On November 2, 2018 Takeda Pharmaceutical Company Limited (TOKYO: 4502) (Press release, Takeda, NOV 2, 2018, View Source [SID1234530660]):
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+4.2% growth in underlying revenue driven by growth drivers, with growth in each region
Underlying sales increased by + 4.2%, with Takeda’s growth drivers (gastroenterology, oncology, neuroscience and emerging markets) continuing to grow +9.8 %.
The key products Entyvio (+ 33.1%) and Ninlaro (+ 38.0%) contributed significantly to the growth in sales, as well as the products acquired from Ariad in 2017. Each region achieved positive growth compared to last year (USA + 9.2%, Japan + 4.1%, Europe & Canada + 4.3%, Emerging Markets + 2.4%).
Reported revenues decreased by -0.1%. Although our growth drivers maintained their strong growth, foreign currency exchange rates (-1.0 pp) and disposals (-3.2 pp) had a negative impact. The impact of the divestments included the sale of additional products to the Teva JV during the 2017 fiscal year, as well as Multilab and Techpool during the fiscal year 2018.
Underlying core earnings of + 31.8% with a margin of + 5.1 pp resulting from strict OPEX discipline
Earnings from underlying core businesses increased +31.8%, reflecting revenue growth and a 5.1pp margin increase, of which two-thirds (3.3ppm) ) were stimulated by OPEX improvements. This was the result of the global OPEX initiative fully integrated into working methods at Takeda.
Reported operating profit fell 26.6%. It was impacted by two strong non-recurring gains recorded in fiscal 2017: the sale of Wako shares for 106.3 billion yen and the sale of additional products to the Teva JV. In addition, Takeda recorded non-recurring expenses for fiscal year 2018 related to the proposed acquisition of Shire. Excluding these non-recurring items, operating income increased by +64.5%.
Core EPS was up + 32.7% and reported EPS decreased 26.9% to 162 yen per share, impacted by disposals and Shire-related costs.
The product pipeline has reached several milestones in the first half of fiscal year 2018
Maintenance of multiple myeloma after a Ninlaro stem cell transplant (TOURMALINE-MM3 study), Alukbris ALK + first line metastatic non-small cell lung cancer (ALTA-1L study), Adcetris first-line CD30 + T cell peripheral lymphoma (ECHELON-2 study) and the subcutaneous formulation in Entyvio ulcerative colitis (VISIBLE 1 study) all met their primary endpoints.
Seven new molecular entities have been integrated into the Phase 1 pipeline since April 2018.
Non-core asset disposal plan is on track
Free cash flow from operations since the beginning of the year decreased by -29.7% primarily as a result of the impact of the sale of additional products to the Teva JV during the 2017 fiscal year.
The sale of securities and real estate generated 44.2 billion yen in cash and the sale of non-core activities Techpool and Multilab generated an additional 27.2 billion yen.
The net debt / EBITDA ratio is 1.7x, an improvement of 1.8x for the fourth quarter of fiscal year 2017 and 2.7x for the fourth quarter of fiscal year 2016.
Christophe Weber, President and Chief Executive Officer, commented:
"Strategic priorities and a high quality of execution led to a solid performance in the first half of fiscal year 2018, as we are committed to meeting our key priorities to increase the portfolio, strengthen the pipeline, boost profitability. Our growth drivers contribute significantly to both earnings and earnings, and I am pleased to report that two-thirds of the 510 basis points of underlying core earnings margin improvement can be explained by the discipline in terms of costs following the global OPEX initiative.
In the first half of the year, we also achieved several important financial and regulatory milestones towards the proposed acquisition of Shire plc. I would like to emphasize that Takeda’s current strategy is working and that Takeda’s board of directors, Takeda’s management team and I are confident that the acquisition of Shire will allow Takeda to significantly accelerate the transformation. of the company to become a global leader in biopharmaceutical, R & D-based, values-based, headquartered in Japan. "
Basic earnings represent adjusted net income to exclude the tax expense, our share of capital gains or losses accounted for by the equity method, financial income and expenses, other costs and income. operating, amortization and impairment of intangible assets associated with revenue and other items that management perceives as unrelated to our core business, such as the impact of purchase accounting and transaction costs.
Underlying growth compares two periods (quarters or years) of financial results on a common basis and is used by management to evaluate the business. These financial results are calculated in constant currencies and exclude the impacts of divestitures and other amounts that are exceptional items, unusual or unrelated to our ongoing operations.
Attributable to the owners of the company.
Takeda Upgrades Velcade’s Full-Year Forecast, Dynamics of Growth Factors and OPEX Discipline
Upward revisions to underlying guidelines and reported forecasts.
Underlying guidance for fiscal year 2018: Underlying earnings guidance increased
Previous projections (% growth)
(May 14, 2018) Revised Projections (% Growth)
(October 31, 2018)
Underlying turnover Low single digit growth rate Low single digit growth rate
Earnings from underlying core businesses High single digit growth Average growth%
Underlying basic EPS Low double-digit growth rate High growth (around mid-20s)
Annual dividend per share 180 yen 180 yen
Projections maintain an additional competitor with no therapeutic equivalence in Velcade with the launch of subcutaneous and intravenous administration in the United States in March 2019, an increase of 35.5 billion yen compared to previous projections (Figure 1). global business for fiscal 2017: 129.6 billion yen, fiscal 2018: 111.0 billion yen) *
Increased underlying core earnings margin in the upper range of + 100-200bps.
These underlying projections exclude the estimated financial impact of fiscal year 2018 related to Takeda’s proposed acquisition of Shire plc.
* (application of the constant exchange rate based on the rate of the fiscal year 2018)
The revised projections in the table above include the costs incurred in the first half of fiscal year 2018 related to Takeda’s proposed acquisition of Shire plc (pre-tax earnings impact: 19.8 billion yen, net profit for the impact on the year: 16.5 billion yen); however, these do not include anticipated Shire costs for the second half of the fiscal year. In addition, the projections do not include any expected Shire earnings in the event that the closing of the acquisition is finalized during fiscal year 2018.
Takeda expects the share of Shire-related costs anticipated for fiscal year 2018 to be between 40 billion yen and 60 billion yen. This does not include integration costs, interest expense and other financial charges, since the magnitude of the impact of fiscal year 2018 will be related to the closing period of the transaction.
(Reference)
A revised financial projection that excludes costs incurred in the first half of fiscal year 2018 related to Takeda’s proposed acquisition of Shire plc is presented below. Previous projections for May 14, 2018 do not include expenses related to Shire.
Forecasts excluding the estimated financial impact of the proposed acquisition of Shire will be announced by Takeda as soon as a reasonable assumption has been confirmed.
For more information on the results of the first half of Takeda’s fiscal year 2018, as well as other financial information, please visit View Source