Business Outline and

Management Strategy

November 2007

Lion Corporation

2

Foundation October, 1891

Establishment September, 1918

Capital ¥34.4 billion

Employees Consolidated: 5,771 Non-consolidated: 2,494

Average age of employees 42.8 years old

Domestic Offices 15 locations （Include headquarters）

Consolidated Subsidiaries 21 companies

Overseas Affiliates 8 countries/regions

Sapporo Office

Fukuoka Office

Sendai Office

Osaka OfficeOsaka PlantAkashi Plant

Headquarters TokyoResearch CentersTokyo (2 locations)KanagawaFukushima

Nagoya Office

Tokyo OfficeChiba PlantOdawara Plant

Company OverviewAs of December 31, 2006

3

Operations

The manufacture and sale of toothpastes, toothbrushes, soaps, hair- and skin-care products, detergents, cooking-related products, pharmaceuticals, and chemicals.Also, exports to overseas affiliates.

Sales Consolidated: ¥330.3 billionNon-Consolidated: ¥257.4 billion Oral care products division

¥52.1 billion (15.8%)

Beauty care products division¥33.5 billion (10.1%)

Pharmaceutical products division¥47.9 billion (14.5%)

Household products¥149.2 billion (45.2%)

Chemical products¥32.3 billion (9.8%)

Other Businesses¥15.0 billion (4.6%)

Health care products

¥133.5 billion (40.4%)

Net Sales¥330.3 billion

(FY2006)

FY2006

Company Overview

4

Oral Care products

Beauty Care products

Pharmaceutical products

Lion Businesses : Health Care Products

4

5

Fabric Care Products

Living Care Products

Lion Businesses : Household Products

5

6

Carbon

IC trays

Polymer fenders

Glycerin CaroteneRaw materials for

cosmetics and toothpastes etc

Pigments for foods, health foods

Chemicals for pulp and paper Industrial cleaners

・Concrete superplastisizer・Curing compounds for concrete

・LCD panel cleaners・Hard disc substrate cleaners

Chemicals for civil engineeringand construction

Deinking agents for recycled paper

◆Concentration on proprietary technologies to improve profitabilityⅰ）Eco-friendly product development using plant-based ingredients ⅱ）In-house product development focused on leading and growth fields

Electro-conductive carbonElectro-conductive compounds

Oleo Chemicals(Natural fat and oil derivatives)

Surfactants (Raw materials for detergents and cosmetics)

Raw materials for surfactants

Alcohols, fatty acidsAlcohols, fatty acids

ＭＥＳＭＥＳ

Insulating oil for transformersInsulating oil for transformers

Fatty Esters

Lion Businesses : Chemical Products

7

Japan

South Korea

Thailand

Singapore Indonesia

Taiwan

Qingdao

Malaysia

Hong Kong

1986 Establishment of Southern Lion Sdn. Bhd.2007 Establishment of Lion Eco Chemicals Sdn. Bhd.

1969 Establishment of Lion Chemical Industry (Taiwan) Co., Ltd.

1982 Establishment of Lion Corporation (Singapore) Pte. Ltd.

1967 Establishment of Lion Corporation (Thailand) Ltd.

1982 Establishment of P.T. Lion Wings

1965 Establishment of Lion Home Products (International) Ltd.

1988 Establishment of Lion Necessities Chemicals (Qingdao) Co., Ltd.

2005 Establishment of CJ Lion

Composition of combined salesfor each countries and regions (2006)

Singapore

TaiwanMalaysia

Indonesia

South

Korea

Thailand

China

Hong Kong

◆Expand our overseas operationsin fast-growing Asian market

i) Increase growth potential by nurturing main brands

ii) Enter new categoriesiii) Bolster production capacity iv) Increase profitability by implementing

cost reduction measures

Overseas-related companies

Lion Businesses : International

8

1. High raw material costs2. Currency exchange rate

fluctuations

Advantages, Tasks and Risks

1. Technological, brand and distribution strength in toiletries, OTC drugs and functional food productsa) Product development based on these combined strengths in these three product fieldsb) Better positioned to grow in the OTC drug field owing to easing of OTC drug sale

regulations in 20092. Proactively utilizing plant-based ingredients to develop products 3. Establishing our presence in fast-growing Southeast Asian market

