Otsuka (4578) Q2 2024 earnings summary

Executive summary

• Revenue grew 17.0% year-on-year to ¥1,109.8 billion, with business profit up 37.8% to ¥213.6 billion, driven by strong pharmaceutical and nutraceutical sales.

• Net profit increased 5.1% to ¥107.8 billion despite a ¥103,293 million impairment loss on AVP-786, supported by finance income.

• First-half results exceeded revised plans, with both segments outperforming expectations and business profit at 115.5% of the May 2024 forecast.

• Comprehensive income for the period was ¥264,541 million, up 13.8% year-on-year.

• Upward revision of FY2024 full-year guidance, with revenue and business profit expected to reach record highs.

Financial highlights

• Operating cash flow before R&D investment rose by approximately ¥20 billion year-on-year.

• Cost of sales ratio improved by 1.9 percentage points due to product mix and efficiency gains.

• Gross profit rose to ¥792,718 million from ¥659,674 million year-over-year.

• Basic earnings per share increased to ¥198.61 from ¥189.06 year-over-year.

• Upfront milestone to royalty revenue decreased to ¥41.8 billion due to lower milestone income, despite higher royalties from Qsymia and Pluvicto.

Outlook and guidance

• FY2024 revenue forecast revised upward to ¥2,315,000 million (up 14.7% year-on-year); business profit forecast raised to ¥390,000 million (up 24.8%).

• Operating profit forecast lowered to ¥302,000 million due to impairment loss; net profit guidance set at ¥240,000 million, nearly double 2023 levels.

• SG&A and R&D expenses expected to rise in the second half due to growth investments and contract changes; R&D forecast at ¥326,000 million.

• Forecast incorporates impact of treasury share purchase and cancellation.

• Annual dividend forecast raised to ¥120.00 per share.