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1/44
Financial Overview for Fiscal Year Ended March 31, 2014
Akihiro KobayashiPresident & Chief Operating OfficerKobayashi Pharmaceutical Co., Ltd.
May 1, 2014
2/44Today’s Topics
1. Consolidated Results for Fiscal Year Ended March 31, 2014
2. Forecasts for Fiscal Year Ending March 31, 2015
3. Priority Issues for Further Growth
4. Returns to Shareholders
3/44
1. Consolidated Results for Fiscal Year Ended March 31, 2014
4/44Highlights of Consolidated Financial Results
FY ended March 2013
FY ended March 2014
Increase(Decrease)
Amount Margin Amount Margin Amount Percentage
SalesMillion yen
121,532%
－
Million yen
127,293% Million yen
5,761%
4.7
Gross profit 69,799 57.4 73,099 57.4 3,299 4.7
Operating income 16,903 13.9 18,122 14.2 1,218 7.2
Ordinary income 18,677 15.4 18,769 14.7 91 0.5
Net income 12,176 10.0 12,307 9.7 130 1.1
EPS (yen) 297.37 － 300.55 － 3.18 1.1
Dividends (yen) 82 － 86 － 4 4.9
Sales : Sales of deodorizing air fresheners, body warmers and Netsusama Sheets sold overseas grew steadily.
Ordinary income: Ordinary income grew slightly due to a fall in equity in earnings of affiliates (Medicon, Inc.) and foreign exchange losses.
Net income : Net income increased for the 16th consecutive fiscal year, reaching the highest-ever level.
181169
14.213.9
0
50
100
150
200
250
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
10
11
12
13
14
15Operating incomeOperating margin
5/44Changes in Consolidated ResultsSales Operating income
(100 million yen) (100 million yen) (%)
1,2151,272
0
500
1,000
1,500
FY endedMarch2010
FY endedMarch2011
FY endedMarch2012
FY endedMarch2013
FY endedMarch2014
4.7% Up 7.2% Up
6/44Increase (Decrease) in Operating Income(100 million yen)
181219
144169 4
30.4 4 5
12
0
50
100
150
200
250
Impa
ct o
f the
wea
ker y
en
(ove
rsea
s sub
sidiar
ies)
Factor for decreaseFactor for increase
GP SGA expenses
Oper
atin
g in
com
e for
FY
ende
d Ma
rch
2013
Incr
ease
in o
pera
ting
inco
me
along
with
sales
incr
ease
Cost
redu
ctio
n
Rise
in ra
w m
ater
ial p
rices
Loss
on
disp
osal
of
inve
ntor
y
Sales
pro
mot
ion
& ad
verti
sing
expe
nses
R&D
expe
nses
Com
mun
icatio
n ex
pens
es
Dist
ribut
ion
expe
nses
Othe
r
Oper
atin
g in
com
e for
FY
ende
d Ma
rch
2014
7/44Net Income Increased for the 16th Consecutive Fiscal Year, Reaching the Highest-Ever Level
(100 million yen)
123
0
50
100
150
FY endedMarch 1998
FY endedMarch 2014
Reaching the highest-ever level
8/44
Consumer Products Business (Sales at stores in Japan and Kiribai Chemical)
9/44Changes in Sales and Operating Income(Sales at Stores in Japan and Kiribai Chemical)
1,011986
0
400
800
1,200
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
Sales Operating income(100 million yen) (100 million yen) (%)
2.6% Up177174
17.517.7
0
50
100
150
200
250
300
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
0
5
10
15
20
25Operating incomeOperating margin
1.5% Up
10/44Sales by Product Category(Sales at Stores in Japan and Kiribai Chemical)
Year-on-Year Main factors
Total 103.7%Pharmaceutical
products 98.3% Sales of a remedy for obesity were sluggish due to the shrinking of the market.
Oral hygiene products 104.5% Sales of interdental cleaning tools and Shouyou
increased solidly.
Food products 106.9% Sales of nutritional supplements were strong.
Sanitary products 105.8% Sales of Keshimin and new skincare products grew steadily.
