On February 5, 2020 Sysmex reported (Press release, Sysmex, FEB 5, 2020, View Source [SID1234553863])
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1. Results for the First Nine Months of the Fiscal Year Ending March 31, 2020
2. Dividend
3. Financial Forecast for the Year Ending March 31, 2020
4. Other Information
(1) Changes in significant consolidated subsidiaries (which resulted in changes in scope of consolidation):
(2) Changes in accounting policies and accounting estimates 1) Changes in accounting policies required by IFRS: Yes 2) Other changes in accounting policies: No 3) Changes in accounting estimates: No (3) Number of outstanding stock (common stock) 1) Number of outstanding stock at the end of each fiscal period (including treasury stock): 209,220,832 shares as of Dec. 31, 2019; 209,154,432 shares as of Mar. 31, 2019 2) Number of treasury stock at the end of each fiscal period: 446,532 shares as of Dec. 31, 2019; 446,168 shares as of Mar. 31, 2019 3) Average number of outstanding stock for each period (cumulative): 208,741,275 shares for the nine months ended Dec. 31, 2019 208,603,219 shares for the nine months ended Dec. 31, 2018 Note: Quarterly summaries of financial results are excluded from quarterly reviews. * Explanation regarding the appropriate use of financial forecast and other information 1. Basic earnings per share have been revised from the figures indicated in the consolidated financial forecast announced on November 6, 2019, in accordance with changes in the number of shares of outstanding stock and treasury stock. No other figures in the financial forecast have been revised. 2. The forecasts and future projections contained herein have been prepared on the basis of rational decisions given the information available as of the date of announcement of this document. These forecasts do not represent a commitment by the Company, and actual performance may differ substantially from forecasts for a variety of reasons. Please refer to "3) Consolidated financial forecast" within
"1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.
3. Supplementary financial materials (in Japanese and English) will be posted on the Sysmex website on Wednesday, February 5, 2020. － 1 － Content of Supplementary Materials 1. Qualitative information on quarterly financial results 2 1) Operating performance analysis 2 2) Financial conditions analysis 4 3) Consolidated financial forecast 4 2. Condensed quarterly consolidated financial statements and notes 5 1) Condensed quarterly consolidated statement of financial position 5 2) Condensed quarterly consolidated statement of income 7 3) Condensed quarterly consolidated statement of other comprehensive income 8 4) Condensed quarterly consolidated statement of changes in equity 9 5) Condensed quarterly consolidated statement of cash flows 11 6) Notes to the condensed quarterly consolidated financial statements 12 1. Notes related to the going concern assumption 12 2. Changes in accounting policies 12 3. Segment information 12 － 2 － 1.
Qualitative information on quarterly financial results 1) Operating performance analysis Future-related information contained in the text below is based on the judgement as of the end of the fiscal period under review. During the first nine months of the fiscal year ending March 31, 2020, the Japanese economy was affected in the manufacturing sector by worsening earnings due to trade friction and other uncertainties in the international situation, and yen appreciation, as well as a downturn in business confidence.
However, the employment and income environments continued their modest recovery, and corporate investment remained firm as companies upgraded obsolete equipment and made streamlining and labor-saving investments against the backdrop of a labor shortage. Overseas, the economic outlook was characterized by a growing sense of caution, due to prolonged US–China trade friction, the United Kingdom’s exit from the European Union and rising geopolitical tension in the Middle East. On the healthcare front, in Japan the medical and healthcare field faces growing demand due to an aging society and increasingly diverse health and medical needs.
The Japanese government is including the medical and healthcare industry in its growth strategies, which is expected to continue invigorating healthcare-related industries going forward. Looking overseas, the populations of developed countries are aging, while economic growth in emerging markets is causing healthcare demand to increase and prompting higher levels of healthcare quality and service enhancements. These trends are promoting efficient healthcare, with structural changes brought about by artificial intelligence, information and communications technology, and other breaking technologies.
Against this backdrop, we reported at the 12th Clinical Trials on Alzheimer’s disease (CTAD) conference in relation to a method of diagnosing Alzheimer’s disease using blood that we are developing in cooperation with Eisai Co., Ltd. At the CTAD, we demonstrated the possibility of understanding amyloid pathology in the brain from the amyloid beta (Aβ) in plasma measured using our protein measurement platform, the HISCL series of fully automated immunoassay analyzers.
This is expected to facilitate more patient treatment opportunities than methods currently used to understand amyloid pathology in the brain, such as amyloid PET and Aβ measurement using cerebrospinal fluid, as well as reducing the financial and physical burden on patients.
Sysmex and Eisai Co., Ltd will continue working to create new diagnostic technologies for the prevention and treatment of dementia. Meanwhile, in January 2020 health insurance coverage went into effect and we launched the ipsogen JAK2 DX reagent, a gene testing kit for blood cancers for which we had received manufacturing and marketing approval in December 2018.
This product is a gene testing kit that measures the JAK2V617F mutation* quantitatively, used in the diagnosis of certain hematopoietic tumors generally referred to as blood cancers, specifically polycythemia vera (PV), essential thrombocythemia (ET), and primary myelofibrosis (PMF). JAK2V617F mutation is frequently observed in patients with PV, ET, and PMF. No in vitro diagnostic (IVD) medical device capable of measuring this mutation had existed in Japan. The introduction of an IVD medical device enabling doctors to make appropriate diagnoses based on international standards had long been awaited. By working to increase testing opportunities for patients and creating high-value testing and diagnosis technologies, going forward Sysmex aims to continue contributing to the development and advancement of personalized medicine. * JAK2V617F mutation: JAK2 refers to the tyrosine kinase JAK2 protein, which transduces the signals for regulating the growth and differentiation of blood cells. JAK2V617F indicates a mutation in which an amino acid (valine) at position 617 of JAK2 protein is replaced by phenylalanine.
