Integrated Report 202 2
For the Year Ended December 31, 2022

Integr a ted Repor t 2 0 2 2

In order that all Pigeon employees should
embody a baby-friendly world as we strive torealize our purpose,
we have updated the Pigeon Way.

■ Sustainability■ Introduction

40

06

Enhancing Business Competitivenessand Resilience

42

08Reducing Our Environmental Impact

46

Contributing to the Resolution of Social Issues

52Managing Talent and Cultivating
the Right Culture for Our Purpose

56

04

PVA
Business Overview■ Message from the President and CEO▲

To Our Stakeholders

Purpose of This
Integrated Repor t

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, “For Sustainable Growth,” announced in February 2023.
In addition to the Integrated Report, Pigeon provides the Investorʼs Guide, which focuses on quantitative data regarding the16

Value Creation Story

18

Vision of a Baby-Friendly Future

20

Toward Sustainable Growth22■ Medium-Term Business Plan
Medium-Term Business Plan

24

The 8th Medium-Term Business Plan

26

Directors/Audit & Supervisory Board
Members/Managing Officers

70

Financial Highlights/Financial Data

72

Nonfinancial Data

75

Corporate Information
Corporate Data/Consolidated Subsidiaries

76

Main External Evaluation

76

Japan Business

32

Pigeon Group Business Structure

77

China Business

34

Stock Data

78

36

Lansinoh Business38

IR Tools (Quick Reference)▲

Singapore Businessinformation. Please visit the sites below for details.

ESG Databook

60■ Data Section

Business Summaries by Segment

performance trends of the Pigeon Group, and the ESG Data Book, which includes more comprehensive sustainability-related

Investorʼs Guide 2022

Message from an Outside Director▲ ▲ ▲This Integrated Report 2022 reports on the performance, strategies, and sustainability (ESG) initiatives of the Pigeon Group

Pigeon DNA・Pigeon Way▲ ▲ ▲other investors, of the corporate value and other values we create over the short, medium, and long term.

▲※新 Pigeon DNA / Way の詳細は P.14 Pigeon DNA・Pigeon Way についてをご覧ください。

The Pigeon Group issues our Integrated Report to deepen the understanding of all stakeholders, including shareholders andEstablishing Solid Management Foundations■ Value Creation Story▲ ▲ ▲ ▲

PigeonIntegrated Report
2022
Contents

10

▲ ▲ ▲

History at a Glance▲ ▲ ▲ ▲

02

▲ ▲Promoting Sustainable Management

History of Pigeon and Nursing Bottles

79

https://www.pigeon.com/ir/library/inv_guid/
https://www.pigeon.com/sustainability/databook/
Pigeon Integrated Repor t 2022

01

Histor y of Pigeon andNursing Bottles

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

1962

Glass Glass-Made Nursing Bottle

Plastic

K- 8-Type Nursing Bottle

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

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

2012 Glass
2005“Ziran Shigan”

Glass

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

1957 Plastic

1960

1963 Plastic

1986

L-Type Nursing Bottle

Silicone Rubber Nipple

KP-8-Type Nursing Bottle

Snoopy-Design K-Type Nursing Bottle

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

More durable than the natural rubber
used previously.

Recipient of the 14th Tokyo
Invention Award.

Nursing bottles released with designs
featuring popular characters like Snoopy.

Glass1988 Glass

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

PPSU* Bonyu Jikkan
Wide-Neck Nursing Bottle

Promoted transition to direct breastfeedingwith the Oketani Method.

With superior shockand heat resistance.

Message fromthe President and CEO

With heat-resistantglass body.

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

2007 Plastic

Bonyu Sodanshitsu Nursing Bottle

A-Type Nursing Bottle

series expanded with
Chinese zodiac designs in China.

Introduction

Plastic Plastic-Made Nursing Bottle

1976

Glass

*Polyphenylsulfone

1956 GlassJapan’s first decorated
nursing bottle.

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

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

1962 Plastic

1950 Glass

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

A-Type Nursing Bottle

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

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

1958 Glass

Nursing Bottle with Wide-Neck and Cap

A-4-Type and A-8-Type Nursing Bottles
Based on research on how infants naturally
drink. A significant influence on future bottle
design.

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

1979 Glass Plastic

2000 Plastic

K-Type Nursing Bottle

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

Japan’s first environmental
hormone-free nursing bottle.

2010 Glass Plastic

2018 Glass

2022 Plastic

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

Silicone Coating
for Bonyu Jikkan Wide-Neck
Nursing Bottles

SofTouchTM T-Ester* Nursing
BottleBased on research on the “Three Key Factorsof Sucking”*Released in China as “Ziran Shigan.”Released in other overseas markets as“Peristaltic PLUS.” Renamed as“SofTouch Peristaltic PLUS” in 2014.

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

*Polyethersulfone

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

Pigeon 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.

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 andSustainability

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

Medium-TermBusiness Plan

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

Bonyu Jikkan Wide-Neck
Nursing Bottle(First Generation)

PW-Type Nursing Bottle

Value Creation Story

1954 Plastic

2002 Glass Plastic

1965 Plastic

F-Type Nursing Bottle

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

services. At the time of our foundation, however, we were preoccupied with theglobe. This is the belief that drives our research and development on nursing bottles.

02

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 202203

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) launchedMarketMarket
capitalization
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 “birth preparation and recovery”careproducts launched under the Lansinoh brand

600

100,000100,000

80,000 80,000
400

400

60,000 60,000

1987
Chibion digital thermometer for babies
launched
1988
Shares registered with the Securities Dealers
Association of Japan (present-day JASDAQ)

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

1966
Name changed to Pigeon Corporation

600

2014
Overseas sales ratio
exceeds 50%

1966
Export business started

40,000 40,000
200

200

20,00020,000

0Jan. 1968
Jan. 1968

Jan. 1978
Jan. 1978

Jan. 1988
Jan. 1988

Jan. 1998
Jan. 1998

00

0

Jan. 2008
Jan. 2008
Jan. 2019
Jan. 2019
Dec. 2022
Dec. 2019
Dec. 2019 Dec. 2022

Medium-TermBusiness Plan

1968
World’s first medicated compact baby
powder launched

Jan. 1958
Jan. 1958

Value Creation Story

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

120,000120,000

Message fromthe President and CEO

Net Sales
Net Sales

2002
Bonyu Jikkan wide-neck nursing bottle(which promotes babies’ natural sucking
peristaltic movement) launched

Net sales
Net sales(¥ millions)(¥ millions)Introduction

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

Market Market
capitalization
capitalization(¥ billions)(¥ billions)(11-month period)(11-month period)

1970-1982

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 territory of
Pigeon’s global business further byadding 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 2022

Pigeon Integrated Repor t 2022

Data Section

1958-1969

Sustainability

1957

05

P VA

PVA-An Independent Performance Indicator Aimed at Enhancing Corporate Value

PVA
Target 6,099
Results 4,6 1 7Previous fiscal 5, 600
year (PFY)NOPAT*
Target 9,940
Results 8,537
PFY 9,335

Income taxes

Target 50,600
Results 50,087
PFY 49,008

Target 4,260
Results 3,659
PFY 4, 001

Invested capital

Working capital

Trade receivables

SG&A expenses

Target 2 1 , 3 1 1
Results 23,966
PFY 2 1 , 64 1

Target 1 5 , 5 1 2Results 16, 1 14
PFY 15 , 670

Target 33,900
Results 32,638
PFY 30,73 5

Fixed assets

WACC
common 5.0%

Note: Assets and liability items are averaged at the beginning and end of the period.

Cash and otherassets and liabilities
Target 22,563
Results 2 1,226
PFY 23,062

Inventories
Value Creation Story

Target 32,956
Results 33,1 89
PFY 30,0 1 5＊The tax rate is 30%

Cost of sales

Target 76 , 8 3 1
Results 78,381
PFY 74 , 7 1 8Introduction and Use of PVA

Target 12,027
Results 14,0 1 2
PFY 12,04 1

Trade payables
Target 6,22 7Results 6, 1 60
PFY 6,070

Medium-TermBusiness Plan
Sustainability

Pigeon introduced PVA in 2013 as a tool to pursue three key elements simultaneously: profitability, efficiency,
and growth across the entire Group. The utilization of PVA extends not only to the overall Group but also toindividual business segments and companies, with the achievement of PVA goals being incorporated into thecompensation system of full-time Directors.
The adoption of PVA concepts and the dissemination of a PVA tree within the Pigeon Group have resulted inclearer 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 mindset of employees, which used to be heavily focused on sales and profits, hasbeen elevated to embrace concepts such as cash flow management and corporate value. To promote theadoption 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-like structure, as depicted in the
diagram at right, Pigeon aims to visualize how everyoneʼs tasks contribute to its various components.
Pigeon utilizes the PVA tree to facilitate dialogue and discussions with stakeholders through external
disclosure.

Net sales
Target 98,700
Results 94,92 1
PFY 93,080

Target 14, 2 0 0Results 12, 1 95
PFY 13 , 33 6

Message fromthe President and CEO

Formula: PVA equals NOPAT minus cost of capital (Invested capital times WACC*)*Weighted Average Cost of Capital

Operating income

Consolidated
Top: December 2022 Target
Mid: December 2022 Results
Bottom: December 2021 Results*(¥ millions)Introduction

Pigeon positions its unique Pigeon Value Added (PVA) as a key performance indicator based on economic value added.
PVA is calculated by deducting the cost of capital from net operating profit after tax (NOPAT) and expresses thefinancial amount of corporate value generated through our business activities that exceeds the cost of capital. PVA isdesigned to assess how efficiently limited resources such as funds and assets have been utilized to maximize returns.
By evaluating the absolute value rather than the ratio, PVA helps prevent a diminishing equilibrium in business,ensuring a solid foundation for future growth.

PVA Tree for the Fiscal Year Ended December 2022

We will continue to leverage PVA and strive to further increase our corporate value.

Data Section

06

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

07

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

Current Status of the Pigeon Group (As of December 31, 2022)

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.

Net sales

17.8%

38.3%

¥

¥

16,917million

36,323million

Consolidated*2¥

12,195million

Margin:

1 491million¥ ,Margin:4.1 %China Business¥

Products/Ser vices

10,408million Margin: 29.9%

Singapore Business¥
China Business

14.9%

36.6%

¥

¥

14,153million

34,776million*1 The consolidated net sales figure refers to the amount after
elimination of intersegment transactions

R O E *3

15.1%

Margin:

6.8%

％

90

China Business
Mainly China, South Korea,
and East Asia

Lansinoh Business

1 154million¥ ,*2 The consolidated operating income figure refers to the amountafter segment profit adjustments, which mainly comprise expenses
associated with administrative departments

10.9

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 ourpresence in the growing e-commerce field under an efficient
production and supply system.
Products/Ser vices

Baby and mother care products

R O I C*4

Countries/Regions

More thanMargin:China BusinessSingapore
Business％

Southeast Asia, India, Middle
East, and Oceania

Overseas sales ratio

63.9

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
and sales systems, including collaboration with local
partners, to meet the diverse needs of each region. In
addition, we aim to further expand our business in the Middle
East and Oceania.

％
Products/Ser vices

60 years ago

Number of Employees

3,803(worldwide, includes
part-time employees)*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.

LansinohBusiness
Mainly North America,
Europe, and China

Data SectionMore than● Sales/service: 4 bases ● Production: 4 bases

Business Conditions and Group Strengths

Baby and mother care products

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

Sustainability

11.4

2,140million

Baby and mother care products

Medium-TermBusiness Plan

Singapore BusinessDespite 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.

Value Creation Story

millionShare of net sales(Sales)12.8%

Japan Business

Consolidated
Net Sales*1¥

Japan BusinessMessage fromthe President and CEO

Japan Business

94,921Business Conditions and Group Strengths

Consolidated operating income

Lansinoh Business

Introduction● 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.

● 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.

Pigeon Group Business Structure P. 77
08

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 202209

To Our S t akeholder s
Review of the 7th Medium-TermBusiness Plan
Product Strategy under the Four-Segment
Business Structure Gains Momentum

Fiscal 2022 marked the final year of our 7th Medium-Term BusinessIn our product strategy, we launched new models of nursing bottles

Plan. Despite our efforts to drive growth under the three basic

in key markets worldwide despite the COVID-19 pandemic. We also

strategies of brand strategy, product strategy, and regional strategy,enhanced our organizational structure by delegating decision-in which each business division swiftly implemented measures

making authority to the four business segments, each with deep

tailored to the characteristics of each region, the unforeseen impact

knowledge of their respective markets, enabling us to rapidlyof the COVID-19 pandemic on different parts of the world at different

develop products that align with the characteristics of each market.
Our Lansinoh Business has achieved consistent growth almost

making the past three years exceptionally challenging. Besides the

every year for the past three years, primarily driven by e-commerce,

varied impacts of the pandemic, we also recognized the significant

even amid the pandemic. By releasing birth preparation and recovery

risk to our business posed by the sharp decline in the number of

products that cater to the needs of expectant and new mothers, webirths observed in many regions such as Japan, China, South Korea,

have captured consumer interest, leading to growth in sales and theEurope, and the United States.

creation of new product markets. In our China Business, we havemade a strong start with skincare products targeting children aged

expectations for fiscal 2022. Although net sales grew to ¥94.9 billion,

three and above. Throughout the 7th Medium-Term Business Plan,up 2.0% year on year, profit indicators declined. Operating income

we have introduced approximately 250 new products each year

decreased 8.6% to ¥12.1 billion, ordinary income was down 8.1% toGroup-wide, including upgrades, reaffirming our commitment to¥13.4 billion, and net income attributable to owners of parent fell

strengthening “monozukuri ” (manufacturing) as a vital element for

2.3% to ¥8.5 billion. In particular, the extended lockdown of close to

Pigeon’s sustainable growth.

Value Creation Story

Given these difficult circumstances, performance fell below

Message fromthe President and CEO

times hindered our ability to implement measures in a timely manner,

Introduction

Fiscal 2022 Performance Below Expectations
Amid a Challenging Business Environment

two months in Shanghai, China, had a significant impact, leading to
the suspension of operations at our sales companies and factories.
Key performance indicators (KPIs) also fell below levels posted in theeconomic value added; the cash conversion cycle (CCC), which

Although the brand strategy, product strategy, and regional strategy

expresses capital efficiency in cash flow management; return on

implemented during the 7th Medium-Term Business Plan haveequity (ROE); and return on invested capital (ROIC). Clearly, we must

President & CEO

yielded positive results, the COVID-19 pandemic has also revealed

focus on enhancing economic value moving forward.

new challenges.
pandemic exposed disparities in logistics, supply, and distribution

At the same time, the COVID-19 pandemic has provided anlevels. In times of crises like the COVID-19 pandemic, sales throughopportunity for us to recognize strengths that might not be

distributors have struggled compared to the direct sales model, andapparent during normal times. One such strength is our brand

we recognize the need to reassess our approach, considering

power. In our China Business, despite a year-on-year decline inregional characteristics and past performance. We will also look tosales due to the prolonged lockdown in Shanghai in 2022, we

optimize our production system by considering not only in-house

maintained a strong position in the market in our mainstay

production but also cooperative relationships with local suppliers,

nursing bottle and skincare categories through major annual

aiming to strengthen profitability. Another challenge is specific to our

e-commerce events such as the shopping festivals “618” onJapan Business. The decline in domestic consumer demand and the

The world is changing drastically. Not only has the COVID-19 pandemic altered the way people live and their values,

June 18 and “Double Eleven” on November 11. We also achieved

rising costs of raw materials due to the pandemic have directly

but we are also facing a temporary sharp decline in the number of births worldwide and changes in the needs of

top rankings in sales in other product categories for the first

affected our profitability. To address this, we will focus on developing

and purchasing behavior for baby-care products.

time, demonstrating the robustness of the Pigeon brand in thehigh-value-added products, explore price revisions again, and work

rapidly expanding e-commerce landscape in China. Even amid a

toward improving profitability.

friendly by furthering our commitment to understanding and addressing babies’ unique needs.”

importance of evolving the Pigeon Way, which serves as a crucial foundation for driving our business. We have also

maintained a high level of competitiveness. We have also been
included in Interbrand Japan’s “Best Japan Brands” for four

Medium-Term Business Plan PP. 24-25

established a framework in which each employee keeps a firm focus on our Purpose and actively engages inconsecutive years, ranking 73rd in 2023. In addition, in many

activities toward its realization, including the updating of the Key Issues (Materiality). In February 2023, weSoutheast Asia countries and regions where lockdown measures

Business Opportunities in Untapped Market of
100 Million People

were implemented, we witnessed a swift recovery in sales

While we recognize the risks posed by the sharp decline in birth rates

immediately after the restrictions were lifted, which can be attributed

due to crises like the COVID-19 pandemic, when we look at theto the resilience of our brand.

number of babies reached by Pigeon currently, there remains

formulated and announced our 8th Medium-Term Business Plan covering from 2023 to 2025 aiming to build afoundation supporting sustainable growth.
Pigeon Integrated Repor t 2022

Data Section

To respond to the rapidly changing environment and realize sustainable growth, the Pigeon Group recognizes the

pandemic-induced decline in inbound demand, the Japan Businesssystems across different markets, resulting in varying performance

Sustainability

The Pigeon Group conducts business with a dedication to our Purpose: “We want to make the world more baby-

10

One such challenge concerns our supply chain. The global

Strong Brand Power Reaffirmed
in Difficult Environment

Reinforcing a Foundation for Sustainable GrowthBased on Our Purpose

Medium-TermBusiness Plan

our own unique Pigeon Value Added (PVA), which expresses

Supply Chain and Japan Business Highlighted
as Key Challenges

final year of the 6th Medium-Term Business Plan (fiscal 2019), namely

Norimasa Kitazawa

Business Opportunities and Issues

Pigeon Integrated Repor t 2022

11

To Our S t akeholder sa mother’s nipple. This shift, combined with the strengthening of ourmale employees has been 100% for seven consecutive years since thehad the opportunity to travel to multiple regions last year after

annual number of births worldwide is approximately 130 million*1,

baby skincare product range, will contribute to the growth of our

fiscal year ended January 31, 2016. While Japan recently introduced theovercoming the challenges posed by the pandemic. Among them, thewhereas Pigeon’s existing markets cover around 73 million births.

sales and profit margins. We have set a target of achieving double-

concept of paternity leave in October 2022, by widely sharing our well-Middle East underwent significant environmental changes before andConsidering factors such as income levels, our products currently

digit growth annually, particularly in Indonesia, India, and other majorestablished practices and expertise in implementing and managing suchafter the pandemic, which left me not only surprised but also deeply

reach only about 30% of the global market, or approximately 30

countries, and will strive to expand business to achieve this. We will

leave policies, we can contribute to the growth of opportunities for

moved. I witnessed remarkable progress in women’s empowerment andmillion people. In other words, there is still an untapped market of

also review our sales structure and strengthen our manufacturing

fathers to actively participate in childcare and create a society thatthe rapid rise of e-commerce, which was virtually nonexistent there justaround 100 million people worldwide. Even in the establishedsystem by working with promising local partners.

warmly embraces newborns. With Pigeon’s profound understanding of

three years ago. Discovering the emerging growth markets in the Middle

markets where our Singapore Business and Lansinoh BusinessIn the Lansinoh Business, which focuses on supporting mothers, webabies’ unique needs and the challenges and joys of parenting, we are

East filled me with great joy and excitement.

operate, there are still many babies and families who have yet toplan to introduce a new model of breast pump, further strengthening

uniquely positioned to provide meaningful support. Through our efforts,

experience our products.

and fostering birth preparation and recovery products into a

we aim to promote activities that make the journey of parenthood a joyful

mainstay category. With continued growth prospects in Europe, theexperience for as many individuals as possible.

United States, and China, we are also looking to increase production

Rebuild a Foundation for
Sustainable Growth under the
8th Medium-Term Business Plan

Aiming for Record High Sales

Full-Fledged Exploration ofBusiness Expansion in Untapped Markets

By strengthening existing areas and exploring and cultivating new areas,each business segment and reform our production and sales

As mentioned earlier, there are still vast untapped markets worldwide for

8th Medium-Term Business Plan: Net sales of ¥113.8 billion, a record high;systems tailored to market characteristics to further enhance thePigeon. Among them, approximately 57 million babies are born each year

operating income of ¥16 billion; and an operating margin of 14.1%. We

profitability of the entire Pigeon Group.

in countries and regions we have yet to enter. In particular, the African

have also set financial KPIs for an ROE of 14% or more, an ROIC of 15% orregion, which accounts for around 45 million annual births, presents an

more, and a PVA of ¥7 billion. Out of the expected operating cash flow ofopportunity for us to embark on new market development, including

approximately ¥34 billion over the three-year period, we have earmarked

establishing sales bases under the Pigeon brand, with a long-termaround ¥12 billion for growth investments. As per our shareholder return

perspective spanning a decade. In addition to Africa, we are exploring

policy, we will continue to provide stable dividend payments bycapacity at our plant in Turkey to drive business expansion.
In this way, we will strengthen autonomous business operation in

we aim to achieve the following targets in fiscal 2025, the final year of ourperiod from 2023 to 2025, we have identified challenges and

New Challenges in Our Four Business Segmentswith a Focus on Toddlers, Women’s Care,and Father Carebusiness opportunities under the theme, “For Sustainable Growth:

In our existing four business segments, we will take on the challenge of

new markets in Southeast Asia and the Middle East for the Pigeon brand,

maintaining current dividend levels along with further improvement in

Restructuring of our business structure in response to global

expanding our core customer target groups based on the keywords ofas well as expanding our presence in Europe with the Lansinoh brand. I

consolidated performance and financial condition.

economic, political, and environmental changes.”“toddler,” “women’s care,” and “father care.”In our 8th Medium-Term Business Plan covering the three-year

Although we have already made progress with the “toddler”

Business Plan, namely brand strategy, product strategy, and regional

category in China, we will further develop skincare products that cater

strategy, we will pursue sustained growth in existing areas andto children aged three and above. We are also planning the global

explore and cultivate new areas.

launch of birth preparation and recovery products under the Lansinohbrand targeting expectant mothers. During the approximate six-week

8th Medium-Term Business Plan PP. 26-39

8th Medium-Term Business Plan Targets
Group consolidated 3-year CAGR
Unit: ¥ millions

Net sales2022+6.2 %

Operating income

3-Year Growth Image

2025 (Final year of 8th MTBP)
Target% of total

3-year CAGR

returns to its pre-pregnancy state. The Lansinoh brand has earned the100.0%

113,800

100.0%

6.2%

In existing areas, we will hone our competitive edge by further

trust of mothers worldwide on the back of renowned products such

Cost of sales

50,08752.8%

57,300

50.4%

4.6%

enhancing our nursing bottle and baby skincare ranges as domains

as nipple care creams that alleviate soreness during the challenging

of comparative advantage.

phase of breastfeeding initiation and are safe for babies. We will

Gross profit

44,83447.2%

56,500

49.6%

8.0%

leverage this strength in the birth preparation and recovery product

SG&A expenses

32,63834.4%

40,500

35.6%

7.5%

category and nurture it into a new pillar of growth.

Operating income

12,195

1 2.8%

16,00014.1 %

9.5%

13,465

14. 2%

16,00014.1 %

5.9%

2023, where we will strengthen our research-and-development

Providing Pigeon Know-How to
Empower Male Parenting

Ordinary income
Net income attributableto owners of parent

8,581

9.0%

10,4009.1%

6.6%

capabilities, notably in baby skincare, allowing us to create products

The key focus of “father care” centers on products and services that support

Currency 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

that embody the essence of Pigeon as a trusted brand in Japan.

men’s childcare efforts. This includes raising awareness and promoting a

For our Japan Business, where improving profitability is of theutmost importance, we will make price revisions and reevaluate our
product portfolio to boost profitability. In addition, we have plans tocomplete a new plant in Fuji City, Shizuoka Prefecture, in August

In China, we will enhance our product lineup and strengthen our sales

society that encourages men’s active involvement in parenting.
Babies are undeniably adorable, and as parents, we aspire to spend as

Our baby skincare products, such as the Avocado and Yuzu series, meetmuch quality time with them as possible. As a father of two, I took on themarket needs and have been well received. We will expand our range toresponsibility of bathing my sons during their infancy. However, uponalso cater to babies aged 12 months and older and tap into the growing

reflection, I believe there were further opportunities for me to actively engage

Investment

demand in the Chinese market, especially as it recovers from its strictin childcare. Today, where female participation in the workforce is increasingly

Investment for growth (3 years): Approx. ¥12 billion

zero-COVID policy. Furthermore, with our Chinese business taking theencouraged, it is crucial to transform the role of fathers in childcare, allowing

lead, we plan to leverage expertise gained in the Chinese e-commercethem to be more involved and take the initiative. By doing so, we canmarket to facilitate the entry of the Pigeon brand into the North American

contribute to the realization of a society where males can confidently embark

market, aiming to achieve further sales growth.

on parenthood.

In our Singapore Business, we will transition from our mainstay slim-

At Pigeon, we established One Month Together, which allows one month ofpaid childcare leave regardless of gender. The uptake of this leave among

Pigeon Integrated Repor t 2022

Operating income

113,800
100,000

94,92150,000012,19516,0002022 Results

2025 Target

Capital Policy and Shareholder Returns under the 8th MTBP

efforts for nursing bottles with the aim of capturing a 50% market share.

type nursing bottles to wide-type versions, which more closely resemble

Net sales

Data Section% of total

94,921(¥ millions)
150,000

Sustainability

ActualNet sales

postpartum period, a mother’s body undergoes various changes as it+9.5%

Medium-TermBusiness Plan

Building upon the three basic strategies of the 7th Medium-Term

Existing Areas: Nursing Bottles and Baby
Skincare Products Core to Product Strategy

12

advantage of such environmental changes in a timely manner.

Value Creation Story

Toward Sustainable Growth throughthe Restructuring of Our Business Structure

We are committed to cultivating these growing markets by taking

Message fromthe President and CEO*1 According to Pigeon research

Introduction

significant untapped growth potential in the global market. The

Cash flows

Shareholder return policy

Increase in operating cash flow (3 years): Approx. ¥34 billion

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

KPI targets in final year of 8th MTBP
ROE*1: 14% or more
ROIC*2: 15% or more
PVA: ¥7 billion or more
*1 ROE: Calculated with equity being the average of the beginning and ending balances*2 ROIC: NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capitalbeing the average of the beginning and ending balances

Dividend per share
90

70

72

74

76

76

2019

2020

2021

2022

2023
(Forecast)

60
30
0
(Yen)

(Year)

Pigeon Integrated Repor t 2022

13

To Our S t akeholder sMake the World More Baby-Friendly
Updated the Pigeon Way

Pigeon Green Action Plan, which aims to achieve decarbonization,a circular society, and coexistence with nature, in December 2022.
During the 7th Medium-Term Business Plan, we made great
strides in assessing and disclosing our environmental (E) and

we aim for.” Therefore, in February of this year, we simplified thesocial (S) initiatives. Our efforts were well received, and we even

Pigeon Way, which embodies our “heart and soul,” to make itearned recognition by being included in prominent ESG investment

easier to understand.

indices worldwide. We also surpassed our initial expectations in
reducing carbon dioxide emissions. Our commitment remains“Only love can beget love,” from the Pigeon Way, as the cornerstones

steadfast in achieving a decarbonized society, aiming for net-zeroof Pigeon that will remain unchanged into the future.

greenhouse gas (GHG) emissions (Scope 1 and Scope 2) by 2050.

