Sawai Group Holdings Co., Ltd. (TYO:4887)
Japan flag Japan · Delayed Price · Currency is JPY
1,619.50
+39.00 (2.47%)
Sep 14, 2026, 3:30 PM JST
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Transcript

Aug 24, 2026

Summary

Revenue and profits grew year-over-year, aided by a U.S. affiliate share sale and improved unit prices. The outlook targets further profit growth via new launches and cost controls, while a major share buyback and dividend hike were announced.

Speaker 1

Thank you for taking time to join our result meeting today. I'd like to give an overview of the financial results for the second quarter of FY 2024, starting with the summary. As stated in the revised earnings guidance released on the 8th, the company fell short of the initial first half business plan as our efforts were focused on restoring trust rather than sales activities. However, on a year-on-year basis, revenue and core operating profit achieved moderate growth. In addition, to enhance the sustainability of the generic business, we continue to work to uphold the product value with an eye to the future, which helped to improve the unit selling price.

In the second half, we aim to increase profits further with volume growth, mainly driven by items subject to selective treatment system and with items for which limited shipments have been lifted, as well as area expansion and gains with a new product launch in December. We will strive to achieve the revised guidance for the second half and the full year. At present, there are 129 items subject to limited or suspended shipment. Company-wide efforts are underway to lift the restriction on shipment and to augment the production ramp-up. The key figures from the financial results are illustrated by the table on this page.

Revenue and all profit items achieved growth. The first half profit attributable to owners of the company greatly exceeded the same period of the previous year, owing to gain on the sale of shares in a U.S. affiliate company with stock transfer completed on April 1st. Please note that the line items from revenue through profit before tax show the amounts of the Japanese business as continuing operations, and profit attributable to owners of the company is a total of the continuing and discontinued operations. Page four shows the core operating profit analysis. While gross profit grew owing to higher sales and better unit prices, raw material prices increased for APIs, additives, and packaging materials, among others. Fixed costs such as depreciation and labor costs were up, as well as the contracted manufacturing fee, resulting in JPY 100 million growth for core operating profit.

Page five is the operating profit analysis. OP grew by JPY 860 million after adjusting for the SG&A in core operating profit and proceeds from land sale of former Pharmaceutical Technology Center. Page six shows revenue by product launch year. Sales of products launched from FY 2023 onward, such as zinc acetate and azacitidine, achieved growth as well as the existing products launched in FY 2014 or earlier owing to the pricing policy. Next, let me show the full year forecast for FY 2024. As already communicated with the press release on November 8th, after reviewing the first half results, we revised the initial forecast as indicated on the slide here.

In the second half, we will strive to increase the sales volume of products, primarily those eligible for the selective treatment system and the products with limited shipment has been lifted, as well as to expand market share with new product launch in December. We will also work on cost reduction, aiming to increase profits and further improve profitability. Page eight is an overview of the sales plan for the second half. By understanding the market trends such as the products for selective treatment and products for which the limited shipment has been lifted, we will engage in providing information that meets the market needs. Furthermore, by rolling out promotional activities for new product in December after ensuring sufficient inventory, we aim to achieve a 7.3% year-on-year sales increase in the second half and a 4% increase for the full year to JPY 183.9 billion.

This page explains the proactive efforts to lift the limited shipments on certain items in order to quickly resolve the supply shortage. As I explained in the first quarter financial results, we have been actively lifting limited shipments since July. So far, we have lifted the limited shipments for 115 items, and as of November 11th, we have been able to reduce the number of limited shipments to 97 items, down to double digits. The new solid dosage facility in Daini Kyushu Factory has started its operations, and by steadily increasing production, we will continue to work proactively to lift the limited shipment restrictions. Regarding the 91 products for which the limited shipment was lifted between June and September, other companies followed suit on 68 of those items. We will continue to lead the way so that this movement will continue to spread across the industry.

We'll also continue with active CapEx to further ramp up our production capacity and work closely with the contract manufacturers for increased production to resolve the shortage of pharmaceutical products as quickly as possible. By proactively lifting the limited shipments, we will strive to alleviate the concerns and the burdens of patients, medical professionals, and drug distributors. Page 10 shows the change in the number of limited shipment items from March 2022 to present. Page 11 illustrates the production at Trust Pharmatech and new solid dosage facility in Daini Kyushu Factory. At both sites, the transfer of items and production have progressed steadily, and we aim to achieve our full year plan. Last but not least, our shareholder return.

As announced in June this year, we have decided to execute a share buyback of up to JPY 33 billion, and the shares we repurchase will be canceled by the end of April next year. The buyback status as of October end is indicated here on the slide. We will also hike the interim dividend by JPY 13 to JPY 78. The year-end dividend is expected to be JPY 27. This is equivalent to JPY 81 before the stock split, which is an increase of JPY 16. Please refer to pages 13 and beyond for financial data and other reference materials. This concludes the overview of the financial results for the second quarter of fiscal year 2024. Thank you for your attention.