September 12, 2019

Takashige Negishi

President and Representative Director

Yakult Honsha Co., Ltd.

Results for the second quarter

ended September 30, 2019

Future management outlook

Result(exchange-rate

effects)

Initial forecast(announced May 14)

Compared to

initial forecast

Result in previous

yearYear-on-year

Net sales

201.9

{(2.8)}

211.0 95.7% 203.5 99.2%

Operating

profit

23.7

{(0.5)}

25.5 93.1% 23.7 99.7%

Ordinary profit

30.3

{(0.6)}

31.5 96.2% 29.5 102.7%

Profit attributable

to owners of parent

20.6

{(0.5)}

20.0 103.3% 21.3 96.9%

(Figure 1)

(billion yen)

Consolidated financial results (Apr. – Sep. 2019)

Exchange-rate effects are year-on-year values

Amended forecast(exchange rate

effects)

Initial forecast(announced May 14)

Compared to

initial forecast

Result in previous

yearYear-on-year

Net sales409.0

{(4.7)}

420.0 97.4% 407.0 100.5%

Operating profit

46.0

{(1.2)}

48.5 94.8% 45.8 100.3%

Ordinary profit58.0

{(1.4)}

59.5 97.5% 57.1 101.5%

Profit attributable

to owners of parent

39.0

{(1.1)}

36.5 106.8% 34.9 111.6%

Basic earnings

per Share 243.46 yen 227.80 yen217.89

yen

Full-year forecast (consolidated) for year ending March 31, 2020

Exchange-rate effects are values compared to the initial forecast

(Figure 2)

(billion yen)

Country

Marketing Population

(Th. people)

Sales Result Jan. ~ Sep. 2019(bottles per day)

Y o Y(%)

Sales / Marketing pop. (%)

CountryMarketing Population

(Th. people)

Sales Result Jan. ~ Sep. 2019(bottles per day)

Y o Y(%)

Sales / Marketing pop. (%)

Hong Kong 8,180 534,842 96.4 6.54 Brazil 101,290 1,562,390 92.7 1.54

Singapore 5,610 228,144 99.1 4.07 Mexico 94,955 3,876,721 100.3 4.08

Indonesia 200,000 6,204,472 108.3 3.10 USA 327,490 376,606 112.2 0.11

Australia 24,500 252,194 102.3 1.03 Americas Total 523,735 5,815,717 98.8 1.11

Malaysia 24,000 358,793 104.0 1.49 Netherlands 17,285 160,077 94.1 0.93

Vietnam 64,200 517,485 143.4 0.81 Belgium 46,897 77,380 102.0 0.16

India 130,000 245,428 111.9 0.19 UK 70,897 193,703 96.4 0.27

Middle East 20,005 18,409 111.5 0.09 Germany 82,430 73,994 93.0 0.09

Myanmar 5,160 2,138 --- 0.04 Austria 8,747 9,708 80.3 0.11

Guangzhou 84,490 3,063,696 102.3 3.63 Italy 61,000 93,797 95.4 0.15

Shanghai 24,000 594,609 89.5 2.48 Europe Total 287,256 608,659 95.5 0.21

Beijing 30,530 457,867 100.1 1.50 (Consolidated Total) 2,024,796 22,942,734 102.9 1.13

China 593,130 4,040,281 102.2 0.68 Taiwan 23,151 706,367 93.5 3.05

China Total 732,150 8,156,453 101.1 1.11 Thailand 66,410 2,200,766 96.1 3.31

Asia/Oceania

Consolidated Total1,213,805 16,518,358 104.7 1.36 Korea 51,650 3,156,310 94.3 6.11

Philippines 91,400 3,221,358 104.2 3.52

(Equity method Total) 232,611 9,284,801 97.9 3.99

Total 2,257,407 32,227,535 101.4 1.43

Countries and Regions Information (Figure 3)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2002 2004 2006 2008 2010 2012 2014 2016 2018

The Progression of the Daily Sales of Dairy Products in China Thousands bottles per Day

International Business (China1)

• Spending slump in response to

Sino-America trade issues

• Introduction of competing

products by local dairy companies

• Expansion of e-commerce

Regional Developments

• Marketing Population: 730 mil.• Daily Average bottle sales: 8 mil.• Population Ratio：1%