As such, the Pigeon Way is now structured around our

We are actively calculating our Scope 3 emissions and working

Purpose, Values, and Action Principles, with our Purpose, “We

toward obtaining SBT (Science-Based Targets) certification, whichwant to make the world more baby-friendly by furthering our

involves setting specific targets aligned with SBT criteria andcommitment to understanding and addressing babies’ uniquedeveloping a comprehensive road map. Moreover, as aneeds,” at the core. This empowers our employees to be deeply

manufacturer, we will promote sustainable sourcing practices andconscious of fulfilling our Purpose in their daily activities andaccelerate the adoption of circular manufacturing approaches.

drives them to advance our business.

Message fromthe President and CEO

We separated our Corporate Philosophy, “Love,” and Credo,

Introduction

To drive our business forward, it is crucial to clearly define “whatReducing Our Environmental Impact PP. 46-51
Value Creation Story

Pigeon DNA・Pigeon Way PP. 16-17

Formulation of
Our “Vision of a Baby-Friendly Future”

The third and fourth Key Issues, “Contributing to the resolution ofDiversity as a Key Issue:
Increasing the Ratio of Female Managers

Pigeon will consist of a majority of Outside Directors for the firsttime, with Rehito Hatoyama, an Independent Outside Director,

We formulated our “Vision of a Baby-Friendly Future” to furthersocial issues” and “Managing talent and cultivating the rightadvance our efforts to realize our Purpose, by depicting, in terms

culture for our Purpose,” are particularly relevant to our social (S)I enjoy reading books that introduce animal ecology, and I havewell-established governance structure. Through effectiveof six specific faces of society, the “baby-friendly” world

initiatives. In our Human Milk Bank program, the number of babies

always felt that the natural world is full of phenomena that cangovernance, we will support proactive and bold endeavors in eachenvisaged in that Purpose. This Vision, shared both internally andreceiving donated breast milk more than doubled from 364 to 813

serve as references for corporate management. For example,

business division, which will lead to the long-term enhancement of

externally, was created based not only on proposals from Pigeon

in 2022. This initiative has been crucial in supporting prematurewhen it comes to ants, known for their collective behavior, it is said

corporate value.

employees the world over but also from ideas that arose throughand underweight babies.

that around 20% of them deliberately keep themselves available toserving as the Chairman of the Board. This brings us closer to a

In addition, we continue to invest in employee education andrespond in emergencies. Although ants might have different ways

the environment, and welfare, along with everyday mothers andtraining, fostering a culture where employees can boldly embraceof working, they complement each other’s roles and operate

fathers. The Vision serves as a guide for product development

challenges and face the future without fear of failure. Under ourbased on the idea of overall optimization. This teaches us the

In Conclusion

and helps employees visualize how their work contributes to this“Pigeon Frontier Awards (PFA)” program, which started in 2019 toimportance of diversity within an organization.

In this Integrated Report, we present the evolution of our nursing

future.

recognize innovative employee ideas, we receive a diverse range

Pigeon is actively promoting diversity and has received

bottles, to which we have dedicated years of research andI ask not only our employees but also all our businessof ideas each year, some of which have been implemented asrecognition from external sources, such as being selected for thepartners who make up our value chain to embrace our Purpose

successful business ventures. In January 2023, we published a

MSCI Japan Empowering Women (WIN) Select Index. However, I

I have previously seen nursing bottles and cradles from the early

as members of the Pigeon family and to take actions aligned withbook about parenting*2, inspired by the PFA, while “Precious Drop,”

believe there is still more to be done. Increasing the ratio of female

Qing Dynasty (17th century) at the Shenyang Imperial Palace Museumthat Purpose together with us.

managers at Pigeon Corporation is one of our most pressing

in China. It was a profound experience for me to realize that despitefrom an employee idea in 2022 and has been adopted by a growing

issues. During the 8th Medium-Term Business Plan, our goal is tothe passage of time, baby products essential to humanity remain

address to realize the society depicted in this Vision, identifying

number of perinatal medical centers, hospitals, and clinics

surpass a ratio of 30%, but in addition to achieving the target

unchanged. While technological advancements have significantly

five elements in December 2022.

nationwide since its launch in 2022.

ahead of schedule, we would like to reach a level of more thantransformed our lives in terms of convenience and the speed of

One of the key points I emphasize when dealing with talent is the

40% on a constant basis. As a global company, we recognize thechange, the process and timeline of human growth from infancy

spirit of embracing new challenges. I believe that individuals grow byimportance of diversity, not only in terms of nationality but also inremain constant, transcending eras and geographical boundaries.

facing and addressing challenges within their own environments,

nurturing a workplace where diverse talents can demonstrate

The expertise we have accumulated through our research andand I value individuals who have taken on challenges and failed overtheir individuality and capabilities, both within the leadership teamdevelopment in nursing bottles will not be easily eroded. Having

those who haven’t tried at all. Moreover, as failure is often a part ofand among the generations who will build the Pigeon of tomorrow.

products that can secure significant market share is a major strength

Realize Decarbonization, a Circular Society,and Coexistence with Nature for
the Future of Babies

taking on challenges, I believe that fostering a culture that celebrates
attempts and does not condemn failure is essential for generating
innovation within the organization. I actively place capable individuals

The first key issue, “Enhancing business competitiveness andin challenging positions to cultivate them into the talent that will leadresilience,” has been explained as a concrete initiative of the 8th

the next generation.

Medium-Term Business Plan. The second key issue, “Reducing ourenvironmental impact,” must be addressed to leave a rich earth forthe future of babies born tomorrow. This led us to formulate thePigeon Integrated Repor t 2022

*2 Published by KADOKAWA Co., Ltd., on January 19, 2023 (Japanese only)

Contributing to the Resolution of Social Issues PP. 52-55

Managing Talent and Cultivating the Right Culture for
Our Purpose PP. 56-59

Diverse Board of Directors Structure

Data Section

a device supporting colostrum collection, was commercialized

Sustainability

development.

We also reviewed the Key Issues (Materiality) that Pigeon must

Promoting Sustainable Management PP. 40-41

Medium-TermBusiness Plan

Establishing Solid Management Foundations PP. 60-71

various discussions with experts on regions and communities,

Vision of a Baby-Friendly Future PP. 20-21

14

Toward a Culture That Embraces
Challenges

for us in achieving sustainable growth.
With approximately 100 million babies still without access to our
products, we are committed to making the world more babyfriendly through the dedication of our employees to take onchallenges and the pursuit of innovation born from new ideas and

The fifth key issue concerns “Establishing solid management

diversity. Through this journey, we highly value engagement withfoundations” and enhancing corporate governance, including

all stakeholders involved in our business and ask for yourGroup governance. Starting in 2023, the Board of Directors ofcontinued support as we forge ahead.

Pigeon Integrated Repor t 2022

15

Pigeon DNA・Pigeon Way

Introduction
Message fromthe President and CEO

Pigeon undertakes various business initiatives aimed at realizing our Purpose,“We want to make the world more baby-friendly by furthering our commitment

to understanding and addressing babiesʼ unique needs.” We updated the Pigeon

Value Creation Story

Way in February 2023 so that all Pigeon employees can provide products andservices with a greater focus on realizing our Purpose.

■ Pigeon DNA
Medium-TermBusiness Plan

The Pigeon DNA is an independent embodiment of our Corporate Philosophy andCredo, which have been passed down for generations and will continue to be valued
highly. Our DNA has served as the core of Pigeon throughout our history and will remain
so into the future.

Sustainability■ Pigeon Way

Data Section

The Pigeon Way comprises our Purpose, Values, and Action Principles. We havepositioned our Purpose as the cornerstone of the Pigeon Way to emphasize ourcommitment to achieving our reason for being. Our Values represent the key
attributes that all Pigeon employees should embrace, and our Action Principles serveas 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 ouractions with our Purpose to achieve its underlying tenets.
Employees of the Pigeon Group will uphold the Pigeon DNA and Pigeon Way in thecourse of everyday activities to build an even stronger brand.

16

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

17

Value Creation Stor y

Corporate Philosophy (Foundation of Value Creation)

Pigeon DNA•Pigeon Way

Financial capital(Materiality)

Japan
Business
Enhancing Business
Competitiveness and Resilience

Reducing Our Environmental Impact

Intellectual capital

Contributing to the
Resolution of Social Issues*From Best Japan Brands 2023 (Interbrand)

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

billionGross profit ¥billion¥billionOperating income

PVA

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

billionROE% or more

ROIC% or more

Loose, friendly ties facilitating
easy cooperation around raising children

Creativity from babies brings
excitement to society

Environment
Realize the Pigeon Green Action Plan
P. 47
No barriers to raising children

SocialEstablishing SolidManagement Foundations

P. 23

P. 26

Contribute to the resolution of social
issues surrounding babies and families
P. 52

Support activities for babies
requiring specialized care(collaborative research with
NICUs, products forpremature babies)

Foster human resources whoenhance corporate value

P. 60

Research and Development,“monozukuri ” (manufacturing)

P. 22

P. 44

Quality (Pigeon
Quality Standards)

P. 42

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’ uniquenursing bottles and nipples, where we command the top global market share. Our mission is to address materiality while reducing environmental impact andneeds,” the Pigeon Group has identified the Key Issues (Materiality) that we must address to foster a sustainable society through our business activities andsolving social issues surrounding babies and their families in all the countries and regions where we conduct business.

provide unique, high-quality products and services that solve areas of concern in child-rearing for babies and their families worldwide. This includes providing

Pigeon Integrated Repor t 2022

Data Section

Pigeon Group ʼ s operating environment

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

Human resources
P. 56

Corporate governanceBabies are part ofeveryone ʼ s everyday life

Social Value

Baby-friendly andeco-friendly monozukuri(manufacturing)

Managing Talent and Cultivating
the Right Culture for Our Purpose

¥

P. 20

P. 28

Singapore
Businessenhance our corporate value. Drawing upon our “sources of value creation,” which include human capital and financial capital, we will harness our strengths to

18

Net sales ¥Sustainability

Business foundation

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

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

Unique products and services
that solve areas of concern inbaby-care

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

Economic Value

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

Medium-TermBusiness Plan

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$620 million*

Long-Term Value
Co-Creation with Society

Value Creation Story

Consolidated net assets:¥79.9 billion
Equity ratio: 75.4%(Fiscal 2022)

Corporate Value CreatedMessage fromthe President and CEO

The Pigeon DNA and thePigeon Way practiced by
employees
Group total: 3,803 employees(As of December 31, 2022)

Key Issues

Medium-Term Business Plan

Human capitalBusiness Activities and Value Proposition

P. 16

Introduction

Sources ofValue Creation

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

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

Pigeon Integrated Repor t 2022

19

Vision of a Baby-Friendly
FutureVision of a Baby-Friendly Future: Six Faces of Society
Babies are part of everyoneʼs everyday life
Create more opportunities to encounter babies in everyday life,
making everyone feel closer to them.
Introduction

Loose, friendly ties facilitating easy cooperation
around raising children
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.

Message fromthe President and CEO

Creativity from babies brings excitement to society
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

Value Creation Story

Prepare flexible systems and career stages for employees having
and raising babies, instead of making them choose between
children and career.

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.

Medium-TermBusiness Plan

A comfortable world where babies are not troubled byenvironmental risks
Review business activities to eliminate environmental burden, and alert
society to the risks babies may face during their lives in the future.

efforts to realize our Purpose, “We want to make the world more babyfriendly by furthering our commitment to understanding andaddressing babies’ unique needs.” The Vision describes the babyfriendly world envisaged in our Purpose in terms of six faces of society.
families, the Vision of a Baby-Friendly Future is the result of thinking
about how society should be to improve the world babies will face inthe future. The Vision was created based not only on proposals from
Pigeon employees but also from ideas that arose through various
discussions with experts on regions and communities, theenvironment, and welfare along with everyday mothers and fathers.
To realize its Vision of a Baby-Friendly Future, Pigeon will move
forward step by step, seeking to increase the number of people insociety who empathize with the vision and co-creating and taking
action with a diverse range of stakeholders.

20

Pigeon Integrated Repor t 2022

Offering nursing support to each and every baby

To realize a society where there are no barriers to raising children and all babies are helped to develop and grow regardless of the conditions of
their birth, Pigeon has been offering nursing support in countries around the world. One of our key initiatives is providing nursing bottles thatallow babies to have a similar feeding experience when direct

Data Section

Amid the great changes now taking place around babies and their

Pigeon Group Initiative

Sustainability

Pigeon has formulated the Vision of a Baby-Friendly Future to advancebreastfeeding is not possible for different reasons. This results
in no interference in breastfeeding continuity. Families indiverse countries have embraced these nursing bottles.
We also conduct joint research with medical institutions todevelop and offer exclusive products that assist in nursing
babies requiring specialized care, including those born
prematurely and those with a cleft lip and/or palate. Moreover,
we extend our support to human milk banks providing donatedbreast milk to premature babies and provide operational support
for lactation lounges in 24 countries worldwide.

Pigeon Integrated Repor t 2022

21

Toward Sustainable Growth
Key Issues (Materiality)
Pigeon Group ʼ s Operating Environment

Key Issues (Materiality)

In Japan and China, which account for a large portion of the PigeonGroup’s sales, birth rates have been steadily declining, a trend amplified
untapped markets for the Group, such as the Africa region, where birth- Declining birth rate in key markets (Japan, China)*- Increasing birth rate in the Africa region*1

1

Environmental issues

business growth. Moreover, as global warming worsens and natural- 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

disasters become more frequent and severe, governments around theworld 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

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

Reducing Our
Environmental Impact

Implementing the Pigeon Green Action Plan
aimed at realizing decarbonization, a circularsociety, and coexistence with nature, to leave arich 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 tocontribute; and can embrace new challenges andexpress themselves to drive personal growthEstablishing SolidManagement
Foundations

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

Message fromthe President and CEO

rates are on an upward trajectory, offering substantial opportunity for

Enhancing Business
Competitiveness andResilience

SDGs Contributed toIntroduction

by the COVID-19 pandemic. Nonetheless, there are still numerous

Birth rate trends

What We Aim to Achieve

Social issues

plastics, driving the rapid transition to a circular economy.
In addition to addressing environmental challenges, companies arefocused 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 inthroughout the supply chain.

Rapidly changing business environment*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- Intensifying competition due to a growing e-commerce market- Diversification and increasing complexity of supply chain risks

Review of Key Issues (Materiality)

Medium-TermBusiness Plan

In April 2019, we identified the Key Issues (Materiality) that we must address to foster the development of a sustainable society through our

Value Creation Story

respect of human rights not only for their employees but also everyone- One in seven babies worldwide (more than 20 million annually)
is born with a low birth weight of less than 2,500 grams*2- More than 80% of the worldʼs 2.5 million newborns who dieevery year are of low birth weight.*2- Consideration of local communities and human rights- Diversification of work styles

business activities and enhance our corporate value. The specific process entailed identifying social issues based on international standards andguidelines 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) in terms of their importance in building a sustainable society and their importance in ourbusiness 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 anddriving a business that balances both economic and social value while achieving our Purpose, “We want to make the world more baby-friendly by

Former Key Issues (Materiality)
Enhancing businesscompetitiveness andR&D capabilities

Reducing environmental
impact sustainably

Enhancing stakeholder
responsivenessImproving thequality of humanresources

Creating
an ideal working
environment

Establishing a solidmanagement base

Sustainability

Governance Committee engaged in discussions on multiple occasions to exchange insights aimed at establishing a foundation for value creation andRedefined the unique Key
Issues (Materiality)
considering changes in thebusiness environment torealize our Purpose

furthering our commitment to understanding and addressing babies’ unique needs.” Five Key Issues that ought to be addressed over the medium to longterm were uncovered and subsequently approved by the Board of Directors in December 2022. These Key Issues, together with the newly formulated
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 we will strive to create corporate value by realizing our Purpose and secure sustainable growth by working to achieve the SDGs.

Review the process for Key Issues (Materiality)

Formulated the Pigeon Green Action Plan

Data Section

Key Issues (Materiality)

In December 2022, Pigeon formulated the Pigeon Green Action Plan detailing

Medium-Term Business Planand its implementation
Economic value

Social value

Outlined the Pigeon Groupʼs operating environment

medium- to long-term environmental targets to leave a rich Earth for the
future of babies born tomorrow. The Group will focus on addressing climatechange, issues caused by plastic, and biodiversity degradation-areas with

Exchanged insights
in the Sustainability
Committee (multiple times)

Exchanged insights
in the GovernanceCommittee (multiple times)

particularly high relevance to our operations. The Plan includes goals andinitiatives toward achieving decarbonization, a circular society, andcoexistence with nature, with the overarching objective of reducing theenvironmental burden.

Key Issues approved by the Board of Directors

Achieve our Purpose
22

Pigeon Integrated Repor t 2022

Pigeon Green Action Plan P. 47

Pigeon Integrated Repor t 2022

23

Medium-Term Business Plan

Under the Pigeon Way, established in 2014, Pigeon is dedicated to making the world a more baby-friendly place through its daily business activities. By sharing
our medium- to long-term business strategy with stakeholders, Pigeon aims to enhance corporate value from both “social value” and “economic value”
perspectives. To adapt to the significant changes in the business environment, Pigeon announced the 8th Medium-Term Business Plan in February 2023 withEnvironment and Key Challenges

Quantitative Data

P. 28

Brand Strategy

P. 29

Product Strategy

PP. 30-31

Regional Strategy

PP. 32-39

Introduction

P. 26

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

Review of Past Medium-Term Business Plans
5th MTBP

Profitability and Efficiency KPI Trends
6th MTBP(FY Jan. 2018 to FY Dec. 2019)

Vision 2016

-Expansion of the global e-commercemarket, led by China-Increase in inbound demand in Japan

Social Value Enhancement-

Create and implement measures based on
the Pigeon Way to realize our Vision

Economic Value Enhancement
1. Improve business profitability and-efficiency, and maximize cash flow

2. Invest management resources giving
priority to key products to lay solid
foundations for the future-Intensifying competition due toexpansion of the e-commerce market(e.g., new competitors due to lower
barriers to entry and competition withprivate-label brands in retail stores)-Decline in inbound demand in Japan

100,000

Brand strategy: Develop a brand “chosen bycustomers who buy into a business” rather
than a brand “chosen by customers who buy
a product"
Product strategy: Accelerate growth inour core products where we offer uniquecompetitive advantages in the global market
Regional strategy: Develop andimplement a cycle of “productdevelopment, production, and sales”
that fits the market characteristics andconsumer preferences in each region

80,00060
60,00040
40,000-Global outbreak of COVID-19 andestablishment of a new lifestyle (“living with
COVID-19”)-Decreased birth rates and slowing growth

in major markets such as Japan and China-Intensifying competition in each market

0Exchange rates:* FY Dec. 2019
US$1 = JPY 109.02 / CNY 1 = JPY 15.77

Total return ratio

Gross margin

Operating margin

Approx. 45%–50% ⇒ 57.1％

50.0% ⇒ 50.8％

18.3% ⇒ 12.8％

Return on equity (ROE)

Return on equity (ROE)

Return on equity (ROE)

21.0% or above ⇒ 21.8％

22.0% or above ⇒ 17.4％

20.0% or above ⇒ 11.4％

Return on invested capital (ROIC)

Return on invested capital (ROIC)

Return on invested capital (ROIC)

15.0% or above ⇒ 16.3％

20.0% or above ⇒ 17.5％

19.0% or above ⇒ 10.9％

Although net sales fell short of theinitial target, we exceeded our goal inoperating income despite the impact of
exchange rates. Our operating margin
reached 16.9%, and ROE reached a record
high of 21.8%, indicating a significant
improvement in our revenue structure.
In nonfinancial highlights, we received
high praise externally for our management
strategy and its progress, including the
successful implementation of the Pigeon
Way, culminating in various awards.
In terms of governance, we madestrides in building a management
structure aimed at becoming a truly global
company by appointing Outside Directors
and non-Japanese Directors.

Although the China Business grew asplanned and achieved a gross margin of 50%
in the final fiscal year, we faced challenges in
the Japanese market due to a decline in birthrates and a decrease in inbound demand.
In addition, slow growth in the Indian andIndonesian markets contributed to us fallingshort of financial targets in the final year of
the MTBP.
At the same time, under the leadershipof our newly appointed President and CEO,
Norimasa Kitazawa, we established a fourbusiness segment structure (Japan, China,
Singapore, Lansinoh) and created a “productdevelopment, production, and sales” cycle
tailored to the market characteristics
of each segment while also conducting
business activities from an ESG perspective.
We also established a branding promotion
department and made steady preparations
for growth strategies in the evolving
competitive landscape.

Financial targets were not met due to theongoing impact of COVID-19 throughout the three
years.
We achieved our nonfinancial targets, however,including the establishment of a sustainability
promotion department , leading to continued
improvement in corporate value.
Pigeon earned an FTSE Russell ESG Ratingof 1.1 in the final year of the 6th Medium-TermBusiness Plan and improved this to 3.8 in the
final year of the 7th Medium-Term Business
Plan, demonstrating solid progress despite thechallenging business environment.

Pigeon Integrated Repor t 20220
2015/1

Exchange rates:* FY Dec. 2022
US$1 = JPY 131.55 / CNY 1 = JPY 19.50(¥ millions)
12,0002016/1

2017/1

2018/1

2019/1

2019/122020/122021/122022/12

（％）

PVA

ROE

50

ROIC

10,000

40

8,000
30
6,000

Data Section

Exchange rates:* FY Jan. 2017
US$1 = JPY 108.77 / CNY 1 = JPY 16.35

20
4,000

Key Progress of Basic Strategies
Brand strategy: Revitalized the Pigeon brandand provided support for human milk banks
Product strategy: Created new categories suchas disaster preparedness and birth preparation
and recovery products, and announced a newmodel of breast pump
Regional strategy: Released skincare productsthat leverage regional characteristics*Exchange rates are based on the average rate during the term.

24

20

20,000-Increased geopolitical risks

Sustainability

Review

80

Basic Strategies-Sharp exchange rate fluctuations

KPIs and results(vs. the final year of
the MTBP)

100

Gross margin

Medium-TermBusiness Plan

Changes inthe businessenvironment

Exchange rates:* FY Jan. 2017

Basic Strategy

Expand the Key Success Factors (KSFs) of
the Chinese market globally and achieve
healthy business growth and profitability
in all regions

Net sales

Value Creation Story

Business policy/
theme

1. Strengthen our brand power (as the No. 1
baby care manufacturer in the world)
2. Strengthen the management structure
for sustainable business expansion
3. Enhance management quality byfocusing on cash flows
4. Develop global human resources,
establish a global personnel
management system, and implementax system to facilitate employees’
success
5. Further improve enterprise value(FY Dec. 2020 to FY Dec. 2022)
Theme

（％）

(¥ millions)
120,000

Message fromthe President and CEO(FY Jan. 2015 to FY Jan. 2017)

7th MTBP

10

2,000

0

2015/1

2016/1

2017/1

2018/1

2019/1

2019/122020/122021/122022/120Notes:
1 . PVA values for the fiscal years ending January 31, 2015 and 2016, are calculated based on a tax rate of 30.0%.
2. As a result of the change of consolidated closing date from January 31 to December 31 in 2019, fiscal 2019 was the 11-month period from February 1, 2019, to December 31, 2019.
3. The Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020) from the beginning of the fiscal year ended December 31,
2021. Results for the fiscal year ended December 31, 2020, are calculated based on the adapted accounting standard.
Pigeon Integrated Repor t 2022

25

The 8th Medium-TermBusiness Plan

Theme

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

Basic Strategies (Enhanced fromthe 7th Medium-Term Business Plan)

Brand strategy

Product strategy

Regional strategy
Introduction

Environment and Key Challenges
the business structure in response to global economic, political, and environmental changes.” Keeping in mind the Key Issues (Materiality)that need to be addressed over the medium to long term to realize our Purpose, “We want to make the world more baby-friendly byfurthering our commitment to understanding and addressing babies’ unique needs,” we strive for sustainable operations from theperspectives of environment (E), society (S), and governance (G). In all countries and regions where we conduct business activities, we aim to
reduce the environmental impact and address social issues surrounding babies and their families. In addition, by venturing into new
businesses, the Pigeon Group aims to achieve sustainable growth and enhance corporate value, establishing ourselves as an indispensable
entity in society.
The Group’s business environment has been affected by various factors, including the global spread of COVID-19, which has resulted in a
spending due to lockdown measures, as well as significant increases in logistics costs and raw material prices caused by disruptions in the
supply chain. Although we are witnessing some signs of improvement in certain areas, the pace of recovery lacks stability, and the overall
outlook remains uncertain.
Meanwhile, China, despite continually declining birth rates, remains a vast market considering the number of births and economic

While the number of births is declining
worldwide, our global coverage of births is stillaround 30%. Considering income levels and

57 million births in
untapped markets

other factors in each country, there are still

Worldʼsannual births

73 million births inestablished markets

Approx.

130

millionNotes:
1. 45 million births in the African region
2. When income levels in each country
are considered, our actual coverage isaround 30 million.
3. According to Pigeon researchsignificant opportunities in markets where wehave already established a presence.

Key Challenges under the 8th Medium-Term Business Plan

Value Creation Story

decline in birth rates worldwide, including in Japan and China. In addition, there have been economic stagnation and reduced consumer

Current Birth Coverage(estimated under the Pigeon brand)

Message fromthe President and CEO

Actual coverage inestablished markets isaround 30 million births(Less than 30%)

Pigeon started implementing the 8th Medium-Term Business Plan in fiscal 2023 under the theme, “For Sustainable Growth: Restructuring ofBasic Strategies (Enhanced from the 7th Medium-Term Business Plan)

strength. Moreover, in various Asian countries and other emerging markets, we anticipate significant growth in the medium to long term as
consumption expands alongside economic growth and due to the expected penetration and development of e-commerce.

