Updated on Feb 12, 2021

Financial Results of FY Dec. 2020
(64th Fiscal Year)（Securities Code：7956）

Norimasa Kitazawa
President and CEO
February 10, 2021

FY Dec. 20 (FY64)
・Highlights

P. ２ - ６

・Business Plan for FY Dec. 2021

P. 20 - 27

・Results for FY Dec. 2020

・Revision of the 7th Mid-term Business Plan

・ESG Initiatives

AgendaP. ７ - 19

P. 28 - 35
P. 36 - 38

Highlights

Highlights: 7th Mid-term Business Plan / Regional Strategy*Sales and marketing activities of baby strollers and baby slings for the Japanesemarket have been in progress even amid the COVID-19 pandemic.
New initiatives such as new category development and premiumization helped thegrowth despite a low birth rate.

“nautR” launched in Oct. 2020
Our first premium model with a price of over 70,000yen Successful cultivation of the premium market byachieving the debut of our baby strollers indepartment stores. Favorable sales.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential“caboo,” a baby sling originally developed in the U.K.,
featuring a gentle fit and a high position
 With more time spending at home under the pandemic,
proposing a new approach: “Carrying your baby athome.”
 Winner of the Parenting Award 2020 as a hot childrearing product* Regional strategy: Developing and implementing agilely a cycle of “Development, production andsales” that fits market characteristics and consumer preference3

Highlights: Support for Human Milk BanksThe “Nihonbashi Human Breast Milk Bank” was opened on the first floor of ourheadquarters in Tokyo as the second such facility in Japan.
This initiative was awarded in the ESG Investment category of the Tokyo Financial
Award 2020 hosted by the Tokyo Metropolitan Government.

Approx.

6 times

Increase in the capacity to pasteurize
human milk with the opening of thesecond facility

Estimated reach*

12.8 million

162 babies
Received donor milk

(2-facility total: Sept. through Dec, 2020)

Social media exposure of our support
activities incl. donation through our
products*(compared with that of the Toyosu Human Milk Bank)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential* Estimated reach is calculated based on the number offollowers. (based on a research by Pigeon as of Nov. 9, 2020) 4

Highlights: Support for Human Milk Banks
Enhancing social value in tandem with economic value
will lead to the achievement of our purpose.
EnhancingSocialValue

Save the lives of premature babies
 Contribute to raising awareness about human milk banksGained No. 1 share in the 2020 nursing pads market
during a donation campaign
 Chosen by more consumers who bought into this support
initiativeEnhancing
Economic
Value[Consumer feedback on social media]
 As my baby received support from a human milk bank, I want to do what little I can
by purchasing Pigeon products.
 I want to buy products from a manufacturer mindful of its philosophy like Pigeon.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

5

Purpose

Our reason for being and the role we should play in society

We want to make the world morebaby-friendly byfurthering our commitment
to understanding and addressing babies’
unique needs©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

6Results for FY Dec. 2020

Results (Consolidated PL, 11 months for Japan Domestic*)（Unit: Million JPY）

FY Dec. 2019(11 months for Japan Dom.)

Actual% of total

Currency-Neutralbasis

FY Dec. 2020
Actual% of total

YoY Change YoY Change

100,017100.0%

99,380100.0%

99.4%

Cost of Sales

49,21649.2%

49,45949.8%

100.5%

Gross Profit

50,80050.8%

49,921

50.2%

98.3%

SG&A expenses

33,72733.7%

34,60534.8%

102.6%

Operating Income

17,072

17.1%

15,316

15.4%

89.7%

Ordinary Income

17,28417.3%

16,113

16.2%

93.2%

Net Income Attributableto Owners of Parent

11,538

11.5%

10,643

10.7%

92.2%

Net Sales*The fiscal period has changed from the year ending January 31©Pigeon Corporation All Rights Reserved. │ Strictly Confidential
tothe year ending December 31 since FY Dec. 2019 (FY 63)[Currency Rates]
Dec. 2020 (FY 64) Actual：US$1 = JPY 106.77
Dec. 2019 (FY 63) Actual：US$1 = JPY 109.02

100.6%

99.1%

94.0%

CNY 1 = JPY 15.47
CNY 1 = JPY 15.77

8

Results (Consolidated PL, 12-month Adjusted for Japan Domestic)（Unit: Million JPY）

FY Dec. 2019(12-month Adjusted for Japan)

Actual% of total

Currency-Neutralbasis

FY Dec. 2020
Actual% of total

YoY Change YoY Change

103,513100.0%

99,380100.0%

96.0%

Cost of Sales

51,09649.4%

49,459

49.8%

96.8%

Gross Profit

52,41850.6%

49,921

50.2%

95.2%

SG&A expenses

35,20534.0%

34,605

34.8%

98.3%

Operating Income

17,213

16.6%

15,316

15.4%

89.0%

Ordinary Income

17,36616.8%

16,113

16.2%

92.8%

Net Income Attributableto Owners of Parent

11,593

11.2%

10,643

10.7%

91.8%

Net Sales©Pigeon Corporation All Rights Reserved. │ Strictly Confidential[Currency Rates]
Dec. 2020 (FY 64) Actual：US$1 = JPY 106.77
Dec. 2019 (FY 63) Actual：US$1 = JPY 109.02

97.2%

96.1%

93.6%

CNY 1 = JPY 15.47
CNY 1 = JPY 15.77

9

Results (Net Sales by Business Segment, 12-month Adjusted for Japan)

Overseas Sales Ratio : 57.6%（56.0% FY Dec. 2019*）

FY Dec. 2019

(Unit: Million JPY)