Development of high value- added products and total cost reductions

Risks

Advantages

Sustaining business growth with profits

Tasks

9

Stabilize retail prices, expand the range of products handled by existing stores while increasing the number of new stores⇒ Decrease sales promotion expenses

a. Stabilize retail price as a part of infrastructure enhancements

MeasuresBusiness challenge

FY2005Strengthen foundation

Approach to Business Challenge

10

1) Nurture principal brands⇒ Secure a leading share of TV-CM advertising

2) Enhance R&D capabilities from medium- to long-term perspective⇒ Reorganization of new R&D structures

3) Enhance flexibility of production, reduce production costs ⇒ Reorganize production bases

Focus on our core businesses ⇒ Restructure businesses of related companies

Smoothing sales and increasing profitability⇒ Reduce wholesale inventories

a. Strengthen brand b. Develop high value-

added productsc. Reform earnings

structure

MeasuresBusiness challenge

FY2006Enhance profitability

Approach to Business Challenge

11

1) Launch new, high-value-added major products in core categories

2) Establish new business division structure⇒ Strengthen integrated business development

encompassing household products, OTC drugs and functional food products

Strategic product development based on a comprehensive marketing and sales process

3) Sell MES (Methyl ester sulfonate) outside the Lion Group

Acquire trademark rights to BUFFERIN etc.Enter new categories (Expand functional food business and direct marketing business)

a. Increase share of principal items

b. Strengthen nurturing capability

c. Implement medium and long-term growth strategy

MeasuresBusiness challenge

FY2007Increase growth potential

Approach to Business Challenge

12

Year on Year

Jan. – Sep. 2007

Jan. –Sep. 2006 Amount %Change

Net Sales 2,449.9 2,345.4 104.4 4.5

Operating Income 46.7 (42.2) 89.1 -

Ordinary Income 58.9 (25.4) 84.4 -

Net Income 36.4 (9.6) 46.0 -

Results of Operations for the Third Quarter ended September 30, 2007 (Consolidated)

(unit: ¥100 million)

13

- Result of profit structure reform measures- Good sales in both domestic and overseas markets

- Smoothing sales by reducing wholesale inventory- Launch and nurture of new major products- Good performance of overseas subsidiaries

Summary of Financial Results for the Third Quarter ended September 30, 2007

Increase in sales

Increase in profits

Wide range of constitutional improvement

14

5548 49

100

0

100

Jun. 2006 Dec. 2006 Jun. 2007 Sep. 2007

50.2

47.2

40

45

50

55

Jan-Sep2006

Jan-Sep2007

(%)

Cost of sales ratio

◆ Reduce the level of wholesale inventory (Smoothing sales )

Summary of Financial Results Result of Profit Structure Reform Measures

Domestic wholesale inventories (Non-consolidated)(Level of wholesale inventories at the end of Jun. 2006 = 100)

◆ Reorganize production bases(Tokyo plant Lion Chemical Co., Ltd. in Sakaide in FY 2006 etc.)

◆ Focus on core businesses(Restructuring businesses of related companies in FY2006:McCormick-Lion Limited, Lion Building Maintenance Co., Ltd.)

Wide range of constitutionalimprovement

15

Aim for No.1 share of any single product in the dishwashing detergent marketStrengthen the product lineup by adding new items

CHARMY Awa no Chikara(Power of Suds)

Aim for No.1 share in the premium laundry detergent market

Top Fuai-Kan(Fresh Touchand Color)

Aim for No.1 share in general-purpose toothpastes price range

DentorClear MAX

Focus on continuous nurturing in H2 2007Focus on continuous nurturing in H2 2007

Expand market share by introducing high-performance, high value-added new products: New Products launched in H1 2007

Summary of Financial Results Introduction of New Major Products

16

Create new market in household cleanersLookO2 CleanerLaunched in October

Create new market in men’s hair care category by offering new style

PRO TEC HEADLaunched in September

Aim for No.1 share in toothpaste marketClinicaLaunched in September

Expand market share by introducing high-performance, high value-added new products: New products launched in H2 2007

