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     The core Home Products Business encompasses Lion’s Health Care Products Division,
     incorporating Oral and Beauty Care Business Departments, and Household Products Division,
     comprising Fabric and Living Care Business Departments. Focusing on these businesses, Lion
     pursues increased profitability through the development of products with new concept proposals
     that address the self-care needs of its customers, and dynamic promotions at the retail store level.

     Net Segment Sales              Sales by Category
     (Millions of yen)              (Millions of yen)

     Home Products                  Oral Care                    Beauty Care               Household Products

     250,000                        60,000                       50,000                    200,000

     200,000                                                     40,000
     150,000                                                     30,000
                                    30,000                                                 100,000
     100,000                                                     20,000
      50,000                                                     10,000

           0                             0                           0                          0
                   02 03 04 05 06               02 03 04 05 06            02 03 04 05 06             02 03 04 05 06

RESULTS                                                     series of disinfectant sprays that prevent slimy surfaces
The sharp increase in raw material costs particularly       and odors; and the Care Veil series of laundry
for crude oil and the drop in retail unit prices were       detergent and fabric softener introduced in October
contributing factors to intense competition within the      2006 for those with dry and sensitive skin. From a
home products market in Japan. Against this backdrop,       marketing perspective, Lion selectively targeted drug
and guided by the basic policy of creating No. 1            stores for the sale of its medical health care products
selling, ¥10 billion megabrands* while boosting growth      such as Dent Health, PAIR and Alfresh.
potential through selective core brand development,             Lion also took steps to rectify persistent concerns
Lion has worked to strengthen and develop its brand         surrounding excessive wholesale inventories. In
power through focused marketing investment. In              implementing the necessary adjustments, we secured
addition, the Oral Care and Beauty Care Business            improved product shipment efficiency, resulting in
Departments were integrated into the Health Care            balanced production and procurement as well as
Products Division as an initial step in strengthening       reductions in overhead costs.
the development of medical health care products.                Practicing strong retail store management, Lion
    From a retail sales development perspective, Lion       took full advantage of prompt retail store
has received invaluable support from its specialist         development and strong links between store
subsidiary, Lion Field Marketing Co., Ltd. (LFM).           promotions and advertising campaigns. Through
Throughout the fiscal year under review, LFM                these means, we secured greater efficiencies in the
continued efforts to promote effective retail store         development of core brands.
management and rapidly introduce high-value-added
products, accelerating retail store promotion. In           * No. 1 selling, ¥10 billion megabrands: major brands in each of
specific terms, we enjoyed particular success in sales of     Lion’s business segments that hold a leading position or
                                                              maintain sales of ¥10 billion.
Top, our mainstay laundry detergent that addresses the
twin demands for higher detergency and
environmental friendliness; Look Kirei no Mist, a

                                                                                             ANNUAL REPORT 2006                17
     Health Care Products
     Oral Care

                 Dentor Systema                             Dentor Systema EX
                 Toothbrush (Compact)                       A periodontal disease                           Clinica Dental Rinse –
                 The super-tapered bristles of              prevention toothpaste that                      Quick Care
                 this toothbrush penetrate the              enters the gaps between                         When there’s no time or
                 narrow crevices between                    teeth to cleanse and                            place to brush teeth, just a
                 teeth and gums to remove                   sanitize each community                         simple rinse with Clinica
                 “biofilm,” the communities of              of periodontal bacteria and                     Dental Rinse – Quick Care
                 bacteria that cause                        can also prevent bad                            helps to prevent cavities
                 periodontal disease*.                      breath and cavities.                            and bad breath.

