Kobayashi Pharmaceutical (4967) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 net sales declined 10.6% year-over-year to 32.6 billion yen, with operating income down 49.6% and EBITDA down 30.8% to 4.7 billion yen.

• Extraordinary loss of 0.7 billion yen recorded due to the recall of red yeast rice/benikoji-related products.

• Net income rose 66.5% year-over-year to 1.6 billion yen, reflecting lower advertising and extraordinary losses.

• Domestic business net sales fell 12.9% and international business net sales dropped 5.1% year-over-year.

• Major management and governance reforms underway following the recall, including new CEO appointment and board restructuring.

Financial highlights

• Gross profit margin decreased from 57.4% to 51.2% year-over-year.

• Operating income margin fell from 13.8% to 7.8%; ordinary income margin dropped from 15.0% to 7.4%.

• Advertising expenses reduced by 68.1% year-over-year, supporting net income despite lower sales.

• Domestic business operating income margin declined from 14.7% to 11.2%.

• International business operating income fell to zero, with margin dropping from 10.4%.

Outlook and guidance

• FY2025 net sales forecast at 171.0 billion yen (+3.3%), operating income at 14.0 billion yen (-43.7%), and net income at 10.5 billion yen (+4.3%).

• Dividend forecast: 104 yen per share (44 yen interim, 60 yen year-end), up from 102 yen in FY2024.

• Advertising to resume for select products from May 2025.

• Domestic business sales expected to remain flat; international business sales forecast to rise 11.8%.

• EPS projected at 141.25 yen (+4.3%); ROE at 5.0%.