FY 2012 Financial Results

Announcement

Management Reports

Lion Corporation

Itsuo HamaRepresentative Director and President, Executive Officer

February 12, 2013

Business Environment for FY2012

3

（USD/BBL） （MYR/ｔ）

0

20

40

60

80

100

120

140

1/08 1/09 1/10 1/11 1/12

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1/08 1/09 1/10 1/11 1/12

MYR3,290/tonUSD106/BBL

FY2011 (actual)

(12.2%)2.7%

Y-on-YChange(%)FY2012 (actual)

Expected average annual price at the

beginning of FY2012Raw material

MYR2,890/tonJPY109/BBL

MYR3,200/tonUSD100/BBL

Crude palm oilCrude oil

1. Trends in raw material prices

Crude oil (Dubai) Crude palm oil (Malaysia)

Business Environment for FY2012

4

-20

-10

0

10

20

Jan-11

Feb-11

Mar-11

Apr-11

May-

11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-

11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-

12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-

12

Dec-12

USD

Thai Baht

Korean Won

Business Environment for FY20122. Exchange rate fluctuations

Stronger yen

Weaker yen

Jan 2011 = standard

JPY0.0722

JPY2.60

JPY79.6

FY2011(actual)

0.6% (weak yen)JPY80.1JPY78.0USD

0.8% (strong yen)JPY2.58JPY2.50Thai Baht

JPY0.0650

Expected average annual price at the beginning of

FY2012

JPY0.0715

FY2012(actual)

1.0% (strong yen)Korean Won

Y-on-YChange(%)Currency

5

97

98

99

100

101

102

103

104

2007 2008 2009 2010 2011 201295

96

97

98

99

100

101

102

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Monthly trend in unit price oflaundry detergent and fabric softener（％）（％）

fabric softener

laundry detergent

3. Trends in Domestic Home Products Markets Trends in the total of 42 home product markets in which Lion participates (percentage of previous year’s results)

Annual trends

*44 markets until FY2010

No. of units

Amount

Unit price

Business Environment for FY2012

（Source: INTAGE Inc. SRI Survey)

6

94

96

98

100

102

104

2007 2008 2009 2010 2011 2012

（％）

Business Environment for FY20124.Annual Trends in Domestic OTC Drug Markets Trends in the total of 8 OTC Drug markets in which Lion

participates (percentage of previous year’s results.)

No. of unit Unit price

Amount

（Source: Lion）

Business Results of FY2012

8

Change from forecast announced on Nov, 6, 2012Y-on-Y

Change(%)

Y-on-YChangeFY2011FY2012

0.3

(4.3)

(7.8)

1.7

Change

0.93.91.540.71.2

42.31.3Net Income

% of Sales

(4.8)(29.7)(36.1)121.83.7

85.62.6

Ordinary Income% of Sales

(9.8)(35.4)(39.5)111.63.4

72.12.2

Operating Income% of Sales

0.12.376.73,275.03,351.7Net Sales

Change(%)

（unit: ¥100 million）

Financial HighlightsNet Sales and Profits

9

（unit: ¥ 100 million）Results by business segment

(35.4)

(72.4)

(34.0)

25.9

85.0

(16.0)

(50.9)

Y-on-Ychange(%)

(39.5)

(3.0)

(36.5)

1.9

6.7

(0.6)

(44.5)

Y-on-Ychange

111.6

4.1

107.5

7.7

7.9

4.2

87.6

FY2011

72.1

1.1

70.9

9.7

14.6

3.6

43.0

FY2012

Segment income (operating income)

2.598.63,949.34,047.9Subtotal

－(21.9)(674.3)(696.2)Adjustment

FY2011FY2012

2.376.73,275.03,351.7Consolidatedtotal

12.934.1263.8297.9Other

10.154.1537.5591.7Overseas

(5.0)(26.2)524.1497.8IndustrialProducts

1.436.62,623.82,660.4ConsumerProducts

Y-on-Ychange(%)

Y-on-Ychange

Net sales

Financial Highlights

10

Financial Highlights

（unit: ¥100 million）Y-on-Y Changes in Operating Income

112

72

+19

(12)

(5)

△46

＋4

0 20 40 60 80 100 120 140

Operating income for FY2012

Other expenses

Sales, product mix and others

Competition expenses

Crude oil prices and vegetable oil prices

Total cost reduction efforts(manufacturing and logistics costs)