     RESULTS                                                         guards against bad breath and cavities.
     Japan’s oral care market continued to experience overall           Reflecting the pronounced trend toward an aging
     growth spurred by increased demand for premium                  society in Japan, signs are increasingly emerging of
     toothpastes, toothbrushes, dental rinses and other dental       growth in the seniors market. Taking full advantage of
     care products.                                                  the opportunities at hand, Lion launched a series
         Celebrating its 110th anniversary of toothpaste sales,      comprising medicated toothpastes, toothbrushes,
     Lion worked diligently to promote oral care throughout          medicated liquid care and oral health tablets under the
     2006. In addition to providing oral care information, we        Dent Health brand in November 2006. Designed to
     actively renewed our mainstay Clinica, Dentor Systema           prevent periodontal disease, Dent Health products are
     and Between brands to reinforce our position as the             marketed mainly through drugstore sales channels.
     leading oral care product company in Japan. As a result,        Going forward, we will foster Dent Health into a
     domestic sales exceeded those of the previous fiscal year.      comprehensive, highly functional gum care brand.
         In specific terms, Lion enjoyed substantial growth in       * Periodontal disease: The general term for a group of diseases
     dental rinse sales of Clinica, its premier brand in tooth         that includes pyorrhea and gingivitis.
     decay prevention. The release of Clinica Dental Rinse –
     Quick Care, a convenient cavity and bad breath
                                                                         NURTURING THE DENT HEALTH BRAND — A SERIES
     prevention alternative that was particularly well
                                                                         OF GUM CARE PRODUCTS FOR THE ELDERLY
     accepted by people on the go with no time or place to               Traditionally, Lion’s Medical Oral Care brand medicated
     brush their teeth, contributed significantly to favorable           salve for preventing and combating gum disease has
     results. In addition, Lion expanded its toothpaste and              attracted a broad and loyal customer base. Responding to
                                                                         the demands of an increasingly aging society and changes
     toothbrush lineups to make steady progress in
                                                                         in the environment for oral and cavity care, Lion has
     positioning Clinica as a comprehensive oral care brand.             introduced the Dent
         In the Dentor Systema comprehensive periodontal                 Health series of products
     disease* prevention brand, Lion also reported an                    that serve to fight gum
                                                                         disease, including
     upswing in overall sales. This was attributed to strong
                                                                         toothpastes, toothbrushes,
     contributions from its non-alcohol dental rinse and                 mouthwashes and
     Dentor Systema EX, a toothpaste that also totally                   functional food products.

Beauty Care

                                                             Kireikirei Medicated                        Free & Free Damage Aid
                  Soft-in-One                                Foaming Hand Soap                           Hair Treatment
                  This two-in-one                            A medicated antibacterial                   A functional hair treatment
                  conditioning shampoo                       soap that emerges from the                  series that tends to every
                  for speedy washing gives                   bottle as foam so that even                 strand of hair both inside
                  a brand new feel to the                    young children can wash                     and out, depending on the
                  lather and finish.                         their hands thoroughly.                     type of damage.

RESULTS                                                         Wrinkle Cream to counter dryness in focus areas around
The overall scale of beauty care product fields that Lion       the eyes and mouth. Lion will continue to deliver highly
participates in was on par with the previous fiscal year.       functional products in its Pair complexion trouble care
Amid these circumstances, Lion continued to promote             brand for women, and leverage the synergistic effects
“selection and concentration” initiatives for its brand         with the Pairacne W Cream pharmaceutical product,
and items, and particularly focused on upgrading                which boasts the top market share in the acne care
mainstay hand soaps, antiperspirants and deodorants             medication field, to secure a full-fledged entry into the
while participating in new sectors to improve earning           medical skin care market. With these endeavors, Lion
power. Confronted by intense competition and stagnant           will take new approaches to this category to develop its
conditions in its particular fields of operation, however,      business model at drug stores.
Lion incurred a year-on-year decline in overall beauty
care product sales.
                                                                    KIREIKIREI SERIES
    In hand soaps, Lion recorded robust sales of its
                                                                    The Kireikirei series encompasses medicated hand soaps,
market-leading Kireikirei Medicated Foaming Hand
                                                                    beauty soaps, body wash and gargle products supporting
Soap. Combined with liquid hand soaps, Lion saw a                   general family cleanliness and health. In 2006, Lion
slight gain in its overall market share. Owing to growth            introduced a large-size hand soap refill product in response
of the overall hand soap market, sales increased over the           to demands for greater value for money and issues relating
                                                                    to environmental protection. Spurred by norovirus concerns
previous fiscal year.                                               at the end of the year, sales of hand soaps outstripped the
    The antiperspirants and deodorants market showed                previous year.
significant growth due to robust demand for rival
products with high deodorant effect, which intensified
competition. However, Lion was slow in responding to
changing market needs. Despite the renewal of the Ban
series and efforts to intensify promotions and
advertising, sales in this category declined year on year.
    In November 2006, Lion released Pair Melano
Cream, which prevent spots and freckles, and Pair

