Kobayashi Pharmaceutical (4967) Q2 2025 earnings summary

Executive summary

• Net sales for the first half of FY2025 declined 5.6% year-over-year to ¥69.0 billion, with operating income down 29.8% to ¥6.6 billion and net income up 120.5% to ¥3.1 billion due to a low prior-year base and lower extraordinary losses.

• The company faced significant challenges from a red yeast rice (benikoji) product recall, advertising suspension, and direct marketing contraction, but inbound tourism and new products provided some offset.

• International sales fell 6.2% year-over-year, with strong U.S. performance offset by declines in China and Southeast Asia.

• Extraordinary losses related to product recall totaled about ¥2.9 billion in the first half.

Financial highlights

• Gross profit margin for H1 FY2025 was 52.4%, down from 55.7% the previous year.

• EBITDA for H1 FY2025 was ¥10.9 billion, down 17.8% year-over-year.

• Domestic business net sales fell 5.4% to ¥51.7–53.7 billion; international business net sales fell 6.2–6.4% to ¥17.0–17.8 billion.

• Operating income in domestic business dropped 16.2–16.3% to ¥8.1 billion; international business posted a loss of ¥1.4–1.5 billion.

• Cash and cash equivalents increased by ¥1,058 million to ¥47,032 million as of June 30, 2025.

Outlook and guidance

• Full-year FY2025 guidance is unchanged: net sales ¥171.0 billion (+3.3%), operating income ¥14.0 billion (-43.7%), net income ¥10.5 billion (+4.3%).

• Earnings per share for the full year is projected at ¥141.25.

• Dividend forecast is ¥104 per share.

• Risks to H2 include delayed advertising resumption, weak China sales, and further recall-related costs.