Thank you very much for joining our financial results meeting despite your busy schedule. Thank you very much for your consistent support for our IR activity. Taking this opportunity, I would like to express my gratitude. Today, I will explain these two points. Let me start with the consolidated financial results for the first nine months of 2023. First, I will explain the performance overview. In the third quarter, net sales increased and profit decreased year-on-year. In consumer products, sales of fabric care products increased with the launch of major new products, and sales of pharmaceutical product also rose due to robust demand from inbound visitors. Overall, sales increased. But compared to the end of June, in July to September, the momentum was lost slightly. Overseas sales increased significantly in Thailand and China, and their growth was sustained.
Consolidated Core operating income decreased year-on-year in the third quarter, and the decrease in profit decreased, showing tough results. Prior to the quantitative explanation, let me explain the market trend as usual. This slide shows a domestic market trend of consumer products. In Japan, market saw overall recovery from April onward, mainly driven by the increase in unit price. With January to September, results mostly higher than the previous year. This slide shows a major market trend in major product categories overseas. Laundry detergents saw a year-on-year increase in each country in January to September results. The sales are gradually coming back to the pre-COVID level. Toothbrushes are robust, sustaining the previous year level. Hand soaps have been negative year-on-year, but compared to the pre-COVID level, they are still firm. As for China, since monthly data is not available, this slide does not show China results.
In January to June, the market has been growing steadily. But since July, due to social issues, markets slowed down slightly with more moderate growth. Consolidated net sales in January to September was JPY 296 billion, up by 3.5% or approximately JPY 10 billion year-on-year. Excluding exchange rate fluctuation impact, the growth was 1.5% or JPY 4.3 billion. Core operating income was JPY 12.6 billion, down by JPY 4.6 billion year-on-year. As for operating profit and items below, as a gain on the transfer of land was included in the previous year, the year-on-year declines are larger as explained in the second quarter meeting. EBITDA was JPY 26 billion, down by JPY 2.7 billion year-on-year. EBITDA margin was 8.8%, down by 1.3 points. This slide shows year-on-year changes in Core operating income. Positive factors were JPY 4.3 billion in total.
Changes in sales product mix and others were JPY 2.1 billion. Gross profit increase with sales growth was +JPY 2.8 billion, but price increases increased depreciation and amortization, and changes in segment composition was -JPY 0.7 billion, and they resulted in +JPY 2.1 billion. Total cost reduction, mainly in raw material cost, served +JPY 2.2 billion. Negative factors were JPY 8.9 billion in total. Impact of raw material prices was -JPY 0.9 billion, which contracted in the third quarter. Increase in competition related expenses with the launch of new products, and increase in other expenses, which includes a relocation cost of head office, were -JPY 3.4 billion and -JPY 4.6 billion respectively. Results by business segment. As for net sales, upper line shows net sales and lower line shows sales to external customers.
In consumer products, sales increased in January to September year-on-year. But segment profit decreased due to the increase in raw materials cost.
I will explain sales condition by segment in the following slides. In industrial products, the value-added products, including anti-adhesive agent for tires and carbon for rechargeable battery, continue to be robust, and sales and profit increased. Overseas business increased sales and profit, and I will elaborate on them later. First, please look at the breakdown of the general consumer goods sales turnover in Japanese market. As you can see, new products turned out to be quite effective. Fabric care products turned positive, and the living care products. Sorry. Pharmaceutical products have achieved the increase in sales, thanks to the increase in the inbound demand. Sales turnover of the oral care products suffered slightly. But as a total, the sales turnover grew by JPY 3.5 billion.
As for fabric care products, we introduced SOFLAN Airis fabric softener in the second quarter, but so far failed to grow it into a major item, and we have not reached our original goal, though we have to say that the sales turnover increased. Some supplementary information on oral care products. We suspended the shipment of some of our toothpaste because the API manufacturer violated the GMP regulations. The suspension caused a decrease in sales. The heavy-duty detergent launched on September 20th replaced a product of our conventional product. Now I would like to refer to NANOX one. NANOX one was introduced into the market early in order to compensate for the stagnant SOFLAN Airis sales. Thanks to our early start of the business negotiations and well-controlled marketing volume, we have been achieving our plan so far.