                                                                                                   ANNUAL REPORT 2006                  19
     Household Products
     Fabric Care
                                                                                                              Care Veil Laundry Detergent
                                                                                                              Because its ingredients are not
                                                      Kaori to Deodorant no                                   absorbed into fibers, this powerful
                                                      Soflan (Soflan with                                     laundry detergent leaves clothes
                                                      Fragrance and                                           with a fresh, clean feel.
                                                      Deodorant)                                              Care Veil Fabric Softener
                                                      This fabric softener                                    (Right)
     Top Laundry Detergent                            provides superlative                                    This softener employs a
     A laundry detergent combines a plant-            protection against odors                                proprietary Lion agent to
     based MES with three enzymes to                  on clothing and leaves a                                suppress friction between the
     deliver high-performance in scouring             pleasant, long-lasting                                  skin and clothing to ease the
     even the most stubborn of stains.                fragrance.                                              irritation that clothes can cause.

     RESULTS                                                             October 2006, Lion added a new soap fragrance to its Kaori
     Over the past few years, the fabric care market has suffered        to Deodorant no Soflan (Soflan with Fragrance and
     from intense competition. Market participants have tended           Deodorant) product range, a fabric softener that provides
     to pursue volume sales in response to the yearly decline in         superlative protection against odors and leaves a pleasant,
     unit prices. While Lion worked diligently to secure sales           long-lasting scent. Attracting wide market acclaim, Lion is
     growth and enhance brand prowess through the release of             poised to recover market share.
     new products in mainstay laundry detergents and aggressive              In the same month, Lion released the new Care Veil
     promotion campaigns, overall fabric care product sales              series of laundry detergents and fabric softeners, a high-
     declined year on year due to efforts to correct inventory           value-added lineup of products that incorporate concerns for
     balances that has been a task over the last few years.              skin care. Designed especially for people who suffer from
         In the laundry detergent domain, we launched improved           dry, sensitive skin, each product in the Care Veil series was
     Top, the overall product lifecycle of which reduces CO2             tested for its effects on the skin in studies supervised by
     emissions by 47% compared with 1990 levels. This is                 dermatologists. As these products require recommendation
     attributed to the significant increase of plant-based               and guidance regarding their use, we are promoting the Care
     ingredients to over 70% of its total cleansing ingredients.         Veil series through drugstores. Marketing initiatives focus on
     We also conducted an aggressive advertising campaign to             generating appeal among those with dry and sensitive skin.
     simultaneously highlight the increased detergency and
     environmentally friendly aspects of this newly released
                                                                             TOP FUAI-KAN (FRESH TOUCH AND COLOR)
     product. As a result, market share was on an overall upward             For their everyday washing of clothes, linen and related
     trend in the post-summer period. In the liquid detergent                items, consumers demand more than just the complete
     market, which has enjoyed persistent growth in recent years,            removal of stains. For that definitive edge, users require a
                                                                             wash that stays fresh and soft to the touch. To meet these
     Lion introduced new Liquid Top, effective for hard-to-
                                                                             demands, Lion added plant-based cellulose powder to the
     remove dirt and mud. Collectively, these initiatives have               existing plant-based ingredients used in its high-detergency
     contributed to an increase in total Top brand market share              laundry products. Top Fuai-Kan reduces
     and bolstered brand prowess.                                            friction between garments when they are
                                                                             washed, prevents damage to fabric,
         The market for fabric softeners continues to expand,                preserves original colors and gives clothing
     driven by the successive release of competing products. In              a sensational feel. (Launched on March 21, 2007)

Living Care
                                                                                                     Look Kirei no Mist for
                                                                                                     The silver ion ingredient in
            Charmy V Quick                      Charmy Crysta Gel                                    this disinfectant/deodorizer
            Dishwashing                         for Dishwashers                                      spray prevents odor and
            Detergent                           A gel-type dishwasher                                eliminates bacteria. It can be
            This detergent speeds               detergent that removes                               sprayed on bedding that
            up scouring, rinsing                the hard-to-clean                                    cannot be aired out or on
            and drying, making                  grime and makes                                      fabric products that are
            dishwashing a snap.                 glasses sparkle.                                     difficult to wash.

