Kyowa Hakko Raises Forecasts for Operating Income and Sales

Kyowa Hakko Kogyo Co., Ltd. (Kyowa Hakko)(TOKYO:4151) today issued
revised consolidated and non-consolidated forecasts for the interim
and full-year periods of the fiscal year ending March 31, 2007.

Commenting on the revisions, Dr. Yuzuru Matsuda, President of
Kyowa Hakko said, "Our strong performance in core pharmaceuticals is
encouraging and our success at reducing costs is improving our
operating income, though the resulting extraordinary losses have led
to a slightly lower forecast for full-year net income."

Details of the revised forecasts and previous forecasts announced
on April 28, 2006, are as follows:

Revised forecasts: Interim period (April 1, 2006 to September 30,
2006)

-0-
*T
Consolidated Millions of yen
Operating Recurring
Net sales income income Net income
----------------------------------------------------------------------
Previous forecast 165,000 11,000 10,500 4,000
Revised forecast 173,000 14,500 15,000 4,000
----------------------------------------------------------------------
Difference in
forecasts 8,000 3,500 4,500 -
Percentage change 4.8% 31.8% 42.9% -%
======================================================================
Reference:
Results for
interim period
to end September
2005 177,332 12,302 14,385 7,594
----------------------------------------------------------------------
*T

-0-
*T
Non-consolidated Millions of yen
Operating Recurring
Net sales income income Net income
----------------------------------------------------------------------
Previous forecast 82,000 7,500 12,500 13,500
Revised forecast 84,000 10,700 16,200 14,000
----------------------------------------------------------------------
Difference in
forecasts 2,000 3,200 3,700 500
Percentage change 2.4% 42.7% 29.6% 3.7%
======================================================================
Reference:
Results for
interim period
to September
2005 94,683 7,784 10,778 5,627
----------------------------------------------------------------------
*T

Main reasons for revised forecasts

Consolidated and non-consolidated net sales for the interim period
are expected to exceed our previous forecast mainly due to higher than
expected sales in the Pharmaceuticals business of core products
Allelock, an antiallergic agent, and Coniel, a treatment for
hypertension and angina pectoris, as well as price increases in the
Chemicals business resulting from higher raw materials prices.

As regards profits, consolidated and non-consolidated operating
income and recurring income are expected to significantly exceed
initial forecasts as a result of a strong performance from core
pharmaceutical products, the delay of certain R&D expenses until the
second half of the fiscal year, and cost reductions.

Interim net income is however expected to be broadly in line with
initial forecasts as our progress in comprehensive efforts to reduce
costs, for example by outsourcing of our pharmaceuticals distribution
business, cost rationalization at our production plant in Hofu, and
reorganization of our food production systems, have resulted in
extraordinary losses including asset impairment losses and early
retirement support expenses.

Full year forecasts have also been revised as follows, reflecting
the revision of interim forecasts:

Revised forecasts: Full-year (April 1, 2006 to 31 March, 2007)

-0-
*T
Consolidated Millions of yen
Operating
Net sales income Recurring income Net income
----------------------------------------------------------------------
Previous forecast 340,000 26,000 25,000 13,000
Revised forecast 353,000 29,000 29,000 12,000
----------------------------------------------------------------------
Difference in
forecasts 13,000 3,000 4,000 -1,000
Percentage change 3.8% 11.5% 16.0% -7.7%
======================================================================
Reference: Results
for fiscal year to
March 2006 353,439 25,534 28,219 16,273
----------------------------------------------------------------------
*T

-0-
*T
Non-consolidated Millions of yen
Operating Recurring
Net sales income income Net income
----------------------------------------------------------------------
Previous forecast 165,000 16,500 21,000 19,000
Revised forecast 170,000 19,500 25,000 19,000
----------------------------------------------------------------------
Difference in
forecasts 5,000 3,000 4,000 -
Percentage change 3.0% 18.2% 19.0% -%
======================================================================
Reference: Results
for fiscal year to
March 2006 185,361 16,331 19,739 10,258
----------------------------------------------------------------------
*T

For further information please access:
http://ir.kyowa.co.jp/english/index.cfm

This document is an English translation of the Japanese-language
original. All financial information has been prepared in accordance
with generally accepted accounting principles in Japan. It contains
forward-looking statements based on a number of assumptions and
beliefs made by management in light of information currently
available. Actual financial results may differ materially depending on
a number of factors, including fluctuations in exchange rates,
changing economic conditions, legislative and regulatory developments,
delays in new product launches, and pricing and product initiatives of
competitors.