Kobayashi Pharmaceutical (4967) Q3 2024 earnings summary

Executive summary

• Net sales declined 3.9% year-over-year to ¥114,459 million for the nine months ended September 30, 2024, with operating income down 12.4% and net income plunging 65.5% due to extraordinary losses from the red yeast rice (Benikoji CholesteHelp) recall.

• Extraordinary loss of ¥9,947 million was recorded for recall-related losses, severely impacting profitability.

• Management restructuring and a comprehensive compensation program were implemented in response to health damage caused by red yeast rice products.

• Economic recovery and increased inbound tourism supported some product categories, but higher raw material costs and uncertain business conditions persisted.

Financial highlights

• Gross profit for Jan–Jun 2024 was ¥40.7 billion (down 4.1% year-over-year), with a margin of 55.7%.

• Operating income for the period was ¥16,976 million (down 12.4%), and EBITDA was ¥13.3 billion (up 1.0%).

• Net income attributable to owners of the parent was ¥5,344 million, a 65.5% decrease year-over-year, reflecting the extraordinary loss.

• Domestic business net sales fell 8.7% to ¥86,390 million, while international business net sales rose 7.8% to ¥31,926 million.

• Advertising expenses were reduced by 44.2% year-over-year.

Outlook and guidance

• Full-year net sales forecast revised to ¥169,000 million (down 2.6%), with operating income projected at ¥24,000 million (down 6.9%) and net income at ¥10,700 million (down 47.4%).

• Extraordinary loss for FY2024 is estimated at ¥9,947 million, already recorded; further losses may be posted if additional costs arise.

• EPS is projected at ¥143.94, and ROE at 5.7%.

• Dividend forecast is ¥102 per share.