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Becoming the “Global Number One” manufacturer of baby and child care products

Recently, we celebrated 60 years since our founding in 1957. Throughout our history, we have evolved and grown under our Corporate Philosophy of “Love” and our Credo of “Only love can beget love.” I would like to take this opportunity to thank all of our stakeholders, including customers, shareholders and other investors, business partners, and employees.
Fiscal 2016, ended January 2017, was the final year of our Fifth Medium-Term Business Plan. Thanks to your support, consolidated net sales rose 2.6% year on year, to ¥94,640 million; operating income climbed 10.3%, to ¥16,015 million; and ordinary income grew 9.2%, to ¥16,462 million. This marked the 15th consecutive period of increases in revenue and the sixth consecutive period of growth in earnings. Despite the impact of the strong yen and weak U.S. dollar, we achieved steady overall business progress according to plan. We enjoyed particularly good growth in the Domestic Baby & Mother Care Business segment, buoyed by rising consumption from inbound tourists from overseas.
In nonfinancial matters, “Pigeon Way”—which embodies our Corporate Philosophy, Values, and Mission—has become deeply shared and ingrained throughout the Pigeon Group, both in Japan and overseas. Now incorporated into the work of all individual employees, Pigeon Way is driving positive outcomes. In the meantime, our initiatives are receiving widespread acclaim. In January 2016, for example, we won the Grand Prix in the Corporate Value Improvement Awards for 2015, hosted by the Tokyo Stock Exchange (TSE). And in December 2016 we received the Porter Prize, awarded to entities that achieve and maintain high profitability by implementing unique, exceptional strategies. Going forward, we will continue working to expand our business and improve enterprise value in our quest to become the “Global Number One” manufacturer of baby and child care products.
In January 2017, the Pigeon Group announced its Sixth Medium-Term Business Plan, covering the three-year period from February 2017 to January 2020. The slogan of the plan is “Building our dreams into the future—by creating a bridge towards the Global Number One manufacturer of baby products―” Under the plan, we will strive to further enhance enterprise value by steadily implementing various measures based on business strategies and functional strategies that serve as the foundation for such business strategies, while establishing and reinforcing a robust business operational structure.
In fiscal 2019 (ending January 2020), the final year of our Sixth Medium-Term Business Plan, we are targeting consolidated net sales of ¥110 billion (representing average annual growth of 5.1% from ¥94.6 billion in fiscal 2016), operating income of ¥20 billion, and ordinary income of ¥20 billion. We are also targeting return on equity (ROE) of 22.0% or higher and return on invested capital (ROIC: net operating profit after taxes, or NOPAT, divided by invested capital, assuming a taxation rate of 30.0%) of 20.0% or higher.
By actively implementing our Sixth Medium-Term Business Plan, we will work to improve corporate value in terms of both social value and economic value. We look forward to your ongoing support for these endeavours.

Shigeru Yamashita
President and COO
Pigeon Corporation