Results Briefing for
The Six Months Ended July 31, 2017
September 5, 2017
(Securities code: 7956)

President & COO

Shigeru Yamashita© All rights reserved by PIGEON Corporation

Contents

Title, Contents

1-2

Business Results at July 31, 2017

3 - 16

Jan. 2018 Full-Year Performance Forecasts

17 - 20

Approach to Enhance Corporate Value

21 - 34© All rights reserved by PIGEON Corporation

Business Results at July 31, 2017

© All rights reserved by PIGEON Corporation

Financial Highlights（Consolidated）（millions of yen）

Jul. 2016
Results

Jul. 2017

YoY Change

Results

YoY Change

Net Sales

46,302

99.5％

49,048105.9%

Operating
Income7,777

100.6％

9,296

119.5%

Ordinary Income

7,671

97.4％

9,380

122.3%Net Income
Attributable to
Owners of Parent

5,545

105.0％

6,493

117.1%Net Assets

48,87096.3%

56,779116.2%

Total Assets

71,49493.7％

75,437105.5%EPS（¥）

46.30

105.0%

54.22

117.1%

BPS（¥）

398.71

96.3%

462.27115.9%

ROE＊

22.8％

―

24.1％

―

ROIC＊

19.5％

―

22.4％

―

*ROE = Net income ÷ Equity (in both cases, denominators are averaged between beginning and year-end figures)*ROIC: Return On Invested Capital (NOPAT/Capital Invested, calculated with a tax rate of 30%, Capital Invested is averaged between beginning and year© All end
rights reservedby PIGEON Corporation4
figures)Statement of Income (Consolidated)(millions of yen)Jul. 2016
Results% of Total

Jul. 2017
Results% of Total YoY Change

Remarks

46,302 100.0% 49,048 100.0%

105.9%

Cost of Sales

24,743

53.4% 25,277

51.5%

102.2% SG&A expenses

Gross Profit

21,559

46.6% 23,770

48.5%

110.3% Personal Expenses

SG&A Expenses

13,781

29.8% 14,474

29.5%

105.0% Sales Promotion

Net Sales

Operating
Income7,777

Non-Operating
Income(Expenses)(106)

Ordinary
IncomeExtraordinary
Income (Loss)Net Income
Attributable to Noncontrolling Interests
Net Income
Attributable to
Owners of Parent© All rights reserved by PIGEON Corporation

16.8%
―

9,296
83

19.0%
0.2%

■Main Changes in+ 106 million yen

119.5%―（merchandising）+ 185 million yen
Rents+ 100 million yen

Advertising122.3% + 60 million yen

7,671

16.6%

9,380

19.1%

52

0.1%

47

0.1%

89.1%

110

0.2%

110

0.2%

99.8%

5,545

12.0%

6,493

13.3%

117.1%
5

Net Sales by Business Segment (Consolidated)Jul. 2017

Jul. 2016(millions of yen)

Gross
MarginSegment
Profit(ADJ)

100.0%

46.6%

Results % of Total

Consolidated
46,302Net Sales

YoY
ChangeGross
MarginSegment
Profit7,777

49,048 100.0% 105.9%

48.5%

9,296

Results

% of
Total

Domestic
Baby &
Mother Care
Business

16,365

35.3%

46.3%

2,503

17,302

35.3% 105.7%

48.8%

3,058

Child Care
ServiceBusiness

3,652

7.9%

10.4%

80

3,759

7.7% 102.9%

10.0%

81

Health &Elder Care
Business

3,537

7.6%

31.7%

278

3,446

7.0%

97.4%

31.3%

244

Overseas
Business

11,079

23.9%

56.3%

2,346

12,043

24.6% 108.7%

56.1%

2,926

China
Business

13,741

29.7%

43.7%

3,779

15,19831.0% 110.6%

46.5%

4,414

Elimination ofinternal trading
betweensegments(2,722)(5.9%)――(3,355)(6.8%)

647

1.4%

15.7%

Other

84

653

―

1.3% 100.9%

―
12.9%

―
65

※ Starting from the current fiscal year, non-allocable operating expenses associated with the R&D Department, which had previously been included in the
Adjustments section, have been reflected in segment profit of each reportable segment. Accordingly, the figures for the same period of the previous year
have been adjusted in accordance with the calculation method after the above revision.
※ Segment profit on a consolidated basis has been adjusted (by deducting non-allocable operating expenses) to be equal to operating income in the
consolidated statement of income.
© All rights reserved by PIGEON Corporation
6※ Consolidated net sales have been presented after eliminating intersegment transactions of the Overseas Business and the China Business.

