November 4, 2022
Lion Corporation

Analyst Q&A (Summary)Nine Months Ended September 30, 2022

Business Performance
Q: In the first nine months, the progress of measures to counter higher than initially expected
increases in raw material prices lagged by ¥800 million compared with your plan. Could
you tell us why that was and how you plan to make up this difference?
A: The lag of ¥800 million is due mainly to two factors: 1. Worsening of the segment mix, as
the Consumer Products business (which has a relatively high profit margin) grew less than
expected, even as the Overseas business grew, and 2. Promotional expense control efforts
did not progress as much as planned, especially in the domestic Consumer Productbusiness. To make up the difference, we will work to increase sales in fields that are
performing strongly and shift toward higher-value-added products. In the oral care field of
the domestic Consumer Products business, we are decreasing efforts to promote low-end
products based on price and instead shifting efforts toward sales promotion of high-valueadded products. We expect to see the results of these efforts in the fourth quarter.
Q: One of those response measures, “raise sales prices, control promotional expenses byrevising special sale prices and frequency,” had an effect of ¥1.2 billion in the July–
September period. Could you give us a breakdown of that figure?
A: We do not disclose those specific numbers, but the majority came from the Overseas andIndustrial Products businesses. The domestic Consumer Products business accounted for
only a small part.
Q: It seems like Lion’s business in China (Qingdao Lion) did fairly well despite a challenging
business environment. Why was that?
A: In China, to cover the temporary decreases in sales caused by lockdowns related to
COVID-19 and the change in e-commerce vendors, we reinforced sales via offline sales
channels, which included expanding from major metropolitan areas to the surrounding
regions. Also, in terms of products, sales of our White & White toothpaste, which we havecustomized to local needs and produce locally as part of our glocalization strategy, havebeen favorable.

Forecasts
Q: Has your view of the full-year impact of rising raw material prices changed?
A: Our assumption that rising raw material prices will have a full year impact of negative ¥13billion is unchanged. Raw material prices themselves are softening, but this effect iscancelled out by the exchange rate effects (from the weak yen) on raw materials purchasingin Japan, which is conducted in yen.
Q: Where do you see results for the year ending up, and what is your approach going into next
year and beyond? Will you be able to secure a profit this year by controlling costs?
A: As for this year’s results, we are not necessarily aiming to reach our targets through cost
reductions alone, but through overall control, which includes increasing gross profit throughtop-line growth, as part of measures under the first year of the medium-term management
plan. In addition, we are working to shift from the price-based promotion of low-end
products to the promotion of high-value-added products over the medium to long term. So,
if these efforts are successful, and raw material markets settle down, we think that our sales
promotion expense control measures will provide an advantage in the future.
Q: Next year, I believe you plan to launch new fabric care products and, in the spring, torelocate your head office. Could you give us an idea of what to expect in terms of the costsof these one-off factors?
A: We expect expenses next year to be concentrated in the first half, including an increase inpromotional costs associated with the new fabric care products and an estimated ¥500–¥600 million in one-off expenses due to the head office move. We also expect the impactof the rise in raw material prices to persist through the first half, so profit for the first andsecond halves could differ quite dramatically.

Disclaimer
The contents of this document comprise a summary of the views of the Company expressed during
the question and answer portion of a quarterly financial results conference call. This document does
not guarantee the accuracy or completeness of the information contained herein and is subject tochange without notice. Furthermore, forecasts, results projections and other forward-looking
statements are based on certain assumptions judged by the Company to be reasonable in light of
information available at the time of preparation and do not constitute promises or guarantees.
Please be advised that a wide range of factors may cause actual results to differ significantly fromthe forward-looking statements made herein.