Financial Results of FY 2022 Q1( January to March )(Securities Code: 7956)

May 12, 2022

Fiscal Year 2022 Q1
Latest Update of Covid-19 in China
2022 Q1 Results
Summary of Results by Segment
Sales by Regions, EC ratio in Key Markets

AgendaP. ２ - ３
P. ４ - ６

P. ７ - ８

P. ９ - 11

Latest Update of Covid-19 in China①

Impact on Q1 Results• Sales were almost in line with our budget until February YTD.
• Due to a local lockdown that began in mid-March, 10-15% of our March sales forecast could not be shippedin Q1. Also, delays and cancellations of shipments from our distributors and retailers (EC and offline) also
affected Sell-out.

Local Lockdown (Mid-March to today)
Lockdown areas• North China area, Northeast area, etc.
• Shaanxi, Fujian, Yunnan, Tianjin and other areas experienced 14 - 60 days of local lockdown

Impact on logistics, retailers,and consumers• Key warehouses of our distributors were closed for several days, causing intermittent shipping delays.
• Many department stores and chain baby stores in the lockdown area temporarily closed.
• EC retailers were unable to fill the stocks to local warehouses, causing delivery delays.
• Delays in e-commerce deliveries have resulted in an increase in customer returns and order cancellations.

Impacts on our group companies in China
Sales Office (Shanghai)

Two important warehouses of our distributors were closed for several days, intermittently halting
our shipments.

Factory (Shanghai)• Operated normally until End of March.
• Build up inventory prepared for Shanghai lockdown

Factory (Changzhou,Jiangsu Province

Six-day outage due to lockdown in Changzhou city

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential2

Latest Update of Covid-19 in China②

Shanghai Lockdown• Since April, the Shanghai lockdown has had a greater impact on both sales office and factories than in Q1.
• Shipments and production have partially resumed since the end of April; our China group was operating at only
about 20-30% of normal levels as the end of April.
• Shanghai lockdown is still in effect as of May, and the impact on earnings is currently being estimated.

Shanghai Lockdown (Since end of March）
CalendarApril 1 to 10

April 11 to 17

April 18 to 24

April 25 to May 1

Local lockdown

Local lockdowns are ongoing

Logistics in Shanghai

Distribution from Shanghai to other provinces suspended. Shanghai warehouses of our distributors and EC retailers are closed. Offline stores temporarily closed.

Logistics in other areas

Distribution to Shanghai city suspended. Local warehouses of our distributors and EC retailers are experiencing shortages of merchandise.
Some offline stores outside of the blocked areas are open.

Sales Office (Shanghai)

shipping the merchandise almost suspended

Shipment
Business activities

Resumed shipment of some products todistributors via Changzhou factory etc.

All employees shifted to remote work. very limited work in R&D and other activities. Some scheduled marketing activities and events were also postponed

Factory (Shanghai)
Production

Factory operation suspended

Shipment

Resumed operation（Approx. 20% of operation）

Factory (Changzhou）

Production

The factory operated normally. Shipments from Changzhou plant available, but very limited due to lockdown of shipping destination.

Shipment©Pigeon Corporation
All Rights Reserved. │ Strictly Confidential32022 Q1 Results - Consolidated
Sales : Increased. Overseas markets led the growth. Sales increased 101.7% y-o-y due to sales growth of new model ofnursing bottles and favorable FX rates
Profit : Increased. Gross margin increased 0.6 pt y-o-y and operating margin increased 0.4 pt due to improved
profitability from new products, etc.
Raw material prices : Although the yen weakened more than expected, the impact of raw material price hikes on 1Q
results was within expectations.
(Unit: Million JPY)Net Sales
Cost of SalesGross Profit
SG&A Expenses
Operating Income
Ordinary Income

Net Income Attributableto Owners of Parent©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

2021 Q1
Actual2022 Q1% of Total

Actual

21,359
11,19010,168
7,307
2,861
3,454

100.0%

16.2%

21,714
11,243
10,470
7,475
2,994
3,971

2,008

9.4%

2,617

52.4%
47.6%
34.2%
13.4%

【Currency Rates】% of Total

YoY Change

100.0%

101.7%

51.8%

100.5%

48.2%

103.0%

34.4%

102.3%

13.8%

104.7%

18.3%

115.0%

12.1%

130.3%

2022 Results：US$1 = JPY 116.35 / CNY 1 = JPY 18.32
2021 Results：US$1 = JPY 106.04 / CNY 1 = JPY 16.3642022 Q1 Results - By Business Segment(Unit: Million JPY)

2021 Q1

2022 Q1

Gross
MarginSegment
Profit% of Total

YoY
Change21,714100.0%

101.7%

48.2%

2,994

603

8,846

40.7%

91.0%

35.8%

543

51.4%

2,434

7,892

36.3%

102.7%

52.4%

2,532

13.4%

36.4%

356

3,069

14.1%

106.9%

41.3%

514

3,117

14.6%

56.4%

318

3,551

16.4%

113.9%

52.1%

168(2,030)(9.5%)(1,645)(7.6%)

