Unicharm Corporation · TSE:8113

Unicharm — FY2013 Earnings Presentation

46 slides from Unicharm's earnings presentation, Apr 30, 2013

1. Slide 1: Fiscal Year 2013 Unicharm Presentation Materials for Investor Meeting

   Fiscal Year 2013 Unicharm Presentation Materials for Investor Meeting April 30, 2013 Takahisa Takahara President and CEO Unicharm Corporation Projections stated herein include those based on the Company’s assumptions, forecasts and plans as of April 30, 2013. Therefore, actual results may differ sig

2. Slide 2: Table of Contents

   Table of Contents 1. Overall Financial Performance Review: FY2013 P3 2. Financial Performance Summary: P5 FY2013 3. Operating Environment Review: FY2013 P13 4. Financial Results Forecasts for FY2014 P18 5. Overview: Corporate Strategy P23 6. Shareholder Return Policy P40 Copyright Copyright (c) (c)

3. Slide 3: Overall Financial Performance Review: FY2013

   1. Overall Financial Performance Review: Fiscal Year Ended March 2013 (FY2013) Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

4. Slide 4: Overall Financial Performance Review

   Overall Financial Performance Review  Net sales and operating income reached the record highs for 11th and 6th consecutive periods, respectively.  Net sales ¥495.7 billion (UP 15.7%↑)  Operating income ¥59.4 billion (UP 14.6%↑)  Sales from overseas business again reached a record high. Sales in

5. Slide 5: Financial Performance Summary: FY2013

   2. Financial Performance Summary: FY2013 Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

6. Slide 6: Year-on-Year Comparison

   Net sales and operating income achieved all-time highs with year-on-year growth of 15.7% and 14.6%, respectively  Year-on-Year Comparison (Millions of yen） (Million yen) Difference FY2013 FY2012 Difference Note (%) Asia Net sales 495,771 428,391 67,380 15.7% Up ¥43.3 billion Operating income 59,488

7. Slide 7: Changes in Operating Income

   Operating income increased approximately ¥7.5 billion, with higher gross profit due to a sales increase offsetting higher marketing costs, etc.  Changes in Operating Income Increase in gross profit due to sales increase of ¥67.3 billion 59.4 billion yen 51.9 billion yen +30.5 Impact of product mix/

8. Slide 8: Geographical Segment Information

   Both sales and profits significantly increased in Asia and the Middle East  Geographical Segment Information (Millions of yen） Elimination/ Japan Asia Other Total Companywide Consolidated FY2012 Net sales 229,083 145,263 54,045 428,391 ‐ 428,391 Operating income 29,319 21,901 828 52,047 -146 51,900

9. Slide 9: Operating Income Margin by Geographical Segment

   Despite aggressive marketing campaign expenditures in Asia for area expansion, the consolidated operating income margin continues to stabilize  Operating Income Margin by Geographical Segment 20.0% Japan Asia Other Consolidated 15.5% 15.1% 15.0% 14.0% 13.6% 12.4% 13.3% 12.4% 12.8% 11.7% 13.0% 12.6%

10. Slide 10: Business Segment Information

    Sales and profits expanded in personal care and pet care businesses  Business Segment Information (Million yen) Personal Elimination/ Pet Care Others Total Companywide Consolidated Care FY2012 Net sales 362,885 59,557 5,948 428,391 － 428,391 Operating income 48,214 3,173 487 51,875 25 51,900 FY2013

11. Slide 11: Changes in Domestic and Overseas Net Sales

    Sales from overseas business reached an all-time high of 52.6% driven by the steady sales growth in Asia  Changes in Domestic and Overseas Net Sales (Billion yen) 700 60% 52.6% 650 600 46.9% 50% 42.4% 550 36.9% 37.1% 38.5% 38.2% 40% 500 33.9% 31.4% 450 26.9% 30% 400 23.0% 21.5% 350 20% 300 250 10%

12. Slide 12: Sales ratio among emerging countries by Global HPC Players

    No. 3 Global HPC Player (tied with P&G) in the world for sales ratio among emerging countries  Sales ratio among emerging countries by Global HPC Players 38% 0% 10% 20% 30% 40% 50% 60% Source： Global HPC Players – Brokers’ research reports for 2012 12 Copyright Copyright (c) (c) Unicharm Corporatio

13. Slide 13: Operating Environment Review: FY2013

    3. Operating Environment Review: FY2013 Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

14. Slide 14: Raw material prices expected to increase

    In FY ending March 2014 raw material prices are expected to increase, with the market price of naphtha on a rising trend and a weaker yen (increase of ¥3.5 billion compared with last year) Naphtha market price variable ratio Year-on-year comparison of (0.1 billions of yen) (Average for 6 months) raw

15. Slide 15: Impact of exchange rate fluctuations

    Impact of exchange rate fluctuations (year-on-year comparison) Net sales increased approx. ¥2.6 billion year on year, while operating income increased approx. ¥0.6 billion Operating Exchange rate Exchange rate Currency Net sales Change in rate income for FY2012 for FY2013 Taiwanese Dollar 541 79 2.6