Overseas Business Sales by Region
China (incl. Hong Kong)

Other Asian Countries

North America

EuropeNear and Middle East

Other Regions（millions of yen）

Local Currency Basis: 117.8％

1,034
Jul. 201714,086

3,258

23,884

3,913
1,225 365

Local Currency Basis: 111.9％

1,356
Jul. 2016

12,445

3,215

1,140
0

5,000

10,00022,0973,478

15,00020,000460
25,000* [Currency Rates] Jul. 2017: US$1 = ¥112.33 1yuan = ¥16.38; Jul. 2016: US$1 = ¥111.69 1yuan = ¥17.05© All rights reserved by PIGEON Corporation

7

Key Priorities for FY Jan. 2018
 Domestic Baby & Mother Care BusinessStrengthening six key product categories
・ Implementing comprehensive measures against competing products
to sustain the present high market share in the nursing bottle/nipple
category
・ Implementing measures and making necessary investments tosustain the present high market share in the breast pump category
Implementing aggressive sales, marketing and investing activities toincrease the market share of the baby strollers and other large-sized
products (market share target: 16%)
Getting more involved in promotional activities to achieve collaboration
with healthcare professionals

 Child Care Service Business

Clarify the positioning of business and streamlining business operations leading to
improved profitability
Secure quality of child-rearing service by improving employee’s compensation and by
securing and training child-rearing staff
Further strengthening safety measures including reinforcement of crisis management

 Health & Elder Care Business

Achieving growth by streamlining and strengthening the sales and distribution network
Developing concepts and ideas of products to support the in-house care throughworking with professionals at care facilities
Improving profitability by more efficient business system© All rights reserved by PIGEON Corporation

8

Key Priorities for FY Jan. 2018
 Overseas and China Businesses(common issues)

Reinforcement of six key product categories
・ Further increasing the market share of thenursing bottles/nipples category
・ Implementing measures to expand the breast
pump category Overseas Business (except China)Aggressively expanding Lansinoh (particularly in the European
market) with improved profitability
Expanding business in India and improving profitability primarily
through improvement in capacity utilization rate
Exploring feasibility of entering new markets including countries inAfrica to achieve growth for the next MTBP period and onwards

 China Business

Sustaining the high growth rate by taking advantage of the
expansion of purchasing population
Rebuilding of sales/distribution system in response todevelopments in EC channel
Ensuring growth of the disposable diaper categories© All rights reserved by PIGEON Corporation＜China＞
E-Commerce9

Domestic Baby & Mother Care Business Status
 Baby related Large-sized products

Renewed and released the A-type baby stroller- “Runfee”
Newly released the B-type baby stroller- “Bingle”, and other models
Our share in the baby stroller market increased to a record high
17.4% (in July 2017)

 New products

Released “Petit Ice Cream for Babies,” the first-in-the-industry
homemade ice cream exclusively for babies;“Moisture Bodycare Cream” for pregnant women; and other products

 Direct communication

RunfeeBinglePregnancy information events: 9 events/600 participants
Seminars for heath care professionals: 10 events/1,000 participantsMarket share (1st half of FY2017)
70%

68%

67%
37%

No.1

No.1

Breast pads

© All rights reserved by PIGEON Corporation

33%

No.1
No.1

Nursingbottles

Major new products to be releasedin the fall of 2017 (2nd half of FY2017)

Breast
pumps

No.1

Baby
Baby wipes
skincare(cleaners)

Baby Milk Lotion
Moisture Plus

* According to POS Nationwide Drugstore Growth Estimates, INTAGE Inc. (monthly data).

