difficulties in direct breastfeeding or
bottle feeding with artificial nipples due to conditions such as cleft lip and/or palate or otherconditions. This is but one example of our commitment to research and development toassist in the nutritional intake of all babies. Moreover, the expertise we have accumulated
through our constant support for babies requiring specialized care has been reflected in
Pigeonʼs Monozukuri , serving as a significant strength that underpins our product quality.

Introduction

Pigeon boasts the top global share in nursing bottles, with approximately 11%*1 of the market. Among these products, the Bonyu Jikkan® series ofnursing bottles overturned the perception that “all nursing bottles are the same.” This accomplishment stems from our rigorous research on baby
feeding and our attention to detail in the planning and design process, integrated into our product development, which is unparalleled worldwide.
Since its first launch in 2002, the Bonyu Jikkan® series has been embraced by numerous babies and families. The second generation, introduced in
2010, has seen remarkable success, with approximately 140 million units and 290 million individual nipples sold worldwide in the 11-year period to 2020.
Global Market Share of Nursing Bottles in 2023
In Japan, our Bonyu Jikkan® bottle is the most widely adopted in hospitals and maternity facilities, securing an
overwhelming top share above 85%*2 in the domestic nursing bottle market.
11 %Since its launch in the early 2000s as the Shizen Jikkan series in China, Pigeon has gained the trust of Chineseparents across a wide range of generations due to the brandʼs high reliability, functionality, and safety. As a result, it
has secured the top market share in mainland China.
In other international markets, the products are sold as the SofTouchTM series, and alongside other series ofnursing bottles, Pigeonʼs nursing bottles have achieved the top market share in Indonesia, Singapore, Thailand, andVietnam*3. In addition, in our Lansinoh Business, we have introduced the NaturalWave® Nipples series based on the
PigeonCompany A
Bonyu Jikkan® series under the Lansinoh brand in North America and Europe. Pigeonʼs Bonyu Jikkan® series has
Company B
Company C
earned high praise worldwide, garnering support from many customers who wish to continue breastfeeding.
Company D
OthersPigeon Integrated Repor t 2023

39

Reducing Our
Environmental Impact

Key Issue(Materiality)
Reducing Our
Environmental
ImpactWhat We Aim to Achieve

Individual Issues

To leave a rich earth for the future of babies born tomorrow, we are
implementing the Pigeon Green Action Plan, which includes objectives
for decarbonization, a circular society, and coexistence with nature

Using sustainable resources(paper and palm oil)

P. 42

P. 43

P. 44

Outline of the Pigeon Green Action Plan
Pigeon formulated the Pigeon Green Action Plan in 2022 as a blueprint for leaving a rich earth for the future of babies born tomorrow.
The plan sets medium- to long-term environmental targets for achieving decarbonization, a circular society, and coexistence withnature. The entire Pigeon Group is taking steps to achieve the targets.

Message fromthe President and CEO

In addition to complying with environmental laws and regulations, the Pigeon Group recognizes the relationship between our businessactivities and the environment, while energetically tackling environmental issues as a common challenge for humanity to leave a richearth for the future of babies born tomorrow. In that spirit, we pursue maximum efficiency in the use of natural resources and energy andreducing emissions of greenhouse gases, waste, harmful chemicals, and other substances that impact the environment, thereby
contributing to mitigating global warming, preventing pollution, and preserving biodiversity. In advancing these various efforts, we strive
to form appropriate partnerships and cooperative relations with the diverse range of stakeholders in our supply chain, including
customers, business partners, and local communities, to have a beneficial effect on the global environment of the future.

Circularmanufacturing

Introduction

Basic Approach to Global Environmental Protection (Environmental Policy)

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

Pigeon Green Action Plan
Leaving a rich earth for the future of babies born tomorrow

Sustainable Development Policy

Value Creation Story

The Pigeon Group formulated its Sustainable Development Policy in February 2021 as a policy for manufacturing that takes into
consideration the future environment of childcare and the global environment. We aim to carry out monozukuri (manufacturing) withdue consideration to the future environment for parents and the natural world. This begins with every Pigeon employee thinking
about the environmental impact of their actions. The following concepts of our Sustainable Development Policy are adopted in our
manufacturing.

2050 —Scope 1 & 2 GHG emissions: Net Zero

Decarbonization

2030 — Scope 1 & 2 GHG emissions: 50% reduction (compared to FY2018)
Scope 3 GHG emissions: Reductions with Science-Based Targets (to be finalized)“Act with an eye to the future”

Circular society

2030 — Plant-derived or recycled materials in packaging: 50% by weight2030 —Reusable/recyclable/compostable packaging: 100%

Sustainability“Make products that play their part”“Avoid overengineering and overdesign”

2030 — Sustainable paper usage rate in packaging: 100%

Coexistence with nature“Seek empathy, share progress”

Data Section“Watch over products for their whole lifetime”

2030 — RSPO-certified sustainable palm oil usage rate in Pigeon-manufactured
skincare/washing/cleaning products: 100% (including RSPO Credits)

Scope 1: Direct greenhouse gas emissions from our operations and vehicles through fuel combustion and similar uses
Scope 2: Greenhouse gas emissions associated with the use of electricity and heat supplied from other companies, including emissions from their power plants and heat generation facilities
Scope 3: Other indirect emissions by other companies and customers connected to our operations
RSPO stands for Roundtable on Sustainable Palm Oil
The book and claim (B&C) model supports certified palm (kernel) oil production by allowing end users to purchase credits issued based on the amount of palm (kernel) oil produced by
RSPO-certified producers

Flow of Materials for Baby Care and Maternity Products

Pigeon Group sales companies
Main Products
Main Raw Materials-Non-woven fabric(e.g., polyester, rayon)-Fluff pulp
-Chemical materials-Silicone rubber

40

Pigeon Integrated Repor t 2023

-Glass-Resins (plastics)-Electronic components-Fibers-Packaging materials (plastic, paper)

Pigeon Group
production subsidiaries-Nursing bottles (glass, plastic)-Breast pads
-Skincare/washing/cleaning and disinfecting products -Breast pumps-Wet wipes/disposable diapers-Other plastic molded products

OEM suppliers-Skincare/washing/cleaning and disinfecting products -Baby drinks/baby food-Maternity clothing-Plastic molded products-Others (e.g., thermometers)-Baby strollers/carriers(produce Pigeon-brand products under contract)

Consumers

Pigeon Integrated Repor t 2023

41

Reducing Our
Environmental Impact

Initiatives to Realize a Decarbonized Society

Initiatives to Realize a Circular Society

Pigeon Corporation publicly declares its support for the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD). Our aim is to understand business risks and opportunities arising from changes in the natural and business environments due toclimate change, as well as the potential financial impacts of such changes, and to manage key risks and opportunities appropriately.

Strategies: Climate Scenario Analysis

TCFD Report 2023

2030 Target

Plant-derived or recycledmaterials in packaging:

50 % by weight2023
Performance

Currently under review, including the proportion ofplant-derived or recycled materials used

We are working to reduce the use of petroleum-based virgin plastic, aiming to increase the proportion of plant-based or recycledmaterials in our product packaging to 50% by weight by 2030.
In Japan, the packaging for Sterilization Tongs for Nursing Bottles, which previously featured plastic blister packaging on paper
backings, has been replaced with forest-certified paper. This has led to a substantial reduction in plastic usage in the packaging.
We are continuously exploring alternative materials to plastic for packaging toiletry and skincare products. In China, our Ocean
Moisture Skincare Series (Filaggrin EX Series*), launched in July 2023, features jars made from 100% recycled plastic (excludinglids), and the individual boxes for each product in the series are made from forest-certified paper.
*Filaggrin, a vital protein found within the skinʼs stratum corneum cells, serves as the precursor to natural moisturizing factors (NMF), which play a crucial role in skin hydration.

Value Creation Story

As part of our analysis of risks and opportunities using climate scenarios, we initially focused on our core businesses in Japan and China,
specifically the manufacturing and sale of nursing bottles, nipples, and skincare items. We are conducting a financial impact analysis for2030 (with consideration of physical risks up to 2050) based on two scenarios: one aimed at achieving decarbonization to limit the rise in theworldʼs average temperature to 1.5 C compared to pre-industrial levels (the 1.5 C scenario), and the other where carbon emissions remain
high, resulting in a 4 C increase in the worldʼs average temperature (the 4 C scenario). For detailed information on climate-related risks andopportunities, as well as the potential financial impacts they might cause, please refer to the Pigeon Group TCFD Report 2023.

Global plastic consumption is on the rise, and much of the Pigeon Groupʼs product packaging uses plastic as well. To achieve asustainable society, we promote circular monozukuri (manufacturing) by overseeing products throughout their entire life cycle.

Message fromthe President and CEO

Among climate-related issues, our GHO Risk Management Committee spearheads the management of risks that are highly probable in the short tomedium term and are directly related to business continuity, such as the risk of suspension of operations due to flooding. For issues to be addressed overa longer frame and from a cross-business perspective, the Sustainability Committee sets medium- and long-term Group targets for environmental
conservation, including climate change, and evaluates progress. Both the GHO Risk Management Committee and the Sustainability Committee arechaired by the director in charge of the Global Head Office (GHO), who reports the results of deliberations of both committees to the Board of Directors.

2030 Plant-derived or recycled materials in packaging: 50% by weight2030 Reusable/recyclable/compostable packaging: 100%Introduction

Governance and Risk Management of Climate-Related Risks and Opportunities

Medium-TermTargets

https://www.pigeon.com/sustainability/files/pdf/tcfdreport_20231124_e.pdf

Metrics and Targets

8th Medium-Term Business
Plan: Fiscal 2025 target

Scope 1 & 2 GHG
emissions:35% reduction
compared with fiscal 20182023 progress

Scope 1 & 2 GHG
emissions:

Scope 1 and 2 GHG Emissions

Scope 3 GHG Emissions（t-CO2e）

Scope 3-5
Waste 2%25,000

Scope 1

3,198
2,911

20,00015,00010,00025,00522,062

2,855

Scope 3-4
Transportation/delivery 3%

20,655

Scope 3-2
Capitalgoods 9%5,000
0FY ended Jan.
2019 (2018)

Dec. 2020(2020)

Scope 2

Dec. 2021(2021)

2,346

2,903

9,395

8,489

Dec. 2022(2022)

Dec. 2023(2023)

60% reduction

compared with fiscal 2018

Scope 3-12
Product disposal 7%

205.8
thousand t-CO2e(FY2022)

Scope 3-1
Purchased products/
services 73%

In addition to increasing energy efficiency in facilities and equipment and boosting self-generated power through solar energy, we have made strides intransitioning to renewable energy and procuring renewable energy certificates (RECs). As a result of these initiatives, Scope 1 and 2 greenhouse gas (GHG)
emissions in 2023 decreased 60% compared with the fiscal 2018 baseline. Furthermore, we are calculating Scope 3 GHG emissions for the entire PigeonGroup with the aim of collaborating with business partners to mitigate emissions across activities such as sourcing raw materials and supplies,
manufacturing OEM products, transportation, product use, and disposal. In 2022, Scope 3 GHG emissions decreased by approximately 12% year on year.
Scope of data collection: Pigeon Corporation and its domestic and overseas consolidated subsidiaries
Note: For Scope 1 GHG emissions, only energy-derived CO2 is calculated for the period from the fiscal year ended January 31, 2019, to the fiscal year ended December 31, 2022.
From the fiscal year ended December 31, 2023, GHG gases other than energy-derived CO2, such as methane and nitrous oxide, are also included in the calculation scope.
In calculating Scope 3 GHG emissions, we include Categories 1, 2, 3, 4, 5, 6, 7, 9, 11, 12, and 14. Category 9 applies only to the Lansinoh Business.

Website42

Pigeon Integrated Repor t 2023

2030 Target

Sterilization Tongs for Nursing
Bottles (New packaging)

Reusable/recyclable/compostable packaging:

Ocean Moisture Skincare Series(Filaggrin EX Series)

100 %The jars (excluding lids) aremade from 100% recycled plastic

2023
Performance

81 % (of SKUs)

The Pigeon Group aims to make all product packaging reusable, recyclable, and/or compostable by design by 2030. “Reuse” is defined as the ability
for a product to be used again for the same purpose after initial use, while “recycling” refers to the ability for customers to easily disassemble theproduct packaging into parts such as caps, bottles, and labels, with each part composed of a single material rather than composite materials. In
2023, packaging for 81% of all stock keeping units (SKUs) sold by the Pigeon Group met this standard. However, the packaging of wet wipes, baby
food pouches, and the shrink film of certain products are made of composite materials, making them unsuitable for recycling.
In 2024, the Pigeon Group launched the new “Training Master” series of baby drink cups in China. This series is made with 50%
sugarcane and 50% wood pulp for the product packaging material. It also has waterproof functionality, allowing it to be used for a longtime as a small container or a flowerpot. Furthermore, after fulfilling its purpose, the packaging can be crushed to achieve compostableproduct packaging. We will continue to explore packaging
materials that are reusable, recyclable, and/or compostable.
The Pigeon Group is also committed to promoting therecycling of nursing bottles and industrial waste, as well as
50% 50%reducing water usage at production facilities. For moresugarcanewood
information on these initiatives, please visit our website.

Data Section

30,000

Sterilization Tongs for Nursing
Bottles (Old packaging)

Sustainability

2050̶Scope 1 & 2 GHG emissions: Net Zero2030̶Scope 1 & 2 GHG emissions: 50% reduction (compared to FY2018)
Scope 3 GHG emissions: Reductions with Science-Based Targets (to be finalized)

Medium- to LongTerm Targets“Training Master” Series

Websitehttps://www.pigeon.com/sustainability/environment_top/circulation/

https://www.pigeon.com/sustainability/environment_top/co2/
Pigeon Integrated Repor t 2023

43

Reducing Our
Environmental Impact

Contributing to the Resolutionof Social Issues

Initiatives to Realize Coexistence with Nature
Medium-TermTargets2030̶Sustainable paper usage rate in packaging: 100%2030̶RSPO-certified sustainable palm oil usage rate in Pigeon-manufactured skincare/washing/cleaning products: 100% (including RSPO Credits)

Sustainable paper usage rate in packaging:

100 %2023 result

15 %Palm oilPalmkernel oil

2021

2022

2023

Total amount used*1

176 tonnes

244 tonnes

351 tonnes

RSPO Credits purchased and claimed*2

CSPO: 25 tonnes

CSPO: 52 tonnes

CSPO: 56 tonnes

Total amount used*1

346 tonnes

432 tonnes

258 tonnes

RSPO Credits purchased and claimed*2

CSPKO: 28 tonnes CSPKO: 56 tonnes CSPKO: 46 tonnes

Scope of data collection: Pigeon Home Products Corporation, Pigeon Manufacturing (Shanghai) Co., Ltd., Pigeon Singapore Pte. Ltd., Pigeon Industries (Thailand) Co., Ltd., and PT
Pigeon Baby Lab Indonesia.
For Pigeon Home Products Corporation, calculations are based on the raw materials of its in-house manufactured products, covering detergents as well as cleaning and skincare products.
*1 Figures are obtained by converting the amount of palm oil–derived components of the raw material to their equivalent in palm oil or palm kernel oil.
*2 The amount of RSPO Credits purchased and claimed includes 12 tonnes of small-scale farm credits. These figures have not been audited through the RSPO certification system.