Deodorizing air fresheners 106.0% Sales of Bluelet, Kuruma no Shoshugen Clip, and
Shoshugen Kaoru Sticks were robust.
Household sundries 102.9% Sales of Kantan Senjomaru were strong.
Kiribai Chemical 93.4% Sales of body warmers were sluggish due to the warmer weather.
Sales
at S
tore
s in
Japa
nSales of deodorizing air fresheners grew steadily. Sales at stores in Japan stood at 103.7% of the previous year.
Sales of deodorizing air fresheners grew steadily. Sales at stores in Japan stood at 103.7% of the previous year. (Note) 102.6%
including KiribaiChemical
11/44Oral Hygiene Product Feature (Sales were at 104.5% of the previous year.)
Shouyou brand
Chinese herbal
medicineToothbrush
＋
New release
Tomarina brand
＋
Cool type
New release
New release
Increased the frequency of TV advertising for interdental cleaning tools
◆ Shouyou, Tomarina, and interdental cleaning tools
In response to a rise in oral care awareness, we expanded our product lineups and increased our frequency of TV advertising, boosting sales of oral hygiene products.
In response to a rise in oral care awareness, we expanded our product lineups and increased our frequency of TV advertising, boosting sales of oral hygiene products.
13/44Deodorizing Air Freshener Feature (Sales were at 106.0% of the previous year.)
Increasing demand for refills of Shoshugen Kaoru Sticks due to the spread of interior fragrance products and the acceleration of deodorizing air fresheners for cars led to sales expansion.
Increasing demand for refills of Shoshugen Kaoru Sticks due to the spread of interior fragrance products and the acceleration of deodorizing air fresheners for cars led to sales expansion.
◆ Shoshugen Kaoru Sticks and Kuruma no Shoshugen Clips
Kuruma noShoshugen ClipShoshugen Kaoru Stick in collaboration with Hibiya Kadan
14/44
7.9 7.5
0
5
10
15
20
FY endedMarch 2006
FY endedMarch 2007
FY endedMarch 2008
FY endedMarch 2009
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
New Product Contribution Rate (Excluding Mail-Order Business)
(%)
● In FY ended March 2014, we launched 39 new products (27 products in Spring and 12 products in Fall).
Examples of new products launched in FY ended March 2014
15/44Promoting Reduction of Return Rate/Loss on Disposal
2127
2.7
2.9
0
10
20
30
40
50
FY endedMarch 2008
FY endedMarch 2009
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
0
1
2
3
4
5
Loss on disposal Return rate
(%)(100 million yen)
● We were able to appropriately manage the shipment of seasonal products, in particular summer products.
16/44
Consumer Products Business (International Division)
17/44
(100 million yen) (100 million yen)
● Sales of Netsusama Sheets (for children and babies) grew steadily in China and Southeast Asia.
● Sales of body warmers were strong in the United States.
125
95
0
50
100
150
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
2.2
-0.4
-6
-4
-2
0
2
4
6
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
Sales Operating income/loss(after goodwill amortization)
32.6% Up
Changes in Sales and Operating Income(International Division)
18/44
Mail Order Business
19/44Changes in Business Results of Mail Order Business
(100 million yen) (100 million yen)
● Sales of the Hifmid series and Yasai to Kouso (Vegetables and Enzymes) increased solidly.
107101
0
40
80
120
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
3.6
1.6
-6
-4
-2
0
2
4
6
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
Sales Operating income/loss
125 % Up
5.6% Up
20/44
2. Forecasts for Fiscal Year Ending March 2015
21/44Highlights of Consolidated Financial Results Forecasts
Sales: We aim to increase sales by focusing on new product development, the Skincare business and the International business.Operating income: We plan to actively spend money for the advertisement and sales promotion of new skincare products.Net income: We aim to increase net income for the 17th consecutive fiscal year, achieving the highest-ever net income.
