Pigeon Shared Research Report

Pigeon / 7956
COVERAGE INITIATED ON: 2013.01.25

LAST UPDATE: 2019.03.13
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to
provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
always present opinions from company management as such. Our views are ours where stated. We do not try to
convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at
sr_inquiries@sharedresearch.jp or find us on Bloomberg.
Research Coverage Report by Shared Research Inc.

R
Coverage
Pigeon / 7956
LAST UPDATE: 2019.03.13 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp
INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.
Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3

Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 4
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 5
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------5
Trends and outlook ----------------------------------------------------------------------------------------------------------------------------------- 6
Full-year company forecasts --------------------------------------------------------------------------------------------------------------------------------- 11
Outlook ------------------------------------------------------------------------------------------------------------------------------------------------------------- 12
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 18
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 18
Profitability snapshot, financial ratios --------------------------------------------------------------------------------------------------------------------- 32
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 33
Strategy ------------------------------------------------------------------------------------------------------------------------------------------------------------- 38
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 40
Historical financial statements ------------------------------------------------------------------------------------------------------------------ 41
Historical earnings results------------------------------------------------------------------------------------------------------------------------------------- 41
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 56
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 57
Statement of cash flows --------------------------------------------------------------------------------------------------------------------------------------- 59
News and topics ------------------------------------------------------------------------------------------------------------------------------------- 60
Other information ---------------------------------------------------------------------------------------------------------------------------------- 62
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 62
Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 63
Corporate governance and top management --------------------------------------------------------------------------------------------------------- 64
Employees --------------------------------------------------------------------------------------------------------------------------------------------------------- 64
By the way --------------------------------------------------------------------------------------------------------------------------------------------------------- 65
Company profile ------------------------------------------------------------------------------------------------------------------------------------------------- 65
02/66
R
Coverage
Pigeon / 7956
Executive summary
Business overview
◤ Pigeon operates the following business segments: Domestic Baby & Mother Care, Child Care Service, Health & Elder Care,
China, Singapore, Lansinoh, and Other.
◤ Pigeon’s core products are nursing bottles and nipples and its main market is parents with babies 0–24 months old. These
two product types represent approximately 18% of Domestic Baby & Mother Care sales (Shared Research estimates 25% of
total consolidated sales, including overseas sales). Other key products include nursing pads, baby wipes, skincare goods,
maternity products, strollers, and breast pumps.
Trends and outlook

◤ For FY01/19, Pigeon reported full-year sales of JPY104.7bn (+2.1% YoY), an operating profit of JPY19.6bn (+1.0% YoY),
recurring profit of JPY20.4bn (+1.3% YoY), and net income attributable to parent company shareholders of JPY14.2bn (-1.9%
YoY).
◤ In March 2017, Pigeon released a sixth medium-term management plan that covers the three years between FY01/18 and
FY01/20. For FY01/20, the final year of medium-term management plan, targets for results are as follows: Sales, JPY110bn
(+5.1% average growth rate over the three years of the plan); operating profit, JPY20bn (+7.7%); recurring profit, JPY20bn
(+6.7%); net income attributable to parent company shareholders, JPY13.8bn (+7.5%).
◤ The medium-term plan’s slogan: “Building our dreams into the future—by creating a bridge towards the Global Number One
manufacturer of baby products.” The company plans to strengthen its management and business foundation by making
strategic business investments and achieving its current targets in order to generate further growth after the seventh
medium-term plan. The company aims to increase the GPM from 47.2% in FY01/17 to 50.0% and the OPM from 16.9% in
FY01/17 to 18.2%. ROE and ROIC are important management benchmarks and the company is striving to further improve
profitability and capital efficiency.
◤ For FY12/19 Pigeon is forecasting full-year sales of JPY106.2bn, an operating profit of JPY20.0bn, recurring profit of JPY20.0bn,
and net income attributable to parent company shareholders of JPY14.3bn. The forecast reflects company plans to change its
fiscal year-end from January to December. The change, which will take effect in April 2019, will result in an 11-month
accounting period (February to December 2019) during the transitional year (FY12/19) for companies included in
consolidated results that have fiscal years ending in January.
Strengths and weaknesses

Shared Research thinks Pigeon’s strengths center on its strong brand and trustworthiness, overwhelming share in a niche market,
and growth potential overseas. Weaknesses center on its possible competition against giants in adjacent businesses, limited
domestic growth potential, and minor-player status in Europe and the US.
03/66
R
Coverage
Pigeon / 7956
Key financial data

Income statement FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18 FY01/19 FY12/19
(JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Est.
Sales 53,432 57,061 59,145 65,075 77,465 84,113 92,209 94,640 102,563 104,747 106,200
　　 YoY 0.6% 6.8% 3.7% 10.0% 19.0% 8.6% 9.6% 2.6% 8.4% 2.1% -
Gross profit 20,903 23,281 24,319 27,761 34,464 38,296 43,345 44,688 50,572 53,858
　　 YoY 3.7% 11.4% 4.5% 14.2% 24.1% 11.1% 13.2% 3.1% 13.2% 6.5%
GPM 39.1% 40.8% 41.1% 42.7% 44.5% 45.5% 47.0% 47.2% 49.3% 51.4%
Operating profit 4,604 4,546 5,042 7,086 10,365 12,780 14,521 16,015 19,412 19,612 20,000
　　 YoY 7.8% -1.3% 10.9% 40.5% 46.3% 23.3% 13.6% 10.3% 21.2% 1.0% -
OPM 8.6% 8.0% 8.5% 10.9% 13.4% 15.2% 15.7% 16.9% 18.9% 18.7% 18.8%
Recurring profit 4,609 4,435 4,917 7,389 11,002 13,299 15,080 16,462 20,129 20,398 20,000
　　 YoY 7.3% -3.8% 10.9% 50.3% 48.9% 20.9% 13.4% 9.2% 22.3% 1.3% -
RPM 8.6% 7.8% 8.3% 11.4% 14.2% 15.8% 16.4% 17.4% 19.6% 19.5% 18.8%
Net income 2,840 2,928 3,183 4,573 6,985 8,451 10,197 11,118 14,515 14,238 14,300
　　 YoY -0.5% 3.1% 8.7% 43.7% 52.7% 21.0% 20.7% 9.0% 30.5% -1.9% -
Net margin 5.3% 5.1% 5.4% 7.0% 9.0% 10.0% 11.1% 11.8% 14.2% 13.7% 13.5%
Per share data (split-adjusted; JPY)
Shares issued (year-end; '000) 121,653 121,653 121,653 121,653 121,653 121,653 121,653 121,653 121,653 121,653
EPS 23.6 24.4 26.5 38.1 58.2 70.6 85.2 92.8 121.2 118.9 119.4
EPS (fully diluted) - - - - - - - - - -
Dividend per share 10.7 14.7 14.7 19.2 29.3 35.0 42.0 53.0 66.0 68.0 70.0
Book value per share 214.7 221.0 228.4 263.8 325.8 385.5 413.9 437.4 506.8 536.3
Balance sheet (JPYmn)
Cash and cash equivalents 6,906 6,828 7,294 10,574 13,103 21,591 24,298 30,052 31,346 30,949
Total current assets 22,273 24,163 25,443 29,103 35,363 47,027 48,914 55,244 58,178 58,925
Tangible fixed assets 14,040 15,409 15,059 16,208 19,023 21,383 21,471 20,263 21,116 21,127
Investments and other assets 1,951 1,925 1,985 2,051 2,127 2,232 2,212 2,273 1,865 1,729
Intangible fixed assets 1,231 1,188 1,285 1,176 1,441 1,724 1,346 1,106 3,307 4,223
Total assets 39,494 42,685 43,773 48,539 57,955 72,367 73,943 78,889 84,467 86,006
Accounts payable 4,312 3,985 3,758 3,864 4,518 4,463 5,366 6,550 6,991 6,527
Short-term debt 1,470 3,258 3,256 1,416 1,400 2,090 1,309 5,699 0 0
Total current liabilities 10,694 12,227 12,383 11,616 12,819 15,273 14,223 21,381 17,673 15,623
Long-term debt 1,000 1,615 1,642 2,204 2,012 5,928 5,000 0 0 0
Total fixed liabilities 2,535 3,414 3,454 4,558 5,155 9,797 8,927 3,770 3,982 3,800
Total liabilities 13,229 15,641 15,837 16,173 17,974 25,070 23,150 25,152 21,655 19,423
Net assets 26,264 27,044 27,936 32,365 39,982 47,297 50,793 53,736 62,812 66,582
Total interest-bearing debt 2,470 4,873 4,898 3,620 3,412 8,018 6,309 5,699 0 0
Cash flow statement (JPYmn)
Cash flows from operating activities 4,964 3,206 4,212 7,656 7,930 10,135 13,480 14,810 17,094 13,632
Cash flows from investing activities -2,105 -3,948 -1,871 -1,848 -3,794 -3,134 -3,332 -1,854 -3,586 -4,704
Cash flows from financing activities -2,018 886 -1,776 -3,149 -3,163 -150 -6,568 -6,223 -12,812 -8,338
Financial ratios
ROA (RP-based) 11.8% 10.8% 11.4% 16.0% 20.7% 20.4% 20.6% 21.5% 24.6% 23.9%
ROE 11.4% 11.2% 11.8% 15.5% 19.7% 19.8% 21.3% 21.8% 25.7% 22.8%
Equity ratio 65.3% 62.2% 62.7% 65.3% 67.5% 63.8% 67.0% 66.4% 71.9% 74.7%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Gross profit figures are after provisions for returned products.
Note: Per-share data are adjusted for the 2-for-1, and 3-for-1 stock splits in August 2013 and May 2015, respectively.
Note: The company plans to change its fiscal year-end from January to December. The change, which will take effect in April 2019, will result in an 11-month accounting
period (February to December 2019) during the transitional year (FY12/19) for companies included in consolidated results that have fiscal years ending in January.
04/66
R
Coverage
Pigeon / 7956
Recent updates
Highlights
On March 13, 2019, Shared Research updated the report following interviews with Pigeon Corp..
On March 4, 2019, the company announced earnings results for full-year FY01/19; see the results section for details.
On the same day, the company announced the following changes in its representative directors.
Plan change in representative directors
Name New position Previous position
Shigeru Yamashita Chairman of the Board and CEO President and COO
Norimasa Kitazawa President and COO Vice President and Director
Akio Okoshi None (retiring) Chairman of the Board and CEO
Reason for changes at representative director level

Along with the positioning of its corporate headquarters as the global head office in charge of overseeing group operations
around the world, the company is also planning to consolidate and strengthen these functions as it splits global operations into
four business units along regional lines: Japan (includes the Domestic Baby & Mother Care business, Health & Elder Care business,
and Child Care Service business), China, Singapore, and Lansinoh. The four new business units which will be responsible for
managing operations and growing the businesses in their regions. With the new organizational structure, the company is looking
to clarify the roles and responsibilities of each business unit, facilitate communication and coordination with the global head
office, and sustain growth.
Along with the establishment of this new organizational structure, in this the final year of its sixth medium-term business plan the
company is also making changes to its management team. In addition to facilitating the planning and implementation of its
seventh medium-term business plan, the changes in the Pigeon's executive ranks are aimed at increasing the competitiveness of
the group as a whole and increasing enterprise value.
For previous releases and developments, please refer to the News and topics section.
05/66
R
Coverage
Pigeon / 7956
Trends and outlook
Quarterly trends and results

Cumulative FY01/18 FY01/19 FY01/19
(JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % of FY FY Est.
Sales 23,977 49,048 75,350 102,563 25,798 52,847 79,394 104,747 97.9% 107,000
YoY 5.4% 5.9% 7.9% 8.4% 7.6% 7.7% 5.4% 2.1% 4.3%
Gross profit 11,715 23,770 37,029 50,572 12,986 27,063 41,215 53,858
YoY 12.7% 10.3% 12.8% 13.2% 10.9% 13.9% 11.3% 6.5%
GPM 48.9% 48.5% 49.1% 49.3% 50.3% 51.2% 51.9% 51.4%
SG&A expenses 6,774 14,474 22,090 31,159 7,540 16,156 24,354 34,246
YoY 1.7% 5.0% 6.5% 8.7% 11.3% 11.6% 10.2% 9.9%
SG&A ratio 28.3% 29.5% 29.3% 30.4% 29.2% 30.6% 30.7% 32.7%
Operating profit 4,940 9,296 14,938 19,412 5,446 10,907 16,860 19,612 96.1% 20,400
YoY 32.4% 19.5% 23.8% 21.2% 10.2% 17.3% 12.9% 1.0% 5.1%
OPM 20.6% 19.0% 19.8% 18.9% 21.1% 20.6% 21.2% 18.7% 19.1%
Recurring profit 4,858 9,380 15,171 20,129 5,380 11,679 17,684 20,398 100.0% 20,400
YoY 35.1% 22.3% 24.7% 22.3% 10.7% 24.5% 16.6% 1.3% 1.3%
RPM 20.3% 19.1% 20.1% 19.6% 20.9% 22.1% 22.3% 19.5% 19.1%
Net income 3,473 6,493 10,434 14,515 3,852 8,109 12,243 14,238 101.0% 14,100
YoY 39.9% 17.1% 21.8% 30.5% 10.9% 24.9% 17.3% -1.9% -2.9%
Net margin 14.5% 13.3% 13.8% 14.2% 14.9% 15.4% 15.4% 13.6% 13.2%
Quarterly FY01/18 FY01/19
(JPYmn) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Sales 23,977 25,071 26,302 27,212 25,798 27,049 26,547 25,353
YoY 5.4% 6.4% 11.9% 9.6% 7.6% 7.9% 0.9% -6.8%
Gross profit 11,715 12,056 13,258 13,543 12,986 14,077 14,152 12,643
YoY 12.7% 8.0% 17.7% 14.1% 10.9% 16.8% 6.7% -6.6%
GPM 48.9% 48.1% 50.4% 49.8% 50.3% 52.0% 53.3% 49.9%
SG&A expenses 6,774 7,700 7,616 9,069 7,540 8,616 8,198 9,892
YoY 1.7% 8.1% 9.3% 14.5% 11.3% 11.9% 7.6% 9.1%
SG&A ratio 28.3% 30.7% 29.0% 33.3% 29.2% 31.9% 30.9% 39.0%
Operating profit 4,940 4,356 5,642 4,474 5,446 5,461 5,953 2,752
YoY 32.4% 7.7% 31.4% 13.5% 10.2% 25.4% 5.5% -38.5%
OPM 20.6% 17.4% 21.5% 16.4% 21.1% 20.2% 22.4% 10.9%
Recurring profit 4,858 4,521 5,791 4,958 5,380 6,299 6,005 2,714
YoY 35.1% 11.0% 28.8% 15.4% 10.7% 39.3% 3.7% -45.3%
RPM 20.3% 18.0% 22.0% 18.2% 20.9% 23.3% 22.6% 10.7%
Net income 3,473 3,020 3,941 4,081 3,852 4,257 4,134 1,995
YoY 39.9% -1.4% 30.4% 59.9% 10.9% 41.0% 4.9% -51.1%
Net margin 14.5% 12.0% 15.0% 15.0% 14.9% 15.7% 15.6% 7.9%
Note: Estimates represent most recent company forecast.
06/66
R
Coverage
Pigeon / 7956
Quarterly segment performance (new segments)

Cumulative FY01/18 FY01/19
Sales 23,977 49,048 75,350 102,563 25,798 52,847 79,394 104,747
YoY 5.4% 5.9% 7.9% 8.4% 7.6% 7.7% 5.4% 2.1%
Domestic Baby & Mother Care 8,729 17,302 25,840 33,841 9,393 18,429 27,301 35,593
YoY - - - - 7.6% 6.5% 5.7% 5.2%
Child Care Service 1,931 3,759 5,623 7,541 1,664 2,564 3,499 4,472
YoY - - - - -13.8% -31.8% -37.8% -40.7%
Health & Elder Care 1,681 3,446 5,059 7,058 1,673 3,519 5,158 6,986
YoY - - - - -0.5% 2.1% 2.0% -1.0%
China 7,124 15,167 24,454 34,305 7,806 17,364 26,879 35,581
YoY - - - - 9.6% 14.5% 9.9% 3.7%
Singapore 2,311 4,799 7,595 10,286 2,928 5,915 9,150 12,133
YoY - - - - 26.7% 23.3% 20.5% 18.0%
Lansinoh 2,935 5,914 8,903 12,523 2,948 6,316 9,406 12,753
YoY - - - - 0.4% 6.8% 5.7% 1.8%
Eliminations -1,060 -1,994 -3,088 -4,284 -931 -1,889 -3,021 -4,176
Other 323 653 962 1,289 314 628 1,020 1,402
YoY 32.4% 19.5% 23.8% 21.2% 10.2% 17.3% 12.9% 1.0%
YoY - - - - 7.0% 14.9% 10.4% 2.8%
Child Care Service 53 81 141 218 44 74 112 169
YoY - - - - -16.2% -9.0% -20.4% -22.7%
Health & Elder Care 97 244 315 468 80 240 236 353
YoY - - - - -17.3% -1.9% -25.2% -24.5%
China 2,477 5,134 8,671 11,514 2,961 6,183 9,893 11,972
YoY - - - - 19.5% 20.4% 14.1% 4.0%
Singapore 664 1,285 2,036 2,488 731 1,437 2,425 2,744
YoY - - - - 10.1% 11.8% 19.1% 10.3%
Lansinoh 544 898 1,257 1,553 463 1,005 1,405 1,576
YoY - - - - -14.9% 11.8% 11.8% 1.5%
Eliminations -683 -1,472 -2,182 -2,885 -737 -1,606 -2,396 -3,442
Other 35 65 92 126 26 58 99 142
Quarterly FY01/18 FY01/19
Sales 23,977 25,071 26,302 27,212 25,798 27,049 26,547 25,353
YoY 5.4% 6.4% 11.9% 9.6% 7.6% 7.9% 0.9% -6.8%
YoY - - - - 7.6% 5.4% 3.9% 3.6%
Child Care Service 1,931 1,828 1,864 1,918 1,664 900 935 973
YoY - - - - -13.8% -50.8% -49.8% -49.3%
Health & Elder Care 1,681 1,765 1,613 1,999 1,673 1,846 1,639 1,828
YoY - - - - -0.5% 4.6% 1.6% -8.6%
China 7,124 8,043 9,287 9,851 7,806 9,558 9,515 8,702
YoY - - - - 9.6% 18.8% 2.5% -11.7%
Singapore 2,311 2,488 2,796 2,691 2,928 2,987 3,235 2,983
YoY - - - - 26.7% 20.1% 15.7% 10.9%
Lansinoh 2,935 2,979 2,989 3,620 2,948 3,368 3,090 3,347
YoY - - - - 0.4% 13.1% 3.4% -7.5%
Eliminations -1,060 -934 -1,094 -1,196 -931 -958 -1,132 -1,155
Other 323 330 309 327 314 314 392 382
YoY 32.4% 7.7% 31.4% 13.5% 10.2% 25.4% 5.5% -38.5%
YoY - - - - 7.0% 25.5% 1.2% -23.4%
Child Care Service 53 28 60 77 44 29 38 57
YoY - - - - -17.0% 5.0% -36.7% -26.0%
Health & Elder Care 97 147 71 153 80 160 -4 117
YoY - - - - -17.5% 8.8% - -23.5%
China 2,477 2,657 3,537 2,843 2,961 3,222 3,710 2,079
YoY - - - - 19.5% 21.3% 4.9% -26.9%
Singapore 664 621 751 452 731 706 988 319
YoY - - - - 10.1% 13.7% 31.6% -29.4%
Lansinoh 544 354 359 296 463 542 400 171
YoY - - - - -14.9% 52.7% 11.4% -42.2%
Eliminations -683 -789 -710 -703 -737 -869 -790 -1,046
Other 35 30 27 34 26 31 41 43
Note: From Q1 FY01/19, Pigeon breaks down the Overseas segment into Singapore and Lansinoh segments. The Singapore segment is involved with procurement and
sales of Pigeon-branded products mainly in ASEAN and Middle Eastern countries; the Lansinoh segment operates Lansinoh brand business centered in Europe and the
US. FY01/18 figures are provided for reference based on company estimates.
07/66
R
Coverage
Pigeon / 7956
GPM by segment (half-year basis)

Gross profit margin FY01/18 FY01/19
1H 2H FY 1H 2H FY
Consolidated total 48.5% 50.0% 49.3% 51.2%
YoY change +1.9pp +2.3pp +2.1pp +2.7pp
Domestic Baby & Mother Care 48.8% 49.0% 48.9% 49.2%
YoY change - - - +0.4pp
Child Care Service 10.0% 10.8% 10.4% 12.3%
Health & Elder Care 31.3% 31.3% 31.3% 32.1%
Overseas 54.2% 55.1% 54.7% 56.2%
Overseas 48.1% 46.0% 47.0% 49.7%
China 55.5% 57.2% 56.4% 59.4%
Note: From Q1 FY01/19, Pigeon breaks down the Overseas segment into Singapore and Lansinoh segments. The Singapore segment is involved with procurement and
sales of Pigeon-branded products mainly in ASEAN and Middle Eastern countries; the Lansinoh segment operates Lansinoh brand business centered in Europe and the
US. FY01/18 figures are provided for reference based on company estimates.
Sales by overseas region (half-year basis)

FY01/18 FY01/19
1H 2H FY 1H 2H FY
USD/JPY (average) 112.33 111.99 112.16 108.67
CNY/JPY (average) 16.38 16.86 16.62 17.08
China (JPYmn) 14,086 17,816 31,902 16,324
YoY 13.2% 14.6% 14.0% 15.9%
Other Asia (JPYmn) 3,258 3,957 7,215 4,298
YoY 1.3% 18.0% 9.8% 31.9%
North America (JPYmn) 3,913 4,196 8,109 3,998
YoY 12.5% 17.1% 14.8% 2.2%
Europe (JPYmn) 1,225 1,441 2,666 1,338
YoY 7.5% 28.4% 17.9% 9.2%
Near and Middle East (JPYmn) 1,034 985 2,019 1,272
YoY -23.7% -4.0% -15.2% 23.0%
Other (JPYmn) 365 552 917 473
YoY -20.7% 7.0% -6.0% 29.9%
Full-year FY01/19 results

