Fuji Pharma Co.,Ltd. FY2025 Q4 Earnings Report

Financial Highlights

• Net Sales: ¥51.68B
• Operating Income: ¥4.99B
• Net Income: ¥2.45B
• EPS: ¥122.94

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Verdict: Core operating performance was solid with double-digit revenue growth and margin expansion, but bottom-line contracted sharply due to non-operating/extraordinary items. Revenue rose 12.0% YoY to 516.77, demonstrating healthy top-line momentum. Gross profit increased to 207.63 with a gross margin of 40.2%, reflecting favorable mix and/or cost control. Operating income climbed 28.6% YoY to 49.90, lifting the operating margin to 9.6% (approximately +120–150 bps YoY by inference, given faster OP growth than sales). Ordinary income was essentially flat at 44.59 (+0.3% YoY) as non-operating expenses (7.18) outweighed non-operating income (1.87). Profit before tax of 40.00 was below ordinary income, implying an extraordinary loss of roughly 4.6 during the period. Net income fell 51.2% YoY to 30.00, indicating significant non-recurring headwinds versus last year’s base (likely one-off gains in the prior period or one-off losses this period). Earnings quality was strong with OCF of 58.01, yielding an OCF/NI ratio of 1.93x and positive FCF of 15.82 after -19.81 in capex. Balance sheet quality remains sound: current ratio 154.6%, quick ratio 133.4%, and interest coverage 15.1x. Debt is manageable with D/E at 0.99x and equity roughly 50% of total assets. ROE calculated at 6.4% reflects mid-single digit returns, tempered by the lower net margin (5.8%) amid extraordinary effects. Total comprehensive income of 21.71 trailed net income, indicating negative OCI movements. Cash and deposits of 72.45 combined with robust receivables and inventories support liquidity against short-term loans of 153.00. Dividend capacity appears sustainable with a 35.3% payout ratio (calculated) and FCF coverage of 1.50x, though DPS was unreported. Forward-looking, the company enters the next fiscal year with improved core margins and healthy liquidity, but needs to mitigate non-operating/extraordinary volatility to translate operating gains into net profit growth. Monitoring non-operating expense run-rate, extraordinary items, and working capital discipline will be key to sustaining ROE above 6%.

Profitability Analysis

ROE decomposition (DuPont): ROE 6.4% = Net Profit Margin 5.8% × Asset Turnover 0.553 × Financial Leverage 1.99x. The margin component is the main swing factor this period: despite strong operating leverage (OP +28.6% on sales +12.0%), net margin is constrained by non-operating expenses and extraordinary loss, compressing the translation of operating gains into bottom line. Business drivers: higher gross margin (40.2%) and SG&A ratio around 30.5% indicate improved core profitability, but non-operating expenses (including 3.30 interest expense and other items) and an extraordinary loss (~4.6) suppressed ordinary income and net income. Sustainability: the operating margin improvement appears more sustainable than the net profit contraction, which looks one-off driven; if non-operating/extraordinary headwinds normalize, ROE should improve from the current 6.4%. Operating leverage is evident as OP growth outpaced revenue; however, ordinary income being flat YoY suggests non-operating volatility remains a key drag. Watch for SG&A growth versus revenue; the current SG&A ratio (~30.5%) is reasonable, but if SG&A escalates faster than sales, margin expansion could stall.

Growth Assessment

Revenue grew 12.0% YoY to 516.77, indicating solid demand and/or favorable price-mix. Operating income rose 28.6% YoY to 49.90, highlighting effective gross margin management and operating leverage. Ordinary income was flat (+0.3% YoY) due to higher non-operating expenses and likely extraordinary loss, masking the underlying operating improvement. EBITDA of 88.65 implies a 17.2% margin, supporting the view of improved core profitability. The effective tax rate was 25.0%, consistent with a normalized tax environment. Given strong OCF (58.01) and positive FCF (15.82), the growth profile is backed by cash generation, not merely accrual earnings. Near-term outlook hinges on maintaining gross margin at ~40% and controlling SG&A while reducing non-operating drags (interest and other expenses). With capex at -19.81, the company appears to be investing at a disciplined pace that supports sustainable growth. Absent segment disclosures, we cannot attribute growth to specific products; however, the broad financials imply core operations are expanding at a healthy clip.