Brand Strategy

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, andskincare products), and explore new areas

Regional Strategy

Strengthen autonomous business operation in each business unit, implement drastic structuralreform 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

Currently, it is estimated that the global annual birth rate is around 130 million*. Of this number, the Pigeon brand reaches less than 30% ,COVID-19, we remain optimistic about the significant growth opportunities that lie ahead for both the Pigeon and Lansinoh brands.
The previous Medium-Term Business Plan period (FY December 2020 to FY December 2022) was a challenging three-year periodcharacterized by rapid environmental changes exacerbated by COVID-19. Certain initiatives could not be executed as planned, and thestrategies themselves needed to be adjusted to align with the changing realities. Our performance has suffered as a result. In the 8th

Medium-TermBusiness Plan

which only accounts for around 30 million babies worldwide. Although there has been a temporary decline in global birth rates due toMedium-Term Business Plan, we will carry over the three basic strategies of “Brand Strategy,” “Product Strategy,” and “Regional Strategy”
from the previous plan, while further deepening them to adapt to the changing global environment as we focus on restructuring our businessIn our brand strategy, we will focus on enhancing brand power through our products, with our Purpose at the core of corporate activities.
In our product strategy, we will strengthen monozukuri (manufacturing) and focus on key areas such as nursing bottles, nipples, and thebaby skincare category where we command a competitive edge, while also exploring new areas. In our regional strategy, we will reinforce
autonomous operation in each business unit and further advance business operations tailored to the characteristics of each market.
In addition to pursuing sustainable growth in existing business areas, we will explore and cultivate new areas with the aim of establishing afoundation for long-term, sustainable growth.
each business, we will focus on improving profitability in the mainstay baby care segment and implement measures that include increasing
high-value-added products in the Japan Business. In the China Business, the priority is to overcome the disruptions caused by the pandemic

Sustained growth in existing areas and exploration and cultivation of new areas

Existing Areas

New Areas

Further strengthen nursing bottle, nipple, and baby skincare
product categories where we have a competitive edge

Expansion of core customer target groups

Structural reforms in each business

Expansion of the target market

Lansinoh and Singapore Businesses: Accelerate growth
China Business: Shift from high growth to stable growth
Japan Business: Improve profitability

Toddlers, mothers to be, fathers

North America (Pigeon)
Africa region

Data Section

In terms of existing areas, we have set the core products of nursing bottles, nipples, and baby skincare products as priority categories. In

Sustainability

Implementation of structural reforms

structure.

and further strengthen the business foundation for stable growth over the next three years. In the Singapore Business and the Lansinoh
Business, we will strive to maintain the momentum in recovery seen from the previous year and continue to accelerate growth during theCommon to existing and new areas: Strengthen brand strategy and monozukuri

period of the plan to nurture these sectors into future pillars of revenue.
Regarding new areas, we will strive to cultivate customers in the toddler, women’s care, and father care categories while also seeking to
expand the markets we target. In North America, we have already begun selling Pigeon-brand products through major e-commerce
platforms, and we are actively considering establishing sales bases for the Pigeon brand in the African region.

Key Issues (Materiality) to Address over the Medium
and Long Term to Achieve Our Purpose P. 41*According to Pigeon research

26

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

27

The 8th Medium-TermBusiness Plan

Financial Targets and KPIs
Under the 8th Medium-Term Business Plan, the Pigeon Groupaims for financial targets of a 6.2% CAGR (compound annual
income over the three-year period, emphasizing both sales

8th Medium-Term Business Plan Targets
Group consolidated
3-year CAGR

Net sales+6.2 %

2022

Unit: ¥ millions

Over the period of the 8th Medium-Term Business Plan, we expect operating cash flow to increase by approximately ¥34 billion and have earmarked+9.5%

Operatingincome2025 (Final year of 8th MTBP)

Actual% 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 profit

44,83447.2%

56,500

49.6%

8.0%

SG&A expenses

32,63834.4%

40,500

35.6%

7.5%

four business segments implements tailored profit

Operating income

12,195

1 2.8%

16,00014.1 %

9.5%

improvement measures to address specific challenges. We

Ordinary income

13,465

14. 2%

16,00014.1 %

5.9%

are also committed to investing in enhancing our

Net income attributableto owners of parent

8,581

9.0%

10,400

9.1%

6.6%

manufacturing capabilities, which will serve as the foundation

Currency rates-FY2022 results: US$1 = JPY 131.55 / CNY 1 = JPY 19.50; 8th MTBP (assumed): US$1 =JPY 130.00 / CNY 1 = JPY 19.50

growth and steady improvement in the operating margin. In
2022, due to factors such as lockdowns and global increases
in raw material and logistics costs, the operating margin wasa result of 14% or higher in 2025 by ensuring that each of ourfor sustained growth. Moreover, we will focus on initiatives toimprove operational efficiency in production and logistics andcategories to boost the gross profit margin.

Net sales

Operating income

Operating margin

100,000
80,00012.8%

60,000product quality, all aimed at driving greater growth. Regarding KPIs, we aim to achieve ROE of 14% or higher, ROIC of 15% or higher, and PVA of ¥7billion 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.

25%
20%

14.1% 15%

13.1%

12.4%

10%

40,00012,19520,0000

2018

2019.01 2019.12

2020

6th MTBP

2021

2022

2023

7th MTBP

16,00014,00012,4002024

2025

earnings in several ways to fortify our operational base, improve future Group earnings, and further enhance corporate value. These include investingin new businesses and research and development, as well as investing in production facilities to raise production capacity, reduce costs, and boost

30%

113,800
New standard*
106,500
94,921 100,000

120,000

improvement in consolidated performance and financial condition. In addition to strengthening our financial position, we effectively use retained

Cash flows

Shareholder return policy

Increase in operating cash flow (3 years): Approx. ¥34 billion

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

Investment

Dividend per share

Investment for growth (3 years): Approx. ¥12 billion

90

KPI targets in final year of 8th MTBP

70

72

74

76

76

2019

2020

2021

2022

2023
(Forecast)60

ROE*1 : 14% or more
ROIC*2 : 15% or more
PVA: ¥7 billion or more

30

*1 ROE: Calculated with equity being the average of the beginning and ending balances*2 ROIC: NOPAT/Invested capital, calculated with a tax rate of 30.0% and invested capitalbeing the average of the beginning and ending balances

0
(Yen)

(Year)

5%0%

Brand Strategy

8th MTBP*A new standard for revenue recognition was adopted in 2021

The Pigeon Group formulated our “Vision of a Baby-Friendly Future” to further advance efforts to realize our Purpose, “We want to make the world moresociety, the “baby-friendly” world envisaged in that Purpose. This Vision, shared both internally and externally, was created based not only on proposals

Targets by Segment and Region

from Pigeon employees but also from ideas that arose through discussions with individuals from various backgrounds. This is a promising source of our
Purpose more relatable for our employees and serves as a guiding direction and source of inspiration for our initiatives. The Pigeon Group will focus on
Growth Projection by Business Segment (8th MTBP)
Japan Business

8.4% for our China Business, 7.9% for our Singapore
Business, 6.4% for our Lansinoh Business, and 2.0% for(¥ millions)
150,000

Sales by Segment

Plan, we anticipate that our China Business will drive the100,000

14,153

actively aiming for robust sales growth in our Singapore

34,77650,00020,00017,800

revitalizing our sales structure in South Korea. We are also

1,154
2,140

44,30010,00010,4080

As for operating income, we are targeting a 3-yearbusinesses. The Japan Business has faced challenges dueto the impact of rising costs, leading us to implement

36,32338,5002022
Results

2025
Target

The first and most important point is to strengthen the “distinctiveness” of Pigeon. We have gained an in-depth understanding of babies’ growth
processes and identified areas of concern in child-rearing based on more than 60 years of research into breastfeeding and early childhood

1,491
2022
Results

0

1,900
2025
TargetNote: Eliminations of inter-segment transactions are not included.

brand. While Pigeon is widely recognized as a leading company in Japan and China, we aim to showcase our strengths and unique value proposition in
Asia and other regions as well. By incorporating these unique qualities into our products, services, and communications, Pigeon strives to provide
customers with a truly exceptional brand experience and differentiate itself from competitors.
The second point is to deliver a consistent brand experience (“coherence”). Pigeon aims to communicate its message clearly by ensuringconsistent communications at all points of contact with customers, whether through our website, e-commerce platforms, or physical stores.
The third point is “participation.” Pigeon aims to be a brand that involves society and encourages co-creation by actively incorporating customer

Data Section

CAGR of 8.5% for our China Business, 8.4% for our Japan
Business, and 6.7% for both our Singapore and Lansinoh

1,400
2,600
13,300and Lansinoh businesses, positioning them as future
pillars of revenue.

There are three key points to consider in strengthening our brand.

development. This has led to our development and launch of numerous high-quality products, resulting in a competitive advantage for the Pigeon

20,40016,917enhancing brand power through products that embody our Purpose, which has been positioned at the core of our corporate activities.

Singapore Business
Lansinoh Business(¥ millions)
30,000Operating Income
by Segment

Sustainability

our Japan Business. In the 8th Medium-Term Businessgrowth in sales, benefiting from initiatives such as

China BusinessMedium-TermBusiness Planbaby-friendly by furthering our commitment to understanding and addressing babies’ unique needs,” by depicting, in terms of six specific faces of

By business segment, we are projecting a 3-year CAGR of

Value Creation Story

optimize the sales mix by emphasizing high-margin product(¥ millions)
140,000

priority. Under the MTBP, our basic policy is to continue stable dividend payments by maintaining current dividend levels along with further

Message fromthe President and CEO

only 12.8%, while under the current plan, the goal is to achieveroughly ¥12 billion for investments to drive growth. The Pigeon Group regards the return of profits to shareholders as an important management

Introduction

growth rate) in net sales and a 9.5% CAGR in operating

Cash Flows and Shareholder Return Policy

feedback into products and services to meet changing needs. In addition, we will collaborate with the community to realize our “Vision of a BabyFriendly Future.”

Growth Projection by Region (Sales in 8th MTBP)
2025
Target77,208What We Aim for under the 8th Medium-Term Business Plan

price adjustments for certain product categories in 2023.
We are planning a thorough review of our product lineupand sales strategies to ensure further stability in ourearnings. Note that our plans do not account for the

2022
Results

Distinctiveness

60,689Sharpen the “distinctiveness” of Pigeon
0

20,000uncertainties surrounding the recovery timeline for

China (including Hong Kong)

inbound demand.

EuropeNear and Middle East

40,00060,000

Other Asia

North America

Other areas

80,000 (¥ millions)

Embody the strength and distinctiveness of
Pigeon in our products, ser vices, andcommunications, and provide a distinctive
brand experience

Coherence

Participation

Provide a consistent
brand experience

Engage in collaboration withcustomers and society

Ensure consistent communications
at all points of contact withcustomers

Generate dialogue with customers, actively
incorporate customer opinion into products andservices, and engage in collaboration withsociety to realize a “baby-friendly future”

Main priority
28

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

29

The 8th Medium-TermBusiness Plan

Products Strategy: Strengthen Our Monozukuri

Product Strategy: Basic Policy for Nursing Bottles and Nipples
Nursing bottles and nipples are at the heart of the Pigeon Group, representing ourHighMarket share 80%＋

origins and most significant products. With the wealth of knowledge gained from longterm research, our competitive edge, and the trust we have earned from ourcustomers, we strive to foster their growth into even more formidable categories.

Market share
50%＋
Middle East Indonesia

We will continue our unwavering efforts in the field of breastfeeding research, andon the sales front, work to expand the sales ratio of high-profit wide-neck nursing
bottles featuring exceptional functionality.

Marketshare

Market share 40%＋

Chinaplan to increase our monozukuri expenses by approximately ¥2 billion compared with 2022,

Slim-neck bottles
Low

Wide-neck bottles

being the launch of POCHItto, a bottle sterilizer and dryer, in the Japanese market in 2022.

High profit bottles

Although this product category had a successful track record in overseas markets, it had not

ProfitabilityHighdevelopment approach to target a market share of more than 50% in the future.

▲ With this product, Pigeon has introduced a new steam
sterilization method for bottles to Japan, which is popular
overseas. The convenience of fully automated sterilization,
drying, and storage has been well received.

Message fromthe President and CEO

The Pigeon Group has always been dedicated to monozukuri activities, with one example

the well-being of babies to strengthen sales and improve profitability. In China, where

1. Baby bottle steam sterilizer and dryer
POCHItto (Japan)

research and product planning, to strengthen our capabilities. Over the next three years, we
expanding those expenses to about ¥6 billion by 2025.

focus on effectively communicating the superior functionality of wide-neck bottles for

Examples of strengthening our monozukuri

further invest management resources into a series of monozukuri activities, including market

However, as our main products are standard-neck bottles, in these markets, we will

44%*1. We will further incorporate customer feedback and refine our productand new business areas, and it is a crucial means of embodying the brand. Under our 8th
Medium-Term Management Plan, in addition to traditional research and development, we willIn the Middle East and Indonesia, our nursing bottle market share is already high.

wide-neck bottles are already commonly used, our current market share is aroundthrough our products, monozukuri (manufacturing) is a foundation for growth in both existing

Introduction

Japan

For the Pigeon Group, which provides various types of value to babies and their families

gained popularity in Japan, where the habit of using electrical appliances to sterilize baby
bottles was not widespread, and Pigeon Corporation did not offer such a product. However,

2. Slim-neck steel feeding bottle (India)

through customer surveys, we discovered a shift in customer preferences, indicating potential*1 Refers to our share within our target market segment, based on internal researchdemand in the Japanese market, and made the decision to introduce the product. The actual
higher price point, and sales have been progressing well.

Intellectual Property Initiatives

In addition, our stainless-steel baby bottles sold in India are a good example of our

At Pigeon, we recognize intellectual property as a vital management asset that contributes to our sustainable business growth. Since ourmonozukuri activities tailored to market characteristics. Recognizing the cultural preference

founding, we have been committed to acquiring, managing, and leveraging intellectual property rights in a responsible manner. In response tofor stainless-steel tableware in India, this product features a simple stainless-steel design

intensifying global competition and the rapid proliferation of counterfeit products through the Internet, our Intellectual Property Department

without insulation functionality. It has been well received by customers in India, and sales havecollaborates closely with our development and business divisions to protect and utilize Pigeon’s intellectual property globally in key technology

exceeded our expectations since its launch.

Monozukuri Expenses

well as strengthening the monitoring of counterfeit products in both online and offline markets. Through proactive measures against imitation

explore horizontal expansion for existing products and propose new product ideas. We also

through the exercise of rights, we aim to safeguard the interests of our customers and enhance our corporate value.

strive to plan and develop products tailored to specific market characteristics, considering

60

factors such as cultural backgrounds. We will continue to strengthen our monozukuri from40

various perspectives.

20
0

The baby skincare category is a growing market, but it is also recognized as a highly competitive field with numerous global and local players in eachmarket. In the Japan business, the first priority is to improve profitability in the mainstay baby care business, and measures such as increasing thenumber of high-value-added products will be implemented. The Chinese business will first get over the turmoil caused by the COVID-19 disaster andrecovery trend from the previous year, continue to accelerate growth during the current medium-term management plan period, and develop them tobecome pillars of earnings in the next generation. By swiftly introducing items aligned to each market, we aim to enhance the presence of our brandin the category. Currently, we hold a market share of approximately 30% in Japan*2 and around 10% in China*3. However, there is still ample room for
expansion in the skincare category worldwide, including Japan and China. In our Singapore Business, we have introduced the Natural Botanical series,
a new line of products that holds promising growth opportunities despite its limited market share.

Singapore Business

Product Strategy: Explore and Cultivate New Areas
Under our 8th Medium-Term Business Plan, the Pigeon Group will focus on exploring and cultivating new growth areas where we can leverage ourexpertise. Our goal is to increase consolidated Group sales in the final year of the plan, 2025, by ¥19 billion compared with 2022, including
approximately ¥10 billion from new areas and ¥9 billion from existing areas. In terms of new areas, we will focus on “toddlers,” “women’s care,” and“father care.” Through the toddler category, we plan to increase Group sales by around ¥6 billion, mainly via growth in products for skincare andsupporting oral health and development. We will also look to introduce a skincare range for children aged three and older and launch nursing bottles
for older infants in the Chinese market. For women’s care, while our current focus is on the Lansinoh brand, we also have plans to expand under theapproximately ¥2.5 billion from other new areas.

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

Existing Areas

New Areas

Expand market share by strengthening the Basic series

Capture new market opportunities through the development andnurturing of skincare products for toddlers and local strategic products

Three-Year Sales
Growth Target

Toddlers

New Areas+¥10 billion¥6 billion

Existing Areas+¥9 billion

Sales Projections for New Areas(¥ billions)
New Areas +10

Skincare,oral development,
and others
Existing
Areas +9

Birth preparation andbillion recovery pregnancy care,and others

Womenʼscare¥1.5

Others¥2.5 billion and lifestyle products,

Next-generation healthcare
and others

Pigeon Integrated Repor t 2022

2025
TargetData Section

Approx. 10%

2022
Results¥ 6 billion

Pigeon brand, aiming for Group-wide growth in sales of around ¥1.5 billion by 2025. In addition, we plan to achieve Group sales growth ofReference: Value market share of baby skincare products (Pigeon research)
China¥ 4 billion

Sustainability

further develop its business foundation for stable growth over the next three years. In the Singapore and Lansinoh businesses, we will maintain the

Approx. 30%(¥ billions)80

Medium-TermBusiness PlanThrough surveys, we can discern shifting customer preferences and use that knowledge to

Product Strategy: Basic Policy for Baby Skincare Products30▲ This stainless-steel nursing bottle was developed
specifically for the Indian market, considering thepreference for this material in tableware.

fields and markets for the future. This involves securing rights for patents, designs, trademarks, and other forms of intellectual property, as

Japan

Value Creation Story

market response has been positive, with customers appreciating the product despite its

2022
Results

2025
TargetPigeon Integrated Repor t 2022

31

Business Summaries by
Segment Japan Business

Our Competitive Edge

Japan BusinessPigeon conducts in-depth research into the growth processes of babies and uncovers various problems that parents encounter when raising children

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

based on more than 60 years of research into breastfeeding and infant development in Japan since our founding. We have used these findings to

Introduction

develop numerous high-quality products. As such, Pigeon is widely recognized as a leading brand in the industry, and our strength lies in our ability todevelop diverse product categories while increasing market share. As a result, we have performed well even in the Japanese market, which has

Market Trends and Business Environment

experienced declining birth rates since 1975. In recent years, we have been proposing products that enable caregivers to enjoy parenting in a relaxed

In Japan, the birth rate hit a record low of 770,000 births in 2022* , and it is expected to continue gradually declining. At the same time, with the overall
1

female employment rate in Japan at 53.0%*2, there are growing expectations in Pigeon for childcare support. Furthermore, the proportion of the*1 According to National Vital Statistics Reports for 2022 (approximate)*2 Based on Statistics Bureau of Japan’s “Labor Force Survey (Basic Tabulation), Average for 2022”*3 Statistics Bureau of Japan estimate as of October 1, 2022

reliable products through our baby and childcare 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 “children’s growth is our first priority,” and we have earned
the confidence of customers as a result. Known for our unparalleled knowledge concerning babies, the Pigeon Group is constantly expanding andimproving the quality of its childcare services. For the elderly, we offer new competitive products while improving the quality of our elder careservices. Here, we leverage our product planning capabilities, as well as the high-level quality control we have cultivated in baby products, toaccurately identify the unmet needs of consumers.

Fiscal 2022 Performance and Highlights
Net sales for this segment were down 5.1% year on year to ¥36,323 million and segment profit(¥ millions)
50,000In baby and women’s care products, we are focused on two categories: breastfeeding support centered on nursing bottles and nipples, the Group’s
core offerings, and baby skincare. We are committed to expanding our business by boosting sales and improving market share. As a leading

caused by the decline in net sales and high procurement prices. In baby and women’s care, net
sales declined year on year. Contributing factors included people staying indoors because of the
COVID-19 pandemic and consumer demand turning to lower-priced goods due to advancing

40,00038,26436,32336,800intensifying price competition. In the baby skincare category, while sales struggled as overseas
demand declined, we enhanced our product line with new value propositions that included new
products adopting eco-friendly paper-cube packs. In addition, Pigeon launched its first disasterincreases. In addition to creating new categories within the existing baby-related field, we are venturing into areas that resonate with our customers,such as women’s care and father care, ensuring growth even in the face of a declining birth rate. In February 2023, we introduced a new series called

20,000“ME. by Pigeon,” which focuses on caring for the delicate needs of pregnant and postpartum women, and we will continue to introduce innovative
10,0000

products to the Japanese market. We are also committed to our own e-commerce channel, leveraging it as a primary sales platform to effectively
communicate our brand’s essence. In particular, for new product categories, we will implement proactive strategies such as exclusive products andDec. 2021

Dec. 2022

Dec. 2023
Targetpre-launches, capitalizing on the flexibility of our operations.
In childcare services, we strive to enhance the quality of childcare by catering to the individual growth and development of each child.

governments, we worked to entrench public awareness of the importance of disaster
preparedness for babies. We also overhauled the Official Pigeon Online Shop, boosting sales

In health and elder care, we are working to further enhance competitiveness by launching new products that exceed customer expectations andcapabilities to new levels by strengthening connections with social media for better convenienceboast exceptional efficiency, with a focus on products developed and manufactured in-house, such as baby wipes, body wipes, skincare products,

and augmenting the shop’s lineup of limited-edition products.

and oral care products, as well as wheelchairs and other institutional products.

Medium-TermBusiness Plan

preparedness series for babies. By providing these products free of charge to certain local

manufacturer of baby products with a wide range of categories, we continuously review our lineup to meet the evolving needs of our customers. We
strive to increase the value of our products and reflect this in pricing, allowing us to enhance competitiveness and profitability while absorbing cost

30,000inflation. Sales of nursing bottles and breast pumps, two of the Group’s mainstay product lines,
remained strong, although some consumables such as baby wipes declined year on year amid

Value Creation Story

decreased 27.8% year on year to ¥1,491 million due to factors such as a decrease in gross profit

Business Strategy under the 8th Medium-Term Business Plan
Sales of the Japan BusinessMessage fromthe President and CEO

population aged 65 and older (aging rate) has reached 29.0%*3, indicating the ongoing trend of population aging.

manner in such categories as baby strollers and bouncers, where we were a late market entrant. We have earned a reputation for safe, secure, andIn addition, we are reinvigorating our efforts to disseminate information that is attentive tocustomer needs through Pigeon Info, a website that supports women during pregnancy,

Japan Business
3-year CAGR

In products for health and elder care, net sales decreased year on year as the Group rejigged
this category’s product lineup to improve the gross profit margin from 2021. Efforts to enhance

Net sales+2.0 %

Operatingincome+8.4 %

profit margins are starting to bear fruit. In childcare services, we currently provide services at 64
in-company facilities and will continue to develop this business further while striving to enhanceservice quality.

Habinurse liquid
thickener (just add)

Habinurse easy
wipes (mist type)

Priority Strategies (Baby Care)

1

3

Japan Business Targets
50,00040,00030,000Create new categories(Target sales exceeding ¥5,000 million over three years)

20,000Strengthen our own e-commerce platform(Target sales in 2025: 4 times the 2022 level)
Position the e-commerce platform as a major channel for new category products

32

Pigeon Integrated Repor t 2022

38,50020%
10,0000(¥ millions)ME. by Pigeon
products for a female’s
delicate areas

36,32360%

40%

Focus on bottles and nipples, breastfeeding support, and baby skincare

New areas in the baby sector (e.g., next-generation healthcare, toddlers)
Other areas (e.g., womenʼs care, father care)

Net sales
Gross profit margin
Operating margin

Data Section

2

Improve profitability through price revision and product portfolio review

Sustainability

childbirth, and childcare, and through various video distribution sites.

2022
Results

2025
Target0%

Sonaetta disaster
preparedness products
for babies

Pigeon Integrated Repor t 2022

33

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 suchas South Korea, the Philippines, and Mongolia. Approximately 90% of total sales in this segment come from mainland China.

the country choosing to purchase our products. We now consider more than half of all households in China as our target audience. Since 2009, we have

Pigeon made a full-scale entry into the Chinese market in 2002. As China’s economy has grown, we have witnessed an increasing number of customers inin major hospitals across the country. In addition, we have formed partnerships with maternity hospitals to raise awareness about the benefits ofMarket Trends and Business Environment

breastfeeding. These initiatives have greatly contributed to the widespread recognition of Pigeon as a leading brand of safe, reliable, high-quality baby

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 withenormous growth potential for the Pigeon brand over the medium to long term in the Chinese
market amid increasing disposable income and rising consumer interest in product functionality
and safety. Furthermore, as a new generation of families emerges, transitioning from the 1980s
and 1990s to the digital-native era, we are witnessing a significant shift in consumer behavior
toward e-commerce. Pigeon is responding flexibly to this trend, with the e-commerce channel in(Yuan billions)
12,00010,000driven a continued shift to e-commerce, and in 2022, it accounted for approximately 70% of total

2,000

E-commerce share of
total retail sales*2 Survey conducted by Pigeon (nursing bottle and nipple sell through, in value)

30%

Business Strategy under the 8th Medium-Term Business Plan
20%

Looking ahead to 2023 and beyond, as we anticipate the ongoing trend of declining birth rates in mainland China, we will continue to focus on our corenursing bottle and baby skincare categories. At the same time, we are actively pursuing the creation of new product categories to further expand our

10%business. To accurately understand our customers’ needs and propose concrete products, we encourage collaboration not only between our marketingand planning teams but also with our research-and-development department to ensure the seamless integration of foundational research and product0%2010 2012 2014 2016 2018 2020 (year)

Source: Compiled and created based on an annual
monitoring report on Chinaʼs e-commerce market by
the National Bureau of Statistics of China and China
e-Business Research Center

Fiscal 2022 Performance and Highlights

development and enable innovative ideas. These efforts have already led to notable successes, including the introduction of products targeting children
aged three and older, which we launched in the third quarter of fiscal 2022.
In terms of sales, we are actively responding to the expanding e-commerce landscape by making investments in new platforms that align with ourcustomers’ purchasing behaviors. We are also strengthening direct communication with consumers through social media platforms, enabling us to explore
local market needs, enhance our brand presence, and boost sales. Meanwhile, given the accelerated closure of small retail stores during the pandemic,
sales at our brick-and-mortar stores are declining. We are stepping up efforts to halt the decline by introducing items exclusive to these physical stores,

Net sales in this segment amounted to ¥34,776 million, down 6.6% year on year, and segment profit decreased 11.7% to ¥10,408 million. Due to the ongoing
resulting in the temporary reduction or suspension of business activities. However, as the restrictions were eased in June, we witnessed a recovery in our
manufacturing and operational activities, and by July, domestic logistics disruptions were gradually resolved. There was a resurgence of the infection in
mainland China in December, however, due to the relaxation of the zero-COVID policy. This had a significant impact on consumer behavior and our businessactivities. In mainland China, our largest market, we have all but completed the switch to the “Shizen Jikkan” series of nursing bottles that were upgraded in
September 2021 in a move that was well received by the market. These nursing bottles are marketed as “Bonyu Jikkan®” in Japan. In the baby skincare
category, where we are focused on basic research, we leveraged the results of our efforts regarding babies’ skin to launch a line of skincare products forchildren aged three and older in the third quarter of fiscal 2022. This served to expand our new customer domains in the Chinese market.