44

Pigeon Integrated Repor t 2023

Promoting responsible
procurement

P. 47

Expanding use of products designed
for maternity hospitals

PP. 45-46

Participating in andsupporting communities

P. 47

Through initiatives in various countries, we support the healthy growth of babies born prematurely, babies with low birthweight, andbabies born with medical conditions that require special treatment to help families feel more secure and happy.

Products for Babies Who Need Special Care
Committed to enabling all babies to enjoy better sucking, Pigeon conducts joint research with neonatal intensive care units (NICUs) at
hospitals and clinics and works in other ways to develop exclusive products so that infants with low birthweight or disabilities candrink breast milk and packaged milk with minimal effort. These include a nursing bottle for babies with cleft lips and/or palates andnursing nipples for babies with weak sucking. We also offer a special Preemie Care pacifier for babies born prematurely to help easethe pain of treatments and procedures. In 2022, we launched Precious Drop, a device that supports the collection of colostrum frommothers to ensure that premature and low birthweight babies get as much of the mother ʼs precious colostrum as possible,
specifically for clinics and maternity wards. In China, we developed a special oil for low birthweight babies to alleviate issues caused
by underdeveloped skin. In 2024, we launched Silicone Long Nipple Feeder, renewed a feeder with a long silicone nipple for babies
who have difficulty breastfeeding directly or with artificial nipples due to cleft lips and/or palates or medical conditions. Our
accumulated expertise, gained from our constant support of babies in need of specialized care, is reflected in our manufacturing
activities and is directly linked to the superior performance of Pigeon-brand products.

Nursing Bottle Set
for Babies with Cleft
Lips and/or Palates

Nursing Nipple forBabies with Weak
Sucking

Preemie Care
Pacifiers

Precious Drop

Low Birthweight
Baby Oil

Data Section

Type

PP. 45-46

Sustainability

Some of the skincare, washing, and cleaning and disinfecting products manufactured and sold by the Pigeon Group contain ingredients
made from palm oil and palm kernel oil. To promote the sustainable use of palm oil products, Pigeon became an ordinary member of theRoundtable on Sustainable Palm Oil (RSPO), a nonprofit organization that encourages the production and use of sustainable palm oil,including through the conservation of tropical rainforests and biodiversity. The Pigeon Group iscommitted to promoting the use of RSPO-certified palm oil in our skincare, washing, andcleaning and disinfecting products. Since 2021, the Japan Business and the Singapore
Business have been using the RSPO Credits purchased and claimed through the B&C model forsome detergents and skincare products. The Natural Botanical Baby skincare series, available
in countries such as Singapore and Indonesia, is one of our products that features the RSPONatural Botanical Baby Skincare Seriescertification label.
(features the RSPO certification label)

New products and services for babies
needing support

Value Creation Story

100% (including RSPO Credits)

Helping to resolve social issues affecting
babies and their families

Message fromthe President and CEO(bamboo-based dry wipes)*Excludes items such as cardboard boxes used during transportation and label stickers.

RSPO-certified sustainable palm oil usage rate in Pigeonmanufactured skincare/washing/cleaning products:

Individual Issues

58 % (of SKUs)

2023 result

The Pigeon Group promotes the use of forest-certified paper and recycled paper sourced from properly managed forests. By 2030, we
aim to ensure that 100% of our stock keeping units (SKUs) using paper in their packaging* will utilize forest-certified or recycled paper.
We are particularly advancing the adoption of forest-certified paper for the individual boxes of our core products, nursing bottles
and nipples. In Japan, we have already implemented forest-certified paper for all paper packaging in the
new series of our Bonyu Jikkan® products. Similarly, in China, we have adopted forest-certified paper for
most of the packaging for Ziran Shigan (the Chinese equivalent of Bonyu Jikkan® in Japan). In addition, weare promoting the use of sustainable paper for the packaging of a wide range of products, including
maternity clothing, skincare, washing, and cleaning and disinfecting products.
We are not only focusing on packaging; in 2023, we also launched bamboo-based dry wipes as part of
our Natural Botanical Baby skincare series, available in countries such as Singapore. Bamboo is abiodegradable material that grows quickly and is easily sourced in large quantities, making it a sustainable
Natural Botanical Baby
resource. In addition, we use paper boxes instead of plastic film for the packaging of this product.
skincare series

2030 Target

Contributing to the
Resolution of Social
IssuesWhat We Aim to Achieve

Introduction

The book and claim (B&C) model supports certified palm (kernel) oil production by allowing end users to purchase credits issued
based on the amount of palm (kernel) oil produced by RSPO-certified producers
2030 Target

Key Issue(Materiality)

Silicone Long
Nipple Feeder
240 mlActivities for Babies Needing Special Care and Their Families:
Photo Exhibition “ Drops of Love ~ Hand-in-Hand with Supporting Professionals ”
To promote awareness of Precious Drop, a device that supports thecollection of colostrum, among healthcare professionals, a photo
exhibition titled “ Drops of Love ~ Hand-in-Hand with Supporting
Professionals” was held at the 64th Annual Meeting of the Japan Society ofMaternal Health in 2023. More than half of the participants (approximately
1,000 people) were midwives. The exhibition showcased the backstory ofPrecious Drop and photos depicting its usage scenes, aiming to convey thefeatures of the product, as well as the images of prematurely born babies
and their families, to healthcare professionals in the field.
Pigeon Integrated Repor t 2023

45

Contributing to the Resolutionof Social Issues

Activities for Babies Needing Special Care and Their Families: Support of Human Milk Banks*1 These facilities collect breast milk donations, pasteurize them at low heat for safety, and provide the breast milk to babies with very low birthweight (less than 1,500 g
at birth) whose mothers are unable to provide enough breast milk to them due to illness or lactation issues.
*2 An average of approximately 1,300 ml of donor milk is provided per baby.

The Pigeon Group engages in activities to support babies with a cleft lip and/or palate* in various
parts of the world, including China, Singapore, Indonesia, Thailand, and Malaysia. In 2023, we
conducted a campaign in China in collaboration with the nonprofit organization Operation Smile toraise awareness about cleft lips and/or palates and to raise funds for surgical costs. Ten employees
participated in this campaign. In addition, employees from Pigeon Singapore Pte. Ltd. volunteered toparticipate in a charity event called “#Fitness4Smiles,” where teams took turns cycling in a relay
format. Donations were made corresponding to the total kilometers ridden by a team. The six teams,
consisting of 18 members from Pigeon Singapore, collected approximately ¥500,000 in support ofbabies with a cleft lip and/or palate. Pigeon also provides administrative support during surgeries.
Beyond donating products and engaging in fundraising activities, local employees volunteer theirtime to provide assistance. By supporting babies and their families and collaborating with healthcare
professionals, we aim to strengthen and enhance our brand power.

Note: Pigeon provided disaster relief supplies, including the Emergency Baby Cup, following the Noto Peninsula Earthquake in 2024 in response to a request from the
Ministry of Economy, Trade and Industry.

In addition, the Pigeon Group is dedicated to addressing social issues by helping to set up, operate, or support Lactation Lounges. We havealso established the Pigeon Smile Lactation Research Institute, where we collaborate with specialists working with mothers, fathers, andbabies to identify challenges during the breastfeeding period and provide solutions. These are just some of the efforts we are undertaking.
For more information on our initiatives, please visit our website.

Websitehttps://www.pigeon.com/sustainability/social_top

Promoting Responsible Procurement

CSR Procurement Assessment 2023

CSR-related corporate governanceCoexistence withlocal communities

Scope of aggregation
Japan Business, China Business, Singapore Business, and Lansinoh Business46

Pigeon Integrated Repor t 2023

100％

Human rights

80％
60％

Data Section

Seminars for General Consumers and Seminars for Healthcare Professionals

Sustainability

The Pigeon Group has formulated its 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 business practices 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. We conduct a CSR procurement survey annually and disclose the findings togain insight into ESG-related initiatives at suppliers and issues in the Groupʼs supply chain.

*A cleft lip and/or palate is a congenital condition characterized by an opening or a split in the roof of the mouth, involving either the soft palate, the hard palate, or both,and/or a fissure in the lip.

The Pigeon Group organizes online seminars and events for general consumers in various countries. In Japan,
we hold the Breastfeeding College seminar, where participants can learn from obstetricians and midwives
about breastfeeding. We also collaborate with a drugstore to conduct joint seminars, focusing on practicallessons on bathing and moisturizing led by experienced mothers, as well as skincare product tutorials led by
Pigeon employees, targeting expecting mothers and fathers. In 2023, 3,920 people participated in these
events. In addition, overseas, we conduct numerous seminars on breastfeeding and baby teeth care.
The Pigeon Group also conducts seminars in different countries specifically designed for healthcare
professionals, such as doctors, midwives, nurses, public health nurses, dieticians, and pharmacists, whoprovide breastfeeding and lactation support. The seminars provide valuable information that can beapplied in their care and support activities. Healthcare professionals from hospitals around the world
participated again in 2023. In Japan, we hold seminars focusing on breastfeeding support andpostpartum care, while in China, we organize seminars on skin issues in premature and low birthweight
infants, providing information including the features of our baby oil. We will continue to foster awarenessand build trust in hospitals and maternity centers through seminars tailored for healthcare professionals.

Value Creation Story

Activities for Babies Needing Special Care and Their Families: Supporting Babies with a Cleft Lip and/or Palate

Message fromthe President and CEO

The Newly Established Human Milk Bank
at Kunming Childrenʼs Hospital

In 2022, Pigeon launched its “Babies and Preparedness Circle Promotion Project”
declaration to firmly establish the concept of disaster preparedness for babies in society.
Under the project, we have initiated collaborations with municipalities and businessesaligned with the declarationʼs objectives to always keep babies safe and continue tocreate a baby-friendly world. We had garnered support from 34 municipalities as of the end of December 2023. In addition to productdonations, our project introduces disaster preparedness items for babies, tailored item lists according to developmental stages, and actively
shares information and engages in activities related to disaster preparedness in coordination with municipalities. In August 2023, we hosted
a workshop on disaster prevention for babies, focusing on pregnant women and infants, who are particularly vulnerable during disasters but
have often been overlooked. Researchers from the National Research Institute for Earth Science and Disaster Resilience, along with local
government officials, presented their insights and case studies. In September 2023, in collaboration with Meiji Co., Ltd., we launched thedisaster prevention set combining Meiji Hohoemi Raku-Raku Milk with Pigeonʼs Bonyu Jikkan® nursing bottles to ensure that babies canreceive nutrition with ease even during disasters. Furthermore, we have categorized the concept of disaster preparedness for babies into
three categories̶“Feeding,” “Toileting and Bathing,” and “Oral Care”̶providing easily understandable information to parents. We remaincommitted to raising awareness of the significance of disaster preparedness for babies and fostering this culture within society.

Introduction

As part of our activities for babies and families in need of specialized care, we support human milkbanks*1 in Japan, China, India, Vietnam, and elsewhere. In 2020, we opened the Nihonbashi Human Milk
Bank, the second of its kind in Japan at the time, on the first floor of our Head Office. Throughcampaigns donating a portion of sales from breast pads, breast pumps, and breast milk storage bags
to the Japan Human Milk Bank Association, as well as conducting awareness surveys regarding humanmilk banks, we have been conducting outreach activities to raise awareness about human milk banks.
In China in 2020, we became the first main partner in the Beijing Chunmiao Charity Foundationʼs
special human milk bank fund, and between then and July 2023, we donated a total of RMB 1 million(roughly ¥19 million), contributing to the opening of human milk banks in six hospitals, including FujianChildrenʼs Hospital, Beijing Huaxin Hospital (the First Hospital of Tsinghua University), and Kunming
Childrenʼs Hospital in Yunnan province. Since our support began, these human milk banks haveprovided a total of 2.2 million ml*2 to more than 1,600 babies born prematurely. We aim to enhance
our corporate value by contributing to the resolution of social issues surrounding babies and theirfamilies in various countries.

Disaster Preparedness for Babies

40％

Surveyed suppliers
For the 2023 survey, the CSR Procurement Self-Assessment Questionnaire developed by Global Compact Network

Supply
chain

20％

Labor

0％

Japan (GCNJ) was distributed to a total of 478 suppliers. This included all primary external suppliers of Pigeon
Corporation, Pigeon (Shanghai) Co., Ltd., and Pigeon Singapore Pte. Ltd., as well as each sales company under theLansinoh Business. Furthermore, the survey now encompasses major suppliers of the production subsidiaries ofboth the Singapore Business and Lansinoh Business, thus broadening its scope to include primary suppliers ofInformation
security

Environment

Quality and safety

production subsidiaries worldwide. We received responses from 367 suppliers for a response rate of 76.8%.

Fair corporate activities
2022

2023

Survey results
The overall average score was 84.7%, with progress noted in the “environment” and “fair corporate activities” categories compared to the previous year. However,“CSR-related corporate governance,” “supply chain,” and “coexistence with local communities” remain areas for improvement. By working together with suppliers
to address the issues identified in the survey, we aim to tackle social challenges and strengthen our relationships with them.

A Seminar in China Showcasing the Useof Our Baby Oil

In 2024, the Pigeon Group newly established its Human Rights Policy. This policy defines our commitment to respecting human rights asoutlined in our Corporate Ethics Guidelines and CSR Procurement Policy, as well as how we intend to implement it. For more information,please visit our website.