Financial Health

Liquidity is healthy: current ratio 154.6% and quick ratio 133.4% exceed benchmarks. Working capital stands at 169.25 with current assets of 479.13 comfortably exceeding current liabilities of 309.88. Solvency appears sound with D/E at 0.99x and equity comprising roughly 50.2% of total assets (469.08/934.05). Interest coverage is strong at 15.12x, indicating the debt burden is manageable. Short-term debt (153.00) exceeds cash (72.45), but is amply covered by current assets (479.13) and receivables (147.46); maturity mismatch risk is moderate and manageable under current liquidity. Long-term loans stand at 72.02; total loans approximate 225.02, implying Debt/EBITDA ~2.5x (consistent with the provided Debt/EBITDA benchmark), within conservative bounds. No off-balance sheet obligations were reported; absence of disclosure does not preclude existence, but we have no data to assess.

Cash Flow Quality

OCF/Net Income at 1.93x indicates high earnings quality with cash conversion well above the 1.0x benchmark. Free cash flow of 15.82 after -19.81 in capex is positive, supporting internal funding of dividends and debt service. Working capital dynamics appear favorable given strong OCF alongside growth, suggesting decent collections and inventory management; AR of 147.46 and inventories of 65.66 are significant but not impairing liquidity. No signs of aggressive working capital management are evident from available data. Financing CF was +9.54, implying some net borrowing or lesser dividends/shareholder returns relative to cash outflows; without detailed dividend data, we attribute this primarily to liability management. Overall, cash generation supports ongoing operations and investment needs.

Dividend Sustainability

The calculated payout ratio is 35.3%, below the 60% benchmark for sustainability. FCF coverage is 1.50x, indicating dividends are covered by free cash flow. Liquidity and leverage metrics (current ratio 154.6%, D/E 0.99x, interest coverage 15.1x) further support dividend capacity. DPS was unreported, and total dividends paid were not disclosed; nonetheless, based on payout and FCF coverage, the current policy appears sustainable. Watchpoints: variability in non-operating/extraordinary items that could pressure net income, and potential capex uplift that could compress FCF.

Risk Assessment

Business Risks:

• Pricing pressure and periodic NHI drug price revisions in Japan impacting margins
• Product and portfolio concentration risk typical for specialty pharma
• Regulatory and approval risks for pipeline and life-cycle management
• API procurement and supply chain disruptions affecting COGS and inventories
• Inventory obsolescence risk tied to demand variability and product life cycles

Financial Risks:

• Reliance on short-term loans (153.00) exceeding cash on hand, creating some refinancing risk
• Non-operating expense volatility (7.18) reducing ordinary income
• Extraordinary loss (~4.6) this period, highlighting bottom-line volatility
• Interest rate risk on floating debt, potentially raising interest expense (3.30)

Key Concerns:

• Net income -51.2% YoY despite strong operating income growth, indicating sizable non-recurring impacts
• Ordinary income flat YoY (+0.3%), masking underlying operating improvement
• Total comprehensive income (21.71) below net income due to negative OCI, reducing equity accretion
• Intangible assets of 139.41 represent meaningful balance sheet exposure if impairments arise

Investment Implications

Key Takeaways:

• Top-line growth of +12.0% YoY to 516.77 with gross margin at 40.2%
• Operating income +28.6% YoY to 49.90; operating margin ~9.6% with clear operating leverage
• Ordinary income 44.59 (+0.3% YoY) pressured by net non-operating expenses of -5.31
• Net income 30.00 (-51.2% YoY) due to extraordinary and non-operating headwinds
• Strong cash quality: OCF/NI 1.93x and FCF 15.82
• Solid balance sheet: current ratio 154.6%, D/E 0.99x, interest coverage 15.1x
• ROE 6.4% with potential to improve if non-operating/extraordinary items normalize

Metrics to Watch:

• Operating margin trajectory versus SG&A ratio (~30.5%)
• Non-operating expenses (including interest expense trend) and extraordinary items
• OCF/NI and working capital turns (AR and inventory levels)
• Capex intensity relative to EBITDA and FCF sustainability
• Equity and comprehensive income movements (OCI volatility)

Relative Positioning: Within Japan specialty pharma peers, the company exhibits stronger-than-average cash conversion and healthy liquidity with moderate leverage; operating margin improvement is encouraging, but headline earnings volatility from non-operating and extraordinary items currently weighs on reported ROE and net income growth.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis