Towa Pharmaceutical (4553) Q4 2026 earnings summary

Executive summary

• Net sales for the year ended March 2026 increased 5.4% year-over-year to ¥273.7 billion, driven by higher sales volume and unit prices domestically and growth in European B2B/B2C businesses, but operating profit declined 0.6% to ¥23.1 billion due to a higher cost of sales ratio and business mix issues at Sunsho Pharmaceutical.

• Ordinary profit rose 7.4% to ¥28.1 billion, aided by a ¥5.3 billion gain on derivatives valuation.

• Profit attributable to owners of parent dropped 72.3% to ¥5.2 billion, mainly due to a ¥14.7 billion impairment loss on Sunsho Pharmaceutical goodwill.

• Both net sales and operating profit fell short of the full-year plan, achieving 97.8% and 85.6% of targets, respectively.

Financial highlights

• Gross profit increased 4.6% year-over-year to ¥99.1 billion, but the gross margin declined slightly to 36.2%.

• SGA expenses rose 6.3% to ¥76.0 billion.

• Comprehensive income fell 44.1% to ¥10,413 million.

• Earnings per share decreased to ¥106.66 from ¥385.71 year-over-year.

• Cash and cash equivalents at year-end were ¥44.8 billion, down ¥648 million from the previous year.

Outlook and guidance

• For the year ending March 2027, net sales are projected to rise 11.1% to ¥304.0 billion, and operating profit is expected to increase 38.5% to ¥32.0 billion.

• Profit attributable to owners of parent is forecast to surge 309.5% to ¥21.5 billion, reflecting recovery from the prior year’s impairment loss.

• Goodwill amortization for Sunsho Pharmaceutical will decrease significantly, supporting profit growth.

• Assumed exchange rates: ¥177/EUR, ¥154/USD.

• Domestic generics industry faces ongoing challenges from price revisions, quality assurance, and supply stability.