In FY2024, our group 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 decreased to ¥43,505 million (down 44.3% year-on-year) due to a decrease of sales of test-related products resulting from a change in the legal positioning of new Coronavirus infectious disease, and a slump in the life science research market affected by the economic sluggishness overseas. Cost of sales decreased to ¥16,597 million (down 50.3% year-on-year) due mainly to a decrease in sales. As a result, gross profit decreased to ¥26,908 million (down 39.9% year-on-year). Selling, general and administrative (SG&A) expenses were ¥23,905 million (down 1.3% year-on-year) due to an increase in research and development (R&D) expenses and other expenses, and operating profit was ¥3,003 million (down 85.4% year-on-year). As a result of the decrease in operating profit, ordinary profit decreased by ¥3,405 million (down 83.5% year-on year), profit before income taxes and others was ¥2,853 million (down 86.6% year-on-year), and net income attributable to owners of the parent was ¥1,480 million (down 90.8% year-on-year).
For the full year ending March 31, 2025, we forecast a year-on-year increase in both sales and profits, with net sales of ¥48,900 million, operating profit of ¥5,000 million, ordinary profit of ¥5,200 million, and net income attributable to owners of the parent of ¥3,400 million.
For the cumulative second quarter, we forecast a year-on-year increase in sales but a decrease in profits, with net sales of ¥20,200 million, operating profit of ¥150 million, ordinary profit of ¥250 million, and net income attributable to owners of the parent of ¥100 million. As mentioned above, due to a bias in the progress of net sales, we expect the progress of our operating profit forecast to be approximately 3% for the full year in the first half of the fiscal year (we expect an operating loss in the first quarter) and 97% for the second half of the fiscal year.
In Reagent business, the life sciences industry's activities are declining worldwide due to economic conditions and other factors. However, we expect sales of both Research/Catalog products and OEM/Custom-made products to increase as we pursue a global, multipolar marketing/manufacturing/sales strategy. Specifically, in Japan, we will focus on application testing kits for private laboratories and other facilities, in the U.S. for OEM/ custom-made products for LDT (laboratory developed test) such as the field of RHT (reproductive health technology), and in Europe for OEM/Custom-made products related to genetic engineering. In China, we will develop new products for the Chinese market and respond to pricing. In Instruments business, we expect sales to increase due to new products for next-generation single-cell analyzers, mainly in Japan and the United States. In CDMO business, we expect an increase in revenues from contracted production of vector and mRNA, contracted quality tests as contract services related to regenerative medicine products, using the second building of the Center for Gene and Cell Processing, which we have been investing in ahead of time. We also expect an increase in revenues from contract services related to gene analysis/testing, as well as an increase in revenues from new menus of proteome analysis, single-cell analysis, and spatial analysis. In Gene Therapy business, we anticipate an increase in sales of AM products (ancillary materials for manufacturing) such as mRNA related enzymes. Consequently, we anticipate an increase in sales in all categories. Regarding the projected progress in consolidated net sales, we expect the first half to be approximately 41% of the full year and the second half to be 59% of 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. Specifically, we plan to pay dividends of retained earnings to 35% of the expected net income in the consolidated financial statements without taking into consideration the extraordinary gains or losses. From the perspective of improving capital efficiency, we decided to pay a year-end dividend of ¥17.00 per share (approximately 87% of the expected net income) for the year ended March 31, 2024, as announced on May 11, 2023.
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 2024
Koichi Nakao
President