▷ Sales: JPY104.7bn (+2.1% YoY)
▷ Operating profit: JPY19.6bn (+1.0% YoY)

▷ Recurring profit: JPY20.4bn (+1.3% YoY)
▷ Net income: JPY14.2bn (-1.9% YoY)

*Net income refers to net income attributable to parent company shareholders.
FY01/19 marks the second year of the sixth medium-term management plan (FY01/18–FY01/20). As Pigeon implemented
business strategies according to the medium-term plan, it reported 2.1% YoY rise in consolidated sales to JPY104.7bn. Sales in the
Domestic Baby & Mother Care and Singapore businesses were strong.
Operating profit rose 1.0% YoY to JPY19.6bn owing to a 2.1pp YoY improvement in CoGS ratio. Recurring profit of JPY20.4bn was
up 1.3% YoY, and net income attributable to parent company shareholders of JPY14.2bn was down 1.9% YoY.
Exchange rates applied to earnings of consolidated subsidiaries (regarding sales and expenses) were JPY110.43/USD (vs.
JPY112.16/USD in FY01/18) and JPY16.70/CNY (vs. JPY16.62/CNY on FY01/18).
From Q1 FY01/19, the Overseas segment was renamed to the Singapore segment, which is involved in procurement and sales of
Pigeon-branded products mainly in ASEAN and Middle Eastern countries. The Lansinoh brand business centered in Europe and
North America, which was part of the Overseas segment in FY01/18, became an independent segment and newly named as the
Lansinoh segment.
08/66
R
Coverage
Pigeon / 7956
Domestic Baby & Mother Care

As inbound demand from overseas visitors continued to rise, the company launched a number of new products that steadily
increased sales and expanded Pigeon's market share.
▷ New product introductions started in February 2018 with the launch of Momo No Ha (peach leaves) medicated foam body soap,
designed to gently cleanse the delicate skin of infants
▷ This was followed in March by the launch of Runfee, a new style of baby stroller designed to be easier to push when in rear-facing
(pusher-facing) position
▷ In July the company came out with a completely redesigned breast pumps under its Nursing Assist® series, the new pumps
featured its “Baby Comfort Rhythm” technology, born from over 60 years of nursing research
▷ This was followed in August by an electric nasal aspirator vacuum suction device, jointly developed with the help of ear, nose,
and throat doctors
To improve direct customer communication, Pigeon held a total of 31 events during FY01/19, including Breastfeeding College—a
class for expecting mothers, and seminars on the theme of breast feeding for medical professionals who work with nursing
mothers (total of roughly 3,100 attendees). On Pigeon Info, a website supporting women who are expecting, just gave birth, or
are raising children, in addition to updating product information the company took further steps towards strengthening its ties
with healthcare providers with the launch of a new website aimed at healthcare providers in May 2018.
Childcare Service
▷ Sales: JPY4.5bn (-40.7% YoY)

▷ Operating profit: JPY169mn (-22.7% YoY)
The company’s contract to operate on-site child-care facilities in National Hospital Organization hospitals ended in March 2018.
During FY01/19 the company began operating five new contracted onsite company childcare centers and expanded services to a
total of 76 locations.
Health & Elder Care

The company displayed new products it plans to launch in 2019 at the International Home Care and Rehabilitation Exhibition
held in October 2018. The company will continue strengthening sales to retailers and nursing facilities as well as improving the
quality of its nursing services.
China

Sales and operating profit rose driven by sales of core products such as nursing bottles, nipples, and skincare products. In
particular, sales of its Momo No Ha (peach leaves) medicated skin lotion series and Bonyu Jikkan® Nursing bottle my Precious
09/66
R
Coverage
Pigeon / 7956
have continued to be strong. Products launched in 2H, including handled nursing bottles and steam disinfectants, also received
strong reviews.
In addition to strengthening initiatives geared toward e-commerce, the company plans to bolster direct communications with
customers through social networking services and influencers, and expand its offline activities, such as sales promotions at retail
stores and activities in maternity and general hospitals.
Singapore

Sales increased mainly on strong sales of nursing bottles and nipples in Middle Eastern and ASEAN countries, including Indonesia.
The company intends to continue working toward market penetration of its brand.
Lansinoh
In North America, sales of breast pumps and other products via new sales channels including the durable medical equipment
(DME) and maternity center channel grew. Further, the company is working on measures to strengthen marketing and its brand
in Europe and Lansinoh Shanghai with an aim of expanding business in the regions.
For details on previous quarterly and annual results, please refer to the Historical financial statements section.
10/66
R
Coverage
Pigeon / 7956
Full-year company forecasts

FY012/19 company forecasts
FY01/19 FY12/19
(JPYmn) 1H Act. 2H Act. FY Act. FY Est.
Sales 52,847 51,900 104,747 106,200
YoY 7.7% -3.0% 2.1% -
CoGS 25,784 25,105 50,889
Gross profit 27,063 26,795 53,858
YoY 13.9% 0.0% 6.5%
GPM 51.2% 51.6% 51.4%
SG&A expenses 16,156 18,090 34,246
SG&A ratio 30.6% 34.9% 32.7%
Operating profit 10,907 8,705 19,612 20,000
YoY 17.3% -13.9% 1.0% -
OPM 20.6% 16.8% 18.7% 18.8%
Recurring profit 11,679 8,719 20,398 20,000
YoY 24.5% -18.9% 1.3% -
RPM 22.1% 16.8% 19.5% 18.8%
Net income 8,109 6,129 14,238 14,300
YoY 24.9% -23.6% -1.9% -
Note: The company plans to change its fiscal year-end from January to December. The change, which will take effect in April 2019, will result in an 11-month accounting
period (February to December 2019) during the transitional year (FY12/19) for companies included in consolidated results that have fiscal years ending in January.
For FY12/19 Pigeon is forecasting full-year sales of JPY106.2bn, an operating profit of JPY20.0bn, recurring profit of JPY20.0bn, and
net income attributable to parent company shareholders of JPY14.3bn. The company plans to change its fiscal year-end from
January to December. The change, which will take effect in April 2019, will result in an 11-month accounting period (February to
December 2019) during the transitional year (FY12/19) for companies included in consolidated results that have fiscal years
ending in January.
Historical forecast accuracy

Results vs Initial Est. FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18 FY01/19
(JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons.
Sales (Initial Est.) 56,000 60,700 61,100 64,300 73,500 84,500 92,000 95,000 99,800 107,000
Sales (Results) 53,432 57,061 59,145 65,075 77,465 84,113 92,209 94,640 102,563 104,747
Results vs Initial Est. -4.6% -6.0% -3.2% 1.2% 5.4% -0.5% 0.2% -0.4% 2.8% -2.1%
Operating profit (Initial Est.) 4,400 5,500 5,000 5,650 7,800 11,600 13,900 15,000 17,000 20,400
Operating profit (Results) 4,604 4,546 5,042 7,086 10,365 12,780 14,521 16,015 19,412 19,612
Results vs Initial Est. 4.6% -17.3% 0.8% 25.4% 32.9% 10.2% 4.5% 6.8% 14.2% -3.9%
Recurring profit (Initial Est.) 4,350 5,400 4,950 5,550 7,800 11,800 14,000 15,300 17,000 20,400
Recurring profit (Results) 4,609 4,435 4,917 7,389 11,002 13,299 15,080 16,462 20,129 20,398
Results vs Initial Est. 6.0% -17.9% -0.7% 33.1% 41.1% 12.7% 7.7% 7.6% 18.4% 0.0%
Net income (Initial Est.) 3,000 3,500 3,300 3,300 4,850 7,300 8,900 10,400 11,800 14,100
Net income (Results) 2,840 2,928 3,183 4,573 6,985 8,451 10,197 11,118 14,515 14,238
Results vs Initial Est. -5.3% -16.3% -3.5% 38.6% 44.0% 15.8% 14.6% 6.9% 23.0% 1.0%
11/66
R
Coverage
Pigeon / 7956
Outlook
Targets for the Medium-term Management Plan
In March 2017, Pigeon released a sixth medium-term management plan that covers the three years between FY01/18 and
FY01/20.
For FY01/20, the final year of medium-term management plan, targets for consolidated results are as follows:
▷ Sales: JPY110bn (+5.1% average growth rate over the three years of the medium-term plan)
▷ Operating profit: JPY20bn (+7.7%)
▷ Recurring profit: JPY20bn (+6.7%)
▷ Net income: JPY13.8bn (+7.5%)
Regarding indicators of shareholder returns, the sixth medium-term management plan targets a YoY dividend increase in each
fiscal year and consolidated total returns ratio of around 55%. The company says that it will adopt a flexible approach to
increasing shareholder returns with share buybacks as one of the options.
Main points of Medium-term Management Plan

The sixth medium-term management plan, which is positioned to build foundations for further growth during the next
medium-term plan period, focuses on improving the GPM over expanding sales. The company aims to build a base for
double-digit growth starting four years after the start of the sixth plan by prioritizing the allocation of management resources,
and strategic investment in core product categories.
Rather than slashing SG&A expenses, the sixth medium-term plan aims to lift gross profit by increasing sales of profitable
products and improving production efficiency. In terms of SG&A expenses, the company plans to increase marketing costs to
expand its trade area, but also improve the OPM by increasing gross profit.
The company’s FY01/19 forecasts are sales of JPY107bn, GPM of 51.1%, operating profit of JPY20.4bn, and OPM of 19.1%. If the
company were to attain these targets, it will reach the final-year targets of its current medium-term plan a year early in FY01/19.
Positioning of sixth medium-term management plan
Source: company data
12/66
R
Coverage
Pigeon / 7956
Outline of Sixth Medium-Term Management Plan

In the medium-term plan, the company has decided on the following slogan: “Building our dreams into the future—by creating a
bridge towards the Global Number One manufacturer of baby products.” The company plans to strengthen its management and
business foundation by making strategic investments and achieving its targets in order to generate further growth after the
seventh medium-term management plan.
In this new medium-term management plan, the company aims to expand the group’s businesses and improve management
quality with the following three key strategies.
◤ Based on the core principles of the “Pigeon Way,” the company will develop and implement policies to achieve its goal set in
the plan to become the most trusted company for babies and their families around the world and the top global manufacturer
of baby products.
◤ The company will aim to increase corporate value by maximizing its cash flow and improving profitability and efficiency. In
addition, the company will build and strengthen its organizational structure, management system, and governance structure
to sustain medium- to long-term growth.
◤ In the three years of the sixth medium-term plan, the company will make strategic investments and focus management
resources on key products in order to lay the foundation for double-digit future growth.
Based on these key strategies, the company plans to focus on improving efficiency and profitability (better profit and cash flow
management) and expanding its priority categories (leverage strengths of the robust nursing bottles and nipples businesses into
related categories).
Specifically, the company is focusing on three new core products in addition to its traditional three core products of nursing
bottles & nipples, cups, and pacifiers/teether toys to lift sales. The three new core products are breast milk-related products,
electrical appliances, and skincare, toiletries, & detergents (i.e., chemical products made in the same factory). Pigeon aims to
improve its product mix by increasing the sales share of these profitable new products.
In specific trade areas, the company is focusing on expanding sales of disposable diapers in China and strollers and infant car seats
in Japan. These measures are designed to increase the sales share of these products in each region so that higher sales lead to
improved production and sourcing.
By implementing these measures, the company aims to increase the GPM from 47.2% in FY01/17 to 50.0% and OPM from 16.9%
in FY01/17 to 18.2%. ROE and ROIC have been identified as important management benchmarks and the company is striving to
further improve profitability and capital efficiency.
Improving business efficiency and profitability
(JPYbn) Sales Gross profit GPM
120.0 110.0 51.0%

99.8 102.3
100.0 94.6 50.0%
50.0%
49.7%
80.0 49.0%
47.7% 55.0
60.0 50.8 48.0%
44.6 47.6
40.0 47.0%
47.2%
20.0 46.0%
0.0 45.0%
FY01/17 FY01/18 FY01/19 FY01/20
13/66
R
Coverage
Pigeon / 7956
Key targets for medium-term management plan

FY01/17 Act. FY01/20 Target CAGR
(JPYbn) Act. % of sales Target % of sales
Sales 94.6 - 110.0 - +5.1%
Gross profit 44.6 47.2% 55.0 50.0% +7.2%
Operating profit 16.0 16.9% 20.0 18.2% +7.7%
Recurring profit 16.4 17.4% 20.0 18.2% +6.7%
Net income 11.1 11.8% 13.8 12.5% +7.5%
ROE 21.8% - Over 22.0% - -
ROIC* 19.2% - Over 20.0% - -
Note: ROIC = NOPAT divided by invested capital
Note: Tax rates are assumed at 30.0%.
Plan targets and business strategies by segment

Sales targets for final year of medium-term management plan by segment are as follows:
▷ Domestic Baby & Mother Care: JPY36.5bn (+4.7% average growth rate over the three years of the plan)
▷ Child Care Service: JPY3.0bn

▷ Health & Elder Care: JPY8.0bn (+5.0%)
▷ Overseas: JPY28.9bn (+7.9%)
▷ China: JPY39.0bn (+8.5%)
Sales forecasts by segment

FY01/17 Act. FY01/20 Target CAGR
(JPYbn) Act. GPM Target GPM
Domestic Baby & Mother Care 31.8 47.0% 36.5 47.6% +4.7%
Child Care Service 7.3 10.6% 3.0 16.8% -
Health & Elder Care 6.9 31.4% 8.0 34.6% +5.0%
Overseas 23 55.6% 28.9 56.1% +7.9%
China 30.5 44.6% 39.0 45.7% +8.5%
Elimination -6.3 - -6.9 - -
Others 1.2 15.6% 1.4 15.5% +4.6%
Consolidated sales 94.6 47.2% 110.0 50.0% +5.1%
Business strategies and main measures by segment
Domestic Baby & Mother Care segment: Increase sales from JPY31.8bn in FY01/17 to JPY36.5bn in FY01/20
Expand existing businesses Increase market share in six core categories

Sales target (excluding large-size products): from JPY30.7bn in FY01/17 to JPY33.0bn in FY01/20
Business growth Growth in large-size products category

Growth in baby strollers, car seats, etc., by increasing market share
Sixth medium-term plan target of 25% market share in strollers
Category sales target: from JPY1.0bn in FY01/17 to JPY3.5bn in FY01/20
Further strengthen Restructure and reinforce hospital/maternity hospital relations

communication with Strengthen relationship with target hospitals/maternity hospitals and further expand healthcare seminars
consumers (regions, frequency)
Strengthen direct communication
Attract more Pigeon fans using Pigeon.info website
Child Care Service segment: Increase sales from JPY7.4bn in FY01/17 to JPY3.0bn in FY01/20
Improve business quality Practice professional child care suited to individual child’s personality
Further improve management structure for safety and security
Improve quality of child care by training child-care workers
Health and Elder Care segment: Increase sales from JPY6.9bn in FY01/17 to JPY8.0bn in FY01/20
Business growth and Strengthen internal sales and distribution structure

improving profitability Develop and sell new products aligned with consumer/care giver insights by collaborating with partners outside
the company
14/66
R
Coverage
Pigeon / 7956
Strengthen promotion based on four themes aligned with benefiting consumers and care givers
China segment: Increase sales from JPY30.5bn in FY01/17 to JPY39.0bn in FY01/20
Business growth Increase market share in six core categories

Nursing bottles & nipples: Increase sales by 39% between FY01/17 and FY01/20
Launch new products every year
Grow disposable diaper business
Increase sales from JPY900mn in FY01/17 to JPY3.5bn in FY01/20
Strengthen business base Sales and distribution structure

Further strengthen sales and distribution structure to adapt to growth of e-commerce channel
Further strengthen Restructure and reinforce hospital/maternity hospital relations

communication with Strengthen relationship with target hospitals/maternity hospitals (e.g., joint research with university hospitals)
consumers Strengthen direct communication
Attract more Pigeon fans using WeChat and Weibo
Overseas segment: Increase sales from JPY23.1bn in FY01/17 to JPY29.0bn in FY01/20
Business growth Increase market share in six core categories

Nursing bottles: Increase market share by 15pp in each country
Growth of Lansinoh Group
Increase sales from USD99mn in FY01/17 to USD135mn in FY01/20
Strengthen sales via DME route in US
Branding Working with NICU

Step up collaboration with NICU as well as other hospital/maternity hospital relations activities
New and growth markets Strengthen presence in growth markets

India, Indonesia, France (Benelux), Lansinoh Shanghai
Pioneer new markets
Africa (Nigeria, Kenya, and West Coast countries)
Potential of target markets

The company estimates that 135mn babies are born per year worldwide, of which the 20 largest countries account for 68% of the
total (91.6mn). The company estimates that its target market as 17.82mn babies based on this figure and factoring in the
purchasing power of each country benchmarked by US GDP.
Top 20 countries representing Pigeon’s target market
Est. target
No. of births
GDP per capita no. of births
Country ('000 per US=100%
(USD) ('000 per
year)
year)
United States 4,010 56,300 100% 4,010
Mature market Russia 1,650 23,700 42% 700
(Over USD20,000 per capita)
Turkey 1,300 20,500 36% 470
Mexico 2,290 18,500 33% 750
Iran 1,470 17,800 32% 470
Growth market Brazil 2,950 15,800 28% 830
(USD10,000–20,000 per capita) China 17,080 14,300 25% 4,340
Egypt 2,030 11,500 20% 410
Indonesia 4,280 11,300 20% 860
Philippines 2,450 7,500 13% 330
Next wave Nigeria 6,830 6,400 11% 780
(USD5,000–10,000 per capita) India 24,470 6,300 11% 2,740
Vietnam 1,510 6,100 11% 160
Pakistan 4,500 4,900 9% 390
Bangladesh 3,570 3,600 6% 230
Tanzania 1,860 3,000 5% 100
Ten years later Uganda 1,620 2,100 4% 60
(Less than USD5,000 per capita)
Afghanistan 1,260 2,000 4% 40
Ethiopia 3,710 1,700 3% 110
Congo 2,770 800 1% 40
15/66
R
Coverage
Pigeon / 7956
Pigeon comments that there is no direct link between this estimate and the sixth medium-term plan targets, but notes that China
(its current growth market) and other regions offer substantial growth potential. Given the considerable scope for cultivating
these markets based on current GDP levels, the company expects target markets to expand further if these countries’ GDPs rise
going forward.
Image of estimated market size
Source: company data
Targets by overseas region

In the overseas business, Pigeon plans to increase market share in the six core categories in China, North America, and Europe.
The company has two timelines for new/growth markets. The company intends to continue strengthening growth markets like
India, Indonesia, France, and China (Lansinoh Shanghai) as well as pioneering new, emerging markets such as Africa.
16/66
R
Coverage
Pigeon / 7956
Sales target by overseas region
FY01/17 Act. FY01/18 Act. FY01/19 Est. FY01/20 Target. CAGR

(JPYmn)
Sales % of total Sales % of total Sales % of total Sales % of total
Total overseas 47,238 49.9% 52,828 51.5% 55,716 54.5% 61,012 55.5% +8.9％
China (incl. Hong Kong) 27,985 29.6% 31,902 31.1% 32,727 32.0% 36,015 32.7% +8.8％
Other Asia 6,569 6.9% 7,215 7.0% 6,863 6.7% 7,534 6.8% +4.7％
North America 7,061 7.5% 8,109 7.9% 8,355 8.2% 8,713 7.9% +7.3％
Europe 2,262 2.4% 2,666 2.6% 3,605 3.5% 4,075 3.7% +21.7％
Near and Middle East 2,382 2.5% 2,019 2.0% 2,706 2.6% 2,994 2.7% +7.9％
Other regions 976 1.0% 917 0.9% 1,457 1.4% 1,678 1.5% +19.8％
(JP Ybn)
China (incl. Hong Kong) Other Asia North America Europe Near and Middle East Other regions
70
60
50
40
30
20
10
0
FY01/14 FY01/15 FY01/16 FY01/17 Act. FY01/18 Act. FY01/19 Est. FY01/20 Target
(JPYbn) FY01/14 FY01/15 FY01/16 FY01/17 FY01/18 FY01/19 FY01/20

Act. Act. Act. Act. Act. Est. Target
China (incl. Hong Kong) 22.4 26.3 28.2 27.9 31.9 32.7 36.0
Other Asia 6.1 6.8 7.3 6.5 7.2 6.8 7.5
North America 5.4 6.3 7.6 7.0 8.1 8.3 8.7
Europe - 2.0 2.4 2.2 2.6 3.6 4.0
Near and Middle East 2.1 2.2 2.6 2.3 2.0 2.7 2.9
Other regions 24.0 0.9 1.2 0.9 0.9 1.4 1.6
ESG initiative
Pigeon is focusing ESG (Environment, Social, and Governance) as part of a program to improve corporate value (see below).
Main ESG measures
Topics Actions to take
Climate change - Reduce CO2 emission; save electric power

Natural resources - Ensure sustainable use of natural resources
Environment
Pollution and industrial waste - Reduce waste and trash; prevent pollution
Environmental opportunities - Engage in tree-planting activities
- Control overtime work: implement MBO and training; develop
Human capital
human resources for international operations
Product liability - Secure product safety and quality
Social - Promote tree-planting campaign for newborns; support
Social action developing children's creativity; donate buildings to elementary
schools
- Encourage use of Pigeon Partners' Line; respect property
Fair business practices
rights
Corporate governance - Enhance corporate governance
- Promote employee diversity; support female advancement to
Governance
Diversity and inclusion senior management; assist employees with child raising
- Enhance compliance; Encourage use of Speak Up
17/66
R
Coverage
Pigeon / 7956
Business
Business description
Pigeon operates three business segments in Japan, Domestic Baby & Mother Care, Health & Elder Care, and Child Care Service,
and two overseas segments, Overseas (broken down into Singapore and Lansinoh from FY01/19) and China. The Overseas and
China segments handle baby and mother care products, and this product group is overwhelmingly important for the company.
Earnings by segment
(JPYmn) FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Sales 59,145 65,075 77,465 84,113 92,210 94,640 102,563