Summary of Financial Results Introduction of New Major Products

Focus on nurturing toward end of year (demand season)Focus on nurturing toward end of year (demand season)

17

- Sell MES (Methyl Ester Sulfonate) outside the Lion Group

- Acquire trademark rights of BUFFERIN etc.- Enter new categories

Functional foods business and direct marketing business

Implementation of medium- to long-term strategy

Expand chance for future growth

Summary of Financial Results for the Third Quarter ended September 30, 2007

18

Established a new subsidiary (Lion Eco Chemicals Sdn. Bhd.) in Malaysia for the manufacture and sale of MES on June 2007.Plan to start production from December 2008.(25,000 tons per year in the first stage)

Promote sales of MES outside the Lion Group

Work to position MES as the recognized global standard for use in laundry detergents.

Aim to increase annual production capacity to 100,000 tons

Research pilot plant at Sakaide plant of Lion Chemical Co., Ltd.

Implementation of Medium- to Long-term Growth StrategyFeatures of MES（plant-based detergent）1) High biodegradability, 2)High detergency in hard water, 3) Carbon neutral

19

Acquire trademark rights for the analgesics brand “BUFFERIN®”in Japan and other countries in the Asia and Oceania regions(Announced on June 29, 2007)

(1) Will be able to increase the value of its brands by implementing its ownbusiness strategy in Japan utilizing existing brands including BUFFERIN®

(2) Will be able to independently enter into product categoriesthat used to be handled by the joint venture business

(3) Will be able to expand our OTC business to countries in Asia and Oceania(4) Will be able to improve profitability by integrating businesses

formerly covered by the joint venture

Implementation of Medium- to Long-term Growth Strategy

Acquire trademark rights to BUFFERIN etc.

20

Make the most of direct marketing via the Internet where detailed product information and research results can be publicized

Develop in-house research technologies horizontallyto facilitate business development through new business channels and markets

Expand functional food products business

Start full-scale direct marketing business

Launched in 2006

Contains dextranase Contains lactoferrin

New gums to support oral healthMEDISH

Launched in three prefectures for test marketing in 2007

Lactoferrin Palm carotene DHA・Crocetin+Palm carotene

Implementation of Medium- to Long-Term Growth Strategy

21

Total cost reduction from VIP to VIPII09 (accumulated total)

Total Cost Reduction

020406080

100120

2005 2006 Jan.-Sep.2007

2009(Target)

(¥100 million)

22

Unit: ¥100million

Fiscal 2007 Consolidated Financial Forecast

Year on Year Year on Year

Jan.-Sep. 2007 Actual

Results Amount %Change

Revised target announced on Oct. 31, 2007 Amount %Change

Net Sales 2,449.9 104.4 4.5 3,400.0 96.2 2.9

Operating Income 46.7 89.0 - 80.0 76.5 2,232

Ordinary Income 58.9 84.4 - 100.0 75.7 312.0

Net Income 36.4 46.0 - 45.0 (10.4) (18.8)

23

Measures to Increase Shareholders’ Value

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007

Div

iden

d pe

r sha

re

0

2

4

6

8

10

12

14

16

Repurchase of treasury stock

Repurchase of treasury stockDividend per share

(million of shares)(Yen)

4

2

0

8

6

47.2%

¥10

2006

¥10Plan

2007

54.7%－62.2%52.4%－Payout ratio(Non-consolidated)

¥9¥8¥8¥8¥8Dividend per share (annual)

20052004200320022001

* Purchase / Retirement of treasury stock : 55,000,000 shares after 2001, of which 22,000,000 shares (7%) were retired

Dividend

24

Reference materials

25

(unit: ¥100 million)