RESULTS                                                             Confronted by consumer lifestyles that demand
In the fiscal year under review, the living care market         cleanliness with a minimum of effort, Lion was
enjoyed slight year-on-year growth on the back of               successful in creating a new market niche with the
increased demand for odor suppression-related                   release of Look Kirei no Mist. A series of disinfectant
products. Despite efforts to bolster sales in the               sprays for the kitchen, bathroom and toilet, Look Kirei
household cleaner market through the launch of new              no Mist contains a silver ion antibacterial ingredient to
proposal-based products and success in the creation of          prevent slimy surfaces and odors. In August 2006, Lion
new markets in this field, overall living care product          introduced Look Kirei no Mist for Fabrics, a
sales were down compared with the previous fiscal year,         disinfectant spray that eliminates unpleasant odors from
impacted by the drop in dishwashing detergents and              fabrics. A runaway hit, approximately 10 million spray
cooking-aid products.                                           bottles within the Look Kirei no Mist series had been
    In dishwashing detergents, Lion renewed its Charmy          sold by the end of December 2006. As a result, Lion
V Quick product range incorporating a refreshing new            recorded double-digit year-on-year percentage growth
fragrance. This new product responds to the demands of          in household cleaner products.
the young housewife segment. As of March 2006,
dishwashing machines had expanded to 18.6% of                       CHARMY AWA NO CHIKARA (POWER OF SUDS)
households. Recognizing this rapid growth as a                      As consumer attitudes toward dishwashing change,
significant business opportunity, Lion introduced                   demand for increased convenience and comfort impact the
Powerful Charmy, a detergent specifically for use with              development of dishwashing detergents. Utilizing mineral
                                                                    ions and a new SAS surfactant, Charmy Awa no
dishwashers that lifts off hard-to-remove, dried-on food
                                                                    Chikara incorporates advanced foaming
remnants, and Charmy Crysta Gel for dishwashers, a                  technology, creating rich, long-lasting suds that
gel-type detergent that removes the hard-to-clean grime             effectively remove greasy grime and enhance
that makes glass surfaces dim. Buffeted by the release of           high detergency. With the refreshing fragrance
                                                                    of apple cider, Charmy Awa no Chikara fulfills
a succession of competing products, however, overall                consumer demands for sparkling clean dishes
sales of dishwashing detergents declined compared with              and provides a more comfortable experience.
the previous fiscal year.                                           (Launched on March 21, 2007)

                                                                                                   ANNUAL REPORT 2006                 21
     Products                                                      Bufferin Luna
                                                                   An analgesic that is both easy to use and
                                                                   easy on the stomach, Bufferin Luna
                                                                   provides quick relief of menstrual
                                                                   cramps and lower back pain.

     Recognizing significant change in the way          RESULTS
                                                        Cutbacks in the OTC market and steady growth in the
     individuals perceive quality of life and a shift
                                                        functional food products field are a measure of
     in consumer emphasis from treatment to             consumer trends and the increased shift in emphasis
     prevention, Lion has entered the functional        from illness treatment to prevention. Against this
     food products market to supplement its over-       backdrop, Lion worked diligently to release new and
     the-counter (OTC) drug activities and              improved products in its mainstay brands, stepped up
                                                        advertising and promotional investment to foster No. 1,
     facilitate further business growth.
                                                        ¥10 billion megabrands, and newly entered the
                                                        functional food products market. Despite these
           Net Segment Sales                            endeavors, overall results in the Pharmaceutical
           (Millions of yen)                            Products Division declined year on year, impacted by
                                                        a reduction in the scale of the health tonic drinks and
                                                        other markets.
                                                            In its core analgesics field, the release of Bufferin
                                                        Luna, providing quick relief for menstrual and back
           40,000                                       pain, contributed to results and sustained Lion’s top
                                                        position in terms of market share.
           30,000                                           The triple-vitamin formula Smile 40EX product
                                                        retained its leading market position, providing a
                                                        substantial boost to eye care product sales.
                                                            In insecticides, Lion launched new products in the
                                                        Varsan brand range incorporating innovative features
                 0                                      that remove the need for fumes and chemical pesticide
                               02   03   04   05   06
                                                        ingredients. Through these efforts, the Company
                                                        worked tirelessly to expand market scale. Expanding

