SUMITOMO PHARMA CO., LTD. January 29, 2015
Company Name: SUMITOMO DAINIPPON PHARMA CO., LTD. Stock Exchange Listings: Tokyo Security Code Number: 4506 (URL:http://www.ds-pharma.co.jp) Representative: Masayo Tada, Representative Director, President and Chief Executive Officer Contact: Akiko Watanabe, Director, Corporate Communications Department Telephone: 06-6203-1407 Filing Date of Quarterly Financial Report: February 6, 2015 Starting Date of Dividend Payments: － Preparation of Supplementary Financial Data for Quarterly Financial Results: Yes Information Meeting for Quarterly Financial Results to be held: Yes (for institutional investors and analysts)(Note: All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Third Quarter of the Year Ending March 31, 2015（April 1, 2014 to December 31, 2014）
(1) Results of Operations(% represents changes from the corresponding period of the previous year)
Net sales | Operating income | Ordinary income | Net income | |||||
Yen million | % | Yen million | % | Yen million | % | Yen million | % | |
Nine months ended December 31, 2014 | 279,139 | (1.9) | 22,818 | (34.2) | 22,506 | (34.4) | 18,993 | (0.9) |
Nine months ended December 31, 2013 | 284,515 | 5.7 | 34,652 | 6.0 | 34,333 | 4.9 | 19,158 | 13.6 |
Note: Comprehensive income Nine months ended December 31, 2014: ¥61,234 million, 29.3% Nine months ended December 31, 2013: ¥47,363 million, 202.1%
Earnings per share | Earnings per share (diluted) | |
Nine months ended December 31, 2014 | ¥47.81 | ― |
Nine months ended December 31, 2013 | ¥48.22 | ― |
(Millions of yen)
Total assets | Net assets | Shareholders' equity ratio | |
As of December 31, 2014 | 716,912 | 452,289 | 63.1% |
As of March 31, 2014 | 659,032 | 398,540 | 60.5% |
Reference: Shareholders' Equity As of December 31, 2014 : ¥452,289 million
As of March 31, 2014 : ¥398,540 million
2. DividendsDividends per share | |||||
1st quarter | 2nd quarter | 3rd quarter | Year-End | Annual | |
Year ended March 31, 2014 | ― | ¥9.00 | ― | ¥9.00 | ¥18.00 |
Year ending March 31, 2015 | ― | ¥9.00 | ― | ||
Year ending March 31, 2015 (Forecast) | ¥9.00 | ¥18.00 |
Note: Revision of dividend forecasts from the latest announcement: None
3. Consolidated Financial Forecasts for the Year Ending March 31, 2015（April 1, 2014 to March 31, 2015）
(% represents changes from the corresponding period of the previous year)
Net sales | Operating income | Ordinary income | Net income | Earnings per share | |||||
Yen million | % | Yen million | % | Yen million | % | Yen million | % | Earnings per share | |
Year ending March 31, 2015 | 371,000 | (4.3) | 20,000 | (52.5) | 20,000 | (50.8) | 12,500 | (37.7) | ¥31.46 |
Note: Revision of consolidated financial forecasts from the latest announcement: Yes
Notes:(1) Shift of significant subsidiaries during the period (shift of specified subsidiaries accompanied by changes in scope of consolidation) : None
(2) Application of specific accounting methods for preparing quarterly consolidated financial statements: Yes
・Calculation of income taxes
The effective tax rate, after applying tax effect accounting, expected to be imposed on income before income taxes for the fiscal year in which this first quarter is included is estimated based on reasonable assumptions. Then, tax expenses are calculated by multiplying the income before income taxes for the quarter by the estimated effective tax rate.
