Financial Overview for Fiscal Year Ended March 31, 2013 · Anti-obesity drugs Steady sales of Eyebonand Inochi-no-Hahacontinued. Launch of NicitolGincreased the share for anti-obesity

Financial Overview for Fiscal Year Ended March 31, 2013

Yutaka KobayashiPresident & Chief Operating OfficerKobayashi Pharmaceutical Co., Ltd.

May 2, 2013

2

Highlights of Consolidated Financial Results

FY ended March 2012 FY ended March 2013 Increase (decrease)Amount Margin Amount Margin Amount Percentage

SalesMillion yen

131,166%

－

Million yen

121,532％

－

Million yen

△9,634％

△7.3

Gross profit 76,531 58.3 69,799 57.4 △6,731 △8.8

Operating income 19,298 14.7 16,903 13.9 △2,394 △12.4

Ordinary income 20,092 15.3 18,677 15.4 △1,415 △7.0

Net income 11,726 8.9 12,176 10.0 450 3.8

EPS (yen) 286.36 － 297.37 － 11.01 3.8

Dividends (yen) 78 － 82 － 4 5.1

Net income increased for the 15th consecutive fiscal year. Dividend per share grew for the 14th consecutive fiscal year in real terms.

Both sales and profit decreased due to share transfer of a medical devices subsidiary and stagnant domestic sales.

193169

14.7

13.9

0

50

100

150

200

250

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

9

12

15OperatingincomeOperatingmargin

1,2151,311

0

500

1,000

1,500

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

3

Changes in Consolidated Results

Due to share transfer of a medical devices subsidiary (now Japan Medicalnext Co., Ltd.) and stagnant sales of cooling products, etc. during the 1st half in domestic consumer product business, both sales and profit decreased.

Sales Operating income(100 million yen) (100 million yen) (%)

Down 12.4%

Down 7.3%

188169

0

50

100

150

200

250

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

1,2151,236

0

500

1,000

1,500

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

4

Changes in Consolidated Results (excluding the impact of Kobayashi Medical)

Sales Operating income(100 million yen) (100 million yen)

* For FY ended March 2012, sales of Japan Medicalnext was 7.5 billion yen and operating income was 0.5 billion yen (from June 2011 to March 2012)

*7.5 billion yen

*0.5 billion yen Down 9.9%

Down 1.7%

5

11528

5

193

12 8

169

0

50

100

150

200

9

Factor for decreaseFactor for increase

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Cost

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Rise

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y

Sales

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sing

expe

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Othe

r SGA

expe

nses

Oper

atin

g in

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FY

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d Ma

rch

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GP SGA expenses

Increase (Decrease) in Operating Income(100 million yen)

Oper

atin

g in

com

e for

FY

ende

d Ma

rch

2012

6

Consumer Products Business

7

Changes in Sales and Operating Income

1,1081,124

0

500

1,000

1,500

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

183160

16.314.5

0

50

100

150

200

250

300

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

0

5

10

15

20Operating incomeOperating margin

Sales Operating income(100 million yen) (100 million yen) （％）

Both sales and profit decreased due to stagnant sales of cooling products, etc. Overseas sales, mainly for body warmers, expanded.

Down 12.4%

Down 1.4%

8

Sales by Product Category

161

82

42

298

134

164

226

155

91

45

297

143

162

229

0 50 100 150 200 250 300 350

Body warmers

Food products

Household sundries

Deodorizing airfresheners

Sanitary products

Oral hygiene products

Pharmaceuticalproducts

FY endedMarch 2012FY endedMarch 2013

Up 1.1%

Up 3.7%

Down 8.5%

Up 0.3%

Down 1.4%

(100 million yen)

Down 6.2%

Down 9.3%

Sales of sanitary products decreased due to stagnant sales of cooling products, while sales of body warmers increased due to strong overseas performance.

9

Breakdown of Pharmaceutical Product Sales

11

15

23

30

36

41

11

14

26

26

39

46

0 10 20 30 40 50

Feminina Nanko

Nodonuru Spray

Inochi-no-Haha

External anti-inflammation analgesic

Nicitol

Eyebon


(100 million yen)

Figures in brackets indicate shares in previous fiscal year.