Smile 40EX                             Pairacne W Cream                                (Left) Kyupurun
The effective combination of           This highly effective cream, which              This beauty support drink blends flavangenol
vitamins A, E and B contained in       combines anti-inflammatory and                  extracted from French pine bark extract with collagen.
these eyedrops brings express relief   antibacterial agents, treats the root           (Right) Gussumin
to tired, blurring eyes.               causes of facial acne.
                                                                                       Tomato vinegar and GABA, an amino acid found
                                                                                       naturally in both tomatoes and the human body, have
                                                                                       been combined to create this drink, designed to help
                                                                                       women cope with the stresses of modern-day life.

into daily use product fields, we launched a series of
new items through sales channels of toiletries and                         NEW VARSAN DEVELOPMENTS
daily use products in addition to the traditional                          Focusing on insect eradication efficacy, Lion has
                                                                           continued to develop the fumigation-type series of
pharmaceutical sales channels. Through these efforts,
                                                                           Varsan brand products. More recently, however, for
Lion reinforced its Varsan brand prowess. Among new                        consumers who are concerned more about safety and
products, Varsan Insect-Repellent Cube, a stylishly                        comfort, we have expanded our product range to meet
designed insect repellent that does not need to be                         these needs. In addition to Varsan Insect-Repellent
plugged in and requires no batteries, has been                             Cube—a stationary-type repellent placed around
                                                                           windows and other entranceways to prevent the entry of
particularly well received and is steadily gaining
                                                                           insects, released in 2006—Lion will introduce two types
market share.                                                              of Varsan Hyosatsu Jet Spray in 2007. These
    Lion has accumulated 20 years of research into the                     insecticides kill insects with a powerful minus 40-degree
vasodilating effects of tomato vinegar. Accordingly,                       spray. Furthermore, Lion will launch Varsan Insect-
Lion entered the functional food products market with                      Repellent Spray, which controls excessive diffusion and
                                                                           thereby prevents users from inhaling the repellent agent.
the launch of three new drinks. Gussumin, a lifestyle
                                                                           In this manner, we strive to address our customers’
support drink, was particularly successful in achieving                    evolving needs.
sales of approximately four million bottles in the first
seven months after its launch.                                             VARSAN HYOSATSU JET SPRAY
    In the fiscal year under review, Lion released                         Varsan Hyosatsu Jet Spray kills
                                                                           unpleasant bugs instantly by
Pairacne W Cream, the first acne and skin eruption
                                                                           freezing then with a powerful
remedy for direct skin application to contain both                         minus 40-degree spray that
anti-inflammatory and antibacterial agents. Through                        alleviates the need for chemical
this initiative, we saw steady growth of our market                        pesticide ingredients. Safe to use
                                                                           in homes with pets and small
share in this field.
                                                                           children, Varsan Hyosatsu Jet
                                                                           Spray leaves no odor after use.
                                                                           (Launched on March 6, 2007)

                                                                                                           ANNUAL REPORT 2006                   23
                                                                 Alkylene Oxide Adducts (AOA)
                                                                 Lion’s Chemical Division utilizes its
                                                                 expertise in surface science technology
                                                                 to develop nonionic surfactants.