In Japan, instrument and reagent sales increased, centered on the hematology and hemostasis fields. As a result, sales in Japan rise 6.8% year on year, to ¥33,995 million. Overseas, sales of reagents grew, mainly in the hematology, urinalysis and immunochemistry fields, while decreasing in the hemostasis field. Consequently, overseas sales for the Sysmex Group rose 4.3% year on year, to ¥184,167 million. The overseas sales ratio fell 0.3 percentage point, to 84.4%. As a result, during the first nine months of the fiscal year ending March 31, 2020, the Group recorded consolidated net sales of ¥218,162 million, up 4.7% year on year. Operating profit declined 5.0%, to ¥40,420 million; profit before tax decreased 6.8%, to ¥37,224 million; and profit attributable to owners of the parent fell 8.3%, to ¥26,496 million. Performance by segment
(1) Japan In Japan, sales increased 9.0% year on year, to ¥36,695 million, benefiting from higher sales of instruments and reagents, mainly in the hematology and hemostasis fields. On the profit front, higher sales pushed up gross profit, but segment profit (operating profit) fell 5.9%, to ¥26,408 million, owing to higher SG&A and R&D expenses.
(2) Americas Instrument sales were down, mainly in the hemostasis field, but higher sales of instruments and reagents in the hematology field pushed up sales 3.0% year on year, to ¥47,014 million. On the profit front, increased sales boosted gross profit. Nevertheless, segment profit (operating profit) declined 33.7% year on year, to ¥1,667 million, as a result of rising SG&A expenses.
(3) EMEA Sales in the EMEA region expanded 2.5% year on year, to ¥58,193 million, helped by higher reagent sales, mainly in the hematology and hemostasis fields. On the profit front, higher sales leading to higher gross profit and a decrease in SG&A expenses pushed segment profit (operating profit) up 34.7% year on year, to ¥6,338 million.
(4) China In China, reagent sales decreased, mainly in the hemostasis field, and instrument sales fell in the hematology field. However, instrument sales in the hemostasis field grew, as did reagent sales in the hematology field. As a result, sales increased 3.3% year on year, to ¥56,532 million. On the profit front, SG&A expenses decreased, but a worsening cost of sales ratio caused gross profit to decline. Consequently, segment profit (operating profit) dropped 38.8%, to ¥4,275 million.
(5) Asia Pacific Instrument and reagent sales were up, mainly in the hematology field, leading to a 12.2% year on year rise in sales in the Asia Pacific region, to ¥19,727 million.
－ 4 － On the profit front, despite worsening cost of sales ratio and higher SG&A expenses, higher sales led to a rise in gross profit and pushed segment profit (operating profit) up 34.0% year on year, to ¥3,079 million. 2) Financial conditions analysis
(1) Financial conditions As of December 31, 2019, total assets amounted to ¥374,368 million, up ¥27,593 million from March 31, 2019. As principal factors, property, plant and equipment increased ¥20,398 million, and inventories grew ¥11,178 million, while other short-term financial assets decreased ¥7,091 million. Meanwhile, total liabilities as of December 31, 2019, were ¥99,873 million, up ¥18,280 million from their level on March 31, 2019. Principal increases included a ¥17,083 million rise in lease liabilities (non-current) and a ¥5,542 million increase in lease liabilities (current), while accrued bonuses decreased ¥2,118 million.
Total equity came to ¥274,495 million, up ¥9,312 million from March 31, 2019. Among principal reasons, retained earnings rose ¥11,467 million, while other components of equity declined ¥2,492 million. Equity attributable to owners of the parent to total assets fell 3.1 percentage points, from 76.3% on March 31, 2019 to 73.2% on December 31, 2019.
(2) Cash flows As of December 31, 2019, cash and cash equivalents amounted to ¥48,695 million, down ¥2,366 million from March 31, 2019.
Cash flows from various activities during the first nine months of the fiscal year are described in more detail below. (Cash flows from operating activities) Net cash provided by operating activities was ¥35,155 million, up ¥6,062 million from the first nine months of the previous fiscal year. As principal factors, profit before tax provided ¥37,224 million (¥2,707 million less than in the corresponding period of the preceding year), depreciation and amortization provided ¥17,810 million (¥6,165 million more than in the corresponding period of the preceding year), an increase in inventories used ¥11,301 million (up ¥7,477 million), an increase in trade payables provided ¥2,998 million (¥1,477 million used in the corresponding period of the previous year), and a decrease in consumption taxes receivable provided ¥623 million (¥33 million used in the corresponding period of the previous year). (Cash flows from investing activities) Net cash used in investing activities was ¥17,994 million (decrease of ¥11,425 million).
Among major factors, purchase of property, plant and equipment used ¥10,123 million (decrease of ¥2,163 million), purchase of intangible assets used ¥9,633 million (up ¥2,976 million), purchase of investments in equity instruments used ¥3,522 million (up ¥1,507 million), and proceeds from withdrawal of time deposits provided ¥7,223 million (up ¥7,223 million). (Cash flows from financing activities) Net cash used in financing activities was ¥19,001 million (up ¥4,825 million). This was mainly due to dividends paid of ¥15,028 million (up ¥428 million), and repayment of lease liabilities, which used ¥4,177 million. 3) Consolidated financial forecast The Company maintains its consolidated financial forecasts, as announced on November 6, 2019. These forecasts are based on information available as of the date of this release. Actual results may differ materially from these forecast due to unforeseen factors and future events.