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

Fuji Pharma (TSE:4554) delivered solid topline and operating performance in FY2025, with revenue up 12.0% year over year to ¥51.68bn and operating income up 28.6% to ¥4.99bn. Operating margin expanded to roughly 9.7%, supported by higher EBITDA of ¥8.33bn and an EBITDA margin of 16.1%. Despite these operating gains, reported net income declined 51.2% YoY to ¥3.00bn, indicating significant below-OP effects such as non-operating/extraordinary items or tax effects. Ordinary income of ¥4.46bn was below operating income, implying a negative net non-operating contribution (e.g., finance or other items). The stated income tax expense of ¥2.13bn does not reconcile neatly with ordinary income and net profit, suggesting the presence of extraordinary items or timing/tax adjustments; the reported effective tax rate of 0.0% should be treated as not disclosed. Gross profit is presented as ¥17.84bn (gross margin 34.5%), which does not arithmetically align with cost of sales provided; we attribute this to disclosure taxonomy differences and analyze using the provided margins. Cash generation was strong: operating cash flow reached ¥5.80bn (OCF/Net Income = 1.93x), and free cash flow was positive at ¥1.58bn after ¥4.22bn investing outflows. Liquidity is adequate but not abundant, with a current ratio of 118.6% and quick ratio of 103.6%, supported by working capital of ¥6.67bn. Leverage is moderate (debt-to-equity ~0.95x using total liabilities as a proxy), and interest coverage is healthy at 25.5x on an EBIT basis. DuPont analysis yields ROE of 6.4% from a 5.81% net margin, 0.553x asset turnover, and 1.99x financial leverage, indicating mid-single digit equity returns despite strong operating progress. The combination of margin expansion and strong cash conversion points to improving core profitability quality. However, the sharp decline in net income versus operating income growth highlights elevated earnings volatility below the operating line. Dividend-related data (DPS, payout, CCE, equity ratio, and share counts) were not disclosed in the provided XBRL snippets and thus cannot be used to infer policy changes; we instead assess capacity from earnings and FCF. For a generics- and women’s-health–focused pharmaceutical company, near-term drivers likely include mix improvements in injectables/obstetrics-gynecology, stabilization post-NHI price revisions, and cost discipline. Key watchpoints are NHI price cuts, procurement costs for APIs, inventory normalization, and the trajectory of non-operating items that drove the divergence between OP and NP. Overall, the business showed resilient operating fundamentals and robust cash conversion, but headline net profit weakness tempers the quality of the print and warrants scrutiny of below-OP items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 5.81%
• asset_turnover: 0.553
• financial_leverage: 1.99
• calculated_ROE: 6.40%
• commentary: ROE is driven more by moderate leverage and asset turnover than by high net margins. Expansion of operating margin did not fully translate to net margin due to below-OP items. margin_quality: Gross margin presented at 34.5% and operating margin at ~9.7% indicate a healthy spread for a domestic generics-oriented pharma. The discrepancy between reported gross profit and cost of sales suggests disclosure taxonomy differences; we rely on the provided margins. Net margin at 5.81% is compressed by non-operating/extraordinary items or tax effects. operating_leverage: Revenue grew 12.0% YoY while operating income grew 28.6% YoY, evidencing positive operating leverage from cost control and scale effects. EBITDA rose to ¥8.33bn (16.1% margin), signaling improved absorption of fixed costs.

Growth Assessment

revenue_sustainability: Topline growth of 12.0% YoY to ¥51.68bn implies share gains or favorable product mix, likely within core franchises (women’s health, injectables, and selected generics). Sustainability depends on product lifecycle management and resilience to NHI price revisions. profit_quality: Operating income increased significantly alongside EBITDA, suggesting underlying margin improvement. However, the 51.2% YoY decline in net income indicates quality dilution below OP, with potential one-offs or higher non-operating costs overshadowing operating gains. outlook: Near-term growth should hinge on mix upgrades and cost efficiencies, while medium-term depends on pipeline launches and disciplined capex. External headwinds include NHI price cuts, API cost volatility, and competitive pressure in generics; these could cap net margin expansion even if operating metrics continue to improve.

