Value Creation Story

In order to create a society that realizes our long-term vision of a baby-friendly future, we will focus our resources on solving key issues (materiality), and through the efforts of our four global businesses in accordance with our medium-term management plan, we will aim to expand and realize both economic value and social value.To make the world a more baby-friendly place, we, the Pigeon Group, as a leading global company in the niche field of “baby care products,” aim to achieve sustainable growth and increase our corporate value.

① Corporate philosophy (base for value creation)

Pigeon is developing its business activities to realize our purpose “We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs.” In February 2025, we updated our corporate philosophy so that each and every employee of the Pigeon Group will further embody our purpose through the provision of products and services.

②Sources of Value Creation

We have identified the following five elements as sources of value creation.

・Human capital: Employees who practice Pigeon's philosophy

・Financial capital: Consolidated net assets: ¥85.8 billion, Equity ratio: 75.3% (Fiscal 2025)

・Intellectual capital: Know-how and intellectual property derived from 70 years of intensive research of nursing and babyʼs sucking behaviors, manufacturing, sales, and service

・Manufacturing capital: Global quality control

・Relationships of trust with consumers, business partners, and medical professionals

③Business Activities and Value Proposition

Based on the source of value creation, we will utilize our strengths to provide babies and their families around the world with unique, high-quality products and services that solve child-rearing problems, including nursing bottles and nipples, for which we have the top global market share. In this way, we will steadily address Key issues (materiality), reduce our environmental impact and resolve the social issues that affect babies and their families
across all the countries and regions where we operate.

Key Issues (Materiality)

In April 2019, we identified the Key Issues (Materiality) that we must address to foster the development of a sustainable society through our business activities and enhance our corporate value. In 2022, we conducted a review of materiality given significant changes in our business and the social environment.

The 9th Medium-Term Management Plan

Starting with the fiscal year ending December 2026, we are implementing our 9th Medium-Term Management Plan under the new goal of “sustained growth with profitability.” Always grounded in the Pigeon Group’s “Purpose”—“We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies’ unique needs,”—we are promoting business strategies aligned with our medium- to long-term material issues aimed at realizing this purpose. We aim to accelerate growth in our Americas and Europe Business (formerly the Lansinoh Business) and our Singapore Business, while pursuing stable growth in our Japan and China Business. Furthermore, we will continue to strengthen sustainable operations from the perspectives of Environment (E), Social (S), and Governance (G). In every country and region where our Group conducts business, we view efforts to reduce environmental impact and other burdens as a fundamental responsibility. Additionally, by addressing social issues surrounding babies and their families and taking on the challenge of expanding our business into untapped markets and product areas, we aim to further enhance our corporate value and become an indispensable presence in society.

Pigeon Group Operating Environment

The Pigeon Group aims to enhance corporate value on a sustainable basis by accurately identifying changes in the operatingenvironment, appropriately managing and responding to various risks, and investing in growth opportunities.

Time horizon	Category	Risks	Opportunities
Short term (0–2 years)	Changes in the business environment	Intensifying competition due to a growing e-commerce market Diversification and increasing complexity of supply chain risks Rising raw material costs/foreign exchange risk	Expansion of the target customer base through e-commerce growth Business growth through new products tailored to diverse parenting styles
Medium term (3–5 years)	Demographic trends and social issues	Declining birth rates in key markets (Japan and China) Persistently high infant mortality rates Insufficient social support for babies born prematurely Emergence of human rights risks in the supply chain Labor shortages	Full-scale expansion into untapped markets Expansion of products and services for babies requiring specialized care Building a resilient supply chain through responsible sourcing Securing talented employees through enhanced engagement
Long term (6+ years)	Climate change and environmental issues	Escalation and increased frequency of natural disasters Institutionalization of soft law and hard law related to the environment	Increased sales of environmentally friendly products driven by growing environmental awareness among consumers

④Business foundation

As a foundation for creating economic and social value, we will promote corporate governance, R&D, manufacturing, quality, and a strong supply chain.

⑤Corporate Value Created

As part of the Pigeon Group's goal of sustainable growth and enhancement of corporate value, we have set the following targets in terms of both economic value and social value.

Economic value: Targets for the final year of the 9th Mid-Term Management Plan
Net sales:125.0 billion yen; Gross profit: 65.4 billion yen; Operating income: 20.0 billion yen
PVA: 9.4 billion yen or more, ROE: 14.9% , ROIC: 15.4%

Social Value:【Environment】 Realization of Pigeon Green Action Plan
【Society】 Contribute to solving social issues surrounding babies and their families
【Human Resources】 Cultivate human resources who can contribute to enhancing corporate value

⑥Impact on Society

United as one Group, we will continue creating positive impact for the future through our commitment, “Giving every baby the best possible start,” as we strive to realize a sustainable society in which every baby can thrive and to build a business that future generations can be proud of. Our aspiration for these final outcomes is embodied in our commitment, “Giving every baby the best possible start.” Rather than allowing this commitment to remain merely a slogan, we have begun articulating our social impact to clearly demonstrate our contribution to society. As the first step, we established social impact indicators to make the impact of our activities more visible and incorporated them into our executive remuneration system* as one of the performance metrics for stock-based compensation under the 9th Medium-Term Management Plan (2026–2028).

⑦Long-Term Value Co-Creation with Society

Pigeon announced the formulation of its Vision of a Baby-Friendly Future in order to further advance its efforts to realize its Purpose, "We want to make the world more baby-friendly by furthering our commitment to understanding and addressing babies' unique needs," by describing, in terms of six specific faces of society, the "baby-friendly" world envisaged in that Purpose.
Amid the great changes now taking place around babies and their families, the Vision of a Baby-Friendly Future is the result of thinking about how society should be to improve the world babies will face in the future. It was created based not only on proposals from Pigeon employees but also from ideas that arose through various discussions with experts on regions and communities, the environment, and welfare along with everyday mothers and fathers.
In order to realize its Vision of a Baby-Friendly Future, Pigeon will move forward step by step, seeking to increase the number of people in society who empathize with the vision and co-creating and taking action with a diverse range of stakeholders.