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.
E-commerce sales make up a significant portion of sales in the South Korean market, where we are widely recognized under the Double Heart brand. To
further drive business growth starting from 2023, we are focusing on strengthening our e-commerce sales while implementing fundamental revisions toour distribution system and expanding our product lineup. Our goal is to double our sales within a three-year period.
Meanwhile, starting from 2022, we are leveraging the expertise and resources of the Pigeon brand in marketing and e-commerce in our Chinese
operations to initiate sales in the North American market. This expansion into new business territories marks an important step for us, and we arecommitted to increasing brand recognition and value for Pigeon in North America.

China Business
3-year CAGR

Net sales+8.4 %

Operatingincome+8.5 %

China Business Targets
50,00037,23934,77620,00010,00034

2Create new categories

PIGEON MANUFACTURING (SHANGHAI) factory

30,00001Expand products for babies aged 12 months and older to achieve 50% market
share in nursing bottles
Expand unique skincare product series following the Avocado and Yuzu series

34,776

Pigeon Integrated Repor t 2022

Dec. 2022

Dec. 2023
TargetBreastfeeding consultation

Skincare for children

40%

30,00020,0003
Dec. 2021

60%

44,30040,000Further enhance baby bottle, nipple, and baby skincare categories
37,700Net sales
Gross profit margin
Operating margin

Data Section

40,000Priority Strategies

Maternity classSustainability

We also initiated the sale of baby products under the Pigeon brand in North America in 2022 by leveraging the capabilities and knowledge gained in China.

such as the Avocado skincare range, thereby differentiating ourselves from e-commerce platforms.

Medium-TermBusiness Plan

spread of COVID-19 in mainland China since the beginning of 2022, lockdown measures were implemented in April and May, primarily in the Shanghai area,(¥ millions)
50,000

Value Creation Story0

users, we have maintained our position as the No. 1 brand for nursing bottles in mainland China*2.

E-commerce retail sales

6,000
4,000

*1 Sell through, in value

healthcare professionals who have recognized the superior functionality and quality of our breast pumps, as well as the positive reviews from satisfied
(%)

8,000

mainland China accounting for a growing proportion of sales each year. The pandemic has also
sales in mainland China*1.

products in China. In the thriving e-commerce market, the breast pump category has seen an influx of competitors. However, through the endorsement of

E-Commerce Retail Sales and Share of
Total Retail Sales in China

Message fromthe President and CEO

9.56 million births in 2022, according to the National Bureau of Statistics of China. There is

Sales of the China Business

Introduction

been working on a collaborative project with the National Health Commission of the People’s Republic of China, opening breastfeeding consultation rooms

Develop new markets such as womenʼs care, father care, and toddler

20%
10,000Restructure by reviewing the supply chain
Improve the profitability of factories and shift to an own direct sales system inSouth Korea

0(¥ millions)

2022
Results

2025
Target0%

Pigeon Integrated Repor t 2022

35

Business Summaries by
Segment Singapore BusinessBusiness Strategy under the 8th Medium-Term Business Plan

Singapore BusinessIn 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 segments that hold substantial market volume. It is therefore crucial for us to deepen ourIntroduction

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.

understanding of consumers in each market and quickly respond to their needs by introducing appropriate products. We aim to build a flexible and agile
structure by not only strengthening our planning and development functions within the Group but also exploring collaborations with promising local

Market Trends and Business Environment

partners in areas such as design and production capabilities.

It is estimated that approximately 130 million babies are born worldwide each year. The Singapore
Business focuses on Indonesia and India as key markets in efforts to expand business. Despite the

In recent times, we have been steadily enhancing our product development capabilities, which includes the launch of a new skincare series thatcaters to increasing environmental consciousness. Moving forward, our focus will be on activities for products that target the upper-middle to premiumIndia

segments. In addition, given the rising demand for e-commerce, we are actively implementing marketing strategies that can adapt to changes in
consumer behavior and regional characteristics. This includes strengthening our digital marketing efforts.

Indonesia has an annual birth rate of around 5.2 million*1, and India, with its staggering annual birthIndonesia

rate of around 24 million, is projected to become the world’s most populous country in 2023. Both

Vietnamprice range have become the mainstream choice. We will focus on strengthening our sales by effectively communicating the quality and functional

their surging economies. We are dedicated to nurturing these markets as the next key markets

Thailandadvantages of higher-priced wide-neck nursing bottles, which have already become popular in Japan and China. By increasing the sales ratio of wide-

following our operations in China. In addition, in the regions where the Singapore Business operates,

Malaysia

While we have been able to gain market share in the mainstay nursing bottle category, in many emerging markets, slim-neck bottles in the lower

countries offer significant growth opportunities not only in terms of birth rates but also on account ofneck bottles, we aim to improve profitability.
In markets where we have already established a brand position, such as Vietnam, Thailand, and Indonesia, we will carefully assess the timing andthere is an expanding middle class with an annual disposable income ranging from $5,000 to$35,000 owing to the economic growth. This suggests that the target demographic for Pigeon,

0

5

25

consider price strategy adjustments in each market to address cost increases.

(Millions of births)

Efficient production and cost improvement are vital challenges for our four facilities within this segment from a Group-wide perspective, as they also

*1 Sources: Population Division, Department of Economic andSocial Affairs, United Nations (2022); World Population
Prospects 2022, Online Edition

produce goods for other segments. By enhancing production efficiency and optimizing the supply chain, we can effectively respond to fluctuating raw material
prices and logistics costs, ensuring stable production and improving profitability. In addition, we are committed to establishing an environmentally conscious

Fiscal 2022 Performance and Highlights

production system, including efforts to reduce greenhouse gas emissions, to contribute to leaving a rich earth for the future of babies born tomorrow.

Net sales for this segment increased 12.2% to ¥14,153 million and segment profit was up 18.2% to ¥2,140 million on a year-on-year basis.

India: Pigeon has been promoting business in India since 2009. In addition to focusing on major cities, we are implementing localized sales strategies inconsideration of changes in consumer purchasing behavior and mindset following the COVID-19 pandemic. We are reorganizing our sales andIndonesia and India as well as Singapore and Malaysia, where we have our own bases. In the nursing bottle category, the Group began a revamp of its

distribution system to align with these changes. We are also raising awareness of the Pigeon brand through collaborations with maternity hospitals. On

mainstay SofTouch nursing bottle series (marketed as Bonyu Jikkan® in Japan), starting with China and Japan and proceeding to other majora production front, we are strengthening our local manufacturing capabilities by introducing stainless steel baby bottles that cater to the culturalcountries in August 2022, and sequentially rolled out nursing bottles made with T-Ester* , a new plastic as transparent as glass. In the baby skincare

preference for stainless steel tableware in India, thereby supporting mothers in their breastfeeding journey.

Medium-TermBusiness Plan

The ASEAN region and India continued to recover from the COVID-19 pandemic, and net sales and profits both rose in key countries such as

2

Value Creation Story

including the upper-middle class (with income levels exceeding $12,000), is poised to grow further.

Message fromthe President and CEO

challenges posed by the COVID-19 pandemic, these countries have shown stable birth rates.

Birth Rate by Country (2021)*

1

category, an area of focus for Pigeon, the Group deployed the Natural Botanical Baby skincare series in more than 15 countries and regions. In
Indonesia: Pigeon entered Indonesia in the 1980s and has built a distribution network covering almost the entire country with the support of local partners. By

November 2022, the Group expanded this series by launching a baby powder made from natural materials based on corn starch.

entering the childcare products market at an early stage and establishing collaborations with multiple national hospitals, our brand awareness in Indonesia

Sales of the Singapore Businesshas significantly increased. On a sales front, we are focused on expanding our product lineup, streamlining procurement and sales processes, and further(¥ millions)

expanding business in the Indonesian market. In 2019, we established a new sales company to support these efforts. In the key category of nursing bottles,

20,00012,61914,153

Pigeon has already captured more than 50% market share in Indonesia, and we have continued to see growth in sales of our higher-priced premium wide-

15,400neck bottles. In other product categories, we are working on developing products targeting the upper-middle to premium class segments by enhancing price

Sustainability

16,000competitiveness through collaborations with reputable local suppliers who meet our stringent quality standards. In production, we consolidated the factory

12,000established in a joint venture with a local partner in 2017 as a subsidiary. In 2021, we further strengthened production capabilities and expanded our lineup
8,000

through facility upgrades and expansions. We will continue to focus on improving production efficiency, implementing environmentally friendly practices, andgenerating synergies between Singapore Business manufacturing and other facilities to support growth in Indonesia.

4,000
0

Dec. 2021

Dec. 2022

Dec. 2023
TargetWide-neck nursing bottle Bonyu
Jikkan® made with T-Ester*2

Natural Botanical Baby skincare series

Online event for a new product launch

Net sales+7.9 %(3-year CAGR for external sales is +10.0%)+6.7 %

Singapore Business Targets

30,000In Southeast Asia, where we have been operating since the 1970s, customer recognition of the Pigeon brand has grown steadily thanks to our highquality products, derived from our research into feeding and infant development in Japan, as well as the cooperation of local partners with whom we

1have built relationships of trust over many years. Our nursing bottles command top market share*3 in Indonesia, Singapore, Thailand, and Vietnam.
In the Singapore Business, we have production facilities in two locations in Thailand as well as in Indonesia and India. These factories adhere to thestrict quality standards set by the Pigeon Group to enable the production of safe and 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*3 Pigeon research2
3

Accelerate business growth centered on nursing bottles, nipples, andbaby skincare

Pigeon Integrated Repor t 2022

60%

Target double-digit annual growth in Indonesia, India, and other major countries

Strengthen manufacturing for upper-middle to premium class
Strengthen in-house planning and development systems and utilize promisinglocal partners

40%

20,00014,15317,80020%

10,000Restructure business by reviewing supply chains and other key processes
Review the sales structure in existing markets and restructure the Thai plants0(¥ millions)36

Net sales
Gross profit margin
Operating margin

Priority Strategies

Our Competitive Edgeenhancing our cost competitiveness in the markets where we operate.

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

Singapore Business
3-year CAGR

2022
Results

2025
Target0%

Pigeon Integrated Repor t 2022

37

Business Summaries by
Segment Lansinoh Business

Lansinoh BusinessBusiness Strategy under the 8th Medium-Term Business Plan
Lansinoh Business operations span various regions including North America (United States, Canada, and others) and Europe (United Kingdom,
Germany, Belgium, and others), as well as China, Turkey, and Central and South America. With the aim of supporting mothers and their babies aroundthe world in achieving the best start in their new lives, Lansinoh offers a comprehensive range of solutions in breastfeeding, from nipple care creams

Currently, the sales composition of the Lansinoh brand by market is approximately 60% in North America, 30% in Europe, and 10% in otherdays after birth.

recommended by many physicians to Bluetooth-enabled electric breast pumps and products specifically designed for hospital use during the first few
In the 8th Medium-Term Business Plan, we will focus on strengthening the sales of our core products such as nipple care creams and actively pursue

However, with many choosing to postpone their plans of starting a family due to the COVID-19 pandemic, the number of births in 2020 reached

the development and market introduction of highly competitive new products, particularly in the breast pump category. In addition to breastfeeding-the lowest level since 1979. Nevertheless, according to the National Center for Health Statistics (NCHS) in the United States, the number of births

related products, we will nurture the expansion and development of our portfolio in the prenatal and postnatal care product segment, which we started

in 2021 was 3.66 million, up 1.3% from the previous year and the first increase in seven years. The total fertility rate was 1.66. In 2022, the number

selling in 2021, aiming to make it a future pillar of our business. In terms of business scope, we will incorporate design thinking into our new productof births remained relatively unchanged, dipping just 0.1% year on year, with a total fertility rate of 1.67 (provisional figure). In Europe, while thedevelopment process and continue to expand the current breastfeeding domain to cover women’s health.

total fertility rate in major countries is declining, some countries, such as France and Sweden, have implemented strong national initiatives to

In terms of sales, we will focus on further expanding our business by strengthening relationships with major pharmacies, baby specialty stores, andsupport parenting. As a result, they have managed to exceed the average birth rates of other advanced countries. Other countries are

retail chains in each country and on augmenting our product lineup to better cater to each market. In addition to enhancing our presence in the growing

addressing the issue of low birth rates and population decline.

e-commerce sector and marketing activities, we will work on streamlining our European operations, including a review of our distribution networks.

In addition, not only in the United States and Europe but also globally, there is increasing awareness of the importance of breastfeeding and its
medical and economic benefits, and demand for breastfeeding-related products is steadily growing as a result.

Fiscal 2022 Performance and Highlights

Net sales+6.4 %

Operatingincome+6.7 %

Lansinoh Business Targets
30,00060%

Priority Strategies

Net sales in this segment amounted to ¥16,917 million, surging 27.0% year on year, and segment profit increased 21.1% to ¥1,154 million.
North America and Europe, two vital markets for the segment, continued to suffer delays in product arrivals and shipments due to disruptions inlogistics, in a trend that began in 2021. In North America, net sales rose year on year in local currency terms, as sales were firm for nipple care creams,
breast pumps, and breast milk storage bags, which are mainstay products, and sales swelled for prenatal and postnatal care products, which were1

launched in 2021. Meanwhile, in parts of Europe such as Germany and the United Kingdom, the energy crisis and high cost of living dampened
Profits increased year on year. Logistical costs such as marine transportation expenses persisted at a high level, impacting unit costs, shipping expenses,

2

and other factors, while vigorous marketing activities contributed to expenses. Nonetheless, sales rose in North America, contributing to the profit increase.

3

Sales of the Lansinoh Business

Strengthen and foster breast pump and prenatal and postpartum careproduct categories

40%

16,917

Introduce new breast pump models and elevate prenatal and postpartum careproducts to the next growth phase

Develop new products and categories utilizing bio-design

20,40020,00020%

10,000

Expand the brand from “breastfeeding” to “womenʼs health”

Restructure business through a review of sales structure
Improve the efficiency of European operations, including a review of distribution
networks

0(¥ millions)

2022
Results

2025
Target0%Medium-TermBusiness Plan

consumer activity, causing net sales in this region to fall year on year in local currency terms.

16,917

Net sales
Gross profit margin
Operating margin

Value Creation Story

Lansinoh Business
3-year CAGR

Message fromthe President and CEO

regions (including China). In the United States, the main market for the Lansinoh Business, demographics have remained relatively stable.

(¥ millions)
20,000Introduction

Market Trends and Business Environment

18,20016,000

Sustainability

13,32012,000
8,000
4,000
0

Dec. 2021

Dec. 2022

Dec. 2023
TargetData Section

Our Competitive Edge
The Lansinoh brand is handled by Lansinoh Laboratories, Inc., which became a wholly owned subsidiary in 2004 and now offers Lansinoh-brand products tocustomers in more than 85 countries and regions. Since its establishment in 1984, Lansinoh has gained strong customer support as a breastfeeding-related
brand, recognized in the market for its strong brand power and the high quality and reliability of its mainstay products, which include nipple care cream,
breast pads, breast milk storage bags, and breast pumps. In the United States, this segment’s key market, we command top market share* for nipple care

Brand Overhaul

cream, breast pads, and breast milk storage bags. In addition to North America and Europe, Lansinoh has expanded its business globally in recent years to

The Lansinoh brand has been highly regarded by customers over the years as a trusted brand for breastfeeding products. In our 8th Medium-Term

include China and elsewhere in Asia, while increasing market share in each country.

Business Plan, as a first step toward further growth in both breastfeeding products, including breast pumps, and prenatal and postpartum care

The Lansinoh brand is at the forefront of research and development in the field of breastfeeding, and our in-house factory in Turkey is dedicated to thedevelopment and production of breast pumps, enabling us to establish a flexible supply system tailored to the needs of each market. In recent years, theproducts, we announced a new brand vision, “Stand with the mothers,” in March 2023. This vision is built upon the core values and traditions that haveearned us support as a breastfeeding brand, while also aligning with our evolving values and brand direction both now and in the future.

brand has also been involved in the manufacturing of certain Pigeon products, helping to generate synergies with other businesses in the Pigeon Group.
*Pigeon research

38

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39

Promoting Sustainable
Management
Pigeon Sustainable Action
Pigeon ESG/SDGs Policy

Pigeon’s Purpose is to make the world more baby-friendly

Together, the Pigeon DNA and Pigeon Way comprise Pigeon’s philosophy that every employee upholds in the course of their duties. The Pigeon ESG/

by furthering our commitment to understanding

SDGs Policy embodies this philosophy, serving as a guideline for contributing to the development of a sustainable society.

and addressing babies’ unique needs.

Introduction

We will pursue sustainable operations from the perspective of the Key Issues (Materiality) that the Pigeon Group must address, as well as from thestandpoint of environmental (E), social (S), and governance (G) considerations. We will also look to create new value through the provision of products

In order to create a baby-friendly future,and services with the aim of helping solve social issues, including those highlighted by the Sustainable Development Goals (SDGs). Going forward, we

we aim to grow sustainably as an indispensable part of society

will strive to build relationships of trust with our stakeholders through our business activities, while improving overall corporate value to foster theby reducing our environmental impact

development of a sustainable society.

and resolving the social issues that affect babies

Message fromthe President and CEO

and their families across all the countries and regions

Sustainability Committee

where we operate, and by embracing the challenge of
new business endeavors.

The Sustainability Committee was established in
December 2020 to further enhance the Pigeon Group’s
Board of Directors

ESG management from a medium- to long-term
perspective. Chaired by the Director in charge of the

President and CEO

Global Head Office (GHO) and consisting of the Business
Strategy Division Manager and other business division

Sustainability Committee

targets related to issues in sustainability, identifies andTask setting/instruction

Progress report

Key Issues (Materiality) to Address over the Medium and Long Term to Achieve Our Purpose

periodically revises the Key Issues (Materiality), andprovides progress reports on initiatives to resolve thesechallenges. The Committee had convened seven times
as of December 2022, conducting reviews of materiality

China Business Unit
Sustainability
Committee

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

LansinohBusiness Unit
Sustainability
Committee

Group Companies
in the SBU

Details of the discussions of each meeting are provided
to the Board of Directors.

Key Discussions in the Sustainability Committee to Date
During Sustainability Committee meetings held in 2021 and 2022, extensive discussions were conducted to formulate the Pigeon Green Action Plan and theCompany’s medium- to long-term environmental targets. Across six sessions, the Committee identified the environmental issues most relevant to the Pigeon

Key Issues (Materiality)

What We Aim to Achieve

Individual Issues

Enhancing
Business
Competitivenessand Resilience

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

- Supporting nursing babies- Supporting healthy baby skin development- Creating new businesses- Releasing products that exceed customer expectations- Building resilient distribution systems

Reducing Our
Environmental
ImpactImplementing the Pigeon Green Action Plan
aimed at realizing decarbonization, a circularsociety, and coexistence with nature, to leave arich earth for the future of babies born tomorrow- Reducing greenhouse gas emissions (Scope 1, 2, and 3)- Circular manufacturing- Using sustainable resources (paper and palm oil)Contributing to
the Resolution ofSocial Issues

Helping to resolve social issues affecting babies
and their families- New products and services for babies needing support- Expanding the use of products designed for maternity
hospitals- Promoting responsible procurement- Participating in and supporting communities

Managing Talent
and Cultivating theRight Culture for
Our Purpose

Cultivating an organizational culture in which diverse
individuals resonate with the Pigeon Way and our Purpose; feelpride in the Company, their department, and their work; havean intrinsic motivation to contribute; and can embrace newchallenges and express themselves to drive personal growth- Working environments that achieve self-fulfillment andgrowth- Ambitious organizational culture- Enriched investment in human resource development- Promoting Diversity & Inclusion

Establishing SolidManagement
Foundations

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

- Reinforcing group governance- Reinforcing compliance- Reinforcing risk management- Dialogue with stakeholders

Group’s business activities and agreed to set targets that contribute to achieving a decarbonized society, a circular economy, and coexistence with nature.

Medium-TermBusiness Plan

Japan Business Unit
Sustainability
Committee

Singapore
Business Unit
Sustainability
Committee

and discussions toward the formulation of environmental
targets covering medium- to long-term time frames.

Value Creation Story

managers, the Committee sets medium- to long-termgas (GHG) emissions. A significant portion of the Pigeon Group’s Scope 1 and 2 emissions come from indirect emissions associated with the use of purchased
electricity. To tackle this issue, several key measures were discussed regarding energy conservation, the introduction of self-generated solar power, and thepurchase of renewable energy. For power consumption that cannot be fully offset by these measures, the Committee agreed to acquire renewable energy
certificates. Simulations were conducted to determine the cost-effectiveness of these measures, considering factors such as the investment required forenergy conservation and self-generation, the cost savings from reduced energy consumption, additional expenses for purchasing renewable energy, and thepotential financial impact of future carbon taxes. Based on these simulations, it was decided that the Pigeon Group will aim to achieve net-zero Scope 1 and 2
Discussions also centered on target values for realizing a circular economy and coexistence with nature, with proposals presented to the Board of Directors.
The medium- to long-term goals of the Pigeon Green Action Plan have been incorporated into the 8th Medium-Term Business Plan with specific targets for

Data Section

GHG emissions by 2050 with an interim target of a 50% reduction (total) by 2030, compared with 2018 levels.

Sustainability

First, discussions addressed the global challenge of achieving a decarbonized society, particularly setting targets for reducing Scope 1 and 2 greenhouseeach business division, which takes responsibility for implementing measures in alignment with these targets. The Sustainability Committee monitors andreviews the progress of each business division.

40- Explanation of the purpose of establishing the Sustainability Committee- Description by outside experts of the latest trends in ESG/SDGs and deliberation on
ESG themes- Reports on the progress of initiatives in each business division- Discussion on formulating medium- to long-term environmental targets for therealization of a decarbonized society, a circular economy, and coexistence with nature- Information sharing for Scope 3 calculation- Progress report on climate-related risk and opportunity analysis

Pigeon Integrated Repor t 2022

2022 (Three sessions)
AgendaAgenda2021 (Four sessions)- Reports 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 ofa decarbonized 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)

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 2022

41

Enhancing Business
Competitiveness and Resilience

Key Issue(Materiality)

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
nursing babies

Supporting healthy
baby skin development

Creating new
businesses

Releasing products that exceed
customer expectations

Building resilient
distribution systems

PP. 44-45

P. 30

P. 31

P. 43

PP. 42-43

Improving Customer Satisfaction

To deliver safe and reliable products to babies and their families around the world, the Pigeon Group is committed to improving productPigeon considers customer feedback to be a valuable asset. Since the 1970s, we have operated the Customer Service Center to obtain

quality from two perspectives: design quality (at the product development stage, including the selection of raw materials and productcustomer feedback for reflection in our business, underscoring our customer-focused management approach. In 2016, we established adesign) and production quality (at the manufacturing stage). Both processes adhere to international ISO 9001 standards and are reviewed

complaint response management system that conforms to ISO 10002 international standards (guidelines for quality management, customer

every six months. In addition, after product launch, customer feedback is shared to improve product design and manufacturing processes.

satisfaction, and handling complaints in an organization). Seeking to further improve customer satisfaction, the Company issued its

Product development stage (= design quality)

Communication with customers

4 After product launch

1 Raw material selection

2 Product design

3 Manufacturing stage-Safety/hygiene verification-Our knowledge and accumulated test data
-Papers and reports from public institutions-Databases-Pesticide residues, microorganisms,
allergens, foreign substances, and others(food)-Design/product evaluation by PQS-Past customer inquiries, analyses ofsimilar products-Design reviews, negative check-Trial monitoring, safety tests, and others-Independent standards (PPM) for the manufacturing
facilities and production environment at each plant-Quality control/assurance through various
mass production tests-Quality assurance audits of factories-Maintenance and improvement of the
production environment through GMP

Consumer-Oriented Declaration in 2018. We endeavor to improve customer satisfaction by identifying issues through feedback andcollaborating across departments such as quality control and product development to enhance the quality of our products and services.

Reflected feedback to improve baby strollers
with the Runfee RB3

We received some comments of concern about ourWith the new Runfee RB3, we redesigned the shoulder belt structure of ournipple shields, including misalignment during

baby strollers and introduced vertical slits for effortless height adjustment

breastfeeding and size issues. Using this feedback, weto accommodate the child’s growth. This allows for a perfect fit and easy

adopted a new butterfly shape, thinned the part thatbelt fastening. A further upgrade involved reducing the noise whenadheres to the breast, and improved the degree of

opening and closing the hood by 13% compared to traditional models for

Pigeon’s “Design Quality”

adhesion to reduce deviation. We also reviewed ourquiet, hassle-free operation that doesn’t disturb the baby’s sleep.

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

Product improvement

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

size range and increased it to three sizes (small,

Before improvement

After improvement

Medium-TermBusiness Plan

Nipple shields improved thanks
to customer feedback-Customer feedback-Feedback from healthcare
professionals/distributors-Improvement meetings to discusscountermeasures

Value Creation Story

Manufacturing stage (= production quality)

Message fromthe President and CEO

Pigeon Quality

Introduction

Enhancing Business
Competitivenessand Resilience

Individual Issues

to support and improve the design quality of our products manufactured worldwide. From the product development stage, we select and use
only raw materials confirmed to be safe, and at the development and design stage we conduct an in-house review process that includes
design reviews and verifications of wide-ranging risks in various life scenarios (“negative check”). Through this review process, we predict
and analyze potential risks in advance, such as defects, injuries, and accidents that could occur when using our products, and reflect them inwhether developed products are of sufficient quality to meet customer needs and whether there are any points that need to be improved.

Pigeon’s “Production Quality”
Pigeon Productive Management (PPM) is an original set of criteria for the manufacturing equipment and production environments at eachproduction plants, which regularly check various aspects of our products, we strive to achieve stable quality by complying with the Good
Manufacturing Practices (GMP) established for each country. The system is designed to ensure that only products that have passed the inspection
process, from incoming material inspection to in-process inspection during production and outgoing inspection of the final product, will be shipped. In theunlikely event of a manufacturing-related problem or a claim from a customer, we promptly provide feedback to the production department to determine

Advancing the Development of New Environmentally Friendly Materials and Manufacturing Technologies
The Pigeon Tsukuba Engineering Center (TEC) opened its doors in February 2022 as a hub for developing new technologies to sustain themedium- to long-term growth of nursing bottles, a key product category. Knowledge from Pigeon’s production technologies and quality

Data Section

plant, and our products are manufactured only in plants that meet those standards. In addition to quality assurance (QA) audits at our

Sustainability

Patent pending Easy height adjustment and no need tochange belts thanks to the vertical slits*Illustration for visual representation only

our designs to prevent them from occurring in the first place. We also evaluate and verify design quality by using trial monitor tests to check

control will be integrated into the facility to further enhance productivity. It will also actively focus on exploring new materials and production
technologies that reduce environmental impact. Through effective use of TEC, we will share production challenges and kaizen(improvement) initiatives with our production centers worldwide, thereby strengthening the development of talent engaged in production
technology and enhancing our knowledge base. This will enable us to maintain the same high quality in the products we deliver globally.

whether the manufacturing process can be improved.