YoY 3.7% 10.0% 19.0% 8.6% 9.6% 2.6% 8.4%
Domestic Baby & Mother Care 24,048 23,882 24,451 24,432 28,053 31,823 33,841
YoY -1.5% -0.7% 2.4% -0.1% 14.8% 13.4% 6.3%
% of sales 40.7% 36.7% 31.6% 29.0% 30.4% 33.6% 33.0%
Child Care Service 5,991 6,388 6,600 6,722 6,758 7,393 7,541
YoY 9.8% 6.6% 3.3% 1.9% 0.5% 9.4% 2.0%
% of sales 10.1% 9.8% 8.5% 8.0% 7.3% 7.8% 7.4%
Health & Elder Care 6,469 6,700 6,721 6,761 6,499 6,901 7,058
YoY -0.5% 3.6% 0.3% 0.6% -3.9% 6.2% 2.3%
% of sales 10.9% 10.3% 8.7% 8.0% 7.0% 7.3% 6.9%
Overseas (old segments, incl. China) 21,585 26,964 38,541 44,921 49,616 47,247 52,830
YoY 8.4% 24.9% 42.9% 16.6% 10.5% -4.8% 11.8%
% of sales 36.5% 41.4% 49.8% 53.4% 53.8% 49.9% 51.5%
Overseas (new segments, excl. China) - - 16,857 19,144 18,421 16,932 18,659
YoY - - - 13.6% -3.8% -8.1% 10.2%
% of sales - - 21.8% 22.8% 20.0% 17.9% 18.2%
China - - 21,684 25,776 31,195 30,315 34,171
YoY - - - 18.9% 21.0% -2.8% 12.7%
% of sales - - 28.0% 30.6% 33.8% 32.0% 33.3%
Other 1,052 1,141 1,152 1,276 1,284 1,273 1,289
Operating profit 5,043 7,086 10,366 12,781 14,522 16,015 19,412
YoY 10.9% 40.5% 46.3% 23.3% 13.6% 10.3% 21.2%
OPM 8.5% 10.9% 13.4% 15.2% 15.7% 16.9% 18.9%
Domestic Baby & Mother Care 3,678 3,380 3,412 3,752 4,384 4,818 5,928
YoY 1.9% -8.1% 1.0% 10.0% 16.8% 9.9% 23.0%
OPM 15.3% 14.2% 14.0% 15.4% 15.6% 15.1% 17.5%
% of operating profit 44.7% 32.8% 24.1% 22.2% 23.1% 25.6% 26.6%
Child Care Service 153 183 176 189 149 211 218
YoY 30.4% 19.7% -3.6% 7.4% -21.3% 41.8% 3.3%
OPM 2.5% 2.9% 2.7% 2.8% 2.2% 2.9% 2.9%
Health & Elder Care 350 213 212 260 141 445 468
YoY 215.6% -39.3% -0.4% 22.6% -45.9% 216.4% 5.2%
OPM 5.4% 3.2% 3.2% 3.8% 2.2% 6.4% 6.6%
Overseas (old segments, incl. China) 3,909 6,387 10,172 12,494 14,166 13,216 15,557
YoY 4.4% 63.4% 59.3% 22.8% 13.4% -6.7% 17.7%
OPM 18.1% 23.7% 26.4% 27.8% 28.6% 28.0% 29.4%
Overseas (new segments, excl. China) - - 4,152 4,969 5,579 4,861 5,841
YoY - - - 19.7% 12.3% -12.9% 20.2%
OPM - - 24.6% 26.0% 30.3% 28.7% 31.3%
% of operating profit - - 29.3% 29.5% 29.4% 25.8% 26.2%
China - - 6,041 7,525 8,587 8,355 9,716
YoY - - - 24.6% 14.1% -2.7% 16.3%
OPM - - 27.9% 29.2% 27.5% 27.6% 28.4%
% of operating profit - - 42.6% 44.6% 45.2% 44.3% 43.6%
Other 138 142 204 173 152 162 126
Eliminations -3,185 -3,218 -3,811 -4,091 -4,469 -2,840 -2,887
Domestic Baby & Mother Care segment

(33.0% of total sales in FY01/18, 26.6% of OP before adjustments)
18/66
R
Coverage
Pigeon / 7956
Domestic Baby & Mother Care segment earnings

Sales 24,048 23,882 24,451 24,432 28,053 31,823 33,841

YoY -1.5% -0.7% 2.4% -0.1% 14.8% 13.4% 6.3%
Gross profit 11,180 11,180 11,200 11,240 12,460 14,960 16,550
YoY 1.3% 0.0% 0.2% 0.4% 10.9% 20.1% 10.6%
GPM 46.5% 46.8% 45.8% 46.0% 44.4% 47.0% 48.9%
SG&A expenses 7,500 7,800 7,790 7,490 8,080 10,140 10,620
YoY 0.9% 4.0% -0.1% -3.9% 7.9% 25.5% 4.7%
SG&A-to-sales ratio 31.2% 32.7% 31.9% 30.7% 28.8% 31.9% 31.4%
Operating profit 3,678 3,380 3,412 3,752 4,384 4,818 5,928
YoY 1.9% -8.1% 1.0% 10.0% 16.8% 9.9% 23.0%
OPM 15.3% 14.2% 14.0% 15.4% 15.6% 15.1% 17.5%
Note: GPM and SG&A expenses are calculated by Shared Research based on company data.
Pigeon’s core products are nursing bottles and nipples and its main market are parents of babies 0–24 months old. These two
product types represent approximately 18% of domestic sales (Shared Research understands the number to be about 25% of
total consolidated sales, including the Overseas segment), and their importance for both the brand and the bottom line cannot
be underestimated. Apart from bottles and nipples, the product lineup includes nursing pads, baby wipes, skincare goods,
maternity products, strollers, and breast pumps.
The product cycle is two to three years for baby food and about five years for other products. The product-renewal cycle offers a
chance to secure shelf space and negotiate with store owners. R&D expenses tend to be a little over 2% of consolidated sales—at
2.1% in FY01/08 and 2.6% in FY01/18.
Pigeon products enjoy exceptional support of its Japanese consumers as illustrated by the market share chart below. The strong
brand allows the company to maintain premium pricing and avoid discounting. This not only helps to perpetuate the brand
image but contributes to high profitability.
Domestic Baby & Mother Care products
Source: Company data
Pigeon core product market share and position (FY01/18)
100%
80% No.1
No.1
No.1
60%
40% No.1
73% No.1
70%
64%
20% 37% 32%
0%
Nursing bottles Manual breast Breast pads Baby skincare Baby wipes
pumps (cleaners)
Pigeon makes about 60% of its products in house. The company did not have its own manufacturing facilities till the mid-80s
when it established Pigeon Home Products Corp. in Shizuoka Prefecture. Pigeon opened its first overseas factory in Thailand in
19/66
R
Coverage
Pigeon / 7956
1996. As of FY01/13, the in-house manufacturing is carried out by several domestic and overseas manufacturing subsidiaries. The
remaining 40% of the products are sourced from over 100 partner manufacturers.
In general, the company’s products sold wholesale to distributors are sold at drugstores and baby goods retailers. Main clients
are major drugstore chains like drugstores of Tsuruha Holdings, Inc. (TSE1: 3391), Matsumotokiyoshi Holdings Co., Ltd. (TSE1:
3088), Sundrug Co., Ltd. (TSE1: 9989), Sugi Holdings Co., Ltd. (TSE1: 7649), and Cosmos Pharmaceutical Corporation (TSE1:
3349), and baby goods retailers including Nishimatsuya Chain Co., Ltd. (TSE1: 7545) and Akachan Honpo. The company has
three-way sales negotiations with a retailer and distributor in attendance. As an exception to this practice, Pigeon deals directly
with Toys “R” Us and Akachan Honpo.
The company also sells online, at third-party e-commerce sites such as Amazon.co.jp.
Mag Mag
Mag Mag Nipple Cup Mag Mag Spout Cup Mag Mag Training Cup Mag Mag Straw Cup
Child Care Service segment

Child Care Service segment earnings
Sales 5,991 6,388 6,600 6,722 6,758 7,393 7,541

YoY 9.8% 6.6% 3.3% 1.9% 0.5% 9.4% 2.0%
Gross profit 690 730 760 750 720 780 780
YoY 3.0% 5.8% 4.1% -1.3% -4.0% 8.3% 0.0%
GPM 11.5% 11.4% 11.5% 11.2% 10.7% 10.6% 10.4%
SG&A expenses 540 550 580 560 570 570 560
YoY -1.8% 1.9% 5.5% -3.4% 1.8% 0.0% -1.8%
Operating profit 153 183 176 189 149 211 218
YoY 30.4% 19.7% -3.6% 7.4% -21.3% 41.8% 3.3%
OPM 2.5% 2.9% 2.7% 2.8% 2.2% 2.9% 2.9%
Child Care Services
This division operates licensed and certified child-care centers, including onsite company child-care centers, contracted centers,
Kids World preschool, and other facilities. As of FY01/18, the division had 54 sites, excluding hospital centers under the National
Hospital Organization.
A “licensed child-care center” is one approved under the provisions of the Child Welfare Act, which cover standards (e.g., facility
size, number of caregivers, kitchen facilities, disaster management, and hygiene management) set by the national government
and approved by the prefectural governor. In contrast, a “certified child-care center” is particular to Tokyo. The Tokyo
20/66
R
Coverage
Pigeon / 7956
Metropolitan Government felt that the licensed centers were not likely to fill the needs of citizens of Tokyo, because many of the
requirements for “licensed” centers were not applicable to large cities (in densely populated Japanese cities, it is fairly difficult to
secure enough space meeting the national standard), and some centers do not accept babies under one year old. The local
government set its own standards that match the characteristics of Tokyo, and established its own centers and designed a system
to cope with diversified child-care needs, through promoting competition among service providers by soliciting a large number
of new entrants.
Pigeon hires its own child-care workers and cooking staff, providing training depending on the type of employment and services.
Child-care staff receives training at Pigeon Heartner College to ensure safe and reliable care. Pigeon Hearts Corporation, a group
company, offers licensed and certified child-care facilities, as well as in-house child-care services for companies. Kids World, a
child-care center, offers child care, English classes, and preschool activities and is primarily a franchise operation that generates
royalty revenues for Pigeon. This labor-intensive business is not a high-margin one, but it does offer synergies with the Domestic
Baby & Mother Care business, which targets babies 0–24 months (unlike other general child-care centers) to better support
working mothers.
Health & Elder Care segment

Health & Elder Care segment earnings
Sales 6,469 6,700 6,721 6,761 6,499 6,901 7,058

YoY -0.5% 3.6% 0.3% 0.6% -3.9% 6.2% 2.3%
Gross profit 1,900 2,050 2,000 1,940 1,840 2,170 2,210
YoY 2.2% 7.9% -2.4% -3.0% -5.2% 17.9% 1.8%
GPM 29.3% 30.6% 29.8% 28.7% 28.3% 31.4% 31.3%
SG&A expenses 1,550 1,840 1,790 1,680 1,700 1,730 1,740
YoY -11.4% 18.7% -2.7% -6.1% 1.2% 1.8% 0.6%
Operating profit 350 213 212 260 141 445 468
YoY 215.6% -39.3% -0.4% 22.6% -45.9% 216.4% 5.2%
OPM 5.4% 3.2% 3.2% 3.8% 2.2% 6.4% 6.6%
This segment offers two brands: Habinurse (nursing products) and Recoup (for active seniors). These brands cover products and
services related to toilet use, bathing, hygiene, meals, sleeping, and mobility. Pigeon plans to use its expertise and quality control
cultivated though its development of baby products to fulfill unmet needs in the senior market.
Health & Elder Care segment products
Pigeon Tahira Corporation sells products in this segment to retail shops and care facilities. In 1991, Pigeon Tahira moved away
from direct sales and introduced a distributor system (a first in the Japanese nursing industry). It has been a Pigeon subsidiary
since 2004. The company began to strengthen sales activities at care facilities in FY01/14. In FY01/15, the company combined the
Pigeon Tahira’s salesforce with its own in the Health & Elder Care segment, in a bid to enhance its marketing capacity and
efficiency.
Pigeon Manaka Corporation sells in-home nursing support services and products in and around its home prefecture of Tochigi.
The group offers house call services, in-home bathing assistance, daycare, assisting devices, home renovation, and care
21/66
R
Coverage
Pigeon / 7956
consultation. Pigeon Manaka hires care workers with level 1 and 2 helper qualifications and standard driver’s licenses. In August
2011, it opened centers in Ohira-machi, Tochigi City, and Kanuma City, offering home-visit nurses and in-home bathing services.
In December 2011, it also opened adult daycare center “San San” in Tochigi City (on the premises of Pigeon Manaka’s head
office) where clients needing nursing or assistance can go to receive help with bathing and meals (including associated nursing)
as well as advice, health checks, help with everyday living, and functional training.
Overseas segment
Overseas segment earnings
(JPYmn) FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Sales 20,306 23,374 25,234 23,051 25,427

YoY - 15.1% 8.0% -8.7% 10.3%
Sales (external customers) 16,857 19,144 18,421 16,932 18,659
YoY - 13.6% -3.8% -8.1% 10.2%
Interrnal transactions or transfer 3,449 4,230 6,813 6,119 6,768
Gross profit 10,780 12,550 13,980 12,820 14,520
YoY - 16.4% 11.4% -8.3% 13.3%
GPM 53.1% 53.7% 55.4% 55.6% 57.1%
SG&A expenses 6,630 7,580 8,400 7,960 8,680
YoY - 14.3% 10.8% -5.2% 9.0%
SG&A-to-sales ratio 39.3% 39.6% 45.6% 47.0% 46.5%
Operating profit 4,152 4,969 5,579 4,861 5,841
YoY - 19.7% 12.3% -12.9% 20.2%
OPM 24.6% 26.0% 30.3% 28.7% 31.3%
Note: Operations in South Korea, Hong Kong, and Taiwan were transferred from the Overseas business to the China business from FY01/16.
The Overseas segment includes other overseas regions than those under the China segment (broken down into Singapore and
Lansinoh from FY01/19). The Overseas segment mainly handles baby goods. As a reference, in FY01/18 the Singapore business
posted sales of JPY10.3bn and operating profit of JPY2.4bn, and the Lansinoh business posted sales of JPY12.5bn and operating
profit of JPY1.4bn.
Sales of the Lansinoh business is close to total sales of the following regional segments: North America (JPY8.1bn in FY01/18),
Europe (JPY2.7bn), and Lansinoh Shanghai (approx. JPY900mn versus a little over JPY450mn in FY01/17).
China segment
China segment earnings
(JPYmn) FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Sales 21,980 26,302 31,688 30,533 34,494

YoY - 19.7% 20.5% -3.6% 13.0%
Sales (external customers) 21,684 25,776 31,195 30,315 34,171
YoY - 18.9% 21.0% -2.8% 12.7%
Interrnal transactions or transfer 296 525 493 218 323
Gross profit 9,430 11,490 14,130 13,620 19,730
YoY - 21.8% 23.0% -3.6% 44.9%
GPM 42.9% 43.7% 44.6% 44.6% 57.2%
SG&A expenses 3,390 3,970 5,540 5,270 10,010
YoY - 17.1% 39.5% -4.9% 89.9%
SG&A-to-sales ratio 15.6% 15.4% 17.8% 17.4% 29.3%
Operating profit 6,041 7,525 8,587 8,355 9,716
YoY - 24.6% 14.1% -2.7% 16.3%
OPM 27.9% 29.2% 27.5% 27.6% 28.4%
Note: Operations in South Korea, Hong Kong, and Taiwan were transferred from the Overseas business to the China business from FY01/16.
The China segment targets new middle-class households, mainly with nursing bottles and skincare products. In FY01/18, Pigeon
had more than 500 products on the Chinese market, and in the main urban areas on the coast it plans to offer products in higher
price bands in response to increasing demand for quality goods as the new middle-class demographic grows.
Pigeon entered the Chinese market upon having established a local subsidiary there in 2002. In the China segment,
manufacturing bases located in Shanghai and Changzhou handle production. High capacity utilization rates at the plants have
22/66
R
Coverage
Pigeon / 7956
helped boost the profitability in China. The segment includes operations in China, South Korea, Hong Kong, Taiwan, Russia, and
the Philippines.
As a measure of its policy to promote providing babies with breast milk, the Chinese Ministry of Health launched a joint project
with Pigeon in 2009 to open counseling rooms for breastfeeding at 34 major hospitals and maternity homes nationwide (the
number rose to 58 in FY01/18). The company joined hands with over 280 hospitals and maternity homes in FY01/18 to hold a
campaign for breastfeeding. As the company’s nursing bottles are used in the instructions in the counseling rooms, they provide
an opportunity to let expecting and nursing mothers recognize its brand.
Pigeon started selling disposable diapers in the Chinese market in July 2013, also targeting affluent families (accounting for 7–8%
of all households). The company aims to take a share of around 30% of the affluent families (2–3% of all households).
23/66
R
Coverage
Pigeon / 7956
Overseas sales trends by market

Pigeon classifies overseas operations into the China and Overseas segments, and also discloses sales trends by region.
Overseas sales breakdown
Overseas sales 21,542 26,922 38,492 44,900 49,579 47,238 52,828

YoY 8.5% 25.0% 43.0% 16.6% 10.4% -4.7% 11.8%
China 10,167 14,112 22,417 26,384 28,291 27,985 31,902
YoY 11.8% 38.8% 58.9% 17.7% 7.2% -1.1% 14.0%
% of sales 47.2% 52.4% 58.2% 58.8% 57.1% 59.2% 60.4%
Other Asia 4,221 5,243 6,125 6,800 7,326 6,569 7,215
YoY 8.0% 24.2% 16.8% 11.0% 7.7% -10.3% 9.8%
% of sales 19.6% 19.5% 15.9% 15.1% 14.8% 13.9% 13.7%
North America 3,842 3,668 5,418 6,376 7,671 7,061 8,109
YoY -0.3% -4.5% 47.7% 17.7% 20.3% -8.0% 14.8%
% of sales 17.8% 13.6% 14.1% 14.2% 15.5% 14.9% 15.3%
Europe - - - 2,090 2,400 2,262 2,666
YoY - - - - 14.8% -5.8% 17.9%
% of sales - - - 4.7% 4.8% 4.8% 5.0%
Near and Middle East 1,532 1,878 2,118 2,262 2,684 2,382 2,019
YoY 8.6% 22.6% 12.8% 6.8% 18.7% -11.3% -15.2%
% of sales 7.1% 7.0% 5.5% 5.0% 5.4% 5.0% 3.8%
Other regions 1,776 2,020 2,412 986 1,205 979 917
YoY 11.8% 13.7% 19.4% - 22.2% -18.8% -6.3%
% of sales 8.2% 7.5% 6.3% 2.2% 2.4% 2.1% 1.7%
Note: In FY01/14 and before, European business was included in Others.
Sales trends by market in FY01/18

China (including Hong Kong)
Sales were JPY32.0bn (+14.0% YoY, +12.1% on a local currency basis). The figures include Hong Kong, a minor contributor. The
number of births in China was 17.23mn in 2017 (-3.5% YoY); China is Pigeon’s largest overseas market.
Other Asia
Sales in this region were JPY7.2bn (+9.8% YoY). Major markets are South Korea, Singapore, Malaysia, Taiwan, and Thailand.
North America and Europe

North American sales were JPY8.1bn (+14.8% YoY, +11.4% on a local currency basis). Sales in Europe were JPY2.7bn (+17.8%
YoY). In these markets, the company depends on Lansinoh Laboratories, Inc., which sells Pigeon products under the Lansinoh
brand.
The Near and Middle East

Near and Middle East sales were JPY2.0bn (-15.2% YoY).
Other regions
Sales were JPY917mn (-6.3% YoY). Other Regions include Central and South America, South Africa, and others.
What are the factors that so far have been helping Pigeon to succeed overseas? Pigeon cites its superior products and a skillful use
of local partners. According to the company, the product superiority is what drives its success not only in China but in all foreign
markets where it sells under Pigeon brand. Pigeon’s R&D effort (described in detail in the R&D section) in baby products,
particularly in bottle and nipple design, is arguably second to none. The second pillar of Pigeon’s success overseas is its strong
relationships with local partners. It has relied on local distributors to grow the Pigeon brand recognition and penetrate the market.
That relatively early move has since won Pigeon brand recognition and deep market penetration thanks to its partners’ selling
power.
24/66
R
Coverage
Pigeon / 7956
Operations by region
China
As of November 2012, China accounted for the largest proportion of the company’s overseas business, and its growth rate is by
far the highest. Pigeon built strong relationships with local primary distributors since it began exporting to China in the 1990s.
The company established a local subsidiary, Pigeon (Shanghai) Co., Ltd. in China in 2002 when it saw the country as a final
market rather than a manufacturing base. Through the subsidiary, the company has enhanced the Pigeon brand recognition and
expanded its presence in this country. In the Chinese market, the company targets affluent families (with monthly income of
CNY10,000 per household).
At the end of FY01/16, approximately 13,000 stores in China stocked Pigeon products. Pigeon had had contracts with three
primary distributors for each channel: baby goods retailers, general merchandisers, and department stores. From 01/16, however,
the company changed the contracts with two of the three primary distributors to those for each product category from those for
each channel, in a bid to expand sales of disposable diapers and other products.
Pigeon aims to expand its business further by having each distributor specializing in a product category, in which they have
strengths.
Distribution system in China
Primary distributors A Primary distributors B

Primary distributors C
(Accessories) (Diapers, baby foods)
E-commerce Baby goods retailers General merchandisers Department stores

