kazumasa kobayashi president & ceo kobayashi
TRANSCRIPT
May 17, 2002May 17, 2002
Fiscal Year Ended March 31, 2002Fiscal Year Ended March 31, 2002
Information MeetingInformation Meeting
KazumasaKazumasa KobayashiKobayashiPresident & CEOPresident & CEOKobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd.
Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 2
Consolidated Financial Consolidated Financial Results for Fiscal 2002Results for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 3
OverviewOverviewll Acquisition of Acquisition of Kiribai Kiribai ChemicalChemicalll Acquisition of goodwill from Chugai PharmaceuticalAcquisition of goodwill from Chugai Pharmaceuticalll Liquidation of Aquarius Medical (scheduled for July) Liquidation of Aquarius Medical (scheduled for July) ll Sale of shares of Nisshin Sale of shares of Nisshin Insatsu Insatsu ShikiShikill Sale of shares of KobayashiSale of shares of Kobayashi Sofamor Danek Sofamor Danek ll Kensho Kensho became a subsidiary of Kobayashi; became a subsidiary of Kobayashi;
Partnership with OTC drug wholesalers in the Partnership with OTC drug wholesalers in the Shikoku region Shikoku region
ll Reduction of the effective tax rate (48% Reduction of the effective tax rate (48% ⇒⇒ 44%)44%)ll Competitive advantages achieved for deodorizing Competitive advantages achieved for deodorizing
air fresheners, air fresheners, NetsusamaNetsusama Sheet, Sheet, EyebonEyebon, , SarasartySarasarty, , and Breath Careand Breath Care
ll Strong sales of nutritional supplement food products Strong sales of nutritional supplement food products ((¥¥3.4 billion through direct marketing and 3.4 billion through direct marketing and ¥¥1.1 billion 1.1 billion through sales at drugstores) through sales at drugstores)
Kobayashi Pharmaceutical Co., Ltd. 4
Financial highlightsFinancial highlights
ChangeChangeAmountAmountRatioRatioAmountAmountRatioRatioAmountAmount
9.69.620.320.3--232.6232.6--212.3212.3EPS (yen)EPS (yen)
9.69.65765763.23.26,5956,5953.33.36,0196,019Net incomeNet income
△△5.15.1△△6556555.95.912,10312,1036.96.912,75812,758Ordinary Ordinary incomeincome
△△1.31.3△△1771776.76.713,62913,6297.47.413,80713,807Operating Operating incomeincome
%%
10.610.6¥¥ millionmillion
19,64619,646%%
--
¥¥ millionmillion
204,647204,647%%
--
¥¥ millionmillion
185,001185,001Net salesNet sales
DifferenceDifference2002200220012001
ConsolidatedConsolidated
Kobayashi Pharmaceutical Co., Ltd. 5
Net salesNet sales
156 ,062166 ,585
180 ,731 185 ,001
204 ,647
0
50 , 000
100 , 000
150 , 000
200 , 000
250 , 000
1998 1999 2000 2001 2002
ConsolidatedConsolidated
¥¥ millionmillion
+6.7%+6.7+6.7%%+8.5%+8.5+8.5%% +2.4%+2.4+2.4%%
+10.6%+10.6+10.6%%
6
1,695
2,904
4,822
6,0196,595
97.4
166.9 170.8
212.3232.6
0
2 , 000
4 , 000
6 , 000
8 , 000
10 , 000
1998 1999 2000 2001 2002
0
50
100
150
200
250
300Net income EPS
ConsolidatedConsolidatedNet income and EPSNet income and EPS
+71.3%+71.3%+71.3%
+66.0%+66.0%+66.0%+24.8%+24.8%+24.8%
+9.6%+9.6%+9.6%
+71.3%+71.3%+71.3% +2.3%+2.3%+2.3%
+24.3%+24.3%+24.3%+9.6%+9.6%+9.6%
1.5 million shares issued
¥¥ millionmillion
1:1.5stock split
Kobayashi Pharmaceutical Co., Ltd. 7
Sales by operationSales by operation ConsolidatedConsolidated
12,65315,490
107,485
76,934
12,63119,931
84,005
117,218
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
ConsumerProducts
Wholesale MedicalDevices
Other
¥ million 2000 2001 2002
+9.2%+9.2%+9.2%
+9.1%+9.1+9.1%%
+28.7%+28.7+28.7%% -¥22 million--¥¥22 22 millionmillion
KiribaiKiribai KenshoKensho
Kobayashi Pharmaceutical Co., Ltd. 8
Operating income by operationOperating income by operationConsolidatedConsolidated
12,764
499 259 82
13,397
440 -14
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
ConsumerProducts
Wholesale Medica lDev ices
Other
¥ million 2000 2001 2002+5.0%+5.0+5.0%%
-¥557 million--¥¥557 557 millionmillion-¥96 million--¥¥96 96 millionmillion
KiribaiKiribai
-58
+69.9%+69.9+69.9%%
Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 9
Consumer Products Consumer Products Operation Operation