(3) Changes in accounting policies, accounting estimates, and retrospective restatements
① Changes due to changes in accounting standards: Yes
・Application of "Accounting Standard for Retirement Benefits"
The Company has applied the "Accounting Standard for Retirement Benefits" (ASBJ Statement No. 26, May
17, 2012) and the "Guidance for the Accounting Standard for Retirement Benefits" (ASBJ Guidance No. 25, May 17, 2012) from the beginning of the current fiscal year, and revised the calculation method for retirement benefit liabilities and service cost according to the provisions found in the body text of Paragraph 35 of the Accounting Standard for Retirement Benefits and Paragraph 67 of the Guidance for the Accounting Standard for Retirement Benefits. The method of attributing benefits to periods of service has been changed from straight-line basis to benefit formula basis, and the method of determining of discount rate has also been changed from using the bond rate determined by reference to the terms closely related to average remaining working lives of the employees, to using a single weighted average discount rate that reflects the estimated timing and amount of benefit payments.
With regard to the application of the Accounting Standard for Retirement Benefits, in accordance with the provisions on transitional implementation indicated in Paragraph 37 of the Accounting Standard for Retirement Benefits, the amount of impact resulting from the change in calculation method of retirement benefit obligations and service costs were added to or deducted from retained earnings at the beginning of the fiscal year.
As a result, at the beginning of the current fiscal year, the amount of assets for retirement benefit decreased by
245 million yen, the amount of liabilities for retirement benefit increased by 62 million yen, retained earnings decreased by 198 million yen. The impact on the profit for the first nine months of the fiscal year is immaterial.
② Changes due to changes in accounting standards other than (3),①: None
③ Changes in accounting estimates: None
④ Retrospective restatements: None
(4) Number of shares outstanding (Common stock) at the end of period
① Number of shares outstanding (Including treasury stock) December 31, 2014 : 397,900,154 shares March 31, 2014 : 397,900,154 shares
② Number of treasury stock
December 31, 2014: 595,558 shares
March 31, 2014 : 593,962 shares
③ Average number of shares during the period December 31, 2014 : 397,305,446 shares December 31, 2013 : 397,308,312 shares
Indication of quarterly review procedure implementation status:
This summary of financial results is exempt from quarterly review procedure based upon the Financial Instruments and Exchange Act. It is under the quarterly review procedure process at the time of disclosure of this report.
Explanation for Appropriate Use of Forecasts and Other Notes:
This document contains forward-looking statements which are based on management's assumptions and beliefs in light of the information currently available and involves risks and uncertainties, and are not the commitment made by the Company. Actual financial results may differ materially depending on a number of factors, including economic conditions. Please refer to page 3 of attachment document with regard to the assumptions and other related matters concerning financial forecasts.
The Company holds a Conference Call for institutional investors and analysts on Thursday, January 29, 2015. The documents distributed at the presentation are scheduled to be posted on our website.
【Attachment Documents】
1. Qualitative Information for the Nine Months Ended December 31, 2014 ····································· 2 (1) Qualitative Information on Business Results ································································· 2 (2) Qualitative Information on Financial Condition ······························································ 3 (3) Qualitative Information on Consolidated Financial Forecasts ············································ 3
2. Consolidated Financial Statements ···················································································· 4 (1) Consolidated Balance Sheets ··················································································· 4 (2) Consolidated Statements of (Comprehensive) Income ···················································· 6 (3) Notes to Consolidated Financial Statements ································································· 8 (Notes on Premise of Going Concern) ········································································· 8 (Notes on Significant Changes in Shareholders' Equity) ·················································· 8
(Segment Information) ····························································································· 8
－1－
1. Qualitative Information for the Nine Months Ended December 31, 2014(1) Qualitative Information on Business Results
Consolidated business performance for the nine months from April 1 through December 31, 2014 is as follows:
The total net sales for the Sumitomo Dainippon Pharma Group amounted to 279,139 million yen, a 1.9% decrease from the first nine months of the previous fiscal year. The sales of LATUDA®, an atypical antipsychotic, in the segment North America and of MEROPEN®, a carbapenem antibiotic, in the segment China achieved solid growths, while the sales in the segment Japan declined considerably due to the NHI price revision in April 2014 and the influences of generics. The operating income for the period was 22,818 million yen, a 34.2% decrease year on year. Sales expenses for LATUDA® increased, and the clinical studies cost in North America increased as well, while amortization of patent rights decreased considerably. Ordinary income was 22,506 million yen, a 34.4% decline year-on-year. Net income was 18,993 million yen, a 0.9% decrease year on year, reflecting an extraordinary income from the sale of fixed assets and impairment losses relating to reorganization of production sites.