Note: Lansinoh-branded products are marketed through distributors handling diapers and baby foods.
At department and baby goods stores in China, Pigeon set up “Pigeon Corner”—a space dedicated to Pigeon products—and
pursuing recognition as a high-end brand (the company had 3,482 stores that had Pigeon Corner retail spaces in FY01/17).
New “Pigeon Corner” at a Store in China
From 2H FY01/14, Pigeon began to sell disposable diapers in the Chinese market. These are high-end products (selling for
CNY2.0–3.0 compared with regular products retailing for CNY1.5–2.0) targeting the affluent segment. The company also started
sales of baby food in China in FY01/14. In the Chinese market where food safety awareness is on the rise, we see strong potential
for the Pigeon brand to win market share.
The company began to operate a plant in Changzhou, Pigeon Industries (Changzhou) Co., Ltd., in March 2011 to manufacture
products for the Chinese market. In FY01/12, the company made some 50% of its products sold in China within the country. This
ratio rose to 60% in FY01/13, 70% in FY01/14, and most recently 75%. The capacity utilization rate of the plant was more than
80–90% as of FY01/18.
25/66
R
Coverage
Pigeon / 7956
According to the company, despite a large percentage of products being made locally, pricing is in line with Japan, as is product
quality.
North America
In April 2004, Pigeon brought Virginia-based Lansinoh Laboratories, Inc. under the group umbrella as a launching pad for
expansion into the US and Europe. Lansinoh makes nursing products, including nipple cream, nursing pads, and breast pumps,
which are stocked at over 40,000 stores in the US. General merchandisers (e.g., Walmart, Target) are the main sales channels for
Lansinoh products. Sales of electric breast pumps covered by medical insurance at hospitals have been rising since 2017.
Lansinoh products
Lansinoh was founded in 1984 and was initially selling Pigeon products on an OEM basis. Lansinoh has historically focused on
breastfeeding-related products, with nipple cream, nursing pads, and breast pumps at the core of its product lineup. However,
after an overhaul of local staff in FY01/13, Lansinoh is putting in place a structure to more aggressively expand sales of nursing
bottles and nipples as well.
In December 2010, Lansinoh acquired the mOmma brand (children’s products in Europe) from Baby Solution SA and Baby
Solution Italia Srl to expand its product categories. The mOmma brand is well-known for nursing bottles and nipples, sippy cups,
baby utensils, etc.
Lansinoh’s electric breast pumps were certified as durable medical equipment (DME) by the FDA in 2017, which led to an
increase in their sales at hospitals as items covered by medical insurance. According to the company, there are approximately
4mn births per year in North America, and 80% of mothers of these newborns choose to breastfeed. Around 50% of the
breastfeeding mothers obtain electric breast pumps under the DME program. With a market share of only 2%, the company sees
substantial growth potential for Lansinoh electric breast pumps in the longer term.
Shares of Lansinoh products in U.S. (FY01/18) Shares of Lansinoh products in Germany (FY01/17)
79.7%
80.0%
80.0%
64.3% 70.9%
60.0% No.1
No.1 60.0%
47.0%
No.2 42.8%
40.0% No.1 39.6%
32.0% 40.0%
No.1
No.2 No.2 20.8%
20.0%
20.0%
No.2
0.0%
0.0%
Nipple care Breast pads Breast milk Manual breast
Nipple care Breast pads Breast milk Manual breast
cream storage bags pumps
cream storage bags pumps
26/66
R
Coverage
Pigeon / 7956
Europe
The company sells Lansinoh-branded products mainly in the UK and Germany through distributors. Main sales channels in
Germany are drugstores, while in the UK main channels are general merchandisers, baby goods stores, and drugstores. In Turkey,
Lansinoh operates a breast-pump, nursing bottle and nipple factory, which began production in January 2017, and accordingly
sells the product under its namesake brand. In Russia, the company began selling Pigeon-brand products through distributors in
2010.
Other Asian regions

The company incorporated a Mumbai representative office of Pigeon Singapore Pte. Ltd. as Pigeon India Pvt. Ltd. in November
2009. The India subsidiary sets up “Pigeon shelves” mainly in pharmacies and conducts sales and marketing efforts. The number
of pharmacies stocking Pigeon products exceeded 30,000 as of end-FY01/18. Meanwhile, not all of the country’s affluent
consumers live in major cities such as New Delhi and Mumbai. Additionally, since many of these affluent consumers in regional
areas tend to send housekeepers to do the shopping, the company must adapt its marketing accordingly. The company expects
sales to continue trending upward as it continues expanding the store network, mainly focusing on drugstores. A factory
producing nursing bottles and nipples also came online in India in March 2015. Import tariffs are high, so the company is
improving profitability by shipping mainstay products from this local factory. The business turned profitable in FY01/18.
In South Korea, the company operates under the Double Heart brand in cooperation with distributors. In Singapore and Malaysia,
Pigeon has eventually bought out its local distributors making them subsidiaries Pigeon Singapore Pte. Ltd. and Pigeon Malaysia
(Trading) Sdn. Bhd. A large number of births in the Near and Middle East have created an attractive market, and Pigeon is mainly
selling nursing bottles and nipples in these markets. Historically, Pigeon has heavily relied on local distributors in Other Asia,
causing its growth in this geographical segment to lag behind that in China. However, from 2012, Pigeon’s distributors in other
Asian regions began visiting Chinese distributors to learn from them.
“DoubleHeart” brand in South Korea
For more information about the competitors in each market, see Competition.
Group companies
◤ Pigeon Home Products Corp.: Manufactures toiletries for Domestic Baby & Mother Care and Health & Elder Care. 100%
owned.
◤ Pigeon Hearts Corp.: Provides contracted child-care and education services. 100% owned.
◤ PHP Hyogo Co., Ltd.: Makes baby wipes for Domestic Baby & Mother Care and Health and Elder Care. 100% owned.
◤ PHP Ibaraki Co., Ltd.: Makes baby wipes for Domestic Baby & Mother Care and Health and Elder Care. 100% owned.
◤ Pigeon Tahira Co., Ltd.: Sells nursing products for Health & Elder Care. 100% owned.
◤ Pigeon Manaka Co., Ltd.: Residential and at-home nursing care services. 67.0% owned.
27/66
R
Coverage
Pigeon / 7956
◤ Pigeon Singapore Pte. Ltd.: Local subsidiary in Singapore. Procures and sells Pigeon-branded products for expecting and
nursing mothers, as well as baby goods. 100% owned.
◤ Pigeon Malaysia (Trading) Sdn. Bhd.: Local subsidiary in Malaysia. As above. 100% owned.
◤ PT Pigeon Indonesia (Pigeon Indonesia): Local subsidiary in Indonesia. Makes baby goods. 65.0% owned.
◤ Pigeon (Shanghai) Co., Ltd.: Chinese subsidiary. Procures and sells Pigeon-branded products for expecting and nursing
mothers, as well as baby goods. 100% owned.
◤ Pigeon Manufacturing (Shanghai) Co., Ltd.: Chinese subsidiary. Makes Pigeon-branded products for expecting and
nursing mothers, as well as baby goods. 100% owned.
◤ Pigeon Industries (Changzhou) Co., Ltd.: As above. 100% owned.
◤ Lansinoh Laboratories, Inc.: US subsidiary. Sells baby products. 100% owned.
◤ Lansinoh Laboratories Medical Devices Design Industry and Commerce Co., Ltd.: Turkish subsidiary. Makes branded
products for expecting and nursing mothers, as well as baby goods. 100% owned.
◤ Lansinoh Laboratorios do Brasil Ltda.: Brazilian subsidiary. Sells products for expecting and nursing mothers, as well as
baby goods. 100% owned.
◤ Lansinoh Laboratories Benelux: Belgian subsidiary. Sells products for expecting and nursing mothers, as well as baby
goods. 100% owned.
◤ Lansinoh Laboratories Shanghai: Chinese subsidiary. Sells products for expecting and nursing mothers, as well as baby
goods. 100% owned.
◤ Doubleheart Co., Ltd.: South Korean subsidiary. Sells products for expecting and nursing mothers, as well as baby goods.
100% owned.
◤ Pigeon India Pvt. Ltd.: Indian subsidiary. Sells Pigeon-branded products for expecting and nursing mothers, as well as baby
goods. 100% owned.
◤ Pigeon Produtos Infantis Ltda. (Pigeon Brazil): Brazilian subsidiary. 100% owned.
◤ Pigeon Industries (Thailand) Co., Ltd.: Thai subsidiary. Makes Pigeon-branded products for expecting and nursing
mothers, as well as baby goods. 97.5% owned.
◤ Thai Pigeon Co., Ltd.: Thai subsidiary. Makes Pigeon-branded products for infants. 53.0% owned.
R&D
Since its founding, Pigeon has been conducting significant amounts of R&D in nipple technology. The company says that long
years of research have resulted in a product that functions more like the real thing than anything competitors offer.
Through half a century of research into breastfeeding and children’s development, Pigeon has delved deep into childhood
growth processes and milk-drinking action.
28/66
R
Coverage
Pigeon / 7956
As an example of the thorough research, the company has used ultrasonic tomography to observe how babies’ tongues move
during breastfeeding to squeeze out the mother’s milk. Pigeon’s researchers also developed methods to observe wave motion
using motion analysis. By comparing actual breastfeeding with artificial-nipple breastfeeding, they were able to demonstrate how
a soft silicone-based nipple material provided an experience similar to suckling on the human mother (2002).
Pigeon’s nursing bottle development

◤ 1949: Introduced Japan’s first wide-neck bottle with cap. Much more hygienic than bottles with connected nipples, which
prevailed until then.
◤ 1954: First polyethylene bottle in Japan (S-type). Hexagonal shape easy for babies to grip. Shape and material represented a
revolutionary advance.
◤ 1956: First glass bottle with pictures (F-type) in Japan. Spread the idea that childrearing could be fun, as compared to purely
functional baby products.
◤ 1962: Introduced polycarbonate bottles. Full of features desirable in a bottle: light yet strong, transparent, and able to
withstand boiling. R-8 type won 1962 Tokyo Invention Prize and is recommended by Japanese Red Cross Central and Main
hospitals.
◤ 1965: Improved neck design to eliminate threads inside bottleneck (W-8 type). As the bottleneck was flat inside, no milk
dregs remained, making it more hygienic.
◤ 1977: P-type bottle introduced. Specially designed for children with reduced sucking power due to problems with lips or
upper jaws or low birth weight.
◤ 1982: New concept introduced: Mag Mag cup with interchangeable caps. With four different caps tailored to different stages
of a baby’s growth, it was a big hit. Became a standard fixture in the company’s product line.
◤ 1988: Company research showed that babies have a unique drinking method—peristaltic movement of the tongue. Pigeon’s
researchers explained that this particular tongue movement, not available to adults, is used when babies drink mother’s milk.
◤ 2000: Japan’s first polyethersulphone (PES) bottle released.
◤ 2002: “Bonyu-jikkan”—loosely translated as “Just like Mom”—nipples and bottles introduced, based on extensive research of
babies’ sucking action. Flexible and fitting the mouth perfectly, the nipples enabled a smooth, natural, sucking action.
◤ 2003: “Just like Mom” line extended with PES bottles suitable for use when going out and about.
◤ 2007: “Just like Mom” line refreshed to reflect a new standard in childrearing. Four nipple sizes and plastic
polyphenylsulphone (PPSU) bottles introduced.
◤ 2010: “Just like Mom” line again refreshed to serve the three key stages of feeding: attachment, sucking, and swallowing.
29/66
R
Coverage
Pigeon / 7956
In 1993, the company established a Central Research Center in Tsukubamirai City, Ibaraki Prefecture.
The Fundamental Research Group of the Center studies nursing infants, sucking action, and the loss of function in the elderly.
Since 2006, the Quality Control Group has tested the quality, safety, and security of company products developed worldwide.
The Intellectual Property Group is responsible for patents and design trademarks.
Central Research Center (Tsukubamirai-shi, Ibaragi Prefecture)
Overseas R&D
Pigeon conducts research in China and Singapore as well as in Japan in order to meet the needs of overseas markets. The key
criteria for its overseas research activities are tailoring development in line with market needs and constructing highly reliable
quality-control systems. The local development divisions ensure that products sold in each region suit local consumers.
30/66
R
Coverage
Pigeon / 7956
Factory in Changzhou, Jiangsu Province, China PMFG China
31/66
R
Coverage
Pigeon / 7956
Profitability snapshot, financial ratios

Profit margins FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Gross profit 20,164 20,903 23,281 24,319 27,761 34,464 38,296 43,345 44,688 50,572
GPM 38.0% 39.1% 40.8% 41.1% 42.7% 44.5% 45.5% 47.0% 47.2% 49.3%
Operating profit 4,269 4,604 4,546 5,042 7,086 10,365 12,780 14,521 16,015 19,412
OPM 8.0% 8.6% 8.0% 8.5% 10.9% 13.4% 15.2% 15.7% 16.9% 18.9%
EBITDA 6,167 6,414 6,486 6,875 8,903 12,436 14,875 17,071 18,371 21,862
EBITDA margin 11.6% 12.0% 11.4% 11.6% 13.7% 16.1% 17.7% 18.5% 19.4% 21.3%
Net margin 5.4% 5.3% 5.1% 5.4% 7.0% 9.0% 10.0% 11.1% 11.7% 14.2%
Financial ratios
ROA (RP-based) 11.3% 11.8% 10.8% 11.4% 16.0% 20.7% 20.4% 20.6% 21.5% 24.6%
ROE 12.1% 11.4% 11.2% 11.8% 15.5% 19.7% 19.8% 21.3% 21.8% 25.7%
Total asset turnover 140.0% 137.2% 138.9% 136.8% 141.0% 145.5% 129.1% 126.0% 123.8% 125.6%
Inventory turnover 710.1% 737.4% 597.6% 547.4% 544.6% 580.0% 553.6% 563.0% 606.9% 637.4%
Days of inventory 51.4 49.5 61.1 66.7 67.0 62.9 65.9 64.8 60.1 57.3
Working capital 10,086 9,954 11,688 13,161 13,453 16,103 19,315 17,364 17,155 18,160
Current ratio 192.4% 208.3% 197.6% 205.5% 250.5% 275.9% 307.9% 343.9% 258.4% 329.2%
Quick ratio 149.1% 154.0% 145.3% 146.8% 189.8% 209.3% 248.9% 276.4% 220.0% 274.9%
OCF / Current liabilities 36.1% 45.3% 28.0% 34.2% 63.8% 64.9% 72.2% 91.4% 83.2% 87.5%
Net debt / Equity -11.6% -16.9% -7.2% -8.6% -21.5% -24.2% -28.7% -35.4% -45.3% -49.9%
OCF / Total liabilities 29.9% 37.5% 20.5% 26.6% 47.3% 44.1% 40.4% 58.2% 58.9% 78.9%
Cash cycle (days) 69.2 60.9 75.8 87.4 87.3 81.8 90.6 85.8 74.4 67.6
Changes in working capital 1,167 -132 1,734 1,473 292 2,650 3,211 -1,951 -209 1,005
The main drivers of SG&A expenses for Pigeon are sales promotion, salaries and allowances. Sales promotion costs grew from
2.9% of sales in FY01/09 to 6.2% in FY01/18 due to an aggressive overseas push. Salaries and allowances rose from 6.5% of sales
in FY01/09 to 7.0% in FY01/12. However, since then they have been on a declining trend, falling to 5.5% of sales in FY01/18.
Pigeon raised its OPM from 8.0% to 18.9% from FY01/09 through FY01/18. This is partly due to the start-up of the Shanghai and
Changzhou factories in China and the Turkish plant, which helped boost gross profit margins from 38.0% to 49.3%.
SG&A expenses
SG&A expenses FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
SG&A expenses 15,895 16,299 18,734 19,276 20,675 24,099 25,515 28,823 28,673 31,159
YoY 2.9% 2.5% 14.9% 2.9% 7.3% 16.6% 5.9% 13.0% -0.5% 8.7%
SG&A-to-sales ratio 29.9% 30.5% 32.8% 32.6% 31.8% 31.1% 30.3% 31.3% 30.3% 30.4%
Delivery expenses 1,616 1,604 1,748 1,782 1,969 2,158 2,476 2,567 2,517 2,809
Promotion expenses 1,539 1,725 3,328 3,336 4,042 4,608 5,120 5,516 5,684 6,342
Salaries and allowances 3,434 3,736 3,904 4,116 4,205 4,716 5,128 5,504 5,274 5,602
Provision for bonuses 297 316 289 311 335 492 560 649 636 516
Provision for doubtful accounts 4 66 10 10 -100 -8 -8 -2 -12 187
Retirement benefit expenses 257 260 274 271 285 321 292 299 338 283
Provision for directors' retirement benefits 24 39 26 33 38 53 43 66 58 70
R&D expenses 1,129 1,211 1,359 1,497 1,621 1,730 1,932 2,263 2,263 2,670
Others 7,596 7,343 7,796 7,919 8,280 10,029 9,972 11,960 11,915 12,680
32/66
R
Coverage
Pigeon / 7956
Market and value chain

Market overview
Domestic Baby & Mother Care segment
According to the Ministry of Health, Labour and Welfare (MHLW)’s Trends in Japan’s Population, in 2017 the total fertility rate
(estimated number of children a woman will give birth to in her lifetime) was 1.43, down 0.01pp YoY. The number of births was
down 31,000 YoY, at 946,000. Although the birth rate is recovering slowly from the 2005 trough of 1.26, the number of births
continued to decline, because the number of women (denominator) shrank.
Number of births and total fertility rate
3,000,000 5.00
Number of births Total fertility rate (right axis)
4.50
2,500,000
4.00
3.50
2,000,000
3.00
1,500,000 2.50
2.00
1,000,000
1.50
1.00
500,000
0.50
0 0.00
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
('000) 1950 1960 1970 1980 1990 2000 2005 2010 2015 2016 2017
Number of births 2,338 1,606 1,934 1,577 1,222 1,191 1,063 1,071 1,006 977 946
Total fertility rate 3.65 2.00 2.13 1.75 1.54 1.36 1.26 1.39 1.45 1.44 1.43
Source: Shared Research based on Ministry of Health, Labour and Welfare’s Trends in Japan’s Population
Meanwhile, the drugstore market—Pigeon’s main sales channel—is growing. According to a survey by the Japan Association of
Chain Drug Stores, total sales in the Japanese drugstore market for FY2015 were JPY6.1tn (+1.1% YoY). The market has been
expanding for 15 years in a row since the survey began in FY2000, although the pace of growth is slow. There were 18,479
drugstores in Japan (+526 YoY).
Child Care Service segment

According to MHLW statistics on child-care facilities (out April 1, 2018), the number of children awaiting entrance to child-care
facilities as of April 2018 declined by 6,186 YoY to 19,895. Capacity of child-care facilities was 2.80mn, up 97,000 YoY. The
number of children attending nurseries was 2.61mn, up 68,000 YoY. The rise in capacity was bigger than the increase in children
attending nurseries, but there were uneven distributions regionally. As a result, the number of cities, wards, towns, and villages
where there were children on waiting lists for licensed facilities totaled 435, up 15 YoY.
70.0% of the children on waiting lists were in the Greater Tokyo Area, the seven prefectures in the Kinki region, and other core
cities. By age, 88.6% were 0–24 months old (as of April 2018).
33/66
RCoverage
Pigeon / 7956
Children on waiting lists for child-care facilities
30,000
26,383 26,275
26,081
25,447 25,384
25,000 24,245 25,556
23,338
24,825
23,553
23,167
22,741
21,031 21,371
20,000
19,794 19,895
19,550
17,926
15,000
10,000
Apr. 2001
Apr. 2002
Apr. 2003
Apr. 2004
Apr. 2005
Apr. 2006
Apr. 2007
Apr. 2008
Apr. 2009
Apr. 2010
Apr. 2011
Apr. 2012
Apr. 2013
Apr. 2014
Apr. 2015
Apr. 2016
Apr. 2017
Apr. 2018
Source: Shared Research based on Ministry of Health, Labour and Welfare data
According to a 2017 MHLW survey on working women, the number of working women totaled 29.37mn in 2017, up 450,000
YoY, and the share of working women increased for the 5th year in a row. The number of women wanting to bear children and
continue working, or those wishing to return to the workforce while raising children is increasing, supporting a strong need for
child-care services despite the trend toward smaller families. Further, the extended economic malaise means that one-income
households cannot make ends meet, which is also spurring child-care needs.
Health & Elder Care segment

As of October 2017, Japan’s population aged 65 or older was 35.2mn (April 2018 estimate by the Statistics Bureau of the Ministry
of Internal Affairs and Communications), up 561,000 YoY. The share in the total population was 27.7% (against 27.3% a year
before). While Japan’s overall population is shrinking, its graying continues. According to Japan’s Cabinet Office’s Policy on
Cohesive Society (2013) data, the share of elderly aged 65 or older will break 30% in 2025, and as baby boomers’ children turn
65 around 2040, the number will reach 35%.
Japan’s aging population (65 and older, % of total)
45%
40%
39.4% 39.9%
38.8%
37.7%
35% 36.1%
33.4%
30% 31.6%
30.3%
29.1%
25% 26.8%
20%
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060
Source: Shared Research based on Cabinet Office data
China
There were 17.23mn births in China in 2017, down by 630,000 from the previous year. The annual number of births in China is
estimated at 14–17x that of Japan. Although the number of births in China had remained below the 17mn level starting in the
year 2000, the number has been exceeding the 17mn level since 2016 with the nation having been gradually easing its one-child
policy since 2014. Upon entering the Chinese market in 2002, Pigeon’s geographic territory had encompassed Shanghai, Beijing
and other coastal areas, and its target demographic had consisted of those ranging from the affluent segment with annual
incomes of at least JPY8mn to the upper-class segment. However, the company later went on to gradually expand its geographic
territory and target demographic, in step with economic development in China. The company now has a presence throughout
34/66
R
Coverage
Pigeon / 7956
China, including locations further inland, and it has extended its reach to customers in the middle-class segment with annual
incomes of JPY5mn or higher, in addition to the affluent and upper-class segments.
Number of births in China
(mn)
19.0
18.0
17.9
17.0
17.0 17.2
16.9
16.0 16.5 16.6
16.4 16.4
16.0 16.2 16.1 16.2 16.0
15.9 15.8 15.9 15.7
15.0
14.0
13.0 13.8
12.0 Number of births