for Fiscal 2002for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 10
Contribution of new productsContribution of new products
2728
36 34
28
14.2 12.5 15.2 10.7 13.0
40.343.3
44.7
39.9 35.9
0
5
10
15
20
25
30
35
40
45
50
1998 1999 2000 2001 2002
Item
0
5
10
15
20
25
30
35
40
45
50
%No. of new products First year 4 years
NonNon--consolidatedconsolidated
Kobayashi Pharmaceutical Co., Ltd. 11
Nutritional supplement food Nutritional supplement food products: Sales and No. of itemsproducts: Sales and No. of items
1,413
2,528 3,377
1,169
0
2,000
4,000
6,000
2000 2001 2002
¥million
Storefront salesDirect sales
0
2 0
4 0
6 0
8 0
2000 2001 2002
No. ofitems
+79.8%+79.8%+79.8%
+78.9%+78.9%+78.9%
4,5444,544
3838
5252
6464
2626
Storefront sales
Kobayashi Pharmaceutical Co., Ltd. 12
Decline in prices stoppedDecline in prices stopped
278
268
282
260
265
270
275
280
285
290
00/4
00/5
00/6
00/7
00/8
00/9
00/10
00/11
00/12
01/1
01/2
01/3
01/4
01/5
01/6
01/7
01/8
01/9
01/10
01/11
01/12
02/1
02/2
02/3
YenToilet no Shoshugen
269
284
Kobayashi Pharmaceutical Co., Ltd. 13
1 ,064
872
800
850
900
950
1,000
1,050
1,100
00/4
00/5
00/6
00/7
00/8
00/9
00/10
00/11
00/12
01/1
01/2
01/3
01/4
01/5
01/6
01/7
01/8
01/9
01/10
01/11
01/12
02/1
02/2
02/3
Yen
Decline in prices stoppedDecline in prices stoppedEyebon Eyebon large bottlelarge bottle
890
902
932
882
Kobayashi Pharmaceutical Co., Ltd. 14
Decline in prices stoppedDecline in prices stopped
679
478
460
400
450
500
550
600
650
700
00/4
00/5
00/6
00/7
00/8
00/9
00/10
00/11
00/12
01/1
01/2
01/3
01/4
01/5
01/6
01/7
01/8
01/9
01/10
01/11
01/12
02/1
02/2
02/3
Yen
Netsusama Netsusama SheetSheet for adults for adults 12 + 4 sheets12 + 4 sheets
490
532
561
Kobayashi Pharmaceutical Co., Ltd. 15
Sales by product categorySales by product category
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Body warmers
Nutritional supplementfood products
Household sundries
Deodorizing airfresheners
Sanitary products
Oral hygiene products
Pharmaceuticals2002 2001
ConsolidatedConsolidated
¥¥ millionmillion
+10.8%+10.8+10.8%%
+9.4%+9.4+9.4%%
-7.3%--7.37.3%%
-10.1%--10.110.1%%
+79.7%+79.7+79.7%%
+¥7.2 billion++¥¥7.2 7.2 billionbillion
-10.9%--10.910.9%%
Kobayashi Pharmaceutical Co., Ltd. 16
Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥3 billion or more3 billion or more
0 3,000 6,000 9,000 12,000
Toilet noShoshugen
Eyebon
Netsusama Sheet
Breath Care
Sawaday
Sarasarty
Bluelet
2001
2002
¥¥ millionmillion
NonNon--consolidatedconsolidated
101.0%101.0101.0%%
132.9%132.9132.9%%
114.4%114.4114.4%%
109.2%109.2109.2%%
101.5%101.5101.5%%
* Shipment base
100.0%100.0100.0%%
81.7%81.781.7%%
Kobayashi Pharmaceutical Co., Ltd. 17
0 2,000 4,000 6,000 8,000 10,000
Mukokukan
Tafudent
Nodonuuru
Anmerushin
Anmerutsu
OheyanoShoshugen
ToiletSonoatoni
2001
2002
¥¥ millionmillion
NonNon--consolidatedconsolidated
102.3%102.3102.3%%
* Shipment base
Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥1.5 billion to 1.5 billion to ¥¥3 billion3 billion
100.4%100.4100.4%%
70.5%70.570.5%%
95.3%95.395.3%%
93.3%93.393.3%%
91.7%91.791.7%%
94.4%94.494.4%%
Kobayashi Pharmaceutical Co., Ltd. 18
0 2,000 4,000 6,000 8,000 10,000
Itoyoji
Feminina
Partialden t
Kimco
Tafugrip
Bikokukan2001
2002
¥¥ millionmillion
NonNon--consolidatedconsolidated
105.8%105.8105.8%%
109.0%109.0109.0%%
110.2%110.2110.2%%
* Shipment base
Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥1 billion to 1 billion to ¥¥1.5 billion1.5 billion
83.7%83.783.7%%
94.3%94.394.3%%
Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 19
Wholesale Operation Wholesale Operation for Fiscal 2002for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 20
To become an OTC drug wholesaler To become an OTC drug wholesaler with sales of with sales of ¥¥300 billion300 billion
Expansion of geographical Expansion of geographical coverage through coverage through acquisition of regional acquisition of regional wholesalers (subsidiaries) wholesalers (subsidiaries) and partnerships and partnerships
