Kobayashi Pharmaceutical, Ltd. (TSE: 4967), a leading importer and distributor of medical equipment and pharmaceutical and consumer goods wholesaler, has announced consolidated financial results for the first quarter ended June 30, 2006. In a quarter with a firmer floor for consumer spending, the Group continued to cultivate the spirit of its "Creation and Innovation" management concept, develop latent customer needs by providing products and services to create new markets while offering new added-value products and services in markets in which the Group already maintains a presence.
Net sales in the first quarter grew to 62,668 million yen, an increase of 2.0% from the previous fiscal year. Operating income was 3,609 million yen, a decrease of 9.7% from the previous year, and ordinary income was 3,106 million yen, a decrease of 13.5%. Net income for the first quarter registered at 2,429 million yen, an increase of 44.6%, following 1,437 million yen in impairment losses accounted for as extraordinary losses in the same period the previous year.
I. First Quarter Financial Summary (April 1, 2006 - June 30, 2006)
(1) Consolidated Operating Results
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(Millions of Yen)
April 1 - June 30, FY 3/31,
2006 % 2005 % 2006
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Operating Revenues 62,668 2.0 61,414 14.9 246,852
Operating Income 3,609 (9.7) 3,998 39.3 16,879
Ordinary Income 3,106 (13.5) 3,591 44.3 15,151
Net Income 2,429 44.6 1,680 0.0 7,474
Net Income per Share (Yen) 58.82 40.37 179.17
Net Income per Share,
diluted (Yen) 58.73 -- 170.01
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(2) Consolidated Financial Position
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(Millions of Yen)
As of June 30, As of March 31,
2006 2005 2006
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Total Assets 160,206 149,996 151,945
Shareholders' Equity 70,519 60,985 66,811
Shareholders' Equity Ratio 44.0% 40.7% 44.0%
Shareholders' Equity
per Share (Yen) 1,706.88 1,465.28 1,617,10
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(3) Consolidated Cash Flows
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(Millions of Yen)
As of June 30, As of March 31,
2006 2005 2006
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Cash Flows from
Operating Activities (1,155) (283) 13,159
Cash Flows from
Investing Activities 2,981 518 (6,414)
Cash Flows from
Financing Activities (2,499) 888 (1,419)
Cash and Cash Equivalents,
End of Term 23,761 20,170 24,436
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Please download the Consolidated Annual Financial Results Financial Results for the First Quarter Ended June 30, 2006 here, or via Bloomberg, MultexNet, Reuters Research or Thomson One Analytics.
II. Summary of Performance by Business Segment
Consumer Products Operations:
The Consumer Product Operations segment saw the introduction of 18 new products (excluding nutritional supplement foods) in the spring, including the internal preparation 'Nicitol' for combustion of internal stomach fat and the household deodorant 'Cleair', which contributed to sales growth. There were also strong trends in the 'Shouyou' oral hygiene preparation and 'Inochi no Haha A', a female health aid marketed since June of last year.
As a result, segment sales increased 1,301 million yen, or 5.9%, from the previous year to 23,508 million yen.
In spite of reductions in manufacturing costs and other expenses, operating income decreased 693 million yen, or 17.1%, from the previous year to 3,358 million yen, due to aggressive advertising aimed at enhancing the Company's brands.
Wholesale Operations:
The Wholesale Operations segment faced a difficult business environment due to inclement weather that hurt the performance of summer products at drug stores, which are the Company's principal customers. However, segment sales rose 239 million yen or 0.6% over the previous period, to 41,246 million yen, as a result of the new consolidation of KS Tohoku in the current quarter.
As a result of declines in sales of health foods and summer products, though, the segment posted an operating loss of 175 million yen, a decline of 135 million yen compared to the previous year.
Medical Devices Operations:
Segment sales trended strongly due to domestic marketing of proprietary products and stress on the orthopedic surgery field, in which market expansion is foreseen. In the U.S., margins improved because of introduction of new customer administration systems and reduction of expenses in the indirect sector.
As a result, segment sales increased by 448 million yen or 11.8% over the previous year, to 4,256 million yen, and operating income increased by 360 million yen over the previous year to 318 million yen.
III. Changes in Financial Position
Compared to the end of the previous fiscal year, total assets increased by 8,260 million yen but a gain of 3,707 million yen in net assets resulted in no change in the equity capital ratio of 44%. By existing standards, the ratio was 42.2%.
Among the principal factors in the increase were gains of 5,849 million yen in current assets (trade notes and accounts receivable) and 2,116 million yen in inventories due to new subsidiary consolidation. Similarly, current liabilities (trade notes and accounts payable) increased by 7,517 million yen and short-term borrowings by 1,356 million yen.
Cash Flows from Operating Activities
Cash used in operating activities was 1,155 million yen. Although net income in the first quarter before tax and other adjustments was 4,767 million yen, corporate and other tax payments amounted to 4,012 million yen.
Cash Flows from Investing Activities
Net cash used in investing activities was 2,981 million yen. This included 330 million yen for the acquisition of tangible fixed assets, but proceeds from the sale of tangible fixed assets and transfer of goodwill amounted to 1,160 million yen and 1,127 million yen, respectively.
Cash Flows from Financing Activities
Net cash used in financing activities totaled 2,499 million yen, due to 1,569 million yen in dividend and other payments.
(4) Consolidated Projections for the Fiscal Year Ending March 31, 2007
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(Millions of Yen)
Full Year Interim
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Net Sales 268,000 135,000
Ordinary Income 16,000 8,000
Net Income 8,600 4,500
Net Income per Share (yen) 207.19 --
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Results for the first quarter of the current fiscal year changed roughly in line with forecasts. Therefore, the Company has not revised the interim or full-year earnings projections that were announced on May 17, 2006.
About Kobayashi Pharmaceutical
Kobayashi Pharmaceutical (TSE: 4967; OTC: KBYPF) first opened for business in 1919, and management policy has always been to provide people and society with wonderful comfort through "Creativity and Innovation". Over the years the Company has expanded its scope, developing into a cluster of enterprises with three principal businesses: Consumer Products Operation, Wholesale Operation and Medical Devices Operation. In the fiscal year ended March 31, 2005, Kobayashi achieved increases in sales and profits for the seventh consecutive year since the introduction of consolidated accounting.
Contact:
Kobayashi Pharmaceutical
http://www.kobayashi.co.jp/english/contact/index.html
July 24, 2006