Consumer Products Business

67.9% (% of consolidated net sales, sales to outside parties)

In its business operations in Japan, in the first half of fiscal 2014, Lion took active initiatives to capture demand in Japan caused by the surge in spending preceding the rise in the consumption tax rate. Sales of new and value-added products were favorable, and overall sales showed substantial expansion. In the latter half of the fiscal year, in the midst of unseasonable summer weather, delays in the recovery of consumer spending, and other factors, Lion worked to nurture high-value-added products that responded to the desire among consumers for discretionary consumption. Driven by the resulting rise in unit prices, Lion's profitability increased, and the Company reported gains in both net sales and operating income.

Net Sales

¥249.3 billion (2.7% up) sales to outside parties

Operating Income

¥8.5 billion (16.8% up)

Market Position of Products in Japan

Lion's major product fields and 2014 market positions in Japan

CLINICA ADVANTAGE Toothpaste

Toothpastes
No. 1 ¥81 billion

SYSTEMA Toothbrush

Toothbrushes
No. 1 ¥45 billion

TOP NANOX

Laundry detergents
No. 3 ¥136 billion

Kaori to Deodorant no SOFLAN Aroma Rich

Fabric softeners
No. 3 ¥84 billion

KireiKirei Medicated Foaming Hand Soap

Hand soaps
No. 1 ¥21 billion

CHARMY Awa no Chikara

Dishwashing detergents
No. 3 ¥46 billion

Note: Figures for market size presented above are based on retail sales data, and do not include sales of gift packages.

Source: INTAGE Inc., SRI survey, each category. Data from January through December 2014, on the basis on sales amount.

Market Environment and Review of Performance in Fiscal 2014

While experiencing the effects of the rise in the consumption tax rate and unseasonable weather conditions during the summer, Lion continued to implement measures to (1) improve its product mix from the viewpoint of profitability by further developing high-value-added products and (2) increase the efficiency of promotional expenditures through improved profit management.

In the oral care business, Lion rebranded its CLINICA product lineup, and, with the theme of preventive dentistry, worked to nurture this brand as an answer to the recommendations of dental professionals for more self-care. In addition, Lion strengthened its SYSTEMA oral care product lineup for taking proper care of the condition of the periodontal pocket surrounding the teeth.

In addition, in each of its businesses, Lion endeavored to nurture and expand the usage of its high-value-added products. For example, in the antiperspirant field, Lion launched Ban Sweat-Blocking Roll-On, which, with its nano-ion ingredients, effectively suppresses underarm perspiration. Also, in the laundry detergent field, Lion introduced TOP NANOX, with increased detergent power for washing away grime, and TOP HYGIA, with a new active enzyme ingredient that dissolves and eliminates the biofilm left behind in washtubs. In addition, in the field of antipyretic analgesics, Lion launched BUFFERIN PREMIUM that is both fast-acting and gentle on the stomach because of its original technology and ingredients.

In the direct-to-consumer business, Lion is developing functional food products, but, because of the effects of the decline in demand following the consumption tax hike, sales weakened. In the midst of this operating environment, Lion launched a new product, Gussumin Koubo No Chikara, which contains sake yeast to support high-quality rest and relaxation and worked to expand sales of products that help to increase the quality of life.

As a result of these activities, sales were above the previous fiscal year, and operating income was substantially higher year on year.

Strategy for Fiscal 2015

In its Consumer Products Business, Lion is working for stable expansion emphasizing profitability in the fields of daily necessities, OTC pharmaceuticals, and functional food products. Lion is taking initiatives to increase profitability by taking up the challenges of launching new products that offer new value and respond to latent consumer needs while also creating new markets and accelerating the expansion of growing markets and raising unit prices in existing markets. In fiscal 2015, Lion will work to provide even more-definitive responses to consumers' desire for discretionary consumption by developing high-value-added products and items that create new markets. Lion will also continue to implement active marketing and increase the efficiency of its sales activities.