Chugai Pharmaceutical (4519) Q2 2024 earnings summary

Executive summary

• Revenue declined by 4.6% year-over-year to ¥552.9 billion, mainly due to the absence of Ronapreve supply and domestic headwinds, but core business excluding Ronapreve grew 10.9%.

• Operating profit and net income reached record highs, rising over 10% year-over-year, driven by strong exports, especially Hemlibra and Actemra, and improved margins.

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

• Domestic sales fell 30.7% due to NHI drug price revisions, generic competition, and Ronapreve supply completion, 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

• Operating profit rose 13.3% to ¥262.8 billion; net income up 10.6% to ¥189.5 billion year-over-year.

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

• Overseas sales increased by 28.2% to ¥268.4 billion, led by Hemlibra and Actemra; domestic sales declined to ¥217.2 billion.

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

• Shareholders' equity ratio remained high at 85%; net cash increased to ¥815.7 billion.

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 is ¥1,070.0 billion; operating profit: ¥460.0 billion; net income: ¥335.5 billion; EPS: ¥204.00.

• Dividend forecast for FY2024 is ¥82.00 per share, up from ¥80.00 in FY2023.

• 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.