% of
Total

Gross
MarginSegment
Profit103,513 100%

50.6%

17,213 99,380

ActualConsolidated
Net Sales

FY Dec. 2020(12-month Adjusted for Japan)
Actual

% of
Total

YoY
Change100% 96.0%

Gross
MarginSegment
Profit50.2%

15,316

Japan Business

48,421

46.8%

40.0%

4,311

44,977

45.3%

92.9%

39.5%

3,008

China Business

37,306

36.0%

54.2%

12,68737,73238.0%

101.1%

54.3%

12,600Singapore
Business

13,600

13.1%

37.8%

2,064

12,184

12.3%

89.6%

38.4%

1,647

LansinohBusiness**

13,207

12.8%

58.2%

1,741

12,473

12.6%

94.4%

55.6%

1,370

Elimination of InterSegment Transactions(9,022)(8.7%)－－(7,986)(8.0%)－－－*12 months adjusted for Japan（Estimated）**The Lansinoh business has a different revenue recognition standard of the earnings between FY Dec. 2020 and FY Dec. 2019. Under the new standard in©PigeonCorporation
Rights Reserved.
│ Strictly Confidential
FY Dec.
2020,All
rebates,
incentives,and other expenses that were previously recorded in SG&A expenses are now deductible from sales in this fiscal year.

10Summary of Results by Business Segment (Net Sales in Local Currency)

Japan

Loss of demand from inbound travelers affected the Domestic Baby & Mother
Care Business.

China

COVID-19 affected the only during Q1. In mainland China, net sales grew year
on year driven mainly by e-commerce sales.

Business

Business

Singapore
Business

LansinohBusiness

Net sales YoY in each of the former business segments: Domestic Baby and Mother Care: 91.9%;
Child Care Service: 94.1%; Health and Elder Care: 105.2%

Net sales YoY in mainland China: 106.7%<Ref.> E-commerce sales accounted for 62.5% of total sales. (53.6%, Dec. 2019)

Net sales increased slightly in Singapore domestic, although the business
was affected by lockdown in some countries.
Net sales YoY in Singapore domestic: 103.0% (including 98.2% for the export business)
India: 78.0%; Malaysia: 91.7%

Net sales grew year on year, driven by e-commerce sales in the U.S. andEuropean countries where COVID-19 remains rampant.
Net sales YoY under the same revenue recognition standard:Lansinoh Business: 104.6% (including 108.3% for North America)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

11Pigeon

Sales by Regions* (Dec. 20 / YoY / Local Currency)

+7%

-4%

（Middle East）

+9%

-22%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

-9 %

-8 %
*：Sell-In (Local Currency)（Baby & Mother Care）

-13%

+44%
12

Lansinoh

Sales by Regions* (Dec. 20 / YoY / Local Currency)

+11%

+21%
+8%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

+9%

+10%

*：Sell-In (Local Currency)

+15%

-17%

13

Consolidated Results

Consolidated

Even amid unprecedently challenging business conditions, Pigeon recorded only aminimal decline in net sales year on year, underpinned by our brand power andstrength as a “Total baby care products brand”
Achievements / Points to be evaluated positively• The Group has reaffirmed that the demand for baby goods remains solid and our brand is resilient in the face of an
unexpected crisis.
• Sales and market shares of our mainstay products, including nursing bottles, expanded in many regions.
• Even amid the COVID-19 crisis, sales of the China and Lansinoh businesses grew, driven by ecommerce sales.
• Our strength as a “Total baby care products brand” helped ease sales declines in a wide range of products.

Challenges / Targets unachieved• The Group missed its earnings targets in the very first year of the 7th Medium-Term Business Plan.
• Sales stagnated in Japan and South East Asia where the ratio of e-commerce sales is relatively small.
• Development of new products has delayed due to COVID-19.
• COVID-19 has evidently revealed that the growth of the Japan Business is structurally dependent on demand frominbound travelers.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

14

Summary of Results by Business Segment

Japan Business

The Pigeon brand has maintained its outright leading position in Japan, despite lossof demand from inbound travelers.
• Sales of nursing bottles and skincare products, which are high-margin and popular among inbound travelers,declined significantly.
• The market share of nursing bottles expanded to 86%*, and those of other core products also expanded further.
• Special demand for consumables amid COVID-19 helped partially offset the decline in sales to inbound travelers(thanks to our strength as a Total baby care products brand).
• Sales of outing goods, such as baby strollers, struggled (as the baby stroller market itself shrank 19% year on year).
• Although e-commerce sales account for only 9% of overall sales, the segment will strengthen digital marketing todrive e-commerce sales.

86%

Market share ofnursing bottles*(Q4 2020)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Implemented consumer participation-type sales
campaign on social media and marketed onlineexclusive products in our official online store▲ Pigeon's strengths lie in its ability to provide diverse contents
focused on a range of themes, such as fun and specialty, thereby
providing total solutions to support baby care.

*: Based on a research by Pigeon (the average of 12 months in 2020; POS Nationwide Drugstore Growth Estimates, INTAGE Inc.)

15

Summary of Results by Business Segment

China Business

Sales grew strongly even amid COVID-19 crisis, led by sales growth in e-commercechannels.
• During the Double Eleven campaign period in November, overall e-commerce sales grew 20% year on year. Pigeon's nursing
bottles/related goods and skincare products marked the largest sales at JD.
• Sales of nursing bottles, skincare products and oral care products (core products) grew 20% year on year, and the market share ofnursing bottles reached 44%.
• While online sales increased 24% year on year, offline sales were down 14% year on year. Offline sales have continued to dwindle.
• Both online and offline markets have become more competitive. Recently, the competition has been increasingly fierce, fueled byharsher price competition.
• Business in mainland China has been growing steadily, but exports to neighboring nations have stalled amid the COVID-19 crisis.