16. Slide 16: Retail prices of disposable diapers in Asia

    Retail prices of disposable diapers in Asia rose gradually  Disposable Diapers: Changes in Retail Price per Piece (Average of All Manufacturers) China Thailand (RMB) (Baht) Indonesia Japan (Rupiah) (Yen) Copyright (c) Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rig

17. Slide 17: Sanitary Products: Changes in Retail Price per Piece

    In Thailand and Indonesia, the retail prices of feminine sanitary products remained stable, while the prices in China continued to post an increase through the introduction of high-value-added products  Sanitary Products: Changes in Retail Price per Piece (Average of All Manufacturers) China Thaila

18. Slide 18: Financial Results Forecasts for FY2014

    4. Financial Results Forecasts for FY2014 Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

19. Slide 19: Financial Results Forecasts for the Full Year FY2014

    Net sales and operating income are both expected to increase by 17% or more in the FY2014  Financial Results Forecasts for the Full Year FY2014 (Millions of yen) FY2014 FY2013 Change (Amount) Change (%) Net sales 580,000 495,771 84,229 17.0% Operating income 70,000 59,488 10,512 17.7% Operating inc

20. Slide 20: Foreign exchange rate sensitivity

    Foreign exchange rate sensitivity to a 1% depreciation of the yen vis-à-vis local currencies increases net sales and operating income approx. ¥3,400 million and ¥300 million, respectively Impact of a 1% change (depreciation of yen) Assumed rate for (Millions of yen) Currency FY2014 Net sales Operati

21. Slide 21: Changes in earnings per share (EPS)

    EPS increased substantially in FY2013 due to gains on foreign exchange EPS for FY2014 is expected to be ¥179.87  Changes in earnings per share (EPS) (Yen) 250.00 233.75 200.00 178.11 179.87 150.00 144.95 128.56 100.00 89.44 86.46 50.00 0.00 '08/3 '09/3 '10/3 '11/3 '12/3 '13/3 '14/3E * EPS decreased

22. Slide 22: Changes in Cash Flow

    Cash flow is directly used for sustainable business growth  Changes in Cash Flow (Billions of yen) 62.6 60 53.7 41.6 43.0 45.4 40 34.1 36.7 23.3 20 15.2 17.3 10.5 11.1 6.2 0 '08/3 '09/3 '10/3 '11/3 '12/3 '13/3 '14/3E Cash Flow Free Cash Flow Consolidated cash flow 08/3 '09/3 '10/3 '11/3 '12/3 '13/3

23. Slide 23: Overview: Corporate Strategy

    5. Overview: Corporate Strategy Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

24. Slide 24: Baby Care business growth and product lineups

    Net sales from Baby Care business continued to grow more than 20%. Our share is No. 2 at 17.1% as of Feb 2013 Baby Care Business: Functions enhanced from entry sizes: Net Sales (in local currency) Strenghtened product lineups Average: annual CAGR 28% 163 growth: 28% 134 For newborns Small Sizes 100

25. Slide 25: Expand market areas and distribution channels in China

    Expand market areas and distribution channels in tandem with growth in demand from middle-income families in inland China  Number of Chinese cities in which Unicharm has businesses is planned to be increased to over 1,000 by December 2013  Share expansion in C and D cities will be done by having S

26. Slide 26: Feminine care business gained No. 2 position in China

    Feminine care business gained No. 2 position with market share of 15.4% in Feb 2013, by creating new markets through functional innovations and advanced designs Feminine Care market share in China (moving Overwhelming popularity among average for 6 months) young people in China (%)  Promoting innov

27. Slide 27: Increase production sites in China

    Increase production sites in Tianjin and Yangzhou in China to realize a stable and efficient supply chain, with possible supply from Hanoi, Vietnam  Under the policy of proximity of production to the market, we will increase production sites in line with the expansion in sales areas  Following the

28. Slide 28: Indonesia: accelerate penetration across the archipelago

    In Indonesia, accelerate penetration across the archipelago in order to continue the growth of more than 40% in net sales from baby care business, with the current share of 63.1% as of February 2013 Baby Care Business: Baby Care market share Net Sales (in local currency) (moving average for 6 months

29. Slide 29: Thailand: overwhelming No. 1 share in Baby Care

    Overwhelming No. 1 share in Thai Baby Care market invigorated with products exclusively for daytime use Increasing market share in Feminine Care business as well by proposing new value Baby Care market share Feminine Care market share (moving average for 6 months) (moving average for 6 months) (%) (

30. Slide 30: Vietnam: No. 1 in Baby Care after Diana acquisition

    Gained No. 1 position for Baby Care market share in two major cities in Vietnam after the acquisition of Diana. Also increased market share in Feminine Care business Baby Care market share Feminine Care market share (6 cities) (Hanoi + HCM) (moving average for 6 months) (moving average for 6 months)