Kensho Kensho became a became a subsidiary of subsidiary of KobayashiKobayashi25% 25% ⇒⇒ 51%51%
Partnerships with Partnerships with three OTC drug three OTC drug
wholesalers (wholesalers (AstisAstis, , Daiwa Daiwa YakuhinYakuhin, , Kowa YakuhinKowa Yakuhin))
Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 21
Medical Devices Medical Devices Operation Operation
for Fiscal 2002for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 22
ll Enrichment of the product lineEnrichment of the product line--upup Handling of products of 21 manufacturersHandling of products of 21 manufacturers Acquisition of goodwill from Chugai Acquisition of goodwill from Chugai
PharmaceuticalPharmaceutical NGK Spark Plug, Gunze, NGK Spark Plug, Gunze, HomsHoms
ll International operationsInternational operationsRestructuring of operations in the U.S.Restructuring of operations in the U.S.
AquariusAquarius
ll Review of joint venturesReview of joint venturesSale of the equity in Kobayashi Sale of the equity in Kobayashi Sofamor DanekSofamor Danek, ,
a joint venturea joint venture
Expansion of the business baseExpansion of the business base
Kobayashi Pharmaceutical Co., Ltd. 23
Medical Devices OperationMedical Devices Operation
Breakdown of salesBreakdown of salesConsolidatedConsolidated
9,873
4,706
911
11,781
7,132
1,017
0
2 , 0 0 0
4 , 0 0 0
6 , 0 0 0
8 , 0 0 0
1 0 , 0 0 0
1 2 , 0 0 0
KMD Shield Others
¥ m i l l i o n
2000 2001 2002
+19.3%+19.3+19.3%%
+51.6%+51.6+51.6%%
+11.6%+11.6+11.6%%KSD KSD relatedrelated
Kobayashi Pharmaceutical Co., Ltd. 24
219256
-215
346
-253
347
-500
-400
-300
-200
-100
0
100
200
300
400
500
KMD Shield Others
¥ million 2000 2001 2002
Medical Devices OperationMedical Devices Operation
Breakdown of operating incomeBreakdown of operating incomeConsolidatedConsolidated
+58.4%+58.4+58.4%% +35.2%+35.2+35.2%%
-¥38 million--¥¥38 38 millionmillion
Kobayashi Pharmaceutical Co., Ltd. 25
Establishment of a foundationEstablishment of a foundation
Kobayashi International Kobayashi International Scholarship FoundationScholarship Foundation
To sTo support students from Asiaupport students from Asia
Endowment is not subject to taxation on reserves and the effective tax rate was reduced: 48% ⇒ 44%
Endowment: 2 million shares¥500 million cash
Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 26
Forecast for Forecast for Fiscal 2003Fiscal 2003
Kobayashi Pharmaceutical Co., Ltd. 27
Summary of forecastSummary of forecast
ChangeChangeAmountAmountRatioRatioAmountAmountRatioRatioAmountAmount
3.13.17.37.3--239.9239.9--232.6232.6EPS (yen)EPS (yen)
3.13.12052053.23.26,8006,8003.23.26,5956,595Net incomeNet income
3.33.33973975.95.912,50012,5005.95.912,10312,103Ordinary Ordinary incomeincome
10.810.81,4711,4717.27.215,10015,1006.76.713,62913,629Operating Operating incomeincome
%%
2.72.7¥¥ millionmillion
5,4535,453%%
--
¥¥ millionmillion
210,100210,100%%
--
¥¥ millionmillion
204,647204,647Net salesNet sales
DifferenceDifference2003200320022002
ConsolidatedConsolidated
Kobayashi Pharmaceutical Co., Ltd. 28
Forecast of sales by operationForecast of sales by operation
128,100
12,631
19,931
84,200
117,218
12,00015,600
86,900
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
ConsumerProducts
Wholesale MedicalDevices
Other
¥ million 2001 2002 2003 (forecast)
ConsolidatedConsolidated
+3.4%+3.4+3.4%%
+9.3%+9.3+9.3%%
-21.7%--21.721.7%% -5.0%--5.05.0%%
Kobayashi Pharmaceutical Co., Ltd. 29
Forecast of operating income Forecast of operating income by operationby operation
700100-14
440
13,397
-58 200
14,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
ConsumerProducts
Wholesale MedicalDevices
Other
¥ million
2001 2002 2003 (forecast)
ConsolidatedConsolidated
+4.5%+4.5+4.5%%
+¥250 million++¥¥250 250 millionmillion +59.1%+59.1+59.1%% +¥100 million++¥¥100 100 millionmillion
Kobayashi Pharmaceutical Co., Ltd. 30
Consumer Products OperationConsumer Products Operation’’s s policiespoliciesll New product development New product development aiming at a big fish in aiming at a big fish in