44

63

Market share ofnursing bottles*(Q4 2020)

Ratio of sales via
e-commerce channels(Q4 2020 / sell-out)%©Pigeon Corporation All Rights Reserved. │ Strictly Confidential%*: Based on a research by Pigeon (sell-out / value basis)▲ Pigeon has rolled out many high added-value products,
such as products available exclusively on e-commercechannels, products themed on new concepts, and special
versions of existing products.

16

Summary of Results by Business Segment

Singapore BusinessAll kinds of activities delayed due to lockdowns, but the rate of sales decline was as
small as 10%.
• In Malaysia and India, our local offices and factory were closed for more than eight weeks.
• Loss of demand from inbound travelers in Japan affected the earnings of factories in Thailand (manufacturing nursing
bottles), driving down both sales and profits.
• Temporary or permanent closure of retail stores affected earnings of this business segment, as offline sales (atphysical stores) account for most sales in many markets.
• Important activities, such as breastfeeding seminars, have swiftly shifted online.
• The segment has enhanced its digital marketing resources towards driving sales via e-commerce channels.

▲ Transformed into a completely new brand styleand enhanced original content in each country©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Also worked on a range of activities torecover sales in India and Malaysia▲ Started activities to recycle plastic nursing bottles in
Singapore. Recycled a total of about 9,000 bottles in
2020. Plan to start the recycling in neighboring
nations going forward.

17

Summary of Results by Business Segment

Lansinoh BusinessOverall sales of the segment grew year on year, driven by sales in North America,
one of the regions hardest-hit by COVID-19.
• On a local currency basis, sales grew in all regions except China. In North America, sales grew 8% year on year.
• Lansinoh products are categorized as “Essential supplies" by major EC platform. Our products are placed priority on
this category, and this helped Lansinoh to smoothly deliver its products to customers even amid the COVID-19
pandemic.
• Nipple cream and breast pumps recorded strong sales in the U.S. The market share* of nipple cream expanded
further to 76%.
• Logistics costs surged towards the end of the year due to the second wave of COVID-19, but Lansinoh stocked up on
its products in Q3 to prevent stockout.
• E-commerce sales account for 35% of overall sales in the U.S. (30% last year)#1Market share of mainstay
products in the U.S. *©Pigeon Corporation All Rights Reserved. │ Strictly Confidential★4.7▲ Lansinoh created its brand page for major EC
platform to effectively showcase the attractivenessof its products and its brand value.
*: Based on a research by Pigeon (December 2020 IRI MULO Report, value basis)▲ Lansinoh's Organic Nipple Balm is rated 4.7/5 on
the biggest EC platform, with the number ofcustomer reviews exceeding 5,600.

18

Consolidated Balance Sheet
End of FY Dec. 2019
(Unit: Million JPY)

(11 months for Japan)

ActualEnd of FY Dec. 2020
ActualYoY Change(Amount)

YoY Change(%)

Cash and deposits

32,416

37,163+ 4,747114.6%

Notes and Accounts Receivable Trade

16,58815,085(1,502)

90.9%

Inventories

11,211

11,376+ 164

101.5%

Notes and Accounts Payable - Trade

4,900

4,757

(142)

97.1%

Electronically Recorded Obligations- Operating

2,009

1,670

(338)

83.1%

Net Assets

70,46372,625+ 2,162103.1%

Total Assets

90,491

93,472+ 2,980103.3%

Equity Ratio

74.8%

74.8%

Borrowings©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

ー

ー

ー

ー

ー

ー

19

Business Plan for FY Dec., 2021
(65th Fiscal Year)

Business Plan for Dec. 2021 (Consolidated PL)(Unit: Million JPY)FY Dec. 2020

FY Dec. 2021

Actual% of total% of total

YoY Change

Net Sales

99,380100.0%

106,500

100.0%

107.2%

Cost of Sales

49,45949.8%

51,30048.2%

103.7%

Gross Profit

49,921

50.2%

55,20051.8%

110.6%

SG&A Expenses

34,60534.8%

38,50036.2%

111.3%

Operating Income

15,31615.4%

16,70015.7%

109.0%

798

0.8%

0

0.0%

0.0%

16,11316.2%

16,70015.7%

103.6%(277)(0.3%)

0

0.0%

0.0%

Net Income Attributable toNon-controlling Interests

216

0.2%

200

0.2%

92.6%

Net Income Attributable to
Owners of Parent

10,643

10.7%

11,10010.4%

104.3%

Non-operating Income(Expenses)

Ordinary Income
Extraordinary Income(Losses)[Currency Rates]
Dec. 2021 (FY 65) Budget：US$1 = JPY 104.00©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

CNY 1 = JPY 16.00⇐

BudgetDec. 2020 (FY 64) Actual：US$1 = JPY 106.77

CNY 1 = JPY 15.47

21

Business Plan for Dec. 2021 (Net Sales by Business Segment)
FY Dec. 2020
(Unit: Million JPY)

Consolidated
Net Sales

Actual% of
Total

99,380 100.0%

Gross
MarginFY Dec. 2021
Segment
ProfitBudget

50.2% 15,316 106,500

Gross
MarginSegment
Profit100.0% 107.2% 51.8%

16,700

% of
Total

YoY
ChangeJapan Business

44,977

45.3%

39.5%

3,008

45,00042.3%

100.1%

40.3%

3,050

China Business

37,732

38.0%

54.3%

12,60044,20041.5%

117.1%

56.0%

14,250Singapore
Business

12,184

12.3%

38.4%

1,647

12,90012.1%

105.9%

38.4%

1,750

LansinohBusiness

12,473

12.6%

55.6%

1,370

12,80012.0%

102.6%

57.0%

1,400

Elimination of InterSegment Transactions(7,986)(8.0%)--(8,400)(7.9%)

105.1%--©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

22

FY Dec. 2021 - Key Agendas for Each Business Segment
Japan
Business• Tap new demand further in Japan and expand large-size products(for babies)• Rebuild platforms for three businesses in Japan

External
environment• Concern over a steep decline in births• Uncertainty over the outlook for demand from inboundtravelers• Deteriorating economy and consumer sentiment, and theirdelayed recovery

Strategic
priorities• Creating new products and novel categories• Appealing new value propositions, and proposing newuse scenes• Restructuring of the Health and Elder Care BusinessNew
products*• magmag coron• Premium Baby Wipes (Super Thick)• Other core products, large-sized products, and products in novel
categories also slated for launch*: Including renewed products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Easy-to-use and cute magmag coron▲ The segment has launched, in the oral
care category (core categories), an electric
toothbrush developed jointly withdentists.