31. Slide 31: India: Baby Care market share increased

    In the Baby Care business in India, our market share increased to 15.8% in Feb 2013, through introduction of one-piece Economy Pants Baby Care market share One-piece Economy Pants (6 month moving average) sold as “9 Rp Diapers” (%) Competitor A Competitor A 60.2% 54.4% Competitor B 31.4% Competitor

32. Slide 32: Myanmar: market share over 50% through MYCARE acquisition

    Gained market share of over 50% for both Baby Care and Feminine Care businesses in Myanmar through acquisition of MYCARE Business of Myanmar Care Growth potential of Myanmar market Products Limited (MYCARE)  Its total population of 62 million is comparable to that of  Dealing with both feminine sa

33. Slide 33: Health Care business in Japan

    Our Health Care business in Japan continues to grow faster than the market trend, resulting in the overwhelming share of over 50% Health Care business in Japan: Recent state of Heath Care business Net Sales <Retail-level health care market share> (%) Unicharm Average CAGRannual : 9% growth: 9% 119 4

34. Slide 34: Elderly population in Asia expected to double

    Elderly population in Asia is expected to double in 20 years; in future, deploying senior care model from Japan across Asia Population trend across Asia Introduce the Japanese care (65 years and older) model to overseas markets (Unit: Million people) 2010 2030 All Asia 279 → 524 2.0x China 110 → 229

35. Slide 35: Baby Care in Japan: innovations in shapes

    In the Baby Care business in Japan, proposals have been made for innovative products ranging from “for newborns” to “pants for bed-wetting”; Price maintenance and achievement of strengthened relations Relationship strengthened from those for World first “Innovations in shapes” new born babies to tra

36. Slide 36: Feminine Care business in Japan

    The Feminine Care business in Japan increased its market share and improved operating income margin by making popular high-value-added categories based on our original non-woven fabric technologies, despite the shrinking market in Japan UC Feminine Care business: UC Feminine Care business: Market sh

37. Slide 37: Pet care market share and segmentation

    Segmentation, brand value and lineups have been further strengthened; Steady expansion of market share realized for pet food and toiletry businesses in Japanese markets Share of overall pet market Share of pet food market (%) (%) Unicharm Unicharm Unicharm 15.7% 20.1% 15.4% No.1 No. 1 No.1 Competito

38. Slide 38: Optimally allocating production sites across the world

    Optimally allocating production sites across the world to be ready when certain demand rises. Aggressively establishing new production sites at the same time as closing certain production sites globally Egypt Vietnam China  New plant started  Hanoi plant gained through  4th plant started operatio

39. Slide 39: UN-recognized Business Call to Action

     UC’s business is acknowledged internationally by the United Nations as responding to a “Business Call to Action”  UC continues to implement the “first menstruation education” targeting 10,000 female students in villages in India  On the United Nations’ website, UC’s business in Asia, the Middle

40. Slide 40: Shareholder Return Policy

    6. Shareholder Return Policy Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved.

41. Slide 41: Shareholder Return Policy in FY2014 and after

    Shareholder Return Policy in FY2014 and after  As for shareholder returns, we have had the policy of returning 50% of net income to shareholders through dividends and acquisition of treasury stocks  We plan to pay dividends for FY2013, with a dividend payout ratio of 14.5% and an annual dividend o

42. Slide 42: Change in dividends

    The planned dividend for FY2014 is ¥36, a ¥2 increase year on year. The dividend is paid out stably and continuously. A dividend increase is planned for 12 consecutive periods  Change in dividends (yen) 40 36 34 35 32 30 28 25 23 20 18 15 14 15 10 11 10 8 8 9 7 5 0 2001/3 2002/3 2003/3 2004/3 2005/

43. Slide 43: Targeting dividend payout ratio, ROE and DOE

    For profit returns, targeting a dividend payout ratio of no less than 20%, ROE of no less than 15%, and DOE of no less than 3% (%) (%) Dividend on Equity Ratio Dividend (DOE) (Right axis) payout ratio Copyright Copyright (c) Copyright (c) Unicharm (c) Unicharm Corporation. 2012 Unicharm All rights C

44. Slide 44: Aggressively implement strategic investment focusing on Asia

    Aggressively implement strategic investment of UC’s capital, focusing on Asian countries where economic growth is ensured Asian countries GDP per capita (Compared with changes to Japan’s per capita GDP) USD (Reference) India Indonesia China Japan (2012) = 45,896 USD Growth in 2012 Growth in 2012 Gro

45. Slide 45: Unicharm Ideals

    Unicharm Ideals We contribute to creating a better quality of life for everyone by offering only the finest products and services to the market and customers, both at home and abroad. We strive to pursue proper corporate management principles which combine corporate growth, associate well-being, and

46. Slide 46: Copyright (c) (c) Unicharm 2012 Unicharm

    Copyright (c) Copyright (c) Unicharm 2012 Unicharm Corporation. Corporation. All rights All rights reserved. reserved. 46

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