Operating income for FY2011

Business Challenge in FY2012

12

1.Qualitative Growth of Domestic Businesses1.Qualitative Growth of Domestic Businesses

2.Quantitative Expansion of Overseas Businesses2.Quantitative Expansion of Overseas Businesses

3.Development of New Business Value3.Development of New Business Value

4.Enhancement of Organizational Learning Capabilities4.Enhancement of Organizational Learning Capabilities

Basic Policies for FY2012

“V-1 Plan” Four Strategies

Establish a medium-term growth trajectory/Strengthen earnings platform

13

･ Stagnation in seasonal products (antiperspirants and deodorants, insecticides) due to unfavorable weather

･ Market shrinkage and intensifying competition in the field of OTC pharmaceuticals

･ Contraction of Lion’s “volume zone”* in the toothpaste market, reflecting polarizing consumer trends

･ Drop in retail prices mainly in the Fabric Care Products field and a rising proportion of economy-priced products

* The product range in which mainstay products are sold

Increasing advertising expenses:Proactive investment to cultivate markets for the Company’s brands, expansion of direct-to-consumer business and promotion of the corporate brand

Industrial Products: Decreasing sales and income･Chemicals: Decreasing domestic and overseas industrial demand,

downturn in exports due to the appreciation of the yen･Detergents: Favorable sales of dishwashing detergents and hand soaps

for institutional use

Deterioration of profitability due to change in product

composition

Rising sales promotion expenses

Qualitative Growth of Domestic BusinessesFactors Contributing to the Decrease in Operating Income

Consumer Products: Increasing sales and decreasing income

14

Lion’s Volume Zone in the Toothpaste Market Contracted Due to Polarizing Consumer Trends

+6.3％￥５００〜

TrendYear-on–year change in market scale in 2012 Price range

(11.1％)￥１５０〜２４９

+1.7％Overall market

+4.8％￥２５０〜４９９

(0.0％)￥１００〜１４９

+4.6％〜￥９９

<Year-on-year trends in the toothpaste market (by price range)>

（Source: Lion, based on monetary amounts ）

Market shrinkage in the price range in which Lion sells its mainstay products

15

（ Source: INTAGE Inc. SRI Survey, based on monetary amounts *Lion’s definition )

(2.8％)

(3.5％)

(3.6％)

（1.9％）

Year-on-year price change in 2012

+0.7％Conventionalliquid laundry detergent

TrendsYear-on-year change

in market scale in 2012

Product type*

+0.6％Total

(10.0%)Powder detergent

+29.1％Super-concentratedliquid laundry detergent

Decreasing Price Trend in Fabric Care Products Fields

< Year-on-year market trends for laundry detergents and price trends (by product type)>

Prices of conventional liquid laundry and powder detergents decreased; market for super-concentrated liquid laundry detergent grew while prices remained virtually unchanged

16

High-Priced Toothpaste

Y-o-Y comparison 114％

Super-Concentrated Liquid Laundry Detergent

Foaming Hand Soap

Y-o-Y comparison 138％

Qualitative Growth of Domestic Businesses Achievements in FY 2012 (1)

Y-o-Y comparison 111% Y-o-Y comparison127%

Sales of high-value-added products showed steady growth

Fabric softener with rich and long-lasting scent

17

Toothpaste for hypersensitivityDentor Systema ToothpasteSensitive Care

Promoted a product effective in relieving stomach pain when stomach is empty Sucrate Ichoyaku

New proposal:Preventing the growth of mold

LOOK Bath Antimold Fogger

Fabric freshenerKaori to Deodorant no SOFLAN(SOFLAN with Fragrance and Deodorant) Aroma Rich Fragrance Mist

New products launched in FY2012

Tooth-WhiteningMedicated ToothpasteClinica Enamel Pearl

Super-ConcentratedLiquid Laundry DetergentTOP HYGIA

Qualitative Growth of Domestic Businesses Achievements in FY 2012 (2)

Expanded growth markets

Cultivated new markets

18

Quantitative Expansion of Overseas Businesses

Double digit-growth in overseas sales (Y-o-Y consolidated basis)＊The following represents year-on-year comparisons (based on local currencies ) by country and region

19

Area expansion(Establishment of a joint venture in the Philippines, commencement oftest-marketing in Vietnam)

Boost production capacityPhilippines：Established PEERLESS LION CORPORATION

Quantitative Expansion of Overseas Businesses

Malaysia：Detergent drying facility completed Thailand：New plant for oral care products

20

Development of New Business Value Direct-to-consumer sales channels

0

2000

4000

6000

8000

10000

12000

2007 2008 2009 2010 2011 2012

Net sales of mail-order-business(unit：¥100 million)

Year-on-year comparison158%

¥9.7 bn.