11.0 11.5
10.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Shared Research based on materials of the National Bureau of Statistics of China (NBS)
China’s GDP growth
15.0%
14.0%
14.2%
13.0%
12.0% 12.7%
11.0%
11.3%
10.0% 10.6%
10.0%10.1%
9.0% 9.6% 9.5%
9.1% 9.2%
8.0%
8.3%
7.9% 7.8%
7.0%
7.3%
6.9% 6.7% 6.9%
6.0%
5.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: Shared Research based on World Economic Outlook (WEO) database, International Monetary Fund (IMF)
According to the company, demand for products for infants aged 0–18 months is similar in Japan and China. It expects the
Chinese market to grow—particularly for supplies—in line with economic growth. The outlook in China is also more promising
than Japan in terms of birth figures, and government policy is settled. The Chinese government is also quick to stimulate
consumer demand and make public investments. Pigeon’ s sales in China have increased as it has expanded there, with sales
inland already outstripping those in major coastal cities such as Shanghai, Beijing, and Guangzhou. The company plans to
continue expanding and growing sales in this region.
India
Along with the Chinese market, the company positions India as a growth market. The Indian population continues to grow,
reaching 1.32bn in 2016, up 15mn from the previous year (source: World Bank). The fertility rate in 2015 was 2.4 (flat YoY),
higher than China’s 1.6. The rate stays high though it is gradually falling. The population is also young, with over half under 25
years old, and despite the wide gap between rich and poor, the notable growth in the rich demographic means births are
increasing. The company estimates the number of births in India at 27mn annually.
The US
Based on World Bank statistics, the population of the US was 323mn in 2016, up 2.0mn from the previous year. The total fertility
rate in the US was 1.84 in 2015, down 0.02. According to Pigeon, the number of births is around 4.0mn per annum, and the
population is rising.
35/66
R
Coverage
Pigeon / 7956
Population rankings and fertility rates

Ranking Country Population (mn) Fertility rate
2015 YoY change 2015 YoY change

1 China 1,371.2 7.0 1.62 0.01
2 India 1,309.1 15.2 2.35 -0.03
3 US 320.9 2.3 1.84 -0.02
4 Indonesia 258.2 3.0 2.39 -0.03
5 Brazil 206.0 1.7 1.74 -0.01
6 Pakistan 189.4 3.8 3.55 -0.07
7 Nigeria 181.2 4.7 5.59 -0.06
8 Bangladesh 161.2 1.8 2.13 -0.03
9 Russia 144.1 0.3 1.75 0.00
10 Mexico 125.9 1.7 2.22 -0.03
11 Japan 127.1 -0.1 1.46 0.04
Source: Shared Research based on the World Bank’s Data Indicators
Customers
The company’s end users are babies 0-24 months old and their mothers. The customers are overwhelmingly mothers. In Health &
Elder Care segment, the customers are seniors over 65. Pigeon sells mainly through drugstores, baby good retailers, and
e-commerce.
Barriers to entry
Barriers to entry in the domestic baby goods market—particularly for the company’s core bottles and nipples—are exceptionally
high as demonstrated by the company’s dominant market share. Mothers buy Pigeon products to feed their babies, choosing the
brand they know and trust (and likely used themselves as babies). Both the reputation and technology have been developed
over many years and represent a formidable barrier to entry.
In other baby products, the barriers may vary—in certain niches having enough capital may be enough to become a competitor
overnight—and the company emphasizes its niche status and has so far been staying away from the markets where price
competition may start easily (and spread into other product groups), such as disposable diapers.
Barriers to entry are also arguably lower in the developing countries. There, the impenetrable brand equity is yet to be built and
price often plays more important role, allowing new entrants to try their hand.
Competition
Pigeon has about 80% of the Japanese market for bottles and nipples. Combi Corp. (unlisted), Aprica Children’s Products Inc.
(unlisted), and Wakodo Co., Ltd. (Asahi Group Holdings, Ltd.; TSE1: 2502) carry a similar wide range of baby goods. These
companies, though, focus on different product categories.
In China, competitors include AVENT (UK), NUK (Germany), and chicco (Italy). Pigeon has the top market share within the
wealthier demographic.
There are a number of competitors in the United States, including local player Evenflo Company, Inc. (unlisted), UK-based Philips
AVENT, and Swiss-based Medela Inc.
36/66
R
Coverage
Pigeon / 7956
Market share of Pigeon products in US, Europe
US market (January 2018) German market (January 2017)

100% 100%
No.1
80% 80% No.1
No.1
60% 60%
No.2
No.1 No.2
40% 79.7% No.2 40%
64.3% 70.9%
47.0% No.2
20% 20% 42.8% 39.6%
32.0%
20.8%
0% 0%
Nipple care Breast pads Breast milk Manual breast Nipple care Breast pads Breast milk Manual breast
cream storage bags pumps cream storage bags pumps
37/66
R
Coverage
Pigeon / 7956
Strategy
Domestic strategy
In Domestic Baby & Mother Care segment, the strategy centers on going into new product categories. The company focuses on
0-24 months old babies. However, even for that market the Pigeon’s offering does not cover the entire possible product range.
Pigeon has already started selling strollers and child safety seats in FY01/11. The company had been struggling to increase its
share of the baby stroller market (as measured by monthly sales), but the launch of the new Runfee line of baby strollers in
January 2015 led to its monthly share of the baby stroller market exceeding 20% at one stage in September 2017.
Pigeon describes itself as a "comprehensive manufacturer" of baby and child-care products, but to complete its product lineup
the company probably also needs to offer disposable diapers. Pigeon had this expertise and did manufacture adult diapers in the
past. Judging from remarks by management that they receive many calls from customers asking why they cannot find Pigeon
diapers, and the progress of the rollout of the company's disposal diaper line in China that began in 2H FY01/14. Shared Research
believes there is room for Pigeon to enter the disposable diaper market in Japan. Although the company would have to keep a
close eye on existing manufacturers to gauge their response, Shared Research believes Pigeon may be able to successfully roll out
a disposal diaper line in Japan if it sticks to a premium product that effectively leverage its existing brand strength in infant and
baby products.
Going forward, Pigeon plans to expand the lineup of goods at its mainstay Domestic Baby & Mother Care segment for babies
ages 0–24 months in areas where it can take full advantage of its existing brand strength. Management is hesitant about
expanding its target market beyond the age of 24 months, fearing that a move into a market outside of its core competence
would siphon off R&D, marketing, and other resources from the 0–24 month market where it has a strong competitive edge.
In Health & Elder Care, Pigeon aims to strengthen sales activities for elder care products targeting drugstores and care facilities—a
promising market—by its salesforce with that of subsidiary Pigeon Tahira Corp.
The company’s Child Care Service is expected to accelerate consigned operations of child-care facilities on the back of strong
demand for such services. Despite the not-so-outstanding profitability that the segment offers, Pigeon appears to want to
generate synergy of Child Care Service and Domestic Baby & Mother Care.
Overseas strategy
Pigeon’s overseas strategy calls for capturing market share of over 50% in each country in bottles and nipples. Market shares over
50% increase brand power and boost sales of bottles and accessories. The company appointed Shigeru Yamashita, who had
headed the overseas operations, as president. The founder’s grandson, Yusuke Nakata, became president of Pigeon Singapore
Pte Ltd in January 2014, to oversee the company’s Asia operations.
China
In China, Pigeon notes that large socioeconomics gaps between rich and poor create difficulties in developing products for the
mass market. The company thus aims to continue developing high-quality, safe products aimed at the affluent, rather than
products for the mass market. Pigeon has leveraged its strengths as all-round child-care brand that provides all-round parenting
support such as setting up counseling rooms for breastfeeding at hospitals and maternity hospitals and providing parenting
information to nurses and parents in the form of antenatal classes, which sets the company apart from competitors and helps to
strengthen its brand. China has abolished its one child policy and is expected to maintain a large number of births for some years.
Chinese consumers are also becoming more aware of product safety as disposable income rises. Shared Research believes that
the combination of these external factors will continue to underpin growth of Pigeon’s China business.
38/66
R
Coverage
Pigeon / 7956
North America
In North America, Shared Research believes that brand strategy will be very important, given the high maturity of the market.
Pigeon plans to grow in North America by expanding product categories, such as nursing pads and nipple-care goods under the
Lansinoh brand, skincare goods under the “earth friendly” brand, and nursing bottles and nipples under the mOmma brand. The
Lansinoh brand is also putting in place a structure to more aggressively expand sales of nursing bottles and nipples. Going
forward, the company has such options as using acquired brands such as mOmma and Lansinoh or developing a new brand as it
moves toward other product categories.
In North America, Pigeon began to sell nursing bottles and nipples in January 2014. The company has also started a sales
campaign, “Smile Promotion,” in an effort to change the notion that nursing bottles are used only for baby formula. Pigeon will
promote the use of breast pumps, storage bags, and nursing bottles to provide breast milk to infants.
Lansinoh’s electric breast pumps were certified as durable medical equipment (DME) by the FDA in 2017, which led to an
increase in their sales at hospitals as items covered by medical insurance. According to the company, there are approximately
4mn births per year in North America, with 80% of mothers of these newborns electing to breastfeed, of which around 50%
acquire electric breast pumps under the DME program. With a market share of only 2%, the company sees substantial growth
potential for Lansinoh electric breast pumps in the longer term.
Central and South America

Central and South America are high on Pigeon’s priority list. Brazil and Mexico provide growing markets in particular. The
company plans to operate the business in the region in cooperation with Lansinoh of the US.
Europe
The company intends to operate through Lansinoh in Europe (including any M&A activity). The company plans to extend its
product lines in this market and increase the network of retailers and other stores selling mOmma products.
India
India should be an attractive market for Pigeon given the growing number of births and lack of dominant baby-product brands.
As in China and Japan, Pigeon aims to boost its recognition as a company that offers high-quality, high-value-added products to
affluent consumers. Because the affluent are dispersed around regional areas and business infrastructure is weak, the company
adopted a policy of shifting the weight of distribution channels from department stores to pharmacies. As of FY01/18, the
number of pharmacies stocking Pigeon products exceeded 30,000. In the longer term, the company targets 100,000 such
pharmacies. It expects to increase production in the region, having brought a new local factory online in March 2015 The
company plans to increase the number of “Pigeon corner” retail space to 100 stores from 40 stores at an early stage.
Other Asia
In Other Asia, the company reorganized its branch in South Korea and upgraded it to a subsidiary in August 2012. This subsidiary
will enhance the company’s brand image, and increase its product line up, which had been limited to its mainline products such
as bottles and nipples.
M&A
Although M&A is one potential growth strategy, it is not a major growth vehicle for the company. The company notes that it
needs distribution channels, but Shared Research notes that Pigeon has a cautious stance toward M&A due to difficulties
identifying adequate acquisition targets.
39/66
R
Coverage
Pigeon / 7956
Strengths and weaknesses

Strengths
◤ Super-brand in Japan: The Pigeon brand is the most well-known and one of the most trusted in Japanese children’s goods.
Shared Research thinks Pigeon’s strong brand and trustworthiness are powerful weapons, not just in existing product
categories but in new ones as well.
◤ Overwhelming share in a niche market: The company has a roughly 80% share of the domestic nursing bottle and nipples
market. As its nursing bottle history suggests, the company created many “industry firsts.” Its ability to develop innovative
products in niche markets is obviously second to none. Such ability will likely remain one of the company’s strengths going
forward, underpinned by its extensive know-how accumulated through vigorous customer hearings and R&D. Also, increased
in-house production will not only drive up the company’s profitability, but also lower the risk of knowledge outflows.
◤ Growth potential overseas: Pigeon can effectively use its business model (premium products, R&D operations) in Domestic
Baby & Mother Care when seeking growth outside Japan. In fact, the company generates about 50% of operating profit from
overseas activities and has attained the leading share in the market of the affluent in China. We think the company can
replicate similar successes in other foreign markets.
Weaknesses
◤ Possible competition against giants in adjacent businesses: Here, giants refer to certain cash-rich toiletry goods
companies. Fortunately, so far, the company has not faced direct competition against such companies. Any of these potential
competitors could in the future penetrate the lucrative niches where the company currently has high shares and subsequently
snatch some shares from the company, particularly for non-core products that the company has yet to develop unbeatable
presence. On the other hand, we wonder if the presence of these potential competitors is preventing the company from
reaching out to new business fields.
◤ Limited domestic growth potential: Given its shrinking population and limited economic growth prospects, Japan may
take some blame for the company’s narrow domestic growth. Behind declining birth rates are such socioeconomic factors as
an increase of dual-income, no-kids (DINK) households and people getting married later in life, and there are no signs of the
rates making a positive turnaround. Thus, the company’ potential for further domestic growth should depend on its ability to
penetrate the senior care products market and strengthen product categories and market shares for these categories in
Domestic Baby & Mother Care.
◤ Minor-player status in Europe and the US: The company essentially does not operate in developed countries other than
Japan. In North America, the company depends on the Lansinoh brand. Shared Research wonders if such somewhat indirect
control may be preventing the company from expanding in the region.
40/66
R
Coverage
Pigeon / 7956
Historical financial statements

Historical earnings results
Cumulative Q3 FY01/19 results
FY01/19 marks the second year of the company's sixth medium-term management plan (FY01/18–FY01/20). As Pigeon
implemented business strategies according to the medium-term plan, it reported a 5.4% YoY rise in consolidated sales to
JPY79.4bn for the nine-month period through Q3 FY01/19. Sales in the Domestic Baby & Mother Care, China, Singapore, and
Lansinoh businesses were strong.
Operating profit rose 12.9% YoY to JPY16.9bn owing to a 2.8pp YoY improvement in CoGS ratio. Recurring profit rose 16.6% YoY
to JPY17.7bn. Net income attributable to parent company shareholders was up 17.3% YoY to JPY12.2bn.
Exchange rates applied to earnings of consolidated subsidiaries (regarding sales and expenses) in cumulative Q3 FY01/19 were
JPY109.60/USD (vs. JPY111.88/USD in cumulative Q3 FY01/18) and JPY16.84/CNY (vs. JPY16.46/CNY).
Compared with its full-year forecast, results for the nine-month period through Q3 FY01/19 left the company with 74.2% of its
full-year target for sales (in the same period the previous year, 73.5% of FY01/18 results), 82.6% of its full-year target for
operating profit (77.0%), 86.7% of its full-year target for recurring profit (75.4%), and 86.8% of its full-year target for net income
attributable to parent company shareholders (71.9%). Although sales and earnings are running ahead YoY, the company left its
full-year forecast unchanged, citing uncertainty with regard to promotion spending and sales connected to the large promotional
sales events run by the various e-commerce sites in China.
From Q1 FY01/19, the Overseas segment was renamed to the Singapore segment, which is involved in procurement and sales of
Pigeon-branded products mainly in ASEAN and Middle Eastern countries. The Lansinoh brand business centered in Europe and
North America, which was part of the Overseas segment in FY01/18, became an independent segment and newly named as the
Lansinoh segment.

Sales increased amid strong inbound demand from overseas visitors.
According to company estimation, the Domestic Baby & Mother Care segment generated roughly JPY6.0bn in sales attributable
to inbound demand (approximately JPY4.6bn during the same period in FY01/18). Notwithstanding the negative impact of a
temporary closure of the Kansai International Airport in September due to a large typhoon that hit the region, sales were
underpinned by robust inbound demand for Momo No Ha (peach leaves) medicated skin lotion, and also the new Momo No Ha
medicated foam body soap launched in Q1 FY01/19. Shipments of Momo No Ha (peach leaves) medicated skin lotion have
already reached 3.2mn bottles, easily topping annual shipments of over 2.7mn bottles during FY01/18 in just the first nine
months of FY01/19.
In July Pigeon launched a complete renewal of the Nursing Assist® series, breast pumps with “Baby Comfort Rhythm” technology
born from over 60 years of nursing research. In August, the company also launched the new product Pigeon electric nasal
aspirator vacuum suction, which was jointly developed with ears, nose, and throat doctors. Furthermore, the company launched
the Pigeon Before Sleeping Fluoride Coating to prevent cavities in babies. The launch of new products contributed to sales
growth.
41/66
R
Coverage
Pigeon / 7956
To improve direct customer communication, Pigeon held 21 events in cumulative Q3 FY01/19, including Breastfeeding
College—a class for expecting mothers, and seminars on the theme of breast feeding for medical professionals who work with
nursing mothers (total of roughly 2,600 attendees). The company also worked to update information and improve the
user-friendliness of Pigeon Info, a website supporting women who are expecting, just gave birth, or are raising children.
By product category, sales of baby skincare (shampoo and lotion) were up 22.2% YoY (18.5% of segment sales), sales of nursing
bottles and nipples were up 11.0% YoY (18.1% of segment sales), sales of baby wipes were up 1.5% (9.0% of segment sales),
sales of baby drinks were up 8.6% (6.6% of segment sales), and sales of masks, cotton swabs, and other baby healthcare
products were down 8.0% (5.6% of segment sales). In addition to the mainstay nursing bottles and nipples, Momo No Ha
medicated skin lotion and other baby skincare products sold well in response to strong demand from inbound tourists. Sales of
baby strollers, a product category positioned as the company’s focus area, were up 20.3% YoY and currently account for 4.5% of
segment sales.
Profits benefited from a 0.2pp YoY rise in the GPM to 49.2%, in addition to sales growth. Margins rose as higher margin nursing
bottles and nipples increased their share of sales, and the company shifted some of its outsourced baby skincare product
manufacturing in-house. The segment profit margin increased by 0.8pp YoY to 18.6% and profit growth exceeded sales growth.
We would note, however, that the segment profit margin of 17.7% in Q3 (August–October 2018) was down 0.5pp QoQ. This
reflected an adverse change in the sales mix that saw sales of relatively low-margin products, such as baby wipes, baby drinks,
and baby food, account for a larger proportion of segment sales during the quarter; in previous quarters, the proportion of
segment sales accounted for by these low-margin products had been on the decline.
Childcare Service
The company’s contract to operate on-site child-care facilities in National Hospital Organization hospitals ended in March 2018,
resulting in fewer facilities under management. However, in cumulative Q3 FY01/19, the company began operating four new
contracted onsite company childcare centers and expanded services to a total of 75 locations.
Health & Elder Care
The drop in operating profit in the face of higher sales was due to additional promotional spending undertaken to support the
upcoming launch of the company's new Pro Fit Care product line.
The company displayed its new Pro Fit Care product line at the International Home Care and Rehabilitation Exhibition held in
October 2018, and plans to start rolling it out item by item starting in February 2019. The company intends to strengthen sales
efforts to retailers and nursing facilities as well as improve the quality of its nursing services.
China

