Tsumura & Co. · TSE:4540
Tsumura & — Q2 FY2023 Earnings Presentation
34 slides from Tsumura &'s earnings presentation, Nov 8, 2023
Slide 1: Second Quarter Business Results for Fiscal 2023
Second Quarter Business Results for Fiscal 2023 November 8, 2023 TSUMURA & CO.
Slide 2: Today's Agenda
Today’s Agenda 01 Purpose-driven Value Creation & Capital Policy Second Quarter Business Results for Fiscal 02 2023 Overview 2
Slide 3: Corporate Governance
Corporate Governance Corporate Purpose/Corporate Philosophy Materiality Bold management policies Executive Committee Board of Directors CEO Co-COO Co-COO Audit and Supervisory Outside General Executive Officers’ Committee directors Representative for Meeting China Outside Directors’ Meeting Sustaina
Slide 4: Oversight Functions of the Board of Directors and Leadership
Oversight Functions of the Board of Directors and Leadership Board of Directors June 2017 ・Shift to Company with an Audit and Supervisory Committee ・The Board of Directors will consist of a majority of independent outside directors ・Established the Nomination / Remuneration Advisory Committee (Chair
Slide 5: Tsumura Group Value Creation Cycle
Tsumura Group Value Creation Cycle Invested Capital 5
Slide 6: Tsumura Group Process for Value Creation
Tsumura Group Process for Value Creation Integrated Report 2023 IMPACT • Realization of a society of healthy longevity ＊Please refer to on Society the integrated • Maintenance of a rich natural environment report for details on the process for value creation OUTCOME Value created through business Sc
Slide 7: Tsumura Group Long-Term Management Vision (FY2022-FY2031)
Tsumura Group Long-Term Management Vision（FY2022～FY2031） 7
Slide 8: Achievements to be Realized under TSUMURA VISION "Cho-WA" 31
Achievements to be Realized under TSUMURA VISION “Cho-WA” 2031 [Updated] 1. 50% of physicians will write basic prescriptions in all treatment areas Business operations 2. Expand standard Kampo treatments and personalize Kampo treatments 3. Scientific study of pre-symptomatic diseases Three preventiv
Slide 9: Achievements to be Realized under TSUMURA VISION "Cho-WA" 31
Achievements to be Realized under TSUMURA VISION “Cho-WA” 2031 [Updated] 1. 50% of physicians will write basic prescriptions in all treatment areas Business operations 2. Expand standard Kampo treatments and personalize Kampo treatments 3. Scientific study of pre-symptomatic diseases Three preventiv
Slide 10: ROE Improvement: Quickly Realize a Positive Equity Spread
ROE Improvement: Quickly Realize a Positive Equity Spread Early On and Expand Total Financial ROE = Earnings power × assets turnover rate × leverage Target Level • Net sales growth • CCC improvement • Secure financial • Reduce cost of goods sold • Manageable level of soundness and pursue an ROE 10％
Slide 11: Net Sales: Image of Growth Aimed for in FY 2031
Net Sales: Image of Growth Aimed for in FY 2031 Image of realization FY 2022 results FY 2031 Net sales: 140.0 billion yen Domestic business strategy Establish the Kampo Existing Businesses Domestic business medicine business (Domestic, China) Realize a medical setting where Net sales one-in-two phys
Slide 12: Improve Quantity, Quality and Speed of Kampo Information through DX
Momentously Improve the Quantity, Quality and Speed of the Provision of Kampo Information through Digital Transformation (DX) ・Aim to realize a usable system by building information provision channels so that medical practitioners can obtain necessary information ✓ Build a system to facilitate FY 20
Slide 13: NHI Drug Price Revision Rate
NHI Drug Price Revision Rate In recent years, the rate of reduction has been shrinking, and in 2023 prices were upwardly revised in tandem with soaring consumer prices NHI drug price revision rate (％) Tsumura +2.3 Prescription pharmaceuticals overall 2012 2014 2016 2018 2019 2020 2021 2022 2023 ( 0.
Slide 14: Improve Earnings Power: Curb Cost of Goods Sold
Improve Earnings Power: Curb Cost of Goods Sold Reduce crude drug prices by expanding domestication of crude drugs and enhancing automation and manpower reduction Aim to further FY 2031 Vision reduce prices... FY 2031 Vision Domestication of 22 crude Automation/manpower reduction of upstream product
Slide 15: Improve Earnings Power: Curb Cost of Goods Sold/SG&A Expense
Improve Earnings Power: Curb Cost of Goods Sold/SG&A Expense ✓ Realize low-cost plant operations Current status of processing Image for 2031 Future Vision Aim to more than double the cost structure physical labor productivity Labor Labor expense • Automation mainly by using AI • After the completion
Slide 16: Improving Total Asset Turnover Rate: Initiatives to Improve the Balance Sheet
Improving Total Asset Turnover Rate: Initiatives to Improve the Balance Sheet Improve total asset turnover mainly by improving the cash conversion cycle (CCC), curtailing cash and deposits and reducing cross-shareholdings Operation cycle ・Improve CCC → Curb 3-4 months FY 2031 Vision ・Curtail cash an
Slide 17: CCC improvement: Introduction of a crude drug compounding planning system
CCC improvement: Introduction of a crude drug compounding planning system Improve crude drug inventory turnover by optimizing crude drug compounding plans and crude drug transport plans China Japan Scope of coverage by compounding plans: Japan only ※Issues before implementation (1) Prior to introduc