Almost achieving our ¥10 billion target for 2014Cumulative total number of Lactoferrin customersreaches more than 1 million

21

＋ ・Double digit-growth in sales and income Sales growth rate: 10% year on year

Quantitative Expansion of Overseas BusinessesQuantitative Expansion of Overseas Businesses

Development of New Business Value Development of New Business Value

Qualitative Growth of Domestic BusinessesQualitative Growth of Domestic Businesses

Summary of the Company’s Operations in FY 2012

＋ ・Scale of direct-to-consumer business grew to ¥10 billionSales growth rate: 58％ year on year

＋ ・Achieved sales expansion by releasing new products in growing markets “Market creation-type products” expanded the markets in which the Company operates

・ Steadily cultivated high-value-added products － ・ Deterioration of profitability due to the change in product composition,

an increasing proportion of low- or economy-priced products in lineup

Policies and Measures for FY 2013

23

◇Qualitative Growth of Domestic BusinessesConsumer Products

The Most

Essential Issue

Regain the Profitability ofDomestic Business

Policies and Measures for FY 2013

<Operations >Improve the product composition

・Achieve stable prices (reinforce sales promotion not dependent on lower prices)

・Expand available product lineups at stores ・Secure the volume of the Company’s products

carried by retailers

<Products>Accelerate the development of high-value-added products and market creation-type products

・During FY 2013, maintain firm sales of products released in FY2012

・Steadily releasenew products in FY2013

24

Policies and Measures for FY 2013

25

Chemical ProductsDevelop new applications in strategic fields while further cultivating overseas customers・Fatty Ester derivatives（ eco-friendly oils for transformers, etc. ）・Electro-conductive carbon black (for secondary batteries for automobiles, etc.）・Industrial cleaners （ IT/Electronics and Automobile Industries ）

◇Qualitative Growth of Domestic BusinessesIndustrial Products

Policies and Measures for FY 2013

Commercial DetergentsStep up promotions aimed at new customers・Food service industry (restaurant chains) and hotels・Medical and nursing care facilities

26

◇ Quantitative Expansion of Overseas Businesses■Measures to win the leading share in oral care products

・Expand and reinforce Systema brands Cultivate brands in all area of operations by releasing new products while bolstering advertising

Policies and Measures for FY 2013

Rendering of a new plant to be constructed in China

・Complete the new plant in Thailand while starting the construction of new Chinese plant

・Promote the adoption of the “oral care habit” in Asia

27

2008 2009 2010 2011 2012

Trend in overseas production volume (domestic production volume as100)

New production facility for detergents in Malaysia

Policies and Measures for FY 2013◇ Quantitative Expansion of Overseas Businesses■Measures to win the leading share in laundry detergents ・ Expand production capacity in line with rising demand accompanying the population growth

in Asia

・Further expand sales of liquid laundry detergents in each country

28

◇Quantitative Expansion of Overseas Businesses■Expand our area of operations while strengthening our R&D structure・ Start the operation of new joint venture in the Philippines ・ Increase the annual production capacity of LECO (Lion Eco Chemicals Sdn.Bhd.)

to 50,000 tons

Policies and Measures for FY 2013

・ Strengthen the R&D structure for products for overseas sales

29

◇Development of New Business Value■ Direct-to-consumer business: Create a second pillar that

aids “Quality of Life” (QOL) enhancement

Policies and Measures for FY 2013

■ Commence the “Oral Care Solution Business”

Financial Forecast for FY2013

31

Business Environment for FY 2013

Crude oil (Dubai) Domestic Naphtha Crude palm oil

FY 2013 forecasts USD115/BBL JPY59,000/KL MYR3,300/ton

US Dollar Thai Baht Korean Won

FY 2013 forecasts USD85.0 THB2.70 KRW0.075

Domestic market environment

Commodity market: Continuing mild decreasetrend with regard to unit prices, with sales volumes and the size of the market edging upOTC pharmaceutical market: Slight downward

trends in unit prices and sales volumes while the size of the market decreases around 2%year on year

Forecasts for GDP growth rate in 2013(year on year)