23

FY Dec. 2021 - Key Agendas for Each Business Segment
China
Business

Continue to grow through selection and focus

External
environment• Concern over declining births• Intensifying market competition• Export business – deteriorating economy and consumer sentiment, and theirdelayed recovery

Strategic
priorities• Further driving sales of nursing bottles and skincare products, which boast
high market share and high margin• Investing in R&D, design, and collaborations with other companies• Preparing for scheduled product launch in Canada and on EC platform (US)New
products*• Launching a new model of nursing bottles in China ahead of other markets inthe world (around fall of 2021)• Launching skincare series themed on a new concept• Also launching more than 80 items, primarily core category products*: Including renewed products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Avocado-based skincare
series (launched in November
2020)

New nursing bottle models
under development

24

FY Dec. 2021 - Key Agendas for Each Business Segment
Singapore
Business

Get back on a growth trajectory by expanding breadth of products targetedat middle-class consumers, and strengthening e-commerce channels▼ Halal-compliant skincare series currently on themarket in Indonesia

External
environment• Deteriorating economy and consumer sentiment, and theirdelayed recovery

Strategic
priorities• Sales recovery of nursing bottles• Driving digitalization (brand communication & e-commerce)• Automating factories, and improving productivity throughdigitalization

New
products*• Adding a new design to nursing bottles for middle-class consumers• Launching new skincare series (with formula varying from region toregion)• Launching more than 70 items, primarily mainstay products*: Including renewed products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Skincare series tailored to theneeds of consumers in eachcountry slated for launch25

FY Dec. 2021 - Key Agendas for Each Business Segment
LansinohBusiness

Revitalize core products and create new categories

External
environment• Transition to e-commerce accelerating• Competition intensifying given commoditization of consumables• Concern over declines in births in the post-coronavirus world

Strategic
priorities• Focusing on core products and breast pumps• Raising brand awareness and brand loyalty• Entering the "postpartum self-care" market, a new categoryNew
products*• Launching seven new postpartum self-care products in May• Developing new products tailored for the Chinese market• Developing sustainable/eco-friendly products*: Including renewed products©Pigeon Corporation All Rights Reserved. │ Strictly Confidential▲ Postpartum self-care, a new category,traces its origin back to North America.

26

Shareholder Return and Investment-Related Indicators[Shareholder return indicators under the 7th Medium-Term Business Plan]

Achieving the consolidated total shareholder return ratio of approx. 55% with a year-on-year increase in dividends foreach fiscal year.
Dividends
Dividend per Share(JPY)
Dividend Payout Ratio

Jan. 2019

Dec. 2019

Dec. 2020

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

34

34

35

35

36

57.2%

72.7％

Jan. 2019

Dec. 2019＜Ref.＞ Investment-related Indicators（Consolidated）(Unit: Million JPY)

Dec. 2021

Year-end
Interim(Scheduled) (Expected)

36

Year-end(Expected)

37

37

81.0%

79.8%

Dec. 2020

Dec. 2021

Mid-year(Actual)Full-year(Actual)Mid-year(Actual)Full-year(Actual) *4

Mid-year(Actual)Full-year(Actual)Depreciation（*2）

1,383

2,804

1,966

3,372

1,968

3,971

3,990

R&D Expenses（*3）

1,479

3,119

1,536

3,059

1,430

3,115

3,875 (+24% YoY)

Capex（*1）

2,795

5,376

2,009

3,869

*1 : Property, plant and equipment and intangible assets (including long-term prepaid expense)*2 : Depreciation (including amortization of goodwill)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

1,690

4,184

Full-year(Forecast)

4,424*3 : Total expenses of R&D activities, including personnel costs*4 : 11 months actual for Japan Domestic

27

Revision of the 7th Mid-term Business Plan

Revision to the 7th MTBP (Strategy)• Demonstrated brand strength and enjoyed strong consumer acceptance

FY2020
Summary

BasicStrategy

What welearned fromCOVID-19• Saw a further increase in shares of nursing bottles and other high-margin, coreproducts• Partially offset sales declines by widely deploying products that fit market
characteristics and consumer preferenceContinue to focus on three themes:
Brand strategy, Core products strategy andRegional strategy▼ Baby face mask (Launched in Feb.
2021 in Japan)

Reinforcing the spirit of Monozukuri (craftsmanship)• Improved and expanded emergency supplies for babies• Promptly implemented all processes from planning to sales to respond to therapidly changing e-commerce market• Increased eco-friendly products that can achieve sustainable growth, and createda new category©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

29

Revised 7th Mid-term Business Plan（Consolidated PL）(Unit: Million JPY)

Dec. 2019 Act. Dec. 2020(12-month Adj)
ActualOriginal MTP Revised MTP
Yr 2019 - 22
Yr 2020 - 22
Revised Budget Revised Budget
CAGR
CAGR

