Kyowa Hakko Kogyo Co. Ltd. (Kyowa Hakko)(TOKYO:4151) today announced its
consolidated financial results for the year ended March 31, 2008 (Fiscal
2007). Consolidated net sales were ¥392.1
billion, up 10.7% and consolidated operating income was ¥39.3
billion, an increase of 28.3% compared to fiscal 2006. Recurring income
increased 23.0% to ¥37.9 billion and net
income increased 84.9% to ¥23.4 billion.
Operating income in the Pharmaceuticals segment grew by 26.8%, supported
by higher sales of anti-allergic and other products, while in the
Bio-Chemicals segment strong demand for amino acids overseas and the
consolidation of Daiichi Fine Chemical resulted in a large increase in
operating income of 135.6%. In the Chemicals and Food segments operating
income decreased by 10.6% and 13.9% respectively as they were each
affected by the sustained high prices of raw materials and other factors.
R&D spending in fiscal 2007 was up 2.3% on fiscal 2006 to ¥34.1
billion, which represented 8.7% of net sales, 0.7 percentage points
lower than in the previous fiscal year.
For the fiscal year ending March 31, 2009 (fiscal 2008) Kyowa Hakko
forecasts a 25.0% increase in net sales, and a 44.7% increase in
operating income, while recurring income and net income are forecast to
grow by 47.4% and 19.3% respectively.
Commenting on the results, Yuzuru Matsuda, President and CEO of Kyowa
Hakko said, "ËœFiscal 2007 was the final year of
our three-year, medium-term business plan during which we sought to
strengthen competitiveness through strategic initiatives to invest
aggressively for future growth and to expand sales of our existing
businesses and implemented broad-ranging cost reductions. We have
significantly exceeded our plan targets for sales and operating income
driven by strong performances in Pharmaceuticals and Bio-Chemicals and
Chemicals.
Today we have also announced details of our new three-year business plan
that details the strategic initiatives that we will pursue and our new
targets for growth in sales and profits following integration with Kirin
Pharma to form Kyowa Hakko Kirin.´
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I. Fiscal 2007 Results
- - - - - -
Results for the fiscal year ended March 31, 2008
- - - - - -
(Billions of Yen)
- - - - - -
FY ended
March 31, 2008
FY ended
March 31, 2007
YOY
Change (%)
- - - - - -
Net sales
392.1
354.2
+10.7%
- - - - - -
Operating income
39.3
30.6
+28.3%
- - - - - -
Recurring income
37.9
30.9
+23.0%
- - - - - -
Net income
23.4
12.6
+84.9%
- - - - - -
Net income per share (¥)
59.03
31.32
+88.5%
- - - - - -
= = = = = = = = = = =
Segmental results for the fiscal year ended March 31, 2008
- - - - - -
Sales
(Billions of Yen)
- - - - - -
FY ended
March 31, 2008
FY ended
March 31, 2007
YOY
Change (%)
- - - - - -
Pharmaceuticals
138.3
131.5
+5.2%
- - - - - -
Bio-Chemicals
86.8
67.1
+29.3%
- - - - - -
Chemicals
108.0
98.6
+9.5%
- - - - - -
Food
43.3
42.5
+1.7%
- - - - - -
Other
48.9
48.4
+1.1%
- - - - - -
= = = = = = = = = = =
Operating Income
(Billions of Yen)
- - - - - -
FY ended
March 31, 2008
FY ended
March 31, 2007
YOY
Change (%)
- - - - - -
Pharmaceuticals
19.9
15.7
+26.8%
- - - - - -
Bio-Chemicals
9.6
4.1
+135.6%
- - - - - -
Chemicals
7.1
7.9
-10.1%
- - - - - -
Food
1.5
1.8
-13.9%
- - - - - -
Other
0.8
0.9
-13.4%
- - - - - -
Segmental Performance
In the Pharmaceuticals business net sales increased 5.2% to ¥138.3
billion, while operating income increased 26.8% to ¥19.9
billion.