We are glad to see that the customers show strong and sustaining intention to purchase each product. So, we have to keep growing these product lines, that they can contribute to profit in the fourth quarter. That is all for the domestic market. I would like to discuss next our overseas market. This is the area-by-area breakdown in Southeast, South, and Northeast Asia, that we see increase in both sales and profit, thanks to the strong performance of Thailand. As for Southeast Asia and South Asia, increase in sales was 9.4%, but 1.7% in real term, minus forex changes. The profitability of the segment increased by 129%. But in Northeast Asia, increase in sales was by 21% thanks to the growth in China, but 17% excluding the forex impact. The segment profit increased by 37%. Next slide discusses the performance of the major four countries. Starting from the left top.
First, Thailand. Our laundry detergent is recovering, but the competition is fierce. Thanks to our sales promotion, but discount and efficiency improvement campaign, the personal care products, including the body soap, have been performing robustly. We could achieve the comfortable increase in the sales turnover. Upper right represents Malaysia. Sales is almost leveling off. Malaysia is the toughest market to compete against other competitors. Nevertheless, we have survived their discount campaigns by concentrating our main products and could maintain the profitability and managed to keep the sales turnover. Left bottom is China. We have been fortifying both online and offline sales and the real sales activities. In the third quarter, we newly introduced the locally manufactured White & White, which has been turning out to be quite well. Laundry detergents are selling briskly in South Korea.
A market of the hand soap is shrinking, but the laundry detergent is more than offsetting the decline in sales. In Bangladesh, which is not included in the document here, our local subsidiary, Lion Kallol Limited, started its operation, as we have disclosed to the press on October 30th. We have decided to build a new manufacturing plant in the country. The new plant will manufacture a wide spectrum of the products covering from the dishwashing detergent to all the oral care products. Our local partner has been manufacturing and selling their products, but we would like to enrich and expand the portfolio until our Bangladesh plant will be our major production site.
Next, we would like to discuss the business forecast in 2023. The business environment has been quite tough till the third quarter, and we anticipate this demanding situation will continue for some time to come.
Through the fourth quarter, we will continue launching the new products, reducing costs, and expand our overseas business in order to achieve our annual target. Lastly, but not the least, the dividend per share will increase by 1 JPY to 26 JPY, which is unchanged from our earlier commitment. It will be the eight consecutive term increase in dividend return to our shareholders. Now, briefly, this concludes my presentation. Thank you. Now we will start the Q&A session. Mr. Hirozumi, please.
I'm Hirozumi of Daiwa Securities. Do you hear me?
Yes.
I lost connection once in the meeting, so let me know if you have already commented on this point. I have one question. Which part of the result was tougher than your expectation? Would you explain quantitatively? At the end, you said that you will keep the guidance unchanged, though the condition is tough. How much were you in short compared to the plan in terms of net sales and Core operating income in nine months? In which segment were the results different from your forecast, and how? This is my question.
Thank you very much. In January to September, profit was in short by about JPY 2 billion. As for the breakdown, though it is not exact, about half was due to the weak sales of SOFLAN Airis laundry softener. It is about JPY 1 billion. Within the remaining JPY 1 billion, about half came from the sales decline in other segment. Suspension of shipment of some product, as explained in the presentation. Remaining JPY 0.5 billion was due to the higher than expected competition-related expenses overseas.
Which part materialized in the third quarter?
All of these three.
All?
Yes. As for SOFLAN Airis, after the second quarter, we changed the way of promotion and revised the commercial. Partly because of the very good pre-launch feedback, retail inventory buildup continued and our shipment stalled in the third quarter.
May I ask a little more detail? Suspension of shipment were in oral products. What are those in others?
Suspended products are toothpaste in oral care and a toothpaste sold at dentist. PAIR acne drug in pharmaceutical. They made major negative impacts.
Then, although achieving annual target is not easy, you are going to counter with the growth of new products, cost reduction, and overseas business growth, right?
Yes. With that combination, we would like to achieve the target.
Understood. I return to others for further questions. Thank you.
Thank you. Next, Ms. Kawamoto, please.
I am Kawamoto of UBS Securities. Thank you very much for your presentation. I would like to ask about the change in Core operating income in the third quarter. Price increase and the segment mix change was a significant minus. Please let us know what happened here.
I think raw material cost impact was plus JPY 1.6 billion.
Looking at the assumed Dubai crude oil price of $75 per barrel as of August 7th, shown at the end of the reference, what is your expected raw material benefit in the second half as of today? I think your initial forecast was JPY 3.5 billion, but how did it change now?