(1 consumer per 100 people)*The developed market of Guanzhouhas a pop. ratio of 3%

• Retail based market development

YearFUTURE

• Enlargement of newly entered sales

areas

• Development of existing sales areas

• Enhancement of the home delivery

channel

Mid – Long Term Business Growth

Jan.-Sep.2019

(Figure 4)

54.6% 50.9%

7.9% 7.6%

32.5% 34.5%

4.0% 5.8%

0%

20%

40%

60%

80%

100%

Jan.-Sep.2018 Jan.-Sep.2019

E-Commerce

Other

Independent Store

CVS

Hypermarket /Supermarket

Answering Regional Developments (China2)

• Increase presence in “Independent Stores”

• Look to develop new sales channels in schools and hospitals etc. as part of “Other”

E-Commerce : 1.0% 1.3％• Introduction of an IT System

Creating New Relationships with Customers

Market Share Breakdown in the Retail Channel Efforts in the Home Delivery Channel

・Introducing electric bicycles, to reduce physical labor

• Reducing the load and optimization- Accepting orders through SNS (WeChat)- Increasing convenience for customers through cashless payments

Regarding the fall in Hypermarket/Supermarket Share

• The “E-Commerce” section is growing, but as chilled products are a limiting factor, we will develop with the few companies which can guarantee both price and chilled distribution.Paying close attention to the local developments, and reacting flexibly

(Figure 5)

Marketing population

Branches started sales in Jun. 2019:Lanzhou Branch (Gansu Province)Nantong Branch (Jiangsu Province)Shaoxing Branch (Zhejiang Province)

Marketing pop. at end of Jun. 2019 732.15 million

Marketing population

Marketing pop. at end of Dec. 2018 718.24 million

13.91 million increase

Mid-Long Term Initiatives

Lanzhou Branch

The Wuxi 2nd Plant Building due to commence operations in April, 2022

Our strategic dominance within the coastal area’s sales points continues, as we continue to build our meticulous sales network

Nantong Branch

Shaoxing Branch

Open multiple sales bases every year to continue to enlarge and develop the market

Production network (million bottles/day)

Plant nameNo. of bottles

producedYakult

YakultLight

Guangzhou No. 1 Plant 1.6 1.6 0

Guangzhou No. 2 Plant 2.0 1.6 0.4

Shanghai Plant 1.7 1.7 0

Tianjin Plant 3.5 2.7 0.8

Wuxi Plant 2.2 1.4 0.8

Foshan Plant (March) 1.6 0.4 1.2

Wuxi Plant 2nd plant building (June)

1.6 1.6 0

Total 14.2 11.0 3.2

(As of end of Sep. 2019)

(Figure 6)

International Business (Myanmar)

Manufacturing and selling of Yakult in Myanmar began on August 1, 2019

Yakult Myanmar Co., Ltd.

Thilawa Special Economic Zone, Yangon, Myanmar

Yangon Laos

Cambodia• Sales region: Yangon and the surrounding area

(to be expanded in response to sales

performance)

• Sales channels: Home delivery with Yakult Ladies

Retail through supermarkets and

other stores

• Bottle sales target: 18,530 bottles per day

(average sales Aug. – Dec. 2019)

(Figure 7)

International Business (The Americas)

＜Mexico＞• Thanks to meticulous market development, the

sustained increase in bottle sales continues.

• We reduce the losses in sales and profits caused by inflation through annual price revisions.(A price increase of 6% in home delivery and 5.4% in retail stores was introduced in Feb. 2019)

Hawaii

Alaska

5,751 5,789 5,820 5,816

0

1,000

2,000

3,000

4,000

5,000

6,000

Jan. - Dec.2016

Jan. - Dec.2017

Jan. - Dec.2018

Jan. - Sep.2019

The Progression of the Daily Sales of Dairy Products in the Americas

USA Brazil Mexico(Thousands of bottles/day)

Mexico is the driving force behind the stable revenue base of the Americas.