Dec. 2021

Dec. 2022

Net Sales

103,513

99,380106,500

114,500

6.8%

7.3%

Gross Profit

52,41849,921

55,20059,700

8.2%

9.4%

Operating Income

17,213

15,316

16,70018,600

10.3%

10.2%

Net Income
Attributable to Ownersof Parent (yen)11,593

10,643

11,10012,300

12.0%

7.5%

Gross Margin

96.37
50.6%

88.93
50.2%

92.75
51.8%

102.78
52.1%

Operating Margin

16.6%

15.4%

15.7%

16.2%

Net income attributable toowners of parent margin

11.2%

10.7%

10.4%

10.7%

EPS（yen）©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

30Revising 7th Medium-Term Business Plan (CAGR of Net Sales)
We will achieve the net sales CAGR target in the revised plan one year
behind of original MTBP.
Revised MTBP (2020 – 2022)
CAGR: 7.3%

Original MTBP (2019 – 2022)
CAGR: 6.8%

FY12/19 Actual
19/12期実績(12ヵ月)(12 months)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

FY12/20
20/12期

FY12/21
21/12期

Original MTBP
当初中計（20年2月発表）(released in Feb. 2020)

FY12/22
22/12期

中計修正計画
Revised MTBP

FY12/23
23/12期31

* The Lansinoh business has a different revenue recognition standard of the earnings between FY Dec. 2020 and FY Dec. 2019.

Revised 7th Mid-term Business Plan（Net Sales by Business Segment）(Unit: Million JPY)

Dec. 2019 Act.
(12-month Adj)

Dec. 2020
ActualConsolidated
Net Sales

103,513

Japan Business
China Business

Original MTP
Yr 2019 - 22
Revised Budget Revised Budget
CAGR

Revised MTP
Yr 2020 - 22
CAGR

Dec. 2021

Dec. 2022

99,380106,500

114,500

6.8%

48,421

44,97745,00046,6002.5%

1.8%

37,30637,732

44,20048,300

9.6%

13.1%

13,60012,184

12,90014,3009.0%

8.3%

Lansinoh Business*

13,207

12,47312,80014,0009.6%

5.9%

Elimination of InterSegment Transactions(9,022)(7,986)(8,400)(8,700)--Singapore
Business■ Japan/Overseas Sales Ratio

Yr 2019

44%
Overseas

Yr 2022
38%

56%

7.3%

62%

Japan domestic[Currency Rates]©Pigeon Corporation All Rights Reserved. │ Strictly Confidential
Dec. 2021 (FY 65) Budget：US$1 = JPY 104.00

CNY 1 = JPY 16.00⇐

Dec. 2020 (FY 64) Actual：US$1 = JPY 106.77

CNY 1 = JPY 15.47

32

Revised 7th Mid-term Business Plan（Operating Income by Business Segment）
Original MTP
Yr 2019 - 22
Revised Budget Revised Budget
CAGR

Revised MTP
Yr 2020 - 22
CAGR

18,600

10.3%

10.2%

3,050

3,450

1.2%

7.1%

12,60014,25015,400

10.0%

10.6%

2,064

1,647

1,750

1,840

10.0%

5.7%

1,741

1,370

1,400

1,700

13.4%

11.4%

Dec. 2019 Act.
(12-month Adj)

Dec. 2020
ActualConsolidated
Net Sales

17,213

Japan BusinessDec. 2021

Dec. 2022

15,316

16,700

4,311

3,008

China Business

12,687Singapore Business
Lansinoh Business(Unit: Million JPY)

■ Operating Income by Business Segment (Million JPY)
Yr 2022
2022年
Yr 2019
2019年

0©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

5,000

10,000
Japan
日本

China
中国

15,000Singapore
シンガポール

20,000Lansinohランシノ

25,00033

FY Dec. 2021 - Adoption of New Revenue Recognition Standard
Background

Companies in China and Japan are basically required to adopt the new revenue recognition standard,equivalent to IFRS, according to the following schedule:
China: Applicable from the fiscal year commencing on or after January 1, 2021
Japan: Applicable from the fiscal year commencing on or after April 1, 2021
What Pigeon will do• Both the Japan Business and the China Business will transition to the new revenue recognition standard
from the current fiscal year (ending December 31, 2021).
• Pigeon ensures the transparency of its consolidated financial statements by bringing forward one year
the transition of the Japan Business to the new standard to align the transition timing of the China
business, thereby unifying the revenue recognition standard across the Group.


The transition to the new revenue recognition standard will reduce net sales of the bothsegments as follows: (estimated based on the business plan for the fiscal year ending Dec.
2021)
Japan: (3,500) million yen©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

China: (2,100) million yen

34

FY Dec. 2021 Business Plan under the New Revenue Recognition Standard（Unit: Million JPY）
Consolidated Net Sales
Cost of Sales
Gross Profit
SG&A Expenses
Operating Income
Non-operating Income(Expenses)≪Previous standard≫

FY Dec. 20
Actual% of total
99,380100.0%
49,45949.8%
49,921
50.2%
34,60534.8%
15,316
15.4%≪New Revenue Recognition Standard≫

Budget100,800
51,30049,50033,00016,500FY Dec. 21% of total YoY Change
100.0%
101.4%
50.9%
103.7%
49.1%
99.2%
32.7%
95.4%
16.4%
107.7%

798

0.8%

200

0.2%

25.1%

16,11316.2%

16,70016.6%

103.6%(277)(0.3%)

0

0.0%

0.0%

Net Income Attributable toNon-controlling Interests

216

0.2%

200

0.2%

92.6%

Net Income Attributableto Owners of Parent

10,643

10.7%

11,10011.0%

104.3%

Ordinary Income
Extraordinary Income(Losses)

Note: See the page# 55 to compare FY12/20 actual and FY12/21 budget under the new revenue recognition standard©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

35

ESG Initiatives

ESG – Major Initiatives in 2020
Reduceenvironmental impact“Leave a rich earth for the futureof babies born tomorrow”

Solve social issues
surrounding
babies and mothers“Create a world that celebrates
babies the way they are”