Sales% of Total

Consolidated Net
Sales

21,359100.0%

47.6%

2,861

Japan Business

9,717

45.5%

35.6%

China Business

7,685

36.0%

Singapore Business

2,869

Lansinoh BusinessElimination of intersegment transactions－－Sales－

Gross
Margin－Segment
Profit－Ref. : The breakdown of Japan business segment

2021 Q1(Unit: Million JPY)

Baby Care

Sales% of Total

6,309

Child Care Services

948

Health & Elder CareBusiness

1,606©Pigeon Corporation All Rights Reserved. │ Strictly Confidential－－－2022 Q1

Gross
MarginSegment
Profit

Sales

42.3%

600

6,244

18.5%75892

28.8%

156

1,176% of Total－－－YoY
ChangeGrossMarginSegment
Profit

99.0%

40.6%

648

94.1%

16.0%

52

73.2%

31.0%

865

2022 Q1 - Analysis of Change in Operating Income (YoY)
Increased 130 million yen of Operating Income due to higher gross profit from increased sales and contributions
from sales of new model of nursing bottles in China and Japan.

28.6+1.6+1.3+0.7
(1.8)

(0.5)

29.9

■ Positive factors ■ Negative factors
OperatingIncome for2021 Q1

Increased
Gross Profit byhigher revenue©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Improved
Gross Margin

Sales promotion
前年and Advertising
営業利益
expenses

Personnel
expenses

Otherexpenses

Operating
Income for2022 Q1(Unit: Million JPY)

6

Summary of Results by Segment*Sales: Sell-in at local currency

Baby care business flat YoY. Nursing bottles grew by new model but consumables struggled

JapanBusiness

ChinaBusiness• Sales in major channels such as baby specialty stores and drugstores increased YoY due to the introduction of newproducts however sales in e-commerce and other channels struggled.
• Sales of Nursing bottles and Breast pumps were strong. Sales of bottles increased 51% YoY due to the switch to newmodels. In the skincare business, sales of renewed products of the standard series were strong, but sales of thehigh-margin Momo-no-ha (Peach Leaves) series were weak.
• Sales of consumable products such as Wet tissues and Nursing pads struggled due to growing consumer demand
for low-priced products.
• Gross margin for baby care business declined by 1.7pt YoY. This was due to the impact of yen depreciation and theproduct mix in the skincare category.
• Sales of Health & Elder Care declined by 4 million yen YoY due to the restructuring of product portfolio, but
progressed almost as expected. Profit margin improved.

Zero-Tolerance Covid-19 policy has impacted business activities in various regions since mid-March• Mainland sales -14% YoY; local lockdowns since mid-March impacted manufacturing, sales, and distribution.
(See p.3 - 4 for details)• Sell-out was +2% YoY. EC was flat but offline was +7% YoY, EC ratio was 61%.
• Sales of Nursing bottles slightly declined YoY due to the impact of the lockdown from March, although theswitch to new models was progressing as planned both in EC and offline.
• Gross margin improved by 1.0pt YoY due to contributions from new models of Nursing bottles and skincare
products.
• Sales of Pigeon products started on major North American e-commerce sites in March©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

7Summary of Results by Segment*Sales: Sell-in at local currency

Strong sales in major countries, good start toward full recovery from Covid-19

SingaporeBusiness• Sales +48% YoY in India, +22% in Malaysia, +27% in Indonesia.
• Strong sales in Australia and the Middle East in export market.
• Sales (in Japanese yen) of core products (Nursing bottles, Breast pumps, Skincare, and Oral care) were strong
with double-digit growth YoY• Shipment of new skincare series (Natural Botanical) was strong. It is now sold in Singapore, Indonesia, Malaysia,Vietnam, the Middle East and other markets.
• Gross profit increased by 21% YoY due to increased sales at sales companies, improved product mix at factories,and foreign exchange effects. Gross margin also improved by 4.9pt.

Sales remain strong, but higher-than-expected distribution costs squeeze profits

LansinohBusiness• Lansinoh Group sales increased 6% YoY. Sales in North America were +8% and strong both online and offline.
• In Europe, Benelux, UK, Turkey, etc. performed well. Sales in Germany ended below YoY due to some shortageof the stock despite increased demand.
• Sales of nipple cream and breast pumps, our main products, increased YoY. Birth Prep & Postpartum careproducts exceeded the plan.
• Gross margin declined by more than 4pt from the previous year due to the procurement and logistics costs(cost factor), which have continued to soar since the 2H of the previous year. Operating income was squeezed
by higher-than-expected logistics costs at the beginning of the period.

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

8Pigeon Sales by Region* (YoY)

KOR

UAE

CHN

+12%

（Middle East）

IND+48%-14%JPN-1%(Baby Care)
MYS

+22%
SGP

©Pigeon Corporation All Rights Reserved. │ Strictly Confidential+202%-1%

IDN

AUS+27%+27%*Sell-in (at local currency)

9

Lansinoh Sales by Region* (YoY)
GBRCANUSA+14%+8%©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

DEU

BENELUX+3%-6%+39%

CHN
TUR

+50%

-7％

*Sell-in (at local currency)

10

E-Commerce Ratio in Key Markets
EC sales ratio of Pigeon / Lansinoh products
89%

Korea*
61%

China - Pigeon*
46%

UKUS

37%

India*

36%
21%

Singapore*
Japan

7%
*: Sell-out©Pigeon Corporation All Rights Reserved. │ Strictly Confidential

Others: Sell-in11