Net Sales Operating Income

Year on Year Year on Year

Jan-Sep2007

Jan-Sep2006 Amount %Change

Jan-Sep2007

Jan-Sep2006 Amount %Change

Health Care Products 983.3 965.5 17.8 1.8 35.1 － － －

Household products 1,190.3 1,030.3 159.9 15.5 8.4 － － －

Chemical products 238.1 238.1 0.0 0.0 (1.5) (2.7) 1.2 －

Other 38.1 111.4 (73.3) (65.8) 2.4 (0.5) 3.0 －

Corporate and eliminations [－] [－] [－] [－] 2.2 0.5 1.7 309.0

Consolidated total 2,449.9 2,345.4 104.4 4.5 46.7 (42.2) 89.0 －

<New Segment>

Actual Results by Business Segment (Consolidated)

* Operating income by segment for the third quarter of the previous fiscal year is not provided.

26

(unit: ¥100 million)<Former Segment>

Actual Results by Business Segment (Consolidated)

Net Sales Operating Income

Year on Year Year on Year

Jan-Sep2007

Jan-Sep2006 Amount %Change

Jan-Sep2007

Jan-Sep2006 Amount %Change

Home Products 1,833.0 1,642.9 190.1 11.6 43.7 (45.0) 88.8 －

Pharmaceutical products 340.6 352.9 (12.3) (3.5) 2.0 5.6 (3.6) (64.6)

Chemical products 238.1 238.1 0 0 (1.5) (2.7) 1.2 －

Other 38.1 111.4 (73.3) (65.8) 2.4 (0.5) 3.0 －

Corporate and eliminations [－] [－] [－] [－] 0.1 0.5 (0.4) (74.8)

Consolidated total 2,449.9 2,345.4 104.4 4.5 46.7 (42.2) 89.0 －

27

(unit: ¥100 million)

Net Sales Operating Income

Year on Year Year on Year

Jan-Sep2007

Jan-Sep2006 Amount %Change

Jan-Sep2007

Jan-Sep2006 Amount %Change

Domestic 2,042.3 2,002.8 39.4 2.0 31.7 (51.7) 83.4 －

Overseas 407.6 342.6 64.9 19.0 12.2 7.3 4.9 66.8

Total 2,449.9 2,345.4 104.4 4.5 43.9 (44.3) 88.3 －

Corporate and eliminations [－] [－] [－] [－] 2.8 2.1 0.6 29.3

Consolidated total 2,449.9 2,345.4 104.4 4.5 46.7 (42.2) 89.0 －

Actual Results by Geographic Segment (Consolidated)

28

Jan-Sep 2007 Jan-Sep 2006 ¥100 million % of sales ¥100 million ％ of sales

Cost of sales 1,155.9 47.2 1,178.2 50.2

Trend for the cost of sales ratio

48.2

48.349.8 49.2

50.1

47.2

40

45

50

55

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 Jan-Sep2007

（%）

Cost of sales ratio 50.2% 47.2%, decreased 3.0%P

Cost of Sales (Consolidated)

29

Jan-Sep 2007 Jan-Sep 2006 ¥100 million % of sales ¥100 million % of sales

Change (¥100 million)

Selling, general and administrative expenses 1247.1 50.9 1,209.4 51.6 37.6

Sales incentive expenses 108.1 4.4 101.6 4.3 6.4 Sales promotion expenses 479.2 19.6 460.5 19.6 18.6 Freight and storage expenses 120.1 4.9 112.2 4.8 7.9 Advertising expenses 170.2 6.9 175.0 7.5 (4.8) Salaries 137.7 5.6 143.5 6.1 (5.7) Other 231.7 9.5 216.4 9.2 15.3

Selling, General and Administrative Expenses (Consolidated)

30

Jan-Sep 2007 Jan-Sep 2006

Extra- ordinary

gains

Gain on disposal of property, plant and equipment ¥1,081 million

Gain on sales of investment securities

¥8 million

Gain on sales of subsidiary shares ¥231 million

Other ¥47 million

Gain on disposal of property, plant and equipment

¥5,811 million

Gain on sales of subsidiary shares ¥683 million

Other ¥156 million

Total ¥1,368 million ¥6,721 million

Extra- ordinary losses

Loss on disposal of property, plant and equipment ¥242 million Voluntary product recall expenses ¥1,950 million Impairment loss ¥67 million Other ¥31 million

