SUZUKEN : Consolidated Financial Statements for the First Quarter of the Fiscal Year Ending March 31, 2018(Japanese Standard)

Consolidated Financial Statements for the First Quarter of the Fiscal Year Ending March 31, 2018 (Japanese Standard) August 4, 2017

Company name: SUZUKEN CO., LTD.	Stock Exchange Listings: Tokyo, Nagoya, Sapporo
Stock Code: 9987 URL: http://www.suzuken.co.jp
Representative: Hiromi Miyata, President and CEO
Contact: Masanobu Nohara, Managing Executive Officer, General Manager of Finance and Accounting Department
Tel.: [phone]
Scheduled date for submission of the quarterly report: August 14, 2017	Scheduled Date for Commencement of Dividend Payments: ―
Creation of supplementary explanatory materials: Yes
Holding of explanatory meeting on quarterly financial results: None

(Fractions less than ¥1 million have been omitted.)

1. Results for the first quarter of the fiscal year ending March 31, 2018 (April 1, 2017 - June 30, 2017)
2. Consolidated Results of Operations (Cumulative)

   (% shows changes from results for the same period in the previous year)

   	Net sales		Operating income		Ordinary income
   1Q period ended June 30, 2017	Millions of yen	%	Millions of yen	%	Millions of yen	%
   	527,631	(1.0)	2,104	670.4	4,689	64.9
   1Q period ended June 30, 2016	532,863	4.6	273	(90.2)	2,844	(45.4)

   	Net income attributable to owners of the parent		Net income per share-basic	Net income per share-diluted
   1Q period ended June 30, 2017	Millions of yen	%	Yen	Yen
   	3,099	188.5	32.38	―
   1Q period ended June 30, 2016	1,074	(65.3)	10.84	―

   (Note) Comprehensive income: 1Q period ended June 30, 2017 ¥5,791 million (193.2%)

   1Q period ended June 30, 2016 ¥1,975 million (-51.1%)

3. Consolidated Financial Position

4. 	Total assets	Net assets	Equity ratio
   As of June 30, 2017	Millions of yen	Millions of yen	%
   	1,119,098	392,781	35.0
   As of March 31, 2017	1,109,012	396,496	35.7

   (Reference) Shareholders' equity: As of June 30, 2017 ¥ 392,198 million As of March 31, 2017 ¥ 395,944 million

   	Annual dividends
   (Record Date)	End of 1Q	End of 2Q	End of 3Q	Year-end	Full-year
   Year ended March 31, 2017	Yen	Yen	Yen	Yen	Yen
   	―	27.00	―	27.00	54.00
   Year ending March 31, 2018	―
   Year ending March 31, 2018 (Forecast)	27.00	―	27.00	54.00

5. Dividends

   (Note) Changes in most recently announced dividend forecasts: None

6. Forecasts for the Year Ending March 31, 2018 (April 1, 2017 - March 31, 2018)

7. (% shows changes from results for the same period in the previous year)

   	Net sales		Operating income		Ordinary income		Net income attributable to owners of the parent		Net income per share
   Six-month period	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
   	1,031,000	(2.3)	4,100	(36.4)	8,300	(24.4)	5,500	(15.8)	56.92
   Full year	2,100,000	(1.3)	10,300	(45.0)	19,000	(31.6)	12,100	(43.2)	125.23

   (Note) Changes in most recently announced results forecasts: None

   *Notes

8. Significant changes in subsidiaries (change in specified subsidiaries resulting in changes in the scope of consolidation): None

   New: - companies (-) Excluded: - companies (-)

9. Application of special accounting methods for the preparation of quarterly consolidated financial statements: None

10. Changes in accounting policies, estimates and restatements

11. Changes in accounting policies resulting from amendments to accounting standards, etc.: None

12. Changes in accounting policies other than item i. above: None

13. Changes in accounting estimates: None

14. Restatements: None

15. Number of shares outstanding (Common shares)

16. As of June 30, 2017	103,344,083 shares	As of March 31, 2017	103,344,083 shares
    As of June 30, 2017	8,653,563 shares	As of March 31, 2017	6,721,683 shares
    1Q period ended June 30, 2017	95,709,528 shares	1Q period ended June 30, 2016	99,134,759 shares

17. Number of shares outstanding (including treasury shares)

18. Number of treasury shares iii Average number of shares

during the period (Year to Date

on a consolidated basis)

• Quarterly financial report is not subject to audit procedures.