Business performance by segment is as follows:
① Japan segment
Net sales of segment Japan declined 9.0% year on year to 120,649 million yen. The growths in the sales of two strategic products, AIMIX®, a therapeutic agent for hypertension, and TRERIEF®, a Parkinson's disease drug, were not large enough to offset the adverse impacts on the sales of existing products left by the NHI price revision and the generic drug utilization promoted in Japan. Segment income decreased 17.3% year on year to 40,760 million yen; strenuous cost-reduction efforts in sales expenses and others were outweighed by the decline in sales.
② North America segment
In North America, net sales increased 3.2% year on year to 109,729 million yen, due to the large increase in LATUDA® sales and helped by the depreciation of Japanese yen against U.S. dollar, even though the sales of LUNESTA®, a sedative hypnotic, dropped considerably due to the April 2014 expiry of the exclusivity period. Segment income decreased 6.2% year on year to 26,377 million yen. Advertisement and other sales promotion expenses increased for LATUDA® and others, and the fee on sales of branded prescription drugs distributed through the government health care program increased considerably, although the amortization of LUNESTA® patent rights was completed.
③ China segment
In China the sales of MEROPEN® grew strongly, which contributed to the 50.9% year-on-year increase of the segment net sales to 12,310 million yen. The segment income increased considerably to 4,484 million yen, a 170.8% increase year on year.
④ Other Regions segment
Decreased export sales of MEROPEN® and other factors brought about a 5.8% year-on-year decrease in the sales of this segment at 6,197 million yen. Segment income was 734 million yen, a 70.5% decrease year on year due mainly to increased sale expenses of LATUDA® which was launched in the U.K. in August 2014.
In addition to the above-mentioned reportable segments, the Sumitomo Dainippon Pharma Group markets food
－2－
ingredients, food additives, materials for chemical products, veterinary drugs, diagnostic agents, etc. Net sales from those types of business were 30,253 million yen, a 2.2% decline year on year, and the segment income was 1,654 million yen, a 19.2% decline year on year.
(2) Qualitative Information on Financial Condition
Total assets increased 57,879 million yen from the previous consolidated fiscal year-end to 716,912 million yen. As for current assets, cash and time deposits as well as marketable securities increased as a result of the sale of idle assets and the effect of foreign exchange conversions. Property, plant and equipment declined due to asset sales and accrual of impairment losses, while intangible fixed asset increased in value, affected by the currency situation.
Total liabilities increased 4,130 million yen from the previous consolidated fiscal year-end to 264,622 million yen, due to a large increase in reserve for sales rebates resulting from the strong growth of LATUDA® sales in the U.S., although income tax payable and long-term loans payable decreased.
Net assets increased 53,749 million yen from the previous consolidated fiscal year-end to 452,289 million yen, mainly due to increases in retained earnings, unrealized gain on available-for-sale securities and foreign currency translation adjustments.
Shareholders' equity ratio as of the end of the current quarter was 63.1%.
(3) Qualitative Information on Consolidated Financial Forecasts
In light of recent performance trends, the October 30, 2014 forecast for the consolidated financial performance of the fiscal year to March 2015 is revised as described below.