Build a strong
managementfoundation“Support sustainable growth tostay close to the baby”©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

System to contribute through eco-friendly
monozukuri• Formulated policies on environment, biodiversity,
sustainable development and CSR procurement• Joined the Roundtable on Sustainable Palm Oil (RSPO)

Support for all babies coming to birth• Supported the opening of the Human Milk Bank (Japan)• Provided products exclusively developed for prematureand low birthweight babies• Established the Pigeon Support Fund for Premature Babies (China)• Supported babies with cleft lip and cavity (Thailand and other countries)

Ensure business continuity across the world while putting
our employees’ safety first• Established a business continuity platform through swift decision-making by
each business unit
• Delivered products to consumers in Japan and overseas without any major
disruptions to business activities
37

ESG – “Pigeon Eco-Label” to start in 2021
To identify eco-friendly products more easily,
Pigeon will start environmental labelingin February 2021 in a phased manner.
Pigeon Eco-Label standards

Based on the life-cycle assessment (LCA) methodology that quantitively
evaluates the environmental burdens associated with each stage of a
product’s life from raw material procurement, manufacturing, transportation
and use right through to final disposal.
(For more information on the Pigeon Eco-Label, see our website.)

We will aim to put Pigeon Eco-Label on
100% of our products distributed in Japan by 2025.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

38

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,
and involve know and unknown risks, uncertainties and other factors, which may
affect the statements made in this material.

P
Head Office
4-4, Nihonbashi-Hisamatsucho, Chuo-ku, Tokyo
103-8480, Japan©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

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

40

Appendix

1. Results and Business Plan
under Previous Revenue Recognition Standard≪Previous Standard≫（Unit: Million JPY）

Financial Highlights (Consolidated)≪Previous standard≫

FY Dec. 19
Actual% of total≪Previous standard≫

ActualFY Dec. 20% of total

YoY

Net Sales

100,017100.0%

99,380100.0%

99.4%

Operating Income

17,072

17.1%

15,316

15.4%

89.7%

Ordinary Income

17,28417.3%

16,113

16.2%

93.2%

Net Income Attributableto Owners of Parent

11,538

11.5%

10,645

10.7%

92.2%

Net assets

70,463―72,625―103.1%

Total assets

90,491―

93,472―103.3%EPS (yen)

96.37

―

88.93

―

92.3%

BPS (yen)565.64―607.06―107.3%

ROE*

17.5%

―

15.5%

―

―

ROIC**

17.4%

―

15.0%

―

―

*ROE: Return on Equity (shareholders’ equity + accumulated other comprehensive income), calculated with equity being the average of the beginning and ending balances©PigeonAll Rights
Reserved.
│ Strictly
Confidential*ROIC:Corporation
Return on
Invested
Capital(NOPAT/Invested
capital, calculated with a tax rate of 30.0% and invested capital being the average of the beginning and ending balances

43≪Previous Standard≫ Results for FY12/2020 : Sales by Geographic Area
China
(Incl. HK)
中国(含む香港)

North
北米
America

Other
Asia
その他アジア7,750(13.5%)

35,701(Composition 62.4%)

20/12月期
4Q
FY12/2020

Europe欧州

Middle中近東
East

Othersその他地域
2,855(5.0%)

857(1.5%)

7,924(13.9%)

103.3% on a local currency basis

103.4% on a local currency basis

2,968
FY12/201919/12月期
4Q

35,184

8,578

2,117
(3.7%)
959

7,831
2,303

0

10,000Currency rates
FY12/2020 (FY64): US$1 = JPY 106.77©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

20,000

CNY 1 = JPY 15.47

30,000⇐40,00050,000FY12/2019 (FY63): US$1 = JPY 109.02

57,20457,82360,000(百万円)

CNY 1 = JPY 15.77

44≪Previous Standard≫ Plan for FY12/2021 : Sales by Geographic Area
China (Incl. HK)

Other Asia

North America

Europe8,555(13.2%)

41,306(Composition 63.8%)

FY12/2021

Middle East

111.9% on a local currency basis

Others
3,368(5.2%)

8,398(12.9%)

108.7% on a local currency basis
2,855 857

FY12/2020

35,7017,750

877(1.3%)

64,6362,132(3.3%)

57,204

7,924
2,117

0

10,000Currency rates
FY12/2021 (FY65): US$1 = JPY 104.00©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

20,000
CNY 1 = JPY 16.00

30,000⇐40,00050,00060,000FY12/2020 (FY64): US$1 = JPY 106.77(Million JPY)

CNY 1 = JPY 15.47

45

Cash Flows (Consolidated)（Million JPY）

Purchase of tangible and intangible fixed assets : ¥(3,823)[Dec. 2019 : ¥4,019)]
14,098 (3,995)

18,400(3,815)(8,734)98

30,94932,416(9,231)(718)

32,416

Dividends paid : ¥(8,517)[Dec. 2019 ¥(8,230)]

Income before income taxes : ¥15,836(Dec. 2019 : ¥17,104)'19/12期 （63期）（日本国内11カ月）
Dec. 2019

期首残高Balanceat

営業活動
Operating

投資活動
Investing

30,94914,098(3,995)

Biginnig
30,949Activities
14,098

Activities▲
3,995©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

財務活動
Financing 換算差額等Translation 期末残高
Balance at
Activities▲
8,734(8,734)

Adjustment
End98
32,41698

32,416'20/12期（64期）
Dec. 2020

期首残高Balanceat

営業活動
Operating

投資活動
Investing

財務活動
Financing

32,416

18,400(3,815)(9,231)

Biginnig
32,416

Activities
18,40037,050

Activities▲
3,815

Activities
▲
9,231

換算差額等
期末残高
Translation BalanceatAdjustment
▲ 718

(718)