Financial Health

liquidity:

• current_ratio: 118.6%
• quick_ratio: 103.6%
• working_capital: ¥6.67bn
• assessment: Adequate short-term liquidity coverage with slim buffer; active working capital management remains important. solvency_and_capital_structure:
• total_assets: ¥93.41bn
• total_liabilities: ¥44.44bn
• total_equity: ¥46.91bn
• debt_to_equity: 0.95x (using total liabilities as a proxy)
• interest_coverage: 25.5x (EBIT/interest)
• assessment: Moderate leverage with strong interest coverage suggests manageable solvency risk. Equity ratio was not disclosed in the data excerpt; balance sheet appears balanced with modest headroom for investment.

Cash Flow Quality

earnings_quality: OCF/Net Income of 1.93x indicates strong cash realization of earnings, reinforcing that operating results are backed by cash. free_cash_flow:

• operating_CF: ¥5.80bn
• investing_CF: ¥-4.22bn
• free_cash_flow: ¥1.58bn
• assessment: Positive FCF after meaningful investing outflows demonstrates self-funding capacity for operations and selective growth investments. working_capital: Quick ratio above 100% and positive OCF imply effective working capital management, though the current ratio near 1.2x suggests limited cushion; inventory control is a key lever given the business model.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio were not disclosed in the provided data (zeros reflect non-disclosure). With EPS at ¥122.94 and positive FCF of ¥1.58bn, capacity exists for distributions in principle, but actual policy cannot be inferred. FCF_coverage: Not assessable due to undisclosed DPS; on capacity terms, FY2025 FCF was positive and would have supported a modest payout if pursued. policy_outlook: Likely to prioritize reinvestment in pipeline and quality/compliance capex given industry dynamics; dividends, if any, would depend on stability of net profit (currently volatile below OP).

Risk Assessment

Business Risks:

• Domestic NHI drug price revisions compressing margins
• API procurement cost and supply chain volatility
• Competitive pressure in generics and tender/pricing dynamics
• Regulatory and quality/compliance risks (GMP, inspections, recalls)
• Product concentration and lifecycle/LOE risks
• R&D and approval timing uncertainty for pipeline products
• FX exposure on imported raw materials

Financial Risks:

• Moderate leverage (D/E ~0.95x using total liabilities) with reliance on ongoing cash generation
• Tight liquidity buffer (current ratio ~1.19x) if working capital swings
• Potential earnings volatility from non-operating/extraordinary items and tax effects
• Refinancing and interest rate risk if debt mix shifts

Key Concerns:

• Divergence between operating income growth (+28.6% YoY) and net income decline (-51.2% YoY)
• Non-reconciling gross profit vs. cost of sales disclosures (likely taxonomy differences)
• Dependence on external pricing and cost inputs in a regulated market

Investment Implications

Key Takeaways:

• Solid operating performance with margin expansion: OP ¥4.99bn (+28.6% YoY), EBITDA margin 16.1%
• Strong cash conversion: OCF/NI 1.93x and FCF ¥1.58bn
• Net profit compression to ¥3.00bn (-51.2% YoY) highlights below-OP headwinds
• Adequate but not abundant liquidity: current ratio 118.6%, quick ratio 103.6%
• Moderate leverage with robust coverage: D/E ~0.95x, interest coverage 25.5x
• ROE 6.4% indicates middling equity returns relative to improved operations

Metrics to Watch:

• Gross and operating margin trajectory post NHI price revisions
• Non-operating items, extraordinary gains/losses, and tax normalization
• Inventory days and working capital turns
• OCF/NI ratio and FCF sustainability amid capex needs
• Leverage and interest coverage trends
• Pipeline approvals and mix shift toward higher-margin products

Relative Positioning: Within domestic generics/women’s-health peers, Fuji Pharma’s operating margin (~9–10%) and cash conversion are competitive, but ROE at 6.4% remains below higher-return innovators and toward the mid-range of Japanese generics, reflecting pricing pressure and below-OP volatility.

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