Chugai Pharmaceutical (4519) Q2 2024 earnings summary

Executive summary

• Revenue declined by 4.6% year-over-year to ¥552.9B, mainly due to the absence of Ronapreve COVID-19 supply, but core business excluding Ronapreve grew 10.9%.

• Operating profit and net income reached record highs, rising 13.3% and 10.6% year-over-year respectively, driven by strong exports, especially Hemlibra and Actemra, offsetting domestic declines.

• Operating margin improved to 47.5%, reflecting a favorable product mix and cost structure.

• Domestic sales declined 30.7% due to Ronapreve supply completion, NHI drug price revisions, and generic competition, while overseas sales surged 28.2% on higher Hemlibra and Actemra exports.

• The company expects record-high operating profit and net income for the full year, maintaining FY2024 guidance.

Financial highlights

• Revenue: ¥552.9B (-4.6% year-over-year); Operating profit: ¥262.8B (+13.3%); Net income: ¥189.5B (+10.6%).

• Cost of sales ratio improved to 33% due to elimination of high-cost Ronapreve and growth of lower-cost products.

• Overseas sales: ¥268.4B (+28.2%); Domestic sales: ¥217.2B (-30.7%).

• Other revenue, including Hemlibra royalties and one-time income, rose by ¥10.7B (18.9%).

• Net cash increased to ¥815.7B, with free cash flow up by ¥134.7B.

Outlook and guidance

• Full-year guidance remains on track, with potential for exceeding forecasts due to strong overseas sales and favorable FX impacts.

• FY2024 revenue forecast: ¥1,070.0B; operating profit: ¥460.0B; net income: ¥335.5B; EPS: ¥204.00.

• Progress toward full-year targets is on track, with 51.7% of revenue and 57.1% of operating profit achieved by mid-year.

• Hemlibra and Actemra exports are expected to remain solid, with no major concerns for the remainder of the year.

• Biosimilar penetration for Actemra is slower than anticipated, supporting continued export strength.