Sales and operating profit rose driven by sales of core products such as nursing bottles, nipples, and skincare products. In
particular, sales of its medicated skin lotion series (peach leaves) and Bonyu Jikkan® Nursing bottle my Precious have continued to
be strong. Products launched in 2H, including handled nursing bottles and steam disinfectants, also showed favorable results.
42/66
R
Coverage
Pigeon / 7956
In addition to strengthening initiatives geared toward e-commerce, the company plans to bolster direct communications with
customers through social networking services and influencers, and expand its offline activities, such as sales promotions at retail
stores and activities in maternity and general hospitals.
By product category, sales of nursing bottles and nipples were up 12.7% YoY (46.8% of segment sales), sales of baby skincare
products were up 45.0% (19.6% of segment sales), sales of baby sanitary products were down 15.4% (4.3% of segment sales),
sales of baby wipes were down 17.4% (3.9% of segment sales), and sales of baby disinfectant cleansing products were up 35.4%
(3.4% of segment sales). Sales of high-value-added nursing bottles, nipples, and baby skincare products increased, but those of
disposable baby sanitary products and baby wipes decreased amid quality improvements of local players. For the nine-month
period through Q3 FY01/19, sales of nursing bottle and nipples were up 12.7% YoY, well off the 22.3% growth rate logged
during the first six months of the year. Explaining the slowdown, the company said that it began commercial-volume shipping of
new nursing bottles featuring designs of popular Disney characters in Q3 the previous year (i.e., August–October 2017) but
following the initial jump, their impact on boosting sales has subsided.
In terms of profits, segment profit was up by a double-digit amount, driven by strong top-line growth and a 1.9pp YoY rise in the
gross profit margin (to 56.7%). The improvement in the gross margin reflected a more favorable sales mix stemming from a rise
in the proportion of sales accounted for by relatively high-margin products, such as nursing bottles, nipples, and baby skincare
products, and a decline in the proportion of sales accounted for by lower-margin products such as baby sanitary products and
baby wipes.
Singapore
Sales increased in all regions, with a major contribution from the consolidation of PT Pigeon Indonesia in November 2017.
For the nine-month period through Q3 FY01/19, estimated sales by country were: Singapore JPY672mn (+53.7% YoY), Malaysia
JPY638mn (+53.7% YoY), Indonesia JPY1.4bn (+137.4% YoY), Thailand JPY810mn (+19.6% YoY), and India JPY579mn (+11.1%
YoY). Note that sales for Indonesia during the same period the previous year were before the consolidation of the local subsidiary,
and thus were not included in the company’s consolidated sales last year.
The company intends to continue working toward market penetration of its brand. Pigeon said it is positive on medium-term
growth in Indonesia as there are roughly 4.2mn births annually in the country, which is more than in North America, which had
3.9mn births in 2016.
The gross profit margin rose 3.0pp YoY to 50.6% due to improved capacity utilization in the Thai factory accompanying the
strong performance of the Domestic Baby & Mother Care business. There was goodwill amortization due to the consolidation of
Pigeon Indonesia, so segment profit growth was slower than that of sales, and the operating profit margin was 26.5% (-0.3pp
YoY).
Lansinoh
In North America, sales of breast pumps and other products via new sales channels including the durable medical equipment
(DME) and maternity center channel grew. Further, the company is working on measures to strengthen marketing and its brand
in Europe and Lansinoh Shanghai with an aim of expanding business in the regions.
43/66
R
Coverage
Pigeon / 7956
In this segment, Lansinoh-branded products of consolidated subsidiary Lansinoh Laboratories, Inc. (“Lansinoh”) are now being
offered in North America, Europe and other regions (including China). By overseas region, North America, Europe, and other
regions account for about 60%, 30%, and 10% of sales, respectively.
In North America, sales by existing channels (retail, e-commerce, and others) accounted for roughly 85% of sales. In the
consumable goods category, the company saw some price competition at brick-and-mortar stores and online stores from the
private brand goods from large general merchandise stores, but sales still finished up 30% YoY thanks to growing sales through
new channels, such as durable medical equipment (DME) channel, which now accounts for about 15% of sales in North America.
Sales in Europe were also strong, especially in Germany and France. Sales of breast pumps also increased thanks to additional
sales through the new DME channel. On a standalone basis, total sales by Lansinoh of JPY3.1bn in Q3 (August–October 2018)
were up 3.4% YoY but down 8.3% QoQ. The company aimed to improve sales by launching sales promotion initiatives during
Q2 (May–July 2018) but cut back on promotion in Q3. Starting in FY01/20, the company plans to stop running promotions and
instead work to get sales through existing routes in North America back on an upward track by introducing new product and
establishing them as part of its regular product lineup.
By product category, sales of nipple cream were up 5.8% YoY (28.7% of segment sales), sales of nursing pads were down 3.7%
YoY (24.2% of segment sales), sales of breast milk bags were down 10.2% (18.8% of segment sales), and sales of breast pumps
were up 23.9% (16.6% of segment sales). As mentioned previously, the company saw some price competition in the
consumable goods category (nursing pads and milk bags) but enjoyed strong sales of breast pumps, which benefited from new
sales channels.
Segment profit logged double-digit growth on higher sales and a 3.3pp rise in the gross profit margin to 60.4%. The product mix
improved due to increased sales composition of higher margin nipple creams and breast pumps. Higher utilization rates at the
Turkish factory that produces breast pumps also contributed to margin improvement.
1H FY01/19 results
FY01/19 marks the second year of the sixth medium-term management plan (FY01/18–FY01/20). In a push to achieve the plan's
objectives, in 1H FY01/19 Pigeon reported a 7.7% YoY rise in consolidated sales to JPY52.8bn due to strong sales performance in
the Domestic Baby & Mother Care, China, Singapore, and Lansinoh businesses.
Operating profit rose 17.3% YoY to JPY10.9bn owing to a CoGS-to-sales ratio that improved 2.8pp YoY. Recurring profit rose
24.5% YoY to JPY11.7bn. Net income attributable to parent company shareholders was up 24.9% YoY to JPY8.1bn.
Exchange rates applied to earnings of consolidated subsidiaries (regarding sales and expenses) in 1H FY01/19 were
JPY108.67/USD (versus JPY112.33/USD in 1H FY01/18) and JPY17.08/CNY (versus JPY16.38/CNY).
Compared with its full-year FY01/19 forecasts, 1H FY01/19 results give the company 49.4% of its full-year target for sales (versus
1H FY01/18 results reaching 47.8% of full-year FY01/18 results), 53.5% for operating profit (47.9%), 57.3% for recurring profit
(46.6%), and 57.5% for net income attributable to parent company shareholders (44.7%). Progress achieved toward full-year
company forecasts for sales and profits exceeded 1H FY01/18 levels due to firm results underpinned by inbound demand from
overseas visitors in the Domestic Baby & Mother Care segment. There was strong progress in quarterly recurring profit and net
income. In Q2, the company booked a tax rebate from the China business under non-operating income that was not included in
initial forecasts.
Pigeon revised its currency assumptions for 2H in light of prevailing forex rates at the time of the 1H results announcement. It
assumed a 2H rate of JPY109.00/USD (initial assumption: JPY107.00/USD) and JPY15.80/CNY (JPY17.00/CNY). According to the
company, a JPY1/CNY appreciation of the Japanese yen against the Chinese yuan reduces full-year sales by roughly JPY2.1bn and
operating profit by about JPY560mn. The 2H assumption for the yen rate is JPY1.20/CNY higher than initial forecasts, so the
half-year impact should be a drag of roughly JPY1.3bn on sales and JPY350mn on operating profit. According to Pigeon, its initial
44/66
R
Coverage
Pigeon / 7956
forecasts are achievable as the strength of the Domestic Baby & Mother Care, China, and Singapore businesses should offset the
impact of the revised currency assumptions.
From Q1 FY01/19, the Overseas segment was renamed to the Singapore segment, which operates Pigeon-branded products
business mainly in ASEAN and Middle Eastern countries. The Lansinoh brand business centered in Europe and North America,
which was part of the Overseas segment in FY01/18, became an independent segment and newly named as the Lansinoh
segment.

to inbound demand (versus approximately JPY3.1bn in 1H FY01/18). Strong sales attributable to inbound demand consisted of
that for Momo No Ha (peach leaves) medicated skin lotion, and also Momo No Ha medicated foam body soap, which was
launched in Q1 FY01/19. Shipments of Momo No Ha (peach leaves) medicated skin lotion have already reached 2.3mn bottles in
1H FY01/19, after having marked annual shipments exceeding 2.7mn bottles in FY01/18.
In June 2018, Pigeon launched sales of a new product, “Bonyu Jikkan® Coating,” a silicon coated glass nursing bottle that
provides the feel of a new texture, which performed well. Further, the company launched “Runfee Lino’n Ocean Kilim Pattern,” a
limited edition (only available to limited companies and in a limited quantity) of Runfee, a baby stroller which uses single tires.
The launch of new products contributed to sales growth. In April 2018, the company had a 24.8% market share in baby strollers,
marking a record high. It maintained its share at over 20% in May 2018 and subsequent months.
To improve direct customer communication, Pigeon held 15 events in 1H FY01/19, including Breastfeeding College—a class for
expecting mothers, and seminars on the theme of breast feeding for medical professionals who work with nursing mothers (total
of roughly 1,500 attendees).
By product category, sales of baby skincare (shampoo and lotion) were up 28.0% YoY (19.0% of segment sales), sales of nursing
bottles and nipples were up 12.2% YoY (17.6%), sales of baby wipes were down 0.4% (8.8%), sales of baby drinks were up 9.5%
(7.0%), and sales of masks, cotton swabs, and other baby healthcare products were down 9.5% (6.2%). In addition to the
mainstay nursing bottles and nipples, Momo No Ha medicated skin lotion and other baby skincare products sold well in response
to strong demand from inbound tourists.
Profits benefited from a 0.4pp YoY rise in the GPM to 49.2%, in addition to sales growth. Margins rose as higher margin nursing
bottles and nipples increased their share of sales, and the company shifted some of its outsourced baby skincare product
manufacturing in-house. The segment profit margin increased by 1.4pp YoY to 19.1% and profit growth exceeded sales growth.
Child Care Service
Sales fell as the company’s contract to operate on-site child-care facilities in National Hospital Organization hospitals ended in
March 2018, resulting in fewer facilities under management. In 1H FY01/19, the company began operating four new contracted
onsite company childcare centers.
45/66
R
Coverage
Pigeon / 7956
Health & Elder Care

Strong sales of the company’s medicated Aloe lotion contributed to segment sales growth. The company will continue
strengthening sales to retailers and nursing facilities as well as improving the quality of its nursing services.
China

Sales and operating profit rose driven by sales of core products such as nursing bottles and baby skincare products.
Sales of nursing bottles, cups, and pacifiers with Disney motifs launched in May 2017 remained strong. Pigeon launched Momo
No Ha (peach leaves) medicated skin lotion and Bonyu Jikkan® Nursing bottle my Precious—products whose sales have expanded
in Japan—in China and saw a steadily increase in sales. In addition to strengthening initiatives geared toward e-commerce, the
company plans to bolster direct communications with customers through social networking services, and expand its offline
activities, such as sales promotions at retail stores and activities in maternity and general hospitals.
products were up 30.9% (17.4%), sales of baby sanitary products were down 3.9% (5.0%), and sales of baby wipes were up
6.7% (4.9%). Sales of high-value-added nursing bottles, nipples, and baby skincare products increased, but those of disposable
baby sanitary products decreased amid quality improvements of local players.
By sales channel, e-commerce sales were 44% of segment sales, a decline of 1pp QoQ.
In terms of profits, segment profits were up by a double-digit amount, driven by sales growth and an improvement in margins.
Product mix improved due to increased sales of higher margin breast pumps, nipples, and baby skincare products, in conjunction
with decreased sales of lower margin baby sanitary products and baby wipes, as a percentage of segment sales. Still, segment
profit growth was just 20.4% despite 14.5% sales growth and a 2.0pp improvement in the GPM. This was due to the booking of
expenses such as sales promotion for the large sales campaigns conducted by Chinese e-commerce companies in June.
Singapore
Sales increased in all regions, with a major contribution from the consolidation of PT Pigeon Indonesia in December 2017.
Sales grew in each region. Estimated 1H sales by country were: Singapore JPY448mn (+2.4% YoY), Malaysia JPY406mn (+50.9%
YoY), Indonesia JPY912mn (+162.9% YoY), Thailand JPY584mn (+52.3% YoY), and India JPY387mn (+23.6% YoY). Note that 1H
FY01/18 sales for Indonesia were before the consolidation of the local subsidiary, and not included in the company’s consolidated
sales.
The company intends to continue working toward market penetration of its brand. Pigeon said it is positive on medium-term
growth in Indonesia as there are roughly 4.2mn births annually in the country, which is more than North America, which had
3.9mn births in 2016.
46/66
R
Coverage
Pigeon / 7956
The gross profit margin rose 1.6pp YoY to 49.7% due to improved capacity utilization in the Thai factory accompanying the
strong performance of the Domestic Baby & Mother Care business. There was goodwill amortization due to the consolidation of
Pigeon Indonesia, so segment profit growth was slower than that of sales, and the operating profit margin was 24.3% (-2.5pp
YoY).
Lansinoh

In this segment, Lansinoh-branded products of consolidated subsidiary Lansinoh Laboratories, Inc. (“Lansinoh”) are now being
offered in North America, Europe and other regions (including China). By overseas region, North America, Europe and other
regions account for about 60%, 30% and 10% of sales, respectively.
In North America, sales by existing channels (retail, e-commerce, and others, roughly 85% North American sales) were in line
with 1H FY01/18, while sales through new channels (the durable medical equipment [DME] channel, about 15% of sales) were
up around 40%. Strong sales in Europe also added to sales growth. Sales of breast pumps through the new North American
channels, DME channel in particular, grew. In the Lansinoh business, overall sales were up 0.4% versus Q1 (February–April 2018),
but for 1H they were up 6.8% YoY. This is mainly because promotion activities through existing channels conducted in Q1
FY01/18 were conducted in Q2 in FY01/19. In Q1, sales at existing channels were down YoY because there were no such
promotion activities, but sales growth of about 30% at new channels offset the decline at existing channels, keeping sales in line
with Q1 FY01/18. In 1H, promotions in Q2 (May–June) enabled sales through existing channels to be flat with 1H FY01/18, and
sales through new channels grew by about 40%, leading higher segment sales YoY.
By product category, sales of nipple cream were up 9.7% YoY (29.0% of segment sales), sales of nursing pads were down 1.2%
YoY (23.8%), sales of breast milk bags were down 3.2% (19.3%), and sales of breast pumps were up 27.3% (16.8%).
There was double-digit segment profit growth owing to higher sales and margins. Product mix improved due to increased sales
composition of higher margin nipple creams and breast pumps. Higher utilization rates at the Turkish factory that produces
breast pumps also contributed to margin improvement.
Q1 FY01/19 results
▷ Net income: JPY3.9bn (+10.9% YoY)
FY01/19 marks the second year of the sixth medium-term management plan (FY01/18–FY01/20). In a push to achieve the plan's
objectives, consolidated sales increased 7.6% YoY to JPY25.8bn largely due to strong performance at the Domestic Baby &
Mother Care and China businesses.
Operating profit rose 10.2% to JPY5.4bn owing to a CoGS ratio that improved 1.5pp YoY. Recurring profit rose 10.7% to
JPY5.4bn. Net income attributable to parent company shareholders was up 10.9% YoY to JPY3.9bn.
Compared with its full-year FY01/19 forecasts, Q1 FY01/19 results give the company 24.1% of its full-year target for sales (versus
Q1 FY01/18 results reaching 23.4% of full-year FY01/18 results), 26.7% for operating profit (25.4%), 26.4% for recurring profit
(24.1%), and 27.3% for net income attributable to parent company shareholders (23.9%). Progress achieved toward full-year
47/66
R
Coverage
Pigeon / 7956
company forecasts for sales and profits exceeded Q1 FY01/18 levels due to firm results underpinned by inbound demand from
overseas visitors in the Domestic Baby & Mother Care segment.
Exchange rates applied to earnings of overseas consolidated subsidiaries (regarding sales and expenses) in Q1 FY01/19 were
JPY108.22/USD (versus JPY113.60/USD in FY01/18) and JPY17.04/CNY (versus JPY16.56/CNY).
From Q1 FY01/19, the Overseas segment was renamed to the Singapore segment, which is operates Pigeon-branded products
business mainly in ASEAN and Middle Eastern countries. The Lansinoh brand business centered in Europe and the US, which was
part of the Overseas segment in FY01/18, became an independent segment and newly named as the Lansinoh segment.

to inbound demand (versus approximately JPY1.6bn in Q1 FY01/18). Strong sales attributable to inbound demand consisted of
that for Momo No Ha (peach leaves) medicated skin lotion, and also Momo No Ha medicated foam body soap, which was
launched in Q1 FY01/19. Shipments of Momo No Ha (peach leaves) medicated skin lotion have already reached 1.0mn bottles in
Q1 FY01/19, after having marked annual shipments exceeding 2.7mn bottles in FY01/18.
Baby strollers, a key category, continued to be robust. The company released Runfee RA8, an upgraded line of Runfee strollers
equipped with improvements to allow for easy pushing when in rear-facing (pusher-facing) position. The company’s
medium-term management plan targets baby stroller market share (value basis) of 25% by FY01/20. The company attained
market share of over 25% in April 2018.
To improve direct customer communication, Pigeon held five events in Q1 FY01/19, including classes for expecting mothers,
Pre-mama Class, and seminars on the theme of breast feeding for medical professionals who work with nursing mothers (total of
about 280 attendees).
products including shampoo and lotion were up 30.3% (18.1%), sales of baby wipes were down 3.8% (8.3%), sales of masks,
cotton swabs, and other baby healthcare products were down 3.2% (7.4%), and sales of baby drinks were up 9.6% (6.2%).
Products that were particularly strong sellers include Momo No Ha (peach leaves) medicated skin lotion and sunscreen cream for
infants.
On the profit front, whereas operating profit increased YoY, the rate of increase in operating profit was lower than that of sales.
The OPM decreased by 0.1pp YoY to 20.0%, amid a scenario of the company outsourcing some production of baby skincare
products, higher sales of lower margin baby strollers as a percentage of segment sales, and also added expenses in terms of
promotion costs incurred from baby strollers launched in February.
Child Care Service
Sales fell as the company’s contract to operate on-site child-care facilities in National Hospital Organization hospitals ended in
March 2018, resulting in fewer facilities under management. An increase in personnel and other expenses in addition to lower
sales pushed down profit.
48/66
R
Coverage
Pigeon / 7956
Health & Elder Care

The company will continue strengthening sales to retailers and nursing facilities as well as improving the quality of its nursing
services.
China

Sales and operating profit rose driven by sales of core products such as baby skincare products and nursing bottles.
Sales of nursing bottles continued to expand, and sales of baby skincare products with Disney character motifs launched in
December 2017 were also steady. In addition to strengthening initiatives geared toward e-commerce, the company plans to
bolster direct communications with customers through social networking services, and expand its offline activities, such as sales
promotions at retail stores and activities in maternity and general hospitals.
products were up 31.6% (17.1%), sales of baby sanitary products were up 15.4% (5.8%), and sales of baby wipes were down
21.9% (5.0%). Sales of high-value-added nursing bottles, nipples, and baby skincare products increased, but those of disposable
baby wipes decreased amid quality improvements of local players.
By sales channel, e-commerce sales were 45% of segment sales, and increase of 3pp YoY.
Product mix improved due to increased sales of higher margin breast pumps, nipples, and baby skincare products, in conjunction
with decreased sales of lower margin baby wipes, as a percentage of segment sales.
Singapore

▷ Operating profit: JPY731mn (+10.1% YoY)
Sales and operating profit rose, largely as a result of having made PT Pigeon Indonesia (“Pigeon Indonesia”) a consolidated
subsidiary.
In Indonesia, one of the company’s business areas, Pigeon made its equity-method affiliate PT Pigeon Indonesia (Pigeon
Indonesia) a consolidated subsidiary in October 2017, and strengthened production and sales with an aim of expanding its
business in the area. Further, in other ASEAN and Middle Eastern countries, the company intends to continue working toward
market penetration with its brand.
Lansinoh

In this segment, brands of consolidated subsidiary Lansinoh Laboratories, Inc. (“Lansinoh”) are now being offered in North
America, Europe and other regions (including China). By overseas region, North America, Europe and other regions account for
60%, 30% and 10% of sales, respectively.
Sales increased by 6% YoY on a local currency basis amid strong results in Europe in addition to higher sales of breast pumps via
the new sales channel (durable medical equipment [DME] channel) in North America. Meanwhile, sales increased by 0.4% on a
49/66
R
Coverage
Pigeon / 7956
yen basis amid strengthening of the yen. The 6% increase in sales on a local currency basis stands 4pp below the company’s
assumption of a 10% increase in sales in its full-year forecast. That is largely attributable to a situation in North America where
promotions carried out in Q1 FY01/18 (February to April) are to be carried out in Q2 (May to July) of FY01/19.
By product category, sales of nursing pads were down 2.4% YoY (23.2% of segment sales), sales of nipple cream were down
18.4% (22.9%), sales of breast milk bags were down 19.0% (18.1%), and sales of breast pumps were up 11.6% (16.0%). Higher
sales of breast pumps as a result of redoubling efforts to sell products through new sales channels, and higher sales of other
products (baby wipes, nursing bottles, and others) offset decreases in sales of nursing pads, nipple cream, and breast milk bags.
In terms of profits, gross profit increased due to growth in sales. Operating profit decreased as a result of the company having
increased its marketing workforce in order to accelerate sales through new sales channel.
Other
▷ Sales: JPY314mn (-2.8% YoY)

Full-year FY01/18 results


▷ Net income: JPY14.5bn (+30.6% YoY)
FY01/18 marks the first year of the sixth medium-term management plan (FY01/18–FY01/20). In a push to achieve the plan's
objectives, consolidated sales increased 8.4% YoY to JPY102.6bn due to strong sales performance, especially in markets such as
Japan and China. Operating profit rose 21.2% to JPY19.4bn owing to a CoGS-to-sales ratio that improved 2.1pp YoY. Recurring
profit rose 22.3% to JPY20.1bn. Net income attributable to parent company shareholders was up 30.6% YoY to JPY14.5bn.
Exchange rates applied to earnings of consolidated subsidiaries (regarding sales and expenses) in Q3 FY01/18 were
JPY112.16/USD (versus JPY108.77/USD in Q3 FY01/17) and JPY16.62/CNY (versus JPY16.35/CNY).
Versus the company forecast, FY01/18 sales were 101.3%, operating profit was 103.8%, recurring profit was 108.2%, and net
income was 111.7%. Sales and operating profit were in line with the company’s forecast. Recurring profit and net income came
in ahead of forecast because of a JPY100mn tax rebate in the China business and a JPY848mn extraordinary gain from making its
Indonesian equity-method subsidiary PT Pigeon Indonesia a consolidated subsidiary.
At the individual segment level, the company reported higher sales and higher earnings for all segments. Growth was especially
strong at its Domestic Baby & Mother Care business, Overseas business, and China business that account for the bulk of overall
sales and earnings, with earnings rising at a double-digit pace in all of these key areas.

