financial overview for the fiscal year ended - … · financial overview for the fiscal year ended...

Financial Overview for the Fiscal Year Ended

December 31, 2016

February 2, 2017

Akihiro Kobayashi

President & Chief Operating Officer

Kobayashi Pharmaceutical Co., Ltd.

Table of Contents

Consolidated Results for the Fiscal Year Ended December 31, 2016

Forecast for Year Ending December 2017

Return to Shareholders

The Company’s Efforts in the Future

1/34

Consolidated Results for the Fiscal Year Ended

December 31, 2016

Amount

(million yen)

Margin

(%)

Amount

(million yen)

Percentage

(%)

Amount

(million yen)

Percentage

(%)

Amount

(million yen)

Percentage

(%)

Net sales 120,051 ー △17,159 87.5% 7,595 106.8% 2,751 102.3%

Operating

income17,409 14.5% △850 95.3% 186 101.1% 509 103.0%

Ordinary

income19,499 16.2% 1,550 108.6% 2,409 114.1% 699 103.7%

Net income 14,321 11.9% 855 106.4% 1,559 112.2% 821 106.1%

Changes from

published

forecasts*

FY2016Domestic firms: Apr.-Dec. 2016

Overseas firms: Jan.- Dec. 2016

Changes from previous

fiscal year

Domestic firms: Apr. 2015-Mar. 2016

Overseas firms: Jan.- Dec. 2015

Changes from same

period of previous year

Domestic firms: Apr.-Dec. 2015

Overseas firms: Jan.-Dec. 2015

Consolidated Results for the Fiscal Year Ended

December 31, 2016

Achieved significant year-on-year growth in both revenue and income

* Published May 9, 2016

3/34

Net income

143

0

50

100

150

Mar.'98 Dec.'16

(100 million yen)

The Company has achieved growth in net income for 19 consecutive years, although the

consolidated operating results for the current fiscal year cover nine months due to the change in

accounting period.

Listed on the

Tokyo Stock

Exchange in

Aug.’00

Posted record

net income

Listed on the

Osaka

Securities

Exchange in

Apr.’99

4/34

Highlights of Consolidated Results [Net Sales]

(1) Strong sales of new products (+4.6)

(2) Increased sales of existing products (+1.5)

(3) Increase in inbound demand (+1.1)

(4) Growth in mail order business (+1.0)

(5) Fewer returns at Kiribai Chemical (+1.0)

Incre

ase

De

cre

ase

(1) Decreased revenues for overseas business

(-1.2)

(Local currency basis: +1.2)

(Currency exchange impact due to yen

appreciation: -2.4)

(2) Other (-0.4)

<Increases/decreases in net sales

(change from the same period of the previous year)>

Year-on-

year change

106.8%

(Unit: billion yen)

•The actual figures for the same period of the previous year (FY ended Mar. 2016) were calculated as nine months

(Apr.–Dec. 2015) for Japan + 12 months (Jan.–Dec. 2015) for overseas firms.

5/34

172 174

+54

+16

△1

+4

△13

△42 △2 △5 △6 △1

+1

△3

100

140

180

220

Op

erat

ing

inco

me

for

FY 2

015

Sale

s in

crea

se

Co

st r

edu

ctio

n

Pri

ce in

crea

se

Loss

on

dis

po

sab

leo

f in

ven

tory

Oth

er c

ost

s

Ad

vert

isin

g ex

pe

nse

s

Pro

mo

tio

n e

xpen

ses

Pe

rso

nn

el e

xpe

nse

s

Co

mm

issi

on

fee

s

R&

D e

xpen

ses

Co

mm

un

icat

ion

exp

ense

s

Oth

er e

xpen

ses

Op

erat

ing

inco

me

for

FY 2

016

・・・Factor for increase・・・Factor for decrease

Same period year–on-year

change

101.1％

Production costs SGA expenses

Assisted growth by actively investing in advertisements and secured an increase in income.

