PIGEON : Summary of Financial Results for the Second Quarter of Fiscal Year Ending January 2018 (Consolidated)（PDF： 203KB ）

Summary of Financial Results for the Second Quarter of Fiscal Year Ending January 2018 [Japanese Standards] (Consolidated)

Name of Listed Company: Pigeon Corporation (Stock code: 7956) Listing: First Section, Tokyo Stock Exchange

Website: www.pigeon.co.jp

Representative: Shigeru Yamashita (President and COO)

September 4, 2017

Contact person: Tsutomu Matsunaga (Managing Officer, Corporate Planning & Administration Division)/Tel: [phone] Scheduled Filing Date of Quarterly Report: September 8, 2017

Scheduled Commencement Date of Dividend Payments: October 10, 2017

Preparation of Any Additional Explanatory Materials for Quarterly Financial Results: None

Holding of Any Briefing Session for Quarterly Financial Results: Yes (For analysts and institutional investors)

1. Consolidated Business Performance for the First Half of Fiscal Year Ending January 31, 2018 (February 1 to July 31, 2017)
2. Consolidated Operating Results (cumulative)

   (Millions of yen, rounded down, % figures denote year-on-year change)

   Net Sales		Operating Income		Ordinary Income		Net Income Attributable to Owners of Parent
   2Q ended July 31, 2017	49,048	5.9%	9,296	19.5%	9,380	22.3%	6,493	17.1%
   2Q ended July 31, 2016	46,302	(0.5)%	7,777	0.6%	7,671	(2.6)%	5,545	5.0%

   (Note) Comprehensive income: 2Q ended July 31, 2017 ¥6,459 million (734.0%)

   2Q ended July 31, 2016 ¥774 million (86.9% negative)

   Net Income per Share (¥)	Diluted Net Income Per Share (¥)
   2Q ended July 31, 2017 2Q ended July 31, 2016	54.22 46.30	－ －

3. Consolidated Financial Position

4. Total Assets	Net Assets	Equity Ratio (%)
   2Q ended July 31, 2017 FY ended January 31, 2017	75,437 78,889	56,779 53,736	73.4 66.4

   (Reference) Shareholders' Equity: 2Q ended July 31, 2017 ¥55,362 million

   FY ended January 31, 2017 ¥52,387 million

5. Cash Dividends

   Annual Dividend (¥)
   1Q-end	2Q-end	3Q-end	Year-end	Total
   FY ended January 31, 2017 FY ending January 31, 2018	－ －	25.00 31.00	－	28.00	53.00
   FY ending January 31, 2018 (Forecast)	－	31.00	62.00

   (Note) Changes in dividend forecasts to the most recent announcement: Yes

6. Consolidated Business Performance Forecasts for the Fiscal Year Ending January 31, 2018 (February 1, 2017 to January 31, 2018)

7. (% figures denote year-on-year change from the previous term)

   Net Sales		Operating Income		Ordinary Income		Net Income Attributable to Owners of Parent		Net Income per Share
   Full year	Millions of Yen 101,200	% 6.9%	Millions of Yen 18,700	% 16.8%	Millions of Yen 18,600	% 13.0%	Millions of Yen 13,000	% 16.9%	Yen 108.55

   (Note) Revision of forecasts to the most recent announcement: Yes

   Notes

8. Changes in major subsidiaries (or changes in specific subsidiaries that affect the scope of consolidation) during the period under review: None

   New: － (Company name: － ), Excluded: － (Company name: － )

9. Application of any accounting procedures specific to preparation of quarterly consolidated financial statements:

   None

10. Changes in accounting policies, changes in accounting-based estimates, and restatements

11. Changes in accounting policies associated with revision of accounting standards: None

12. Changes in accounting policies other than the above 1): None

13. Changes in accounting-based estimates: None

14. Restatements: None

15. Number of outstanding shares (common stock)

16. Number of shares outstanding at the period-end (including treasury stock) 2Q ended July 31, 2017: 121,653,486

    FY ended January 31, 2017: 121,653,486

17. Number of treasury stock at the period-end 2Q ended July 31, 2017: 1,892,309

    FY ended January 31, 2017: 1,891,943

18. Number of average shares outstanding during the period (quarter accumulation) 2Q ended July 31, 2017: 119,761,388

19. 2Q ended July 31, 2016: 119,761,814

    • This quarterly financial results report is exempt from quarterly review.

    • Cautionary Statement regarding Performance Forecasts

    The forecasts and future projections stated in this report have been prepared on the basis of the information and assumption that shall be reasonable as of the date of announcement of this summary information, and the forecasts and future projections stated in this report are in no way intended as a promise of achievement as a company.