Tablet U
Xylitol + Fluorine
10Child Care Service Business /Health & Elder Care Business Status
Child Care Service Business Pigeon HeartsNew additions of facilities under management:- Launched three in-company child-care facilities→ Total of 53 facilities (excluding those of the National Hospital Organization)

Health & Elder Care Business Pigeon TahiraReported strong sales of “Bottom Wipes” and a line of oral cavity nursing care products－
the main product categories
Strengthened activities to increase retail sales by conveying product benefits

 Pigeon ManakaExpanded local community-oriented day care services※Proposal Material by Sales Team

Conveying product benefits ofnursing care products© All rights reserved by PIGEON Corporation

New in-company child-care facilities
11

Overseas Business Status
 European and North American Markets
 North America:

Reported strong sales of electric breast pumps under distribution through the new channel.
Continued to gain top share in categories: nipple care cream, breast pad, breast milk storage bags.
 Europe:
Enjoyed a high capacity utilization rate at a new factory in Turkey that started production in
Jan 2017.
Continued to gain top share in Germany in categories: nipple care cream, breast pad and breast milkstorage bags.

 Asian markets
 India: Singapore:

Expanded a coverage of drug stores and improved a capacity utilization rate.
Strengthen brand power within the territory and increased sales of key category
products.
 Indonesia:
Arranged to make the company into a subsidiary (in November, 2017)
 Lansinoh China: Reported strong sales through EC channels,(which accounted for 87.4% in total sales)

Lansinoh Market Status

Market share (1st half of FY2017)
Germany

US

US

70.0%

82.1%
70.2%
No.1

No.1

40.9%

48.6%
No.1

20.5%

No.1

No.1

No.2
Nipple Care Breast Pads Breast Milk
CreamStorage
Bags© All rights reserved by PIGEON Corporation

Breastpumps(manual)Nipple Care

Breast Pads

37.4%

TurkeyNo.1
Breast Milk

CreamStorage Bags
* The percentages indicate the value share based on the research by Lansinoh.

12China Business Status About Product Sales

 Continued to report strong sales of key category products including nursing bottles/nipples,

pacifiers and breastfeeding-related products.
 New products: Released 31 SKUs of Disney series products (incl. nursing bottles, pacifiers andcups) in May.
 Increased sales of disposable diapers by continuing to run the in-store promotional campaign(across China) and strengthening sales through EC channels.
 Strengthened sales through EC channels, which accounted for 43% in total sales,(up 3 percentage points from the end of FY2016).

 Branding and breastfeeding awareness programs

 Further strengthened the branding activities by changing the design of Pigeon Corner to beconsistent with the Global Brand Style Guidelines.
 Promoted direct communications with consumers primarily through the web and SNS.
 Continued to implement the breastfeeding awareness program promoted jointly with the Ministryof Health of China primarily through establishing breastfeeding consultation offices, presenting at
academic conferences, and organizing child-rearing seminars.

In-store promotion for
disposable diapers© All rights reserved by PIGEON Corporation

Breastfeeding rooms in China
13

＜Ref.＞Consolidated Balance Sheet (Highlights)
Jan. 2017（millions of yen）

Results

Jul. 2017
Results

YoY Change(Amount)

YoY Change(%)

Cash and Deposits

30,052

25,577(4,474)85.1%

Notes and Accounts
Receivable

16,103

15,725

(377)

97.7%

Inventories

7,603

9,041

1,438

118.9%

Notes and Accounts
Payable

4,857

4,713

(144)

97.0%

Electronically Recorded
Obligations – Operating

1,693

2,150

457

127.0%

Borrowings

5,699

―

(5,699)―Net Assets

53,736

56,7793,042

105.7%

Total Assets

78,88975,437(3,451)

95.6%

Equity Ratio

66.4%

73.4%

―

7.0pt

© All rights reserved by PIGEON Corporation

14

<Ref.>Cash Flow(millions of yen)
5,712
6,110

(940)

(3,235)(887)(9,093)30,052(2,229)24,297(206)

25,57724,003Acquisition of PPE ： ¥ (899m)(Jul.2016 : ¥(1,361m)

Income before income taxes ：¥9,427m(Jul.2016 : ¥7,724m)
Decrease (increase)in trade receivables¥
174m（Jul.2016 : ¥ (3,246m))

Loan income/repayments:(Jul.2016:￥(5,674m)¥ (541m))

Payment of cash dividends :¥(3,355m)(Jul.2016 :¥(2,630m))

Jul. 2016

Jul. 2017

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Adjustm ent

Balance atEnd

Balance atBiginnig

Operating
Activities

Investing
Activities

Financing
Activities

Translation
Adjustm ent

Balance atEnd

24,297

6,110

▲ 940

▲ 3,235 ▲ 2,229

24,00330,052

5,712

▲ 887

▲ 9,093▲ 206

25,577© All rights reserved by PIGEON Corporation

15

<Ref.>Investment-Related Indicators (Consolidated)