ASEAN 5*: 5.5%NIEs**: 3.7%China: 8.1%

*Thailand, Indonesia, Malaysia, Philippines and Vietnam** South Korea, Hong Kong, Singapore and Taiwan

(Mitsubishi Research Institute, Inc. forecastsas of December 2012 )

Overseas market environment

Forecasts for raw material prices and currency

Currency (Per JPY 100)

Raw material prices

32

(unit: ¥100 million)

Y-on-YChange

(%)

Y-on-YChange

(%)

Y-on-YChange

16.01.0

30.0

1.9

25.0

1.5

1,620.0

FY20131H

60.01.8

110.0

3.2

100.0

2.9

3,420.0

FY2013 Y-on-YChangeFY2012 FY2012

1H

17.6

24.3

27.8

68.2

41.6

28.4

38.6

2.0

11.60.7

28.3

1.8

22.5

1.4

1,598.7

37.84.342.31.3

Net Income% of Sales

6.01.685.6

2.6

Ordinary Income% of Sales

11.12.472.1

2.2

Operating Income% of Sales

1.321.23,351.7Net Sales

FY2013 Consolidated Financial Forecast

33

8.222.0267.9290.08.749.0560.9610.0Overseas

Y-o-YChange

(%)

1,598.7

23.9

148.0

1,158.8

FY20121H

21.2

(3.9)

2.0

1.1

1.31,620.02.068.23,351.73,420.0Total

(16.4)20.0(13.7)(6.3)46.340.0Other

1.3150.01.13.4301.5305.0IndustrialProducts

0.11,160.00.922.12,442.82,465.0ConsumerProducts

Y-o-YChange

(%)

Y-o-YChange

FY20131H

Forecast

Y-o-YChangeFY2012FY2013

Forecast

【Net sales and sales to external customers】 (unit: ¥100 million)

FY2013 Consolidated Financial ForecastBy business segment

34

FY2013 Consolidated Financial Forecast

Factors Causing Changes in Results Forecasts

◇Increasing costs for market competition due to falling retail prices amid fluctuating economic trends and intensifying competition

◇Intensifying competition among overseas businesses

◇Future uncertainty caused by high raw material prices and exchange rate fluctuations

35

Medium-Term Management Plan ”Vision 2020 Part-1”

Consolidated net salesUnit:100 million

Consolidated operating incomeUnit:100 million

0

100

200

2011 2012 2013 2014

0

1000

2000

3000

2011 2012 2013 2014

■ Results (forecast for 2013) ■V-1 targets

36

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2012 FY2011 FY2012 FY2013（Plan)

Payment ratio(Non-consolidated) － 54.7% 47.2% 53.2% 93.0% 65.4% 46.1% 82.4% 86.9％

4 45 5 5

45

5 5 5

(5)5 5 5 5

(5)5 5 5 5

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

year end dividend

Interim dividend

（yen）

（Plan）

８

１０９

(１０)１０１０ １０ １０１1

１０

Dividends per share (annual)

Cash Dividends Paid to Shareholders

※120th Anniversary Commemorative Dividend PaidIn FY2011 as of the year-end: ¥1

※1

－37－

The forecasts and projected operating results contained in this

report are based on information available at the time of

preparation, and thus involve inherent risks and uncertainties.

Accordingly, readers are cautioned that actual results may differ

materially from those projected as a result of a variety of factors.

Note: Figures are rounded down to the digits that are displayed.

Reference Materials

39

Statements of Income (Consolidated)(unit: ¥100 million)

3.9

18.2

28.510.110.5

(92.5)246.7(29.7)(15.9)

7.8(35.4)

3.3

1.04.12.3

Y-o-YChange(%)

Y-o-YChange

1.540.742.3Net income

1.05.56.5Minority interests in earnings ofconsolidated subsidiaries

3.612.816.5Adjustment of income taxes

1.818.520.4Income taxes

8.177.885.9Net income before income taxes

(41.7)45.03.3Extraordinary loss

2.61.03.6Extraordinary income

(36.1)121.885.6Ordinary income

(1.7)10.99.1Non-operating expenses

1.621.022.6Non-operating income

(39.5)111.672.1Operating Income

58.81,766.81,825.7Selling, general and administrativeexpenses

19.31,878.51,897.8Gross profit

57.31,396.41,453.8Cost of sales

76.73,275.03,351.7Net sales

FY2011FY2012

40

1.1

0.9

0.7

11.7

5.0

3.0

(0.2)