FY ended March 2014
FY ending March 2015
Increase(Decrease)
Amount Margin Amount Margin Amount Percentage
SalesMillion yen
127,293% Million yen
132,000%
－
Million yen
4,706%
3.7
Gross profit 73,099 57.4 77,000 58.3 3,900 5.3
Operating income 18,122 14.2 18,400 13.9 277 1.5
Ordinary income 18,769 14.7 19,000 14.4 230 1.2
Net income 12,307 9.7 12,500 9.5 192 1.6
EPS (yen) 300.55 － 305.27 － 4.72 1.6
Dividends (yen) 86 － 86 － 0 0.0
22/44
3. Priority Issues for Further Growth
23/44Two Priority Issues
Enhancing our efforts to create new markets by developing new products and cultivating them to gain a foothold in the marketplace
Actively investing in prioritized businesses
We will focus our efforts on two priority issues, with the aim of growing our business further.
We will focus our efforts on two priority issues, with the aim of growing our business further.
1
2
24/44Two Priority Issues
Actively investing in prioritized businesses
1
2
Enhancing our efforts to create new markets by developing new products and cultivating them to gain a foothold in the marketplace
25/44
7.97.5
0
5
10
15
20
FY endedMarch 2006
FY endedMarch 2007
FY endedMarch 2008
FY endedMarch 2009
FY endedMarch 2010
FY endedMarch 2011
FY endedMarch 2012
FY endedMarch 2013
FY endedMarch 2014
Management Indicators
(%)
Kobayashi Pharmaceutical’s growth model is the creation of a new market by developing new products.We set a new product contribution rate of greater than 10% in the initial year as one of our management indicators.
Kobayashi Pharmaceutical’s growth model is the creation of a new market by developing new products.We set a new product contribution rate of greater than 10% in the initial year as one of our management indicators.
◆ New Product Contribution Rate (excluding Mail-Order Business)
Examples of new products launched in FY ended March 2014
26/44
(i) Develop products with new valuesIdentify latent needs that go unnoticed even by our customers and
transform them into actual products to satisfy such needs.
With the following 3 viewpoints of customers in mind, we will focus on developing new products that customers really want to purchaseor that customers really use.
With the following 3 viewpoints of customers in mind, we will focus on developing new products that customers really want to purchaseor that customers really use.
◆ Strengthen product development capabilities
Enhancing Our Efforts to Create New Markets: Development
(ii) Develop products with features customers find attractive Gather and analyze data and information on customers' repeat
purchase intentions to develop products with features (includingquality) that entice customers to purchase again.
(iii) Develop products with consistency in mindGive sufficient considerations to naming, packaging, advertising, and
sales promotion goods, to give customers a consistent concept of the product.
27/44
August 2013 September October November December January
2014 February March April
Topic
Closed campaign(Placing postcards)
◎ ◎
Featured items ◎ ○
Magazines ◎◎ ◎ ◎ ◎ ○ ◎◎
Explanation on the product
Special story about the
developmentNotification of
campaignProgress
at the midpoint
TVCF ◎ ○ ◎ ◎
Introduction
Dogs HAPPY Campaign
Release of fragrance-free
productsRelease
Soliciting applications by postcard
ワンダフル
キャンペーン
事務局行
住所氏名年齢電話
応募券３口
Third stageSecond stage
Prepared a six-month cultivation planLink advertisements to in-store sales campaigns to boost sales
Prepared a six-month cultivation planLink advertisements to in-store sales campaigns to boost sales
Enhancing Our Efforts to Create New Markets: Cultivation◆ Example of cultivation: Shoshugen Inu no Kimochi
(launched in August 2013)
Cont
inui
ng cu
ltiva
tion
At st
ores
Adve
rtise
men
t
28/44Enhancing Our Efforts to Create New Markets: Cultivation
Total shipments from August 2013 to
March 2014
Progress rate of sales compared to the sales target in the first year
340 million yen 42.3%
<Our shipments in value>
Although the progress rate has been slow so far, we feel the product has been steadily establishing a foothold in the marketplace because we were able to boost sales at the stores according to our plan. We will try to cultivate it further.
Although the progress rate has been slow so far, we feel the product has been steadily establishing a foothold in the marketplace because we were able to boost sales at the stores according to our plan. We will try to cultivate it further.