Loss on disposal of property, plant and equipment ¥532 million Loss on shutdown of a plant ¥1,530 million Early retirement payments ¥947 million

Impairment loss ¥197 million

Other ¥309 million

Total ¥2,291 million ¥3,516 million

Significant Extraordinary Gains or Losses

31

36.5 36.8 36.6

36.3

65.8

41.6

106.6

40.0 45.047.145.632.0

52.031.0

49.169.5

51.9

201.5

0

20

40

60

80

100

120

140

160

180

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

H2

H1250

450

232.6

86.9

143.5

117.9

101.5

72.9

97.5 96.3

Forecast(435.0)

Capitalexpenditures

Depreciationexpenses

Capital Expenditures and Depreciation Expenses(Consolidated)(¥100 million)

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

Forecast(115.0)

32

Jan-Sep 2007 Jan-Sep 2006

¥100 million ¥100 million

Change (¥100 million) Comments

Net sales 2,449.9 2,345.4 104.4 Overseas sales increased

Cost of sales 1,155.9 1,178.2 (22.2) Total cost reduction

Gross profit 1,293.9 1,167.2 126.7 Selling, general and administrative expenses 1,247.1 1,209.4 37.6

Operating income 46.7 (42.2) 89.0

Non-operating income 20.7 22.6 (1.8)

Non-operating expenses 8.5 5.8 2.7 Ordinary income 58.9 (25.4) 84.4

Extraordinary income 13.6 67.2 (53.5) Gain on disposal of property, plant and equipment in FY 2006

Extraordinary loss 22.9 35.1 (12.2)Shutdown of a plant and early retirement payments in FY 2006; Voluntary product recall expenses in FY 2007

Net income before income taxes 49.7 6.6 43.1

Income taxes 16.5 19.8 (3.2)Adjustment of income taxes (4.4) (5.7) 1.3 Minority interests in earnings of consolidated subsidiaries

1.2 2.1 (0.9)

Net income 36.4 (9.6) 46.0

Statements of Income (Consolidated)

33

Sep 2007 Dec 2006 Change Contributing factors

Current assets 1,201.0 1,230.0 (29.0)

Cash and time deposits 253.4 269.9 (16.5)

Trade notes and accountsreceivable 583.9 641.3 (57.4) Streamline of sales in every month

Short-term investments 16.7 - 16.7

Inventories 290.9 263.8 27.1

Fixed assets 1,563.5 1,233.1 330.3

Property, plant and equipment 646.9 656.0 (9.1)

Intangible assets 380.6 94.2 286.3 Acquirement of trademark rights of BUFFERIN etc.

Investment securities 287.7 268.5 19.2

Deferred tax assets 107.5 102.7 4.8

Total assets 2,764.5 2,463.2 301.2

(unit: ¥100 million)

Consolidated Balance Sheets (Selected) I

34

Sep 2007 Dec 2006 Change Contributing factors Current liabilities 953.6 983.7 (30.0)

Trade notes and accounts payable 465.5 501.8 (36.2)

Short-term loans payable 52.4 76.1 (23.6) Repayment by introducing group fund management system

Other payables and accrued expenses 326.8 335.9 (9.0)

Long-term liabilities 748.7 428.1 (320.5)

Long-term loans 473.9 135.9 337.9 New borrowing

Accrued retirement benefits 224.6 236.8 (12.2)

Common stock 344.3 344.3 0.0

Retained earnings 475.6 466.0 9.5

Unrealized holding gain on other securities 40.2 47.2 (7.0)

Treasury stock (157.6) (159.1) 1.5

Minority interest in consolidated subsidiaries 39.2 33.5 5.6

Total liabilities, minority interests and shareholders’ equity

2,764.5 2,463.2 301.2

(unit: ¥100 million)

Consolidated Balance Sheets (Selected) II

The forecasts and projected operating results contained in thisreport are based on information available at the time ofpreparation, and thus involve inherent risks and uncertainties.Accordingly, readers are cautioned that actual results may differmaterially from those projected as a result of a variety of factors.

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