Slide 18: Financial Leverage: Pursue an Optimal Capital Composition
Financial Leverage: Pursue an Optimal Capital Composition Secure financial soundness while pursuing an optimal capital composition Pursue an optimal capital FY 2031 composition Vision ・Secure financial soundness →Equity ratio of 50%-plus FY 2022 results Liabilities Equity ratio 63.5％ Use interest- I
Slide 19: Cash Allocation
Cash Allocation Generate cash by enhancing earnings power and improving the balance sheets, and allocate cash to achieve further business growth and to expand dividends up to FY 2031 Vision Shareholder Returns Increase First Medium-Term Operating dividends Gradually lift CF Management Plan dividend
Slide 20: Pursue an Optimal Dividend Payout Policy
Pursue an Optimal Dividend Payout Policy Aim to achieve an optimal dividend payout that is based on an optimal capital composition that ensures financial soundness Target level DOE 5％ ＝ Dividend payout ratio of 50％ × ROE of 10％ 35 Existing Businesses yen DOE of 4％-plus Fiscal year- 32 yen (forecast)
Slide 21: Today's Agenda
Today’s Agenda 01 Purpose-driven Value Creation & Capital Policy Second Quarter Business Results for Fiscal 02 2023 Overview 21
Slide 22: 2Q Business Results for FY 2023
2Q Business Results for FY 2023 2Q FY 2023 2Q FY 2023 YoY [Million yen] Achievement Plan results rate （before revision＊1） Amount Change Ratio to total sales Sales 74,000 75,302 101.8％ +5,195 +7.4% Domestic business 65,900 66,131 100.4％ +3,208 +5.1% China business 8,100 9,171 113.2％ +1,986 +27.7% Dom
Slide 23: Key Points in Performance
Key Points in Performance Achieved 1H plans for sales and at each profit level 1H FY 2023* Net sales 75,302 million yen achievement rate 101.8% YoY +7.4% ◼ Domestic business Total sales for the 129 prescription Kampo products: 63,720 million yen, rose 5.9% year-on-year Total sales of the OTC Kampo p
Slide 24: Factors Triggering Changes in Operating Profit (YoY)
Factors Triggering Changes in Operating Profit (YoY) (Million yen) (Million yen) Sales increase +2,000 Domestic business +1,717 China business +283 +2,000 (1,763) Cost of sales increase (1,763) Domestic business: Unit sales price (of which NHI price revision +1,177 (980) impact was +793) Domestic bu
Slide 25: Sales of Drug-fostering Program Formulations/Growing Formulations
Sales of Drug-fostering Program Formulations/Growing Formulations （Million yen） Net sales Product No./formulation Ranking name FY 2022 2Q FY 2023 2Q YoY 1 100 Daikenchuto 4,927 4,937 +9 +0.2% Drug-fostering program 3 54 Yokukansan 3,775 3,819 +43 ＋1.2% formulations Ratio to total sales 4 43 Rikkunsh
Slide 26: Status of Information Provision Activities
Status of Information Provision Activities ・Rise in the number of detailing impact cases owing to an expansion of the MEDiCAL SiTE ・In 2H, aim for detailing impact that is above the level posted in 2Q, and promote information provision activities (1,000 cases) Detailing impact 2,500 ■ MR activities
Slide 27: China Business: Crude Drug Platform (PF) Business Sales Expansion
China Business: Crude Drug Platform (PF) Business Sales Expansion Achieve the 1H plan in the China business by expanding sales in the crude drug platform business 27.7% growth＊ Chinese 9.17 billion ✓ The crude drug platform business is operations Net sales in the black; aim for an expansion in yen b
Slide 28: FY 2023 Earnings Forecast (No revision)
FY 2023 Earnings Forecast（No revision） FY 2022 FY 2023 YoY [Million yen] Results Forecast Amount Change Net sales 140,043 150,500 +10,456 +7.5% Domestic business 124,698 133,300 +8,601 +6.9% China business 15,345 17,200 +1,854 +12.1% Operating profit 20,916 18,000 (2,916) (13.9)% Domestic business 2
Slide 29: FY 2023 Dividend Forecast
FY 2023 Dividend Forecast ・We are hiking our full-fiscal year dividend to ¥70 per share, from a previous ¥64 per share, in tandem with a change to our dividend policy 40.9% (forecast) 45.0% 100 35.9% 35.7% 35.6% 40.0% 33.5% 32.1% 31.9% 31.9% 29.7% 35.0% 80 26.0% 30.0% 60 25.0% 35 32 32 32 32 32 32 3
Slide 30: Inquires about these materials
Inquires about these materials Corporate Communications Dept. Investor Relations Group investor_madoguchi@mail.tsumura.co.jp Cautionary items regarding forecasts ⚫ The materials and information provided in this presentation contain so-called forward-looking statements. Readers should be aware that t
Slide 31: Appendix
of TSUMURA Appendix
Slide 32: Financial Condition/Cash Flow Position
Financial Condition/Cash Flow Position （Million yen） 947 +6 (140) FY 2022 FY 2023 （March 2023） Change 2Q （Million yen） Total assets 396,813 416,840 20,027 Current assets 268,320 279,260 10,940 Non-current assets 128,492 137,579 9,086 Total liabilities 124,566 127,920 3,353 (16) +15 812 Current liabi
Slide 33: Domestic business: Number of Physicians Prescribing 10 or More Prescription Kampo Formulations
Domestic business: The Number of Physicians Prescribing 10 or More Prescription Kampo Formulations The number of physicians prescribing 10 or more prescription Kampo formulations increased by approximately 11,000 physicians, a ratio of 35%* *The number of physicians prescribing 10 or more prescripti
Slide 34: Raw Materials & Energy Expense Trends
Raw Materials & Energy Expense Trends Raw material and energy expenses have been trending flat from 1Q (Billion yen) 3 Raw material 2 expense 1 Energy expense 0 FY2021 2Q 3Q 4Q FY 2022 2Q 3Q 4Q FY 2023 2Q 1Q 1Q 1Q 34