Connecting Customer Feedback to Quality Improvement
The Pigeon Group has a system in place to collect market information on launched products, including customer feedback and inquiries frommedical institutions, and we reflect this information in our safety evaluations of raw materials and products. In the unlikely event of a safety concern,
the relevant department holds a kaizen (improvement) meeting to determine the cause and promptly take necessary countermeasures. We always
evaluate and verify our products from the consumer’s perspective and remain conscious of safety as we strive to maintain higher levels of quality.
42

Pigeon Integrated Repor t 2022

The TEC logo design symbolizes the flow that connects
from production centers and technology to customers

Part of the molding machine area at TEC

Pigeon Integrated Repor t 2022

43

Enhancing Business
Competitiveness and Resilience

Pigeon conducts fundamental research into the growth and development of babies as well as research into the concerns and needs ofcustomers based on behavioral observation to develop the best products and services.

Nursing Bottles Born from R&D
Bonyu Jikkan® SofTouch series

Pigeon’s Breastfeeding Research:More than 60 Years of Research and the Pursuit of the Three Key Factors of Sucking

incorporating our rigorous research on baby feeding, as well as our attention to detail in the planning and design process, into our
product development, which is unparalleled in the world. We launched a new Bonyu Jikkan® series in China in September 2021 and inThree Key Factorsof Sucking

Japan and Southeast Asia in 2022 that more closely resembles the softness of a mother’s nipple. In addition to artificial nipples, we arededicated to baby bottles, releasing a series in 2022 focused on usability through application of a new material called “T-Ester*,” abehavior of babies, who cannot speak for themselves. The

plastic that offers a glass-like transparency, making volume markings easier to see when preparing formula. These and other efforts
aim to ensure products that enhance the baby feeding experience.

oral cavity are not readily apparent through external
observation alone. Accordingly, we have conducted
extensive research and developed unique observational
techniques to examine the movement of the baby’s mouth
and throat during breastfeeding.
Through this research, we identified the “Three Key

Comparison of softness of nipple

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

Factors of Sucking” that are crucial for successful

1.0

The function to transfer milk
down to the esophagus

0.5

The tongue’s wave-like motion to draw
milk

Value Creation Story

breastfeeding.

Swallowing
Peristaltic tongue
movement* T-Ester is a registered trademark of Mitsubishi Gas Chemical Company, Inc.

Newton［N］
1.5

Message fromthe President and CEO

various movements and functions occurring within a baby’s

The smaller, the softer

for more than 60 years aimed at clarifying the sucking

Introduction

Pigeon has conducted in-depth observation and research

Our Bonyu Jikkan® series of nursing bottles overturned the perception that “all nursing bottles are the same.” We achieved this by0

SofTouch II(SS size)

Commitment: Emphasizing the Natural Sucking Motion in Product Development

SofTouch III(SS size)

Mother’s nipple
Source: Pigeon

At Pigeon, we are dedicated to developing nursing bottles that enable babies to suck as they do in breastfeeding, so that mothers cancontinue breastfeeding comfortably at any time.

Nursing Bottles and High Quality That Sustain Life

Pigeon uses a unique method to observe sucking behavior and was the first in the world tonewborns as their first experience outside of breastfeeding to deliver nourishment, helping todevelop its own dedicated measuring device. Once monitoring is complete, we use oursustain life. To ensure the safety of each product, we have established our own strict quality

unique method of superimposing video on an ultrasound image to determine the angle andcontrol standards in addition to official standards such as the EU and Japanese industrial

depth of the baby’s mouth during suction. Pigeon has also focused on the softness of thestandards. For example, each artificial nipple undergoes a more than 15-point quality

mother’s nipple, using a uniquely developed dedicated measuring device, a world-first,

inspection at the factory. We use dedicated measuring instruments for function-related

combined with the cooperation of many mothers, to quantify the softness and reflect thisinspections of size, suction hole, ventilation valve, elasticity, and the like. Items such as

in product design. Ongoing efforts in measuring and analysis from diverse angles aim toforeign matter contamination, dust adhesion, and resin overflow or loss are checked visuallyquantify crucial sensations that can be integrated into product development.

and with a magnifying glass, without relying solely on inspection equipment. Pigeon

Sustainability

Pigeon’s artificial nipples, supplied to countries and regions the world over, are used byMedium-TermBusiness Plan

Sensation: Quantifying sensation to improve artificial nipples

manufactures more than 100 million artificial nipples annually and continues striving to

Design: Nipples that suit a baby’s growthBabies’ sucking behavior evolves as they grow. As such, our goal is to create nipples that

ensure the highest product quality at all our factories. We are always mindful of the fact that0

〜 months

1〜 months

3〜 months

each artificial nipple is for a baby who is irreplaceable.

Pigeonʼs quality control standards P. 42

allow babies to drink in a way that closely resembles breastfeeding by optimizing the size,
softness, and shape of the nipple as well as the sucking holes as the baby grows.
We currently offer a range of six artificial nipples tailored to the age of the baby.

While both softness and moderate pliability are essential for artificial nipples, the silicone

Round hole

Y cut hole

Pigeon remains dedicated to creating nursing bottles and to incorporating the know-how and ideas born from extensive observation and6 〜 months

9 〜 months

Weaning

15months

used for their production presents challenges in achieving the desired balance ofstudy of babies’ feeding movements into the development process. In addition, we will conduct R&D into new materials from a sustainability
perspective and create unique products with social value and ones that reflect regional characteristics to drive ongoing growth in the nursing
bottle category.

durability and softness. Pigeon teamed up with raw material manufacturers to conduct

Pigeon’s dedication to R&D extends beyond this category. We leverage the evidence gathered from research into breastfeeding to guideresearch and trial production for artificial silicone nipples, developing a different

the development of breast pumps as well. In the field of baby skincare, we utilize research facilities both domestically and internationally toformulation for each age group. We also adjusted the thickness of the silicone from thenipple to the base based on accumulated research data to achieve both softness anddurability.

Data Section

Ease of drinking and durability:
Pursuing raw material development and processing technology

Making the World a More Baby-Friendly PlaceRound hole

Y cut hole

not only conduct fundamental research on baby skin but also develop products that meet the specific needs of consumers in different

Y cut hole
Y cut holeregions.
Pigeon’s aim is to deliver our unique, meticulously crafted products to more and more babies and thus make the world a more babyfriendly place.

44

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45

Reducing Our Environmental
ImpactKey Issue(Materiality)

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

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

Circularmanufacturing

Using sustainable resources(paper and palm oil)PP. 48–49

P. 50

P. 51

Introduction

Reducing Our
Environmental
ImpactWhat We Aim to Achieve

Outline of the Pigeon Green Action Plan

In addition to complying with environmental laws and regulations, the Pigeon Group recognizes the relationship between our businessPigeon has formulated the Pigeon Green Action Plan as a blueprint for leaving a rich earth for the future of babies born tomorrow. The plan

activities and the environment, while energetically tackling the environmental issues as a common challenge for humanity to leave a richsets medium- to long-term environmental targets for achieving decarbonization, a circular society, and coexistence with nature. The entire

earth for the future of babies born tomorrow. In that spirit, we pursue maximum efficiency in the use of natural resources and energy andPigeon Group is taking steps to achieve the targets.

Message fromthe President and CEO

Basic Approach to Global Environmental Protection (Environmental Policy)

reducing 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 tobusiness partners, and local communities, to have a beneficial effect on the global environment of the future.

Value Creation Story

Pigeon Green Action Plan

form appropriate partnerships and cooperative relations with the diverse range of stakeholders in our supply chain, including customers,

Leaving a rich earth for the future of babies born tomorrow

Sustainable Development Policy
2050 —Scope 1 & 2 GHG emissions: Net Zero

The Pigeon Group formulated its Sustainable Development Policy in February 2021 as a policy for manufacturing that takes into consideration

Decarbonization

the future environment of childcare and the global environment. We aim to carry out monozukuri (manufacturing) with due consideration to2030 — Scope 1 & 2 GHG emissions: 50% reduction (compared to FY2018)
Scope 3 GHG emissions: Reductions with Science-Based Targets (to be finalized)

the future environment for parents and the natural world. This begins with every Pigeon employee thinking about the environmental impactof their actions. The following concepts of our Sustainable Development Policy are adopted in our manufacturing.

Circular society

Medium-TermBusiness Plan

“Act with an eye to the future”

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

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

2030 — Sustainable paper usage rate in packaging: 100%

“Watch over products for their whole lifetime”

Sustainability

Coexistence with nature“Seek empathy, share progress”

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

Flow of Materials for Baby Care and Maternity Products

Data Section

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.

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

46

Pigeon Integrated Repor t 2022

-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 2022

47

Reducing Our Environmental
ImpactInitiatives to Realize a Decarbonized Society
Pigeon Corporation publicly declares its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Metrics and Targets

change, as well as the potential financial impacts of such changes, and to manage key risks and opportunities appropriately.

Governance and Risk Management of Climate-Related Risks and Opportunities

Medium- to LongTerm Targets

Introduction

Our aim is to understand business risks and opportunities arising from changes in the natural and business environments due to climate

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)

Among climate-related issues, our GHO Risk Management Committee spearheads the management of risks that are highly probable in theissues to be addressed over a longer frame and from a cross-

Director in Charge of Global Head Office (Chair)business perspective, the Sustainability Committee sets medium-

Sustainability Committee

GHO Risk Management Committee

Risk Management Committee and the Sustainability Committee-Deliberates on and sets medium- tolong-term targets-Identifies and periodically revises Key
Issues (Materiality)-Reviews the progress of Group-wide
initiatives-Analyzes and assesses climate-relatedrisks and opportunities over the long term-Collects, analyzes, and evaluatescomprehensive risk information for eachbusiness segment, and considers andimplements countermeasures-Establishes systems enabling rapid
responses to incidents; takes measures
to minimize loss and facilitate recovery

to the Board of Directors.

7th Medium-Term Business
Plan: FY2022 target

Reduce CO2 emissions
per unit of sales by

10% vs. FY2018

Scope 1 and 2 CO 2 emissions per unit of sales

Strategies: Climate Scenario Analysis

200

Pigeon delivers a wide range of products and services to customers worldwide. As part of our analysis of risks and opportunities using

100

286.1

285.8

265.6

252.6

25,000

2,959

2,911

15,00010,00025,00523,972

22,062

2,855

20,655

FY ended Jan. Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022
(2019)(2020)(2021)
2019 (2018)(2022)

0

2,346
9,395

5,000
0

Scope 2

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

Dec. 2020(2020)

Dec. 2021(2021)

Dec. 2022(2022)

Scope of data collection: Pigeon
Corporation and its domestic andoverseas consolidated subsidiaries,
based on energy-derived CO2 emissions
Note: Calculations of sales and CO2
emissions for domestic operations in
December 2019 are based on the
11-month period from February 1 to
December 31, 2019, due to a change infiscal year-end. Please refer to our
website for the method of calculation.

To reduce Scope 1 and 2 CO2 emissions, we are conserving power by shifting to energy-saving facilities and LED lighting and promoting theself-generation of solar power by installing solar panels at production sites. These solar panels have been introduced at production

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

subsidiaries in China, India, Indonesia, and Thailand since 2019. In 2022, we expanded this initiative to one production subsidiary and two

Consumer market changes

now powered by 100% renewable energy. In addition, some of our domestic production subsidiaries have purchased feed-in tariff (FIT) non-Nursing bottles and nipples, which are core products for Pigeon, are essential for babies who need these products regardless of climate conditions andfossil certificates and J-Credits derived from renewable energy, while some of our overseas subsidiaries have purchased international

policies. Under the 4˚C scenario, however, great changes in climate conditions are expected, and we expect that anxiety about the future of babies could

renewable energy certificates (I-REC).

Medium-TermBusiness Plan

global average temperature rises by 4˚C due to growing carbon emissions.

3,198

20,000climate scenarios, we initially focused on our core businesses in Japan and China, specifically the manufacturing and sale of nursing bottles,
scenario, where efforts toward decarbonization limit the global average temperature increase to 1.5˚C, and the 4˚C scenario, where the

Scope 1

(tonne-CO2)
30,000123.7

nipples, and skincare items. We considered two scenarios to envision the world in 2030, with physical impact projected until 2050: the 1.5˚C

56.8% reduction (vs. FY2018)

Scope 1 and 2 CO 2 emissions

CO2 emissions (kg-CO2)/Net sales (¥ millions)300

7th Medium-Term Business
Plan: 2022 results

Value Creation Story

including climate change, and evaluates progress. Both the GHO(GHO), who reports the results of deliberations of both committees

56.8% reduction in CO2 emissions (Scope 1 and 2) per unit of sales in 2022 compared with fiscal 2018 levels. This greatly exceeds the 2022
target of 10% set in the 7th Medium-Term Business Plan (2020-2022). We have set a new goal to achieve net-zero Scope 1 and 2 GHG
emissions by 2050.

and long-term Group targets for environmental conservation,

are chaired by the director in charge of the Global Head Office

As a result of initiatives such as the introduction of self-generated solar power and the purchase of renewable energy, Pigeon achieved a

Message fromthe President and CEO

short and medium terms and are directly related to business continuity, such as the risk of suspension of operations due to flooding. For

business locations in Japan. We are also transitioning to renewable energy sources, with the Pigeon Head Office and the Central Laboratory

Sustainability

be a reason for the decline in the number of births, which might affect sales of nursing bottles and nipples. Under the 1.5˚C scenario, we believe in theimportance of product strategies, such as environmentally conscious products throughout the value chain, and consumer appeal, as consumers havegreater preference for ethical choices. Under both scenarios, we expect the climate to change and natural disasters to become more frequent. As aresult, we expect increased demand for products that can protect babies from high temperatures and humidity and drier conditions, as well as productsthat are more water-efficient than conventional items or can be used without water during droughts or when water is cut off due to flood damage.

Data Section

Changes in policies and regulations
The 1.5˚C scenario assumes the introduction of strict policies and regulations targeting decarbonization. For Pigeon, there is a risk that a carbon tax will
be imposed on greenhouse gas emissions or that an emissions trading scheme will be applied. In addition, we expect the global tightening of
decarbonization policies to result in higher prices for purchased electricity, transportation, palm oil–derived raw materials, and petroleum-derived plastic

Pigeon Manufacturing Hyogo Corporation

Tsukuba officeCentral Laboratory

materials, as well as restrictions on the use of petroleum-derived plastics. Because these factors will increase our manufacturing costs, development
costs, and capital expenditures, we are conducting a quantitative financial impact analysis.

Moreover, we actively calculate Scope 3 GHG emissions throughout the Pigeon Group, including emissions associated with the procurementof raw materials and packaging, outsourced manufacturing, transportation, product use, and disposal of used products, with the aim of
reducing those emissions in collaboration with our business partners. We will analyze the findings and set targets in accordance with theIncreased frequency of natural disasters

Science-Based Targets (SBT) criteria with the aim of obtaining approval from the SBT Initiative by 2025. Please refer to our website for

Under both the 1.5˚C and 4˚C scenarios, the increase in global average temperatures would result in more frequent extreme weather events, thedetailed information regarding the results of Scope 3 GHG emission calculations and the Pigeon Group TCFD Report 2022.

disruption of supply chains and logistics networks, and the suspension of operations due to floods, droughts, and the spread of infectious diseases,
which would incur repair costs when damage occurs. To ensure stable production, we are taking various measures, such as establishing a system toenable temporary switching of production bases within the Group and purchasing key raw materials from dual sources.

WebsiteTCFD Report

48

Pigeon Integrated Repor t 2022

https://www.pigeon.com/sustainability/environment_top/co2/
https://www.pigeon.com/sustainability/files/pdf/tcfdreport_20220414_e.pdf

Pigeon Integrated Repor t 2022

49

Reducing Our Environmental
ImpactInitiatives to Realize a Circular Society
2030 Plant-derived or recycled materials in packaging: 50% by weight2030 Reusable/recyclable/compostable packaging: 100%2030̶Sustainable paper usage rate in packaging: 100%2030̶RSPO-certified sustainable palm oil usage rate in Pigeon-manufactured skincare/washing/cleaning products: 100% (including RSPO Credits)

Mid-Term Targets

Examples of using paper packaging

Global plastic consumption is on the rise, and much of the Pigeon Group’s

Introduction

Mid-Term Targets

Initiatives to Realize Coexistence with Nature

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.

product packaging uses plastic as well. To achieve a sustainable society, wewatch over products for their entire lifetime through circular monozukuri

Message fromthe President and CEO

Sustainable Paper Use(manufacturing). By 2030, 50% by weight of the materials used in the PigeonGroup’s packaging will be either plant-derived or recycled. This involves
transitioning from plastic to paper alternatives for skincare containers and baby

Due to illegal tree felling and other factors, the world’s forested surface is shrinking. Destroying forests not only robs living beings of theirbody foam soap refill pouches. We are also using recycled paper for 90% of thehomes but also has a major impact on natural hazards caused by water and soil degradation as well as climate change. At Pigeon, we

paper packaging and recycled PET for 80% of the plastic packaging in our
KIPPOI Baby Tableware Sets, among other initiatives to switch to more

Baby Milk Lotion 600-g
Cube Pack

Baby Foam Soap 800-ml
Refill/Paper Packsustainable packaging materials.

Example of using recycled materials

Moreover, the Pigeon Group aims for all product packaging to be reusable,

promote the adoption of forest-certified paper that uses timber from responsibly managed forests as its raw material, as well as recycled
paper.

Sustainable Palm Oil Use
Some of the skincare, washing, and cleaning and disinfecting products manufactured and sold by the Pigeon Group contain ingredientsrecycling of our products themselves in addition to the packaging. As an

made from palm oil and palm kernel oil. To promote the sustainable use of palm oil products, Pigeon became an ordinary member of theexample, we have initiated recycling programs for nursing bottles, one of theRoundtable on Sustainable Palm Oil (RSPO), a nonprofit organization that encourages the production and use of sustainable palm oil,

Pigeon Group’s core products, in Japan, China, Singapore, and elsewhere.

including through the conservation of tropical rainforests and biodiversity. The Pigeon Group is committed to promoting the use of RSPO-

Please see our website for details of this initiative.

certified palm oil in our skincare, washing, and cleaning and disinfecting products. Since 2021, the Japan Business and the Singapore
KIPPOI Baby Tableware Set

WebsiteBusiness have purchased and claimed RSPO Credits for some detergents and skincare products through the B&C model.

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

Total palm oil/palm kernel oil used*1

RSPO Credits purchased and claimed*2

2021

2022

2021

2022

The Pigeon Group is committed to minimizing the non-recyclable industrial waste generated by its business activities. Under our 7thPalm oil

176 tonnes

244 tonnes

CSPO: 25 tonnes

CSPO: 52 tonnes

Medium-Term Business Plan (2020–2022), our goal is to reduce the volume of industrial waste per unit of sales by at least 1% per year. In

Palm kernel oil

346 tonnes

432 tonnes

CSPKO: 28 tonnes CSPKO: 56 tonnes

Industrial Wasteover the three-year period from 2020 to 2022, we worked to reduce raw material losses by improving productivity and yield. We also madeother improvements, such as reviewing the design of product packaging to minimize the volume of materials discarded during the
production process. For industrial waste that is not recycled, we reviewed our disposal vendors and entered into contracts with those who

Medium-TermBusiness Plan

Type

2022, we achieved a 28% reduction compared with 2021 and an 80% reduction compared with fiscal 2018. At our production subsidiaries

Value Creation Story

recyclable, and/or compostable by design by 2030. We also actively promote the

Scope of data collection: Pigeon Home Products Corporation, Pigeon Singapore Pte. Ltd., Pigeon Industries (Thailand) Co., Ltd., and PT Pigeon Baby Lab Indonesia. For Pigeon
Home Products Corporation, raw materials used for only products manufactured by itself are covered. Items covered are detergents, cleaning products, and skincare products.
*1 Figures obtained by converting the amount of palm oil–derived components of the raw material to palm oil or palm kernel oil*2 These figures have not been audited through the RSPO certification system

7th Medium-Term Business
Plan: FY2022 target

Reduce volume of industrial
waste per unit of sales byIndustrial waste per unit of sales
Non-recycled industrial waste volume (kg)/Net sales (¥ millions)
12
10

10.6

10.3

6

4.5

4

2.9

2
0

FY ended Jan. Dec. 2019 Dec. 2020 Dec. 2021
2019 (2018)(2019)(2020)(2021)

2.1
Dec. 2022(2022)

1 % per year

28% reduction vs. 2021

(and 80% reduction vs. FY2018)

Recycled

4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

Not recycled
89%

73%

74%

2,856

2,694

To assist customers in Japan seeking to choose greener products, we developed the Pigeon Eco-Label Standards adopting a life cycle
assessment (LCA) perspective that quantifies environmental impact at every stage of the product life cycle, from raw material

Industrial waste generated（tonnes）

Pigeon Eco-Label (Japan)

1,048

969

FY ended Jan.
2019 (2018)

Dec. 2019(2019)

3,415

420
Dec. 2020(2020)

Recycling ratio
93％

3,500

271
Dec. 2021(2021)

94％

3,185

100%

50%

198
0%
Dec. 2022(2022)

Scope of data collection: Pigeon
Corporation and its domestic andoverseas consolidated subsidiaries
Notes:
1. Calculations for domestic
operations for December 2019are based on the 11-month
period from February 1 to
December 31, 2019, due to achange in the fiscal year-end.
2. Recycling includes reuse andthermal recycling.

procurement and manufacturing to distribution, use, and disposal. Products that meet one or more of the criteria are eligible for the
Pigeon Eco-Label. Our goal is to design packaging for all baby and maternity products sold in Japan that meets the Pigeon Eco-LabelStandards by 2025 as part of our Pigeon Package Act 2025 project. Please see our website for details of the standards.
Products with the Pigeon Eco-Label

Progress of the Pigeon Package Act 2025

80

Pigeon Eco-Label

Please see our website for details on efforts to reduce water use.

50

Pigeon Integrated Repor t 2022

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

34％

20

In our production subsidiaries, we have started reusing the same water in more than one cleaning process and reuse wastewater generated

Website

63％

60
40

in the production of purified water. Making process improvements and effectively using water resources like this helps cut consumption.

100%(Target)100

Water Conservation

Data Section

8

7th Medium-Term Business
Plan: 2022 results

Sustainability

can properly recycle such waste.

WebsiteSterilization Tongs for Nursing
Liquid Cleanser Refill / 700 ml
Bottles (with reduced packaging) (100% recycled PET used in the filmʼs
PET layer)0Dec. 2021 Dec. 2022 Dec. 2025
(2021)(2022)(2025)

https://www.pigeon.com/sustainability/environment_top/product/

Pigeon Integrated Repor t 2022

51

Contributing to the
Resolution of Social Issues

Key Issue(Materiality)

Helping to resolve social issues affecting babies and their families

babies born with medical conditions that require special treatment in various countries to help families feel more secure and happy.

Expanding use of products
designed for maternity hospitals

Promoting responsible
procurement

Participating in andsupporting communities

PP. 52-53

P. 52

P. 55

PP. 54-55

Activities for Babies Needing Special Care and Their Families: Supporting Babies with a Cleft Lip and/or Palate
The Pigeon Group engages in activities to support babies with a cleft lip and/or palate in various parts of the world, including China,

Products for Babies Who Need Special Care

Singapore, Indonesia, Thailand, and Malaysia. A cleft lip and/or palate are congenital conditions characterized by an opening or split in theCommitted to enabling all babies to enjoy better sucking, Pigeon conducts joint research with neonatal intensive care units (NICUs) at

designed nursing bottles to facilitate feeding for babies with one of these conditions and other contributions through various nonprofit

hospitals and clinics and works in other ways to develop exclusive products so that infants with low birth weight or disabilities can drink

organizations, our employees in different regions volunteer to help babies with a cleft lip and/or palate and their families.

roof of the mouth, involving either the soft palate, the hard palate, or both, and/or a fissure in the lip. In addition to donating specially

In 2022, local employees from Pigeon Singapore Pte. Ltd. volunteered to participate in a charity event called “#Fitness4Smiles” for babies

long silicone nipple, and nursing nipples for babies with weak sucking. We also offer a special Preemie Care pacifier for babies bornwith a cleft lip and/or palate, where teams took turns cycling in a relay format. Donations were made corresponding to the total kilometers

prematurely to help ease the pain of treatments and procedures.

ridden by a team. The seven teams from Pigeon Singapore collected SGD 6,907 in support of babies dealing with this condition.

Value Creation Story

breast milk and packaged milk with minimal effort. These include a nursing bottle for babies with cleft lips and/or palates, a feeder with a

Message fromthe President and CEO

Through our Tiny Birth Cry Support Project, we support the healthy growth of babies born prematurely, babies with low birthweight, andNew products and services
for babies needing support

Introduction

Contributing to
the Resolution ofSocial Issues

Individual Issues
What We Aim to Achieve

In 2021, we introduced a new disposable bottle exclusively for breast milk storage and pasteurization that enables safer and morehygienic storage of breast milk in human milk banks. In 2022, we launched Precious Drop, a device that supports the collection of colostrum
from mothers to ensure that premature and low birthweight babies get as much of the mother’s precious colostrum as possible, specificallyfor clinics and maternity wards. Also, in China, we developed a special oil for low birthweight babies to alleviate issues caused byunderdeveloped skin. Our accumulated expertise, gained from our constant support of babies in need of specialized care, is reflected ingeneral product development activities and is directly linked to the superior performance of Pigeon-brand products.

Medium-TermBusiness Plan

Lactation Lounges
Pigeon is committed to creating environments where mothers can continue breastfeedingwith peace of mind and helping them return to work after childbirth. With this in mind, we
Nursing bottle set forbabies with cleft lips
and/or palates

Feeder with aLong Silicone
NippleNursing nipple forbabies with weaksucking

Preemie Carepacifiers

Disposable bottle exclusively
for breast milk storage andpasteurization

Precious Drop

Low birthweight baby oil

lactation lounges in 24 countries.

Sustainability

Activities for Babies Needing Special Care and Their Families: Support of Human Milk Banks

have helped set up or are running or supporting breastfeeding/pumping rooms called
We also operate lactation lounges at our Head Office and the Central Laboratory for use
not only by employees but also by mothers living and working in the vicinity.

As part our activities for babies and families in need of specialized care, we support human milk banks in Japan, China, Indonesia, Vietnam,
Lactation lounge at the Pigeon Head Officeand elsewhere. 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 orlactation issues.

The Pigeon Smile Lactation Research Institute
In 2014, we launched the Pigeon Smile Lactation Research Institute, where we work withspecialists involved with mothers, fathers, and babies to identify issues during theincluding serving as the facilitator of a roundtable discussion for donor milk recipient families

breastfeeding period and provide solutions to them. Seeking to “Create a society that values

led by the Japan Human Milk Bank Association. Based on the results of the discussion and amore babies growing up healthy and more mothers and fathers finding happiness insurvey conducted by Pigeon, in 2022, we compiled the Donor Milk Recipient Brochure andchildrearing,” in 2016 we produced the Happy Breastfeeding Support Book, a comprehensive

started providing it free of charge to hospitals using donor milk with the aim of deepening

compilation of information on nursing. As of December 2022, we had distributed aroundunderstanding and eliminating reservations around the use of donor milk. The brochure outlines

890,000 copies of this booklet free of charge. The Happy Breastfeeding Support Book has

the safety and efficacy of donor milk and includes accounts from families who have used it. This

been revised to meet changes in the parenting environment and the content has beenhelps to supplement knowledge gaps and assist families in making informed decisions

enhanced to include topics related to the father’s involvement in childrearing and maternal

regarding the use of donated breast milk.

well-being after childbirth.

