Kyowa Hakko Q1 Sales Up 32.1%: Forecasts Unchanged

Thu Jul 31, 2008 2:00am EDT

* Reuters is not responsible for the content in this press release.

TOKYO--(Business Wire)--
Kyowa Hakko Kogyo Co., Ltd. (Kyowa Hakko)(TOKYO:4151) today
announced its first quarter financial results for the three-month
period from April 1, 2008 to June 30, 2008. Consolidated net sales for
the period were JPY 125.4 billion, an increase of 32.1% compared to
the first three months of the previous fiscal year, which was largely
due to the new consolidation of Kirin Pharma following the
implementation of a share exchange on April 1, 2008, and also the
receipt of a large, one-off out-licensing payment in the
Pharmaceuticals business.

   Operating income increased by 125.6 % to JPY 17.0 billion, driven
mainly by a large increase in Pharmaceuticals business sales, despite
a goodwill amortization expense of JPY 2.3 billion accounted for in
SG&A expenses resulting from the share exchange with Kirin Pharma
accounted for as a reverse acquisition business combination. Likewise,
recurring income was up by 124.5% to 18.7 billion, while net income
was up by 80.2% to JPY 9.5 billion, affected by a JPY 1.5 billion
extraordinary loss due to impairment losses and other factors.

   Commenting on the results, Yuzuru Matsuda, President and CEO of
Kyowa Hakko said, 'Underlying sales growth in our core businesses was
strong, although our reported sales and profits were affected
significantly by the consolidation of Kirin Pharma, the large one-off
out-licensing payment from Amgen, and goodwill amortization. We have
made a strong start to our new three-year medium term plan and there
is no change in our forecasts for full-year sales and profits. Our
plans to form a strategic alliance with the Kirin Group and integrate
our business with Kirin Pharma to form Kyowa Hakko Kirin in October
2008 are proceeding smoothly and on schedule.'

Summary of operating results for the three months ended June 30, 2008

                 (Amounts less than JPY 100 million have been ignored)
                                    Billions of yen             %
                            Three months to Three months to   Change
                             June 30, 2008   June 30, 2007
Net sales                             125.4            94.9     +32.1%
Operating income                       17.0             7.5    +125.6%
Recurring income                       18.7             8.3    +124.5%
Net income                              9.5             5.3     +80.2%
Net income per share (JPY)        JPY 16.69       JPY 13.37     +24.8%


   Segmental performance

   In the Pharmaceuticals business, sales of Kyowa Hakko products
were negatively affected by reductions in National Health
reimbursement prices in Japan and also by a decline in sales of
Durotep, an analgesic for persistent cancer pain, due to the ending of
a joint sales contract. However, sales of products such as Allelock,
an antiallergic agent, Depakene, an anti-epileptic agent, and Patanol,
an antiallergic ophthalmic solution, continued to perform well, while
Coversyl, an ACE inhibitor for treatment of hypertension that was
launched in April, 2008, also performed well and contributed to the
growth in sales. In addition a one-off contract payment of USD 100m
for the outlicensing to Amgen of anti-CCR4 humanized monoclonal
antibody KW-0761 was recorded, resulting in a large increase in sales.
At Kirin Pharma, in a severe competitive environment for core anemia
products ESPO and NESP we are actively providing information on our
products to medical practitioners, while efforts are being made to
achieve rapid market penetration of REGPARA Tablets, a treatment for
secondary hyperthyroidism during dialysis therapy that was launched in
January 2008.

   In the Bio-Chemicals business, sales increased compared to the
first three months of last fiscal year as sales of core amino acid,
nucleic acid, and related compounds for industrial and pharmaceutical
use performed well, supported mainly by strong demand in overseas
markets, while sales of healthcare products and alcohol were also

   In the Chemicals business, domestic demand weakened resulting in a
decline in sales volume compared to the first three months of last
fiscal year but a further rise in prices of raw materials and fuel led
to high product prices in domestic and foreign markets and sales

   In the Food business, growth in sales of umami seasonings
increased but sales of bakery products and ingredients declined,
resulting in overall sales similar to the first quarter of last fiscal

Forecasts for the fiscal year ending March 31, 2009(a)

                          Billions of Yen                 %
                             FORECAST           Change compared to the
                        Fiscal year ending       previous fiscal year
                           March 31, 2009
Net sales                      490.0                    +25.0%
Operating income               57.0                     +44.7%
Recurring income               56.0                     +47.4%
Net income                     28.0                     +19.3%
Net income per share         JPY 48.72                  -17.5%

   The above forecasts for fiscal 2008 are unchanged from those
announced on April 28, 2008.

   (a)The above forecasts are based on information available and
assumptions made at the time of release of this document about a
number of uncertain factors that can affect results in the future. It
is possible that actual results are materially different for a wide
variety of reasons.

   For further information please access:

   This document is an English translation of parts of the
Japanese-language original. All financial information has been
prepared in accordance with generally accepted accounting principles
in Japan. It contains forward-looking statements based on a number of
assumptions and beliefs made by management in light of information
currently available. Actual financial results may differ materially
depending on a number of factors, including fluctuations in exchange
rates, changing economic conditions, legislative and regulatory
developments, delays in new product launches, and pricing and product
initiatives of competitors.

Kyowa Hakko Kogyo Co., Ltd.
Kenshiro Honda, +81-3-3282-0969
Corporate Communications Department

Copyright Business Wire 2008
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.