<Change in actual sales at stores>
0
10,000
20,000
30,000
40,000
50,000
8月 9月 10月 11月 12月 1月 2月 3月
* Sales target in the first year: 800 million yen
◆ Example of cultivation: Shoshugen Inu no Kimochi(launched in August 2013)
(1,000 yen)
August 2013 September October November December January
2014 February March
(Source: Kobayashi Pharmaceutical)
29/44
We aim to have two to four new products gain a foothold in the market every year through cultivation.We will nurture a product that creates a new market, staying in the market as a household name after 5 years or 10 years from the launch of it.
We aim to have two to four new products gain a foothold in the market every year through cultivation.We will nurture a product that creates a new market, staying in the market as a household name after 5 years or 10 years from the launch of it.
◆ Efforts to raise the percentage of new products that gain a foothold in the market through cultivation
Select a product with
growth potential as a
product to cultivate.
A product that creates
a new market
Enhancing Our Efforts to Create New Markets: Cultivation
Select one product as a product to cultivate. Cultivation plan
Prioritized product
Cultivationplan
The whole company is involved in cultivation.
<Past>
<Future>
At the time of release 6 months to 1 year later
Prioritized product
Prioritized product
Cultivationplan
Cultivationplan
30/44Two Priority Issues
Enhancing our efforts to create new markets by developing new products and cultivatingthem to gain a foothold in the marketplace
Actively investing in prioritized businesses
1
2
31/44
Actively invest in three businesses that will support future growth. Actively invest in three businesses that will support future growth.
Prioritized Business
Skincare Business
国際事業
Mail Order Business
Prio
ritize
d Bu
sines
s
InternationalBusiness
32/44
Last year, we acquired two companies to expand the skincare business. Sales of the skincare business segment grew to 4,900 million yen in FY ended March 2014.
Last year, we acquired two companies to expand the skincare business. Sales of the skincare business segment grew to 4,900 million yen in FY ended March 2014.
September 2013Juju Cosmetics
Kobayashi Pharmaceutical
March 2013Rokuyo Pharmaceutical
Skincare Business◆ Expanding business through M&A
33/44
Rough skin and pimples Moisturizing Aging
We have a wide selection of brands covering the main categories. We aim to create a new market in the skincare category by strengthening each brand and developing new products.
We have a wide selection of brands covering the main categories. We aim to create a new market in the skincare category by strengthening each brand and developing new products.
Blotches
Skincare Business◆ Product lineup by category
[New] Combination skin
EAUDE MUGE AQUA MOIST Keshimin BalancinaMadame Juju
34/44Skincare Business
In April 2014, we established the Skincare Division and the Beauty Care Sales Division.We consolidated the Kobayashi Pharmaceutical Group's skincare technology and sales resources.
In April 2014, we established the Skincare Division and the Beauty Care Sales Division.We consolidated the Kobayashi Pharmaceutical Group's skincare technology and sales resources.
◆ Establishment of development and sales organizations
Kobayashi Pharmaceutical
Juju Cosmetics
RokuyoPharmaceutical
Skincare Division(Development and marketing)
<Past> <April 2014 ~>
Beauty Care Sales Division
Koba
yash
i Ph
arm
aceu
tical
35/44Skincare Business
Kobayashi Pharmaceutical
Juju Cosmetics RokuyoPharmaceutical
Brand powerIngredient development technology
Marketing capacityCapacity to develop products in a short periodSales capacity
Brand powerCapability to offer proposals on stores
・Consumers information・Evaluating and analyzing technology・Quality standards (safety), etc.
Centralization
We have centralized the technology and assets that each company owns separately by consolidating organizations. We will strengthen development by horizontally spreading each company's strengths.
We have centralized the technology and assets that each company owns separately by consolidating organizations. We will strengthen development by horizontally spreading each company's strengths.
◆ Further business expansion
36/44
We will aim to achieve sales of 10,000 million yen for FY ending March 2018, four years later, by upgrading the business foundation through the strengthening of product development and sales capabilities.
We will aim to achieve sales of 10,000 million yen for FY ending March 2018, four years later, by upgrading the business foundation through the strengthening of product development and sales capabilities.