• Explanations concerning the appropriate use of earnings forecasts and other special remarks

Earnings forecasts and other statements about the future that are included in this material are based on information currently in the possession of the Company and certain conditions judged reasonable by the Company. These statements do not guarantee that the Company will achieve its earnings forecasts. In addition, actual results, etc., may differ significantly due to various factors. For notes, etc., on the conditions for earnings forecasts and the use of earnings forecasts, please refer to "(3) Explanation of Consolidated Earnings Forecasts and Other Forecast Information" in "1. Qualitative Information on Quarterly Consolidated Financial Statements" on page 4 of the attached documentation.

Contents of attached documentation

1. Qualitative Information on Quarterly Consolidated Financial Statements 2

2. Explanation of Results of Operations 2

3. Explanation of Financial Position 4

4. Explanation of Consolidated Earnings Forecasts and Other Forecast Information 4

5. Quarterly Consolidated Financial Statements and Key Notes 5

6. Quarterly Consolidated Balance Sheets 5

7. Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income 7

8. Notes on Quarterly Consolidated Financial Statements 9

9. (Notes on the Assumption of the Company as a Going Concern) 9

   (Notes in the Event of Marked Changes in Shareholders' Equity) 9

   (Segment Information) 9

   1. Qualitative Information on Quarterly Consolidated Financial Statements (1) Explanation of Results of Operations

   In the first quarter of the fiscal year ending March 31, 2018, the Japanese economy remained on a gradual recovery path, partly due to an improved employment and personal income environment and the impact of the government's economic policies. The Suzuken Group formulated a new medium-term growth strategy, One Suzuken 2019, which starts from the current fiscal year. Now, the Group will work to achieve the four "Ones" of its medium-term visions, which are 1) Number One - Strive to maximize customers' trust, 2) Only One - Create a unique business model, 3) One Group - Common platform and common values, and 4) One Point Improvement - Improve sales and administration cost efficiency through productivity increases. To achieve them, the Group will seek to increase its corporate value even further by thoroughly pursuing customer needs, creating

   new value by promoting links with various companies, enhance Groupwide productivity, and other efforts.

   As a result, consolidated results for the first quarter under review were as follows. Net sales were ¥527,631 million (down 1.0% year on year), operating income was ¥2,104 million (up 670.4% year on year), ordinary income was ¥4,689 million (up 64.9% year on year), and net income attributable to owners of the parent was ¥3,099 million (up 188.5% year on year).

   Performance by segment was as follows.

   (Millions of yen; fractions less than ¥1 million have been omitted.)

   Name of segment	1Q period ended June 30, 2016	1Q period ended June 30, 2017	Change (%)
   Pharmaceutical Distribution	Net sales	510,361	504,826	(1.1)
   	Operating income (loss)	(1,192)	162	―
   Pharmaceutical Manufacturing	Net sales	16,535	15,087	(8.8)
   	Operating income	1,612	1,234	(23.4)
   Insurance Pharmacy	Net sales	23,928	24,549	2.6
   	Operating income (loss)	(103)	537	―
   Healthcare-related Services	Net sales	10,566	12,279	16.2
   	Operating income	88	230	161.0

   (Note) Segment sales results include intersegment transactions.

   (Pharmaceutical Distribution)

   The ethical pharmaceuticals market is estimated to have experienced negative growth due to the impact of efforts to promote the use of generics and a contraction in the market for therapeutic agents for hepatitis C, despite a contribution from the expansion in the market for oncological drugs.

   In this environment, the segment's net sales decreased year on year, mainly due to a decline in sales of therapeutic agents for hepatitis C. Segment operating income increased due to the Company doing its utmost in efforts to improve distribution, such as negotiating prices commensurate with the value of each ethical pharmaceutical product and focusing on securing appropriate profits, as well as working to reduce selling, general and administrative expenses.

   In striving to maximize customers' trust, we will continue to implement our strategy of becoming the No. 1 Group for customer trust, aiming to win as much trust as possible from our customers.

   In April 2017, the Group started the operation of the Seishin Distribution Center for wholesale distribution. This is the first combination-type distribution center in the pharmaceutical industry, incorporating the Rokko Distribution Center for distribution to pharmaceutical manufacturers and a transport delivery terminal in the same building. Through this initiative, the Group will combine its functions to provide fully integrated, high quality distribution services, ensuring that the Company can fulfill its social mission of providing a stable supply of pharmaceuticals, even in times of disaster.

   As a result of the above, net sales amounted to ¥504,826 million (down 1.1% year on year) and segment operating income was ¥162 million (operating loss of ¥1,192 million in the same period of the previous fiscal year).

   Furthermore, the Company has not yet determined sales prices for over 40% of its customers, and has applied reasonably estimated prices for these. The Company will continue efforts to rigorously secure appropriate profit margins in the face of the tough price negotiations expected ahead.