     Within this division, Lion strives to expand its    RESULTS
                                                         In the chemical products market, cost structures have
     three core businesses: alkylene oxide adducts
                                                         changed radically due to crude oil prices remaining at a
     (AOA), oleo chemicals and carbon. Taking into       high level. In contrast, there is growing expectation that
     consideration the impact of its activities on the   the cost advantages offered by plant-based ingredients
     environment, Lion also aims for enhanced            will lead to greater business opportunities for plant-based
     profitability while developing and nurturing        products in keeping with recent environmental concerns.
                                                             Amid such circumstances, Lion promoted
     highly functional products that meet individual
                                                         comprehensive cost absorption measures that involved
     customers’ needs.                                   passing increased raw material costs resulting from
                                                         surging oil prices to product prices, withdrawing
           Net Segment Sales                             unprofitable products, curtailing overall costs and
           (Millions of yen)                             developing new functional products. Despite these
                                                         efforts, however, sales were down from the previous fiscal
           35,000                                        year, reflecting intense market competition.
                                                             Sales in the AOA business were buoyed by the new
                                                         application of nonionic surfactants for detergents in the
           25,000                                        Southeast Asian market. The business achieved a
                                                         moderate sales increase in spite of the impact of intense
                                                         price competition in the domestic market.
           15,000                                            The oleo chemicals business, which utilizes vegetable
                                                         oils and fats as starting materials, handles fatty-acid
                                                         methyl ester, one of the basic raw materials of surfactants.
             5,000                                       Sales in this business declined compared with the
                 0                                       previous year due to inventory adjustments by customers
                               02   03   04   05   06
                                                         of methyl ester and carotene.


                                      Palm carotene

                                                               Dielectric carbon (left) has a wide
             Oleo Chemicals                                    variety of applications, such as in
             Palm and other plant-derived                      IC trays (right).
             ingredients are used as raw material
             for surfactants.

    In the carbon business market, Lion sells electro-
conductive carbon as well as electro-conductive             NEW INSULATING OIL
compounds made from electro-conductive carbon and           Electricity is an everyday necessity. Substation
                                                            transformers, which are filled with petroleum-based oil,
plastics. The compounds are supplied to customers in
                                                            adjust the power voltages for household and industrial
advanced, high-growth fields. Sales of electro-conductive   use. In cooperation with Japan AE Power Systems
carbon increased significantly due to the robust demand     Corporation, the largest transformer manufacturer in
in the electronic device and battery sectors. Sales of      Japan, Lion developed plant-based transformer oil,
conductive compounds showed double-digit growth             satisfying requirements for both environmental
                                                            friendliness and high performance in insulating and
compared with the previous fiscal year, buoyed by
                                                            cooling effects.
contributions from new products. Furthermore, the
profitability of the electro-conductive compounds
business surged due to cost reductions brought about by
partially outsourcing business to overseas factories.
    As for other products, sales increased for cationic
cellulose, an ingredient used in shampoos. During the
fiscal year under review, Lion also expanded sales of
ellagic acid, which is used as a whitening agent.

                                                            The latest type of transformer, which is 10-meters high,
                                                            will use 200kl of insulation oil.

                                                                                            ANNUAL REPORT 2006         25
     With a focus on Asia, Lion’s
     International Division operations                                                                     CHINA
                                                                                 Lion Daily Necessities Chemicals       SOUTH KOREA
     span eight countries and                                                                 (Qingdao) Co., Ltd.       CJ Lion Corporation
     administrative regions where it is
     active in the home products business,                                                HONG KONG
                                                                                 Lion Home Products                    TAIWAN
     encompassing toothpastes, body                                               (International) Ltd.                 Lion Chemical
     washes and laundry detergents.                                                                                    (Taiwan) Co., Ltd.

     Consolidated Net Sales                                                         THAILAND
     (Millions of yen)                                                              Lion Corporation (Thailand) Ltd.

       40,000                                                                       Southern Lion Sdn. Bhd.

                                                                                     Lion Corporation (Singapore) Pte. Ltd.