Up 9.0%

Down 11.9%

Up 10.8%

Up 11.1%

Down 2.4%

Down 1.8%

61.9%(62.1%)

Eyewash

Sales volume: 22.6 billion yen(98.6% of previous fiscal year)

37.8%(35.1%)

Anti-obesity drugs

Steady sales of Eyebon and Inochi-no-Haha continued. Launch of Nicitol G increased the share for anti-obesity drugs.

10

Breakdown of Oral Hygiene Product Sales

16

24

34

35

55

14

26

33

38

54

0 10 20 30 40 50 60 70

Denture stabilizer

Interdental cleaner

Denture cleaner

Shoyo

Breath Care


(100 million yen)

80.9%(81.4%)

26.1%(27.3%)

Up 10.7%

Up 8.8%

Mouth freshener

Denture cleaner



Down 1.2%

Down 3.4%

Down 13.4%

Due to improved awareness of the importance of oral care, stable sales continued for oral hygiene products.

11

Breakdown of Sanitary Product Sales

12

10

18

36

40

9

13

17

26

40

0 10 20 30 40 50

Asewaki Pat

Nure Mask

Keshimin

Netsusama series

Sarasarty


(100 million yen)

37.0%(37.9%)

52.3%(50.4%)

Down 24.6%

Down 8.1%

Due to the abnormal weather of last summer and the negative rebound from the special demand after the great earthquake (for energy-saving, disaster victims’ recovery), demand for cooling products decreased.

Cooling Gel Sheet for forehead


Panty liner

Sales volume: 13.4 billion yen (93.8% of previous fiscal year)

Up 2.3%

Up 31.9%

Down 27.5%

12

Breakdown of Deodorizing Air Freshener Sales

9

11

19

127

132

10

10

11

17

131

131

0 30 60 90 120 150

Toilet Sono Atoni

Sawaday Happy

Muko-kukan

Sawaday

Shoshugen

Bluelet

FY endedMarch 2012

FY endedMarch 2013

(100 million yen)

77.8%(76.0%)

31.2%(32.2%)

Up 2.7%

Down 13.6%

Deodorizing air freshener


Tank cleaner


Down 1.7%

Down 0.8%

Up 4.5%

Sales in the entire deodorizing air freshener market showed a rising trend in the 2nd half of the year.Shipment of Sawaday Happy and Shoshugen Kaoru Stick exceeded 1 billion yen.

13

Breakdown of Body Warmer Sales

7

4

11

27

106

4

5

12

38

102

0 30 60 90 120

Other

UK

China

US

Kiribai


(100 million yen)

Up 40.6%

Down 4.4%

Up 12.0%

Up 16.1%28.0%(27.6%)

Sales of body warmers were stagnant in Japan due to the weather while overseas sales were good (due to contribution by Grabber Inc. in US)

Body warmers (Japan)


Sales volume: 16.1 billion yen (103.7% of previous fiscal year)

14

New Product Contribution Rate

25

21

5.17.5

15.317.5

0

10

20

30

40

FY endedMarch 2006

FY endedMarch 2007

FY endedMarch 2008

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

0

10

20

30

40New products First yearFirst 4 years total

(Number of product items) (%)

25 new products were launched and their contribution rate increased for both first year and first four years total.

15

Promoting Reduction of Return Rate/Loss on Disposal

27

18

2.92.5

0

20

40

60

FY endedMarch 2006

FY endedMarch 2007

FY endedMarch 2008

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

0

1

2

3

4

5Loss on disposalReturn rate

(%)(100 million yen)

Despite enhanced control of returns, inventory and disposal, returns/disposal of products for summer (cooling products) increased.

16

Changes in Overseas Business Results

81

95

0

20

40

60

80

100

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

1.91

-6

-4

-2

0

2

4

6

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

Sales Operating income/loss(after goodwill amortization)(100 million yen) (100 million yen)

Up 17.2%

Contribution by Grabber Inc. in US and sales expansion primarily of body warmers boosted overall sales.

17

• Sales increased through acquisition of Grabber Inc. (Jan. 2012), a company boasting robust distribution channels with sporting goods stores.

• Value packs and Disney design packages were launched for major mass retailers to promote daily consumer use.

• HeatMax, Inc.’s new plant started operation, increasing production capacity. (Aug. 2012)

North America

China • An economical type body warmer Nuan Bao Bao was launched for inland areas.

• TV advertisement using Dong Jie, famous Chinese actress, was launched nationwide.