FY Jan. 2017

FY Jan. 2018

（millions of yen）

Interim(Results)

Full Year(Results)

Interim(Results)

Full Year(Forecast)

Capital Investment
（※１）

1,250

2,498

1,252

3,700

Depreciation（※２）

1,191

2,357

1,206

2,400

Research andDevelopment（※３）

1,085

2,263

1,221

2,500

※１ Property, plant and equipment and intangible assets (including long-term prepaid expense)※２ Depreciation (including amortization of goodwill)※３ Total amount of expenses incurred for research and development activities including
personnel expenses© All rights reserved by PIGEON Corporation

16

FY Jan. 2018
Full-Year Performance Forecasts© All rights reserved by PIGEON Corporation

Jan. 2017 Results and Jan. 2018 Forecast (Consolidated)
FY Jan. 2017
（millions of yen）

Results

% of
Total

YoY
ChangeFY Jan. 2018 (Change of Forecast)
Plan

Forecast

% of
Total

YoY
Changevs Plan

Net Sales

94,640 100.0％ 102.6%

99,800101,200

100.0%

106.9%

101.4%

Operating
Income16,015

16.9％ 110.3%

17,00018,70018.5%

116.8%

110.0%

Ordinary
Income16,462

17.4％ 109.2%

17,00018,60018.4%

113.0%

109.4%Net Income
Attributable to
Owners of
Parent11,118

11.8％ 109.0%

11,80013,00012.9%

116.9%

110.2%Net Assets

53,736―105.8%

58,83061,171－113.8%

104.0%

Total Assets

78,889―106.7%

78,984

82,147－104.1%

104.0%EPS (¥)

92.84―

109.2%

98.53

108.55－116.9%

110.2%BPS (¥)

437.43―105.7%

479.12498.66－114.0%

104.1%

ROE＊

21.8%

―

―

21.5%

23.2％

－

－

－

ROIC＊

19.2%

―

―

19.9%

21.7％

－

－

－

*ROE = Net income ÷ Equity (in both cases, denominators are averaged between beginning and year-end figures)*ROIC: Return On Invested Capital (NOPAT/Capital Invested, calculated with a tax rate of 30%, Capital Invested is averaged between beginning and year-end figures)© All rights reserved by PIGEON Corporation

18

Results and Forecast by Segment (Consolidated)
FY Jan. 2017
（millions of yen）

Gross
MarginFY Jan. 2018 (Change of Forecast)
Segment Profit
(ADJ)

% of
Total

YoY
ChangeGross
MarginSegment
ProfitResults% of Total

Consolidated
Net Sales

94,640100.0%

47.2% 16,015

101,200 100.0% 106.9% 48.4% 18,700

Domestic
Baby &
Mother Care
Business

31,823

33.6%

47.0%

4,818

33,74733.4% 106.1% 48.9%

6,056

Child Care
ServiceBusiness

7,393

7.8%

10.6%

211

7,485

7.4% 101.2% 10.4%

223

Health &Elder Care
Business

6,901

7.3%

31.4%

445

7,100

7.0% 102.9% 31.2%

447

Overseas
Business

23,051

24.4%

55.6%

4,861

24,644

24.4% 106.9% 56.2%

5,357

China
Business

30,533

32.3%

44.6%

8,355

33,925

33.5% 111.1% 46.0%

9,480

Elimination ofInternal Trading
BetweenSegments(6,337)(6.7%)――(6,677) (6.6%)

Other

1,273

1.3%

15.6%

162

Results

974

1.0%

―

―

76.5% 15.7%―
114※ Starting from the current fiscal year, non-allocable operating expenses associated with the R&D Department, which had previously been included in the
Adjustments section, have been reflected in segment profit of each reportable segment. Accordingly, the figures for the same period of the previous year
have been adjusted in accordance with the calculation method after the above revision.
※ Segment profit on a consolidated basis has been adjusted (by deducting non-allocable operating expenses) to be equal to operating income in the
consolidated statement of income.
© All rights reserved by PIGEON Corporation
19※ Consolidated net sales have been presented after eliminating intersegment transactions of the Overseas Business and the China Business.