Inbound demand from overseas visitors increased, driving segment sales growth. In addition, in February the company launched
sales of a new product, “Baby's Ice Cream Minis,” the first homemade ice cream for babies. In June, the company launched a
renewal of the Runfee, a baby stroller which uses single tires. In August, the company launched “Breast Pads Fit Up® Super
Absorptive” with enhanced absorption. In December the company launched “Bonyu Jikkan® Nursing bottle my Precious,” which
50/66
R
Coverage
Pigeon / 7956
won the 2017 Good Design Award. As a result, the company increased sales and market share. Baby strollers, a key category,
continued to be robust. The company’s medium-term management plan targets baby stroller market share (value basis) of 16%
in FY01/18 and 25% in FY01/20. The company attained market share of over 20% in September 2017. However, its market share
declined after a fault was discovered in the rotation of the front caster wheels of some products, to which the company
responded by free recall and replacement. The company commented that the fault had been rectified at the start of FY01/19.
To improve direct customer communication, Pigeon held 32 events in FY01/18, including a class for expecting mothers, and
seminars on the theme of breast feeding for medical professionals who work with nursing mothers (total of 3,000 attendees).
The company attributed much of the sales growth in this area to the increased demand from overseas tourists visiting Japan. By
product category, sales of nursing bottles and nipples were up 12.3% YoY (17.6% of segment sales), sales of baby skincare
products including shampoo and lotion were up 21.3% (16.1%), sales of baby wipes were up 5.1% (9.6%), sales of baby drinks
were up 5.8% (6.3%), and sales of masks, cotton swabs, and other baby healthcare products were down 2.0% (6.0%). One
particular product that was a strong seller was Momo No Ha (peach leaves) medicated skin lotion.
On the profit front, the double-digit growth was driven by a combination of strong top-line growth and margin improvement.
The rise in OPM reflected increased sales of high margin nursing bottles and nipples. The gross profit margin rose due to an
improvement in sales volumes and the resulting rise in the capacity utilization rates at the company’s production plants.
Child Care Service

The company began operating four new contracted onsite company child-care centers.
Health & Elder Care

The company will continue strengthening sales to retailers and nursing facilities as well as improving the quality of its nursing
services.
Overseas

This segment comprises overseas businesses other than China and Asia. The company’s consolidated subsidiary, Lansinoh
Laboratories, Inc. (hereinafter, “Lansinoh”), accounts for around 50% of segment sales.
Sales growth was underpinned by improved sales of Lansinoh’s core breastfeeding-related products, such as nipple cream,
electric breast pumps, and breast milk bags. Sales of electric breast pumps were also strong in North America, which account for
around 70% of Lansinoh's sales. Electric breast pumps were mainly sold at large general merchandise stores, but sales channels
have expanded to include maternity and general hospitals and durable medical equipment (DME) route in which the costs of
electric breast pumps are covered by medical insurance.
According to the company, around four million new babies are born in North America each year, and about 80% of mothers of
these newborns choose to breastfeed, of which half purchase electric breast pumps under the DME program. With only about
2% share of the electric breast pump market at present, Lansinoh has plenty of headroom for sales growth over the medium to
long term. One of the key features of Lansinoh’s electric breast pumps is that by linking them with a smartphone, users can
record data such as pumping times and volumes.
51/66
R
Coverage
Pigeon / 7956
In addition, capacity utilization at the Turkish plant, which began operation in January 2017, also improved, contributing to
profits growth. Sales of Lansinoh Laboratories Shanghai in China, which started in 2017, reached JPY900mn in FY01/18 (versus
JPY450mn in FY01/17). Further, in India, the company’s key market, both sales and profits rose as the company took efforts to
expand distribution locations.
By product category (local currency basis), sales of nipple cream increased by 15.6% YoY (28.6% of sales at Lansinoh), sales of
milk pads rose 7.5% (26.4%), sales of milk bags increased by 25.2% (22.3%), and sales of breast pumps rose 4.5% (14.0%).
Profits rose due to higher sales, an improved GPM, and more efficient usage of SG&A expenses. Gross profit increased due to
improved capacity utilization rates at the production plants. High capacity utilization at the new plant in Turkey, which started
operations in January 2017, also contributed to profits growth.
China

Sales and operating profit rose driven by sales of core products such as skincare products, nursing bottles and nipples. A new
range of nursing bottles, cups, and nipples with Disney motifs launched in May 2017 saw growth for both e-commerce and
physical retail stores, boosting sales. Sales growth was also underpinned by shipments to Chinese e-commerce businesses for big
sales events in Q3. The company plans to bolster direct communications with customers through social networking services, and
expand its offline activities, such as retail sales promotions and activities in maternity and general hospitals.
Product mix improved due to an increase in higher margin breast pumps and nipples.
Other
FY01/17 results
▷Sales: JPY94.6bn (+2.6% YoY)
▷Operating profit: JPY16.0bn (+10.3% YoY)
▷Recurring profit: JPY16.5bn (+9.2% YoY)
▷Net income: JPY11.1bn (+9.0% YoY)
For full-year FY01/17, Pigeon reported a 2.6% YoY rise in consolidated sales as the rise in sales at the company's Domestic Baby &
Mother Care segment, which continued to benefit from spending by overseas tourists, offset the impact of the yen's appreciation
against the dollar. Operating profit rose 10.3% thanks to effective SG&A spending and an improved cost ratio. Recurring profit
rose 9.2%. Net income attributable to parent company shareholders was up 9.0% YoY.
Progress toward the full-year target was 99.6% for sales, 106.8% for operating profit, 107.6% for recurring profit, and 106.9% for
net income attributable to parent company shareholders. Although yen appreciation had a negative impact on earnings,
excluding this factor, all segments performed well, with profits exceeding the initial company target at all levels. Looking at
segment results, the China segment resolved a longstanding inventory problem and made progress with its focus business of
diaper sales. In Japan, the mainstay Domestic Baby & Mother Care segment benefited from continued brisk inbound demand,
52/66
R
Coverage
Pigeon / 7956
while earnings improved in the Child Care Service and Health & Elder Care segments, which had presented challenges for the
company. In the Overseas segment, core business Lansinoh Laboratories performed well.
Major exchange rates applied to earnings of consolidated subsidiaries (regarding sales and expenses) in Q4 FY01/17 were
JPY108.77/USD (versus JPY121.10/USD in Q4 FY01/16) and JPY16.35/CNY (versus JPY19.22/CNY). The company commented that
the negative forex impact was approximately JPY7.0bn on sales, JPY3.7bn on gross profit, JPY1.8bn on recurring profit, and
JPY1.5bn on net income. Consolidated results for FY01/17 excluding this effect would come to increases of 10.1% YoY in sales,
11.6% in gross profit, 22.5% in operating profit, and 23.4% in net income.
▷Sales: JPY31.8bn (+13.4%YoY)

▷Operating profit: JPY6.2bn (+42.4% YoY)
In this segment, operating profit saw significant YoY upside thanks to increased sales in mainstay products such as nursing bottles.
The company launched a revamped version of the baby clothes laundry detergent series Pure in February 2016 and rereleased its
light weight Runfee ef baby stroller redesigned for better comfort and a smoother ride. In March 2016, the company launched a
revamped version of its Bonyu-jikkan (“Just like Mom”) bottles with four new designs. The company expanded market share and
increased sales thanks to these initiatives as well as launching a redesigned Mimi chibi on in August, an ear thermometer making
it easier to measure and read temperature.
To improve direct customer communication, Pigeon held 32 events in Q4, including the Pre-Mama Class for expecting women
and seminars with the theme of breast feeding while cuddling. The events targeted people working in the medical field (total of
2,700 attendees). The company also added product information on Pigeon Info, an informational website aimed at pregnant
women and those with young children, and further enhanced its online presence with the addition of Bonyu Iku in February 2016,
a portal website offering ready access to topics of interest to nursing mothers.
According to the company, inbound demand in this segment remains robust, although per-customer spending of the segment as
a whole is trending down, due in part to a rising share of repeat customers. Demand has been stable due to annual turnover of
target customers, typically parents of infants aged 0–18 months, as well as the expanding scope of products purchased. Pigeon
notes that demand is especially high for products that make direct contact with infants’ skin. We surmise that there is persistent
demand associated with consumers’ confidence in the quality of Japanese products and products offered by a company
considered the top brand in the business.
Pigeon commented that baby stroller sales were flat YoY at JPY1.0bn, reflecting a weak market, although market share was up
slightly to almost 12% from 10% in 2015. The company plans to expand the scope of baby strollers sold by introducing products
exclusive to Akachan Honpo, which has around 70% sales share in baby strollers in Japan.
Child Care Service
▷Operating profit: JPY211mn (+41.9% YoY)
The operating profit growth is attributable to effective spending on SG&A and higher sales pushing up gross profit. The company
began operating two new contracted onsite company child-care centers.
Sales and profits grew in FY01/17 due to this increase in the number of contracted onsite company child-care centers, but a
shortage of workers remains a challenge for the segment. Thus Pigeon is focusing on improving the quality of child care to
improve profit margins as opposed to seeking scale.
53/66
R
Coverage
Pigeon / 7956
Health & Elder Care

Segment sales increased due to solid sales of wet towels, skincare and meal/oral care products. On the earnings front, the rise in
sales coupled with cuts in SG&A spending following the streamlining of the division's operating structure led to a sharp jump in
operating profit.
The company improved segment profits by SG&A expense savings made by transferring personnel seconded from the parent
company to the flourishing Domestic Baby & Mother Care segment as part of the operating structure streamlining program. A
customer-specific sales structure starting in January 2016 also proved effective, helping sales turn positive. Pigeon plans to
progress these measures further.
In February 2016, the company launched Nursing Oral Care, a series of oral care products. The company continued increasing
marketing to retailers and nursing facilities as well as improving the quality of its nursing services.
Overseas
▷Sales: JPY23.1bn (-8.6% YoY)
▷Operating profit: JPY5.4bn (-4.1% YoY)
This segment includes countries other than China and other Asian regions. The ongoing appreciation of the yen versus the US
dollar put pressure on segment sales and profit.
Pigeon’s operations in North America and Europe are primarily focused on its consolidated subsidiary Lansinoh Laboratories, Inc.
(Lansinoh). In North America, Lansinoh business saw increased sales for mainstay products such as nipple cream, nursing pads,
breast pumps, and other nursing products. Lansinoh has also been operating in China as a new venture and generated robust
sales there. In Turkey, it built a new factory (operations began in January 2017) to strengthen its production network and has
been working on expanding its operations in Europe by improving sales structure.
The company notes that Lansinoh Laboratories Shanghai (Lansinoh’s Chinese operation founded in April 2016) has posted sales
of over JPY450mn in FY01/17, 50% up on target. Lansinoh Shanghai uses its own hospital network for marketing, which proved
successful in raising the brand’s profile and gaining customers’ trust. As a result, e-commerce sales of products like breast pumps
in which Lansinoh excels are growing fast. Lansinoh’s earnings remain brisk and are likely to continue expanding in 2017 and
beyond. Further, earnings have been especially strong in Germany, which overtook the UK as the top market in Europe in terms
of sales.
China

▷Operating profit: JPY8.4bn (-2.7% YoY)
From FY01/16, this segment includes Asia and other regions (South Korea, Taiwan, the Philippines, Russia and other countries) in
addition to China (excluding Japan). While sales and profits grew on a local currency base, the segment saw sales and profit
decline year-one-year on a yen base, impacted by the further appreciation of the yen against the renminbi, and parallel imports of
products sold in Japan.
In China and other Asian countries (excluding Japan), Pigeon is looking to strengthen its handling of online orders, and is also
looking to simulate more direct communications with consumers utilizing social networking services. It also continues to expand
54/66
R
Coverage
Pigeon / 7956
off-line activities, such as retail sales promotions, measures aimed at increasing sales of disposable diapers, and activities in
maternity and general hospitals to increase market share.
Although inventory problems occurred in China in 2016, inventory levels normalized in FY01/17, resulting in solid sales growth
on a local currency basis. The e-commerce sales share (percentage of sales coming from e-commerce site) in China at
end-FY01/17 was approximately 41% versus 30% a year earlier. Although physical store sales were affected by the shift to
e-commerce site, the rate of in-store sales decline has slowed after closing unprofitable stores. Instore campaigns have also been
effective in boosting sales of disposable diapers (a focus product for the company) by 2.16x YoY on a local currency basis to
approximately JPY900mn.
Other

55/66
R
Coverage
Pigeon / 7956
Income statement
Income statement FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Sales 53,092 53,432 57,061 59,145 65,075 77,465 84,113 92,209 94,640 102,563
YoY 7.8% 0.6% 6.8% 3.7% 10.0% 19.0% 8.6% 9.6% 2.6% 8.4%
CoGS 32,896 32,541 33,796 34,812 37,331 42,992 45,831 48,863 49,941 52,010
Gross profit 20,196 20,891 23,266 24,333 27,744 34,473 38,283 43,347 44,698 50,552
YoY 8.2% 3.4% 11.4% 4.6% 14.0% 24.3% 11.1% 13.2% 3.1% 13.2%
GPM 38.0% 39.1% 40.8% 41.1% 42.6% 44.5% 45.5% 47.0% 47.2% 49.3%
Reversal of allowance for sales returns 48 76 61 46 60 47 57 46 45 70
Provision for sales returns 80 64 47 60 43 55 44 48 55 50
Adjusted gross profit 20,164 20,903 23,281 24,319 27,761 34,464 38,296 43,345 44,688 50,572
SG&A expenses 15,895 16,299 18,734 19,276 20,675 24,099 25,515 28,823 28,673 31,159
SG&A ratio 29.9% 30.5% 32.8% 32.6% 31.8% 31.1% 30.3% 31.3% 30.3% 30.4%
Operating profit 4,269 4,604 4,546 5,042 7,086 10,365 12,780 14,521 16,015 19,412
YoY 33.7% 7.8% -1.3% 10.9% 40.5% 46.3% 23.3% 13.6% 10.3% 21.2%
OPM 8.0% 8.6% 8.0% 8.5% 10.9% 13.4% 15.2% 15.7% 16.9% 18.9%
Non-operating income 407 410 373 373 656 974 923 1,113 945 1,263
Non-operating expenses 382 405 484 499 353 338 405 554 498 547
Recurring profit 4,294 4,609 4,435 4,917 7,389 11,002 13,299 15,080 16,462 20,129
YoY 35.1% 7.3% -3.8% 10.9% 50.3% 48.9% 20.9% 13.4% 9.2% 22.3%
RPM 8.1% 8.6% 7.8% 8.3% 11.4% 14.2% 15.8% 16.4% 17.4% 19.6%
Extraordinary gains 16 5 20 20 7 9 8 11 122 1,058
Extraordinary losses 290 449 86 213 27 24 167 205 350 271
Tax charges 1,015 1,210 1,352 1,452 2,655 3,784 4,503 4,424 4,891 6,157
Implied tax rate 25.3% 29.0% 31.0% 30.7% 36.0% 34.4% 34.3% 29.7% 30.1% 29.4%
Net income 2,854 2,840 2,928 3,183 4,573 6,985 8,451 10,197 11,118 14,515
YoY 94.0% -0.5% 3.1% 8.7% 43.7% 52.7% 21.0% 20.7% 9.0% 30.5%
Net margin 5.4% 5.3% 5.1% 5.4% 7.0% 9.0% 10.0% 11.1% 11.7% 14.2%
56/66
R
Coverage
Pigeon / 7956
Balance sheet
Balance sheet FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
ASSETS
Cash and deposits 5,973 6,906 6,828 7,294 10,574 13,103 21,591 24,298 30,052 31,346
Accounts receivable 10,119 8,758 9,874 9,993 10,541 12,569 15,278 13,871 16,103 16,440
Inventories 4,641 5,508 5,798 6,926 6,776 8,052 8,499 8,859 7,602 8,711
Deferred tax assets 491 624 801 729 703 826 773 686 665 739
Accounts receivable–other 233 292 375 279 248 369 397 500 253 278
Other current assets 228 298 601 334 278 475 520 736 595 885
Allowance for doubtful accounts -55 -112 -114 -112 -17 -31 -31 -35 -26 -221
Total current assets 21,631 22,273 24,163 25,443 29,103 35,363 47,027 48,914 55,244 58,178
Buildings 4,542 4,639 5,351 5,157 5,221 6,239 6,802 7,372 6,989 7,105
Equipment 2,670 2,970 3,461 3,726 4,025 6,227 7,851 7,886 7,363 7,435
Land 5,880 5,897 6,013 5,979 6,015 6,080 6,139 6,018 5,683 5,878
Construction in progress 217 533 585 196 947 478 591 194 226 695
Total tangible fixed assets 13,308 14,040 15,409 15,059 16,208 19,023 21,383 21,471 20,263 21,116
Goodwill 816 521 600 660 552 441 302 163 51 1,271
Software 646 512 426 351 336 416 486 554 502 456
Others 83 198 163 275 288 585 936 629 552 578
Total intagible fixed assets 1,545 1,231 1,188 1,285 1,176 1,441 1,724 1,346 1,106 3,307
Total fixed assets 16,777 17,221 18,522 18,329 19,435 22,592 25,340 25,029 23,644 26,289
Total assets 38,408 39,494 42,685 43,773 48,539 57,955 72,367 73,943 78,889 84,467
LIABILITIES
Accounts payable 4,674 4,312 3,985 3,758 3,864 4,518 4,463 5,366 6,550 6,991
Short-term debt 1,820 1,470 3,258 3,256 1,416 1,400 2,090 1,309 5,699 0
Others 4,750 4,912 4,984 5,368 6,336 6,901 8,720 7,548 9,132 10,682
Total current liabilities 11,244 10,694 12,227 12,383 11,616 12,819 15,273 14,223 21,381 17,673
Long-term debt 1,320 1,000 1,615 1,642 2,204 2,012 5,928 5,000 0 0
Other fixed liabilities 1,520 1,535 1,799 1,812 2,353 3,143 3,869 3,927 3,770 3,982
Total long-term liabilities 2,840 2,535 3,414 3,454 4,558 5,155 9,797 8,927 3,770 3,982
Total liabilities 14,083 13,229 15,641 15,837 16,173 17,974 25,070 23,150 25,152 21,655
Net assets
Capital stock 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,199 5,199
Capital surplus 5,180 5,180 5,180 5,180 5,180 5,180 5,180 5,180 5,179 5,179
Retained earnings 15,485 17,044 18,451 19,874 22,686 26,930 31,384 36,791 42,280 49,729
Treasury stock -443 -447 -448 -449 -450 -456 -942 -947 -948 -949
Valuation and translation differences -1,494 -1,196 -1,850 -2,376 -944 2,271 5,343 3,344 676 1,534
Minority interests 397 483 511 507 694 857 1,133 1,226 1,349 2,119
Total net assets 24,325 26,264 27,044 27,936 32,365 39,982 47,297 50,793 53,736 62,812
Working capital 10,086 9,954 11,688 13,161 13,453 16,103 19,315 17,364 17,155 18,160
Total interest-bearing debt 3,139 2,470 4,873 4,898 3,620 3,412 8,018 6,309 5,699 0
Net debt -2,833 -4,436 -1,955 -2,395 -6,954 -9,691 -13,572 -17,989 -24,353 -31,346
Inventory management
Excess product returns from secondary distributors and stagnant Pigeon (Shanghai) subsidiary sales to primary distributors
created a dead inventory problem in China in FY01/11. Some secondary distributors were making more orders than they could
actually sell to primary distributors, and some distributors sold to retailers in regions outside provinces that they were responsible
for. Subsequently, the company strengthened primary distributors’ inventory monitoring. By FY01/12, these distributors’
inventory turnover (days in inventory) fell from a peak of five months to a more normal two months. From FY01/13, Pigeon has
started strictly enforcing rules on its distributors to prevent similar problems from reappearing. Though inventor levels stabilized
thereafter, the problem at primary distributors in China reappeared in FY01/16 However, as it had learned the lessons of the past,
the company adjusted the inventories immediately and the problem was basically resolved during the year.
Issued shares
The number of issued shares has been stable. The company generally invests within its operating cash flow and hasn’t used
equity financing over the past decade. The company split its stock 2 for 1 in August 2013, and conducted another 3-for-1 stock
split in April 2015 (record date April 30).
Per share data FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
(JPY) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons.
Shares issued (year end; '000) 20,276 20,276 20,276 20,276 20,276 40,551 40,551 121,653 121,653 121,653
EPS 142.8 141.9 146.3 159.1 228.5 174.5 211.7 85.2 92.8 121.2
Dividend per share 55.0 64.0 88.0 88.0 115.0 88.0 105.0 42.0 53.0 66.0
Book value per share 1,195.5 1,288.1 1,325.7 1,370.5 1,582.5 977.5 1,156.4 413.9 437.4 506.8
57/66
R
Coverage
Pigeon / 7956
Shareholder returns
Pigeon’s sixth medium-term management plan calls for overall returns to shareholders, including share buybacks, of around 55%.
Shared Research believes that high ROEs (at 25.7% in FY01/18) allow Pigeon to adopt a flexible attitude toward its shareholder
return policy.
58/66
R
Coverage
Pigeon / 7956
Statement of cash flows

Cash flow statement FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Cash flows from operating activities (1) 4,206 4,964 3,206 4,212 7,656 7,930 10,135 13,480 14,810 17,094
Cash flows from investing activities (2) -1,279 -2,105 -3,948 -1,871 -1,848 -3,794 -3,134 -3,332 -1,854 -3,586
Free cash flow (1+2) 2,927 2,859 -742 2,341 5,808 4,136 7,001 10,148 12,956 13,508
Cash flows from financing activities -110 -2,018 886 -1,776 -3,149 -3,163 -150 -6,568 -6,223 -12,812
Depreciation and amortization (A) 1,898 1,810 1,940 1,833 1,817 2,071 2,095 2,550 2,356 2,450
Capital expenditures (B) -1,769 -2,109 -2,903 -1,540 -1,858 -3,677 -3,155 -3,374 -2,634 -3,254
Changes in working capital (C) 1,167 -132 1,734 1,473 292 2,650 3,211 -1,951 -209 1,005
Simple FCF (NI + A + B - C) 1,817 2,673 231 2,003 4,240 2,730 4,179 11,325 11,049 12,706
Cash flows from operating activities

Cash flows from operating activities fluctuate mainly according to pretax profit, depreciation, and income tax payments.
Cash flows from investing activities

The main factor affecting cash flows from investing activities are outflows for the purchase of property, plant, and equipment and
intangible assets.
Cash flows from financing activities

The main components of Pigeon’s cash flows from financing activities are dividend payments and inflows (outflows) from change
in interest-bearing debt. In FY01/18, the company repaid its debt by JPY5.7bn. As a result, cash flows from financing activities
showed a net outflow of JPY12.8bn.
Simple free cash flow

Simple free cash flow has been positive since FY01/08. The temporary slow-moving stock problem in China during FY01/11
concerned distributors’ inventory and was resolved relatively quickly with little impact on days in inventory (based on year-end
comparisons). Efforts to cut inventory have been successful, resulting in a recent improvement of inventory turnover.
Cash conversion cycle FY01/09 FY01/10 FY01/11 FY01/12 FY01/13 FY01/14 FY01/15 FY01/16 FY01/17 FY01/18
Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons.
Accounts receivable turnover 5.2 6.1 6.1 6.0 6.3 6.7 6.0 6.3 6.3 6.3
Accounts receivable days 69.6 59.8 59.6 61.3 57.6 54.4 60.4 57.7 57.8 57.9
Inventory turnover 7.1 7.4 6.0 5.5 5.4 5.8 5.5 5.6 6.1 6.4
Days in inventory 51.4 49.5 61.1 66.7 67.0 62.9 65.9 64.8 60.1 57.3
Accounts payable turnover 7.0 7.5 8.1 9.0 9.8 10.3 10.2 9.9 8.4 7.7
Accounts payable days 51.8 48.4 44.8 40.6 37.3 35.6 35.8 36.7 43.5 47.5
Cash conversion cycle (days) 69.2 60.9 75.8 87.4 87.3 81.8 90.6 85.8 74.4 67.6
59/66
R
Coverage
Pigeon / 7956
News and topics