As for the gross profit increase due to sales change, without mix change, we can expect JPY 2.8 billion plus.
With price increases, sales and gross profit grew. That growth is about JPY 3.5 billion. On the other hand, segment mix changed. With the increase in overseas, consumer products in Japan were not so strong. In consumer products in Japan, fabric care product marked the largest growth. That served negative as much as benefit. So, price increase benefit was offset by the segment mix change. There was a depreciation cost for CapEx. As a result, it was JPY 2.1 billion. If I may continue. As for raw material cost, it was almost in line with our forecast in the third quarter, with a positive impact. So, the total impact of raw material cost for January to September was first cost increase of JPY 0.9 billion, but up to second quarter, cost increase was JPY 2.5 billion.
In the third quarter, cost benefit was JPY 1.6 billion, which was mostly in line with our expectation. We expect that in the fourth quarter as well, they will continue to benefit profit.
I see. Then you can expect positive impact by raw materials as initially expected, but the mix of high value-added product in Japan was not good. Is that right? Especially, main concern would be the sluggishness of oral care product. When do you think they'll recover?
Oral care products were negative in July to September. In second quarter, it was plus, and it turned negative in the third quarter. There are several reasons behind this. Impact of shipment suspension of Dent Health as mentioned. Intentionally, we controlled the sales promotion of low-end price product.
From the year-on-year comparison viewpoint, in the third quarter last year, we launched the value-added products of CLINICA PRO. So there is a reactive downturn, and that also served a negative. This is one off factor. So we recover in the fourth quarter. Was the suspension of shipment lifted already? As for the suspension, at the end of the third quarter, we did the voluntary recall. So its negative impact will be lingering on in the fourth quarter as well.
Understood. Thank you.
Thank you. Next, Ms. Sato, please.
I'm Sato of Mitsubishi UFJ Morgan Stanley Securities. Japanese market improved a lot from April to June to July to September, but I was very surprised to see your cumulative growth in sales in Japan was 1.8%.
As other people were also asking about the impact of suspension of shipment, I think it would benefit you if you explain more about this. How much was the impact of suspension of shipment? How large was it? Would you give a specific number? Looking at beauty care product, the negative impact of sales promotion seems to be shrinking, but the result deteriorated from the second to third quarter. Due to the hot summer, I think the body soap market was strong and the sales decline of hand soap should be shrinking, but the results declined further. Double-digit decline. Why? Would you explain this?
Thank you very much. First, as for oral care, though described as suspension of shipment, it is the voluntary recall in the fourth quarter. The impact of suspension of shipment and voluntary recall in the third quarter was JPY 0.5 billion in profit.
In profit?
How about in sales?
In sales, JPY 1 billion plus.
Is it for the third quarter alone?
A considerable amount. We made a decision of voluntary recall in September. We allocate cash allowance for this in this fiscal year. So, the quarter impact will be mitigated.
In the fourth quarter, can we think that the impact on profit will be negligible?
We will try to offset sales negative impact with the other factors.
On profit, no impact in the fourth quarter?
Right.
How about the weak beauty care product?
Not only hand soap, but it includes a hygiene product, and in beauty care, body soap and antiperspirant roll-on type are included. As of today, except antiperspirant roll-on type, whose sales are small, all the other sales were down year-on-year. They are struggling.
This time, your mix deteriorated with a decline of profitable oral care and beauty care products. You launched a new product in fabric care, whose profitability is not high. So this is a question about your strategy, which may be the question for President. Is your strategy about new products in the category too focused? Is it on the right track?
The profitable segment fell without focused effort this time, and the most profitable segment fell.
I think oral decline was something that couldn't be helped, but don't you think that you should revisit your overall strategy?
Oral continues to be our top priority. That remains unchanged. As you know, detergent is a facility-based process business, so we need to secure a certain volume. Strategically, it is not possible to keep on going without major action for some years.
As a result, this time, we took a major action in detergent. It is true that currently we are struggling. Based on this experience, management is now fine-tuning the strategy of the next medium-term plan, which will start from next year or two years from now.
Understood. Thank you.
Thank you very much. Next, Ms. Kuwahara, please.
This is Kuwahara of JPMorgan Securities. Do you hear me?
Yes.