Human Rights Policy

https://www.pigeon.com/sustainability/social_top/humanrights/
Pigeon Integrated Repor t 2023

47

Managing Talent and Cultivating
the Right Culture for Our Purpose

What We Aim to Achieve

Individual Issues

Cultivating an organizational culture in which diverse individuals resonate with
the Pigeon Way and our Purpose; feel pride in the Company, their department,
and their work; have an intrinsic motivation to contribute; and can embrace newchallenges and express themselves to drive personal growthdevelopment

Culture andenvironment

Health andsafetyPigeon Integrated Repor t 2023

Co-creation

Growth and results

Individual
Work style

Work-life
balance

Establishment of an environment in which diverse individuals
embrace new challenges and thrive in their own unique ways

48

Empathy

CareerPromotion of DE&I
HealthSupport

Systems

Engagement

Diversity, equity,and inclusion(DE&I)

Occupational
healthmanagement

Health andsafetyScore*1

4.11

4.21 orabove

Ratio of female managers

23.9％

26.2％

26.8％

30.0％

Ratio of employees with disabilities

2.7%

3.0%

3.2%

Maintainabove 3%Paternity Leave Uptake Rate during fiscal year*2
Average number of days of paternity leave taken*2

150％
30 days

87.5％
30.4 days

100％
35.7 days

100.0％
40 days or
more

Ratio of mid-career hires promoted to
managerial positions

42.3％

46.2％

52.1％

Maintain at
50%

Comprehensive health risk fromstress check79 pts77 pts77 ptsDegree of occupational healthmanagement (standard deviation)

51.8

54.9

58.5

Injured persons in occupational
accidents

1

2

4

0

Number of work-related injuries
requiring at least one day of absencefrom work

0

0

0

0

Average monthly overtime hours

8.25

5.83

5.58

Less than
10

Paid leave uptake rate

70.2%

83.4%

81.4%

80% orabove

Workenvironment

Maintainunder
80 ptsWhite 500
certified(unofficial)*1 The survey on engagement covers Pigeon Corporation, Pigeon (Shanghai) Co., Ltd., and Pigeon Singapore Pte. Ltd.
*2 T he rate of paternity leave taken during fiscal year is determined based on a calculation method publicly disclosed by the Ministry of Health, Labour and Welfare. The average number ofpaternity leave days taken represents the average duration of parental leave taken by male employees before the child reaches the age of one year and six months during the reporting period.

Data Section

The Pigeon Group aims to be an organization where every employee can shine in their own way by acquiring and nurturing personnel withthe ability to think autonomously about what new products and services are demanded and how they can contribute to solving societal
issues, amid significant changes in the business environment. In addition, we are committed to continuously developing an environment
where employees can work
Human Resource
Vision of a Baby-Friendly Future
Societyactively and vigorously. We have
Strategy Overview
established a long-term vision for
Corporate Philosophy/Purpose
human resources and a humancapital action policy, envisioning
Key Issues (Materiality)that the Sustainable Growth andLong-term vision for
Purpose outlined in the 8th
human resources andCompany
Overall Group vision andhuman capital management
Medium-Term Business Plan can Pigeon Corporation policies
Degree of connection
and action policy
between the company
be achieved through the brillianceand the individual
and accomplishments of Group
Enhanced engagement
employees.
Human resource
Three pillars and eight foundations
behind the human resource strategy
supporting business growthP. 50

Sustainability

HR department in each BU(BU-level policy)

Notes:
1. GHO: Global Head Office, overseeing the entire Pigeon Group
2. B U: Four Strategic Business Units (Japan Business, China Business, Singapore Business, and Lansinoh
Business) responsible for business operation and growth

Human Resource Strategy

P. 51

Pigeon is promoting initiatives aimed at maintaining and improving various metrics toward realization of the key issue of “Managing
talent and cultivating the right culture for our Purpose.”
FY2021
FY2022
FY2023
FY2025(Results)(Results)(Results)(Target)Establish an environment in which diverse individuals
embrace new challenges and thrive in their own unique ways

Human resource strategy(From left) Takatoshi Uragari, Deputy Head of the Business Strategy Div.; Naoki
Wakayama, Senior Manager of the Human Resource Management Dept. andManager of the HR Strategy Section; and Yukika Watanabe, Manager of the HRM
Section (payroll & welfare)P. 51

Value Creation Story

Business strategy

HRM Section (payroll & welfare)(environment enhancement)

Promoting Diversity &Inclusion

Message fromthe President and CEO

Division managers in each BU

Pigeon Corporation
HR Strategy Section(HR development)

Enriched investment in
human resource development

Metrics and Targets

The Pigeon Group places greater importance than ever on our human resource strategy, recognizing it as essential for executing business strategies thatenable sustainable growth, even amid significant changes in the business environment. We believe in the potential of human capital as the source of value
creation, respect individuals with autonomy, and continually work to foster their growth and success while providing the necessary environment for theirachievements. We understand that our human resource strategy must be aligned with both our management and business strategies.
To achieve this, in 2024, we established the Human Resource Management Department within the Business Strategy Division of the Global Head Office(GHO). This allows us to consolidate information on organizational and personnel issues and initiatives from each business division that support theCompanyʼs overall business strategy. By coordinating with theBoard of Directors
Board of Directors as needed, we have created a system that
Supervising and monitoring of
enables us to provide guidance tailored to each business
important human resource strategies
division. We will implement various initiatives to further
enhance the overall value of the Groupʼs human resources,
Business execution
President & CEO
Consolidation of
ensuring that each individual can continue to shine in theirinformation
GHO: Human Resource
and guidance
own unique way.
Management Dept.,
Business Strategy Div.

PP. 50-51

Ambitious
organizational culture

Introduction

Aiming to Be a Company Where Every Employee Can Shine in Their Own Way

Working environments that achieveself-fulfillment and growth

PigeonGroup

Managing Talent andCultivating the Right
Culture for Our
PurposePigeon Corporation

Key Issue(Materiality)

Effective Paternity Leave Uptake Rate of 100% for Eight Consecutive Years*: Initiative Supporting Employee Childcare*Proportion of eligible individuals who utilized the system during the period when parental leave could be taken.

Pigeon Corporation, as a company dedicated to supporting parents and caregivers, has long been enhancing its employee childbirthand child-rearing programs. Since 2006, we have implemented the One-Month Together program, allowing employees to take one
month of paid leave following the birth of their child. It has now become commonplace for departments to discuss the timing of thisleave when a male employee ʼs spouse becomes pregnant. This has fostered an environment where paternity leave is regarded as
standard practice. As a result, the uptake of this leave among male employees has effectively reached 100% for eight consecutive
years, with an average of more than 30 days taken per leave.
One employee who took approximately three and a half months of paternity leave mentioned that after taking leave for their first child, hedesired to take a longer leave the next time, which he did with suppor t andencouragement during the consultation process. He noted that the opportunity tofocus more on childcare allowed him to deeply reflect on the efficiency of his work
style and the significance of his work.
Furthermore, all employees with children submit childcare reports, sharing theirexperiences and insights gained from childcare on the internal company website. By
cultivating employees who can discuss childcare, we harness their experiences tocontribute to the planning, development, and promotion of our products.

Pigeon Integrated Repor t 2023

49

Managing Talent and Cultivating
the Right Culture for Our Purpose

Three Pillars of the Human Resource Strategy

Eight Foundations of the Human Resource Strategy

1. Enhanced engagement

1. Human resource development

The Pigeon Group has initiated engagement surveys, recognizing the importance of employeesʼ strong empathy toward thePigeon DNA and the Pigeon Way, as well as their tangible connection to individual work and our Purpose.

2. Systems

Engagement Survey (2023)
Regular employees of Pigeon Corporation, Pigeon (Shanghai）Co., Ltd., and Pigeon Singapore Pte. Ltd.

〈Survey items〉

The survey included items provided by Gallup, Inc., along with the Pigeon Groupʼs unique statements: “I empathize with the Pigeon
Way the Company embraces,” “I feel that my teamʼs work contributes to the realization of Pigeonʼs Purpose,” and “I can be myself
in the workplace.” The response rate was 88.9%.
Based on the findings that there is a high correlation between theengagement score and the scores for the Pigeon Group ʼ s uniquestatements, we have set the average score of these three statements asa key performance indicator (KPI). We will promote initiatives aimed at
improving this score.

4.2 12025 target

Engagement score2023 result

Engagement score

4.11

Our Corporate Ethics Policies states that “Pigeon shall respect its employeesʼ humanrights and personalities at all times, ensuring them discrimination-free, equal job
opportunities and rewarding work environments, and offering them fair merit ratings to
help their self-fulfillment. ” We welcome motivated and talented individuals as
employees regardless of their nationality, race, gender, age, disability, gender identity,
sexual orientation, and other factors. We also strive to create a workplace environment
in which employees can maximize their abilities even when faced with different life
circumstances such as illness or the need for childcare or nursing care. We embrace,
respect, and utilize individual differences stemming from varied backgrounds toaddress ever-changing business conditions and diversifying customer needs. We
respect the civil and political rights of employees̶including freedom of expression,association, and religion̶and engage in dialogue with them about these rights. In
terms of labor, guided by the Pigeon DNA and the Pigeon Way, we consistently upholdhigh ethical standards and promote compliance-oriented management, respecting therights and human rights of workers both in Japan and abroad.

64%

62%

62%

62%

67%

33%

50%

61%

40%

Japanese employees
Non-Japanese employees
Scope of aggregation: Pigeon
Corporation and its domestic andoverseas consolidated subsidiaries

41%

40%

40%

30%
20%

30%
0%

50%
40%

40%

In Japan, we have implemented the Pigeon Frontier Awards (PFA) system to support andrecognize forward-thinking employees who embrace challenges without fear of failure,
allowing us to leverage their strengths to the fullest. Through this system, we invite all
employees to submit innovative ideas and new business concepts. Outstanding proposals
are not only rewarded but also developed with the potential for future commercialization.
All employees, regardless of their employment status̶be it regular, temporary, casual,or part-time ̶ are eligible to apply if they possess a strong desire and unwavering
dedication to realizing their ideas. Since introducing the system, we have received
applications from a wide range of departments.
Through the PFA initiative, we aim to foster an environment where employees can findjoy in their work and clarify their career aspirations, ultimately contributing to the creationof new high-value-added products and services. To learn more about the philosophy
behind projects born from the PFA, such as the new bottle cap and straw cap designed for
the Bonyu Jikkan® nursing bottles, please visit our website.

38%

39%

20%

21%

41%

41%

41%

24%

26%

27%

10%
Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023
(2023)(2019)(2020)(2021)(2022)
Ratio of female employees

Ratio of female managers

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).

0%
Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023
(2019)(2020)(2021)(2022)(2023)
Ratio of female employees

Ratio of female managers

Scope of aggregation: Pigeon Corporation
Managers are defined as those who have subordinates, as well as those
who do not have subordinates but hold equivalent positions (excluding
directors).

3. Establishment of an environment in which diverse individuals embrace new challenges and thrive in their own unique ways
The Pigeon Group believes it is essential to foster an environment where diverse individuals can maintain both physical andmental health, showcase their unique personalities and expertise, and strive toward their desired selves. We also emphasize theimportance of cultivating a culture that accepts failures during the process of taking on new challenges, enabling individuals tolearn and grow from their experiences. In addition, we have enhanced our human resource system to accommodate various life
events that employees might encounter. To ensure these systems are practical and effective, we actively disseminate
information to employees and work to promote their understanding.
50

Pigeon Integrated Repor t 2 02 3

Kaori Nagata, leader of the project for recycling
Bonyu Jikkan® nursing bottles, was awarded theGrand Prize at PFA 2022. (At the time of the PFA
submission, she was employed as a temporary
worker and was promoted to a regular employee
in 2023.)

Data Section

70%

Pigeon Corporation has been recognized as a Health & Productivity Management Outstanding
Organization 2024 (Large Enterprise Category) by the Ministry of Economy, Trade and Industry and
the Nippon Kenko Kaigi (“Japan Health Council”), showcasing its commitment to exemplary healthmanagement practices. Striving to create a workplace where employees can work energeticallyand maintain good health, we have established a health management promotion system directly
under the President and CEO. Collaborating with industrial physicians and health insurance
associations, we are dedicated to improving employeesʼ exercise habits and health literacy.

5. Culture and environment

Ratio of Female Employees and Managers(Pigeon Corporation)

60%

4. HealthSustainability

Ratio of Female Employees and Managers(Pigeon Group)

Pigeon Corporation has instituted the Accelerate My Career program to bolster employeesʼ self-driven career growth by offering
avenues to embrace diverse work styles, perspectives, and values. This initiative encompasses internal job postings, internships,
pro bono work, external postings, volunteer/pro bono leave, and various other opportunities. We equip employees with insights
and experiences beyond their routine tasks, empowering them to actively shape and propel their careers forward.

Value Creation Story

2. Promotion of DE&I

3. Career
Message fromthe President and CEO〈Survey results〉

Introduction

Pigeon Corporation operates a human resource system that includes “breadth and depth of expertise” as an evaluation criterion.
Furthermore, to secure and acquire outstanding talent, we have constructed a role-based wage system, ensuring acompensation structure linked not to age or length of service, but rather to the roles and responsibilities fulfilled by employees.
This approach ensures competitiveness in the market.

〈Scope of aggregations〉

Ratio of Non-Japanese
Employees(Pigeon Group)

The Pigeon Groupʼs human resource development policy aims to create a diverse team of specialists who possess advanced
knowledge and experience across various points of the value chain. These employees are expected to remain keenly aware ofsocietal changes, think about the future, and proactively update their skills and knowledge.

Website https://push.pigeon.info/article-63.html (Japanese only)
6. Health and safety
Pigeon Corporation is committed to initiatives centered on health management as measures for promoting the maintenance andenhancement of health. In addition, as part of efforts to establish a safe and comfortable workplace environment, we determine
and implement measures through discussions in the Health and Safety Committee and the Central Health and Safety Committee,
aiming to safeguard both the well-being of employees and the integrity of the workplace.

7. Work style
Pigeon Corporation has been implementing various measures to promote a work-life balance and enhance productivity under the
work-style reform slogan, “Smart & Smile! Work.” These initiatives include establishing a “Dash Day” for employees to leave theoffice on time, adopting efficient work practices through flexible hours and telecommuting, and generally discouraging e-mails
and meetings after regular working hours. By optimizing work styles and encouraging employees to take breaks and rejuvenate,
the uptake of annual paid leave increased from 54.2% in 2017 to 81.4% in 2023.