Skincare Business◆ Business goal
100
49
2014.3期 2015.3期 2016.3期 2017.3期 2018.3期
New product
New product
(100 million yen)
FY ended March 2014
FY ending March 2015
FY ending March 2016
FY ending March 2017
FY ending March 2018
37/44
China
United States
International Business◆ Business strategies
We will strengthen locally rooted marketing, mainly in 3 key regions: the United States, China, and Southeast Asia. We will continue to focus on the sales of body warmers, cooling gel sheets, and an external anti-inflammatory.
We will strengthen locally rooted marketing, mainly in 3 key regions: the United States, China, and Southeast Asia. We will continue to focus on the sales of body warmers, cooling gel sheets, and an external anti-inflammatory.
Southeast Asia
38/44International Business
• We will enhance our efforts to display HeatMax's HOTHANDS in front of cashiers of mass retailers.
• We will try to increase the number of stores handling our body warmers by enhancing our sales efforts in alliance with Grabber, a sales company for body warmers, we acquired in 2012.
To promote daily use as a countermeasure against the cold, we will strengthen our efforts to display the products in front of cashiers.
To promote daily use as a countermeasure against the cold, we will strengthen our efforts to display the products in front of cashiers.
◆ United States: Body warmers
39/44International Business
<Body warmers>•We will enhance our efforts to cultivate the market for our body warmers in inland areas by marketing our economically priced body warmer (priced at 2 yuan, normally 3.3 yuan), with the aim of increasing the number of stores handling our body warmers to 50,000. •We will try to raise product recognition by actively using in-store advertisements and sales promotion campaigns.
We will expand sales channels for economically priced body warmers in inland areas and enhance our efforts to market cooling gel sheets for babies.
We will expand sales channels for economically priced body warmers in inland areas and enhance our efforts to market cooling gel sheets for babies.
◆ China: Body warmers and cooling gel sheets
< Cooling gel sheets>•We will try to increase the number of stores handling our cooling gel sheets for babies, which are selling well, supported by the one-child policy.•We will continue running TV commercials focused on babies to make the use of our cooling gel sheet as a part of daily habits.<Production facility>•To cope with the expansion of demand for body warmers and cooling gel sheets, we plan to commence the operation of a new plant in Anhui Province this fall.
< Cooling gel sheets>•We will try to increase the number of stores handling our cooling gel sheets for babies, which are selling well, as in China.•We will continue promoting our cooling gel sheets as a heat relief remedy in Hong Kong and Malaysia, where the market has been established.< External anti-inflammatory products>•We will strongly promote our product brands by unifying the packaging logos in Hong Kong, Malaysia, Singapore, etc., where we have had a track record for many years.•We will aim to launch sales of the products in other Southeast Asian countries at an early stage bypromptly obtaining Pharmaceutical Affairs regulatory approval in each country.
40/44International Business
We will strive to establish a foundation for creating a new market.We will strive to establish a foundation for creating a new market.
◆ Southeast Asia: Cooling gel sheets and external anti-inflammatory products
40/44Mail Order Business
<Nutritional supplements>•We will strengthen our research in materials by placing Enzymesas the most focused area. We will plan to establish a study group in alliance with universities and enterprises.<Hifmid>•We will revamp the products after 10 years from the launch. We will plan to improve ingredientsand expand the product lineups.<Aloe>•We will promote our research on materials and strengthen the product lineups. We started marketing the Ikujyun Eki series in Fall 2013. <Campaign>•We will expand sales through the Mail Order Business 15th anniversary campaign.
We will upgrade research activities, our strength, to develop high-quality new products.
We will upgrade research activities, our strength, to develop high-quality new products.
◆ Business strategies
41/44
4. Returns to Shareholders
42/44Changes in Dividends and Payout Ratios
(%)(Yen)
● We increased dividends for the 15th consecutive fiscal year.
8682
28.627.6
0
20
40
60
80
100
'99/3 '14/30
10
20
30
40
配当金額 配当性向
FY ended March 1999
FY ended March 2014
Dividend amount
Dividend payout ratio
43/44Returns to Shareholders
+
[Annual dividends]86 yen
[Acquisition of treasury stock]1,500 million yen (planned)
Returns to shareholders in FY ending March 2015
44/44