On October 26, 2023 Takeda (TOKYO:4502/NYSE:TAK) reported financial results for the first half of fiscal year 2023 (six months ended September 30, 2023), updating reported and Core forecasts and reconfirming Management Guidance for Core change at CER (Press release, Takeda, OCT 26, 2023, View Source [SID1234636400]).

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Takeda chief executive officer, Christophe Weber, commented:
"We continue to pursue our vision to discover and deliver life-transforming treatments, making further progress in the first half of our fiscal year to address unmet medical needs and provide new treatment options to improve patient outcomes and quality of life. Our pipeline is robust and we anticipate a number of important milestones in the second half of the fiscal year, including potentially up to three new product approvals in the U.S., for TAK-755, fruquintinib, and TAK-721.

"Development setbacks with EXKIVITY and ALOFISEL, which impacted our reported profit in FY2023 Q2, highlight the inherent risk in research and development in the pharmaceutical business, but do not hinder our strategy for a return to growth in the near-term and our confidence in the long-term strength of the business remains firm."

Takeda chief financial officer, Costa Saroukos, commented:
"We are raising our full-year revenue and Core EPS forecasts to reflect updated foreign exchange and tax rate assumptions, while revising our reported operating profit and EPS forecasts to reflect large non-core items booked in our second quarter. These items do not reflect the underlying momentum of the business, and we remain on track to our Management Guidance, which is on a Core basis at CER.

"We continue to see strong performance of our Growth and Launch Products, which grew +13% at CER in the first half of the fiscal year and represent 42% of total revenue. While our Core revenue and profit performance in the first half continued to reflect the temporary headwinds we face this fiscal year, largely from generic competition, we believe our Growth and Launch Products will drive a return to revenue and profit growth in the near-term."

FINANCIAL HIGHLIGHTS

Results for FY2023 H1 Ended September 30, 2023

(Billion yen,
except
percentages and
per share
amounts)

REPORTED

CORE(c)

(Non-IFRS)(a)

FY2023 H1

vs. PRIOR YEAR

(Actual % change)

FY2023 H1

vs. PRIOR YEAR

(Actual % change)

vs. PRIOR YEAR

(CER % change(d))

Revenue

2,101.7

+6.4%

2,101.7

+6.4%

+1.4%

Operating Profit

119.2

-53.2%

588.8

-5.8%

-9.5%

Margin

5.7%

-7.2pp

28.0%

-3.6pp

Net Profit

41.4

-75.2%

407.7

-8.7%

-13.8%

EPS (yen)

27

-75.4%

261

-9.4%

-14.4%

Operating Cash Flow

291.3

-4.6%

Free Cash Flow
(Non-IFRS)(a)(b)

-71.1

N/A

(a) Further information regarding certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at View Source

(b) We define Free Cash Flow as cash flows from operating activities, subtracting acquisition of property, plant and equipment ("PP&E"), intangible assets and investments as well as removing any other cash that is not available to Takeda’s immediate or general business use, and adding proceeds from sales of PP&E, as well as from sales of investments and businesses, net of cash and cash equivalents divested.

(c) Core results adjust our reported results calculated and presented pursuant to IFRS to exclude the effect of items unrelated to Takeda’s core operations, such as, to the extent applicable for each line item, non-recurring items, purchase accounting effects and transaction related costs, as well as amortization and impairment of intangible assets and other operating income and expenses.

(d) CER (Constant Exchange Rate) change eliminates the effect of foreign exchange rates from year-over-year comparisons by translating Reported or Core results for the current period using corresponding exchange rates in the same period of the previous fiscal year.

FY2023 OUTLOOK
Updating Full-Year FY2023 Reported and Core Forecasts, and Reconfirming Management Guidance

Based on Takeda’s first half results and reflecting expected foreign exchange rates during the second half of FY2023, Takeda’s reported and Core forecasts have been revised from the original forecast.

(Billion yen except per share amounts)

FY2023 ORIGINAL
FORECAST
(May 2023)

FY2023 REVISED
FORECAST
(October 2023)

FY2023 MANAGEMENT
GUIDANCE
Core Growth at CER
(Non-IFRS)
(Unchanged from May 2023)

Revenue

3,840.0

3,980.0

Core Revenue

3,840.0

3,980.0

Low-single-digit % decline

Reported Operating Profit

349.0

225.0

Core Operating Profit

1,015.0

1,015.0

Low-10s % decline

Reported Net Profit

142.0

93.0

Reported EPS (yen)

91

59

Core EPS (yen)

434

447

Low-20s % decline

Free Cash Flow*

400.0-500.0

400.0-500.0

Annual Dividend per Share (yen)

188

188

*Free Cash Flow forecast reflects expenditures related to the acquisition of TAK-279 from Nimbus (JPY134.1 billion) and in-licensing of fruquintinib from HUTCHMED (JPY55.1 billion).

Additional Information About Takeda’s H1 Earnings Results
For more details on Takeda’s FY2023 H1 results and other financial information, including key assumptions in FY2023 forecast and management guidance, please visit: View Source

For more information on Takeda’s commercial progress across the five key business areas and pipeline updates, please visit: View Source