Yakult Honsha : Financial Report for the first quarter Ended June 30, 2023 (1.93 MB)

Consolidated Financial Results for the 1st Quarter ended June 30, 2023

(Japanese Generally Accepted Accounting Principles)

(Figures less than 1 million yen have been rounded down)

1. Consolidated financial results for the 1st quarter of FY2023, ended June 30, 2023 (April 1, 2023 - June 30, 2023)

(1) Consolidated Financial Results (Accumulated)

(Ref.) Equity for 1Q FY2023 517,219 million yen FY2022 498,659 million yen

2. Dividends

(Note) Revision of the latest dividend forecast : Yes

(Note) The Company resolved at a meeting of its Board of Directors held today to implement a 2-for-1 stock split of shares of common stock with an effective date of October 1, 2023. For this reason, the year-end dividend per share (projected) for the fiscal year ending March 31, 2024 is presented in an amount that takes the impact of this stock split into account. The year-end dividend per share (projected) for the fiscal year ending March 31, 2024 without considering the stock split would be 56 yen. For details, please refer to the "Notification Regarding Stock Split and Related Partial Amendment to Articles of Incorporation, Revision of Dividend Forecast, and Shareholder Benefit Program" released today.

3. Forecast for consolidated financial results for FY2023 (April 1, 2023 - March 31, 2024)

(Note) Revision of the latest financial forecast : No

(Note) The impact of the stock split has been taken into account in the basic earnings per share in the forecast for consolidated financial results for FY2023 (full year). The forecast for basic earnings per share for FY2023 without considering the stock split would be 374.83 yen.

*Notes

1. Changes of important subsidiaries during the period : No
   (Change in specified subsidiary with change in scope of consolidation)
2. Special Accounting Treatment for Preparation of the Quarterly Consolidated Financial Statements : Yes (Note) Details are stated on pg. 9 under "Notes on Quarterly Consolidated Financial Statements."
3. Change in accounting policies and estimates, correction of prior period errors

• This financial report is not included in quarterly reviews by our external auditors.
• Explanation for the appropriate use of the financial forecast and other comments Note concerning statements about the future, etc.
  The statements about the future, including earnings projections, contained in this report are based on information currently available as well as certain assumptions considered reasonable. Actual results may vary considerably from these projections owing to a range of factors.
  Assumptions upon which the forecast is based and notes on the use of the forecast are stated on pg. 4 under "Disclaimer on Future Outlook Including Consolidated Financial Results Forecast."

Procedure for obtaining supplementary information on financial results

We plan to hold a conference call for analysts and institutional investors on July 28, 2023. Materials used in the conference call will be posted on the company's website.

Yakult Honsha Co., Ltd. (2267) Financial Report for the 1st Quarter of FY2023 ended June 30, 2023

1. Qualitative Information Regarding Quarterly Consolidated Financial Results

(1) Business Performance Overview

1 Performance Overview

During the first quarter of the fiscal year ending March 31, 2024, despite a gradual recovery in economic conditions, partly as the result of the effects of various policies, the Japanese economy remained susceptible to downward risks due to global monetary tightening and other factors and to the impacts of rises in the cost of living and other factors.

Against this background, the Yakult Group worked to build awareness and understanding of the probiotics that constitute the bedrock of our operations, while striving to communicate the superiority of our products. Guided by our long-term vision, Yakult Group Global Vision 2030, we pursued business activities and sought to improve our performance with the aim of evolving into a healthcare company that continues to contribute to the health of people around the world.

Following these efforts, consolidated net sales for the three months of this fiscal year rose 13.1% from the same period of the previous year to 122,115 million yen. Operating profit increased 15.0% to 16,981 million yen, while ordinary profit increased 13.0% to 20,859 million yen. Profit attributable to owners of parent increased 14.5% to 13,111 million yen.

2 Overview by Segment Food and Beverages (Japan)

In dairy products, Yakult focused on broadening recognition of the science behind its proprietary living Lactobacillus casei strain Shirota1 and Bifidobacterium breve strain Yakult by utilizing evidence to conduct grassroots value dissemination initiatives.

In our home delivery channel, we implemented initiatives to encourage customers to drink the fermented milk drinks Yakult 1000 and the Yakult 400W, linking them to the roll-out of advertising. To strengthen our home delivery organization, we pressed ahead with efforts to conduct recruitment activities and create convenient working conditions for Yakult Ladies.

As for the retail store channel, we worked to improve visibility in store, focusing on the fermented milk drinks Yakult 1000 and the New Yakult series, in our efforts to increase revenue.

In product-specific initiatives, we addressed rising demand for Yakult 1000 and Y1000 by increasing production capacity for both products. We will continue taking action to ensure stable supply going forward.

In other beverages, in April, we expanded the sales regions of Kan Fine, a food with functional claims that contains an effective quantity of anthocyanin derived from purple sweet potato and that assists with lowering the level of the enzymes, AST and γ-GTP, related to liver function, and worked to increase sales.