8. Work-life balance
Pigeon Corporation, as a company dedicated to supporting parents and caregivers, has long been enhancing its employee
childbirth and child-rearing programs. In 2024, we launched a new grandchild support system, enabling employees to take leave
upon the birth or caregiving needs of their grandchildren.
Pigeon Integrated Repor t 2 02 3

51

Establishing Solid Management
Foundations

Key Issue(Materiality)
Establishing SolidManagement
Foundations

What We Aim to Achieve

Reinforce our GHO/4SBU structure and enhance our corporate
governance framework encouraging ambitious endeavors to boost
corporate value over the medium to long term

PP. 52-54

P. 55

Reinforcing risk
management

Dialogue withstakeholders

P. 57

P. 13

Internal Audit

Value Creation Story

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. In conducting the audits, it focuses mainly on the effectiveness andefficiency of operations, the reliability of financial reporting, compliance, and asset protection, and makes 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
Group-wide internal controls and the financial process for closing accounts, pursuant to the basic plan for internal controls overfinancial reporting under the Financial Instruments and Exchange. Act, and to monitor the appropriateness of the development
and operation of these controls.

Sustainability

Evaluating the Effectiveness of the Board of Directors
The Company conducts an annual evaluation of the effectiveness of the Board of Directors with the aim of strengthening the Board andimproving its governance.

Regarding the effectiveness evaluation and analysis methods implemented in fiscal 2023
【Implementation period】October–November 2023
【Respondents】Directors and Audit & Supervisory Board Members (total: 13 people)【Implementation procedure】
Conducted a selfevaluation questionnaire
for Directors and Audit &Supervisory Board
Members (Response
Format: Five-stage
evaluation and freecomment)

Questionnaire
collection

Conducted individualinterviews with
Directors and Audit &Supervisory Board
Members

Questionnaire andinterview analysis

Review anddiscussion at theGovernanceCommittee

Data Section

Advisory Panels for
the Board of Directors

To further strengthen corporate governance in the Pigeon Group, we established the Governance Committee as an advisory panel to the Board of
Directors, chaired by an Independent Outside Director and with a majority of its members being Outside Directors and Outside Audit &Supervisory Board Members. The Committee deliberates on various issues related to corporate governance within the Group that have been
identified through the evaluation of the effectiveness of the Board of Directors and other measures from the perspective of promoting organic
coordination and integration and proactive implementation, and provides advice and recommendations to the Board of Directors. In fiscal 2023,
we looked at measures to realize human capital management, reviewed amendments to the Articles of Incorporation (business purposes),followed up on the performance of the functions of the Global Head Office, confirmed the progress of governance issues overall, andimplemented the evaluation of the effectiveness of the Board of Directors (analysis of evaluation results and consideration of countermeasures).

Message fromthe President and CEO

Corporate Governance Organization Chart

Pigeon Integrated Repor t 2023

Reinforcing
compliance

Governance Committee

The Company adopts the system of a company with Audit & Supervisory Board Members and has made rigorous legal audits by Audit &Supervisory Board Members the basis of compliance management. The primary management structures (meeting bodies) are as follows: The
Board of Directors comprises nine members (six men, three women; eight Japanese nationals, one foreign national) including five Independent
Outside Directors; the Audit & Supervisory Board comprises four members (three men, one woman; four Japanese nationals) including two
Outside Audit & Supervisory Board Members; and the Management Committee, headed by the President and CEO, comprises standing Directors
and Senior Managing Officers. The Company is working to enhance the diversity of each of the meeting bodies. In addition, the Company adopts a
mandatory executive officer system to provide for mutual partnership between decision-making and oversight (governance) of businessexecution and to clarify the operating responsibilities of Directors.
The Board of Directors makes decisions on matters (management objectives and important business-execution strategies such as the
management strategy) prescribed in laws and regulations, the Articles of Incorporation, and the “Board of Directors Rules” based on its authority
to supervise the execution of duties of directors and managing officers. The Board of Directors actively elicits the opinions of Outside Directors andAudit & Supervisory Board Members, and the supervisory function of the Board of Directors has been further strengthened by having an
Independent Outside Director serve as Chairman of the Board from 2023. Furthermore, apart from Board meetings, we hold a meeting on future
strategies biannually to eliminate information asymmetry among Directors and Audit & Supervisory Board Members and for them to discuss theGroupʼs management issues and strategies from a medium- to long-term viewpoint.
In addition to the Voluntary Nominating and Remuneration committees, for which the chair and a majority are Independent Outside Directors,
we established the Governance Committee in 2021 as an advisory panel to the Board of Directors aimed at further strengthening corporate
governance in the Pigeon Group. The Governance Committee is headed by an Independent Outside Director and has a majority of Outside Directors
and Outside Audit & Supervisory Board Members.
Audit & Supervisory Board Members attend meetings of both the Board of Directors and the Management Committee, where they deploy theirexperience in the field to swiftly resolve issues. In addition to enhancing the supervisory function through expression of opinions and the like, Audit& Supervisory Board Members listen to directors, view important resolution documents, examine the current status of business and financial
assets, and otherwise conduct meticulous supervision and oversight in accordance with audit policy and segregation of duties. They also meet
regularly with the President and CEO, receive reports on matters such as important company issues, and carry out frank exchanges of opinion.
Under the current management
General Meeting of Shareholders
structure, centered on the Board of
Appoint/Dismiss
Appoint/
Appoint/
Decision-Making/Supervisory Functions
Dismiss
Dismiss
Directors, the Audit & Supervisory
Governance Committee with
Audit Functions
5 Directors and 2 Audit &Board, and the Management
Supervisory Board Members
Appoint/(Outside Directors: 2,
Committee, Pigeon is working toDismiss/
Outside Audit & Supervisory Board Members: 2)
Audit & Supervisory Board
Consult
with 4 Members
improve corporate governance by
Board of Directors
Voluntary Nominating(Outside Audit &
Audit
with
9
Directors
Supervisory Board Members: 2)
Committee
with5
Directors
expanding the diversity of the Board of(Outside Directors: 5)(Outside Directors: 3)
Advise/Directors through the appointment of
ProposeVoluntary Remuneration
Audit
ReportAppoint/
Committee with 5 Directors
more Outside Directors; establishing
Dismiss/(Outside Directors: 3)
Cooperation
Superviseand operating the Voluntary Nominating
Accounting Auditors
Business Execution Functions
Accounting
Committee, the Voluntar y
Cooperation
Audit
President & CEO
Appoint/
Remuneration Committee, and theDismiss
Audit Department
Risk Management
Instruct Management
Governance Committee as advisory
Internal
Committee
Committee
Audit
ReportPlace matters on
the agenda/Reportpanels to the Board of Directors; and3 Executive Managing Officers
Sustainability
12 Managing Officers
actively exercising the supervisory
Committee
Instructfunction of the Audit & Supervisory
Business Departments and Group Companies
Board.

52

Reinforcing group
governanceIntroduction

Corporate GovernanceIndividual Issues

Deliberations at theBoard of Directors
based onrecommendations
from the GovernanceCommittee【Questionnaire items】(i) The role and function of the Board of Directors(ⅱ) The composition and size of the Board of Directors(ⅲ) Operation of the Board of Directors(ⅳ) Coordination with auditors(ⅴ) Providing opportunities for Outside Directorsʼ success(ⅵ) Engagement with shareholders and investors(ⅶ) Advisory panels (Voluntary Nominating Committee, Voluntary
Remuneration Committee, and Governance Committee)

Please refer to the following page for fiscal 2022 issues and initiatives, fiscal 2023 evaluation results and issues, and future efforts.
Pigeon Integrated Repor t 2023

53

Establishing Solid Management
Foundations

Evaluating the Effectiveness of the Board of Directors
Regarding fiscal 2022 issues, fiscal 2023 evaluation results and issues, and future efforts
Issuesidentified at
the fiscal 2022
evaluation

The Company confirmed that the Company ʼ s Board of Directors and advisory panels makeappropriate decisions through open and active discussions, taking advantage of the diverse
expertise, values, and perspectives of its Outside Directors and other members, and that they play
an effective role in enhancing corporate value over the medium to long term.

54

Pigeon Integrated Repor t 2023

Analyze results and reflect(2) Enhance awareness and knowledge, andcreate an organizational culture(3) Check whether system and educational
efforts, etc., are functioning properly

Compliance education

Compliance monitoring
Analyze results and reflect(1) Compliance-related rules
Based on the Pigeon DNA and the Pigeon Way, the Group has established a basic policy on compliance called the“Corporate Ethics Guidelines.” The Corporate Ethics Guidelines have two components: corporate ethics policies, which
comprise the ethical sensibility we must hold to continue to earn the trust and support of society, and a code of conduct,
which comprises guidelines that spell out how each employee embodies the corporate ethics policies in businessactivities. Based on the Corporate Ethics Guidelines, the Group is committed to ensuring that every employee complies
with all laws, regulations, social norms, and their spirit and takes actions with the highest sense of ethics and integrity,
thereby earning more trust and support from stakeholders. Moreover, in the three areas that are considered to pose aparticularly high risk within the entire Group̶“Anti-bribery and Corruption,” “Antitrust Compliance,” and “Information
Management”̶we have established “Compliance Policies” that outline specific actions to be taken and the necessary
systems and mechanisms. Furthermore, to detect and resolve compliance violations, we have the following internalreporting systems in place: the “Speak-Up Desks” (for Pigeon Group employees to make reports through three contact
points: the Audit & Supervisory Board Members, the Legal Department, and a corporate attorney) and the “Pigeon Partners
Line” (for customers to make reports through two contact points: the Legal Department and a corporate attorney). For the
Speak-Up Desks, we launched a multilingual reporting system that ensures anonymity in 2023. If a problem is found in or
outside the Company, the Risk Management Committee or the person in charge of the internal reporting system, such as
Audit & Supervisory Board Members, investigates the facts and responds to the report, giving due consideration to theprotection of the person who made the report, and the Risk Management Committee takes measures to prevent
recurrence as necessary. When responding to the reports made through these systems, we consult with a corporate
attorney as necessary to ensure the legality of our responses and solutions. In fiscal 2023, there were six Speak-Up Desk
reports and zero Pigeon Partners Line reports.
(2) Compliance education
The Pigeon Group aims to raise the compliance awareness of all Group employees by providing them with complianceeducation based on the Pigeon DNA and the Pigeon Way, the Corporate Ethics Guidelines, the Compliance Policy, theinternal reporting at the Company and Group companies in Japan and overseas.
In 2023, we provided employees with training with a focus on the internal reporting system and the Compliance Policy.
Through the training, all Group employees learned how to utilize the new internal reporting system launched in 2023 inreference to our own created materials and deepened their understanding of the Compliance Policy through case studies.
After the training, participants were asked to reply to a questionnaire, and the results have been utilized to improve thecontent of our compliance education and training. In addition, we circulated the monthly “ Pigeon Compliance
Communication” newsletter to employees of the Company and all domestic Group companies on the theme of the Group ʼsinternal reporting system and the Compliance Policy, with an eye to instilling the compliance that employees should
practice in their daily work.

Data Section

Future efforts(in fiscal 2024)

We will continue to review and take necessary measures to maintain and improve the effectiveness of
the Board of Directors, improve corporate value, and achieve sustainable growth over the medium tolong term, focusing on the following:・Demonstrate more advanced supervisory functions by the Board of Directors:
Strengthen confirmation and supervision of important matters including Group governance・Achieve more substantive engagement with stakeholders:
Further enhance information disclosure given requests for “efforts to realize management with anawareness of capital costs and stock prices”
・Systematic organization of officer training:
Organize officer trainings specific to internal, external, and newly appointed personnel, andexpand as necessary

Formulate (revise) and implement
compliance-related rules

Sustainability

The following issues have been identified as needing to be addressed in the future to realize the
Purpose and sustainable growth.
・Demonstrate more advanced supervisory functions by the Board of Directors
・Achieve more substantive engagement with stakeholders
・Systematic organization of officer training(1) Develop compliance systems and mechanisms

Value Creation Story

fiscal 2023
evaluation
results andissuesRegarding the issues recognized in the fiscal 2022 evaluation, we confirmed that progress has been
made as follows:
・Among Key Issues (Materiality), new business (business portfolio), human capital/appointment of
women to higher positions, and business in China were selected as agenda items. They werediscussed, and progress was confirmed at the Board of Directors meeting. Regarding business in
China, we also had a business trip to the country (e.g., visiting Chinese business bases), so wewere able to improve our understanding and have discussions on that item.
・By holding a preliminary briefing and applying bulk deliberations, we were able to operate theBoard of Directors meeting with a more balanced time allocation and to secure sufficient time foragenda items that require time for discussion.
・ An outside director assumed the position of chair of the Board of Directors and facilitatedlistening to a wide range of opinions from inside and outside directors, which enabled more lively
discussions.

Reflect (with the intention of promoting
awareness and thoroughimplementation of the system)

Message fromthe President and CEO

The Company continuously addressed operational improvements aimed at further invigorating
discussions by the Board of Directors, focusing on the following:・Selected Key Issues (Materiality) to be discussed at the Board of Directors meeting in fiscal 2023, setthem as agenda items for the Board of Directors meeting schedule in advance, and discussed them.
・With the appointment of an outside director as the chairman of the Board of Directors, we secured
time for discussion at the Board meetings by streamlining Board operations, such as by holding
preliminary briefings and applying bulk deliberations.

The Pigeon Group has been implementing compliance-related measures with a focus on the following three pillars. We
are examining and implementing these measures to 1) prevent compliance violations and 2) detect and resolve
compliance violations as soon as possible. Compliance-related measures are reported annually to the Board of Directors.

Introduction

Initiatives infiscal 2023

The Company set the following issues to be addressed in the future to realize the Purpose of the Pigeon Way.
・Continuous operational improvements aimed at further invigorating discussions by the Board of
Directors, such as strengthening discussions and progress checks on Key Issues (Materiality).

Compliance(3) Compliance monitoring
By regularly conducting compliance monitoring for all domestic and overseas Group employees, we identify and analyze
compliance risks in the Group. We then reflect the results in the compliance rules and education described above, aiming
to reduce the compliance risks of the Group and raise awareness toward compliance of the employees and executives of
the Group.
In 2023, we conducted compliance monitoring, and tabulated and analyzed the results for the entire Group and for eachGroup company. Based on the results for the entire Group, we identified issues such as the lack of knowledge about theinternal reporting system including the details of the protection given to whistleblowers, as well as the tendency toprioritize business performance. Accordingly, we will examine and implement specific compliance measures to be
implemented in and after 2024 to raise employeesʼ awareness and understanding about the internal reporting system andthe importance of giving priority to compliance.
Pigeon Integrated Repor t 2023

55

取締役会

Establishing Solid Management
Foundations

代表取締役社長
報告・相談

内部
通報制度

GHOリスクマネジメント委員会
GHO
指示

Tax Initiatives

報告

Risk Management

The Pigeon Group has established the Global Tax Policy as a group regulation based on a resolution by the Board of Directors.
The policy outlines matters such as the ultimate responsibility for tax management within the Group, our approach to tax
payment, and the policy for tax risk management.