small pondssmall pondsReduction in number of new itemsReduction in number of new items
3030--35 35 ⇒⇒ 20 items a year20 items a yearUtilization of development project teamsUtilization of development project teams
ll Beat competitors and achieve larger market shareBeat competitors and achieve larger market shareDeodorizing air freshenersDeodorizing air fresheners 46% 46% ⇒⇒ 49%49%EyebonEyebon 53% 53% ⇒⇒ 5555%%NetsusamaNetsusama SheetSheet 53% 53% ⇒⇒ 55%55%
ll Thorough reduction of manufacturing costs Thorough reduction of manufacturing costs ¥¥1.2 1.2 billionbillion
ll Redeployment of brandsRedeployment of brands
Kobayashi Pharmaceutical Co., Ltd. 31
A new approach to product A new approach to product developmentdevelopment
MarketingMarketing
Technology Technology developmentdevelopment
ResearchResearch
Ad agencyAd agency
Aroma companyAroma company
Alliances with other companiesAlliances with other companies
Design companyDesign company
Launch of Wafuka
etc.etc.Packaging Packaging companycompany
((Development project teams)Development project teams)
Kobayashi Pharmaceutical Co., Ltd. 32
Launch of a creative Launch of a creative development organizationdevelopment organization
Marketing Dept.Marketing Dept.
Ph
armaceu
ticalsP
harm
aceuticals
Oral h
ygien
e O
ral hyg
iene
and
foo
dan
d fo
od
San
itary and
S
anitary an
d
skin care
skin care
Deo
do
rizing
air D
eod
orizin
g air
freshen
ersfresh
eners
Ho
useh
old
H
ou
seho
ld
sun
dries
sun
dries
Creative
Creative
develo
pm
ent
develo
pm
ent
Kobayashi Pharmaceutical Co., Ltd. 33
Strengthen and expand Strengthen and expand international businessinternational business
ll Competition strategy and expansion strategyCompetition strategy and expansion strategy
ChinaChina Launch a new deodorizing air freshener productLaunch a new deodorizing air freshener product
UKUK Launch an additional Launch an additional NetsusamaNetsusama Sheet productSheet product
USUS Media mix, advertising in focused 13 areasMedia mix, advertising in focused 13 areas
ll Creation of new marketsCreation of new markets
Start sales of body warmersStart sales of body warmers
Kobayashi Pharmaceutical Co., Ltd. 34
Forecasts of sales and operating income in Forecasts of sales and operating income in the US for the year ending December 2002 the US for the year ending December 2002
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
1999 2000 2001 2002(forecast)
Sales Operating loss
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 35
-250
-200
-150
-100
-50
0
50
100
150
200
2001 2002 (forecast)
Sales
Operating loss
Forecasts of sales and operating income in Forecasts of sales and operating income in the UK for the year ending December 2002the UK for the year ending December 2002
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 36
-200
-100
0
100
200
300
400
500
1999 2000 2001 2002(forecast)
Sales
Operating loss
Forecasts of sales and operating income in Forecasts of sales and operating income in China for the year ending December 2002China for the year ending December 2002
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 37
Medical Devices OperationMedical Devices Operation’’s s policiespolicies
ll Strengthen manufacturing and developmentStrengthen manufacturing and development Product development in house: Product development in house:
Launch of 2 productsLaunch of 2 products Acquisition of Japanese/overseas manufacturersAcquisition of Japanese/overseas manufacturersll Find new partner manufacturersFind new partner manufacturers ll Strengthen sales of products procured from Strengthen sales of products procured from
partner manufacturerspartner manufacturers Sharpest focus on orthopedicsSharpest focus on orthopedics
Kobayashi Pharmaceutical Co., Ltd. 38
0
1 , 0 00
2 , 0 00
3 , 0 00
4 , 0 00
5 , 0 00
6 , 0 00
7 , 0 00
1998 1999 2000 2001 2002 2003(forecast)
Surgery Otolaryngology Orthopedics Neurosurgery
Medical Devices OperationMedical Devices Operation’’s s salessales NonNon--consolidatedconsolidated
+70.8%+70.8+70.8%%+49.6%+49.6+49.6%%