Since 2020, we have conducted the “#Saving Tiny Lives” campaign whereby a portion ofSince May 2021, we have been sharing parenting tips and information on breastfeeding

proceeds from designated products such as nursing pads and breast milk freezer packs isand childcare during the nursing period in a friendly and understandable manner through adonated to the Japan Human Milk Bank Association. The campaign has received strong

dedicated Instagram account.

Data Section

In September 2020, we provided comprehensive support for the Nihonbashi Human Milk Bank, the second of its kind in Japan at the time,
which opened on the first floor of our Head Office. In 2021, we engaged in promotional activities to raise awareness of human milk banks,

Happy Breastfeeding Support Book

support, and we have donated approximately ¥10 million over three years.
52

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

53

Contributing to the
Resolution of Social Issues

Disaster Preparedness for Babies

The Pigeon Group organizes online seminars and events in various countries. This includes the

In disaster-prone Japan, although many families become more aware of the importance of disaster preparedness upon the birth of a child,

Breastfeeding College seminar where participants can learn from obstetricians and midwives about

more than 70%* of households lack proper disaster supplies for their children and are often unsure of what to prepare. To address this,breastfeeding, and baby skincare seminars. By sharing useful information before and after childbirth, wePigeon launched its first disaster preparedness series of products for babies called “sonaetta” in Japan in 2022 based on the concept ofoffer parenting support that empathizes with the feelings of families raising babies. During the COVID-19

providing items that are not only useful in a disaster but also in everyday parenting. The series includes items such as the Emergency Baby

pandemic, we conducted online breastfeeding seminars, provided information on newborn care, andCup, the Head Protection Blanket, the Antibacterial/Antiviral Compact Bed, and the Wearable Care Light.

facilitated consultations via social media with pediatricians and other experts to address the anxieties of*Based on a survey conducted by Pigeon in May 2021 that had 1,270 valid responses

Introduction

Seminars for General Consumers

mothers and fathers. These initiatives were implemented in

Message fromthe President and CEO

Japan, the United States, Malaysia, China, Singapore, and othercountries. By directly connecting and engaging with parents
worldwide, we can address and alleviate concerns. We willcontinue to collaborate with healthcare professionals and experts
to further promote communication with customers via online
Emergency Baby Cup

channels.
Online seminar for general consumers

Head Protection Blanket

Antibacterial/Antiviral Compact Bed

Wearable Care Light

In September 2022, Pigeon revealed its “Babies and Preparedness Circle Promotion Project” declaration to firmly establish the concept ofdisaster preparedness for babies in society. With this project, we cooperate with municipalities and businesses that resonate with the

Seminars for Healthcare Professionals
The Pigeon Group also conducts seminars specifically designed for healthcare professionals such as doctors, midwives, nurses, public healththe end of December 2022. In addition to donating products, through the project we introduce disaster preparedness items for babies, offer

nurses, dieticians, and pharmacists, who provide breastfeeding and lactation support. The seminars provide valuable information that can beitem lists tailored to development stage, and actively share information and engage in activities related to disaster preparedness inapplied in their care and support activities. In 2022, seminars were held in Japan on topics such as breastfeeding support and infection

coordination with municipalities. By fostering a shift in the mindset and behavior of families with babies toward self-help and promoting

control measures for newborns and children based on basic medical research; comprehensive support from healthcare professionals during

mutual assistance and public assistance, we aim to contribute to raising awareness of the significance of baby disaster preparedness andpregnancy, the postpartum period, and breastfeeding; and mental health care for pregnant women. We also actively disseminate productpromoting this culture within society.

information and FAQs for healthcare professionals, aiming to enhance recognition and build trust within hospitals and maternity centers.

Value Creation Storydeclaration to always keep babies safe and continue to create a baby-friendly world. We had garnered support from 26 municipalities as of

To always keep babies safe and continue to create a baby-friendly world, we
at Pigeon declare our commitment to promoting broader awareness of theMedium-TermBusiness Plan

need for disaster preparation through our series of dedicated products andother means. We also pledge to cooperate with municipalities, businesses,
and other groups that share the same dedication to supporting disaster
preparedness for babies and to encourage baby-friendly urban planning.

Online seminar for healthcare professionals

Promoting CSR Procurement

Lactation Volunteers

The Pigeon Group has formulated its CSR Procurement Policy, which describes our basic mindset and approach to procurement activities,

In September 2020, a total of 20 employees from Lansinoh Laboratories Medical Devices Design Industry and Commerce Ltd. Co., our Turkish

maintain fair business practices with strict compliance and a strong ethical outlook. We also pursue stable supplies of high-quality products

Lansinoh Factory, and the Lansinoh Türkiye office in Istanbul started their training to become certified Lactation Volunteers to assist mothers

and materials and build win-win relationships with suppliers.

of Turkey. Employees involved in the production of breastfeeding-related products voluntarily participated in this training, which lasted 100

We conduct a CSR procurement survey annually and disclose the findings to gain insight into ESG-related initiatives at suppliers andissues in the Group’s supply chain.

hours, to further their understanding of breastfeeding, and in January 2021, those who passed the exam received a certificate of completion.

CSR Procurement Assessment 2022

breastfeeding support, as well as practical training in the plant’s lactation room. In 2021, this activity won the bronze award in the HR

Scope of aggregation

category of the Stevie® Awards, known as the world’s premier business awards. In 2022, in cooperation with the local authorities in Turkey,

Japan Business, China Business, Singapore Business, and Lansinoh Businessour business areas and support working women, and we will continue to expand our activities to make further contributions to solving social
issues. The Pigeon Group will continue to expand awareness of the importance of breastfeeding and provide a variety of information onbreastfeeding and solutions to issues.

Surveyed suppliers

100％

Local
communities

Corporate governance
Human rights

80％

Data Section

In May 2021, Lactation Volunteer–certified employees conducted classroom training for employees and their families on the topic ofmothers with babies were invited to local venues for breastfeeding seminars. These activities have helped to raise employee awareness of

Sustainability

who need help with breastfeeding. To become a Lactation Volunteer, one must complete special training organized by The Health Foundationand our CSR Procurement Guidelines, which serve as guidelines for our activities with suppliers. Based on the policy and guidelines, we

60％
40％

Supply
chain

Labor

20％
0％

For the 2022 survey, the CSR Procurement Self-Assessment Questionnaire developed by Global
Compact Network Japan (GCNJ) was sent to a total of 247 suppliers: all primary external suppliers of
Pigeon Corporation, Pigeon (Shanghai) Co., Ltd., and Pigeon Singapore Pte. Ltd., and each sales
company under the Lansinoh Business, as well as major suppliers of production subsidiaries in Japanand China. We received responses from 236 suppliers for a response rate of 95.5%.

Information
security

Environment

Quality and safety
2021

Fair corporate activities
2022

Survey results
The overall average score was 83.7%, with strong efforts being made in “quality and safety” and “labor,” whereas “supply chain” and “environment”
remain challenging areas. By working together with suppliers to make improvements to issues identified by the survey, we will help resolve social issues
and build stronger relationships with our suppliers.

54

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

55

Managing Talent and Cultivating
the Right Culture for Our Purpose

Key Issue(Materiality)

What We Aim to Achieve

To realize the Pigeon Group’s Purpose, we are working toward becoming a company where each and every employee can shine in their own way.

Ambitious organizational
cultureEnriched investment in
human resource development

PromotingDiversity & Inclusion

P. 58

P. 59

P. 57

P. 56

Personnel Development Policy

Message fromthe President and CEO

We believe that a company cannot succeed in business unless it takes care of its employees.

Working environments that achieveself-fulfillment and growth

Introduction

Managing Talent
and Cultivating theRight Culture for
Our Purpose

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
new challenges and express themselves to drive personal growth

In 2021, Pigeon Corporation established its Personnel Development Policy: “We will provide each and every member of the company with thePromoting Diversity & Inclusion

development opportunities they need to contribute as autonomous professionals through highly specialized skills and knowledge, continuously
raising their value as human resources.” Based on this policy, we will implement education and training tailored to the role of each employee.

One of our Corporate Ethics Policies is that “Pigeon shall respect its employees’ human rights 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, gender, age, disability, sexuality, and other factors. We
such as illness or the need for childcare or nursing care. We embrace, respect, and utilize individual differences stemming from varied backgrounds
to address ever-changing business conditions and diversifying customer needs. We respect the civil and political rights of employees—including
freedom of expression, association, and religion—and engage in dialogue with them about these rights. Regarding labor, our Compliance
Committee spearheads rigorous compliance-oriented activities to ensure respect for workers’ and human rights both in Japan and overseas. In
October 2022, Pigeon Corporation formulated its Diversity & Inclusion Policy. Please refer to our website for details.

WebsiteWe are committed to developing human resources who can continue to enhance corporate
value by honing their human skills based on the values of the Pigeon Way. Every six years, weYear 120 people → 15 people

Year 210 people

Year 30–5 people

run a three-year training course for selected next-generation managerial human resources. The
course consists of programs to identify, develop, deploy, and advance participants, and thecurriculum is designed to select and develop participants in each program process. The course
has been held four times since its launch in 2004, and many of the 82 participants to date

Deployment
Development
Program
Identification
Program
Programhave gone on to become key personnel and managers.

Value Creation Storyalso strive to create a workplace environment in which employees can maximize their abilities even when faced with different life circumstances

Future executive leader candidate development

Advancement
ProgramTraning program for selected
future executive leader candidates

Global Player and Supporter development

https://www.pigeon.com/sustainability/HR/members/

To continuously produce human resources who can promote and contribute to the expansion of the Pigeon Group’s business beyond
national and regional boundaries, we recruit and selectively train global human resource candidates every three years. These candidates

Supporting the Advancement of Women
Pigeon Corporation regards the creation of environments in which female employees can play an even more active role to be a particularly
important issue and one inherent to our business. With this in mind, we formulated our Three-Year Action Plan for Promoting the Active

Medium-TermBusiness Planare organized into two categories, “Global Player” and “Global Supporter,” and candidates in both categories are given education andtraining in accordance with their individual record for one to three years. They also receive official certification as global humanresources if they meet the respective certification criteria.

Participation of Women. The three pillars of the Action Plan, which also form a key element of the 7th Medium-Term Business Plan (2020–2022), are “expansion of the support system for a work-life balance,” “reforming awareness in the workplace,” and “supporting the feelings
and skills of women.” In these ways, we continue to promote female empowerment by enhancing systems and changing mindsets.
Although the ratio of female managers has been on the rise

Ratio of Female Employees and Managers (Pigeon Corporation)

50%

relatively low compared to the ratio of women making up our total

40%

workforce. Recognizing this as a challenge, we have set an

30%

ambitious target of a 30% ratio of female managers in our 8th20%

Medium-Term Business Plan (2023–2025). As most people who

10%

consume our products are women, we remain committed to0%undertaking initiatives based on the aforementioned pillars toencourage the active participation of women in leadership positions.

39%
21%

30 %

2022 result

Ratio of female managers:

2 6%

24%

26%

2021

2022
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 holdequivalent positions (excluding directors)

Pigeon Corporation aims to be a company where each and every employee can shine in their own way. We accept diversity in sexual
orientation and gender identity and pursue initiatives to create work environments and systems in which everyone can be themselves atwork, regardless of what they choose to publicly reveal. In November 2022, we introduced the “Familyship system,” under which commonlaw partners of any gender are eligible for the same internal schemes and welfare services as legally married spouses. We have alsoestablished a hotline for discussing harassment and other LGBTQ+ issues that can be used anonymously.

Pigeon Integrated Repor t 2022

Global Supporters refer to human resources who are based in Japan but workin collaboration with overseas offices. Candidates are required to havelanguage and communication skills to interact with overseas offices. Training
is provided at different levels to improve these skills. As of December 31,
2022, 29 individuals had been certified as Global Supporters.

Promoting Continuous Individual and Organizational Development
Pigeon Corporation provides opportunities to gain insights into diverse work styles, perspectives, and value systems via the Accelerate My Career program.
This program supports employees’ self-directed career development through internal recruitment, internships, and pro bono activities; external postings;

LGBTQ+-Related Initiatives

56

Global Players refer to human resources who perform their duties in a global
environment, which includes experience working in an affiliated company
overseas. In addition to cross-cultural adaptability, candidates are required to
be tough and possess good communication and leadership skills. Training is
tailored to their individual level. As of December 31, 2022, 12 individuals had
been certified as Global Players.

Data Section

Ratio of female managers:

41%

最小サイズ
ヨコ 12.8 ミリまで

2020

Ratio of female employees

2025 target

41%

Global Supporter

Sustainability

annually due to our consistent efforts, the proportion remains

Global Player

and pro bono/volunteer leave. To stimulate the right brain as part of our key theme-based training, we hold “Dialogues in the Museum” and other events
that enable participants to improve perceptivity with respect for diverse viewpoints and value systems. We plan to implement measures promoting digitaltransformation (DX) to maintain and strengthen competitiveness and increase the speed of that transformation.
Broadening perspectives and cultivating diverse values through external postings
Our external posting program is designed for employees to work at another company for
approximately three months, around one day per week, to gain new experiences, learn
new things, and network. Employees who utilize this program bring back leadershipskills and new work attitudes to Pigeon and can apply the knowledge gained to transfer
to a desired department, thereby shaping their own career path.
With colleagues at an external posting(Pigeon employee second from left)

Pigeon Integrated Repor t 2022

57

Managing Talent and Cultivating
the Right Culture for Our Purpose

Pigeon Frontier Awards: Encouraging Employees to Embrace Challenges

Pigeon Corporation, as a company dedicated to supporting parents andPigeon introduced the Pigeon Frontier Awards (PFA) system in 2019 to support and recognize future-oriented employees who embracecaregivers, has long been enhancing its employee childbirth and child-rearing

challenges without fear of failure so that we can maximize their strengths. With the system, we solicit free ideas and new business concepts

programs. Since 2006, we have implemented the “One Month Together”

from all employees. Excellent proposals are awarded and developed with a view to future commercialization. All employees with a strong

initiative, which allows employees to take one month of paid childcare leave

desire and unwavering dedication to realize ideas are eligible to apply, whether they are regular, temporary, casual, or part-time employees.

after the birth of a child. By nurturing employees with childcare experience, we

In 2022, we began expanding eligibility to include employees of domestic Group companies in addition to Pigeon Corporation employees, andcan leverage their valuable insights in product development and other areas.

plan to extend this further to cover personnel at overseas Group companies. Since introducing the system, we have received applications

In October 2022, the Childcare and Family Care Leave Act was revised infrom a wide range of departments, with seven each in 2020 and 2021, and five adopted in 2022 as projects under the direct control of the
A look at “One Month Together”

President & CEO. Through PFA, a platform for envisioning and shaping Pigeon’s future, we will create an environment in which employees can enjoy

where both mothers and fathers can take part equally in childcare. With thetheir work and clarify their aspirations for their work and what they want to become, with the aim of creating new products and services of highaim of encouraging male participation in childcare throughout Japanesequality.

society, we publicly share our accumulated knowledge and the initiatives we

Features of PFA

undertake. Pigeon have resulted in a 100% uptake of one-month childcare

1. Increases the amount of enjoyable time at work

leave among eligible male employees for the past six consecutive years.

2. Encourages employees to take on challenges without fear of failure
3. Includes direct support from the president, allowing ideas to materialize quickly

Pigeon conducted interviews to gauge awareness of the revised Childcare and Family Care Leave Act and gain insight into

childcare leave
feel guilty for being absent from2 Somethe workplace and are concerned
about the impact on their career

Pigeon embarked on this long-term project with the aim of becoming a trusted presence among healthcare professionals worldwide andTo allay this fear, Pigeon provides individual explanations of the childcare leave system andtailored information on salary calculation, including the amount of childcare leave benefits
received via employment insurance and exemption from social insurance premiums.

laying the foundation to provide care that fosters the development and growth of every baby by leveraging the expertise of employees
who have worked as midwives in hospitals. Through this endeavor, in 2022, we developed Precious Drop, a device for maternity wards
and hospitals designed to reduce the burden of collecting colostrum for mothers so that as much of this vital first secretion as possible

Top management are vocal in dispelling these concerns while the Company strives to create

can be given to premature and low birthweight babies. The inspiration behind the development stems from the observation of mothers’

an environment in which employees feel comfortable disclosing their private and family

struggles over years of work in hospital settings. Colostrum, which is secreted in the early postpartum period, is rich in immune-

circumstances, and to build a system that encourages women to announce their pregnancy

boosting substances and is particularly important for babies born prematurely or with low birthweights. However, when mothers are

early on to enable smooth work handover.

unable to directly breastfeed their babies because they are in a Newborn Intensive Care Unit (NICU), for instance, the only option is to

Pigeon has introduced a rule requiring male employees to report to the president if theychoose to forego childcare leave. Also, an internal system naming contest aims to increase
familiarity while efforts are being made to provide easier access to leave without singling out
childcare leave as a special case.

Sustainability

product’s development. We will continue driving activities throughthis project, fueled by the excitement of shaping the future with like-

Since 2022, we have been undertaking a wide range of measures to promote a work-lifeminded individuals who have overcome many challenges since thebalance and enhance productivity under the work-style reform slogan, “Smart & Smile! Work.”

project’s inception.

These include setting a “Dash Day” where employees leave the office on time, adopting
efficient work styles using flexible work hour and telecommuting systems, and prohibiting
Note: In the Childcare System Project Created by
Employees, workshops are run by voluntar y
members and the opinions of employees arereflected in the childcare system based on the
results of employee surveys.

Project: Empowering caregivers through a book of parenting reports (2021)
At Pigeon, all employees who become parents submit parenting reports sharing their experiences, insights, and observations on ourinternal website. As a company specializing in childcare products, some might assume that our employees are experts in parenting.
However, they also face their own challenges and uncertainties in raising children. By externally sharing the realities revealed in the

Data Section

Occupational Health Management

delivering it to their little ones despite lingering postpartum pain. Precious Drop embodies our desire to provide personalized care forwitnessed by the Pigeon employees who played a role in thecurrent employees. This led to a new childcare system in 2022, which reflects employee feedback.

increased from 54.2% in 2017 to 83.4% in 2022.

Pigeon understands that mothers want to do everything they can for their babies, tirelessly expressing breast milk day or night andprofessionals by alleviating the immense pressure they face, as

System Project Created by Employees with the aim of evolving our childcare system to meet the needs ofencouraging employees to take breaks and rejuvenate, the uptake of annual paid leavedifficulties in effective collection.

babies and their families as well as to support healthcare

In addition, considering the diversification of work styles in recent years, we launched the Childcare

e-mails and meetings after regular working hours, in principle. By optimizing work styles andmanually express colostrum drop by drop using a small syringe. This can be challenging for inexperienced mothers, resulting in

Medium-TermBusiness Plan

is a lack of workplace
3 Thereunderstanding of male childcare leave

Value Creation Story

Project: Care for babies the way they are at NICUs (2020)

the social environment. The following portrays related challenges and Pigeon’s measures.

1 economic concerns when considering

Message fromthe President and CEO

Japan. Before this revision, Pigeon was already actively promoting a society

Many male employees have vague

Introduction

Work-Life Balanceparenting reports, we hope to provide solace and support to others in society who might be struggling with parenting. This goal formed
the basis for an employee-led project to transform the parenting reports into a book.

Over the years, Pigeon Corporation has endeavored to be a corporate group through which

For the project, more than 200 parenting reports submitted by employees between 2006 and 2021 were compiled and released in aemployees can work in a lively fashion and in good health by supporting them in maintaining andbook about parenting insights and struggles (Publisher: KADOKAWA Co., Ltd.; Japanese only) in January 2023. The project team

improving their health to realize dynamic work environments. We have established a healthcommitted to producing and editing the book with the hope that it will bring some relief and a sense of reassurance to mothers, fathers,

management promotion system directly under the President and CEO, and coordinate withand families engaged in parenting and that it will contribute to aindustrial physicians and a health insurance association on proactive initiatives such as anti-

future where everyone can find even greater joy in parenting. The

smoking programs, annual health check management improvements, and mental health measures.

overwhelming support, cooperation, and kindness received during

We also host walking events twice a year and internal lectures from industrial physicians andthe project have inspired us to take on new challenges goingpromote initiatives to encourage good exercise habits and higher health literacy among employees.

forward.

Pigeon has been recognized as a Health & Productivity Management Outstanding Organization(Large Enterprise Category) for two consecutive years from 2022. Please see our website for details.

Website58

Pigeon Integrated Repor t 2022

https://www.pigeon.com/sustainability/HR/health_management_policy/
Pigeon Integrated Repor t 2022

59

Establishing SolidManagement Foundations

Message from an Outside Director

Key Issue(Materiality)

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

Reinforcing group
governanceReinforcing
complianceReinforcing risk
management

Dialogue withstakeholders

P. 62

P. 65

P. 64

P. 65

challenges after a year as Outside Director.

Message from Outside Director Rehito Hatoyama

Message from Outside Director Yumiko Miwa

The Board of Directors at Pigeon has always operated with an

Japanese but has raised children in the United States, I have

Pigeon updated its corporate philosophy of “Love” and its credobabies and exemplifying how corporations can drive societal

open and vibrant yet serious and focused approach. When I first

personally observed significant differences in how parents inof “Only love can beget love” as the Pigeon DNA in Februarychange. In the Lansinoh Business, Pigeon has made progress injoined, there were only two Outside Directors, Mr. Nitta andJapan and the United States perceive and prioritize “spending

2023. The core foundation of any company lies in its

ESG initiatives and successfully tapped into new markets withmyself. Now, with five outside and four internal directors, thetime with their children.” While Japan has a well-developed

management philosophy, and when considering whether tobirth preparation and recovery products. Pigeon’s approach ofmajority of the Board is comprised of external members,

childcare leave system, this period represents only a small

accept the role of Outside Director, I placed the utmost

allowing each business unit under a four-segment business

contributing to broader diversity. With each addition of an

fraction of the total time parents can spend with their children. In

importance on whether I agreed with the Company’s guiding

structure to independently pursue product development,

Outside Director, the dynamics within the Board have changed,

contrast, in the United States, there is a strong emphasis on

principles. As someone who specializes in ESG investments andleveraging their deep understanding of market dynamics, isallowing for greater awareness and reflection of external

actively enriching daily interactions with their children, evencorporate governance for institutional investors, with a focus onremarkably forward thinking. However, to further capitalize on

perspectives. Despite the challenges posed by COVID-19 andoutside of childcare leave. Moreover, even in terms of productresearch and activities toward a “financial ecosystem rooted in

the Group’s strengths, it would be advantageous if best

global uncertainties in fiscal 2022, the Board functioned

offerings, there are significant differences between Japan andcompassion” (a society where warmth permeates financial

practices, such as those in the Lansinoh business, could be

effectively, further deepening mutual trust between internal andthe United States. For instance, looking at the use of breasttransactions), I was deeply moved by the presence of “Love” indisseminated more swiftly throughout the Group. In this regard,

external directors.

pumps, the emphasis on enabling fathers to participate in

Pigeon’s DNA. Over the past year, I have devoted my efforts as

there is room to enhance Pigeon’s global governance, and I lookfeeding is greater in the United States than in Japan.

Outside Director to the advancement of Pigeon’s corporate value.

forward to delving deeper into discussions on this topic.

materialize in fiscal 2023, with my appointment as Chairman ofBeing in Japan, it can be difficult to fully grasp the differences

The Board of Directors at Pigeon is highly regarded for not

Pigeon has long been committed to addressing societal

the Board being one such development. As Chairman, I aim toin language, market characteristics, culture, business practices,

only its diverse composition in terms of gender, nationality, andissues through various initiatives such as product development

contribute to the advancement of governance by taking theand decision-making processes across countries and regions.

skill matrix but also for the presence of Outside Directors such as

and support for human milk banks. In recent years, the Company

Board beyond its role of conducting legal procedures andTherefore, it is crucial for the Board of Directors to consistently

Mr. Nitta who reflect the perspective of institutional investors.

has strengthened its ESG initiatives, including organizational

reporting and further enhance management agility.

prioritize decision-making with a global perspective. I aim to

Each Outside Director effectively demonstrates a well-balanced

improvements, leading to high external evaluations. In particular,

contribute to enhancing Pigeon’s value by actively incorporating

combination of monitoring and advisory functions. I consider thisthe appointment of an Outside Director, Mr. Hatoyama, as

global best practices into management. Furthermore, by

to be a significant characteristic of Pigeon’s Board that fits nicely

Chairman of the Board this year elevates the Company to a new

the rapidly changing business environment, it is vital to consider

leveraging these best practices, I will strive to demonstrate

into the Japanese style of the “Board 3.0” movement.

level. Considering this, I will do my utmost to further enhancea broader range of stakeholders and address topics that

Pigeon’s commitment as a Japanese company to making the

When considering my own role within this context, I recognize

Pigeon’s presence in ESG and other nonfinancial fields whilenecessitate external perspectives at the appropriate timing whileworld more baby-friendly. Also, by advancing governance, I willthat it involves fulfilling the dual functions of monitoring from thestaying true to the Company’s essence, and thus help build

embracing a long-term view when determining the course ofwork diligently to drive tangible improvements in the Company’s

standpoint of a minority shareholder and providing advisory

corporate value.

significant endeavors. To ensure that the necessary expertise ismedium- to long-term value on a quantitative level.

suppor t regarding value creation and strategy from a
nonfinancial, ESG-based perspective. My efforts aim to enhancethat prioritize discussions over mere reporting and incorporate

value for shareholders and all other stakeholders.

diverse opinions.

During the previous fiscal year ’s Board meetings, wePigeon is indeed a company with strong fundamentals.

recognized the decline in birth rates not only in Japan but also in

However, in this era of rapid change, it is crucial to enhanceother developed countries as a significant challenge while

adaptability. To achieve this, the Company needs to further

formulating strategies for the 8th Medium-Term Business Plan.

delegate business execution, actively leverage global talent, andThis is not just an issue for individual companies but a challenge

explore business opportunities beyond core product development,that affects the entire nation. Although there is no immediate

which includes digital transformation and M&A activities.
Moving forward, it will be increasingly important for Pigeon to
adopt a global mindset as a Japanese company. One significant
challenge lies in recognizing that the global market, unlike theJapanese market where Pigeon has its headquarters, does not
uniformly face declining birth rates. As someone who is

Pigeon Integrated Repor t 2022

Data Section

engaged when required, I will strive to facilitate Board operations

Sustainability

In the past, discussions during Board meetings primarily
focused on topics requiring internal perspectives. However, given

Medium-TermBusiness Plan

Term Business Plan from the perspective of socially responsible investment. Here, she discusses her expectations of Pigeon and potential

and shares his enthusiasm for his new role and his perspective on the responsibilities involved.