中国事業

シンガポール事業

ランシノ事業

Introduction〈Global Tax Policy〉
Pigeon Group has established Corporate Ethics Guideline as a universal guideline to implement compliance (compliance withlaws and corporate ethics) management. We comply with all laws and regulations, social norms and their spirit, and each andevery employee is expected to act in good faith with higher ethical standards.

日本事業

Governed by the Pigeon Groupʼs Rules for Risk Management, the Global Head Office (GHO) Risk Management Committee is chaired
リスクマネジメント委員会
リスクマネジメント委員会
リスクマネジメント委員会
リスクマネジメント委員会
by the director for GHO, under the supervision of the president and CEO. Reporting directly to the GHO Risk Management
Committee are the Risk Management Committees of each business segment, chaired by the respective heads of operations in
事業セグメント傘下
事業セグメント傘下
事業セグメント傘下
事業セグメント傘下
each segment, namely
the Japan Business, グループ会社
the China Business, theグループ会社
Singapore Business, andthe Lansinoh Business. This
各本部／グループ会社
グループ会社
framework facilitates the collection of risk-related information across the entire Group, implements necessary controls, andenables swift response to risk issues by each segment.
Board of Directors

Approach to Tax Payment
President and CEO
Internal
Whistleblowing
SystemReporting andconsultation

GHO GHO
Risk Management Committee
Instruction

Governance Structure
The Board of Directors of Pigeon Corporation (hereinafter referred to as “Pigeon”) is ultimately responsible for the tax
operations of the Pigeon Group. The Global Head Office Accounting & Finance Managing Officer of Pigeon formulates andexecutes tax policies based on delegation from the Board of Directors.

Compliance

Ensuring Transparency
We disclose our approach to tax and strive to ensure transparency.

Tax Incentives and our Relationships with Tax Authorities
When considering the use of tax incentives that aligns to our commercial objectives, we ensure to maintain good
relationship with tax authorities by respecting the intended objectives of the benefits. We are committed to responding to
the inquiries from tax authorities in a prompt, transparent, and a courteous manner. When a conflict in opinion rises
between tax authorities, we will strive to resolve the conflict through constructive dialogue.
We comply with the OECD Transfer Pricing Guidelines and determine our transfer price based on the取締役会
armʼs length principle.
：年度活動の評価
We will not use tax havens for the purpose of tax avoidance or use artificial schemes lacking commercial
substance.

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 BUGroup Companies
in the BUGroup Companies
in the BUGroup Companies
in the BU

The GHO Risk Management Committee systematically collects, analyzes, and evaluates the risk information it gathers fromthroughout the Group, centered on the risk information it collects from each business segment. On its own or through therespective business segments, the GHO Risk Management Committee then examines and implements response measures. In
particular, key risks are being addressed primarily by the departments in charge of risk as nominated by the GHO Risk
Management Committee. These departments collate information and examine and implement measures across the Group.
The Risk Management Committees in each business segment collect, analyze, and evaluate risk information pertaining totheir respective segments, including risk information related to Group companies within the same segment, and consider andimplement response measures.
リスクマネジメント委員会：活動の年度計画：全社リスクアセスメントの計画

Board Meeting- Evaluation of Annual Activities

Sustainability

Cross Border Transactions and Transfer Pricing

Reporting

Value Creation Story

We act as a good corporate citizen in all countries and jurisdictions we operate in with a high sense of ethics. We arecommitted to paying the right amount of tax at the right time. We comply with all relevant laws and regulations, following
both the spirit and the letter of the law.

Message fromthe President and CEO

We believe it is essential to commit to the society through tax contributions to realize our Purpose. Further, we believe thatappropriate tax operations will contribute to our business growth and maintain trust from our stakeholders. Based on thisbelief, we define the roles of each member engaged in tax activities, and in order to ensure tax compliance, establishedand published Global Tax Policy based on the resolution of the Board of Directors.

Risk Management Committee- Annual Plan of Activities- Company-wide risk assessment plan

Tax Risk Management
Any potential tax risk that may have a material impact on the Group will be reported to the Board of Directors of Pigeon at
an appropriate timing. To mitigate our tax risk for complex tax matters or issues requiring an ambiguous legal
リスクマネジメント委員会
interpretation, we will consult with independent external advisors as needed.
：年度活動のレビュー

全社リスクアセスメントの実施：リスクの特定、リスク分析、
リスク評価
リスク低減活動の実施

Risk Management Committee- Review of Annual Activities- Sharing risk analysis- Monitoring of priority risks

Conduct company-wide risk assessment- Risk identification, risk analysis, risk assessment
Implementation of risk reduction activities

Data Section：リスク分析の共有：重点リスクのモニタリング

Shareholding Status
Criteria and Considerations for Categorizing Investment Stocks

The Pigeon Group classifies stocks primarily held for benefiting from fluctuations in stock value or dividends as “investment
stocks held for pure investment purposes,” while categorizing others as “investment stocks held for purposes other than pureinvestment.” Pigeon does not hold any “investment stocks held for pure investment purposes.”

In addition to responses during normal times, in the event of a crisis affecting the Group, such as a large-scale disaster, the Risk
Management Committee promptly convenes in accordance with the Risk Management Regulations or the Business Continuity Plan
(BCP) and responds to minimize losses and restore operations. In the event of a serious risk or incident, the GHO Risk Management
Committee reports to the Board of Directors on the details and results of the response, as appropriate.
Activities of the GHO Risk Management Committee (2023)

Shareholding policy for “ investment stocks held for purposes other than pure investment, ” the method ofverification of the rationale for shareholdings, and details of verification by the Board of Directors, etc., regarding
the appropriateness of holding individual stocks
Our shareholding policy involves strategically holding shares of issuing companies when we determine that fosteringsynergies through strengthened relationships and collaboration associated with the shareholding will contribute to thesustainable enhancement of the Groupʼs corporate value over the medium to long term. When assessing the rationale forshareholdings, we verify, on a case-by-case basis, the actual returns and trading conditions based on our cost of capital,
and review these, including the appropriateness of the holdings, at Board of Directors meetings. As of December 31, 2023,
Pigeon held only one overseas listed stock.

56

Pigeon Integrated Repor t 2023

Number of meetings

Twice a year

Reports to the Board of
Directors

Twice a year
・Sharing of information on Group risks and incidents
・Formulating measures to mitigate key risks andActivities

manage progress

・Reporting on the results of risk assessments

conducted and risk mitigation measures
implemented across the entire GroupKey Risks monitored by the GHO
Risk Management Committee
・Compliance・Finance
・Information security
・Supply Chain Management (SCM)
・Customer complaints

Note: Human rights added in fiscal 2024

Pigeon Integrated Repor t 2023

57

Establishing Solid Management
Foundations

Executive Renumeration System
Basic policy on executive remuneration
The Company ʼ s basic policy on remuneration for Directors (hereinafter “ executive remuneration ” ) shall be as follows, inaccordance with the aforementioned Pigeon DNA and Pigeon Way, the Key Issues, and the Basic Policy of Corporate
Governance:（iii）It should be highly independent, objective, and transparent, and accountable to stakeholders.

Remuneration levels

Remuneration mix

Position

Remuneration Level

President

100％

Vice president

80％

Senior managing executive officer

60％

Managing executive officer

50％

Director

40％

The remuneration for the Company’s Directors (excluding Independent Outside Directors) consists of “basic remuneration” commensurate withposition, “bonuses” provided as short-term incentives, and “stock remuneration” provided as a medium- to long-term incentive. The
remuneration for Independent Outside Directors and Audit & Supervisory Board Members consists of “basic remuneration” only.

Managing Talent and Cultivating
the Right Culture for Our Purpose(ii) Standard model for the composition of Director (excluding Independent Outside Directors) remuneration (if the achievement level ofeach indicator is 100%)

Value Creation Story

Note: “Bonuses” and “stock remuneration” are applicable to performance-based remuneration, and “stock remuneration” is applicable to non-monetary remuneration pursuant to Article 98,
Paragraph (5), of the Regulation for Enforcement of the Companies Act.

after deliberation at the Voluntary Remuneration Committee.
The valuation ratio for each indicator is as shown on the right.

Message fromthe President and CEO

The Company determines levels of executive remuneration in accordance with theaforementioned “Basic policy on executive remuneration,” after surveying and analyzing its
business environment and the compensation levels in its peer group of companies in the same
industry (manufacturing) and of the same size, through external databases and other research.
Remuneration levels for each position are listed as shown on the right (with the president as 100%).

Introduction（i）It should contribute to “management that improves the corporate value” of the Group over the medium to long term;（ii）It should contribute to the hiring of talented managers toward solving the Key Issues based on the Pigeon DNA and the Pigeon Way; andStock remuneration
Stock remuneration is paid at the time of retirement for the purpose of granting an incentive to improve the Group’s medium- to long-term
performance and corporate value, and to place Directors in the “same boat” as the shareholders (thus giving Directors and shareholders ashared interest).
In principle, the remuneration will vary within a range from zero to 150%, in accordance with the achievement level of targeted financial
indicators related to consolidated performance set out in the Medium-Term Business Plan (EPS (Earnings per Share), the growth rate, TSR(Total Shareholder Return), and ROIC) and indicators related to the Key Issues (reducing our environmental impact, contributing to theresolution of social issues, and managing talent and cultivating the right culture for our Purpose), based on the base amount of the stock
remuneration determined for each position. Financial indicators related to consolidated performance are used to further improve businessprofitability and efficiency, as well as to increase our corporate value over the medium to long term. Regarding indicators related to the Key
Issues, we will work to contribute to social issues surrounding
Indicator
Valuation Ratio
babies, their mothers, and their families, as well as reduce factors
EPS growth rate
30％
that lead to environmental load in all countries and regions in
Consolidated
TSR (relative comparison)30％
which the Group operates, by fostering a corporate culture that
performanceallows diverse human resources to take on challenges and grow to
ROIC
20％
be themselves, with the aim of making the world more babyReducing Our Environmental Impact
friendly. If there is a significant change in the targets set out in theMedium-Term Business Plan, the Board of Directors determines
Contributing to the Resolution of
20％
Key Issues
Social Issues
the appropriateness of the target values for stock remuneration,(i) Overview of remuneration types
Basic remuneration
Positions are determined in accordance with the roles and responsibilities of each Director in the Company’s four business departments.
Monetary amounts are decided by position and paid as monthly remuneration.

Key Issues

58

Pigeon Integrated Repor t 2023

Enhancing Business Competitivenessand Resilience
Establishing Solid Management
Foundations

10％

Basic remuneration

60％

Bonuses20％

Stock remuneration

20％<Indicators related to the Key Issues for bonuses and stock remuneration and reason for selection>
Indicators and achievement rates related to Key Issues for bonuses and stock remuneration are shown below.
Remuneration

Key Issues

Indicators

WeightTarget Value

2023
Achievement Rate

Enhancing
Business
Competitivenessand Resilience

Increase inratio ofwide-necknursingbottles

High-quality nursing bottles and nipples that canbe used with peace of mind, developed based on
intensive research into babiesʼ sucking behavior,
are among Pigeonʼs strengths. Expanding our rangeof wide-neck nursing bottles, which embody our
research findings, is crucial for enhancing ourbusiness competitiveness and resilience.

5％

Set by the SBU

50%

Establishing
Solid
Management
Foundations

Maintenanceandimprovementof ESG scores

We strive to enhance corporate value (economic
and social value) while concurrently seeking tostrengthen governance structures that support
its realization. The adoption of external agency
scores allows for an objective evaluation of these
initiatives.

5％

FTSE 3.8 orhigher, MSCI BBB
or higher

150％

Reducing Our
Environmental
ImpactExecution of
the Pigeon
Green ActionPlan

We believe that implementing the Pigeon Green Action
Plan, aimed at achieving decarbonization, a circularsociety, and coexistence with nature, contributes
to leaving a rich earth for the future of babies born
tomorrow.

5％

Execution of theprovisions of the
Pigeon Green
Action Plan-

Contributing
to theResolution ofSocial Issues

Diversesupport andawareness
activities forchildcare

Executing diverse support and awareness activities
for childcare helps to resolve social issues affecting
babies and their families and fosters joy andhappiness through parenting.

5％

Set by the SBU-Managing
Talent andCultivating theRight Culture
for Our Purpose

Enhancementof employee
engagement

We believe that the highest priority lies in cultivatinga strong resonance with the Pigeon Way embracedby the Company, and in ensuring that each
employee feels their work is deeply connected to
our Purpose.

10％

0.1 above theaverage score ofthree of our original
engagement
questions-

BonusesStockremuneration

Reason for Selection

Pigeon Integrated Repor t 2023

Data Section

the right.

Composition Percentage

Sustainability

Bonuses
Bonuses are paid in March every year for the purpose of granting incentives to improve the Group’s consolidated performance and to solve
the Key Issues.
In principle, the amount will vary within a range from zero to 150%, in accordance with the achievement level of targeted indicators
related to consolidated performance (net sales, operating income, and PVA (Pigeon Value Added, the Company’s original performanceindicator)) and indicators related to the Key Issues (enhancing business competitiveness and resilience and establishing solid managementfoundations), based on the base amount of the bonus determined for each position. Indicators related to consolidated performance areused to drive the expansion of the scale and earnings of our main business and the creation of corporate value that exceeds the cost ofcapital. With regard to the indicators related to the Key Issues, to make the world more baby-friendly, we aim to be a company essential tosociety by expanding our corporate value over the medium to long term by building a solid system that can “create,” “produce,” and“deliver” and by working to strengthen the GHO/4SBU system and enhance corporate governance that enable employees to take on
aggressive and bold challenges. We will also actively engage with shareholders and investors to ensure that they share and support theseideas, thereby building a solid management base to continue to be close to babies.
To calculate the targets, we use the performance forecasts published in the summary of financial results at the beginning of each period
for net sales and operating income, and the initial fiscal-year plan for PVA and indicators related to the Key Issues (enhancing businesscompetitiveness and resilience and establishing solid management foundations).
For Executive Directors in charge of department(s), bonuses will vary within a range from zero to 150%, in accordance withthe achievement level of targets, with consolidated
performance and the Key Issues accounting for 70%
Indicator
Valuation Ratio
and the performance of the Directors’ respective
Net sales
40％
departments (in net sales, operating income, andConsolidated
Operating income
30％PVA) accounting for 30%.
performance
PVA
20％
The valuation ratio for each indicator is as shown on

Type of Remuneration

59

Establishing Solid Management
Foundations

Voluntary Remuneration Committee

Voluntary Nominating Committee

・Governance of executive remuneration
・Whether it is necessary to revise the executive remuneration policy・Remuneration levels of individual executives (base amount by position)・Performance targets and evaluation table for bonuses and stock remuneration
・Performance evaluations, individual payment amounts, andother considerations for bonuses in the previous fiscal year

considerations for stock remuneration in the previous fiscal year

・Status of initiatives of the Medium-Term Business Plan and the Key Issues
・Factors such as level, composition, and indicators of executive

remuneration using external data and other research・The necessity of response to executive remuneration due to changes inthe external environment and business environment
・Improving the effectiveness of the Voluntary Remuneration Committee

Nomination and Dismissal of Candidates for Director

・Executive nomination policy
・Personnel requirements for the CEO・Standards for the appointment and dismissal of Directors
・Succession planning for Independent Outside Directors

Table (ii) Main duties and expected results
Key Issues

Main Duties

Enhancing Business
Competitiveness and Resilience

Build a business model and strategy to become essential
to society.