Results benefited from higher sales of products such as Allelock
an antiallergic agent, Patanol, an antiallergic ophthalmic
solution, and Depakene, an anti-epileptic agent, despite a
decline in sales of products such as Coniel, a treatment for
hypertension and angina pectoris. The antiepileptic Topina, which
was launched in September 2007, also contributed to the growth in sales.
In the licensing-out of technologies and export of pharmaceutical
products, sales of antiallergic agent Olopatadine hydrochloride that are outlicensed to Alcon, Laboratories, Inc. continued to perform
very well.
In new drug development in Japan, KW-2246, an analgesic for
cancer pain, completed Phase II clinical trials. Kyowa Hakko is also
carrying out Phase II clinical trials on KW-6002, an anti-Parkinson´s
disease treatment, KW-6500, also an anti-Parkinson´s
disease treatment, and KW-7158, a candidate treatment for irritable
bowel syndrome. KW-0761, a therapeutic antibody that utilizes our
Potelligent(R) technology, is in Phase I
clinical trials as a blood cancer treatment, and KW-3357, an agent for
inhibiting blood coagulation, and ARQ 197, an anticancer agent for the
treatment of malignant tumors that was inlicensed from U.S. drug
development company ArQule in April 2007, are also in Phase I clinical
trials. In addition, inflammatory bowel disease agent Asacol
which Kyowa Hakko is jointly developing with Zeria Pharmaceutical Co.
Ltd., has completed Phase II clinical trials and preparations have been
made for application for its approval as a new drug.
Overseas, the U.S. Food and Drug Administration (FDA) informed Kyowa
Hakko in February 2008 that it could not grant approval as of that time
for anti-Parkinson´s disease treatment
KW-6002, for which Kyowa Hakko has applied for approval as a new drug in
the United States. Kyowa Hakko has decided to consider its development
policy for this treatment while proceeding with discussions with the
FDA. In addition, Kyowa Hakko decided in March 2008 to outlicense
KW-0761, which is in Phase I trials as a therapeutic antibody in Europe
to major U.S. biotechnology company Amgen. Furthermore, Phase I clinical
trials are underway in the United States for anti-cancer treatment
KW-2449 and in Europe for anti-cancer treatment for malignant tumors
KW-2478. Meanwhile, in China, application was made in July 2007 for
approval for additional indications for Coniel as a treatment for
angina pectoris, and Phase III clinical trials are underway for Allelock, an antiallergic agent.
In the Bio-Chemicals business, net sales increased 29.3% to ¥86.8
billion, while operating income increased 135.6% to ¥9.6
billion. The major increase in sales was attributable to stronger
overseas demand for raw materials for pharmaceuticals and industrial
use, particularly amino acids, nucleic acids and related compounds, as
well as increased sales in Japan of raw materials for generic
pharmaceuticals. The inclusion of Daiichi Fine Chemical as a
consolidated subsidiary also contributed. In healthcare products, sales
increased from the previous fiscal year, due to steady growth in sales
in overseas markets of amino acids used as dietary supplements and in
mail-order sales in Japan of the Remake series, although Kyowa
Hakko did not escape the impact of sluggish growth in the Japanese
health food industry.
In the Chemicals business, net sales increased 9.5% to ¥108.0
billion, while operating income decreased 10.1% to ¥7.1
billion. In Japan, firm demand from the car industry and others
underpinned a slight increase in shipment volumes, while core product
prices were revised against a background of higher raw materials and
fuel prices accompanying continued high crude oil and naphtha prices
leading to a large increase in sales compared to last fiscal year.
Export shipment volumes were lower, despite prices trending higher in
overseas markets, as production of certain products declined due to
difficulties at production facilities, and export sales also declined
slightly. By product category, sales volumes of high-purity solvents
increased, driven by sales to the electronics materials industry. Sales
in Japan and overseas of specialty chemicals products were slightly
higher than in the previous fiscal year, supported by steady growth in
core refrigerant oil raw materials.
