2021 New Year’s Message from General CEO

Dear respected members of Pulmuone,

A bright new year 2021, the Year of the Metal Ox, has dawned.

Last year, COVID-19 heavily affected global communities, and it is still disrupting our day to day life. Although the pandemic is expected to be mitigated with vaccination and treatment finally underway, faced with stark reality and mandated to adapt to the new way of life.

The COVID-19 outbreak also took its toll on business management, and the last year has been a challenging and uncertain time for the industry. Despite the hardship during the difficult time, members of Pulmuone gathered with each other and achieved a meaningful outcome of total sales of KRW 2.20 trillion and 89.4 percent operating profit growth year-on-year.

Although performance considerably varied by business categories, we have discovered our new growth drivers by actively responding to online business environment, launching new products that represent latest trends and conducting profitability improvement strategies. Our global businesses made a significant process, with a double-digit operating profit margin in China and a profit turnaround in the U.S.

I sincerely appreciate every member of Pulmuone for the hard work and dedication they have put into during the difficult time last year.

Some economy experts are saying that the economy will partially recover this year, but the future ahead of us is still unpredictable.

The COVID-19 reminded humanity of the importance of wholesome food and environment. With more and more global consumers, especially the millennials and gen-Z populations, becoming aware of healthy and sustainable foods and buying LOHAS products, Pulmuone is required to quickly respond to the rapid changes in the market and boost its competitiveness. Pulmuone is a company equipped with best capabilities in marketing as well as research and development to cope with the changing dynamics of the market.

Based on its mid-to-long term LOHAS strategies, Pulmuone will take lead in creating the future of food business by focusing on Plant-Forward business. With the Plant-Forward business and the Home Meal Replacement (HMR) business, another trend in the new normal era, as the two main pillars for its future growth, Pulmuone aims to reach a record KRW 2.5 trillion in total sales in 2021.

Dear valued members of Pulmuone,

In the new year, a structural shift to profitable growth is required for each and every business unit of Pulmuone.

Pulmuone will generate significant growth in sales and profit by innovating and restructuring Korean domestic business operations and securing the foundation for growth of its overseas subsidiaries.

Below are major tasks of Pulmuone by business units in 2021:

1) "Natural Food and Beverage Region BU" encompasses 2 Market Business Units (MBUs) - Integrated Pulmuone Fresh Foods and Beverage MBU and Pulmuone Food and Culture MBU – and 6 Subordination Business Units (SBUs). Integrated Pulmuone Fresh Foods and Beverage MBU was newly created by a merger of Pulmuone Foods MBU and Foodmerce MBU in July 2020 with an aim for improved operational efficiency and synergy.

"Integrated Pulmuone Fresh Foods and Beverage MBU" provided healthy, tasty and convenient food products that satisfy consumers’ changing needs, posting total sales of KRW 1.356 trillion and its profit exceeded the initial target.

This year, the MBU will expand its lineup with new products that reflect Pulmuone’s wholesome food values and further promote communication with millennials and Generation Z consumers to improve brand values.

In order to nurture future growth drivers, the MBU will improve profitability of the existing products, strengthen competitiveness in the HMR segment by executing its Eumseong Plant master plan, dominate the plant-based protein (PBP) category through lineup expansion and develop new categories such as cheese, vegan, functional and premium foods.

The MBU will also enlarge the size of its franchisees for improving its competitiveness in channel and solidify its no.1 leadership position in B2B kids meal and school lunch. The MBU will discover new growth drivers by operating franchise business of health and care category for future silver economy dominance, securing more contracts of Out-Of-Home (OOH) channel including hotels, restaurants and cafes, and improving its online channel capabilities.

"Pulmuone Danone SBU" achieved its profit goal thanks to structure improvement despite the difficulties in volume growth due to the pandemic-triggered delay in the construction of new manufacturing lines.

This year, Pulmuone Danone SBU will launch various new products to meet consumers’ needs for health and better lifestyle, including double format products and high functional foods, to broaden its market horizons. In particular, by extending to a newly rising market of plant-based alternative yogurt (PBAY) and expanding its e-commerce channels, the SBU is set to take a step for another leap forward.

"North America SBU" made 2020 a very special year. Despite the confusion cause by the COVID-19, NA SBU achieved sales growth and set 2020 the first year to make a profit turnaround due to the continuous rise from 2018 in plan-based protein and Asian food category sales, product mix optimized for profitability, manufacturing line stabilization and logistics cost savings through supply chain management.

In the new year, the SBU will continue its profitable growth momentum of plant-based protein products and explore new markets by launching plant-based ready meals and plant-based meat (PBM).

By focusing on dumplings, Asian meal kits and kimchi, which already proved their popularity in the U.S. food market, NA SBU will improve Pulmuone’s brand and product leadership in the Asian food category.

To even further strengthen its profitable growth foundation, the SBU will improve its manufacturing infrastructure and execute the plan for logistics warehouse integration.

"Japan SBU" took a bold move to get rid of its unprofitable businesses and discovered profit-making products that reflect the latest trends.

In 2021, Japan SBU will ensure product quality by upgrading its manufacturing infrastructure to improve its competitiveness and expand the lineup of plan-forward foods and global items that established strong foundation in the last year.

The SBU will also implement efficient logistics system by changing its partner and revising its transport and delivery structure.

Through revamping its existing business, nurturing new projects and innovating logistics and manufacturing infrastructure, Japan SBU is ready to pave the way for bringing profitability in 2021.

Marking 14 percent operating profit margin with rapid sales increase, "China SBU" successfully delivered business transformation in 2020. Based on its performance last year, China SBU is planning to continue expanding the sales of pasta and soybean products while beginning full-scale efforts on frozen food category as new driver for growth.

By implementing the master plan, China SBU will make the Beijing Plant a manufacturing hub for the Chinese business.