• Sales promotion using “baozhu” (package columns) at stores and sales through recommendations expanded public recognition.Dong Jie Baozhu

To promote further sales of body warmers overseas, a product originating from Japanese traditional culture, steady progress was made through area-based marketing strategies.

Overseas Business: Body Warmers

18

By adopting integrated package designs, the brand’s basic concept was stabilized. Efforts began to establish usage for cooling fever in children and to propose other usages.

Southeast Asia• Modified, integrated package designs were adopted in phases throughout

the area to clearly indicate the features of “cooling well,” “effect lasting for a long time,” and “a gel product,” aiming to enhance the brand appeal.

• TV advertising was launched to encourage use for children who have a fever.

• In the growing markets of Hong Kong, Malaysia, etc., promotion for cooling in hot weather began, along with usage for cooling a fever.

CM featuring cooling fever

CM featuring cooling in hot weather

Overseas Business: Cooling Gel Sheet

19

Mail Order Business

20

Changes in Sales and Operating Income/Loss

103 101

0

30

60

90

120

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

1.61.3

-5

0

5

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

1

Sales Operating income/Loss(100 million yen) (100 million yen)

Up 23.5%

Despite steady growth in sales of skin care products, including Hifmid, income decreased due to stagnant sales of nutritional supplements.

Down 1.9%

21

Hifmid series Up 10.0% from previous year

Glucosamine & Collagen Down 4.2% from previous year

• Slowdown in acquisition of new triers along with market expansion

• Intensifying competition is making product differentiation difficult.

• Offered trial and monitoring services to demonstrate product performance, succeeding in product differentiation and acquisition of new customers.

• Enhanced the series lineup from basic skin care products to lucent powder, to encourage use of a full lineup.

Status of Top 2 Selling Products

22

Medical Devices Business

23

Changes in Sales and Operating Income/Loss

24

104

0

50

100

150

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

2.9

0.1

-6

-4

-2

0

2

4

6

FY endedMarch 2009

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

Sales Operating income/Loss(100 million yen) (100 million yen)

Income decreased due to transfer of shares of a medical devices subsidiary (now Japan Medicalnext Co., Ltd.)

*Transfer of the remaining shares owned is planned for May 20, 2013.

24

Policy and Forecasts for Fiscal Year Ending March 2014

25

Basic Policy for Current Fiscal YearUnder the principle of “Duty First, Profit Later,”

we aim to create value that can be achieved only by ourselves, and provide excellent customer satisfaction across the globe.

(1) Becoming a development-based company with infinite creativity

(2) Developing human resources and business culture that keep on trying

(3) Enhancing systems to take actions leading to results, based on speedy PDCA.

26

Highlights of Consolidated Financial Results

FY ended March 2013 FY ending March 2014 Increase (decrease)Amount Margin Amount Margin Amount Percentage

SalesMillion yen

121,532

%

－

Million yen

127,000%

－

Million yen

5,467

%

4.5

Gross profit 69,799 57.4 73,400 57.8 3,600 5.2

Operating income 16,903 13.9 17,700 13.9 796 4.7

Ordinary income 18,677 15.4 19,400 15.3 722 3.9

Net income 12,176 10.0 12,600 9.9 423 3.5

EPS (yen) 297.37 － 307.70 － 10.33 3.5

Dividends (yen) 82 － 82 － 0 0.0

27

Changes in Consolidated Results

1,215 1,270

0

500

1,000

1,500

2,000

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

FY endingMarch 2014

estimate

169 177

14.7 15.2

0

50

100

150

200

250

FY endedMarch 2010

FY endedMarch 2011

FY endedMarch 2012

FY endedMarch 2013

FY endingMarch 2014

estimate

0

5

10

15

20Operating income

Operating margin

Sales Operating income(100 million yen) (100 million yen) (%)

Up 4.5%Up 4.7%

28

Sales/Operating Income of Major Businesses

Sales Operating incomeFY ended

March 2013

FY ending March 2014

Compared with previous

year

FY ended March 2013

FY ending March 2014

Compared with previous

year

Consumer products 110,833 116,700 105.3 16.040 16,800 104.7

Overseas 9,557 12,000 125.6 98 150 153.1

Mail Order 10,180 11,000 108.1 163 300 183.0

(Amount: million yen Compared with previous year: %)

29

Business Strategies for Fiscal Year Ending March 2014

30

Improving quality/quantity of both purely new products and in-brand new products

Major new products for spring 2013

Health care products Household productsPurely new

products

SomethingNew

In-brand new

products

SomethingDifferent

Effects are expected from creating purely new products by establishing a new product development group and developing in-brand new products.