Value Creation Story

As a specialist in ESG and corporate governance, Outside Director Yumiko Miwa contributed to the development of Pigeon’s 8th Medium-of Chairman of the Board. Having served as an Outside Director for seven terms, Mr. Hatoyama reflects on the evolution of the Pigeon Group

Message fromthe President and CEO

On March 30, 2023, following a resolution at the Ordinary General Meeting of Shareholders, Outside Director Hatoyama assumed the position

The results of discussions held in 2022 are expected to60

Individual Issues
Introduction

Establishing
Solid Management
Foundations

What We Aim to Achieve

Rehito Hatoyama, Outside Director and Chairman of
the Board of Directors
Rehito Hatoyama is the Representative Director of Hatoyama Soken Corporation. In addition to serving as Outside
Director and Audit & Supervisory Committee member of Z Holdings Corporation, and Outside Director oftranscosmos inc., he possesses a wealth of experience and deep insights in managing global business strategies
and their execution as well as corporate governance, within various companies, and has provided support tonumerous start-ups in Japan and abroad. He has been recognized by the U.S.-based economic publication
Business Insider as one of the “31 most successful Harvard Business School graduates of all time.”

solution, I strongly hope that Pigeon will face it with positive
initiatives and a determination to drive societal change throughcorporate action.
For instance, Pigeon’s efforts to support human milk bankshave
gained widespread recognition and led to increased participation,
making a significant contribution to the well-being of premature

Outside Director Yumiko Miwa
Yumiko Miwa is a professor at Meiji Universityʼs School of Commerce who possesses specialized knowledge in
ESG and corporate governance and high-level management expertise and supervisory capabilities that sheleverages as Representative Director of I-O Wealth Advisors, Inc., and as a member of the Fund Management
Committee, National Federation of Mutual Aid Associations for Municipal Personnel. She actively engages in
research on the advancement of institutional investors and corporate governance, as well as ESG investments
by institutional investors, and emphasizes the visualization of long-term investment effects, including theformulation of new stock price indices based on industry-academia collaboration.

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61

Establishing SolidManagement Foundations

Evaluating the Effectiveness of the Board of Directors

The Company adopts the system of a company with Audit & Supervisory Board Members and has made rigorous legal audits by Auditors the

The Company conducts an annual evaluation of the effectiveness of the Board of Directors in order to strengthen it and improve its

basis of compliance management. The primary management structures (meeting bodies) are as follows: The Board of Directors comprises

governance.

nine members (six men, three women; eight Japanese nationals, one foreign national) including five Independent Outside Directors; the Audit

In fiscal 2022, the Company addressed the role and function of the Board of Directors and collaboration with both Outside Directors and& Supervisory Board comprises four members (three men, one woman; four Japanese nationals) including two Outside Audit & Supervisory

auditors that were identified in the fiscal 2021 evaluation. Specifically, the meeting time of the Board of Directors was extended and theBoard Members; and the Management Committee is headed by the President and CEO and comprises standing Directors and Senior

reporting time was reviewed, and each advisory panel to the Board of Directors reported its annual activity plans, results, and the like. In

Managing Officers. The Company is working to enhance the diversity of each body. In addition, the Company adopts a mandatory executive

addition, Outside Directors participated in the reporting meetings hosted by each audit organization to confirm the content of the reports

officer system to provide for mutual partnership between decision-making and oversight (governance) with business execution and to clarify

and exchange opinions.
In our effectiveness evaluation conducted from October to November 2022, all Directors and Audit & Supervisory Board Members were

The Board of Directors makes decisions on matters (management objectives and important business-execution strategies such as theinterviewed individually after completing a questionnaire-based self-assessment. The results of the questionnaire and interviews were thenmanagement strategy) prescribed in laws and regulations, the Articles of Incorporation, and the “Board of Directors Rules” based on its

compiled and analyzed by the Secretariat, verified and discussed by the Governance Committee, and discussed by the Board of Directors

authority to supervise the execution of duties of directors and managing officers. The Board of Directors actively elicits the opinions ofbased on the recommendations of the Governance Committee. In addition, the questionnaire and other methods confirmed questions

Outside Directors and Audit & Supervisory Board Members, and the supervisory function of the Board of Directors has been further

regarding the role and function of the Board of Directors, the composition and size of the Board of Directors and other committees, thestrengthened by having an Independent Outside Director serve as Chairman of the Board from March 2023. In addition to the Voluntary

operation of the Board of Directors, cooperation with the audit organization, communication with management, engagement with

Nominating Committee and Voluntary Remuneration Committee, both of which have a majority of Independent Outside Directors and areshareholders and investors, and advisory panels (the Voluntary Nominating Committee, the Voluntary Remuneration Committee, and thechaired by an Independent Outside Director, we established the Governance Committee in 2021 as an advisory panel to the Board ofGovernance Committee).

Audit & Supervisory Board Members.

As a result of the fiscal 2022 evaluation, the issues recognized in the evaluation for fiscal 2021 have been improved through the initiatives

Value Creation Story

Directors. The Governance Committee is headed by an Independent Outside Director and has a majority of Outside Directors and Outside

Message fromthe President and CEO

the operating responsibilities of Directors.

Introduction

Corporate Governancedescribed above, and we have confirmed that the Board of Directors is making appropriate decisions through open and active discussions

Audit & Supervisory Board Members attend meetings of both the Board of Directors and the Management Committee, where they deploy

utilizing the diverse expertise, values, and perspectives of its Outside Directors, and plays an effective role in enhancing corporate value overtheir experience in the field to swiftly resolve issues. In addition to enhancing the supervisory function through expression of opinions andthe medium to long term. Meanwhile, we confirmed that it is necessary to improve the operation of the Board of Directors to further

the like, Audit & Supervisory Board Members listen to directors, view important resolution documents, examine the current status ofinvigorate discussions at the Board of Directors meetings, including strengthening discussions and progress checks on the Key Issues to bebusiness and financial assets, and otherwise conduct meticulous supervision and oversight in accordance with Pigeon’s policies on auditing

resolved by the Company to realize its Purpose, and we will continue to examine and work on the necessary measures for maintaining andand allotment of duties. They also meet regularly with the President and CEO, receive reports on matters such as important company issues,

improving the effectiveness of the Board of Directors on an ongoing basis, focusing on improving the operation of the Board of Directors.

and carry out frank exchanges of opinions.

Governance Committee

increase of Outside Directors; establishing and operating the Voluntary Nominating Committee, the Voluntary Remuneration Committee, andTo further strengthen corporate governance in the Pigeon Group, we established the Governance Committee as an advisory panel to thethe Governance Committee as advisory panels to the Board of Directors; and actively exercising the supervisory function of the Audit &Board of Directors, chaired by an Outside Director and with a majority of its members being Outside Directors and Outside Audit &Supervisory Board.

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

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

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

Appoint/
Dismiss

Audit Functions
Appoint/
Dismiss/
Consult

Board of Directors
with 9 Directors(Outside Directors: 5)

Appoint/
Dismiss

President & CEO
Instruct

ReportManagement
Committee

Place matters on
the agenda/Report

3 Executive Managing Officers
10 Managing Officers(Outside Audit &Supervisory Board Members: 2)

organic coordination and integration and proactive implementation, and provides advice and recommendations to the Board of Directors.
During the current fiscal year, we reviewed and confirmed the permeation status of the Pigeon Way and Materiality, confirmed the role of the
Global Head Office and exercise of its functions, and implemented the evaluation of the effectiveness of the Board of Directors (including
consideration of implementation methods and analysis and verification of results).

Internal Audit
We established the Audit Office, an independent organization under the direct control of the President, as an internal auditing body. Each

Audit

Appoint/
Dismiss/
Supervise

Business Execution Functions

Sustainability
Committee

Audit

Advise/Propose(Outside Directors: 3)

Risk Management
Committee

Audit & Supervisory Board
with 4 Members

Appoint/
Dismiss

Reportyear, the Office formulates an audit plan based on a risk approach for the Company and domestic and overseas group companies andData Section

Voluntary Remuneration
Committee with 5 Directors

Appoint/Dismiss

Sustainability

Governance Committee with
5 Directors and 2 Audit &Supervisory Board Members

Advisory Panels for
the Board of Directors

Decision-Making/Supervisory Functions

Medium-TermBusiness Plan

Under the current management structure, centered on the Board of Directors, Audit & Supervisory Board, and Management Committee,
Pigeon is working to improve corporate governance by expanding the diversity of the Board of Directors through the appointment andconducts internal audits accordingly. In conducting the audits, it focuses mainly on the effectiveness and efficiency of operations, thereliability of financial reporting, compliance, and asset protection, and makes suggestions for improvement as necessary. The results of the

Accounting
Audit

Accounting Auditors

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

Audit Department
Internal
Audit

accounts, pursuant to the basic plan for internal controls overfinancial reporting under the Financial Instruments and ExchangeAct, and to monitor the appropriateness of the development andoperation of these controls.

Instruct

Business Departments and Group Companies
Corporate Governance Organization Chart

62

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

63

Establishing SolidManagement Foundations

Compliance

The risk management system of Pigeon is headed by the Global Head Office (GHO) Risk Management Committee. Governed by the Rules for

Based on the Pigeon DNA and the Pigeon Way, the Group has established a basic policy on compliance called the “Corporate Ethics

Risk Management, which systematically stipulate the Group’s risk management responses, the GHO Risk Management Committee is chaired

Guidelines.” The Corporate Ethics Guidelines have two components: corporate ethics policies, which comprise the ethical sensibility we mustby the director for GHO, under the supervision of the president and CEO. Directly below the GHO Risk Management Committee are the Risk

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

Management Committees of each business segment, which are chaired by the head of operations in each segment (Japan Business, China

embodies the corporate ethics policies in business activities. The corporate ethics policies declare that every Pigeon Group employee must

Business, Singapore Business, and Lansinoh Business). This framework enables information about risk to be collected across the entire

comply strictly with laws, regulations, and social norms, in both letter and spirit, acting in good faith and with a high sense of ethics. The

Group, provides necessary controls, and empowers each segment to respond rapidly to risk issues.

Corporate Ethics Guidelines enable us to earn the trust and support of stakeholders. For each employee to strongly embrace the Pigeon DNA
and the Pigeon Way and actively engage in compliance, as the Corporate Ethics Guidelines indicate, we believe it is vital to convey to all Group
employees Pigeon’s business philosophy and the sense of values of its management. Our President and CEO and all other executives lead bysegments, the GHO Risk Management Committee then examines and implements response measures. In particular, compliance risk,

example in rigorously promoting our spirit of ethics and compliance. We have also established compliance policies in three areas that are

financial risk, information security risk, supply chain management (SCM) risk, and customer complaint risk, which have been identified as key

considered to pose a particularly high risk to the entire Group: “Anti-bribery and Corruption,” “Antitrust Compliance,” and “Information

risks, are being addressed primarily by the departments in charge of risk as nominated by the GHO Risk Management Committee. These

Management.” These policies outline specific actions to be taken and the necessary systems and frameworks in these three areas.

departments collate information and examine and implement measures across the Group.

With regard to compliance education, we ensure that all Group employees are knowledgeable about compliance. We carry out training on
topics such as the Pigeon DNA and the Pigeon Way, the Corporate Ethics Guidelines, and the internal whistleblowing system at the Company

business segments and the Group companies under them. These Committees then examine and implement response measures. In theand at each Group company in Japan and overseas. In 2022, we circulated the monthly “Pigeon Compliance Communication” newsletter toevent that the Group is confronted with a crisis, such as a disaster or other major incident, the Risk Management Committee (here andemployees of the Company and all domestic Group companies on the theme of the Corporate Ethics Guidelines and the Group’s internal

hereinafter, “Risk Management Committee” refers to either the GHO Risk Management Committee or the Risk Management Committee ofwhistleblowing system. In addition, as compliance training, all Group employees were informed of the importance of compliance through a

the appropriate segment) convenes and takes steps to minimize damage and effect recovery, based on the Rules for Risk Management andvideo message from the President and CEO. Furthermore, the Pigeon DNA and the Pigeon Way, the Corporate Ethics Guidelines (including

the Business Continuity Plan (BCP). In addition, in the event of significant risks or incidents, the GHO Risk Management Committee reports

anti-corruption and compliance with antitrust laws), and the internal whistleblowing system were explained based on our own materials, inthe details and the results of responses made to the Board of Directors, as necessary.

order to instill the compliance that employees should practice in their daily work. After the training, a questionnaire, utilized to improve theValue Creation Story

The Risk Management Committees of each business segment collect, analyze, and evaluate risk information from their respective

Message fromthe President and CEO

The GHO Risk Management Committee systematically collects, analyzes, and evaluates the risk information it gathers from throughout
the Group, centered on the risk information it collects from each business segment. On its own or through the respective business

Introduction

Risk Management

contents, was given to the participants. Furthermore, compliance monitoring is regularly conducted for all executives and employees to
identify and analyze compliance risks in the Group. We are working to reduce compliance risks and promote compliance awareness among
Activities of the GHO Risk Management Committee (2022)

Number of meetings

executives and employees of the Group by reflecting the measures on the above compliance system, framework, and training.
As for internal reporting, we operate two whistleblowing systems: Speak-Up Desks for Pigeon Group employees (three points of contact:

Two

Reports to the Board of
Directors

One

Activities-Sharing of information on Group risks and incidents-Formulation of measures mitigating key risks and management of progress-Reporting on the results of risk assessments conducted and risk mitigation
measures across the entire Groupand others (two points of contact: the Legal Department and a consulting lawyer). In 2023, we introduced a reporting system that ensures
anonymity and provides language assistance as needed at the contact points for Pigeon Group employees. When a problem is discovered
within the Group or outside it, the Risk Management Committee, or the person in charge of taking whistleblower reports such as an Audit &Supervisory Committee Member, handles such reports by conducting an investigation into the facts, taking every precaution to protect

Medium-TermBusiness Plan

Audit & Supervisory Board Members, the Legal Department, and a consulting lawyer) and the “Pigeon Partners Line” for business partners

whistleblowers and consultants. The Risk Management Committee takes measures to prevent reoccurrence as necessary. The advice of aconsulting lawyer might be sought to weigh the legal propriety of responses and solutions. In fiscal 2022, there were five reports to Speak-Up
Desks and one report to the Pigeon Partners Line. Details of compliance education and of reports made to the internal whistleblowing
system are provided to the Board of Directors every year.

President & CEO

Responsible Dialogue with Shareholders and Other Investors

Management Committee

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

financial results briefings. We recognize that the Ordinary General Meeting of Shareholders is the Company’s highest decision-making body and

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

Japan Business Unit
Risk Management
Committee

China Business Unit
Risk Management
Committee

Singapore Business Unit
Risk Management
Committee

Lansinoh Business Unit
Risk Management
Committee

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

Risk Management Organization Chart

Pigeon Integrated Repor t 2022

Data Section

is a forum for constructive dialogue with shareholders. Accordingly, we ensure a sufficient period and a good environment so shareholders can

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

64

The Company actively engages in responsible dialogue with shareholders and other investors. During the COVID-19 pandemic, for example, we
increased the number of contact points compared with the previous year by using the Web and teleconferences to host IR meetings andReporting and consultation

Internal
whistleblowing
systemSustainability

Board of Directors

properly exercise their rights. Each year, we post the convocation notice in Japanese and English on the Company’s corporate website and othermedia around one month before the Ordinary General Meeting of Shareholders and send out paper copies three weeks before the meeting. In
addition, we strive to ensure convenience for shareholders, including by enabling them to exercise their voting rights via the Internet or aplatform for the electronic exercise of such rights. We also provide sign language interpreters at the venue of the Ordinary General Meeting of
Shareholders, as well as a special childcare room. Moreover, beneficial shareholders who hold the Company’s shares in the name of trust banks
and the like are allowed to observe the Ordinary General Meeting of Shareholders after completing the prescribed procedures. Since 2021, we
have conducted an online livestream so that shareholders who could not make it to the venue can watch the General Meeting of Shareholders.
Responsible Dialogue with Shareholders and Other Investors

66th Ordinary General Meeting of
Shareholders (March 30, 2023)-Number of attendees: 79 Voting rights exercised: 84.6%-Number of online viewers: 78

IR meetings with institutional
investors

Total number of correspondences: 332 (FY2022)

Pigeon Integrated Repor t 2022

65

Establishing SolidManagement Foundations

Executive Renumeration System
Basic policy on executive remuneration
aforementioned Pigeon DNA and Pigeon Way, the Key Issues, and the Basic Policy of Corporate Governance:（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; and（iii）The remuneration system should be highly independent, objective, and transparent, and accountable to stakeholders.

Position

Remuneration Level

President

100％

Vice president

80％

Senior managing executive officer

60％

Managing executive officer

50％

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.

the right.
Key Issues

66

Pigeon Integrated Repor t 2022

Enhancing Business Competitivenessand Resilience
Establishing Solid Management
Foundations

10％

Type of Remuneration

Composition Percentage

Basic remuneration

60％

Bonuses20％

Stock remuneration

20％

Voluntary Remuneration Committee
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 decision-making.
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 such asexternal 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
and 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.

Data Section

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 with theachievement level of targets, with consolidated
performance and the Key Issues accounting for 70% andIndicator
Valuation Ratiot h e p e r fo r m a n c e o f t h e D i re c to r s ’ re s p e c t i v e
Net sales
40％
departments (in net sales, operating income, and PVA)
Consolidated
Operating income
30％
performanceaccounting for 30%.
PVA
20％
The valuation ratio for each indicator is as shown on(ii) Standard model for the composition of Director (excluding Independent Outside Directors) remuneration (if the achievement level ofeach indicator is 100%)

Sustainability

Bonuses
Bonuses are paid in March every year for the purpose of granting incentives to improve the Group’s consolidated performance and tosolve 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 solidmanagement foundations), based on the base amount of the bonus determined for each position. Indicators related to consolidated
performance are used to drive the expansion of the scale and earnings of our main business and the creation of corporate value thatexceeds the cost of capital. With regard to the indicators related to the Key Issues, to make the world more baby-friendly, we aim to be acompany essential to society 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 theyshare and support these ideas, thereby building a solid management base to continue to be close to babies.

Managing Talent and Cultivating
the Right Culture for Our Purpose

Medium-TermBusiness Plan（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 businessdepartments. Monetary amounts are decided by position and paid as monthly remuneration.

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

Value Creation Story

Remuneration mix
Director
40％
The remuneration for the Company’s Directors (excluding Independent Outside Directors) consistsof “basic remuneration” commensurate with position, “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.

Message fromthe President and CEO

Remuneration levels
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

The Company’s basic policy on remuneration for Directors (hereinafter “executive remuneration”) shall be as follows, in accordance with theStock remuneration
Stock remuneration is paid at the time of retirement for the purpose of granting an incentive to improve the Group’s medium- to longterm company performance and corporate value, and to place Directors in the “same boat” as the shareholders (thus giving Directors
and shareholders a shared interest).
In principle, the remuneration will vary within a range from zero to 150%, in accordance with the achievement level of targetedfinancial indicators related to consolidated performance set out in the Medium-Term Business Plan (EPS (Earnings per Share), growthrate, TSR (Total Shareholder Return), and ROIC) and indicators related to the Key Issues (reducing our environmental impact,
contributing to the resolution of social issues, and managing talent and cultivating the right culture for our Purpose), based on the baseamount of the stock remuneration determined for each position. Financial indicators related to consolidated performance are used tofurther improve business profitability 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 tosocial issues surrounding babies, their mothers, and their
Indicator
Valuation Ratio
families, as well as reduce factors that lead to environmental
EPS growth rate30％
load in all countries and regions in which the Group operates, byConsolidated
TSR (relative comparison)30％
fostering a corporate culture that allows diverse humanperformance
resources to take on challenges and grow to be themselves, withROIC
20％
the aim of making the world more baby-friendly. If there is a
Reducing Our Environmental Impact
significant change in the targets set out in the Medium-TermBusiness Plan, the Board of Directors determines theContributing to the Resolution of
20％
Key Issues
Social Issues
appropriateness of the target values for stock remuneration,

Main agenda items of the Voluntary Remuneration 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 and other considerations for bonuses in the previous fiscal year
・Performance evaluations, individual payment amounts and other 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 in the external environment and business environment
・Improving the effectiveness of the Voluntary Remuneration Committee
Pigeon Integrated Repor t 2022

67

Establishing SolidManagement Foundations

Nomination and Dismissal of Candidates for Director

68

Pigeon Integrated Repor t 2022

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 sustainablereduction of environmental impact to leave the Earthfavorable for the future of babies born tomorrow.

Set numerical targets for each separate challenge and executemeasures to achieve these targets.

Contributing to the
Resolution of Social
IssuesBuild a mechanism to encourage the development of
next-generation businesses and products to resolve
social issues that affect babies and their families.

Carry out the development of next-generation businesses andproducts that help solve social issues, with consideration for theentire 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 andgrow to be themselves to make the world morebaby-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 andfollowing 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 theCompany’s plans and actions.

(iii) Required competencies
Item

Behavioral
characteristics

Personality
characteristics

Details

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

Development and proliferation of
our vision and corporate culture

Promotes the wide adoption of the Pigeon DNA and the Pigeon Way as well as a healthy corporate
culture through strategic engagement with stakeholders

Envisioning, planning, andexecution of strategies

Proposes management strategies and a grand design that reflects our corporate culture, andallocates management resources in an optimal manner

Development of humanresources and the organization

Develops successors to the CEO and other management positions, and develops an organization thatis 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 governancesystemInterest and curiosity

Has a strong interest in and diverse perspectives regarding the Company’s products and services,and displays an attitude of learning through a cycle of “creating, making, and delivering”

Passion and romanticism

Has the courage to pursue dreams and take on challenges, and a strong commitment and passion
to persevere until success is achieved

Sensitivity and empathy

Carries out two-way communication with stakeholders, displays sensitivity, and focuses energy
on having empathy

Sensibility and ingenuity

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
Has a record of contributing to the improvement of corporate value (social and economic value) in
the top management of Group subsidiaries

Data Section

To 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 the standards for appointment and dismissal of Directors as well as CEO successor plans, and provide advice and proposals to the Boardof Directors. The Board of Directors in turn follows such advice and proposals to the greatest extent possible in its decision-making. To introduce an
objective perspective from outside 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 external data, the economic environment, industry trends, and management conditions. In addition, to enhance theeffectiveness of the Board of Directors, we are working to coordinate the Voluntary Nominating Committee and Voluntary Remuneration Committeeon activities related to Director nomination and remuneration. We also evaluate the effectiveness of the Voluntary Nominating Committee in
evaluating the effectiveness of the Board of Directors.
Main agenda of the Nominating Committee-Executive nomination policy -Roles of the Chairman of the Board -Skill matrix of the Board of Directors -Personnel requirements for the CEO-Succession planning for the CEO and management -Candidates for Director -Standards for the appointment and dismissal of Directors-Term of office and tenure for Directors -Succession planning for Independent Outside Directors -Improving the effectiveness of the Voluntary
Nominating Committee

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

Sustainability

Voluntary Nominating Committee

Enhancing Business
Competitiveness and Resilience

Medium-TermBusiness Plan

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

Expected Results

Value Creation Story

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 oftraining for the development and selection of the next generation of management 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.

Main Duties

Message fromthe President and CEO

Standards for appointment and dismissal: 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 other information. 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 they have taken actions that meet these criteria, 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 the individual
to continue his or her current dutiesd) ROE is below 5% for three consecutive fiscal years (CEO only)

Key Issues

Introduction

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 enhance resourcefulness and continuously increase the Company’s 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, and required competencies (behavioral characteristics, personality
characteristics, experience and achievements, and knowledge and skills)) are determined based on the Pigeon DNA and the Pigeon Way, theKey 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: Is responsible for processes and results that increase corporate value (social and economic value) based on the values 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 thetable on page 69).
(iii) Required competencies
The required competencies of the CEO are determined based on the “Responsibilities and authority” referenced above (see the table on page 69).

(ii) Main duties and expected results

Has created new value by inventing new businesses, products, and services
Experience and achievements
Has managed multiple functions, regions, or locations
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

Pigeon Integrated Repor t 2022

69

Establishing SolidManagement Foundations

Directors/Audit & Supervisory Board Members/
Managing Officers

Directors (As of March 31, 2023)
Areas of Expertise Demanded of the Board of Directors

Number of the Company’s commonshares held: 43,716(Includes 16,516 shares to be
granted based on the stock
remuneration system)

Director, Senior Managing
Executive Officer

Tadashi Itakura
Head of Global Head Office
Number of the Company’s commonshares held: 16,289(Includes 9,269 shares to be granted
based on the stock remuneration system)

Director, Executive Officer

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: 0Expertise demanded of the Board of Directors*1
Name/Position

President & CEO

Takayuki Nitta(Appointed in April 2015)
Number of the Company’s commonshares held: 7,400

Outside Director
Chairman of the Board

Rehito Hatoyama(Appointed in April 2016)
Number of the Company’s commonshares held: 3,200

Outside Director

Outside Director

Outside Director

Chiaki Hayashi

Eriko Yamaguchi

Yumiko Miwa

(Appointed in March 2020)(Appointed in April 2020)(Appointed in April 2022)

Number of the Company’s commonshares held: 1,600

Number of the Company’s commonshares held: 300

Number of the Company’s commonshares held: 400

Kevin Vyse-Peacock
Director, Executive Officer

Directors

Rehito Hatoyama

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Yumiko Miwa

Hiroshi Nishimoto

Koji Ishigami

Koichi Otsu

Atsuko Taishido

Outside Director*4

Number of the Company’s commonshares held: 2,000

Number of the Company’s commonshares held: 42,300(Appointed in April 2019)(Appointed in April 2019)

Number of the Company’s commonshares held: 5,400

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

Nobuo Takubo

Business Strategy Division Manager

Katsushi Tsutsui

Research & Development Division Manager

Kazuyuki Tajima SCM Division Manager

Takatoshi Urakari

Human Resources & General Affairs Division Manager

Takanori Tsuru

Related Business Division Manager

Koji Matsutori

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

Takashi Arai

Accounting & Finance Division Manager

Pigeon Integrated Repor t 2022

Head of Japan Operations
Baby Care Business Division Manager

○

○

○

○

○

○

Audit & Supervisory Board
Members

Hiroshi Nishimoto

Audit & Supervisory
Board Member

○

○

○

○

○

○

○

○

○

○

○

○

○

○

○
○

○
○

○

Audit & Supervisory
Board Member

Koji Ishigami

○

○

Law,
Solvingcompliance,
societal issues
risk
management

○

○

○

○

Koichi Otsu

Outside Audit & Supervisory
Board Member*4

Atsuko Taishido

Outside Audit & Supervisory
Board Member* 5○○

Data Section

70

Zenzou Yamaguchi Senior Managing Officer○○

Finance,accounting

Sustainability

Outside Director*4

Audit & Supervisory Board
Member

○

○

○

Human
resource
development,
corporate
culture○○Takayuki Nitta

Audit & Supervisory Board
MemberSCM*

Marketing,branding○○

Eriko Yamaguchi

Senior Managing Officer
Singapore Business Division Manager/
Representative Director of PIGEON SINGAPORE PTE. LTD.