End
37,05037,05046≪Previous Standard≫ Results (Breakdown of Japan Business Segment)(Breakdown of Japan business segment was estimated by Pigeon for your reference)（Unit: Million JPY）

≪Previous Standard≫
FY Dec. 19(12-month Adjusted)

ActualJapan
Business≪Previous Standard≫
FY Dec. 20% of total

Gross
MarginSegment
ProfitActual% of total

YoY
ChangeGross
MarginSegment
Profit48,421 46.8% 40.0%

4,311 44,977 45.3% 92.9% 39.5%

3,008

Domestic Babyand Mother care

33,205

32.1%

49.0%

5,063

30,518

30.7%

91.9%

46.8%

3,210

Child Care
Services

3,816

3.7%

13.0%

78

3,592

3.6%

94.1%

14.5%

109

Health & Elder
Care Business

7,094

6.9%

31.5%

413

7,466

7.5% 105.2%

33.4%

690

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

47≪Previous Standard≫

FY12/2021 Plan (Breakdown of Japan Business Segment)(Breakdown of Japan business segment was estimated by Pigeon for your reference)（Unit: Million JPY）

≪Previous Standard≫
FY Dec. 20
Actual% of total

Gross
Margin44,97745.3%

Domestic Babyand Mother care

30,518Child Care
Services
Health & Elder
Care BusinessJapan
Business≪Previous Standard≫
FY Dec. 21

Segment
ProfitBudget% of total YoY Change

GrossMarginSegment
Profit39.5%

3,008 45,000

42.3% 100.1%

40.3%

3,050

30.7%

46.8%

3,210

31,57029.6%

103.4%

46.8%

3,669

3,592

3.6%

14.5%

109

3,583

3.4%

99.7%

16.0%

177

7,466

7.5%

33.4%

690

5,877

5.5%

78.7%

40.2%

435

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential48≪Previous Standard≫ PVA Tree: Consolidated Results in FY12/2020 (FY64)
Consolidated

Net sales

Operating profit

Top: Dec. 2020 Plan
Mid: Dec. 2020 Results
Bottom: Dec. 2019 Results(Unit: Million JPY)NOPATPlan 12,670
Results 10,721
LY 11,951

Plan 18,100
Results 15,316
LY 17,072

Plan 109,000
Results 99,380
LY 100,017

Tax

Cost of sales

Plan 5,430
Results 4,595
LY 5,122

PVA

Plan
Results
LY

9,044

7,144
8,525

Capital invested

Working capital

Trade receivables

SG&A expenses

Plan 72,548
Results 71,545
LY 68,523

Plan 21,037
Results 20,462
LY 19,986

Plan 17,086
Results 15,837
LY 15,796

Plan 38,500
Results 34,605
LY 33,727

Fixed asset

Inventory asset（参考）Plan 28,526
Results 28,400
LY 27,820

Plan 11,069
Results 11,294
LY 10,908

見込 0Cash and otherasset and liability

Trade payables

Results 22,683

Results 6,669

WACC

common 5.0%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Plan 52,400
Results 49,459
LY 49,216

Plan 22,986
LY 20,718

Plan 7,118
LY 6,719

研究開発費

前期 0

発送費

見込 0
前期 0

* From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.
* The figures for Dec. 2019 are those for 11 months for Japan.

49≪Previous Standard≫ PVA Tree: Consolidated Results in FY12/2020 (FY64)
Consolidated
Top: Dec. 2020 Plan
Mid: Dec. 2020 Results
Bottom: Dec. 2019 Results

Cost of sales ratio
Operating profit ratio

ROIC before tax

ROIC

PVA
spreadPlan
Results
LY

Plan
Results
LY

17.5%

15.0%

Plan
Results
LY

24.9%

21.4%

Plan
Results
LY

16.6%

15.4%
17.1%

24.9%

Plan
Results
LY

49.2%

SG&A expenses ratio
Plan
Results
LY

17.4%

48.1%

49.8%

35.3%

34.8%
33.7%

Working capital ratio

12.5%
10.0%
12.4%

Capital invested t/o

WACC

common5.0%

tax ratecommon30.0%

Plan
Results
LY

1.5

1.4
1.5

Plan
Results
LY

19.3%

20.6%
20.0%

Fixed asset ratio
Plan
Results
LY

26.2%

28.6%
27.8%

Cash and otherasset and liability ratio

Plan
Results
LY©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

21.1%

22.8%
20.7%

* From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.
* The figures for Dec. 2019 are those for 11 months for Japan.

50≪Previous Standard≫ PVA Tree: Consolidated Results in FY12/2020 (FY64)
Consolidated
Top: Dec. 2020 Plan
Mid: Dec. 2020 Results
Bottom: Dec. 2019 Results(Unit: Million JPY)

Working capital
Plan 21,037

Results 20,462
LY 19,986

Plan 17,086

Results 15,837
LY 15,796

Inventory asset
Plan 11,069

Results 11,294
LY 10,908

Trade payables
Plan 7,118

Results 6,669
LY 6,719©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

CCC

Trade receivables
Plan
Results
LY

Receivable turnover period
85.0
92.3
88.7

Plan
Results
LY

57.2
58.2
57.6

Inventory turnover period
77.3
83.3
80.9

Plan
Results
LY

Payables turnover periodPlan
Results
LY

49.6
49.2
49.8

* From Jan. 2017, B/S Factors for PVA calculation are averaged between beginning and year-end figures.
* The figures for Dec. 2019 are those for 11 months for Japan.

51E-commerce Ratio in Key Countries (FY12/2020)
EC sales ratio of Pigeon / Lansinoh products
82%

Korea*
63%

China - Pigeon*
47%

UK
41%

India*
35%

US
23%

Singapore*Japan©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

9%*：Sell-out

Others：Sell-in

52

Key Theme : 7th Medium-Term Business Plan
Expand the Key Success Factors (KSF) of Chinese market globallyand achieve healthy business growth and profitability in all regions.

