On November 12, 2019 Nippon Kayaku reported that (Press release, Nippon Kayaku, NOV 12, 2019, View Source [SID1234550888])
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1. Consolidated Business Results for the Second Quarter of the Fiscal Year Ending March 31, 2020 (April 1,201 September 30, 2019)
(Figures shown are rounded down to the nearest million yen.)
(1) Consolidated Operating Results
The provisional accounting treatment of the corporate combination that occurred during the third quarter of fiscal
year ended March 31, 2019 has been finalized and the amount of the impact from retrospective adjustments is
reflected in the figures for the first half of fiscal year ended March 31, 2019.
(2) Consolidated Financial Position
3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2020 (April 1, 2019–March 31, 2020)
(1) Significant changes in subsidiaries during the first half (changes in designated subsidiaries that result in changes
in scope of consolidation): None
(2) Adoption of special accounting methods for presenting the quarterly consolidated financial statements: None
(3) Changes to accounting policies and estimates and restatements
[1] Changes to accounting policies associated with revision of accounting standards or similar items: None
[2] Changes other than [1]: None
[3] Changes to accounting estimates: None
[4] Restatements: None
(4) Number of shares issued (common stock)
[1] Number of shares issued at end of the fiscal period (including treasury stock)
As of September 30, 2019: 177,503,570 shares
As of March 31, 2019: 182,503,570 shares
[2] Number of treasury stock at end of the fiscal period
As of September 30, 2019: 4,359,265 shares
As of March 31, 2019: 9,358,749 shares
[3] Average number of shares during the fiscal period (cumulative)
First half of the fiscal year ending March 31, 2020: 173,144,521 shares
First half of the fiscal year ended March 31, 2019: 173,145,594 shares
* Quarterly summary financial statements are not subject to audit by a certified public accountant or audit firm.
* Analysis related to appropriate use of the business forecasts, and other notes
The information in this report constitutes forward-looking statements regarding future events and performance. This
information is based on the beliefs and assumptions of management in light of information currently available to it
at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to "(3) Analysis of Forward-looking Statements, including Consolidated Business Results Forecasts" on page 3 of the Supplementary Information.
Supplementary Information
Contents
1. Qualitative Information Concerning Results for the Second Quarter 2
(1) Analysis of Operating Results 2
(2) Analysis of Financial Position 3
(3) Analysis of Forward-looking Statements, including Consolidated Business Results Forecasts 3
2. Quarterly Consolidated Financial Statements and Notes to Quarterly Consolidated Financial
Statements
(1) Consolidated Balance Sheets 4
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income 6
(3) Consolidated Statements of Cash Flows 8
(4) Notes to Quarterly Consolidated Financial Statements 10
Notes Regarding Assumptions for the Going Concern 10
Notes in Case of Significant Change in Shareholders’ Equity 10
Segment Information and Other Items 10
Significant Subsequent Events
1. Qualitative Information Concerning Results for the Second Quarter
The figures in the provisional accounting for a business combination in the previous consolidated fiscal year have
been confirmed, and the content confirmed in the provisional accounting is reflected in the figures for the second
quarter of the previous consolidated fiscal year.
(1) Analysis of Operating Results
In the first half of this consolidated fiscal year (April 1 to September 30, 2019), the global economy as a whole saw
slow growth. This was mainly due to the deceleration of external demand in the manufacturing industry, while
consumer spending remained steady on the back of an improved employment and income environment in the U.S.
and Europe. The trend of deceleration in economic growth persisted in China, owing to the impact from trade
friction between the U.S. and China, among other factors. The Japanese economy showed signs of a gradual rebound despite weak exports. This resulted mainly from moderate growth in capital investment and a resurgence in
consumer spending.
Amid these conditions, the Nippon Kayaku Group worked to implement the key themes and resolve the midand long-term key issues outlined in "KAYAKU Next Stage," the mid-term business plan launched this fiscal year.
We worked to cut costs further to reinforce our profit structure, in addition to focusing on strengthening R&D,
optimal allocation of business resources into core businesses, and expanding our overseas business.
Sales for the first half of this consolidated fiscal year outperformed the same period last fiscal year in the functional
chemicals business, the pharmaceuticals business, and the safety systems business, resulting in total net sales of
85,608 million yen, an increase of 749 million yen (0.9%) year-on-year.
Operating income totaled 9,045 million yen, a decrease of 518 million yen (5.4%) year-on-year.
Ordinary income totaled 9,149 million yen, a decrease of 1,902 million yen (17.2%) year-on-year due to an
increase in exchange losses.
Profit attributable to owners of parent was 6,337 million yen, a decrease of 1,136 million yen (15.2%)
year-on-year.
Performance by business segment is as described below.
[Functional Chemicals Business]
Sales stood at 34,141 million yen, an increase of 27 million yen (0.1%) year-on-year.
The functional materials business recorded growth in sales over the same period of the previous fiscal year.
This growth was resulted from strong sales of epoxy resins for smartphones and 5G base stations, which more than
covered for the deceleration in demand from the semiconductor market.
The color materials business outperformed the first half of last fiscal year, boosted by strong sales of colorants
for inkjet printers for industrial applications and materials for thermal paper.
The catalyst business underperformed the same period of the previous fiscal year.
In the Polatechno Group, sales of components for X-ray analysis systems were strong, but sluggish sales of
dye-type polarizing films resulted in underperformance of the Polatechno Group as a whole, compared with the
same period of the previous fiscal year. Segment profit was 2,590 million yen, a decrease of 1,095 million yen (29.7%) year-on-year.
[Pharmaceuticals Business]
Sales stood at 23,225 million yen, an increase of 158 million yen (0.7%) year-on-year.