Revision of Consolidated Financial Forecasts for the Fiscal Year Ending March 31, 2015 (April 1, 2014 to March 31, 2015)
Net sales | Operating income | Ordinary income | Net income | Earnings per share | |
Yen million | Yen million | Yen million | Yen million | Earnings per share | |
Previous forecasts（A） | 366,000 | 20,000 | 19,500 | 14,000 | ¥35.24 |
New forecasts（B） | 371,000 | 20,000 | 20,000 | 12,500 | ¥31.46 |
（B－A） | 5,000 | ― | 500 | (1,500) | |
Change（%） | 1.4 | ― | 2.6 | (10.7) | |
(Reference) Results for the year ended March 31, 2014 | 387,693 | 42,142 | 40,631 | 20,060 | ¥50.49 |
The forecasted net sales is revised upward by 5 billion yen to 371 billion yen. The sales in North America is expected to remain brisk and the exchange rate of yen is anticipated to stay weaker than the assumption made in the previous forecast.
The forecasted operating income remains unchanged at 20 billion yen, because the selling, general and administrative expenses are expected to increase, due mainly to the exchange rate situation. The forecast for ordinary income is revised upward by 0.5 billion yen to 20 billion yen, reflecting an improvement in non-operating income.
The forecasted net income is revised downward by 1.5 billion yen to 12.5 billion yen in anticipation of a reversal of
deferred tax assets in view of the expected reduction in regulatory effective tax rates.
－3－
2. Consolidate d Financial Sta tements
(1) Consolidated Balance Shee ts
As of
March 31, 2014
(Millions of yen) As of
Decem ber 31, 2014
Assets
Current as s ets :
Cas h and tim e depos its 22,746 33,033
Notes and accounts receivable 111,662 105,165
Marketable s ecurities 81,952 117,242
Merchandis e and finis hed goods 46,377 49,524
Work-in-proces s 2,408 3,214
Raw m aterials and s upplies 10,356 13,375
Deferred tax as s ets 37,281 38,554
Short-term loans receivable 41,720 42,196
Others 5,225 4,814
Allowance for doubtful receivables (120) (118) Total current as s ets 359,611 407,001
Fixed as s ets :
Property, plant and equipm ent:
Buildings and s tructures 100,804 93,962
Accum ulated depreciation and im pairm ent los s (56,396) (52,258) Buildings and s tructures , net 44,407 41,704
Machinery, equipm ent and carriers 77,479 78,027
Accum ulated depreciation and im pairm ent los s (67,833) (68,883) Machinery, equipm ent and carriers , net 9,646 9,143
Land 8,396 6,362
Cons truction in progres s 3,080 1,376
Others 32,271 33,494
Accum ulated depreciation and im pairm ent los s (25,113) (26,254) Others , net 7,157 7,239
Total property, plant and equipm ent 72,689 65,826
Intangible as s ets :
Goodwill 80,669 89,699
In-proces s res earch and developm ent 56,071 60,852
Others 20,055 21,725
Total intangible as s ets 156,796 172,278
Inves tm ents and other as s ets :
Inves tm ent s ecurities 50,823 56,084
As s et for retirem ent benefit 4,685 4,732
Deferred tax as s ets 8,602 4,761
Others 5,865 6,272
Allowance for doubtful receivables (41) (44) Total inves tm ents and other as s ets 69,935 71,805
Total fixed as s ets 299,421 309,910
Total as s ets 659,032 716,912
－4－
As of
March 31, 2014
(Millions of yen)
As of
Decem ber 31, 2014
Liabilities
Current liabilities :
Notes and accounts payable 11,713 15,902
Current portion of long-term loans payable 10,000 9,017
Incom e taxes payable 10,524 3,107
Res erve for bonus es 7,786 5,502
Res erve for s ales returns 9,894 8,018
Res erve for s ales rebates 26,421 35,327
Accounts payable-other 35,937 35,266
Others 18,930 22,726
Total current liabilities 131,207 134,870
