Takeda Reports 1st Quarter Results of FY2015 with Underlying Revenue Growth of +6.1%
OSAKA, Japan, July 30, 2015 /PRNewswire/ --
Guidance for FY2015 confirmed, including Core Earnings and Core EPS
Highlights of Q1 results
- Underlying revenue +6.1% year-to-year (reported revenue growing +8.5% to 446.3 billion yen)
- Underlying core earnings and underlying core EPS were flat, year-to-year
Growth supported by innovative new products
- The growth of new products was sufficient to offset the headwinds of generic competition in the base business
- Entyvio growth supports more than $2bn peak sales target
- Brintellix and Adcetris showed strong growth
- Azilva and Lotriga growing strongly in Japan
Regional performance
- Year to year underlying revenue growth in U.S. +15.7%, Europe and Canada +6.8% driven by new products
- Emerging Markets up 8% year-to year, contributed by growth in China and Russia
- Successful product launches in Japan, but revenue decreased by 1.2% year-to-year as a result of increasing generic penetration
Efficiency gains continue
- Project Summit achieved 5 billion yen of additional cost savings, which means we are on track to deliver over 20 billion yen this fiscal year
- R&D +6.7% year-to-year, but increased investment does not reflect trend for this fiscal year
Affirming guidance for profitable growth in FY2015
- Low single-digit underlying revenue growth in FY2015, with underlying core earnings growth higher than underlying revenue growth, and underlying core EPS growth higher than underlying core earnings growth
Christophe Weber, President and Chief Executive Officer of Takeda, commented:
"Takeda started FY2015 on a positive trend, with underlying revenue growing 6.1%. This will help us make the planned turnaround this year, in building a patient and customer centric organization. Our new products Entyvio and Adcetris contributed strongly to this result. Furthermore, strong performance of Brintellix and Azilva in CNS and CVM areas, and Value Brands in Emerging Markets, contributed to our growth. Operating profit was mainly impacted by an increase in expenses for several recent launches and in R&D. This should even out over the coming quarters, and we expect to achieve the full-year guidance."
Key figures for 1Q of FY2015
FY 2014 FY 2015 Growth
billion yen Q1 Q1 Underlying[2]
Revenue 411.1 446.3 +8.5% +6.1%
Operating Profit 63.7 49.6 -22.2% -
Core Earnings[1] 84.8 86.9 +2.5% -0.1%
Net Profit[3] 33.4 24.6 -26.4% -
EPS 42 yen 31 yen -26.1% -
Core EPS 66.60 yen 67.48 yen +1.3% +0.0%
[1] Core Earnings is calculated from operating profit by excluding the impact of exceptional items, such as purchase accounting, amortization and impairment loss of intangible assets, restructuring costs and litigation costs.
[2] Underlying performance aims at understanding the real performance of the business. Underlying Revenue and Underlying Core Earnings excludes the same as above[1] plus product divestments and foreign exchange.
[3] Attributable to the owners of the company
Underlying revenue growth was 6.1% while Underlying Core Earnings and Underlying Core EPS were flat, with no changes in our operational guidance for FY2015. Reported revenue grew 8.5% to 446.3 billion yen. Increase in expenses for new launch products, as well as a decrease in other income related to sale of real estate in 2014, resulted in a year-to-year decline in Operating Profit, Net Profit and EPS, by 14.1 billion yen, 8.8 billion yen and 11 yen, respectively.
Revenue growth was mainly driven by Entyvio and Brintellix in the U.S., Entyvio and Adcetris in Europe, and Azilva and Lotriga in Japan - adding 33.7 billion yen. Performance in the U.S. (+15.7% underlying revenue growth) and Europe and Canada (+6.8%) was very strong. Emerging Markets grew by 8.0%, led by Value Brands, with strong growth in China and Russia. In Japan, new products contributed 10.5 billion yen, but as a result of increasing generic competition, total revenue declined -1.2%.
Project Summit - a company-wide strategic initiative to increase efficiency -- continued to produce results, with 5 billion yen savings in Q1. Execution of Summit initiatives in recent months include the completion of the European Finance shared service hub consolidation in Poland; the closure of manufacturing sites in Denmark and Norway; the continued re-organization of select commercial areas in Emerging Markets and Europe; the implementation of global initiatives for IT service management; and the transformation of the procurement process. Our efficiency initiatives as part of Project Summit remain on track and we are committed to this project
Entyvio is expected to be a key global contributor to Takeda's sales growth over the next few years, and Azilva, Takecab and Zafatek are the new products in Japan that are expected to enable Takeda to overcome increased generic penetration and maintain a leading position. The ongoing efforts of the R&D organization will contribute assets in the mid- and long-term. Importantly, a New Drug Application (NDA) for ixazomib for multiple myeloma has been submitted to the U.S. Food and Drug Administration (FDA), and Takeda expects to submit a marketing authorization application to the European Union (EU) soon.
The new company structure, effective April 1, 2015, reflects the new strategic growth focus, prioritizing patients' needs, clarifying accountability, and increasing operational efficiency. The company continues to be R&D driven, focusing on four therapeutic areas and vaccines.
In May, Takeda set the following management guidance for FY2015:
Management Guidance for FY2015
Underlying Growth
Revenue Low single digit
Core Earnings Higher than revenue growth
Core EPS Higher than core earnings growth
For more details on Takeda's FY2015 Q1 results and other financial information please visit http://www.takeda.com/investor-information/results/
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