Establish a business model that achieves sustainable growth andimproves corporate value over the medium to long term.

Reducing Our
Environmental Impact

Build frameworks that promote the sustainable reductionof environmental impact to leave the Earth favorable forthe future of babies born tomorrow.

Set numerical targets for each separate challenge and execute measuresto achieve these targets.

Contributing to the
Resolution of Social Issues

Build a mechanism to encourage the development of nextgeneration businesses and products to resolve social
issues that affect babies and their families.

Carry out the development of next-generation businesses and productsthat help solve social issues, with consideration for the entire value chain.

Managing Talent andCultivating the Right Culture
for Our Purpose

Cultivate the right culture in which diverse humanresources are motivated to take on challenges and grow tobe themselves to make the world more baby-friendly.

Promote diversity and a work-life balance, and carry out initiatives toward
diverse work styles.
Ensure that there are future CEO candidates for the next and following
generations.

Establishing SolidManagement Foundations

Build a management base that enables employees toactively take on challenges to increase corporate value
over the medium to long term.

Carry out both proactive and reactive measures to strengthen the
management base.
Meticulously provide information to stakeholders, engage in two-way
communication with them, and get them on board with the Company’splans and actions.

Behavioral
characteristics<Term of office of Directors>

Has foresight and leads reform personally, without being hindered by past success or common knowledge

Development and proliferation of ourvision and corporate culture
Envisioning, planning, andexecution of strategies
Development of human resources
and the organization

Promotes the wide adoption of the Pigeon DNA and the Pigeon Way as well as a healthy corporate culture
through strategic engagement with stakeholders
Proposes management strategies and a grand design that reflects our corporate culture, and allocatesmanagement resources in an optimal manner
Develops successors to the CEO and other management positions, and develops an organization that is
accepting of diversity, in order to ensure sustainable growth over the medium to long term

Building corporate governance

Increases the quality and speed of management by building a proactive and reactive governance system

Interest and curiosity

Sensibility and ingenuity

Has a strong interest in and diverse perspectives regarding the Company’s products and services, anddisplays an attitude of learning through a cycle of “creating, making, and delivering”
Has the courage to pursue dreams and take on challenges, and a strong commitment and passion topersevere until success is achieved
Carries out two-way communication with stakeholders, displays sensitivity, and focuses energy on
having empathy
Continually develops sensibility, and devises ways to carefully consider and carry out what is not being
done by others

Sincerity and trustworthinessIs sincere, achieves missions in the proper way, and is trusted by employees

Sensitivity and empathy

Data Section

Personality
characteristics

Details

Innovative leadership

Passion and romanticism

Sustainability

Item

Has a record of contributing to the improvement of corporate value (social and economic value) in the
top management of Group subsidiaries
Has created new value by inventing new businesses, products, and services
Experience and achievements
Has managed multiple functions, regions, or locations<CEO successor plans>
Successor plans for the CEO are deliberated by the Voluntary Nominating Committee, in accordance with the “Human resource requirements of the Chief Executive
Officer (CEO)” referenced above. Namely, the results and content of outside assessments of training for the development and selection of the next generation ofmanagement human resources for CEO candidates, evaluation regarding personnel, and career planning are deliberated. The Board of Directors oversees successor
plans to verify that they are conducted appropriately, based on reports on deliberations by the Voluntary Nominating Committee.

Expected Results

Table (iii) Required competencies<Standards for the appointment and dismissal of senior management, Directors, and the CEO>The policy for appointing senior management shall be to make appointments from an objective perspective, based on the “Human
resource requirements of the Chief Executive Officer (CEO)” referenced above, and with reference to external assessments and otherinformation. The appointment is referred to the Board of Directors to be decided, after deliberation by the Voluntary Nominating
Committee. The appointment of Directors and the CEO is referred to the Board of Directors to be decided, after deliberation by the
Voluntary Nominating Committee, based on the “Human resource requirements of the Chief Executive Officer (CEO)” referenced above.
If a Director or the CEO meets the criteria for dismissal defined below, or there is a concern that actions have been taken that meet thesecriteria, the Voluntary Nominating Committee shall swiftly seek advice from the Board of Directors and deliberate based thereupon.
a) Suspected misconduct, inappropriate actions, or disloyaltyb) Recognized illegal or otherwise disqualifying actionsc) It has been determined that the process or results of carrying out duties are inadequate, and it is no longer appropriate for theindividual to continue his or her current dutiesd) ROE is below 5% for three consecutive fiscal years (CEO only)・Roles of the Chairman of the Board
・Skill matrix of the Board of Directors
・Succession planning for the CEO and management
・Candidates for Director
・Term of office and tenure for Directors
・Improving the effectiveness of the Voluntary Nominating Committee

Value Creation Story

Human resource requirements of the Chief Executive Officer (CEO)The ideal human qualities necessary for the role of Chief Executive Officer (CEO) of the Company are human qualities that can enhanceresourcefulness and continuously increase the Companyʼs corporate value (social and economic value), based on the values of the Pigeon DNA
and the Pigeon Way. The human resource requirements of the CEO (responsibilities and authority, main duties and expected results, andrequired competencies (behavioral characteristics, personality characteristics, experience and achievements, and knowledge and skills)) aredetermined based on the Pigeon DNA and the Pigeon Way, the Key Issues, and the Basic Policy of Corporate Governance.
(i) Responsibilities and authority
The responsibilities and authority of the CEO are determined based on the Pigeon DNA and the Pigeon Way, the Key Issues,and the Basic Policy of Corporate Governance.
Responsibilities: Responsible for processes and results that increase corporate value (social and economic value) based on thevalues of the Pigeon DNA and the Pigeon Way to contribute to the improvement of social sustainability
Authority: Has the authority to make final decisions regarding the optimal allocation of management resources to improve
corporate value (social and economic value)(ii) Main duties and expected results
The main duties and expected results of the CEO are determined based on the “Responsibilities and authority” referenced
above (see the table on page 61).
(iii) Required competencies
The required competencies of the CEO are determined based on the “Responsibilities and authority” referenced above (see the table on page 61).

Main agenda of the Voluntary Nominating Committee
Message fromthe President and CEO

Main agenda items of the Voluntary Remuneration Committee・Performance evaluations, individual payment amounts, and otherTo increase the independence, objectivity, and transparency of the determination process for appointment, dismissal, and nomination of Directors, a
Voluntary Nominating Committee has been established as an advisory panel to the Board of Directors, consisting of a chairperson and a majority of
Independent Outside Directors. In principle, the Voluntary Nominating Committee shall meet at least four times per year, deliberate on issues including thestandards for appointment and dismissal of Directors as well as CEO successor plans, and provide advice and proposals to the Board of Directors. The Boardof Directors in turn follows such advice and proposals to the greatest extent possible in its decision-making. To introduce an objective perspective fromoutside of the Company, as well as expertise on nominations, the Company employs an outside consultant, with whose support it considers the details of
the standards for appointment and dismissal of Directors as well as CEO successor plans and other issues, taking into account matters such as externaldata, the economic environment, industry trends, and management conditions. In addition, to enhance the effectiveness of the Board of Directors, we areworking to coordinate the Voluntary Nominating Committee and the Voluntary Remuneration Committee on activities related to Director nomination andremuneration. We also evaluate the effectiveness of the Voluntary Nominating Committee in evaluating the effectiveness of the Board of Directors.

Introduction

To increase the independence, objectivity, and transparency of the details of the executive remuneration system, the Voluntary Remuneration
Committee has been established as an advisory panel to the Board of Directors, consisting of a chairperson and a majority of Independent Outside
Directors. The Voluntary Remuneration Committee shall meet at least four times per year, deliberate primarily on the following main agenda items
regarding executive remuneration amounts, calculation methods, and policy for deciding the content of remuneration per individual, and provide
advice and proposals to the Board of Directors. The Board follows such advice and proposals to the greatest extent possible in its decisionmaking. Please note that executive remuneration will be paid within the limit of remuneration adopted at the General Meeting of Shareholders.
To introduce an objective perspective from outside of the Company, as well as expertise on the executive remuneration system, the Company
employs an outside consultant, with whose support it considers the details of the remuneration system, while taking into account matters suchas external data, the economic environment, industry trends, management conditions, employee remuneration amount, and dividend amount.
In addition, to enhance the effectiveness of the Board of Directors, we are working to coordinate the Voluntary Nominating Committee andthe Voluntary Remuneration Committee on activities related to director nomination and remuneration. We also evaluate the effectiveness of the
Voluntary Remuneration Committee in evaluating the effectiveness of the Board of Directors.

Has experience conducting management under chaotic conditions, including start-ups, reorganization,
rehabilitation, and restructuring
Has knowledge of all businesses, customers, and market trends
Knowledge and skills

Has management knowledge (e.g., marketing, accounting, management strategy, finance, humanresource and organizational strategy, governance, business management)
Has the English-language ability to converse directly with global stakeholders

The term of office of Directors (including Independent Outside Directors) shall be one year.
60

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

61

Establishing SolidManagement Foundations

Directors/Audit & Supervisory Board Members/
Managing Officers

Directors (As of March 28, 2024)
Areas of Expertise Demanded of the Board of Directors

Norimasa Kitazawa
Number of the Company’s commonshares held: 44,416(Includes 16,516 shares to be
granted based on the stock
remuneration system)

Director, Senior Managing
Executive Officer

Tadashi Itakura

Director, Executive Officer

Kevin Vyse-Peacock

Ryo YanoLansinoh Business Division Manager/
CEO of Lansinoh Laboratories, Inc.
Number of the Company’s commonshares held: 6,605(Includes 6,605 shares to be granted
based on the stock remuneration system)

In charge of: China Business
Division/Singapore Business Division
Number of the Company’s commonshares held: 3,991(Includes 0 shares to be granted basedon the stock remuneration system)

Name/Position

Norimasa Kitazawa
President & CEO

Outside Director

Outside Director

Outside Director

Outside Director

Rehito Hatoyama

Chiaki Hayashi

Eriko Yamaguchi

Yumiko Miwa

Hidenori Nagaoka(Appointed in March 2020)(Appointed in March 2020)(Appointed in March 2022)(Appointed in March 2024)

Number of the Company’s commonshares held: 2,500

Number of the Company’s commonshares held: 500

Number of the Company’s commonshares held: 1,300

Number of the Company’s commonshares held: 0

Number of the Company’s commonshares held: 3,900

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Hiroshi Nishimoto

Koji Ishigami

Koichi Otsu

Atsuko Taishido

Number of the Company’s commonshares held: 2,600

Number of the Company’s commonshares held: 43,000(Appointed in April 2019)(Appointed in April 2019)

Number of the Company’s commonshares held: 7,200

Number of the Company’s commonshares held: 2,100

Yusuke Nakata

Senior Managing Officer
Singapore Business Division Manager

Nobuo Takubo

Business Strategy Division Manager

Takatoshi Urakari

Deputy Division Manager of Business Strategy Division

Takashi Arai

Accounting & Finance Division Manager

Takanori Tsuru

Related Business Division Manager

Eiko Yamanaka

Research & Development Division Manager

Kazuyuki Tajima

SCM Division Manager

Masatoshi Oguchi

Baby Care Business Division Manager

Akira Okamoto

Seconded to Pigeon (Shanghai) Co., Ltd.

Katsushi Tsutsui

Deputy Division Manager ofSingapore Business Division

Koji Matsutori

Deputy Division Manager ofLansinoh Business Division

Head of Japan Operations

62

Pigeon Integrated Repor t 2023

○

○

○

○

○

○

Ryo Yano
Director,
Executive Officer

○

○

○

○

Rehito Hatoyama
Outside Director andChairman of the Board

○

○

○

Chiaki Hayashi
Outside Director○

Eriko Yamaguchi
Outside Director

○

○

○

○

○

○

○

○

Koji Ishigami
Audit & Supervisory
Board Member○○

Koichi Otsu
Outside Audit & Supervisory
Board Member
Atsuko Taishido
Outside Audit & Supervisory
Board Member○

Solvingsocietalissues

○

○

○

○

○

○

○

○

○

○

○

○

○

○

Nomination Compensation○○

Hiroshi Nishimoto
Audit & Supervisory
Board Member

Solvingsocietalissues○Kevin Vyse-Peacock
Director,
Executive Officer

Hidenori Nagaoka
Outside Director

Audit & Supervisory Board
Members

Zenzou Yamaguchi Senior Managing Officer

○

Human
Law,
resource
Marketing,
Finance, compliance,development,
branding
accounting
risk
corporate
management
cultureYumiko Miwa
Outside Director

Note: Number of the Company ʼs common shares held is as of December 31, 2023.

Managing Officers (As of March 28, 2024)

○

SCM*2

○

○

○

○

○

○

○

○

○

○

○

◎

◎

○

○

◎

Data Section

Audit & Supervisory Board
Member○Design,R&D,
product
development

Sustainability

Audit & Supervisory Board
Member○Globalbusiness

Tadashi Itakura
Director, Senior Managing
Executive Officer

Directors

Audit & Supervisory Board Members (As of March 28, 2024)

Experience inManagement,
the company,
businessindustry
strategy
experience◎Chairperson 〇Members

Value Creation Story

Outside Director
Chairman of the Board(Appointed in April 2016)

Committee members

Expertise demanded of the Board of Directors*1

Message fromthe President and CEO

Head of Global Head Office
Number of the Company’s commonshares held: 16,989(Includes 9,269 shares to be granted
based on the stock remuneration system)

Director, Executive Officer

Introduction

President and CEO

To ensure the effectiveness of the Board of Directors and Audit & Supervisory Board, we believe it is necessary to clarify theexpertise of the individual Directors and Audit & Supervisory Board Members who make up each respective body. For this reason,
we have clarified the areas of expertise of each in the following table (Skills Matrix), based on a resolution by the Voluntary
Nominating Committee. Each area of expertise has been selected based on the relationships among the Pigeon DNA, which is thecore of Pigeon and will be upheld into the future as an unchanging spirit that describes our Corporate Philosophy (“Love”) and ourCredo (“Only love can beget love”); our Purpose, positioned as the core of the Pigeon Way, which embodies “heart and soul” andsets the grounds for our actions to stream from this core; and the five Key Issues (Materiality) that we must address in the processof realizing our Purpose. We have also considered the core strategies of the 8th 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, inorder to achieve the tenets of the Pigeon DNA, the Pigeon Way, and our Purpose, and to resolve the Key Issues (Materiality).