    In addition, the actual results could differ significantly from forecast figures depending on a variety of factors. See the section "(3) Explanation of Consolidated Performance Forecast and Other Future Predictions" in "1. Qualitative Information Regarding the Financial Results for the Current Quarter" on page 4 regarding conditions which are preconditions for business performance forecasts and cautions for using the business performance forecast.

    Table of Contents of the Appendix

20. Qualitative Information Regarding the Financial Results for the Current Quarter 2

21. Explanation of Business Performance 2

22. Explanation of Financial Position 4

23. Explanation of Consolidated Performance Forecast and Other Future Predictions 4

24. Issues Regarding Summary Information (Notes) 4

25. Significant Changes in Subsidiaries During the Period Under Review 4

26. Application of Any Accounting Procedures Specific to Preparation of Quarterly

    Consolidated Financial Statements 5

27. Quarterly Consolidated Financial Statements and Main Notes 6

28. Quarterly Consolidated Balance Sheets 6

29. Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income 8

    Quarterly Consolidated Statement of Income

    (Scope of Consolidation of Second Quarter) 8

    Quarterly Consolidated Statement of Comprehensive Income

    (Scope of Consolidation of Second Quarter). 9

30. Quarterly Consolidated Statements of Cash Flows. 10

31. Notes on Consolidated Financial Statements 12

32. (Notes Regarding Going Concern Assumptions) 12

    (Notes Regarding Substantial Changes in Shareholders' Equity) 12

    (Segment Information) 13

    1. Qualitative Information Regarding the Financial Results for the Current Quarter (1) Explanation of Business Performance

    During the consolidated first six-month period under review, although personal consumption lacked momentum, Japan's economy continued to recover at a gradual pace as a whole, thanks to an increase in corporate earnings, as well as enhancement in the employment and income environment. On the other hand, the conditions in the world economy remained uncertain due to the U.S. regulations and financial polies that are hard to predict, negation for the conditions after the British exit from the European Union, and geopolitical risks, while general condition of businesses in the

33. economy remained strong as a whole.

    Amid such economic circumstances, the Group developed the sixth medium-term business plan (for the period between the fiscal year ending January 2018 and the fiscal year ending January 2020), under the slogan of "Building our dreams into the future - by creating a bridge towards the Global Number One manufacturer of baby products -," and has made efforts toward our further growth in the first year of this plan. In addition, we have set the following three basic strategies that would help us to expand the Group's business and improve its management quality.

34. Based on the Pigeon Way, create and implement all kinds of measures to achieve the goal of becoming 'an indispensable company' for the society and make our Vision "to be the baby product manufacturer most trusted by the world's babies and families, i.e. 'Global Number One'" come true.

35. A further increase in corporate value will be pursued through improvement in profitability and efficiency of the business, and maximization of cash flows. The organizational structure, management system and governance system will also be put in place and reinforced to ensure sustainable growth from a medium to long-term perspective.

36. During the three years of the sixth medium-term business plan, invest management resources giving priority to the key products and carry out strategic investments, laying solid foundations for the double-digit growth of Pigeon Group in the future.

37. During the consolidated first six-month period under review, we implemented strategies for each of our business and function on the basis of the above business policies. As the result, net sales amounted to ¥49,048 million (up 5.9% YOY), as supported by sales increases mainly in Japan, China and North America. Regarding earnings, operating income rose to ¥9,296 million (up 19.5% YOY) thanks to a reduction of approximately 1.9 percentage points in the sales cost ratio from the previous term. Ordinary income recorded ¥9,380 million (up 22.3% YOY), and net income attributable to owners of parent also increased to ¥6,493 million (up 17.1% YOY).

    The main exchange rates used in the preparation of this six-month period's financial statements for the Company's overseas consolidated subsidiaries (revenues and expenses) are as follows:

    ・1US$: 112.33 yen (111.69 yen)

    ・1 CNY: 16.38 yen (17.05 yen)

    Note: Figures in parentheses represent the exchange rate in the same period of the previous fiscal year.

    Our Group has a total of five reporting segments identified as: "Domestic Baby & Mother Care Business," "Child Care Service Business," "Health & Elder Care Business," "Overseas Business," and "China Business." Each segment is outlined below.

    Please take note that in order to explain the profit status of each segment in a more detailed manner, we decided to record expenses in non-allocable operating expenses associated with the Research and Development Department, which had been included in the Adjustment section so far, in the segment profit of each reporting segment starting from the consolidated first three-month period of the current fiscal year.

    In addition, we have made year-over-year comparisons by converting the figures in the same period