I would like to ask about the recovery measure in the fourth quarter and from a little longer perspective. As explained, raw material cost is currently in line with your expectation. How about in the fourth quarter onward? What's your projection for the next fiscal year, as recently, oil price began to rise again? You said that you would counter this with cost reduction, including mix change.
Other cost increases up to the third quarter has already exceeded the initial forecast of minus JPY 4.5 billion. How are you going to reduce cost? Can you make it by the end of fourth quarter? Or in the longer perspective, do you consider anything that you need to do? Thank you.
Very short term and others, and farther down the road, there are different things to do. First, in the fourth quarter, NANOX one and currently struggling SOFLAN Airis are the products that we made upfront investment, and we will strive to recoup the investment without additional expenses. This is a short-term issue. Additionally, combined with the cost control, we would like to generate profit in the fourth quarter.
Talking about the mid to long term, for the next year onward, as we made a big trial in fabric care product and was not successful, we enhance portfolio management and scrutinize the resource allocation. We have to reduce SKUs and raw material variation to improve efficiency in low-profit product categories.
I see. Let me confirm one thing. You said that due to the built-up retail inventories, you were not able to ship Airis in the third quarter. In the fourth quarter, will you be able to ship for the retail sales? Is the situation gradually developing as such?
Yes. I think the time lag between our shipment and the sell out at the retailers will be gradually reducing in the fourth quarter. We are not able to achieve the target of sell out. So we try not to spend much additional cost.
I see. Again, on the shipment suspension, is there any case of change of API suppliers that might affect adversely later?
Of course. Now we are searching for alternative API suppliers to minimize the sales suspension period. Since they are pharmaceutical products, it takes some time.
I see. Then that is not included in the recovery in the fourth quarter you just mentioned.
Right. For the expected recall part in the fourth quarter, we have already allocated some allowances.
Understood. Thank you.
Thank you very much. Next, Mr. Ohana, please.
Thank you. I am Ohana of Nomura Securities. I would like to ask about competition-related expenses. Looking at the third quarter alone, sales promotion cost increased by almost 40%, and I think that impacted the overseas total, which was below the guidance by about JPY 0.5 billion. First, would you tell us in which country did sales promotion cost increase?
It increased mostly in China. With the expansion of offline distribution, sales promotion cost increased more than expected.
Is it along with the sales growth or more like the upfront investment? Is it going to be spent in the fourth quarter as well?
It is expanding drastically. I do not think that the sales promotional costs will continue to rise sharply. But temporarily in the new area, we have to spend to secure retailer's shelf, rebate for dealers, and so on.
Then you are spending more for offline, not for the upfront cost for Double 11. So, in the fourth quarter, besides the Double 11, cost spending will continue. Is that right?
Yes, but Double 11 was a huge event two years ago. But last year and this year, the momentum was not as huge as before. As it is more skewed to Alibaba, we do not expect so much sales out of it.
I see. Finally, one confirmation. I think the growth in China in the third quarter was a little over 10%. But even with this, the sales promotion cost is as such. Is that right way to say it?
Yes. They are also linked to the launch of new products and distribution to retailers, et cetera. It is rather hard to see the direct core relationship with the total sales. But going forward, if we are to continue the similar growth of sales, it is not likely to see the proportional growth of sales promotion ratio.
Understood. Thank you.
Thank you. Thank you very much. Yamanaka-san, your question, please.
Yes. Thank you very much. My name is Yamanaka. I would like to ask you over the sales promotion initiatives in Japan and overseas separately. You earmarked JPY 1.6 billion as the necessary cost of the sales promotion in the third quarter. It is because the Chinese market is growing so far. Am I right to understand that the sales promotion cost in Japan has not been increasing so much?
Yes. Our increase in the sales promotion cost is almost equally split between Japan and overseas. Turning our eyes onto your overseas business, you expect the sales to increase by JPY 3 billion in the second quarter and the third quarter, and by JPY 1 billion in income. I think this is an excellent increase in both sales turnover and the profit.
I understand that SOFLAN Airis is not returning the investment very smoothly, especially in the third quarter. Are you going to invest in the sales promotion initiatives dividing equally between Japanese and the overseas market, or are you going to keep investing in the fabric-related products? Are you going to change?
NANOX one is introduced, but are you still investing in the fabric-related products?