In the Food business, sales increased 1.7% to ¥43.3
billion, while operating income decreased 13.9% to ¥1.5
billion. In seasonings, sales of natural seasonings were broadly in line
with the previous fiscal year, supported by expanding sales of fermented
seasonings and despite sluggish sales of extract seasonings amidst a
difficult environment of sharply rising prices of raw materials and
other factors. Increased demand for Umami seasonings also
contributed to higher sales.
In bakery products and ingredients, sales were higher than in the
previous year supported by sales of products such as core yeasts and
flavor enhancers and despite the suspension of sales of certain products
due to factors such as the rapidly increasing prices of raw materials.
Processed foods also contributed to growth in sales, partly due to an
increase in sales of OEM products.
In the Other business segment, sales increased 1.1% to ¥48.9
billion, while operating income decreased 13.4% to ¥0.8
billion.
= = = = = = = = = = =
II. Forecasts for the fiscal year ending March 31, 2009(a)
- - - - - -
Billions of Yen
%
- - - - - -
FORECAST
Fiscal year ending March 31, 2009
Change compared to the previous fiscal year
- - - - - -
Net sales
490.0
+25.0%
- - - - - -
Operating income
57.0
+44.7%
- - - - - -
Recurring income
56.0
+47.4%
- - - - - -
Net income
28.0
+19.3%
- - - - - -
Net income per share (¥)
48.72
-17.5%
- - - - - -
These forecasts assume average exchange rates for fiscal 2008 of ¥110/US$
and ¥160/euro.
- - - - - -
In fiscal 2008, we expect large increases in sales and profits, mainly
due to integration with Kirin Pharma. Our forecasts for operating
income, recurring income and net income reflect a ¥ 9.5 billion expense for the amortization of goodwill. The forecast
dividend for fiscal 2008 is ¥20 per share (¥10
interim dividend, ¥10 final dividend).
In the Pharmaceuticals business, despite the challenging environment
resulting from reductions in prescription pharmaceuticals prices that
were implemented in April we are forecasting that fiscal 2008 net sales
and operating income will each increase significantly, as a result of
factors such as Kyowa Hakko´s integration with
Kirin Pharma. Furthermore, we expect revenues due to benefit from growth
in sales of core products Allelock and Patanol, the
commencement of sales of Coversyl, an ACE inhibitor for treatment
of hypertension in-licensed from Daiichi Sankyo, and a one-off contract
payment for the outlicensing of KW-0761 to Amgen, although we expect
sales of Durotep, an analgesic for persistent cancer pain, to
decline due to the completion of the term of a joint sales contract.
In the Bio-Chemicals business, we are forecasting an increase in sales
due to expected growth in the health care domain, particularly in amino
acids, for which we are pursuing an active sales expansion strategy, and
in mail-order sales of the Remake Series. However, we are
forecasting a slight decrease in operating income, as we expect an
increase in SG&A expenses such as R&D expenses and amortization of
goodwill. In the Chemicals business, we are forecasting an increase in
sales, as we expect product prices to remain high against the backdrop
of high prices for raw materials and fuel. However, we are forecasting a
decrease in operating income, due partly to an expected increase in
depreciation expenses. In the Food business, we are forecasting an
increase in sales volumes of natural seasonings for the prepared food
and restaurant markets, but we expect sales to be almost the same level
as last fiscal year, partly as a result of a revision in the items we
sell, and we expect operating income to decrease, partly due to
amortization of goodwill.
(a) The above forecasts are based on
information available and assumptions made at the time of release of
this document about a number of uncertain factors that can affect
results in the future. It is possible that actual results are materially
different for a wide variety of reasons.
For further information please access: http://ir.kyowa.co.jp/english/index.cfm
This document is an English translation of parts 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.