<Subject period>Domestic：Apr.-Dec. 2015Overseas：Jan.-Dec. 2015

*Cu

rren

cy e

xch

ange

imp

act

Highlights of Consolidate Results

[Operating Income]

（100 million yen）

6/34



Segment Results

(1) Figures on the lower line exclude Kiribai Chemical results.

(2) Net sales excluding the impact of the change of fiscal year are 17,599 million yen (92.6% year-on-year).

Sales at stores in Japan and the direct marketing business saw significant

increases, while sales at stores outside Japan ended below last year’s level

due to the warm winter and the strong yen.

Amount

(million yen)

Year-on-

year change

(%)

Amount

(million yen)

Year-on-

year change

(%)

Amount

(million yen)

Year-on-

year change

(%)

92,955 109.6%

85,498 109.1%

16,456 105.7%

15,886 102.7%

Net sales

Operating

income

Direct Marketing BusinessSales at stores in Japan

and Kiribai Chemical

Domestic Consumer

Products Business

61.2%

Operating

income for the

same period of

the previous

year

34

706

18,026 93.4% 7,159 115.9%

△287

Overseas Consumer

Products Business

(1)

(1)

(2)

7/34

* The actual figures for the same period of the previous year (FY ended Mar. 2016) were calculated as

nine months (Apr.–Dec. 2015) for Japan + 12 months (Jan.–Dec. 2015) for overseas firms.

Domestic Consumer Products Business

(Sales at stores in Japan and Kiribai Chemical)

848 930

0

300

600

900

1200

Dec. '12 Dec. '13 Dec. '14 Dec. '15 Dec. '16

156

165

18.3 17.7

0

10

20

30

40

50

0

50

100

150

200

250


Operating income

Operating margin

<Net Sales> <Operating Income>(100 million yen) (%)(100 million yen)

Performance of Domestic Business

Net sales : 93.0 billion yen (109.6% year-on-year)

Operating income: 16.5 billion yen (105.7% year-on-year)

9/34

＊The actual figures for the same period of each year were calculated as nine months(Apr.-Dec.)for Japan + twelve months(Jan.-Dec.)for overseas

Sales by Business CategoryAll categories saw significant growth due to strong sales of new and

existing products and inbound demand.

FY ended Dec.

2016

Amount

(million yen)

Amount

(million yen)

Difference

(million yen)

Year-on-year change

(%)

Healthcare

products 42,237 37,415 4,822 112.9%

Household

products 41,045 39,335 1,710 104.3%

Skin care products 4,181 3,430 751 121.9%

Body warmers 5,490 4,646 844 118.1%

Total 92,955 84,827 8,127 109.6%

Same period of the previous year

10/34



823

3015

15

0

10

20

30

40

50

Mar. ’15 Mar. ’16 Dec. ’16

(100 million yen)

<Estimated inbound demand>

23 33(Apr.-Dec.)

Supplements Household products

Pharmaceuticals

Inbound DemandPurchase items and purchase places have increased, with inbound demand in the

fiscal year ended Dec. 2016 of 4.5 billion yen(* Nine-month period).

4345(Apr.-Dec.)

“Twelve Supreme Drugs You Must Buy When You Visit Japan”

Source: Sofu (Chinese social media) (Oct. 17, 2014)

(Nine-month accounting period)

10

10 Apr.-Sep.

Oct.-Dec.

Apr.-Sep.

Oct.-Dec.

Jan.-Mar.

Apr.-Sep.

Oct.- Mar.

11/34

Overseas Consumer Products Business

153

189 176

11.9%

13.8%12.1%

0%

5%

10%

15%

20%

0

50

100

150

200

Mar. '13 Mar. '14 Mar. '15 Mar. '16 Dec. '16

Net sales

Overseas sales ratio

<Overseas net sales and overseas sales ratio>(100 million yen)

Performance of Overseas Business

Net sales decreased from the previous fiscal year due to the warm winter and the

strong yen. The overseas sales ratio declined to 12.1%.