3.3

% ofsales

Other

Research and development expenses

Salaries and allowances

Advertising expenses

Transportation and warehousing expenses

Promotion expenses

Sales commission

3.4

0.7

0.8

25.9

7.5

20.6

(0.3)

58.8

¥100million

Change

5.1167.05.0166.7

21.1691.621.3712.2

4.6150.54.7158.1

318.0

89.1

129.1

221.2

1,766.8

¥100million

FY2011

6.87.4247.2

3.93.9129.9

9.79.6321.4

2.72.789.8

53.954.51,825.7Selling, general andadministrative expenses

% ofsales

% ofsales

¥100million

FY2012

Selling, General and Administrative Expenses (Consolidated)

41

Significant Extraordinary Income or Loss (consolidated)

45.0Total3.3Total

3.8

0.35.9

29.75.1

Loss on disposal of noncurrent assetsImpairment lossLoss on valuation of investment securitiesLoss on disasterOther

2.0

1.3

Loss on disposal of noncurrent assetsImpairment loss

Extraordinary loss

1.0Total3.6Total

0.3

0.4

0.2

Gain on disposal of noncurrent assetsGain on sales of investment securitiesReversal of allowance for doubtful accounts

2.9

0.6

Gain on disposal of noncurrent assetsGain on sales of investment securitiesExtraordinary

income

FY2011FY2012

(unit: ¥100 million)

42

Consolidated Balance Sheets (Selected) I

47.8420.5468.3Investments and other assets

83.22,492.72,575.9Total assets

(37.3)214.8177.5Intangible assets

34.5585.0619.5Property, plant and equipment

44.91,220.41,265.4Noncurrent assets

15.8302.5318.3Inventories

59.1104.3163.5Short-term investments

(39.7)551.9512.1Notes and accounts receivable-trade

6.7254.7261.4Cash and deposits

38.21,272.21,310.4Current assets

ChangeFY2010FY2012

(unit: ¥100 million)

43

Consolidated Balance Sheets (Selected) II

(0.0)(166.5)(166.5)Treasury stock

－24.124.1Current portion of long-term loans payable

89.11,052.51,141.6Minority interests

83.2 2,492.72,575.9Total liabilities and net assets

17.430.247.7Valuation difference on available-for-sale securities

12.4567.5579.9Retained earnings

－344.3344.3Capital stock

0.7191.5192.3Provision for retirement benefits

(24.1)250.8226.7Long-term loans payable

(21.2)494.1472.8Noncurrent liabilities

17.6378.8396.5Accounts payable-other and accrued expenses

8.051.459.4Short-term loans payable

(15.4)420.7405.3Notes and accounts payable-trade

15.3946.0961.4Current liabilities ChangeFY2011FY2012

(unit: ¥100 million)

44

5139

2632

62 60 59 59 57

43

62 60

66

4051

8363

150

61

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013

Jul-Dec

Jan-Jun

160

108

64

118123 124 124

79

117 120120

63

44

70

Capital expenditures Depreciation expenses

Plan Plan

Capital Expenditures and Depreciation Expenses (consolidated)

（¥100 million）

Note: Both capital expenditures and depreciation expenses include amounts for intangible assets.

45

142.1(89.4)52.7Net increase (decrease) in cash and cash equivalents

7.2(1.2)6.0Effect of exchange rate change on cash and cash equivalents

52.7356.4409.1Cash and cash equivalents at end of period

(89.4)445.8356.4Cash and cash equivalents at beginning of period

69.7(118.9)(49.2)Net cash provided by (used in) financing activities

(11.2)(80.5)(91.7)Net cash provided by (used in) investment activities

76.2111.3187.6Net cash provided by (used in) operating activities

ChangeFY2011FY2012

Consolidated Cash Flow (Consolidated)

(unit: ¥100 million)

46

(unit: ¥100 million)

9.54.042.346.3

9.950.7510.1560.9

(2.8)(8.5)310.1301.5

1.330.52,412.32,442.8

2.598.63,949.34,047.9Net sales total

2.376.73,275.03,351.7Sales to external customers total

12.934.1263.8297.9Other

10.154.1537.5591.7Overseas

(5.0)(26.2)524.1497.8Industrial Products

1.436.62,623.82,660.4Consumer Products

Y-on-Y Change(%)

Y-on-YChangeFY2011FY2012

Net Sales

Upper line: Net sales; Lower line: Sales to external customersNet sales include internal net sales within and among segments.

Results by business segmentNet sales and sales to external customers