Pharmaceuticals in Japan recorded growth in sales for the antibody biosimilar, INFLIXIMAB BS for I.V.
Infusion, and for Trastuzumab BS for I.V. infusion. Sales for the pharmaceuticals business as a whole outperformed
the first half of last fiscal year. Growth in sales of the generic anti-cancer drugs OXALIPLATIN for I.V. Infusion
NK, TEMOZOLOMIDE Tab., and other generic anti-cancer drugs boosted performance, despite the year-on-year
underperformance of long-listed products as the switch to generic drugs continued.
Exports as a whole underperformed year-on-year due to a decline in exports of BLEOs and ETOPOSIDEs (anti-cancer drugs), despite year-on-year growth in high potency active pharmaceutical ingredients.
Sales of active pharmaceutical ingredients and contracted production for the Japanese domestic market, and
diagnostic agents underperformed the first half of last fiscal year.
Segment profit totaled 2,409 million yen, an increase of 743 million yen (44.6%) year-on-year
[Safety Systems Business]
Sales stood at 24,071 million yen, an increase of 590 million yen (2.5%) year-on-year.
Business in Japan outperformed the same period of the previous fiscal year due to firm sales of both airbag
inflators and micro gas generators for seatbelt pretensioners.
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the Second Quarter of the Fiscal Year Ending March 31, 2020
This document is an English translation of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
The overseas business saw an increase in the automotive safety component installation rate; however, the
sluggish market in China caused air bag inflators, micro gas generators for seatbelt pretensioners, and squibs all to
underperform the same period of the previous fiscal year.
Segment profit was 3,431 million yen, a decrease of 271 million yen (7.3%) year-on-year.
[Other]Sales totaled 4,170 million yen, a decrease of 27 million yen (0.6%) compared to the same period of the previous Fiscal year.
The agrochemicals business outperformed the same period of the previous fiscal year in both domestic sales
and exports, resulting in year-on-year growth for the business as a whole.
Sales in real estate and other business decreased compared to the same period of the previous fiscal year.
Segment profit totaled 795 million yen, an increase of 137 million yen (20.9%) year-on-year.
(2) Analysis of Financial Position
[1] Status of Assets, Liabilities, and Net Assets
Total assets were 287,017 million yen, a decrease of 6,554 million yen from the end of the previous consolidated
fiscal year. The main decreases were in securities, a decrease of 4,752 million yen; notes and accounts receivable-trade, a decrease of 4,260 million yen; and investment securities, a decrease of 1,749 million yen. The
main increases were in cash and deposits, an increase of 3,432 million yen; and long-term loans receivable, an
increase of 632 million yen.
Liabilities were 58,923 million yen, a decline of 5,605 million yen compared to the end of the previous
consolidated fiscal year. The main decreases were in long-term loans payable, a decrease of 2,177 million yen;
accounts payable-other, a decrease of 1,885 million yen; income taxes payable, a decrease of 917 million yen; and
deferred tax liabilities, a decrease of 675 million yen. The main increase was in notes and accounts payable-trade, an
increase of 570 million yen.
Net assets were 228,093 million yen, a decrease of 949 million yen compared to the end of the previous
consolidated fiscal year. The main decreases were in translation adjustments, a decrease of 3,299 million yen; and
dividends paid, a decrease of 2,597 million yen. The main increase was in profit attributable to owners of parent, an
increase of 6,337 million yen.
[2] Cash Flows Status
Net cash provided by operating activities amounted to 15,746 million yen (versus a cash inflow of 14,465 million
yen during the first half of the previous fiscal year). The positive cash flow was primarily generated from profit
before income taxes of 8,840 million yen, depreciation and amortization of 5,983 million yen, and a decrease in
notes and accounts receivable-trade of 3,577 million yen. The above factors more than compensated for income tax
paid of 3,524 million yen and an increase in inventories of 1,118 million yen.
Net cash used in investing activities totaled 10,450 million yen (versus a cash outflow of 7,950 million yen
during the first half of the previous fiscal year). The net outflow was mainly due to expenditures of 8,702 million
yen for the purchase of property, plant and equipment.
Net cash used in financing activities amounted to 5,167 million yen (versus a cash outflow of 5,907 million yen
during the first half of the previous fiscal year). This was mainly due to expenditures for repayment of long-term
loans of 2,171 million yen and dividends paid of 2,590 million yen.
Reflecting the above cash flow performance, the balance of cash and cash equivalents at the end of the first
half was 51,297 million yen (versus 51,362 million yen during the first half of the previous fiscal year), a decrease
of 1,400 million yen from the end of the previous fiscal year.
(3) Analysis of Forward-looking Statements, including Consolidated Business Results Forecasts
The global economy will benefit from the anticipated firmness of the U.S. and European economies, and this will
affect the future business environment surrounding the Nippon Kayaku Group. However, there is concern over a
downswing in the global economic environment due to increased uncertainty over the future caused by trade friction and the political climate. The Chinese economy is expected to improve, due in part to various government policies which will underpin growth. Although a continued rebound in the Japanese economy is expected as employment and ncome environment continues to improve and also due to support from various government policies, we need to keep a cautious eye on the impact that a downswing in the global economy would have.
Under these conditions, the Nippon Kayaku Group aims to construct a solid financial structure which flexibly
adapts to changes in the business environment, as well as expand existing businesses in global growth markets,
accelerate the development of new businesses and new products, and enhance profits.
The business results forecasts for fiscal year ending March 31, 2020 have been revised from the forecasts
announced on May 10, 2019. See the Notice of Revision to the Business Results Forecasts posted on the corporate
website today for further details