Into the fourth quarter, I am interested in the breakdown of the sales promotion expenses between domestic and overseas market. Your observation is quite accurate. We expect the international market will continue growing in the fourth quarter. As we increase the percentage of our personal care products popular in foreign countries, I think that we will be able to gradually increase our profitability. This is our future vision. Turning our eyes to our domestic market, we invested into the fabric care products.
Our strategy has not been too effective so far. In the fourth quarter, therefore, we think that we have to better control the promotion cost in order to protect our overall profit.
Understood. Thank you very much.
Thank you. We have responded to all the participants who have asked us in advance to pose questions by raising your hands. We have 15 more minutes left. If you have not had any opportunity to raise your hands, please pose your questions now. If not, we will ask those who have already posed their first round of questions. Hirozumi-san, how about you?
Hirozumi from Daiwa Securities. Hold on a second. Please help me understand one more time. Why did you decide to suspend the shipment of some oral products? Some people asked already, but why now?
Are you concerned that such development has adverse effects on the bottom line of the fourth quarter? That is all.
A manufacturer of the API was, quote, "violating the GMP by prefectural auditors." They are forced into stopping the shipment of their products. According to our Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, the product manufactured using the GMP non-compliant raw materials cannot be sold in the market. Prefectural auditors took time to decide on the applied penalty on them, API manufacturer. We kept our products from selling in the market. Ultimately, we decided to effectively recall the products altogether because we have confirmed there was indeed violation of the GMP. There are no reported injuries or adverse effects on the human bodies. Both safety and the functionality are assured.
Our best guesstimate tells us that there are no problems with efficacy. You seem to be an innocent victim.
You may even demand them to pay damages, but at the same time, do you think that you are accused of having ties with such bulk material manufacturer?
Yes, we may be accused of insufficient supervision of our vendors, yes. Our so-called PAIR products and the other oral products also use the bulk material manufacturing by the same company. The efficacy, active ingredients are different, but the same manufacturer.
Is that so? Now the situation is quite clear to me. The same API manufacturer provided the raw materials. Now I understand. Thank you.
Kawamoto-san.
Thank you. Have you ever experienced a GMP violations by your vendors in the past? If yes, what kind of measures have you taken to prevent recurrence or managing of the risk?
What I am going to introduce is not a case of the violation committed by an API producer.
But yes, looking back on our history, a specific lot of a certain product, toothpaste product, was found that it contains the products containing a certain active component gradually lose their efficacy in the course of the time in 2021. Concentration fell short of the standard level. There was absolutely no problem with safety during the storage period, but we decided to recall the product voluntarily. We intended to strictly abide by the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, but we should have been more careful for supervising the possible illegal acts committed by our vendors.
Recently, we see a spate of the violation of the pharmaceutical law committed by the generic drug manufacturers. This company, by the way, was specialized in extracting the bulk materials from herbs, which we cannot do internally. Unfortunately, there is always some possibility of unintended errors emerging along our supply chains.
We have to identify and correct them and bring them back on the correct track as soon as possible.
2021 is not so long ago. I am afraid that some of your competitors took over your market share while your sales were declining. Haven't you taken recovery measures? Aren't you worried that your competitors invaded into your space?
Right. We try to fill up the shelf space with our other products. The bulk material manufacturer of herbal medicine has been selling their products to our competitors, including the toothpaste producers. But we were the first to start voluntary recall, which was favorably assessed by the major distributors. Actually, our share did not decline, fortunately.
Do you mean to say that there are other competitors voluntarily recalled their products? How many?
I believe some other competitors also recalled their products, but I cannot tell you specifically of which one, because they do not disclose the information.
Okay. I understand your toothpaste products continue enjoying the similar level of the market share because our products filled in the gap. I understand. Thank you.
Sato-san.
Sato is here. I am interested in inbound businesses. Please tell me the scale and the contents as well as the outlook of the inbound businesses. Your PAIR products are not selling too well in China, which is disappointing. Kyusoku Jikan is making a good start, right? What is the breakdown?
Yes. This is a rough figure, but our inbound sales reached JPY 4.5 billion till the end of the third quarter. We registered JPY 2.8 billion in the first half that we are gathering momentum.
Cooling sheets to care for feet, Kyusoku Jikan, have been popular. This is a little confusing, but we decided to recall the oral pills called PAIR A Tablets. Our products, including the ointment called PAIR Acne Cream W, are hugely popular among the inbound Chinese customers.
Congratulations. Can you tell us a breakdown of the JPY 4.5 billion PAIR Kyusoku Jikan?