As a result of these efforts, consolidated net sales for the Food and Beverages (Japan) segment increased 14.5% from the same period of the previous fiscal year, totaling 63,887 million yen.

Food and Beverages (Overseas)

Yakult's operations outside Japan commenced in March 1964 with the establishment of Yakult Taiwan Co., Ltd., and now the manufacture and sale of Yakult outside of Japan spans 39 countries and regions centered around 29 companies and one research center, with average daily bottle sales of approximately 30.57 million bottles in June 2023.

a. The Americas

In the Americas, Yakult and other products are manufactured and sold by Yakult S/A Ind. E Com. (Brazil), Yakult S.A. De C.V. (Mexico), and Yakult U.S.A. Inc.

At Yakult U.S.A. Inc., boosting support for sales through publicity campaigns and other initiatives, as well as making efforts to increase the number of stores stocking our products resulted in a steady increase in sales figures.

In other regions within the Americas, we strived to increase revenue by reinforcing the sales networks for both the home delivery and retail store sales channels.

As a result of these efforts, consolidated net sales in the Food and Beverages (The Americas) segment increased

• Classified as Lacticaseibacillus paracasei strain Shirota as of April 2020.
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Yakult Honsha Co., Ltd. (2267) Financial Report for the 1st Quarter of FY2023 ended June 30, 2023

34.4% from the same period of the previous year to 18,652 million yen.

b. Asia and Oceania

In Asia and Oceania, Yakult and other products are manufactured and sold by Hong Kong Yakult Co., Ltd.; Yakult (Singapore) Pte. Ltd.; PT. Yakult Indonesia Persada; Yakult Australia Pty. Ltd.; Guangzhou Yakult Co., Ltd.; Yakult (Malaysia) Sdn. Bhd.; Shanghai Yakult Co., Ltd.; Beijing Yakult Co., Ltd.; Yakult (China) Corporation; Yakult Vietnam Co., Ltd.; and Yakult Danone India Pvt. Ltd.; among others. In addition, Yakult Middle East FZCO imports Yakult and other products for sale.

At Yakult Vietnam Co., Ltd., as the result of efforts to enhance the home delivery organization and increase the number of stores stocking our products, the monthly average number of bottles sold per day in April was the highest on record.

Yakult (China) Corporation established the Xuzhou Branch in Xuzhou, Jiangsu Province and began selling Yakult, Yakult Light, and Yakult 50 Billion Light in the retail store channel in June. This brought the number of sales location in China to 51.

As a result of the above, consolidated net sales in the Food and Beverages (Asia and Oceania) segment rose 8.7% from the same period of the previous year to 31,827 million yen.

c. Europe

In Europe, Yakult and other products are manufactured by Yakult Europe B.V., and sold by Yakult Nederland B.V., Yakult Belgium N.V./S.A., Yakult Europe B.V., Yakult UK Ltd., Yakult Deutschland GmbH, Yakult Oesterreich GmbH, and Yakult Italia S.r.l.

In this region, taking advantage of heightened health consciousness, we aimed for sustainable growth by conducting sales activities tailored to each individual country's market.

Yakult UK Ltd. began selling Yakult Plus in the retail store channel in April.

Meanwhile, the prolongation of the conflict between Russia and Ukraine means that, although we do not operate in either country, we will continue to pay close attention to the impact of the conflict on Europe as a whole.

As a result of these efforts, consolidated net sales in the Food and Beverages (Europe) segment increased 2.5% from the same period of the previous year to 2,638 million yen.

Others

This segment encompasses Yakult's cosmetics manufacturing and sales, pharmaceuticals manufacturing and sales, and its professional baseball team operations.

In our cosmetics operations, we worked to help customers realize their internal and external beauty, and to increase the number of regular users of our cosmetics by focusing on initiatives to disseminate the value of our proprietary moisturizing agent S.E. (Shirota Essence), which is the result of our extensive research on lactic acid bacteria since the Company's foundation.

As specific examples of such activities, in the Lactdew series of basic skin care products, we released a revamped version of Lactdew S.E. Lotion 1, which offers a lightly moisturized feel. We also rolled out a brand-boosting campaign for our Parabio series of high-performance basic skin care products in an effort to encourage regular use of the products in the series.

In our pharmaceuticals operations, we promoted awareness and the proper use of our products, particularly those specializing in oncology and related fields. Regarding our mainstay, the antineoplastic drug Elplat, while medical institutions are increasingly switching to available generic versions in line with government policy, we leveraged our ability to provide relevant information about it, a Company strength as the developer of the original drug.

However, our revenue was impacted by revisions to National Health Insurance drug prices in April 2023, which reduced prices for most of Yakult's pharmaceutical products.

In our professional baseball operations, we improved the various fan service engagements at Jingu Stadium and disseminated a range of information in our efforts to increase attendance and revenue.

As a result of the above factors, consolidated net sales in the Others segment fell 12.9% from the same period of the previous year to 8,281 million yen.

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