Net sales : 17.6 billion yen (92.6%year-on-year)

Operating income: 0.7 billion yen (61.2%year-on-year)

* Net sales for the period under review (Dec. ’16) have been adjusted for the impact of the fiscal year change.

13/34

Sales Portfolio of the Overseas Business

<Core products by region>

U.S. : Body warmers

South East Asia: Netsusama Sheet,

Anmeltz

China : Body warmers,

Netsusama Sheet

While sales of body warmers were sluggish in the U.S. due to the warm

winter, sales of Netsusama Sheet increased in South East Asia.

45%

39%

19%

23%

26%

28%

6%

6%

4%

4%

Dec. ’15

Dec. '16

<Sales portfolio by region>

U.S. South East Asia China and Hong Kong U.K. Others

57%

50%

20%

21%

10%

12%

13%

17%

Dec. ’15

Dec. '16

<Sales portfolio by product>

Body warmers Netsusama Sheet cooling gel Anmeltz Other

* Both the period under review (Dec. ’16) and the previous year’s period (Mar. ’16) are

calculated for a 12-month period (Jan.–Dec.).

14/34

Direct Marketing Business

76 79 66 62

72

0

20

40

60

80

100


(100 million yen)

Performance of the Direct Marketing Business

Year-on-year

114%

<Net sales>

Net sales showed a V-shape recovery due to an increase in the number of customers

supported by the Company’s strategic advertising investment.

Although the Company posted an operating loss, it will try to turn the business around

by increasing the number of regular customers.

Net sales : 7.2 billion yen (115.9% year-on-year)

Operating loss: 0.3 billion yen (operating income of 0.03 billion yen in the previous

year)

<Supplements>

<Skin care>

16/34

Year-on-year

122%

Growth Drivers

2015

Apr.-Mar.

Year-on-

year

change

Consolidated net

sales1,372 106.9%

Inbound demand 43 187.0%

Consolidated net

sales excluding

inbound demand1,329 105.4%

Growth Excluding Inbound Demand

<Growth rate excluding inbound demand *Year-on-year change>

2016

Apr.-Dec.

Year-on-

year

change

1,200 106.8%

45 134.9%

1,156 105.9%

Even if inbound demand is excluded, the Company’s consolidated sales increased

from the preceding years in FY2015 and FY2016.

The development of new products and growth of four businesses (overseas, direct

marketing, skin care, and Kampo) contributed to robust business performance.

(Unit: 100 million yen)

* The actual figures for the same period of the previous year (Apr.-Dec. 2015) and the current year (Apr.-Dec. 2016) were

calculated as nine months (Apr.–Dec.) for Japan + 12months (Jan.–Dec.) for overseas firms.

18/34

Contribution Ratio of New Products

(Excluding Direct Marketing Business)

The four-year contribution ratio has gradually risen thanks to the Company’s efforts to

develop new products.

The initial-year contribution ratio has been on the decline due to sharp growth in the

sales of existing products.

(%)

5.5 7.9 7.5 8.1

7.1 6.8

15.4

18.0 16.9

19.6 20.2

22.8

0

10

20

30

Mar. '12 Mar. '13 Mar. '14 Mar. '15 Mar. '16 Dec. '16(nine-month accounting period)

Red : Four-year contribution ratio

Blue: Initial-year contribution ratio

19/34

Four Growth Businesses (Overseas, Direct Marketing, Skin Care, and Kampo)

Actual results

in FY2013

(12 months)

Actual results

in FY2016

(12 months)

Comparison to FY2013

Difference Growth ratio

Overseas 124 180 ＋56 145.2%

Direct marketing 107 95 ▲12 88.8%

Skin care 36 54 ＋18 150.0%

Kampo 87 111 ＋24 127.6%

Total of the four growth

businesses354 440 86 124.3%

Sales of the four businesses grew by 124.3% compared to those in FY2013 (3 years ago).