Enhancing New Product Development Capabilities

31

Along with the trend of searching not for “countermeasures” after getting ill but for the root “cause” to prevent illness, needs for Kampo to tackle the cause will increase.

<Kobayashi Pharmaceutical’s Kampo Medicines>

Enhancing Approaches for Kampo Herbal Medicine

*Products for limited areas included

32Offering high-quality, natural scent-oriented deodorizing air fresheners

Shoshugen Ki-no-aru Seikatsu

Shoshugen Kaoru Flower

• Interior deodorizing air freshener to diffuse sweet scent of natural hinoki/hiba cedar, in a warm wooden-touch case

• Presenting a relaxing living atmosphere that makes users feel like being surrounded by trees

• Interior deodorizing air freshener to diffuse sophisticated scent of natural sola flower perfume oil

• Together with Shoshugen Kaoru Stick, launched with the aim of expanding the market share of reasonable interior fragrance products.

Enhancing Approaches for Deodorizing Air Fresheners

33

Deodorizing Air Fresheners

8 9

8

31

19

39

24

9

21 26

Garigari-kun

CurrentShoshugen

10’s or younger 20’s 30’s 40’s 50’s 60’s or older

<Ages of Garigari-kun purchasers> Expanding users and usage scenarios

Products featuring characters succeeded in acquiring younger customers.Shoshugen Kaoru Stick has been accepted as a reasonably-priced

interior fragrance diffuser.

Products featuring characters

Shoshugen Kaoru Stick series(Customer survey by Kobayashi)

(Usage scenario)

34

Aiming to create a completely new market of deodorizers for clothes

Deo Inner

Men’s Asewaki Pat Riff

Anti-perspirants

Body

Preventingsweat/odor

Clothes

Newmarket

Body padsAftercare forsweat/odor

Clothesdeodorizing

spray

<Market for sweat/odor-related products> • Deodorizing spray for clothes,

with deodorizing effect lasting all day just by a spray in the morning• Containing ingredients that

remove odor-generating bacteria and germs

•A pad to be put on underwear, to prevent sweat stains and odors•Expanding the conventionally

female-dominated market to men.

Creating a market for men’s odor care

35

Efforts for 3 key regions to enhance sales of body warmers/cooling gel sheets

Through increasing dealerships and promoting collaboration between TV advertising and shop displays, encourage usage as a “habit.”

North America

China

Southeast Asia

•To promote daily use, make efforts to display products not only in sporting shop floors but also in places “visible” to customers, such as in front of cashiers.•Enhance cross-selling between HeatMax, Inc. and Grabber, Inc.

• Increase dealerships in inland cities (from pinpoint to widespread approach)•Expand recognition through offering samples and

recommendation services at stores.

•Enhance extended lineups for cooling gel sheets.•Enhance distribution of products for children and babies, through

presenting shop displays in line with TV advertising.

Approaches in Overseas Businesses

36

Through a shift in focus from brand management to customer management, encourage continuous purchasing of several items.

Customer services

Advertising/sales promotion

•A dedicated customer center with full-time pharmacists and skin care advisor offers total health support.•The order-receiving desk not only receives orders but also

serves as a call center offering consultations based on dialogues with customers.

Approaches in Mail Order Business

•Enhance sales promotion for existing customers by direct mail, offering products appropriate for their age and gender.•For the Hifmid series, employ web-based advertising such as

a Yahoo! brand panel.

Enhancing customer management to grasp each customer’s needs

37

Shareholder ReturnsShareholder Returns

38

Changes in Dividends and Payout Ratios

828278

26.627.627.2

0

20

40

60

80

100

FY endedMarch1999

FY endedMarch2001

FY endedMarch2003

FY endedMarch2005

FY endedMarch2007

FY endedMarch2009

FY endedMarch2011

FY endedMarch2013

0

10

20

30

40Dividend amount (left-hand scale)

Dividend payout ratio (right-hand scale)

(Yen) (%)

Dividend per share continues to increase in real terms.

39

Documents

Financial Overview for Fiscal Year Ended March 31, 2013 · Anti-obesity drugs Steady sales of Eyebonand Inochi-no-Hahacontinued. Launch of NicitolGincreased the share for anti-obesity