Shareholder Return and Investment-Related Indicators
Shareholder return indicator under our 6th Medium-Term Business Plan
We adopt a flexible approach (incl. through share buybacks) to increasing shareholder return with atarget to achieve a year-on-year increase in dividends and approximately 55% of the consolidated
total shareholder return ratio in each fiscal year.

Dividends
Dividend per
Share (yen)FY Jan. 2015

FY Jan. 2016

Interim(Actual)Year-end(Actual)Interim(Actual)Year-end(Actual)

45

60

（15）

（20）

20

22

Dividend
Payout
Ratio

49.6%

FY Jan. 2017
Interim(Actual)25

FY Jan. 2018

Year-end(Actual)28(including(includingcommemorative
commemorative
dividend of 3 yen) dividend of 3 yen)

49.3%

Interim(Plan)

Year-end(Estimate)

31

31

57.1%

57.1%

* Our Group carried out a 2-for-1 stock split with respect to its common stock, effective as of August 1, 2013. It also carried out a
3-for-1 stock split with respect to its common stock, effective as of May 1, 2015. The values given in the parentheses for dividend
per share above are reference values converted based on the number of shares after the stock split.

<Reference> Investment-related indicators
FY Jan. 2016
（millions of yen）

Interim(Actual)Full-year(Actual)FY Jan. 2017
Interim(Actual)Full-year(Actual)FY Jan. 2018
Interim(Actual)Full-year(Forecast)

CapitalExpenditures (※1)

1,773

3,036

1,250

2,498

1,252

3,700

Depreciation (※2)

1,216

2,474

1,191

2,357

1,206

2,400

© All rights reserved by PIGEON Corporation※1※2

Property, plant and equipment and intangible assets (including long-term prepaid expense)
Depreciation (including amortization of goodwill)

20

Approach to Enhance Corporate Value© All rights reserved by PIGEON Corporation

6th Medium-term Business Plan: 12 tasks
ESG

Global sharingof corporate
philosophy &valuesWorld-classbrand power

Sustainable growth
Logical work
process

World-class Business
Excellence
Salaryincrease

Global humanresource
development© All rights reserved by PIGEON Corporation

Nurture employees’ motivation, satisfaction,
confidence, sense of pride and belonging to
the company

Diversity/
women inmanagement

Global SCM

Development
capabilities

Businessmodel forsuccess

Cash flow
management(PVA)

Global cash
management※SCM: Supply Chain Management

22

PVA Tree: Consolidated Results in Jul. 2017
Consolidated

Net sales

Operating profit

Top: Jan. 2018 2Q Plan
Mid: Jan. 2018 2Q Results
Bottom: Jan. 2017 2Q Results(\millions)NOPAT
2Q Plan 5,579

2Q Plan 7,970

2Q Results 9,296
LY 2Q

2Q Results 6,508
LY 2Q

2Q Plan 47,955

5,444

2Q Results 49,049

7,778

LY 2Q

Cost of sales

Tax
2Q Plan 2,391

2Q Plan 24,939

2Q Results 2,789
LY 2Q

PVA
2Q Plan
2Q Results
LY 2Q

4,088

5,055

4,049

Capital invested
2Q Plan 59,633

2Q Results 58,108
LY 2Q

55,795(Reference)
Capital invested 2Q
2Q Plan 29,817

2Q Results 29,054
LY 2Q

2Q Plan 17,613

2Q Results 17,529
LY 2Q

common 5.0%

16,805

LY 2Q

Trade receivables
2Q Plan 15,600

2Q Results 15,914
LY 2Q

14,556

Fixed asset

Inventory asset

2Q Plan 24,981

2Q Plan 8,267

2Q Results 23,495
LY 2Q

27,897WACC

2Q Results 25,278

2,333

Working capital

23,933

Cash and otherasset and liability

2Q Plan 17,039

2Q Results 17,084
LY 2Q

15,05646,303

2Q Results 8,323
LY 2Q

8,260

Trade payables
2Q Plan 6,254

2Q Results 6,708
LY 2Q

6,011

24,744

SG&A expenses
2Q Plan 15,046

2Q Results 14,474
LY 2Q

13,781

（参考）

研究開発費
見込 0
前期 0

発送費
見込 0
前期 0

※For PVA calculation, B/S Factors are averaged between beginning and year-end figures, and adjusted into 1/2.
© All rights reserved by PIGEON Corporation