○○

Outside Director
and Chairman of the Board*4

Chiaki Hayashi

Yusuke Nakata○

2Medium-TermBusiness Plan

Director, Executive Officer

Outside Director*4

Managing Officers (As of March 31, 2023)○

Design,R&D,
product
development

Tadashi Itakura

Outside Director*4

Notes:
1. Mr. Takayuki Nitta, Mr. Rehito Hatoyama, Ms. Chiaki Hayashi, Ms. Eriko Yamaguchi, and Ms. Yumiko Miwa are Outside
Directors as stipulated in Item 15 of Article 2 of the Corporate Law.
2. Mr. Koichi Otsu and Ms. Atsuko Taishido are Outside Auditors as stipulated in Item 16 of Article 2 of the Corporate Law.
3. Number of the Company ʼs common shares held is as of December 31, 2022.

○

Globalbusiness

Director, Senior Managing
Executive Officer

Ryo Yano*3

Audit & Supervisory Board Members (As of March 31, 2023)

Experience inManagement,
the company,
businessindustry
strategy
experience

Value Creation Story

Norimasa Kitazawa

Outside Director

Message fromthe President and CEO

Norimasa Kitazawa

Introduction

President and CEO

To ensure the effectiveness of the Board of Directors and Audit & Supervisory Board, we believe it is necessary to clarify the expertise of theindividual Directors and Audit & Supervisory Board Members who make up each collegial body. For this reason, we have clarified the areas ofexpertise of each individual in the following table (Skills Matrix). Each area of expertise has been selected based on the relationships between
the Pigeon DNA, which is the core of Pigeon and will be upheld into the future as an unchanging spirit that describes our Corporate
Philosophy (“Love”) and our Credo (“Only love begets love”); our Purpose, positioned as the core of the Pigeon Way, which embodies “heartand soul” and sets the grounds for our actions to stream from this core; and the five Key Issues (materiality) that we must address in theprocess of 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, in order toachieve 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*3 Mr. Yano was elected and took office at the 66th Ordinary General Meeting of Shareholders, held on March 30, 2023
*4 Independent directors based on the regulations of the Tokyo Stock Exchange*5 Independent directors who satisfy the requirements for an independent director based on the regulations of the Tokyo Stock Exchange

Committee Members
The Company has established the three committees shown below as advisory panels to the Board of Directors. Each committee is chairedby an independent outside director, and outside officers constitute the majority of members.

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

Pigeon Integrated Repor t 2022

71

Financial Highlights/
Financial Data

Consolidated Statements of Income(¥ millions)

Annual Sales Trend by Segment

FY ended
Dec. 2021

FY ended Dec. 2022

ResultResult49,008

Cost of sales

120,000

1,402

102.0％

50,087

12,753100,000

12,133102.2%
80,00044,072

44,834101.7%

SG&A expenses

30,73532,638106.2%

Previous Standard

New Standard*

Other )

35,58160,000Operating income

13,336

12,19591.4％

40,000Ordinary income

14,64813,46591.9％

20,000Net Income attributable to owners ofparent

8,785

8,581

97.7％

0

6,986
4,472
35,593
FY ended Jan. 2019

1,343

Item

12,473

13,213

13,32012,184

11,482■ Consolidated Balance Sheets
16,917

12,61937,23934,7766,546
3,492
44,97730,813
Dec. 2019

38,264

Dec. 2020

36,323

Dec. 2021

Dec. 2022

Note: Effective from the fiscal year ended December 31, 2020, the Domestic Baby & Mother Care
Business, Child Care Service Business, Health & Elder Care Business, and Other segments havebeen consolidated into the Japan Business.

Operating Income/Operating Margin(¥ millions)(¥ millions)

120,000

PreviousStandard

21,000NewStandard*

Ordinary Income/Ordinary Margin

Operating Margin （%）
50
NewStandard*

18,00094,921

100,000

Operating Income
PreviousStandard40

15,00080,000(¥ millions)
21,000Ordinary Income
Ordinary Margin
Previous
New
Standard
Standard*

18,000

30

（%）
50

40

15,00012,19512,00013,46530

12,00040,000

6,000

6,000

Dec.
2019

Dec.
2020

Dec.
2021

0

Dec.
2022

EPS

10

12.8%

3,000
FY endedJan. 2019

FY endedJan. 2019

Dec.
2019

Dec.
2020

Dec.
2021

0

Dec.
2022

Cash Dividend per Share/Dividend Payout Ratio
(¥)

(¥)

Dividend per Share

80

150
120

Payout Ratio

（%）

76

106.1%FY endedJan. 2019

ROE* /ROIC*
1

（%）
30

Dec.
2019

Dec.
2020

Dec.
2021

ROE

PreviousStandard

FY endedJan. 2019

Dec.
2019

Dec.
2020

Dec.
2021

0

Dec.
2022

Dec.
2021

Dec.
2022

Total Assets/Net Assets

Net Income Margin（%）
50

New
Standard*40

12,00010,000

Dec.
2020

0

8,581

100,000

Total Assets

Net Assets

101,733
79,95280,000

6,000

2,000
0

72

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

15,004

16,58815,085

16,253

15,975Merchandise and Finished Goods

7,360

8,144

8,256

8,723

10,529Other Current Assets

4,887

4,783

4,724

6,059

6,355

Total Current Assets

58,201

61,933

65,231

66,254

67,143

Tangible Fixed Assets

21,12722,49423,262

27,09330,132Intangible Fixed Assets

4,223

3,863

2,957

2,572

2,308

Investment Securities

889

950

687

532

547

Total Investments and Other Assets

1,176

1,250

1,333

1,590

1,601

Total Fixed Assets

27,41728,55828,241

31,78834,590Total Assets

85,61890,491

93,472

98,042

101,733

Notes and Accounts Payable—Trade

4,567

4,900

4,757

4,087

5,066

Liabilities

1,951

1,272

1,906

1,180

989

10

Accrued Bonuses to Employees

972

928

952

882

920

4,768

5,876

5,320

6,668

6,212

15,623

15,63815,664

15,072

15,563Long-Term Borrowings

̶

̶

̶

̶

̶

Other Fixed Liabilities

0

Other Current Liabilities
Total Current Liabilities

3,412

4,389

5,181

6,159

6,217

Total Fixed Liabilities

3,412

4,389

5,181

6,159

6,217

Total Liabilities

19,03620,02820,846

21,232

21,781

Capital Stock

5,199

5,199

5,199

5,199

5,199

Capital Surplus

5,179

5,179

5,179

5,179

5,132

Retained Earnings

55,70458,97961,12061,16360,762

Treasury Stock△ 951△ 1,088△1,478△1,479△1,387

21

25

13

16

26

Foreign Currency Translation Adjustment

△ 910

△ 572

△129

3,805

6,962

Non-Controlling Interests

2,339

2,741

2,722

2,925

3,257

Total Net Assets

66,582

70,46372,62576,81079,952

Total Liabilities and Net Assets

85,61890,491

93,472

98,042

101,733

Net Assets
10.9

5
FY endedJan. 2019

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

（%）
100

75.4

80

Valuation Difference on Available-forSale Securities

30

60,00060

Notes: 1. Figures less than one million yen are truncated. 2. Effective from the fiscal period ended December 2019, the Pigeon Group changed its fiscal year-end from January 31 to December 31. Therefore, fiscal
2019 was a transitional period of 11 months (February 1–December 31, 2019).

20

40,00040■Equity Ratio, ROE, and ROIC

10

20,000

20

Item

0

0

FY endedJan. 2019

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

0

FY endedJan. 2019

Dec.
2019

Dec.
2020

Dec.
2021

Dec.
2022

*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 standards as of fiscal 2020, whereas the “New Standard” refers to actual results after the change inaccounting standards. 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 atransitional period of 11 months (February 1–December 31, 2019)

Pigeon Integrated Repor t 2022

Notes and Accounts Receivable—Trade

Income Taxes Payable

11.4

9.0%
FY endedJan. 201934,283

2,373

20

8,000

4,000

35,2182,253

NewStandard*

Equity Ratio(¥ millions)

37,163

2,727

25

0

32,416F Y ended

Data Section

Net Income Attributable to
Owners of Parent
PreviousStandard

Dec.
2019

30,9492,660*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 Income Margin (%)(¥ millions)

FY endedJan. 2019

Cash and Deposits

3,363

ROIC

10
25

Dec.
2022

Dec. 2022

Accounts Payable

2

50
20

30

14,000

0

15

40

60

16,000

14.2％

3,000

Dec. 2021

Sustainability

75

90

0

125

100

60

71.72

9,000

Dec. 2020

Medium-TermBusiness Plan

20,000020

Dec. 201920

60,0009,000

Jan. 2019

Value Creation StoryNet Sales(¥ millions)

Assets14,15337,73236,824

F Y ended

Message fromthe President and CEO

Gross profit

Health & Elder Care(¥ millions)YoY change

94,921

Financial Data

LansinohChild Care Service

Introduction

93,080Net sales

Japan
Singapore
China
Domestic Baby & Mother Care(（％）

Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Equity Ratio

75.0

74.8

74.8

75.4

75.4

ROE

22.8

17.5

15.5

12.2

11.4

ROIC

21.2

17.4

15.0

12.5

10.9

Notes: 1. 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 rate of 30%.
Invested capital is the average of the beginning and end from the fiscal year. 2. As a result of the change of consolidated closing date, the consolidated fiscal year ended December 31, 2019;
therefore, the 11-month transition period (February 1–December 31, 2019) was the timeframe used by the Company and its subsidiaries in Japan to settle their accounts on January 31, 2020.

Pigeon Integrated Repor t 2022

73

Financial Data/
Nonfinancial Data

Financial Data

Nonfinancial DataItem

F Y ended(¥ millions)Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

F Y ende d

Item

62%

(%)

ー

66%

67%

Number of managers(persons)

478

469

441

Japan

(persons)

160

153

145

Overseas(persons)

318

316

296

Ratio of female managers

(%)

40%

41%

40%

Japan

(%)

27%

29%

30%

Overseas

(%)

47%

48%

45%

(%)

9%

15%

19%

(persons)

373

368

345

(%)

39%

41%

41%

93,08094,92149,45949,00850,087

Ratio of female employees

51.4

50.8

50.2

47.3

47.2

34,246

Selling, General and Administrative Expenses

33,72734,60530,73532,638

19,612

17,072

15,316

13,336

12,195

Operating Margin (%)

18.7

17.1

15.4

14.3

12.8

Non-operating Income

1,295

1,136

1,406

1,427

1,418

Non-operating Expenses

509

924

608

115

149

Operating Income

17,284

16,113

14,64813,465

Ordinary Margin (%)

19.5

17.3

16.2

15.7

14.2

Extraordinary Income

243

121

38

65

7

Extraordinary Loss

379

300

315

1,182

329

Income before Income Taxes

20,262

17,104

15,836

13,531

13,143

Income Taxes—Current

5,794

5,067

4,715

4,690

4,678

Income Taxes—Deferred

△ 127

267

261

△138

△296

Net Income

14,594

11,76910,860

8,979

8,761

356

230

216

193

179

14,238

11,538

10,643

8,785

8,581

Net Income Attributable to
Non-Controlling Interests
Net Income Attributable to
Owners of Parent

Voluntary turnover of regular employees
Number of employees
Ratio of female employees(persons)

75

71

65

Ratio of female managers

(%)

21%

24%

26%

Mid-career hires at management positions

(%)

44%

42%

46%

Ratio of non-Japanese managers

(%)

ー

ー

2%

Number of managers

(%)

1%

2%

5%

Average length of service(years)

15.0

14.8

15.2

Number of new-graduate hires(persons)883

Number of mid-career hires(persons)

16

5

5

Voluntary turnover of regular employees

Notes: 1. Figures less than one million yen are truncated. 2. Effective from the fiscal period ended December 2019, the Pigeon Group changed its fiscal year-end from January 31 to December 31. Therefore, fiscal 2019 was atransitional period of 11 months (February 1–December 31, 2019).

*Ratio of employees with nationality other than Japanese.
Note: The ratio of non-Japanese employees, the number of managers, and the ratio of female managers in the Pigeon Group for FY2021 have been restated upon a review of data from previous fiscal years.

■ Consolidated Statement of Cash Flows■ Officer Data (As of December 31 in each year)

Item

F Y ended(¥ millions)Jan. 2019

Dec. 2019

Dec. 2020

Dec. 2021

Dec. 2022

Number of directors

12

12

10

(%)

25%

25%

30%

13,632

14,09818,40010,893

13,210Cash Flows from Investing Activities△ 4,704△ 3,995△ 3,815△5,593△5,659Ratio of Outside Directors

(%)

42%

42%

50%

Cash Flows from Financing Activities△ 8,338△ 8,734△9,231△8,693△9,666

Ratio of non-Japanese directors

(%)

8%

8%

10%

Effect of Exchange Rate Changes on
Cash and Cash Equivalents

△ 986

98

△718

1,560

1,180

Net Increase (Decrease) in Cash and Cash Equivalents

△ 397

1,467

4,634

△1,832△934

Cash and Cash Equivalents at Beginning of Period

31,34630,94932,41637,05035,2 18

Cash and Cash Equivalents at End of Period

30,94932,41637,05035,21834,283

Notes: 1. Figures less than one million yen are truncated. 2. Effective from the fiscal period ended December 2019, the Pigeon Group changed its fiscal year-end from January 31 to December 31. Therefore, fiscal 2019 was atransitional period of 11 months (February 1–December 31, 2019).

■ Data per Share

Cash Dividend (yen)Dividend Payout Ratio (%)
BPS (yen)

118.89Dec. 2019
96.37

Dec. 2020
88.93

Dec. 2021
73.44

Dec. 2022
71.72

68.00

70.00

72.00

74.00

76.00

57.2

72.7

81.0

100.9

106.1

536.43565.64584.30617.59640.96

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 Integrated Repor t 2022

Ratio of female Audit & Supervisory Board Members
Number of managing officers
Ratio of female managing officers

4

4

4

(%)

25%

25%

25%

(persons)

13

11

12

(%)

8%

9%

8%

(tonne-CO2)

24,97323,51011,741(kg-CO2 /¥ million)

265.6

252.6

123.7

(persons)■ Environmental Data
Scope 1 and 2 CO2 emissions＊1

Jan. 2019
EPS (yen)

Number of Audit & Supervisory Board Members

Data Section

Cash Flows from Operating Activities

Sustainability(persons)

Ratio of female directors

Medium-TermBusiness Plan

20,398

Ordinary Income

Ratio of non-Japanese employees
Pigeon Group

44,834

Pigeon Corporation

Gross Margin (%)

44,072＊

Value Creation Story

3,803

62%

99,38049,216

Message fromthe President and CEO

3,935

62%

100,01750,88949,921

Dec. 2022

3,886

104,747

Cost of Sales

50,800Dec. 2021(%)

Net Sales

53,858Dec. 2020(persons)

Number of employees

Gross Profit

74■ Employee Data

Introduction■ Consolidated Statements of Income＊1

Scope 1 and 2 CO2 emissions per unit of sales＊2

Non-recycled industrial waste generated
Industrial waste per unit of sales＊2
Reuse and recycling ratio(tonnes)

420

271

198

(kg/¥ million)

4.5

2.9

2.1

(%)

89％

93％

94％

Notes:
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 CO2 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).

Pigeon Integrated Repor t 2022

75

Corporate Information
Corporate Data/Consolidated Subsidiaries/
Main External Evaluation/Pigeon Group Business Structure

Corporate Data (As of December 31, 2022)

Our Business
Number of Employees

August 15, 1957
¥5,199,597 thousand
December 31
Note: At the 62nd Ordinary General Meeting of Shareholders convened April 25, 2019, a partial amendment to the Articles
of Incorporation was approved, changing the fiscal year-end from January 31 to December 31 from FY2019 onward.
Manufacture, sale, import, and export of baby and childcare products, maternity items, women’s care products,
home healthcare products, elder care products and related products; operation of child-minding centers
345 (Japan, full-time employees) / 3,803 (Worldwide, includes part-time employees)

Consolidated Subsidiaries (25 companies) (As of December 31, 2022)◦ PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

◦ PIGEON HEARTS CORPORATION◦ LANSINOH LABORATORIES, INC.

◦ PIGEON MANUFACTURING HYOGO CORPORATION◦ LANSINOH LABORATORIES MEDICAL DEVICES◦ PIGEON TAHIRA CORPORATION◦ PIGEON MANAKA CORPORATION◦ PIGEON SINGAPORE PTE. LTD.
◦ PT PIGEON INDONESIA◦ PT PIGEON BABY LAB INDONESIA◦ PIGEON (SHANGHAI) CO., LTD.
◦ PIGEON AMERICA INC.
◦ PIGEON MANUFACTURING (SHANGHAI) CO., LTD.

ー● Pigeon Corporation

Japan

ー

Maternity and baby products: Sales, R&D, etc.

● Pigeon Home Products Corporation

Japan

100%

Manufacture and sale of toiletries● Pigeon Hearts Corporation

Japan

100%

Child-minding and daycare services, babysitter
dispatch services, preschool education services● Pigeon Manufacturing Hyogo Corporation

Japan

100%

● Pigeon Manufacturing Ibaraki Corporation

Japan

100%

● Pigeon Tahira Corporation

Japan

100%

Sale of elder care products● Pigeon Manaka Corporation

Japan

67%

At-home elder care services, sale of elder careproducts

China

100%

Sale of maternity and baby products
Nursing Bottles, Skincare products, Cleaning andDisinfecting products, etc.

UnitedStates（100.0%）100%

Sale of baby products
Nursing Bottles, and others

China

100%

Manufacture of maternity and baby products
R&D Nursing Bottles, Skincare products, Breast Pads, etc.

● PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

China

100%

Manufacture of maternity and baby products
Nursing Bottles, Skincare products, Breast Pads, etc.

● DOUBLEHEART CO. LTD.

South
Korea

100%

Sale of maternity and baby products
Nursing Bottles, Skincare products, Cleaning andDisinfecting products, etc.

Singapore100%

Malaysia（100.0%）Indonesia（65.0%）

Indonesia（100.0%）India（0.1%）＊2

DESIGN INDUSTRY AND COMMERCE LTD. CO.

◦ LANSINOH LABORATORIES BENELUX◦ LANSINOH LABORATORIES SHANGHAI◦ LANSINOH LABORATORIES (HONGKONG) CO.,LIMITED◦ LANSINOH LABORATORIES UK LIMITED◦ LANSINOH LABORATORIES FRANCE SAS◦ DOUBLEHEART CO. LTD.

of the Year

Companies selectedby Minister of State
Commendation

Challenge 2022 Excellence
Award

＊1,＊2

● PT PIGEON INDONESIA＊1● PT PIGEON BABY LAB INDONESIA＊1,＊2●● PIGEON INDIA PVT. LTD.

＊2

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

● THAI PIGEON CO., LTD.

＊3● LANSINOH LABORATORIES, INC.

Lansinoh Business◦ Corporate Governance ◦ Consumer-Oriented ◦ Forest × Decarbonizing＊1● PIGEON MALAYSIA (TRADING) SDN. BHD.

● LANSINOH LABORATORIES MEDICAL DEVICESDESIGN INDUSTRY AND COMMERCE LTD. CO.＊1,＊2＊1● LANSINOH LABORATORIES BENELUX＊1● LANSINOH LABORATORIES SHANGHAI＊1● LANSINOH LABORATORIES (HONGKONG) CO.,LIMITED76

Pigeon Integrated Repor t 2022

Manufacture and sale of maternity and baby products
Nursing Bottles, Breast Pumps, etc.

100%

Sale of maternity and baby products
Nursing Bottles, Skincare products, Breast Pumps, etc.

100%

Manufacture and sale of maternity and baby products
Nursing Bottles, Breast Pumps, etc.

Thailand

97.5%

Thailand53%

Manufacture of maternity and baby products
Nursing Bottles, Wet wipes, Nipple Care
products, etc.

UnitedStates100%

Turkey（99.9%）

Belgium（100.0%）China（100.0%）China（100.0%）

UnitedKingdom＊1

France● LANSINOH LABORATORIES FRANCE SAS
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.

65%

＊1,＊2

● LANSINOH LABORATORIES UK LIMITED

100%

Sale of maternity and baby products
Nursing Bottles, Skincare products, Breast
Pumps, etc.

100%

Data Section

Gender Diversity Tilt Index＊2

Sustainability

Women Index

THE INCLUSION OF Pigeon Corporation IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICEMARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE ASPONSORSHIP, ENDORSEMENT OR PROMOTION 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.

◦ Morningstar Japan ex-REIT ◦ FTSE4Good Index Series＊2● PIGEON MANUFACTURING (SHANGHAI) CO., LTD.

＊2

◦ S&P/JPX Carbon ◦ MSCI Japan Empowering

Efficient Index＊1● PIGEON AMERICA INC.

● PIGEON SINGAPORE PTE. LTD.

◦ THAI PIGEON CO., LTD.

Sector Relative Index

Manufacture and sale of non-woven products＊3◦ PIGEON INDUSTRIES (THAILAND) CO., LTD.

◦ FTSE Blossom Japan Index ◦ FTSE Blossom Japan＊2● PIGEON (SHANGHAI) CO., LTD.

◦ PIGEON INDIA PVT. LTD.

Main External Evaluation (As of May 31, 2022)◦ JPX NIKKEI INDEX 400

ーMedium-TermBusiness Plan

◦ PIGEON MALAYSIA (TRADING) SDN. BHD.

Japan

Value Creation Story◦ PIGEON HOME PRODUCTS CORPORATION◦ PIGEON MANUFACTURING IBARAKI CORPORATION

GHO Pigeon Corporation

Message fromthe President and CEO

Fiscal Year-End

Business

Company name

Japan Business

Capital Stock

Location

Percentage of voting
rights in the stock of
a subsidiary held by aparent corporation

China Business

Established

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

Introduction

Address

Singapore BusinessCompany Name

Pigeon Group Business Structure (As of December 31, 2022)

Sale of maternity and baby products
Nipple Care products, Breast Milk Storage Bags,
Breast Pumps, etc.
Manufacture of maternity and baby products
Nursing Bottles, Breast Pumps, etc.

100%
100%
100%
100%

Sale of maternity and baby products
Nipple Care products, Breast Milk Storage Bags,
Breast Pumps, etc.

（100.0%）100%（100.0%）*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).

Sales/Service offices ●Factories
Pigeon Integrated Repor t 2022

77

Corporate Information■IR Tools (Quick Reference)

Stock Data/IR Tools (Quick Reference)

The purpose of this Integrated Report is to describe management strategies aimed at conveying the vision of the Pigeon Group, as well as details of the Group’sbusiness and ESG activities. It is also designed to deepen understanding of the corporate value created by the Pigeon Group. In addition, we provide a variety ofother information through our Investors Guide and our corporate website, which give qualitative and quantitative details of the Pigeon Group’s history.

Integrated Report 2022

Purpose

Corporate Site

Stock Data (As of December 31, 2022)● Total number of shareholders …………………… 22,970 ● Treasury stock……1,893,272● Number of shareholders with voting rights …… 20,272➡

To see Pigeon’s business bysegment.

➡

P. 72 Financial Highlights/Financial Data
P. 75 Nonfinancial Data➡

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

➡

P. 78 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. 76 Corporate Information（Corporate Data）➡

To learn about Pigeon’s
history andcorporate profile.

P. 32 Business Strategy by Segment

Major Shareholders (As of December 31, 2022)
Numberof shares

Shareholder name		(Thousand)Ownership*(%)

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

21,830

18.2

Custody Bank of Japan, Ltd. (Trust Account)

7,282

6.1

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

5,1 6 8

4.3

SMBC Nikko Securities Inc.

3,340

2.8

THE BANK OF NEW YORK MELLON 140051

3,1 6 92.6

RBC ISB S/A DUB NON RESIDENT/TREATY RATE UCITS-CLIENTS ACCOUNT-MIG

2,783

2.3

STATE STREET BANK CLIENT OMNIBUS OM04

2,432

2.0

Y.N. Corporation

2,378

2.0

JPMorgan Securities Japan Co., Ltd.

2,030

1.7

Yoichi Nakata

1,944

1.6

Investors
・Segment Financial Overview

Investors
・Chart Generator
・Investor's Guide

Value Creation Story➡

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

Message fromthe President and CEO➡

To see Pigeon’s Key
Performance
Figures.

P. 06 PVA
P. 08 Business Overview
P. 72 Financial Highlights/Financial Data

Introduction● Shares authorized……360 million● Shares issued………… 121,653,486

Stock Information*The shareholding ratio is calculated deducting treasury stock (1,893,532 shares). Treasury stock does not include the number of shares held by the Board Incentive Plan for Directors (BIP) Trust Account (102,956 shares)

Share Breakdown by Shareholder Type (As of December 31, 2022)

13.9%

Treasury Stock

1.6%

Government and Public
Bodies 0.0%

0.0%
121,653

Financial Institutions

thousand shares

42.4%

Non-JapaneseCorporations
Financial
Institutions
Individuals andOthers51,613（thousands)

16,861（thousands)

Securities
Companies

7,135（thousands)

Securities
Companies

Japanese
Corporations

5,970（thousands)

Treasury Stock

1,893（thousands)

5.9%
4.9%

Government andBodies

P. 16 Pigeon DNA・Pigeon Way
P. 18 Value Creation Story
P. 20 Vision of a Baby-Friendly Future
P. 22 Toward Sustainable Growth1（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

P. 10 To Our Stakeholders
P. 16 Pigeon DNA・Pigeon Way
P. 18 Value Creation Story
P. 26 The 8th Medium-Term Management Plan
P. 32 Business Strategy by Segment
P. 60 Message from an Outside Director
P. 70 Directors, Audit & Supervisory Board
Members, Managing Officers➡

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

➡

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

➡

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

➡

➡

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

Investors
・Top Message
・Medium-Term Business Plan

Data Section（¥）

Company Profile

38,177（thousands)

31.4%

Japanese Corporations➡

Sustainability

Non-JapaneseCorporations

Number of shares*

Medium-TermBusiness Plan

Individuals andOthersCorporate History
・Pigeon’s History
・History of Nursing Bottles

Management

6,500
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. 18 Value Creation Story
P. 22 Toward Sustainable Growth
P. 40 Promoting Sustainable Management
P. 42 Enhancing Business Competitiveness and ResilienceP. 46 Reducing Our Environmental Impact
P. 52 Contribution to the Resolution of Social Issues
P. 56 Managing Talent and Cultivating theRight Culture for Our Purpose
P. 60 Establishing Solid Management Foundations➡

Sustainability
・ESG/SDGs Policy
・ESG Data Book

078

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3
2018
2022
2023
2019
2020
2021

Pigeon Integrated Repor t 2022

Pigeon Integrated Repor t 2022

79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