Long-term liabilities :
Bonds payable 60,000 60,000
Long-term loans payable 25,000 20,379
Deferred tax liabilities 15,704 15,920
Liability for retirem ent benefit 13,892 14,127
Others 14,687 19,325
Total long-term liabilities 129,284 129,752
Total liabilities 260,492 264,622
Net as s ets
Shareholders ' equity:
Com m on s tock 22,400 22,400
Capital s urplus 15,860 15,860
Retained earnings 318,861 330,372
Treas ury s tock (656) (659) Total s hareholders ' equity 356,465 367,973
Accum ulated other com prehens ive incom e (los s )
Unrealized gains on available-for-s ale s ecurities , net of tax 17,247 19,567
Deferred gains (los s es ) on hedges (0) 28
Foreign currency trans lation adjus tm ent 26,792 66,441
Rem eas urem ents of defined benefit plans (1,964) (1,721) Total accum ulated other com prehens ive incom e (los s ) 42,074 84,316
Total net as s ets 398,540 452,289
Total liabilities and net as s ets
659,032 716,912
－5－
(2) Consolidated Statements of (Comprehensive) IncomeConsolidated Statements of Income
Nine m onths ended
Decem ber 31, 2013
(Millions of yen) Nine m onths ended
Decem ber 31, 2014
Net s ales 284,515 279,139
Cos t of s ales 78,130 75,097
Gros s profit 206,385 204,041
Revers al of res erve for s ales returns 16 2
Gros s profit-net 206,401 204,043
Selling, general and adm inis trative expens es
Salaries 26,168 27,837
Provis ion for res erve for bonus es 2,973 3,837
Retirem ent benefit expens es 3,072 3,252
Res earch and developm ent cos ts 48,971 51,193
Others 90,562 95,105
Total s elling, general and adm inis trative expens es 171,749 181,225
Operating incom e 34,652 22,818
Non-operating incom e
Interes t incom e 235 291
Dividend incom e 779 1,163
Gain on inves tm ents in partners hip 1 891
Others 704 480
Total non-operating incom e 1,720 2,827
Non-operating expens es
Interes t expens e 763 704
Foreign exchange los s es 270 1,383
Others 1,006 1,050
Total non-operating expens es 2,039 3,138
Ordinary incom e 34,333 22,506
Extraordinary incom e
Gain on s ales of property, plant and equipm ent － 15,978
Com pens ation incom e for dam age － 1,711
Gain on s ales of inves tm ent s ecurities 2,772 － Fair value adjus tm ent of contingent cons ideration 1,068 － Total extraordinary incom e 3,840 17,689
Extraordinary los s
Im pairm ent los s 4,601 5,128
Bus ines s s tructure im provem ent expens es 1,803 790
Total extraordinary los s 6,404 5,919
Incom e before incom e taxes and m inority interes ts 31,768 34,276
Incom e taxes 12,610 15,283
Incom e before m inority interes ts 19,158 18,993
Net incom e 19,158 18,993
－6－
Consolidated Statements of Comprehensive Income
Nine m onths ended
Decem ber 31, 2013
(Millions of yen) Nine m onths ended
Decem ber 31, 2014
Incom e before m inority interes ts
Other com prehens ive incom e (los s )
19,158 18,993
Unrealized gains (los s es ) on available-for-s ale s ecurities , net of tax 2,090 2,319
Deferred gains (los s es ) on hedges － 29
Foreign currency trans lation adjus tm ent 26,114 39,649
Rem eas urem ents of defined benefit plans , net of tax － 242
Total other com prehens ive incom e (los s ) 28,204 42,241
Com prehens ive incom e 47,363 61,234
Com prehens ive incom e attributable to
Com prehens ive incom e attributable to owners of the parent 47,363 61,234
Com prehens ive incom e attributable to m inority interes ts － －
－7－
(3) Notes to Consolidated Financial Statements(Notes on Premise of Going Concern）
Not applicable.
(Notes on Significant Changes in Shareholders' Equity)
Not applicable.