23

PVA (Ratio): Consolidated Results in Jul. 2017
Consolidated
Top: Jan. 2018 2Q Plan
Mid: Jan. 2018 2Q Results
Bottom: Jan. 2017 2Q Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC
PVA
spread2Q Plan
2Q Results
LY 2Q

2Q Plan
2Q Results
LY 2Q

18.7%

22.4%

2Q Plan
2Q Results
LY 2Q

26.7%

32.0%

2Q Plan
2Q Results
LY 2Q

16.6%

19.0%
16.8%

27.9%

2Q Plan
2Q Results
LY 2Q

51.5%
53.4%

SG&A expenses ratio
2Q Plan
2Q Results
LY 2Q

19.5%

52.0%

31.4%

29.5%
29.8%

Working capital ratio

13.7%
17.4%
14.5%

Capital invested t/otax rate
WACC
common5.0%

common30.0%

2Q Plan
2Q Results
LY 2Q

2Q Plan
2Q Results
LY 2Q

1.6

1.7
1.7

18.4%

17.9%
18.1%

Fixed asset ratio
2Q Plan
2Q Results
LY 2Q

26.0%

24.0%
25.8%

Cash and otherasset and liability ratio

2Q Plan
2Q Results
LY 2Q© All rights reserved by PIGEON Corporation

17.8%

17.4%
16.3%

24

CCC Tree: Consolidated Results in Jul. 2017
Consolidated
Top: Jan. 2018 2Q Plan
Mid: Jan. 2018 2Q Results
Bottom: Jan. 2017 2Q Results(\millions)

Working capital
2Q Plan 17,613

2Q Results 17,529
LY 2Q

16,805CCC

Trade receivables
2Q Plan 15,600

2Q Results 15,914
LY 2Q

14,556

2Q Plan
2Q Results
LY 2Q

74.1
70.9
74.0

Receivable turnover period
2Q Plan
2Q Results
LY 2Q

59.4
59.2
57.4

Inventory asset

Inventory turnover period

2Q Plan 8,267

2Q Plan

2Q Results 8,323
LY 2Q

8,260

Trade payables
2Q Plan 6,254

2Q Results 6,708
LY 2Q

6,011

60.5
60.1
60.9

2Q Results
LY 2Q

Payables turnover period
2Q Plan
2Q Results
LY 2Q

45.8
48.4
44.3

※For CCC calculation, B/S Factors are averaged between beginning and year-end figures, and adjusted into 1/2.
© All rights reserved by PIGEON Corporation

25

Appendix© All rights reserved by PIGEON Corporation

6th Medium-term Business Plan: 12 tasks
ESG

Global sharingof corporate
philosophy &valuesWorld-classbrand power

Sustainable growth
Logical work
process

World-class Business
Excellence
Salaryincrease

Global humanresource
development© All rights reserved by PIGEON Corporation

Nurture employees’ motivation, satisfaction,
confidence, sense of pride and belonging to
the company

Diversity/
women inmanagement

Global SCM

Development
capabilities

Businessmodel forsuccess

Cash flow
management(PVA)

Global cash
management※SCM: Supply Chain Management

27

ESG
Brief Explanation© All rights reserved by PIGEON Corporation

12 Tasks of the 6th Medium-Term Business Plan: ESG (Environment)
Carbon Dioxide Reduction and Electricity Savings
Environment We have strengthened our system for managing carbon dioxide emission

ClimateChange© All rights reserved by PIGEON Corporation

reductions and electricity savings. Specifically, we have established a consistentGroupwide method for calculating the volume of greenhouse gas emission, which
had previously been addressed by each of our factories at its own responsibility.
At our Chinese production facilities, though on a small scale, we are working tomaximize solar and wind power generation while using paint containing
photocatalytic paints, under the theme of “environmentally friendly factories,”
and we are promoting all-LED lighting to save electricity.

29

12 Tasks of the 6th Medium-Term Business Plan: ESG (Social)
Child-Rearing Support Activities

SocialWe provide support to establish “breastfeeding &pumping rooms” in companies and otherlocations around the world, with the aim ofhelping female employees rear their children. Asof May 2017, we provided such support for over
5,000 rooms in 15 countries around the world.