We do not have a very precise number, but Kyusoku Jikan, roughly, how shall I say? In the category of the pharmaceuticals, the inbound accounts for about 70%. Kyusoku Jikan is more popular in Korea than PAIR, especially among the Korean tourists visiting Japan.
I see. Now, you predicted that the JPY 4 billion as their possible annual sales volume, but you could far exceeded your target. Thanks to the product mix.
Yes, you are right. As far as the inbound customers are concerned.
In other words, the inbound sales account for more because of the drop in domestic sales for several reasons.
I see. Thank you.
Yamanaka-san.
Thank you. I am interested in the domestic market for your pharmaceuticals and oral care products of the domestic market. Is there an environment for organic growth of the oral care products in Japan?
There are some temporary developments explained in your presentation, and the launch of the new products last year should have increased your sales by at least a single digit, 1%-2%, according to my calculation. Your growth in the third quarter from the second quarter is weaker than my expectation despite the introduction of the rubber brass products. Is there still room for the organic growth? Is the third quarter growth minimal if you remove the inbound demand?
First, price increase was the major factor affecting our organic growth of our oral products. Simply put, the overall market is, say, growing by 3%, but our target remains to be 5% as growing the market share. As our strategy, we decided to intentionally put our general consumer products in a back burner and try to predict our base by improving the product mix. Therefore, we appear to be growing just at the same speed as the entire market from outside.
Okay. How about the pharmaceuticals?
Inbound demand contributed greatly to the sales of the pharmaceuticals, especially during the pandemic, seeing that the largest component is antipyretic analgesics. This enjoyed the tremendous level of the demand. After the pandemic, the demand came down slightly from its peak, but the inbound pharmaceuticals are still registering the increase in overall sales.
I believe that the market environment of the oral care products has been changing dramatically. Can you give us a real-time assessment of your shelf area? Are you declining or increasing?
We do not feel any negative impact of the shelf areas. Shelf areas are not shrinking. The sales of the oral care products for the medical purposes and the eye care eye drops are on an increasing trend, which is unchanged. Our shelf area is increasing.
Thank you.
This is almost the time that we have to wrap up. How about Saji San, that you did not pose questions earlier?
Thank you. My name is Saji from the Mizuho Securities. I would like to confirm the situation in China.
You mentioned before that launching the new products, White & White in China, helped you boost your sales in this country by 20%, although the Chinese economy is sluggish, and consumables are not selling as well as before. Do you think that you can sustain the sales increase in China continuous, thanks to the new products? Or do you think that the sales would hit the ceiling when the initial momentum dissipates? Thank you.
You are absolutely correct that Lion is advancing briskly in the Chinese market, which somehow stagnates. We maintain our market share and expect to grow more, especially in the area of oral hygiene goods. Chinese people are becoming health-conscious and aging, and their needs are changing accordingly. If we successfully meet their changing demands with our newly developed innovative products, especially oral care products, there is ample room for expanding our business.
Meanwhile, we have to be mindful of more short-term external factors. First, treated water released from the nuclear power plants had some temporarily impact on our reputation, but just temporarily. No substantial impact on our sales turnover, but a more potentially substantial impact may come from the coming amendment to a regulation on toothpaste. The regulation is in effect from November and says that only pre-registered toothpaste can be sold in the market. It is similar to the pharmaceutical affairs law in Japan. They also say that they are going to separate the consumer's products and the toothpaste. We are rushing to take necessary measures. This may affect not only us but all other competitors. We can act swiftly and how much retrospectively the regulation be applied may be instrumental in or otherwise of our future business in the rest of the fourth quarter and next year.
Then please tell me the reasons of plus and minus. Can you give me one background information for each?
For example, the message on the package of our toothpaste, White & White, emphasizes that the product makes your teeth pure white, which may be prohibited under the new regulation. We can, for example, apply for the provisional registration by making necessary amendments to their claims in order to avoid attacks from competitors. One option is to redesign our package and emphasize a healthier image than the aesthetic effect. But if this takes time, then we may be delayed. On the other hand, if all these strategies hit the sweet spot, we will be able to enjoy a very advantageous position in the market.
Thank you very much. Your answer is very clear to me.
We have passed the time to conclude.
This concludes my third quarter, the briefing of our performance. Thank you very much for your active discussions and the questions. Thank you once again for coming to this briefing.