The outlook for the global economy in the fiscal year under review is uncertain due to factors such as prolonged inflation in the United States and Europe, economic recession in China, and heightened geopolitical risks caused by regional conflicts.
In the life science industry as well, the research budget has been reduced due to the impact of high prices and high interest rates, the activity of research and development in industry and academia has been reduced, and the market recovery has been delayed.
Under these circumstances, in the Long-Term Management Plan 2026 for the six-year period ending March 31, 2026, and the Medium-Term Management Plan 2026 for the three-year period ending March 31, 2026, we have promoted the development of basic biotechnology-based biologics development technologies through Reagents / Instruments business and CDMO business and have promoted initiatives aimed at becoming a global platform provider responsible for the infrastructure of the life science industry.
In the fiscal year under review, net sales increased year on year in all categories of Reagents, Instruments, CDMO and Gene Therapy. As a result, sales increased to \45,039 million (up 3.5% year-on-year). Cost of sales increased 14.3% year-on-year to ¥18,972 million due to a decrease in sales of test-related reagents, which have relatively high profit margins, and a change in the sales mix. As a result, gross profit decreased 3.1% to ¥26,067 million. Selling, general and administrative (SG&A) expenses decreased by 0.4% year-on-year to ¥23,804 million due to a decrease in R&D expenses and other expenses, and operating profitincome decreased by 24.6% to ¥2,263 million.
As a result of the decrease in operating profit, ordinary profit was ¥2,592 million (down 23.9%), incomeprofit before income taxes and others was ¥1,997 million (down 30.0%), and net income attributable to owners of the parent was ¥1,041 million (down 29.6%).
From the first quarter of the current fiscal year, due to a review of the management classification, sales of products related to the production of mRNA, which had previously been included in "Reagents", are included in “Gene Therapy”. As a result, net sales for the previous fiscal year have been reclassified based on the new classification, and \555 million, which was included in "Reagents" in the previous fiscal year, has been reclassified as "Gene Therapy."
Consolidated financial forecasts for the fiscal year ending March 31, 2026 are net sales of \52,500 million, operating profit of \2,500 million, ordinary profit of \2,500 million, and net income attributable to owners of the parent of \1,300 million. The forecasts are for net sales, operating profit and profit attributable to owners of the parent to increase both revenue and profit year on year.
For the second quarter of the fiscal year under review, the Group forecasts net sales of \21,300 million, an operating loss of \1,450 million, an ordinary loss of \1,430 million, and a net loss attributable to owners of the parent of \1,320 million, with both net sales and each profit item forecast to increase and decrease year on year. As mentioned above, there is a bias in the progress of net sales in the second quarter of the fiscal year under review. Therefore, the forecast for operating profit is based on the projected operating loss for the first, second and third quarters of the fiscal year under review, and the forecast is for operating profitincome of ¥2,500 million for the full year.
Our basic policy is to return profits to shareholders based on a comprehensive consideration of our operating results and financial position, and we consider the return of profits to shareholders to be an important management issue, while ensuring that we retain sufficient internal reserves in order to actively carry out research and development activities. Previously, we paid dividends from retained earnings with an aim of 35% of the assumed net income calculated without any extraordinary gains or losses included in the consolidated financial statements. As we proceeded with our management with market evaluation in mind and comprehensively consider the consolidated results for the full year and our dividend policy, the year-end dividend for the year ended March 31, 2025 was ¥17.00 per share (approximately 116% of the expected net income), as announced on May 10, 2024.
We will reduce the dividend from the previous fiscal year, but we would like to ask for the continued understanding and support of our shareholders.
May 2025
Koichi Nakao
President