Breastfeeding roomin the Philippines

Elementary School Building Donations

Local
Activities© All rights reserved by PIGEON Corporation

In China, we have been building schools named
Pigeon Hope Elementary School to donate themto areas with inadequate educational
infrastructure. We have been making such
donations at the pace of one building per year,
and have so far donated nine elementary schools
including those under construction. Our project ishighly recognized and awarded by thegovernment. We also maintain networking withteachers and pupils of the Pigeon Hope
Elementary Schools.

Breastfeeding room
in Panama30

12 Tasks of the 6th Medium-Term Business Plan: ESG (Social)
Newborn Baby Commemorative Tree-Planting Campaign

SocialFor over 30 years, we have continuously held our annual Newborn Baby
Commemorative Tree-Planting Campaign, providing parents with lifelong
memories of their babies’ birth. Being a forest conservation initiative, thecampaign also contributes in a small way to educational awareness about
environmental protection. We have so far planted more than 130,000
seedlings on 42.65 hectares of both national forest and private land (morethan 8 times as large as Tokyo Dome). In the national forest portion,
covering 25.37 hectares, the “green dam” benefits equate to storage andpurification of 5.71 million two-liter PET bottles.

Local
Activities© All rights reserved by PIGEON Corporation31

12 Tasks of the 6th Medium-Term Business Plan: ESG (Social)
Supporting Women During Breastfeeding Stage

SocialLocal
Activities

We have launched the Pigeon Smile Breastfeeding Period
Research Group in collaboration with various experts on
mothers and babies during breastfeeding, with the aim ofidentifying issues they face during the breastfeeding stage andexploring solutions. Every year we distribute about 100
thousand copies of Shiawase (Happy) Breastfeeding Support
Book, a free-of-charge publication that summarizes the five
most important points about breastfeeding.

Providing Scholarships to Students
We operate the Pigeon Scholarship Foundation, a public
interest incorporated foundation, to award a nonrepayable scholarship to students in the neonatal,
pediatric, and obstetrics departments of universities.

Strengthening Support for
Advancement of Women.

Human
Capital© All rights reserved by PIGEON Corporation

We are also concentrating on fostering
female managerial staff, with the aim ofraising the current female manager ratio of
19.7%.

32

12 Tasks of the 6th Medium-Term Business Plan: ESG (Governance)
Number of meetings heldwith institutional investors

Engagement with Investors

Governance

We will further strengthen “a framework
for transparent, fair, swift, and resolutedecision-making” to continuously expand
our business with an aim to increase ourcorporate value through the engagement,or purposeful dialogue, with investors.

151

Jan/2016

162

Jan/2016

179

177

Jan/2017

Jan/2017

193

Jan/2018

First Half Second Half First Half Second Half First Half

Top Management Conference
We regularly convene top management
conference comprising directors andmanaging officers to discuss with external
lecturers what we need to continuously
grow our business on a global scale andperpetuate the company.

© All rights reserved by PIGEON Corporation

33

Our Definition of Corporate Value
Social Value

Economic Value

To be indispensable for thesociety and our customers

Sum of present values of
future free cash flows

Provision of solutions
and new values

Free cash flows= NOPAT + Depreciation- Investments- Incremental working capital

Corporate philosophy
shared by all employees andother stakeholders
Development capabilities andbrand power

Business models andcompetitive advantages
that are hard to copy

Competency of each employee

Marketing capabilities

Reduction of our environmental
impact and contribution tosociety in the fields other thanour own business

KPIs (PVA, CCC, ROE, ROIC)
and actions for theirimprovement© All rights reserved by PIGEON Corporation

34

Corporate Overview

Head Office
4-4, Nihonbashi-Hisamatsucho, Chuo-ku, Tokyo
103-8480, Japan

URL http://www.pigeon.co.jp/
http://www.pigeon.com/

Disclaimer on Forward-Looking Statements
This material includes certain forward-looking statements about the Pigeon Group. To
the extent that statements in this material do not related to historical or current facts,
they constitute forward-looking statements.
These forward-looking statements are based on the current assumptions andjudgments of the Pigeon Group in light of the information currently available to it, andinvolve know and unknown risks, uncertainties and other factors, which may affect thestatements made in this material.

© All rights reserved by PIGEON Corporation

35