November 5, 2021
Lion Corporation

Analyst Q&A (Summary)Nine Months Ended September 30, 2021
Business Performance
Q: How did sales and profit in the third quarter (July–September) compare with plans?
A: Net sales were slightly lower than planned, reflecting slow recovery in Southeast Asia andrecoil from strong hand soap sales in the previous year, but were still more or less on parwith plans, overall. Core operating income was also within the range of our assumptions.
Q: How did the major product categories of the Consumer Products segment fare in the thirdquarter?
A: On a total net sales basis, oral care products continued to see growth of about 5%. Salesof toothbrushes recovered, which we believe is partly due to marketing focusing on thinhead models. Sales of beauty care products gradually bottomed out and recovered to morethan 80% of the levels in the same period of the previous fiscal year. The mainstay handsoap market has held steady at around 1.4 times its size in 2019. Sales of fabric careproducts in the third quarter were down around 5% year on year, as sales of regular liquid
laundry detergents decreased. Living care products saw strong sales growth, bolstered by
the launch of a new toilet cleaner product as well as ongoing double-digit sales growth for
LOOK Plus Bath Cleansing and LOOK Plus Bath Antimold Fogger. Looking at
pharmaceutical products, although sales of antipyretic analgesics have quieted down, thecategory saw year-on-year sales growth of about 2%.
Q: I understand that the decrease in profit in the third quarter was due to changes in sales andthe product mix, but could you give us a little more detail?
A: In the third quarter, higher sales bolstered profit by several hundred million yen. On theother hand, negative factors affecting profit included changes in the product mix—
particularly as sales of highly profitable beauty products declined year on year even as
those of industrial products rose—as well as an increase in depreciation due to the start ofoperations at the new toothpaste factory in Sakaide City, Kagawa Prefecture.
Q: Could you tell us more about third-quarter results by country in the Overseas business?
A: In the Overseas business, third-quarter sales to external customers were up 3.9% year onyear.
In Southeast Asia, weak consumption due to the COVID-19 pandemic negatively affected
results in Thailand. In Malaysia, despite challenging market conditions, we achieved a yearon-year increase in sales on a local currency basis and have been successful in assertinga strong market presence. In laundry detergents, we have taken steps in response tocircumstances in each country. Also, oral care product sales grew in Malaysia.

Turning to Northeast Asia, third-quarter growth in China was below 10%. This was mainlydue to adjustments to distribution inventories made in the third quarter to resolve productbacklogs resulting from lower-than-expected sales during the 618 online shopping festival,
reflecting market stagnation in China. However, brick-and-mortar sales were up by 50%
year on year. In the fourth quarter (October–December), which includes the Double 11
online shopping festival, we are working to achieve further growth in e-commerce sales aswell as growth in brick-and-mortar sales. In South Korea, demand for hygiene products has
settled down and the laundry detergent market contracted, reflecting stagnant consumption
stemming from the pandemic. Nevertheless, net sales to external customers in South Korea(at constant currency excluding exchange rate fluctuations) saw a turnaround, with a yearon-year increase in the third quarter that we expect to continue in the fourth quarter.
Forecasts
Q: What do you expect to be the full-year impact of raw material cost increases? How will you
absorb these increases?
A: In August, we estimated the full-year impact at ¥2.4 billion, but the impact in just the thirdquarter came to ¥1.2 billion, and we expect it to be about the same in the fourth quarter. Toachieve our profit plan, we aim to absorb this impact by reducing costs, adjusting theproduct mix and streamlining competition-related expenses, among other measures.
Q: In terms of total cost reduction, where and to what extent do you see room for cuts goingforward?
A: One area is in further optimizing inventories to reduce freight and storage expenses andlogistics costs. Also, over the course of the year we have been making major investments
in core systems. We expect these systems to help improve operational efficiency and, withregard to the handling of raw materials, contribute to rationalization, process simplificationand labor saving.
Q: Can you not pass along higher material costs by raising product prices?
A: In toiletries, it would be difficult to pass along costs by simply raising prices. We areconsidering raising prices in conjunction with product renewals that offer additional added
value or by revising product volumes. Ultimately, customers’ willingness to buy our products
determines where we can set prices; we cannot just raise prices across the board toaccommodate our needs as a manufacturer. This is true both in Japan and overseas.
Q: Could you tell us about your profit plan for 2022?
A: We are still drawing up our plans for next year, including the new medium-term management
plan. However, we see the period leading up to 2024 as one for forward-looking investment
aimed at achieving the targets of Vision 2030. Of course, depreciation will rise in step withinvestment, so rather than aiming for rapid profit growth, we will be prioritizing increasing
the top line and our market presence as we focus on securing EBITDA, which includes bothearnings and depreciation. Although recent rises in raw material costs have been greaterthan anticipated, to absorb costs we will enhance total cost reductions and implement cost

cutting measures ahead of and beyond what is scheduled. By doing so, we will change theoverall expense structure over the coming three years.

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 thetime 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
from the forward-looking statements made herein.