                                                       Consolidated subsidiary                INDONESIA
                                                                                              P.T. Lion Wings
       10,000                                          Affiliate accounted for by
                                                       equity method

                         05   06

     GENERAL POLICIES AND OVERALL RESULTS                                double-digit year-on-year percentage sales growth, a
     While introducing and cultivating global brands                     figure that exceeded market expansion.
     common to the ASEAN and Northeast Asian regions,                        Having commenced full-scale business development
     Lion is conducting product development in close liaison             in South Korea in 2005, Lion strengthened its
     with local business partners in order to meet each                  infrastructure for further growth, proactively introduced
     country’s market needs.                                             new products, reinforced its sales structure and
         In Thailand, where the GDP growth rate hovered                  implemented cost-reduction measures.
     around 5% in 2006, the toiletries market continued to                   Accounting for these factors and supported by robust
     expand. Under these circumstances, Lion introduced                  conditions in ASEAN countries, Lion’s International
     new products and actively engaged in advertising and                Division reported double-digit percentage sales growth
     promotion with the aim of boosting sales. Buoyed by                 compared with the previous fiscal year.
     these initiatives, Lion enjoyed steady results, particularly
     in laundry detergents and toothpastes, and recorded

• TAIWAN                                                         • SINGAPORE
Sales of household products grew due                             Singapore also achieved double-digit growth
to the introduction of new liquid                                in terms of overall sales and fabric care
laundry detergents. Overall sales were                           product sales, the latter coming as a result
on par with the previous fiscal year.                            of brisk sales for Top laundry detergent and
                                             Lanpao              newly introduced Liquid Top.                 Top
                                             Laundry detergent                                                     Laundry detergent

• HONG KONG                                                      • INDONESIA
Laundry detergent sales rose                                     Dishwashing detergents under the
approximately 30%, owing to the                                  Mama brand and Emeron basic
introduction of laundry detergents with                          skin care products enjoyed
fabric softening functions. These                                popularity in Indonesia, recording
endeavors significantly improved overall                         an increase in sales of more than
sales in Hong Kong.                                              20%. Furthermore, export
                                             Laundry detergent                                           Emeron
                                                                 expansion supported overall             Shampoo
                                                                 business growth.

Despite the entry of competitors into the fabric care
segment, sales of compact-type laundry detergents were           • CHINA
more than double those of the previous year. In addition,        In China, Lion focuses on its
sales of laundry detergents for delicate fabrics and fabric      oral care business, with ZACT
softeners grew over 20%,                                         toothpaste and Systema
primarily for refills.                                           toothbrushes gaining in
Consequently, overall sales                                      popularity in 2006. There was
for the fabric care business                                     significant improvement in
recorded double-digit                                            product exports from the
growth, a performance                                            Qingdao plant to Japan and
repeated by Systema                                              South Korea, which served to         Systema          ZACT
                                                                                                      Toothbrush       Toothpaste
toothbrush and toothpaste                                        boost overall business sales.
sales, contributing to
substantial business           Systema
                               Toothbrush, toothpaste
expansion in Thailand.
                                                                 • SOUTH KOREA
                                                                 Although sales of oral care products increased thanks to
                                                                 new Dentrala brand toothpastes and toothbrushes,
• MALAYSIA                                                       Mouhatsuryoku hair-nourishment treatment sales were
On the back of robust demand for Top and Bio Zip laundry         stagnant. As a result, overall sales in South Korea were on
detergents, as well as the introduction of new Liquid Top,       par with the previous year. Powder
sales of laundry detergents continued to be strong. In the       detergents, however, contributed
Shokubutsu-Monogatari (Plant                                     to improvements in the earnings
Story) brand, Lion introduced                                    structure as streamlining of
new value-added Royal, which                                     formulations and reviewing the
significantly boosted sales of                                   selection of raw materials
beauty care products from the                                    achieved drastic cost reductions.
previous year. This contributed                                  Chamgreen dishwashing
to an overall double-digit                                       detergents, which were very much
percentage increase in year-         Shokubutsu (Royal)          in demand, registered double-digit        Dentrala
on-year sales in Malaysia.           Shower Cream                growth in sales.                          Toothbrush, toothpaste

                                                                                                  ANNUAL REPORT 2006                   27

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