First Quarter Business Results for Fiscal 2023
August 4, 2023
Director, and CFO
Muneki Handa
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agenda
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First Quarter Business Results for FY 2023
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Here is the content for today's presentation.
I will give an overview of the business results for the first quarter of fiscal 2023, discuss the initiatives and the progress we are making in our domestic business, and talk about the initiatives and the progress we are making in the China business.
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Roadmap for the Realization of the TSUMURA VISION "Cho-WA" 2031
Prescription Kampo
Products
1st stage
FY2022-2024
-Germination-
Standardization of Kampo |
treatments |
Personalized Kampo |
treatments |
Personalized Kampo |
2nd stage
FY2025-2027
-Growth-
Over 50% physicians write 10 or more Kampo prescriptions
3rd stage
FY2028-2031
-Flowering-
50% of physicians write basic |
prescriptions in all treatment areas |
R&D
Formulation | |
platform | |
Chinese | |
Crude drug | |
operations | platform |
Research | |
platform | |
Smart factory | |
Sales | |
Labor | |
productivity | Production |
Crude drugs | |
treatments | Research |
Scientific study of pre- | |
symptomatic diseases |
Traditional Chinese | Market |
medical products business | entry |
Crude drugs, drug pieces and | Sales |
Yakushokudogen products | expansion |
Traditional Chinese Medicine | Establishment |
Research Center |
Expand scope of
automation
Sales per MR (Yen/MR)
Physical labor productivity
Personnel expenses per crude drug arranging volume
Development
Build
foundations
Establish brands
Function expansion
Shift to oversight/management
Social
implementation
Establish brands
Lead industry development
Evidence-building for traditional
Chinese medical products
Realize smart factories
Double productivity | |
(vs. FY2021) | 3 |
This is a roadmap for the realization of the TSUMURA VISION "Cho-WA" 2031, which was announced in May 2022.
The first stage of the medium-term management plan, which will run through fiscal 2024, is positioned as the stage for conducting upfront investments and building a foundation as a step toward realizing the
TSUMURA VISION.
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1Q Business Results for FY 2023 | |||||||||||||
【Million yen】 | 1Q | 1Q | YoY | 1H plan | Progress | ||||||||
FY 2022 | FY 2023 | Rate | |||||||||||
results | results | Amount | Change | (vs. 1H plan) | Ratio to total sales | ||||||||
Sales | 34,417 | 37,036 | +2,618 | +7.6% | 74,000 | 50.0% | |||||||
50.1% | |||||||||||||
Domestic business | 31,562 | 32,988 | +1,426 | +4.5% | 65,900 | ||||||||
50.0% | |||||||||||||
China business | 2,855 | 4,047 | +1,191 | +41.7% | 8,100 | ||||||||
Domestic business: | |||||||||||||
Operating profit | 6,353 | 4,684 | (1,668) | (26.3)% | 9,500 | 49.3% | |||||||
Prescription Kampo | |||||||||||||
(26.9)% | 47.3% | Products | |||||||||||
Domestic business | 6,404 | 4,684 | (1,719) | 9,900 | 86.0% | ||||||||
China business | (50) | 0 | +51 | - | (400) | - | |||||||
China business: | |||||||||||||
Ordinary profit | 8,665 | 5,989 | (2,676) | (30.9)% | 9,800 | 61.1% | |||||||
Crude Drug Platform 10.9% | |||||||||||||
Profit | 6,632 | 4,332 | (2,300) | (34.7)% | 6,800 | 63.7% | Domestic business: | ||||||
attributable to owners of | OTC Kampo etc. 2.3% | ||||||||||||
parent | |||||||||||||
PL translation rate (CNY) | 18.32 | 19.36 | +1.04 | - | - | - | Domestic business: | ||||||
Other prescription | |||||||||||||
pharmaceuticals 0.8% | |||||||||||||
*Forex rate at the time overseas subsidiaries' PLs were incorporated; differs from the import rate for raw material crude drugs | |||||||||||||
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This is an overview of the business results in the first quarter of fiscal 2023.
Sales totaled ¥37.0 billion, a growth of 7.6% year-on-year.
The progress rate for sales versus our plan for the first half was 50.0%. Sales broke down to ¥32.9 billion in sales in the domestic business and ¥4.0 billion in sales in the China business.
The sales breakdown is as shown in the pie graph on the right.