○

○

○

○

○

○

*1 A maximum of five main areas of expertise are presented for each person*2 SCM: Supply Chain Management

Committee Members
The Company has established the three committees shown below as advisory panels to the Board of Directors. Eachcommittee is chaired by an independent outside director, and outside officers constitute the majority of members.
-Voluntary Remuneration Committee: Yumiko Miwa (Chair), Norimasa Kitazawa, Tadashi Itakura, Chiaki Hayashi, Hidenori Nagaoka-Voluntary Nominating Committee: Yumiko Miwa (Chair), Norimasa Kitazawa, Tadashi Itakura, Eriko Yamaguchi, Hidenori Nagaoka-Governance Committee: Chiaki Hayashi (Chair), Norimasa Kitazawa, Tadashi Itakura, Ryo Yano, Rehito Hatoyama, Koichi Otsu, Atsuko Taishido
Pigeon Integrated Repor t 2023

63

Financial and Nonfinancial
Highlights/Financial Data

■ Financial Highlights

Financial Data

Net Sales

Operating Income/Operating Margin

Ordinary Income/Ordinary Margin(¥ millions)(¥ millions)(¥ millions)

120,000

PreviousStandard

21,000NewStandard*

PreviousStandard

18,00094,461

100,000

Operating Income

Operating Margin （%）
50

NewStandard*40

15,00080,00010,726

9,000

30
20

6,000

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

0

Dec.
2023

(¥)

11.4%
Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

0

12.2％

3,000
0

Dec.
2019

Dec.
2020

ROE

122.6% 100
75

62.06

9,000

Payout Ratio （%）
125
76

Dividend per Share

60

60

Dec.
2023

10

（%）
30

Dec.
2021

Dec.
2022

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

16,000Net Income Attributable to
Owners of Parent

PreviousStandard

14,000

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Net Margin

（%）
50

New
Standard*

Dec.
2019

40

10,000

30

6,000
4,000
2,000

16,58815,085

16,253

15,975

14,41210

Merchandise and Finished Goods

8,144

8,256

8,723

10,529

9,575

Dec.
2023

Other Current Assets

4,783

4,724

6,059

6,355

6,454

Total Current Assets

61,933

65,231

66,254

67,14364,800

Tangible Fixed Assets

22,49423,262

27,09330,132

31,952Intangible Fixed Assets

3,863

2,957

2,572

2,308

1,483

Investment Securities

950

687

532

547

558

Total Investments and Other Assets

1,250

1,333

1,590

1,601

1,644

0

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Total Fixed Assets

28,55828,241

31,78834,59035,639Total Assets

90,491

93,472

98,042

101,733

100,440

Notes and Accounts Payable—Trade

4,900

4,757

4,087

5,066

3,643

Accounts Payable

2,660

2,727

2,253

2,373

2,353

Income Taxes Payable

1,272

1,906

1,180

989

495

Accrued Bonuses to Employees

928

952

882

920

923

5,876

5,320

6,668

6,212

6,116

15,63815,664

15,072

15,563

13,53280,000Long-Term Borrowings

̶

̶

̶

̶

̶

Other Fixed Liabilities

60,000Liabilities

Other Current Liabilities

100

Total Current Liabilities
77.2

80
60

20

40,00040

1020,000

20

4,389

5,181

6,159

6,217

5,820

Total Fixed Liabilities

4,389

5,181

6,159

6,217

5,820

Total Liabilities

20,02820,846

21,232

21,781

19,35200Capital Stock

5,199

5,199

5,199

5,199

5,199

Capital Surplus

5,179

5,179

5,179

5,132

5,132

Retained Earnings

58,97961,12061,16360,76259,033

Treasury Stock△ 1,088△1,478△1,479△1,387△1,488

25

13

16

26

33

△ 572

△129

3,805

6,962

9,672

2,741

2,722

2,925

3,257

3,505

Total Net Assets

70,46372,62576,81079,952

81,087

Total Liabilities and Net Assets

90,491

93,472

98,042

101,733

100,440

Net Assets

7.9%

0

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Scope 1 and 2 GHG Emissions（t-CO2e）30,000

Scope 1

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Ratio of Female Directors, Managers,and Employees (Pigeon Group)（%）

Scope 2

Dec.
2019

70

Ratio of Female Directors
Ratio of Female Employees

Ratio of Female Managers
61

0

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Paternity Leave Uptake Rate* 1 and Paternity Leave
Uptake Rate during Fiscal Year*2 (Pigeon Corporation)（%）
200

Paternity Leave Uptake Rate
Paternity Leave Uptake Rate during Fiscal Year

Valuation Difference on Available-forSale Securities
Foreign Currency Translation Adjustment

Data Section■ Nonfinancial Highlights

60

25,000Non-Controlling Interests

150

50

20,00040
100

40
15,000

2,903

10,000100
30FY endedJan. 2019

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Scope of data collection: Pigeon Corporation and its domestic
and overseas consolidated subsidiaries

100

33

Note: Figures less than one million yen are truncated.

20

8,489

5,000

50

10
0

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Scope of data collection: Pigeon Corporation and its domestic
and overseas consolidated subsidiaries
Note: Managers are defined as those who have subordinates,
as well as those who do not have subordinates but holdequivalent positions (excluding directors)

0

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

Dec.
2023

Scope of data collection: Pigeon Corporation*1 Proportion of eligible individuals who utilized the system
during the period when parental leave could be taken*2 Uptake rate during the fiscal year the child was born basedon the calculation formula of the Ministry of Health, Labourand Welfare

Note: The Pigeon Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the beginning of consolidated fiscal 2021. The“Previous Standard” in the above graph refers to actual results based on the accounting standard as of fiscal 2020, whereas the “New Standard” refers to actual results after thechange in accounting standard.

64

Notes and Accounts Receivable—Trade

7,423

8,000

0

20

Sustainability

12,000（%）

81,087

Dec. 2023

34,3579.3

5(¥ millions)

Net Assets 100,440

Dec. 2022

34,283

9.6

Equity Ratio

Total Assets

Dec. 2021

35,21820

Total Assets/Net Assets
100,000

Dec. 2020

37,16325

0Dec. 2019

32,416*1 Return on equity: The denominator is the average of the
figures at the beginning and end of the fiscal year.
*2 Return on invested capital is defined as net operating profit
after tax (NOPAT) divided by invested capital. This figure is
calculated using a tax rate of 30.0%.

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

Dec.
2019

0

(¥ millions)

Value Creation Story

Dec.
2019

25

F Y ended

Cash and Deposits

NewStandard*

10

0

30

ROIC

PreviousStandard

50
20

0

Item

15

40

30

■ Consolidated Balance Sheets
Assets11,522

12,000ROE* 1 /ROIC*2

80

90

40

Cash Dividend per Share/Dividend Payout Ratio
(¥)

120

50

Message fromthe President and CEO

EPS

（%）

6,000

3,000

0

18,000Ordinary Margin

New
Standard*

Introduction

60,00020,000PreviousStandard

15,00012,00040,000Ordinary Income

21,000

Pigeon Integrated Repor t 2023

■Equity Ratio, ROE, and ROICItem

F Y ended（％）

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Dec. 2023

Equity Ratio

74.8

74.8

75.4

75.4

77.2

ROE

17.5

15.5

12.2

11.4

9.6

ROIC

17.4

15.0

12.5

10.9

9.3

Note: Return on equity: The denominator is the average of the figures at the beginning and end of the fiscal year. ROIC: Return on invested capital. It is calculated using a tax rateof 30.0%. Invested capital is the average of the beginning and end of the fiscal year.

Pigeon Integrated Repor t 2023

65

Financial Data/
Nonfinancial Data

Financial Data

Nonfinancial Data

■ Consolidated Statements of IncomeItem

F Y ended(¥ millions)

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Dec. 2023■ Employee Data (As of December 31 in each year)
F Y ended

Item

Number of employees(persons)

December 2021

December 2022

December 2023

3,935

3,803

3,618

99,38093,08094,921

94,461

Cost of Sales

49,21649,45949,00850,08749,008

Ratio of female employees

(%)

62%

62%

61%

Ratio of non-Japanese employees*1

(%)

66%

67%

67%

Number of managers(persons)

469

441

455

Japan

(persons)

153

145

149

Overseas(persons)

316

296

306

49,92144,072

44,83445,452

50.8

50.2

47.3

47.2

48.1

Selling, General and Administrative Expenses

33,72734,60530,73532,63834,726

Operating Income

17,072

15,316

13,336

12,195

10,726

Operating Margin (%)

17.1

15.4

14.3

12.8

11.4

Non-Operating Income

1,136

1,406

1,427

1,418

1,126

Non-Operating Expenses

924

608

115

149

329

17,284

16,113

14,64813,465

11,522Gross Margin (%)

Ordinary Income

Ratio of female managers

(%)

41%

40%

40%

Japan

(%)

29%

30%

33%

Overseas

(%)

48%

45%

44%

(%)

15%

19%

16%

Voluntary turnover of regular employees
Number of employees(persons)

368

345

334

(%)

41%

41%

41%

16.2

15.7

14.2

12.2

121

38

65

7

29

Number of managers(persons)

71

65

71

Ratio of female managers

(%)

24%

26%

27%

Mid-career hires at management positions

(%)

42%

46%

52%

Ratio of non-Japanese managers

(%)

ー

2%

1%

Voluntary turnover of regular employees

(%)

2%

5%

6%

Wage differential between males and females*2

(%)

ー

63.4%

58.4%

Regular employees*2

(%)

ー

78.3%

69.4%

300

315

1,182

329

397

Income before Income Taxes

17,104

15,836

13,531

13,143

11,154

Income Taxes—Current

5,067

4,715

4,690

4,678

3,778

Income Taxes—Deferred

267

261

△138

△296

△186

11,76910,860

8,979

8,761

7,561

230

216

193

179

137

11,538

10,643

8,785

8,581

7,423

Extraordinary LossNet Income
Net Income Attributable to
Non-Controlling Interests
Net Income Attributable to
Owners of Parent
Note: Figures less than one million yen are truncated.

Item

F Y ended(¥ millions)

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Dec. 2023

(%)

ー

45.5%

50.5%

(years)

14.8

15.2

15.5

Males

(years)

16

17

18

Females(years)

13

13

12

Number of new-graduate hires(persons)

8

3

10

Number of mid-career hires(persons)

5

5

4

Non-regular employees*

2

Average length of service*1 Ratio of employees with nationality other than Japanese.
*2 The aggregation period is from January 1 to December 31 in each year, calculated in accordance with the Act on Promotion of Womenʼs Participation and Advancement in the Workplace (Act No. 64 of 2015).
Wages include basic salary, bonuses, and other standard wages. There is no difference in wages based on gender for equal work performed by employees. The primary factors contributing to wage disparities inregular employees include differences in the proportion of male and female employees in management positions, where bonuses make up a higher proportion of annual earnings, as well as variations in average
length of service. As for non-regular employees, the disparity arises from the fact that while men tend to be full-time workers, women are more likely to work part-time hours.

Cash Flows from Operating Activities

14,09818,40010,893

13,21014,523

Cash Flows from Investing Activities△3,995△3,815△5,593△5,659△5,467

Cash Flows from Financing Activities△8,734△9,231△8,693△9,666△10,256

Effect of Exchange Rate Changes on
Cash and Cash Equivalents

98

△718

1,560

1,180

1,275

1,467

4,634

△1,832△934

74

Ratio of female directors
Ratio of Outside Directors

Cash and Cash Equivalents at Beginning of Period

30,94932,41637,05035,21834,283

Cash and Cash Equivalents at End of Period

32,41637,05035,21834,28334,357■ Officer Data (As of December 31 in each year)
Number of directors(persons)

Ratio of non-Japanese directors

Note: Figures less than one million yen are truncated.

Number of Audit & Supervisory Board Members■ Data per Share

Number of managing officers

Ratio of female Audit & Supervisory Board Members

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Dec. 2023

Ratio of female managing officers

12

10

9

(%)

25%

30%

33%

(%)

42%

50%

56%

(%)

8%

10%

11%

(persons)

4

4

4

(%)

25%

25%

25%

(persons)

11

12

10

(%)

9%

8%

0%

（t-CO 2 e）

23,51011,741

11,392

EPS (yen)

96.37

88.93

73.44

71.72

62.06

■ Environmental Data (As of December 31 in each year)

Cash Dividend (yen)

70.00

72.00

74.00

76.00

76.00

GHG emissions (Scope 1 and Scope 2)*1

72.7

81.0

100.9

106.1

122.6

GHG emissions (Scope 3)*565.64584.30617.59640.96648.73

Dividend Payout Ratio (%)
BPS (yen)（thousand t-CO 2 e）

234.1

205.8

Being calculated

Non-recycled industrial waste generated*2(tonnes)

271

198

153

Reuse and recycling ratio

（%）

93％

94％

95%

1

Data Section

Net Increase (Decrease) in Cash and Cash Equivalents

Sustainability■ Consolidated Statement of Cash Flows

Pigeon Corporation

17.3

Extraordinary Income

Value Creation Story

Ordinary Margin (%)

Ratio of female employees

Message fromthe President and CEO

50,800Gross Profit

Pigeon Group

100,017

Introduction

Net Sales*1 Scope of data collection: Pigeon Corporation and its domestic and overseas consolidated subsidiaries
Please refer to our website (“Initiatives to Achieve Decarbonization”) for details of the calculation method for GHG emissions.
*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, but does not include recycled waste (including thermal recycling).