Under the medium-management plan, the Company aims to boost sales of the four

growth businesses.

<Reference>

<Net sales of the four businesses>

Consolidated net sales127,200

million yen

144,800

million yen

＋17,600

million yen113.8%

(Unit: 100 million yen)

20/34

Forecast for Year Ending December 2017

Highlights of Forecasts of Consolidated

Results

Amount

(million yen)

Margin

(%)

Amount

(million yen)

Percentage

(%)

Amount

(million yen)

Percentage

(%)

Net sales 150,000 - 120,051 124.9% 144,806 103.6%

Operating

income20,000 13.3% 17,409 114.9% 18,446 108.4%

Ordinary

income21,000 14.0% 19,499 107.7% 20,359 103.1%

Net income 15,100 10.1% 14,321 105.4% 15,025 100.5%

FY ending Dec.

2017[Domestic and overseas firms:

Jan.-Dec. 2017]

FY ended Dec. 2016　

[Domestic firms: Apr.-Dec. 2016]

[Overseas firms: Jan.-Dec. 2016]

Year-on-year

change[Domestic and overseas firms:

Jan.-Dec. 2016]

22/34

In the FY ending December 2017, the Company will aim to achieve an

increase in profits for 20 consecutive years.

45 48

52

0

10

20

30

40

0

10

20

30

40

50

60

Mar. '99 Mar. '16Dec. '16

Dividend amount

Dividend payout ratio

(%)(Yen)


(Changes in Dividend Payment)

29.0%

Interim dividend :25 yen (to be paid in Dec. 2016)

Year-end dividend:27 yen (to be paid in Mar. 2017)

The Company increased the year-end dividend to 27 yen per share, up 3 yen

from 24 yen, achieving an increase in dividend payment for 18 consecutive

terms.

24/34

The Company’s Efforts in the Future

Outline of the New Medium-Term

Management Plan

FY2019 targets*1 FY2016 results*2 Comparison to

FY2016

Net sales 165.0billion yen 144.8billion yen 114%

Operating income 23.0billion yen 18.4billion yen 124%

Net income 17.0billion yen 15.0billion yen 113%

ROE 10% 10% 100%

<Consolidated numerical targets>

*1: Numerical targets are the minimum target, and the Company will aim for a higher level.

*2: FY2016 results are the sum of January to December 2016.

<Future goals>

Theme: “Growth with real strength”To further improve the ability of new product development and

cultivation, achieve “growth with real strength,” and become the No.

1 company in new market creation that can solve customers’

problems The figures are changed from those released in the

announcement of the medium-term management

plan (on November 1, 2016), since the actual

results for April to December 2016 were fixed.

26/34

<Outline of strategies>

3. Development and cultivation of new market

creator products

4. A company where employees can feel growth

2. Investing in growth for the future

1. Promote the four growth businesses

(overseas, direct marketing, skin care, and Kampo)

27/34Outline of the New Medium-Term

Management Plan

Outline of Strategies:

Promote the Four Growth Businesses

Overseas businessFY2019

target amount

Strengthen the OTC drug business mainly in North America

and China.

27.0 billion

yen

Direct marketing businessFY2019

target amount

Develop large-scale new products that would lead to new

customer acquisition.

12.0 billion

yen

Skin care businessFY2019

target amount

Create a brand that would become the third pillar after

Keshimin and Eau de Muge9.0 billion yen

Kampo businessFY2019

target amount

Continue to pursue the development of products that are

easier for customers to choose depending on their

constitution and symptoms

12.5 billion

yen

28/34

<Inbound demand>Increasing the number of items and shops

Four Growth Businesses

(Overseas Business)

The Company will promptly feed information on inbound demand in Japan back to cross-border

electronic commerce (EC) and sales in local markets.

The Company will aim to acquire a license to manufacture and market pharmaceuticals in China.

<Cross-border EC>Promoting the sales of cosmetics and health foods as a platform.