September 2018
On September 3, 2018, the company announced a change in the accounting period.
The company changed its fiscal year end from January 31 of each year to December 31. The fiscal year from February 2019
through December 2019 is planned to be a transitional period of 11 months after the accounting period change.
March 2018
On March 5, 2018, the company announced the booking of extraordinary profit (gain on step acquisition).
As announced in April 2017, wholly-owned subsidiary Pigeon Singapore Pte. Lt. acquired additional shares of PT Pigeon
Indonesia, making it a consolidated subsidiary. At the same time, the company revalued the holdings from before the additional
share acquisition based on market price at the time of this transaction. As a result, the company booked JPY848mn in valuation
gain (gain on step acquisition).
On the same day, the company made an announcement regarding a surplus dividend in the FY01/18.
At a board of directors meeting held on the same day, the company decided to raise the FY01/18 year-end ordinary dividend by
JPY4 per share from the most recent dividend forecast, resulting in a year-end dividend of JPY35 per share (ordinary dividend of
JPY35).
September 2017
On September 4, 2017, the company announced revisions to its earnings forecast.
Revised full-year FY01/18 forecasts are as follows:
▷ Sales: JPY101.2bn (previous forecast: JPY99.8bn)
▷ Operating profit: JPY18.7bn (JPY17.0bn)

▷ Recurring profit: JPY18.6bn (JPY17.0bn)
▷ Net income: JPY13.0bn (JPY11.8bn)

Reasons for earnings forecast revision

In 1H FY01/18, earnings grew in the China segment centered on e-commerce channels. Earnings were also brisk in the Overseas
segment, mainly Lansinoh Laboratories, Inc., which operates in North America and Europe. Sales of the Domestic Baby & Mother
Care segment increased YoY thanks to higher inbound demand. As a result, consolidated sales were up YoY. Profits were also up
YoY at all levels due to higher gross profit stemming from sales growth and lower CoGS-to-sales ratio and efficient use of SG&A
expenses. The company’s forex assumption for 2H on which it bases the revised full-year forecast is around JPY108/USD
(JPY112.33/USD in 1H) and JPY16/CNY (JPY16.38/CNY in 1H).
On the same day, the company announced a dividend hike and revisions to its dividend forecast.
The company plans to increase its interim dividend by JPY3 per share from the most recent forecast to JPY31 per share, and final
dividend also by JPY3 per share to JPY31 per share for a total of JPY62 per share (+JPY9 per share from FY01/17) to reflect
consolidated earnings performance in 1H FY01/18.
60/66
R
Coverage
Pigeon / 7956
April 2017
On April 17, 2017, the company announced a change in status of an affiliated company from an equity-method affiliate to a
consolidated subsidiary.
At the board of directors meeting held on the same day, the company resolved to transfer all shares of an equity-method
affiliate—PT Pigeon Indonesia (“Pigeon Indonesia”)—it holds (total of 3,500 shares; 35% ownership) to its wholly-owned
subsidiary, Pigeon Singapore Pte. Ltd. (“Pigeon Singapore”) through an investment in kind (capital increase). The company also
resolved that Pigeon Singapore acquire additional shares of Pigeon Indonesia (3,000 common shares; 65% ownership after
acquisition) as it prepares to make Pigeon Indonesia a consolidated subsidiary. The acquisition value of additional shares amounts
to USD8.8mn and the transaction is set to take place in November 2017.
According to Pigeon, making Pigeon Indonesia a consolidated subsidiary will give the company a more accurate grasp of the
Indonesian market environment, which will allow it to release new products and expand product procurement system locally in a
timely manner. The company plans to expand Pigeon group’s business in Indonesia through these efforts.
In FY12/16, Pigeon Indonesia posted sales of IDR200.2bn (+21.7% YoY), operating income of IDR21.7bn (+59.8%) and net
income of IDR10.0bn (+18.5%).
61/66
R
Coverage
Pigeon / 7956
Other information
History
Before founding Pigeon, Yuichi Nakata worked in the textile industry before the war. He returned to Japan after the war and made
a fortune selling uniforms to Tokyo metropolitan government officials. Nakata then decided he wanted to help children, the
future of the peaceful nation, to grow up healthy. That was the start of the business focused on infants. In 1951, Nakata invested
in and supported a company called Doufu Boeki, which imported nursing bottles. At the time, there were very few types of
high-quality nursing bottles in Japan. Two years earlier, in 1949, the company started selling Japan’s first wide-necked, cap-type
bottle. It was more hygienic than older models, which had a nipple connected directly to the bottle. In 1950, the A-type bottle,
which became the prototype for the current Pigeon bottles, entered the market. In 1951, using the famous peace symbol for
inspiration, the company adopted the “Pigeon” brand name (pigeon and dove are the same word in Japanese). Adding the word
for nursing bottle, “honyuki,” the company changed its name to Pigeon Honyuki. Nakata became president in 1952 and
established a new company in 1957—Pigeon Honyuki Honpo Co., Ltd.—changing the name to Pigeon Corporation in 1966.
Yuichi Nakata desired to develop the best nipple shape for his bottles—he wanted to find the form that would be as close to
nature as possible. The “formalin incident” of 1969, in which trace amounts of formalin were detected in the company’s nipples,
was a major turning point (formalin is a liquid form of formaldehyde, is colorless, has a pungent odor, and is widely used to fix
and preserve biological specimens). To apologize for the problem, Pigeon sent each of Japan’s 40,000 to 50,000 pharmacies two
dozen nipples at no charge. The pharmacies sold the free nipples, and Pigeon’s nipples spread nationwide as a result.
Accordingly, the company’s ceaseless efforts to respond to the incident generated a great deal of trust among consumers.
After the incident, business grew steadily. In 1975, Pigeon entered the elder care market utilizing some of the transferable
know-how from its baby products expertise. In 1993, the company started a child-care business.
In 1995, the company listed on the Second Section of the Tokyo Stock Exchange. It moved to the First Section in 1997.
In the early 1990s, domestic sales growth began to slow due to the market’s maturity. Pigeon responded by beginning exports to
China in 1996. It set up a Chinese subsidiary in 2002. In 2006, the company set up a factory in Shanghai and another in
Changzhou in 2009.
In North America, Pigeon added Lansinoh Laboratories, Inc. to its portfolio of brands in 2004; Lansinoh in turn bought the
mOmma brand in 2010 and the “earth friendly baby” brand in 2011.
Pigeon began operations in India in 2009, setting up a local subsidiary, Pigeon India Pvt. Ltd., and pursuing sales in Delhi,
Mumbai, and other major cities.
In China, the company began to sell disposable diapers in July 2013.
The company is also preparing to enter the Brazilian market, where it established a subsidiary in March 2014.
62/66
R
Coverage
Pigeon / 7956
Year Event
1949 Pigeon forerunner, Doufu Boeki, established
1949 Launched A-type bottle (Japan’s first wide-necked, cap-type bottle)
1952 Yuichi Nakata appointed first president
1966 Export of Pigeon products overseas begins
1974 First overseas branch office established in Singapore
1978 Pigeon Singapore Pte. Ltd. established
1988 Shares listed on Japan Securities Dealers Association over-the-counter market (currently JASDAQ)
1988 Company research showed babies’ unique drinking method—peristaltic movement of the tongue
1990 Thai Pigeon Co., Ltd. established
1993 Company opened Pigeon Land Joso, a child-care facility that accepts children younger than 12 months old
1995 Company listed on TSE Second Section
1996 Pigeon Industries (Thailand) Co., Ltd. established
1997 Listing transferred to TSE First Section
2002 Pigeon (Shanghai) Co., Ltd. established
2004 Lansinoh Laboratories, Inc. (USA) brought under group umbrella
2006 Pigeon Manufacturing (Shanghai) Co., Ltd. established
2009 Pigeon India Pvt. Ltd., sales subsidiary in India, established
2009 Pigeon Industries (Changzhou) Co., Ltd. established
2010 Lansinoh Laboratories Medical Devices Design Industry and Commerce Co., Ltd. established in Turkey
2011 Lansinoh Laboratories, Inc. (USA) acquires “earth friendly baby” brand
2011 Pigeon Malaysia Trading Sdn. Bhd. established
2015 Pigeon India Pvt. Ltd., factory established
2016 Lansinoh Laboratories Shanghai established
2017 PT Pigeon Indonesia became consolidated subsidiary
Major shareholders
Shares held Shareholding
Top shareholders
('000) ratio
The Master Trust Bank of Japan, Ltd. (Trust account) 6,875 5.65%
Japan Trustee Services Bank, Ltd. (Trust account) 6,439 5.29%
JP MORGAN CHASE BANK 385164 3,300 2.71%
BBH FOR MATTHEWS ASIA DIVIDEND FUND 3,077 2.53%
Y.N. Corporation 3,000 2.47%
THE BANK OF NEW YORK MELLON 140044 2,694 2.21%
Yoichi Nakata 2,638 2.17%
Japan Trustee Services Bank, Ltd. (Trust account 5) 2,326 1.91%
Japan Securities Finance Co., Ltd. 2,108 1.73%
SSBTC CLIENT OMNIBUS ACCOUNT 1,947 1.60%
SUM 34,408 28.27%
As of end-July 2018
63/66
R
Coverage
Pigeon / 7956
Corporate governance and top management

Status of corporate governance
Capital structure
Controlling shareholders None
Parent company ticker N/A
Form of organization; directors
Organizational type Company with corporate auditors
Number of directors under Articles of Incorporation 15
Directors' terms under Articles of Incorporation 2 years
Number of outside (independent) directors 3
Voluntary committee equivalent to nomination committee or compensation committee None
Number of members of Audit & Supervisory Board under Articles of Incorporation 4
Number of external (independent) members of Audit & Supervisory Board 2
Independent officers (outside directors and external auditors) 5
Other
Disclosure of directors' compensation Total amount disclosed
Policy on determining amount of compensation and calculation methodology In place
Corporate takeover defenses None
Top management
Chairman and Chief Executive Officer Akio Okoshi (born 1950) joined Pigeon in 1969. After his posting in Singapore, he left the
company in 1985 and worked at a subsidiary of Mitsubishi Chemical and other manufacturers.
Okoshi rejoined the company in 2000 when one of his contemporaries, former Chairman Seiichi Matsumura, was appointed
president and chief operating officer after listing the company in the late 1990s. Subsequently, Okoshi helped the company shift
away from an owner-driven culture and build one in Mr. Matsumura’s style. After serving as managing director in 2006, Okoshi
was appointed president and chief operating officer in 2007. In 2013 he became chairman and CEO. As Okoshi spent some time
outside the company, he is able to see it from an objective viewpoint, in SR Inc.’s view.
President Shigeru Yamashita (born 1958) joined the company in 1981. After working in overseas sales for around 15 years, he was
appointed managing director of Pigeon’s Thai manufacturing subsidiary in 1997. Subsequently, in 2004 he became managing
director of Lansinoh Laboratories, Inc., and then in 2007 he was appointed an executive officer of the parent company,
responsible for overseas operations.
Yamashita was appointed president in April 2013, and at the results briefing held in March 2013, he commented ambitiously,
“Company founder Yuichi Nakata laid the tracks. Chairman Okoshi got the train running. I am making it my job to bring the train
up to speed.”
Employees
The company had 4,306 employees (as of end-January 2018) and an average of 1,729 temp workers. The parent had 984
employees and an average of 587 temp workers.
Number of employees by segment
Segments No. of employees
Domestic Baby & Mother Care 250（88）
Childcare Services 635（489）
Health & Elder Care 16（4）
Overseas 17（4）
Company-wide 66（2）
Total 984（587）
Note: Figures in parentheses are average annual temp workers and are not included in the numbers of employees.
Note: Company-wide (common) employees are those belonging to the administrative division.
In FY01/18, key statistics for the parent’s employees were as follows:
64/66
R
Coverage
Pigeon / 7956
▷ Average age: 43.3 years old

▷ Average years of service: 10.4 years
▷ Average annual salary: JPY5.0mn
By the way
The company has a wild boar statue outside its head office. Wild boars represent fertility, and Pigeon has had the statue there
since 1973. The boar became a popular tourist attraction in Kanda, Chiyoda Ward, Tokyo. Even after the company moved its
head office in May 2006 from Kanda to Nihombashi, Chuo Ward, passersby still stop to rub the beloved boar’s nose in the belief
that it brings good luck.
Photo by Shared Research,
Company profile
Company Name Head Office
4-4, Hisamatsu-cho
Pigeon Corp. Nihonbashi Chuo-ku
Tokyo, Japan 103-8480
Phone Listed On
+81-3-3661-4188 Tokyo Stock Exchange 1st Section
Established Exchange Listing
August 15, 1957 September 9, 1988
Website Fiscal Year-End
http://www.pigeon.com/ January
IR Contact IR Web
- http://www.pigeon.com/ir/
65/66
RCoverage
About Shared Research Inc.
Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp
We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously
updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on the web at http://www.sharedresearch.jp.
Current Client Coverage of Shared Research Inc.
Accordia Golf Trust Financial Products Group Co., Ltd. Nisshinbo Holdings Inc.
Adastria Co., Ltd. FreeBit Co., Ltd. NS TOOL CO., LTD.
ADJUVANT COSME JAPAN CO., LTD. FRONTEO, Inc. NTT URBAN DEVELOPMENT CORPORATION
Aeon Delight Co., Ltd. Fujita Kanko Inc. Oki Electric Industry Co., Ltd
Aeon Fantasy Co., Ltd. Gamecard-Joyco Holdings, Inc. ONO SOKKI Co., Ltd.
Ai Holdings Corporation GCA Corporation ONWARD HOLDINGS CO.,LTD.
ANEST IWATA Corporation Grandy House Corporation Pan Pacific International Holdings Corporation
AnGes Inc. Hakuto Co., Ltd. PARIS MIKI HOLDINGS Inc.
Anicom Holdings, Inc. Happinet Corporation PIGEON CORPORATION
Anritsu Corporation Harmonic Drive Systems Inc. RACCOON HOLDINGS, Inc.
Apaman Co., Ltd. HOUSEDO Co., Ltd. RESORTTRUST, INC.
Arealink Co.,Ltd. IDOM Inc. ROUND ONE Corporation
Artspark Holdings Inc. IGNIS LTD. RVH Inc.
AS ONE CORPORATION Inabata & Co., Ltd. RYOHIN KEIKAKU CO., LTD.
Ateam Inc. Infocom Corporation SanBio Company Limited
Aucfan Co., Ltd. Infomart Corporation SANIX INCORPORATED
AVANT CORPORATION Intelligent Wave, Inc. Sanrio Company, Ltd.
Axell Corporation ipet Insurance CO., Ltd. SATO HOLDINGS CORPORATION
Azbil Corporation istyle Inc. SBS Holdings, Inc.
AZIA CO., LTD. Itochu Enex Co., Ltd. Seikagaku Corporation
BEENOS Inc. JSB Co., Ltd. Seria Co.,Ltd.
Bell-Park Co., Ltd. JTEC Corporation SHIP HEALTHCARE HOLDINGS, INC.
Benefit One Inc. J Trust Co., Ltd SIGMAXYZ Inc.
B-lot Co.,Ltd. Japan Best Rescue System Co., Ltd. SMS Co., Ltd.
Canon Marketing Japan Inc. JINS Inc. Snow Peak, Inc.
Career Design Center Co., Ltd. JP-HOLDINGS, INC. Solasia Pharma K.K.
Carna Biosciences, Inc. KAMEDA SEIKA CO., LTD. SOURCENEXT Corporation
CARTA HOLDINGS, INC Kenedix, Inc. Star Mica Co., Ltd.
CERES INC. KFC Holdings Japan, Ltd. Strike Co., Ltd.
Chiyoda Co., Ltd. KI-Star Real Estate Co., Ltd. SymBio Pharmaceuticals Limited
Chugoku Marine Paints, Ltd. Kondotec Inc. Synchro Food Co., Ltd.
cocokara fine Inc. Kumiai Chemical Industry Co., Ltd. TAIYO HOLDINGS CO., LTD.
COMSYS Holdings Corporation Lasertec Corporation Takashimaya Company, Limited
CRE, Inc. LUCKLAND CO., LTD. Take and Give Needs Co., Ltd.
CREEK & RIVER Co., Ltd. MATSUI SECURITIES CO., LTD. Takihyo Co., Ltd.
Daiseki Co., Ltd. Medical System Network Co., Ltd. TEAR Corporation
DIC Corporation MEDINET Co., Ltd. Tenpo Innovation Inc.
Digital Arts Inc. MedPeer,Inc. 3-D Matrix, Ltd.
Digital Garage Inc. Mercuria Investment Co., Ltd. TKC Corporation
DIGITAL HEARTS HOLDINGS Co., Ltd Milbon Co., Ltd. TOKAI Holdings Corporation
Dream Incubator Inc. MIRAIT Holdings Corporation Tri-Stage Inc.
Earth Corporation Monex Goup Inc. VISION INC.
Elecom Co., Ltd. NAGASE & CO., LTD VISIONARY HOLDINGS CO., LTD.
Emergency Assistance Japan Co., Ltd. NAIGAI TRANS LINE LTD. WirelessGate, Inc.
en-Japan Inc. NanoCarrier Co., Ltd. YELLOW HAT LTD.
euglena Co., Ltd. Net One Systems Co.,Ltd. YOSHINOYA HOLDINGS CO., LTD.
Evolable Asia Corp. Nichi-Iko Pharmaceutical Co., Ltd. YUMESHIN HOLDINGS CO., LTD.
FaithNetwork Co., Ltd. Nihon Denkei Co., Ltd. Yume no Machi Souzou Iinkai Co., Ltd.
Ferrotec Holdings Corporation Nippon Koei Co., Ltd. Yushiro Chemical Industry Co., Ltd.
FIELDS CORPORATION NIPPON PARKING DEVELOPMENT Co., Ltd. ZAPPALLAS, INC.
Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.
Disclaimer: This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared Research Inc. offers
no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. We shall not be held responsible for any damage
caused by the use of this report. The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared
Research Reports belong to Shared Research. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are strictly
prohibited and a violation of the copyright of this report. Our officers and employees may currently, or in the future, have a position in securities of the companies
mentioned in this report, which may affect this report’s objectivity.
Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer: The report has been prepared by Shared Research under a contract with the company
described in this report (“the company”). Opinions and views presented are ours where so stated. Such opinions and views attributed to the company are
interpretations made by Shared Research. We represent that if this report is deemed to include an opinion by us that could influence investment decisions in the
company, such opinion may be in exchange for consideration or promise of consideration from the company to Shared Research.
Contact Details
Shared Research Inc.
3-31-12 Sendagi Bunkyo-ku Tokyo, Japan
URL: https://sharedresearch.jp
Phone: +81 (0)3 5834-8787
Email: info@sharedresearch.jp
66/66

Pigeon Shared Research Report

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Pigeon Shared Research Report

Transféré par

Droits d'auteur :

Formats disponibles

Pigeon / 7956

COVERAGE INITIATED ON: 2013.01.25

Research Coverage Report by Shared Research Inc.

Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3

Trends and outlook

Strengths and weaknesses

Key financial data

Plan change in representative directors

Name New position Previous position

Norimasa Kitazawa President and COO Vice President and Director

Akio Okoshi None (retiring) Chairman of the Board and CEO

Reason for changes at representative director level

Trends and outlook

Quarterly trends and results

Quarterly segment performance (new segments)

GPM by segment (half-year basis)

Sales by overseas region (half-year basis)

Full-year FY01/19 results

▷ Operating profit: JPY19.6bn (+1.0% YoY)

▷ Net income: JPY14.2bn (-1.9% YoY)

Domestic Baby & Mother Care

▷ Sales: JPY35.6bn (+5.2% YoY)

▷ Sales: JPY4.5bn (-40.7% YoY)

Health & Elder Care

▷ Sales: JPY7.0bn (-1.0% YoY)

▷ Sales: JPY35.6bn (+3.7% YoY)

▷ Sales: JPY12.1bn (+18.0% YoY)

▷ Sales: JPY12.8bn (+1.8% YoY)

▷ Operating profit: JPY1.6bn (+1.5% YoY)

Full-year company forecasts

Historical forecast accuracy

Main points of Medium-term Management Plan

Positioning of sixth medium-term management plan

Source: company data

Outline of Sixth Medium-Term Management Plan

(JPYbn) Sales Gross profit GPM

120.0 110.0 51.0%

Source: Shared Research based on company data

Key targets for medium-term management plan

Plan targets and business strategies by segment

▷ Child Care Service: JPY3.0bn

▷ China: JPY39.0bn (+8.5%)

Sales forecasts by segment

Business strategies and main measures by segment

Expand existing businesses Increase market share in six core categories

Business growth Growth in large-size products category

Further strengthen Restructure and reinforce hospital/maternity hospital relations

Business growth and Strengthen internal sales and distribution structure

China segment: Increase sales from JPY30.5bn in FY01/17 to JPY39.0bn in FY01/20

Business growth Increase market share in six core categories

Strengthen business base Sales and distribution structure

Further strengthen Restructure and reinforce hospital/maternity hospital relations

Overseas segment: Increase sales from JPY23.1bn in FY01/17 to JPY29.0bn in FY01/20

Business growth Increase market share in six core categories

Branding Working with NICU

New and growth markets Strengthen presence in growth markets

Potential of target markets

Image of estimated market size

Source: company data

Targets by overseas region

Sales target by overseas region

FY01/17 Act. FY01/18 Act. FY01/19 Est. FY01/20 Target. CAGR

(JPYbn) FY01/14 FY01/15 FY01/16 FY01/17 FY01/18 FY01/19 FY01/20

Climate change - Reduce CO2 emission; save electric power