The 6 states first entered

2016 expansion (19 states)2017 expansion from November (4 states)

2017 expansion from June (6 states)

2019 expansion from July (15 states)

＜USA＞• Sales began originally and were developed in 6

States in the South West (which are now a growth driver for the whole market)

• We used the know-how we cultivated in those 6 states to develop sales in other areas

• With sales starting in 15 eastern states in July 2019, we have incrementally expanded our sales area to the entire country

(Figure 8)

Pharmaceutical Business

Initial Projection Revised Forecast Difference

Campto 900 900 0

Elplat 10,400 11,500 1,100

Others 6,200 6,600 400

Sales (combined) 17,500 19,000 1,500

Operating profit (loss) (1,400) (1,000) 400

Ongoing Initiatives・ Alliances with other companies

- Signed promotion agreement for liposomal irinotecan with Nihon Servier Co., Ltd. in Oct.

・ Continued launch of new generic drugs- Capecitabine and Gefitinib launched in June

・ Roll out products in-licensed from other companies - Signed exclusive licensing agreement with Verastem Oncology for development and

commercialization of duvelisib in Japan in June 2018

Background to revised forecasts・ Drug price revision

- The drug price reduction in October 2019 was 12%, larger than the 7% we expected

・ Elplat- Successful provision of information via MRs allowed us to revise our initial sales projections upwards

- Rate of replacement with generic drugs was 51.3% at end of Sept. (50.6% at end of June)

(Figure 9)

Yakult concentrated its R&D and technological capabilities to realize 100 billion L. casei strain Shirota in each bottle. The

resulting fermented milk drink has the highest concentration and number of probiotic bacteria of any product in Yakult’s history

Yakult’s first product labelled as a “Food with Function Claims”・ Improves sleep quality and Relieves stress in situations that cause temporary mental stress

・ Effective in improving the gut environment by L. casei strain Shirota

※ Recommended retail price: 130 yen / bottle, 910 yen / 1 pack (7 bottle / 1 pack) (Exclusive of tax)

※ Launch in Ibaraki Prefecture, Tochigi Prefecture, Gunma Prefecture, Saitama Prefecture, Chiba

Prefecture, Tokyo Prefecture, and Kanagawa Prefecture

※ Sales channel: Home delivery channel by Yakult lady, etc.

New product for release

Yakult 1000

(Figure 10)

Yakult 400 W

New product for release

The “Yakult 400” Brand Product, with the appeal of “Synbiotics”*

• 1 bottle (80ml) contains 40 billion Lactobacillus casei strain Shirota, which reach the gut alive

• Each bottle contains 5.0g of the companies own unique “galacto-oligosaccharide” ingredient, which increases the

bifidobacteria in the gut

• The well loved taste of Yakult with an added sense of refreshment and healthfulness, making continued drinking a

pleasure

＊“Synbiotics” are made of a combination of “Probiotics”; the microorganisms which work to improve the gut, such as Lactobacillus and

bifidobacterium, and “Prebiotics”; those ingredients which help to increase the helpful bacteria.

※Recommended retail price: 100 yen / bottle, 700 yen / 1 pack (7 bottle / 1 pack) (Exclusive of tax)

※Launch in Kyushu region

※Sales channel: Home delivery channel by Yakult Lady

(Figure 11)

Current initiatives (Home delivery channel)

Extend educational provision

Create a more productive home delivery system Online ordering for home delivery

Enhance employee benefits

• Enhance welfare provisionfor Yakult Ladies (set up health line, caregiving & financial planning advisory services, etc.)

Online paying-in system Mobile devices

• Boosted communication skills & impart knowledge

• Share success stories & nurtured sense of togetherness

• National introduction from Sept. 2018• Supports cashless payment (credit card) • Can collect deliveries even when out during

the day• Availability of home delivery exclusive

products

Improve work setup

Yakult Delivery Net

(Figure 12)

Statements contained in these materials with respect to Yakult's

plans, forecasts and other statements that are not historical facts

are forward-looking statements that involve risks and

uncertainties that could cause actual results to differ

substantially from expectations.

The information contained in these materials is not intended as a

solicitation for investment. Furthermore, Yakult does not

guarantee the accuracy of the contents of these materials. Yakult

and the provider of these materials disclaim any responsibility

for any loss or damage that should arise from the use of this

information.

CAUTIONARY STATEMENT