Sales have been gradually expanding, supported by steady sales of

Keshimin Cream, etc.

<Sales in local markets>Hong Kong : Began marketing Ninocure in

April 2016 and Senacure in

September 2016

South Korea: Began marketing Eyebon in

April 2016

29/34

Four Growth Businesses (Kampo Business)

Hefei Kobayashi Pharmaceutical Co., Ltd. began

full-scale production in January 2017and began

full-fledged in-house development of extracts.

漢方処方

清肺湯(せいはいとう)

Development under

an easy-to-understand

concept

The Company will continue the development of new products under an easy-to-

understand concept.

Makino Botanical Garden Hefei Kobayashi Pharmaceutical Co., Ltd.

The Company will aim to develop new products using

Makino Botanical Garden’s resources and

Kobayashi’s development know-how.

30/34

Create a

new market

Create

sales

boosters

Cultivation productsNew priority

products

Products with market potential

Corporate-

wide

cultivation

First

arrow

Second

arrow

Third

arrowSales R&D

MarketingProduction

Development and Cultivation of New Market

Creator Products

The Company has been making corporate-wide efforts to develop and

cultivate new products that can survive in the market after five to 10 years

from their launch and contribute to its profits.

31/34

1,069

929

15.4%18.0%

16.9%

19.6% 20.2%22.8%

5.5%7.9% 7.5% 8.1% 7.1% 6.8%

0%

5%

10%

15%

20%

25%

30%

35%

0

300

600

900

1200

Mar. '12 Mar. '13 Mar. '14 Mar. '15 Mar. '16 Dec. '16

The four-year contribution ratio has risen thanks to the Company’s efforts to develop

and cultivate new products that can survive in the market, although the initial-year

contribution ratio of new products has been on the decline.

The Company plans to develop and cultivate two or more new products every six

months and have them gain a foothold in the market.

Development and Cultivation of New Market

Creator Products

(Nine-month

accounting period)

<Net sales of the Domestic Consumer Products Business and new

product contribution rate>

Red : Four-year contribution ratio

Blue: Initial-year contribution ratio

(100 million yen)

32/34

Actively Invest for Future Growth

Investment: marketing expense+ capital expenditure + R&D expenseNet income

12.4 billion yen

Net sales

128.3 billion

yen

Investment

29.5 billion

yen

Investment

34.9 billion

yen

Net income

13.4 billion yen

Net sales

137.2 billion

yen

ROE

9.4%

ROE

9.6%

Investment

32.3 billion

yen

Net income

14.3 billion yen

Net sales

120.0

billion yenROE

10.0%

ROE

10.0%

or more

Net income

17.0 billion yen

Net sales

165.0

billion yen

Investment

47.0 billion

yen

March 2015

March 2016

December 2016(Nine-month accounting period)

December 2019

33/34

1,273 1,423

1,650

1,000

1,500

2,000

2,500

2013 2016 2019 20222011–2013

(94th–96th Terms)2014–2016

(97th–99th Terms)2017–2019

(100th–102nd Terms)2020–2022

(103rd–105th Terms)

Take on challenges for

new growth• Cultivate new

growth businesses.

• Implement large M&As.

Perform and

achieve

results

Growth with real

strength• Improve the ability of new

product development and

cultivation.

• Promote the four growth

businesses.

• Aggressively invest in

future growth.

(M&A, R&D)

New market

creation

Ahead of “Growth with Real Strength”

By achieving

“growth with real

strength” in 2017–

2019, generate

“new growth” in

2020–2022.

(100 million yen)

34/34

<Attention>

Of the Company’s current business performance, plans, and strategies that are

included in this material, those that are not historical facts are an outlook on

future performance, and are based on the judgment of the Company’s

management that have been obtained from currently available information.

Therefore, please be aware that the actual performance may differ significantly

from the future outlook described in this material due to changes in various

factors.

financial overview for the fiscal year ended - … · financial overview for the fiscal year ended...

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