66

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

67

Corporate Information

Corporate Data/Consolidated Subsidiaries/
External Evaluation and Related Items/
Pigeon Group Business Structure

Corporate Data (As of December 31, 2023)

Pigeon Group Business Structure (As of December 31, 2023)

Pigeon Corporation

Address

4-4, Nihonbashi Hisamatsu-cho, Chuo-ku, Tokyo 103-8480, Japan
Phone: +81-3-3661-4200 Fax: +81-3-3661-4320
URLs: https://www.pigeon.com (global) https://www.pigeon.co.jp (Japan)

Established

August 15, 1957

Capital Stock
Fiscal Year-End

Percentage of Voting
Rights in the Stock of
a Subsidiary Held by aParent Corporation

Business

GHO Pigeon Corporation

Japan

ー

ー

¥5,199,597 thousand● Pigeon Corporation

Japan

ー

December 31
Note: At the 62nd Ordinary General Meeting of Shareholders convened April 25, 2019, a partial amendment to the Articles
of Incorporation was approved, changing the fiscal year-end from January 31 to December 31 from fiscal 2019 onward.

● Pigeon Home Products Corporation*2

Japan

100%

Manufacture of toiletries● Pigeon Hearts Corporation

Japan

100%

Child-minding and daycare services, preschool
education services● Pigeon Manufacturing Hyogo Corporation*2

Japan

100%

● Pigeon Manufacturing Ibaraki Corporation*2

Japan

100%

● Pigeon Tahira Corporation

Japan

100%

Sale of elder care products● Pigeon Manaka CorporationNote

Japan

67%

At-home elder care services, sale of elder careproducts● PIGEON (SHANGHAI) CO., LTD.*3

China

100%

Sale of maternity and baby products such as
nursing bottles, skincare products, and cleaningand disinfecting products● PIGEON AMERICA INC.*1

UnitedStates（100.0%）100%

Sale of maternity and baby products such as
nursing bottles● PIGEON MANUFACTURING (SHANGHAI) CO., LTD.*2

China

100%

Manufacture and R&D of maternity and baby products suchas nursing bottles, skincare products, and breast pads

● PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.*2

China

100%

Manufacture of maternity and baby products such as
nursing bottles, skincare products, and breast pads

● DOUBLEHEART CO. LTD.

South
Korea

100%

Sale of maternity and baby products such as
nursing bottles, skincare products, and cleaningand disinfecting products

Singapore

100%

Sale of maternity and baby products such as nursing
bottles, skincare products, and breast pumps

India（0.1%）

100%

Manufacture and sale of maternity and baby
products such as nursing bottles and breast pumps● PIGEON MALAYSIA (TRADING) SDN. BHD.*1

Malaysia（100.0%）100%

Sale of maternity and baby products such as nursing
bottles, skincare products, and breast pumps● PT PIGEON BABY LAB INDONESIA*1

Indonesia（100.0%）100%

Sale of maternity and baby products such as nursing
bottles, skincare products, and breast pumps● PIGEON BABY LAB KENYA LTD.

Kenya

100%

Sale of maternity and baby products● PIGEON INDUSTRIES (THAILAND) CO., LTD.*2

Thailand

97.5%

Manufacture of maternity and baby products such as
nursing bottles, wet wipes, and nipple care products● PT PIGEON INDONESIA*1,2

Indonesia（65.0%）

65%

Manufacture of maternity and baby products
such as nursing bottles and nipple care products● THAI PIGEON CO., LTD.*2

Thailand53%

Manufacture of maternity and baby products such as
nursing bottles, wet wipes, and nipple care products● LANSINOH LABORATORIES, INC.*3

UnitedStates100%

Sale of maternity and baby products such as
nipple care products, breast pumps, and breast
milk storage bags

Turkey（99.9%）● LANSINOH LABORATORIES BENELUX NV*1

Belgium（100.0%）● LANSINOH LABORATORIES SHANGHAI*1

China（100.0%）● LANSINOH LABORATORIES (HONGKONG) CO. LTD. *1

China

PIGEON (SHANGHAI) CO., LTD.
PIGEON AMERICA INC.
PIGEON MANUFACTURING (SHANGHAI) CO., LTD.
PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.
DOUBLEHEART CO. LTD.
LANSINOH LABORATORIES, INC.
LANSINOH LABORATORIES MEDICAL DEVICES DESIGN INDUSTRY AND
COMMERCE LTD. CO.
LANSINOH LABORATORIES BENELUX NVLANSINOH LABORATORIES SHANGHAILANSINOH LABORATORIES (HONGKONG) CO. LTD.
LANSINOH LABORATORIES UK LTD.
LANSINOH LABORATORIES FRANCE SAS

External Evaluation and Related Items (As of May 31, 2024)
JPX NIKKEI INDEX 400

FTSE Blossom Japan Index

FTSE Blossom Japan
Sector Relative Index

S&P/JPX Carbon
Efficient Index

MSCI Japan Empowering
Women Index

Morningstar® Japan
ex-REIT Gender
Diversity Tilt IndexSM

FTSE4Good IndexSeriesMSCI ESG Ratings

Ministry of Education, Culture, Sports, Scienceand Technologyʼs Encouragement Award for
Companies Promoting Experience-Based
Learning Activities for Youth

Health & Productivity
Management Outstanding
Organization 2024 (Large
Enterprise Category)

THE USE BY PIGEON CORPORATION OFANY MSCI ESGRESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA,AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICEMARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTEA SPONSORSHIP, ENDORSEMENT, RECOMMENDATION,
OR PROMOTION OF PIGEON CORPORATION BY MSCI. MSCISERVICES AND DATA ARE THE PROPERTY OF MSCI OR ITSINFORMATION PROVIDERS, AND ARE PROVIDED ʻAS-ISʼ
AND WITHOUT WARRANTY. MSCI NAMES AND LOGOS ARE
TRADEMARKS OR SERVICE MARKS OF MSCI.

68

FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Pigeon Corporation has been independently assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE Blossom Japan
Index and FTSE Blossom Japan Sector Relative Index. The FTSE Blossom Japan Index and FTSE Blossom Japan Sector Relative Index are used by a wide variety of market participants to create and assess responsible investment funds and other products. FTSE Russell (the trading
name of FTSE International Limited and Frank Russell Company) confirms that Pigeon Corporation has been independently assessed according to the FTSE4Good criteria and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the
global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create
and assess responsible investment funds and other products. Please refer to our website for details of the Morningstar® Japan ex-REIT Gender Diversity Tilt Index.SM

Pigeon Integrated Repor t 2023●● PIGEON INDIA PVT. LTD.*1,2● LANSINOH LABORATORIES MEDICAL DEVICESDESIGN INDUSTRY AND COMMERCE LTD. CO.*1,2● LANSINOH LABORATORIES UK LTD.*1,2

UnitedKingdom● LANSINOH LABORATORIES FRANCE SAS*1

France100%

Data Section

THE INCLUSION OF PIGEON CORPORATION IN ANY MSCIINDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN, DO NOTCONSTITUTE A SPONSORSHIP, ENDORSEMENT ORPROMOTION OF PIGEON CORPORATION BY MSCI OR ANY
OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF
MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOSARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITSAFFILIATES.

● PIGEON SINGAPORE PTE. LTD.*2

Sustainability

Note: As for Pigeon Manaka Corporation, on April 1, 2024, we transferred our entire holding of Pigeon Manaka Corporation (67.0% of voting rights) to Marumitsu Corporation.

Manufacture of non-woven products

Value Creation Story

PIGEON HOME PRODUCTS CORPORATIONPIGEON HEARTS CORPORATIONPIGEON MANUFACTURING HYOGO CORPORATIONPIGEON MANUFACTURING IBARAKI CORPORATIONPIGEON TAHIRA CORPORATIONPIGEON MANAKA CORPORATIONNote
PIGEON SINGAPORE PTE. LTD.
PIGEON INDIA PVT. LTD.
PIGEON MALAYSIA (TRADING) SDN. BHD.
PT PIGEON BABY LAB INDONESIAPIGEON BABY LAB KENYA LTD.
PIGEON INDUSTRIES (THAILAND) CO., LTD.
PT PIGEON INDONESIA
THAI PIGEON CO., LTD.

China Business

Consolidated Subsidiaries (26 companies) (As of December 31, 2023)

Sales, R&D of maternity and baby products

Message fromthe President and CEO

Number of Employees 334 (Japan, full-time employees) /3,618 (worldwide, includes part-time employees)

Singapore Business

Manufacture, sale, import, and export of baby and childcare products, maternity items, womenʼs care products,
home healthcare products, elder care products and related products; operation of child-minding centers

Japan BusinessCompany Name

Lansinoh Business

Our Business

Location

Introduction

Company Name

Manufacture of maternity and baby products
such as breast pumps and nursing bottles

100%
100%

100%
（100.0%）100%（100.0%）100%（100.0%）

Sale of maternity and baby products such as
nipple care products, breast pumps, and breast
milk storage bags

*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 a specific subsidiary.
*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).
Note: As for Pigeon Manaka Corporation, on April 1, 2024, we transferred our entire holding of Pigeon Manaka Corporation (67.0% of voting rights) to Marumitsu Corporation.

●Sales/Service offices ●Factories
Pigeon Integrated Repor t 2023

69

Corporate Information
Stock Data/IR Tools (Quick Reference)■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 Groupʼsbusiness 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 Investor's Guide and our corporate website, which give qualitative and quantitative details of the Pigeon Groupʼs history.

Integrated Report 2023

Stock Data (As of December 31, 2023)●Shares authorized ‥‥‥‥‥ 360 million●Total number of shareholders ‥‥ 48,777●Treasury stock ‥‥ 1,893,833●Shares issued ‥‥‥‥‥‥‥ 121,653,486●Number of shareholders with voting rights ‥‥ 43,026

Major Shareholders (As of December 31, 2023)

19.1

Custody Bank of Japan, Ltd. (Trust Account)

10,6608.9

BNYMSANV RE MIL RE FIRST SENTIER INVESTORS ICVC - STEWART INVESTORS ASIA PACIFIC LEADERS SUSTAINABILITY FUND

5,283

4.4

STATE STREET BANK CLIENT OMNIBUS OM04

2, 2 1 1

1.8

THE BANK OF NEW YORK MELLON 140051

2,090

1.7

Yoichi Nakata

1,944

1.6

Y.N. Corporation

1,678

1.4

The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)

1,550

1.3

STATE STREET BANK WEST CLIENT - TREATY 505234

1,442

1.2

The Nomura Trust and Banking Co., Ltd. (Trust Account)

1,349

1.1

➡

➡

To see Pigeon’s businessby segment.

➡

P. 64 Financial and Nonfinancial Highlights
P. 65 Financial Data
P. 67 Nonfinancial Data➡

To see the financial data andearnings structure
as a reference forinvestment decisions.

➡

P. 70 Corporate Information (Stock Data)➡

To find Pigeon’s stock
information.

➡

P. 02 History of Pigeon and Nursing Bottles
P. 04 History at a Glance
P. 68 Corporate Information (Corporate Data)➡

To learn about Pigeon’s
history andcorporate profile.

Investors
・Financial Results
・Results Briefing
・Medium-Term Business Plan

Investors
・Segment Financial Overview

Investors
・Chart Generator
・Investor’s Guide

Stock Information

Value Creation Story

22,815➡

To see Pigeon’s Key
Performance
Figures.

Message fromthe President and CEO

The Master Trust Bank of Japan, Ltd. (Trust Account)

P. 24 Business Summaries by Segment

Corporate Site

Introduction

NumberOwnership*of Shares(%)(Thousands)

Shareholder Name

P. 06 Business Overview
P. 1 2 Initiatives to Improve Corporate Value
P. 64 Financial and Nonfinancial Highlights
P. 65 Financial Data

Purpose*Pigeon holds 1,893,833 treasury shares, which are excluded from the aforementioned major shareholders. Shareholding ratios are calculated after deducting treasury
shares. Note that treasury shares do not include the number of shares held in the Board Incentive Plan for Directors (BIP) Trust Account (169, 948 shares) .

Share Breakdown by Shareholder Type (As of December 31, 2023)
Individuals andOthersTreasury Stock

24.0%

1.6%

Number of shares*

121,653

thousand shares

Non-JapaneseCorporations

3.9%

Japanese Corporations

5.4%

Non-JapaneseCorporations

36,312 (thousands)

Individuals andOthersJapanese
Corporations

29,163 (thousands)

P. 01 Pigeon DNA・Pigeon Way
P. 08 To Our Stakeholders
P. 14 Value Creation Story
P. 16 Vision of a Baby-Friendly Future
P. 18 Toward Sustainable Growth6,613 (thousands)

Securities
Companies

4,708 (thousands)

Treasury Stock

1,893 (thousands)

Note: Share distribution ratios are rounded to the first decimal place. *The number of shares held has been rounded down to the nearest unit.

Stock Price Range/Turnover of Common Stock(¥)

Pigeon Stock Price

Pigeon Stock Turnover (Monthly Total)(Millions of shares)
60

7,000
6,500

P. 08 To Our Stakeholders
P. 14 Value Creation Story
P. 20 The 8th Medium-Term Business Plan
P. 24 Business Summaries by Segment
P. 33 Sustainability Roundtable
P. 62 Directors/Audit & Supervisory Board
Members/Managing Officers

Company Profile➡

To learn about Pigeon’s
corporatephilosophy, culture, andmanagement vision.

➡

To understand Pigeon’s
management team andtheir views and opinions on
business.

➡

The Pigeon DNA and the Pigeon Way
Vision of a Baby-Friendly Future

Data Section

29.9%

Securities
Companies

42,962 (thousands)➡

Sustainability

Financial Institutions

35.3%

Financial
Institutions

Corporate History
・Pigeon’s History
・History of Nursing Bottles

Investors➡

・Message from the CEO・Sustainability: Message from the CEO・Medium-Term Business Plan

Management

50

6,000
5,500
5,000

40

4,500
4,000
30

3,500
3,000
2,500

20

2,000
1,500

10

1,000
500

P. 14 Value Creation Story
P. 18 Toward Sustainable Growth
P. 32 Promoting Sustainability Management
P. 34 Enhancing Business Competitiveness and ResilienceP. 40 Reducing Our Environmental Impact
P. 45 Contributing to the Resolution of Social Issues
P. 48 Managing Talent and Cultivating theRight Culture for Our PurposeP. 52 Establishing Solid Management Foundations➡

To understand Pigeon’s ESG
initiatives, which drive
the sustainable growthof business and corporate
value.

➡

Sustainability
・ESG/SDGs Policy
・ESG Data Book0

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
2019
2023
2024
2020
2021
2022

70

Pigeon Integrated Repor t 2023

Pigeon Integrated Repor t 2023

71

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 Section)+81-3-3661-4320
Fax
www.pigeon.com
URL