Operating profit was ¥4.6 billion, a decrease of 26.3% versus the same period, a year earlier. The progress rate for operating profit in contrast with our plan for the first half was 49.3%.
Ordinary profit was ¥5.9 billion, a decline of 30.9% year-on-year. The progress rate for ordinary profit in contrast with our plan for the first half was 61.1%.
Meanwhile, profit attributable to owners of parent came to ¥4.3 billion, a reduction of 34.7% year-on-year. The progress rate for profit attributable to owners of parent in contrast with our plan for the first half was 63.7%.
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Key Points in Performance
・Net sales rose reflecting growth in the domestic and China businesses
・Profit declined chiefly due to impact from unrealized gains, a rise in the cost of procuring crude drugs, and impact from a depreciation in the yen's value
Net sales | 37,036 | million yen | YoY | +7.6% | Progress rate | 50.0% | |
(vs. 1H plan) | |||||||
◼ | Domestic business | Total sales for the 129 prescription Kampo products: 31,838 million yen, up 5.2% year-on-year | |||||
Total sales of the OTC Kampo formulations and other healthcare products: 837 million yen, down 7.2% year-on-year | |||||||
◼ | China business | Raw material crude drugs, drug pieces, Yakushokudogen products, etc. : 4,047 million yen, rose 41.7% year-on-year | |||||
Operating profit | 4,684 | million yen | YoY | (26.3)% | Progress rate | 49.3% | |
(vs. 1H plan) | |||||||
Operating profit margin | 12.6 | % | YoY | (5.9)pt |
- Cost-to-salesratio: 54.9%, +7.1pt YoY: In the same period of the previous year, unrealized gains contracted due to the lockdown of Shanghai; Unrealized gain is expected to rise in FY2023 owing to an increase in inventory; In addition, there is impact from crude drug procurement costs and devaluation of the yen
- SG&A ratio: 32.4%, (1.3)pt YoY: Sales growth offset growth investments, mainly in the DX transformation for Kampo value chain
Ordinary profit | 5,989 | million yen | YoY | (30.9)% | Progress rate | 61.1% |
(vs. 1H plan) | ||||||
- Foreign exchange gain primarily related to loans to overseas subsidiaries: 929 million yen, down 1,070
million yen year-on-year*Foreign exchange gain not posted in plan
Profit attributable to | 4,332 | million yen | YoY | (34.7)% | Progress rate | 63.7% |
owners of parent | (vs. 1H plan) | |||||
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This slide depicts the key points of our performance.
In the domestic business, sales of the 129 prescription Kampo products came to ¥31.8 billion, a growth of 5.2% versus the same period, a year earlier.
Under restricted shipment conditions, sales grew reflecting information provision activities owing to e-promotions, which were partially restricted, and owing to continued prescriptions of formulations in the domain of cardiovascular diseases, and related to symptoms such as anxiety, insomnia and dizziness.
Sales of OTC Kampo products were ¥800 million, a decrease of 7.2% year-on-year, reflecting impact from an ongoing shortage of formulations related to common cold-related symptoms. From July, we launched operations for a new manufacturing line to strengthen our production capacity for OTC Kampo products. We expect to gradually unwind our product shortage. Sales in the China business totaled ¥4.0 billion, a rise of 41.7% in comparison with the same period, a year earlier. This reflect an increase in sales of raw material crude drugs in the crude drug platform business.
The cost-to-sales ratio was 54.9%, an improvement of 7.1pt year-on-year.
As factors triggering changes in performance, we posted an increase in unrealized gains, a rise in the procurement cost for crude drugs, a depreciation in the yen's value versus major currencies, and furthermore there was impact from soaring energy and raw material expenses. I will explain this in detail later on.
The SG&A ratio was 32.4%, a decline of 1.3pt year-on-year.
The increase in sales absorbed the rise in outlays due to growth investments, mainly for the digital transformation of the Kampo value chain.
Operating profit totaled ¥4.6 billion, a decline of 26.3% versus the same period, a year earlier.
Under non-operating income, we posted a foreign exchange gain of ¥900 million, related to loans to overseas subsidiaries. Accordingly, ordinary profit came to ¥5.9 billion, putting the achievement rate for ordinary profit slightly higher than where we planned to be at the end of the first quarter in our first half plan.
Extrapolating from the above, profit attributable to owners of parent totaled ¥4.3 billion, a fall of 34.7% year-on-year.
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Tsumura & Co. published this content on 10 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2023 08:57:04 UTC.