(Segment Information)
Ⅰ Nine m onths ended Decem ber 31, 2013
1. Inform ation on s ales and incom e by reportable s egm ent
(Millions of yen)
Reportable Segm ents | Other Bus ines s * | Total | |||||
Pharm aceuticals Bus ines s | Other Bus ines s * | Total | |||||
Japan | North Am erica | China | Other Regions | Subtotal | Other Bus ines s * | Total | |
Net s ales Sales to cus tom ers Inters egm ent s ales and trans fers | 132,531 74 | 106,302 － | 8,156 － | 6,575 － | 253,565 74 | 30,949 53 | 284,515 128 |
Total | 132,605 | 106,302 | 8,156 | 6,575 | 253,640 | 31,003 | 284,643 |
Incom e of s egm ent | 49,277 | 28,128 | 1,656 | 2,488 | 81,550 | 2,048 | 83,598 |
Note: The "Other Bus ines s " category incorporates operations not included in reportable s egm ents , including food ingredients , food additives , chem ical product m aterials , veterinary drugs , diagnos tics and other products .
2. Difference between total of the incom e of the reportable s egm ents and the am ount on cons olidated s tatem ents of incom e, and m ain contents of the difference (adjus tm ent of difference)
(Millions of yen)
Incom e | Am ount |
Reportable s egm ents total Incom e of "Other Bus ines s " Res earch and developm ent cos ts * Elim ination of inters egm ent trans actions | 81,550 2,048 (48,971) 25 |
Operating incom e on cons olidated s tatem ents of incom e | 34,652 |
Note: Res earch and developm ent cos ts are not allocated to any s egm ent as the Group m anages s uch cos t on a global bas is .
3. Inform ation on im pairm ent los s es of fixed as s ets or goodwill etc. by reportable s egm ent
(Significant im pairm ent los s es relating to fixed as s ets )
In the North Am erica s egm ent, an im pairm ent los s is recorded for a part of fixed as s ets and in-proces s R&D. Fixed as s ets and in-proces s R&D deem ed to have little future profitability are evaluated in term s of collectability, therefore 363 m illion yen and 4,237 m illion yen are recorded as an im pairm ent los s , res pectively.
(Significant changes in am ount of goodwill)
In the North Am erica s egm ent, the goodwill am ount is increas ing by 2,408 m illion yen due to the fact that the contingent cons ideration was additionally paid in connection with the acquis ition of Bos ton Biom edical, Inc.
－8－
Ⅱ Nine m onths ended Decem ber 31, 2014
1. Inform ation on s ales and incom e by reportable s egm ent
(Millions of yen)
Reportable Segm ents | Other Bus ines s * | Total | |||||
Pharm aceuticals Bus ines s | Other Bus ines s * | Total | |||||
Japan | North Am erica | China | Other Regions | Subtotal | Other Bus ines s * | Total | |
Net s ales Sales to cus tom ers Inters egm ent s ales and trans fers | 120,649 126 | 109,729 － | 12,310 － | 6,197 － | 248,886 126 | 30,253 45 | 279,139 172 |
Total | 120,776 | 109,729 | 12,310 | 6,197 | 249,013 | 30,298 | 279,311 |
Incom e of s egm ent | 40,760 | 26,377 | 4,484 | 734 | 72,357 | 1,654 | 74,011 |
Note: The "Other Bus ines s " category incorporates operations not included in reportable s egm ents , including food ingredients , food additives , chem ical product m aterials , veterinary drugs , diagnos tics and other products .
2. Difference between total of the incom e of the reportable s egm ents and the am ount on cons olidated s tatem ents of incom e, and m ain contents of the difference (adjus tm ent of difference)
(Millions of yen)
Incom e | Am ount |
Reportable s egm ents total Incom e of "Other Bus ines s " Res earch and developm ent cos ts * Elim ination of inters egm ent trans actions | 72,357 1,654 (51,193) (0) |
Operating incom e on cons olidated s tatem ents of incom e | 22,818 |
Note: Res earch and developm ent cos ts are not allocated to any s egm ent as the Group m anages s uch cos t on a global bas is .
3. Inform ation on im pairm ent los s es of fixed as s ets or goodwill etc. by reportable s egm ent
(Significant im pairm ent los s es relating to fixed as s ets )
In the Japan s egm ent, 5,128 m illion yen of im pairm ent los s is recorded res ulting from evaluating the collectability of the as s ets of the plant which we plan to clos e in connection with reorganization of production s ites .
－9－
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