Brand strategy:

Develop a brand “chosen by consumers who buy into a business”
rather than a brand “chosen by customers who buy a product.”

Product strategy:

Accelerate growth in our Core products
which we can have a unique competitive advantages in global market.

Regional strategy:

Develop and implement agilely a cycle of “Product development, production and sales” that fitsmarket characteristics and consumer preference of each region.
©Pigeon Corporation All Rights Reserved. │ Strictly Confidential532. Results and Business Plan
under New Revenue Recognition Standard≪New Standard≫

FY12/2021 Business Plan (Consolidated PL)（Results of FY12/2020 in New Revenue Recognition Standard was estimated by Pigeon for your reference)（Unit: Million JPY）

≪New Standard≫
FY Dec. 20
Actual% of total≪New Standard≫
FY Dec. 21
Budget% of total
YoY Change

Net Sales

94,021100.0%

100,800

100.0%

107.2%

Cost of Sales

49,45952.6%

51,30050.9%

103.7%

Gross Profit

44,56247.4%

49,50049.1%

111.1%

SG&A Expenses

29,482

31.4%

33,00032.7%

111.9%

Operating Income

15,08016.0%

16,50016.4%

109.4%

1,035

1.1%

200

0.2%

19.3%

16,11317.1%

16,70016.6%

103.6%(277)(0.3%)---Net Income Attributable toNon-controlling Interests

216

0.2%

200

0.2%

92.6%

Net Income Attributable to
Owners of Parent

10,643

11.3%

11,10011.0%

104.3%

Non-operating Income(Expenses)

Ordinary Income
Extraordinary Income(Losses)©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

55≪New Standard≫ FY12/2021 Business Plan (By Business Segment)（Results of FY12/2020 in New Revenue Recognition Standard was estimated by Pigeon for your reference)≪New Standard≫
FY Dec. 20（Unit: Million JPY）

≪New Standard≫
FY Dec. 21% of total

Gross
MarginConsolidated
Net Sales

94,021 100.0%

47.4%

Japan Business

41,231

43.9%

34.0%

2,772

41,50041.2%

China Business

36,121

38.4%

52.3%

12,60042,000Singapore
Business

12,184

13.0%

38.4%

1,647

LansinohBusiness

12,473

13.3%

55.6%

Elimination of InterSegment Transactions(7,986)(8.5%)-

Actual©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Segment
ProfitBudget% of total

YoY
Change15,080 100,800 100.0% 107.2%

Gross
MarginSegment
Profit49.1%

16,500100.7%

35.3%

2,850

41.7%

116.3%

53.7%

14,25012,90012.8%

105.9%

38.4%

1,750

1,370

12,80012.7%

102.6%

57.0%

1,400

-

(8,400)(8.3%)

105.1%-

56

≪New Standard≫ Revised 7th Mid-term Business Plan (Consolidated PL)（Results of FY12/2019 and FY12/2020 in New Revenue Recognition Standard was estimated by Pigeon for your reference)Dec. 2019 Act.
(12-month Adj)

Dec. 2020
ActualDec. 2021

Net Sales

98,19394,021

100,800

Gross Profit

47,09744,562

Operating Income

16,959Net Income Attributableto Owners of Parent（Unit: Million JPY）

Dec. 2022 Original MTP Revised MTP
Yr 2019 - 22
CAGR

Yr 2020 - 22
CAGR

108,600

6.8%

7.5%

49,50053,8008.2%

9.9%

15,08016,50018,300

10.3%

10.2%

11,593

10,643

11,10012,300

12.0%

7.5%

EPS (yen)

96.37

88.93

92.75

102.78Gross Margin

48.0%

47.4%

49.1%

49.5%

Operating Margin

17.3%

16.0%

16.4%

16.9%

Net income attributable toowners of parent margin

11.8%

11.3%

11.0%

11.3%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

RevisedBudgetRevisedBudget57

≪New Standard≫
Revised 7th Mid-term Business Plan (Net Sales By Business Segment)(All data in New Revenue Recognition Standard was estimated by Pigeon for your reference)Dec. 2019 Act.
(12-month Adj)

Dec. 2020 Dec. 2021
RevisedActualBudgetDec. 2022

Original MTP
Yr 2019 - 22
CAGR

Revised MTP
Yr 2020 - 22
CAGR

Consolidated
Net Sales

98,19394,021 100,800

108,600

6.8%

7.5%

Japan Business

44,534

41,231

41,50043,000

2.5%

2.1%

China Business

35,87336,12142,00046,000

9.6%

12.9%

Singapore Business

13,60012,184

12,90014,3009.0%

8.3%

Lansinoh Business

13,207

12,47312,80014,0009.6%

5.9%

Elimination of InterSegment Transactions(9,022)(7,987)(8,400)(8,700)--（Unit: Million JPY）

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

RevisedBudget58

≪New Standard≫
Revised 7th Mid-term Business Plan (Operating Income By Business Segment)(All data in New Revenue Recognition Standard was estimated by Pigeon for your reference)Dec. 2019 Act.
（Unit: Million JPY）
(12-month Adj)

Dec. 2020
ActualOriginal MTP
Yr 2019 - 22
Revised Budget Revised Budget
CAGR

Dec. 2021

Dec. 2022

Revised MTP
Yr 2020 - 22
CAGR

Consolidated
Net Sales

16,95915,08016,50018,300

10.3%

10.2%

Japan Business

4,057

2,772

2,850

3,150

1.2%

6.6%

China Business

12,687

12,60014,25015,400

10.0%

10.6%

Singapore Business

2,064

1,647

1,750

1,840

10.0%

5.7%

Lansinoh Business

1,741

1,370

1,400

1,700

13.4%

11.4%

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

59