Meanwhile, Pulmuone’s Vietnam Business is in its beginning stage trying to pitch new ideas and examine exemplary cases to lay the foundation for market entrance.

In the new year, it will focus its capacity on securing flagship products and stores to fully boost its business in the country.

"Fresh Daily Delivery SBU" saw a sluggish pace in Home and Office Delivery (HOD) channel due to external factors but minimized its profit loss by diversifying Business-to-Business (B2B) channels and bringing growth online.

In the new year, FDD SBU will expand its scope of online business to respond to contactless environment, support partner companies through providing sophisticated digital infrastructure for HOD channel including order information system and learning platform, and establish customer-oriented fresh beverage delivery system.

By facilitating a successful market entry of its integrated food products with distinguished nutritional functions, FDD SBU will further consolidate its position in the daily fresh beverage delivery market.

"ORGA WholeFoods SBU", despite the unpredictable surroundings last year, paved the way for profit-making management with improved competitiveness, efficient operation and optimized restructuring enabled by expansion of contactless online and Online-to-Offline (O2O) business and aggressive launches of its unique products.

In 2021, the ORGA WholeFoods SBU plans to continue its innovation and growth based on the O2O platform and accelerate its digital transformation to cope with the COVID-19 pandemic.

By further launching its unique fresh ready meals and hyper-fresh products and actively conducting zero-waste and other environmental campaigns, the SBU will strengthen its stance as a LOHAS fresh market that leads to sustainability.

"Pulmuone Food & Culture MBU" faced one of the biggest difficulties in its history caused by the COVID-19 pandemic and saw sales and profit decline in 2020 due to its characteristics as a face-to-face business.

The MBU is conducting organizational structure improvement through detailed analysis on each operation site. Under the MBU’s emergency management system, the entire members are sharing burden and making utmost efforts to overcome the crisis.

In 2021, Pulmuone Food & Culture MBU will innovate its business structure in the concession and expressway rest area businesses and win more meal service contracts with the military and the police as well as large-size companies.

Furthermore, it will put more focus on profitable contracts and build foundation for another leap forward through service platform establishment, development of simple and convenient (SC) food materials and discovery of new profit model.

2) "Health & Living Solution (HLS) Region BU" is comprised of "LOHAS Care SBU" and "Pumeiduo LOHAS SBU."

"LOHAS Care SBU" identified potential for growth by entering a new distribution channel to overcome the limitations of door-to-door sales and improving its profitability by promoting better sales practices and conducting more efficient business management.

In the new year of 2021, LOHAS Care SBU – a new name of LOHAS Direct Sale (LDS) SBU created with an aim to go beyond direct selling and become a specialized health and living care business – is set to make this year mark the beginning of a new business structure establishment by expanding its scope to enter new channels including retail sales and rentals and improving competitiveness of its products.

The SBU is also planning to actively promote contactless business through online employee training and door-to-door sales web platform.

"Pumeiduo LOHAS SBU" posted continued growth in 2020 despite a declining overall market due to external factors. With fermented health functional foods as its flagship products, the SBU expanded its range to skin care and successfully enhanced its price competitiveness through a transition to local production.

In 2021, the SBU will widen its consumer base and continue its growth by expanding the fermented product lineup and conducting a digital transformation of the overall business including online malls, live online platform and online employee training.

Fellow members of Pulmuone,

In the new year, Pulmuone will actively respond to the digital transformation of the market and discover new businesses and overseas market opportunities with the following company-wide strategies:

First, with continued dominance in online channel and expansion of e-commerce business based on mobile applications, Pulmuone will prepare itself for the changing consumption patterns caused by COVID-19 and the digital environment of the future.

Second, by thoroughly implementing its core strategy “Digital Transformation (DX),” Pulmuone will improve its overall productivity and actively respond to the new normal era.

Third, Pulmuone will foster new drivers for growth by constantly developing new business models that reflect the latest trends and enter Indonesia, Malaysia and other new ASEAN markets centering around Vietnam to go beyond its current overseas key markets.

Fourth, with new “Agile” departments at place to take on new challenges, Pulmuone will build flexible and efficient organizational culture through extended systems for  remote work and training.

Dear 10,000 valued members of Pulmuone,

The COVID-19 fallout reminded us of the genuine values of LOHAS mission for health and environment.

Maximizing profit for shareholders was the main purpose of the companies in the past, but now we are in the middle of a transition to the era of “stakeholder capitalism” where companies communicate with and create shared values for not only shareholders but also employees, customers, partner companies and local communities.

Pulmuone stated corporate social responsibilities as creating economic, social and environmental shared values in its Articles of Incorporation and defined Pulmuone’s identity as a “commercial corporation that pursues public benefit” to fully practice principles of stakeholder capitalism.

Pulmuone’s efforts to generate shared values led the company to be awarded the Most Respected Company in Korea for the pas 14 consecutive years, along with Highly Outstanding ESG Company in ESG Company Awards that evaluates non-financial performances including environmental management, corporate social responsibility and governance. Pulmuone was also ranked as Excellent in Win-Win Growth Index by National Commission for Corporate Partnership.

Despite the anticipated difficulties and upheaval in the global business landscape, Pulmuone will exert utmost efforts to achieve its mission and Global New DP5 vision based on the annual business plan and mid-to-long-term strategies.

With our united efforts to lead the changing business environment and manage internal and external risks, I am confident that we can overcome the crisis in the early stage and take a new leap forward.

As we welcome the hopeful new year, I would like to ask all of our members to mobilize collective efforts for Pulmuone to become the no.1 global LOHAS company and take another great leap forward.

I sincerely wish all the best of luck and good health to you and your family.

January 1st, 2021

Hyo-yul Lee

General CEO, Pulmuone