CMIC Holdings Co Ltd
TSE:2309
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Thank you very much for taking time out of your busy schedule and joining the conference call today. We are now starting the CMIC Holdings First Quarter 2023 Financial Results Presentation Meeting. Today, our CFO, Wataru Mochizuki, will explain the financial results overview. We are scheduled to end for 4:45 p.m. after the Q&A session. The video recording of this call will be posted later on CMIC's IR and recording will be available to view on demand.
Now our CFO Wataru Mochizuki will explain an overview of financial results.
Hello. I am Mochizuki. I will be giving an overview of financial results for the first quarter of the fiscal year ending September 30, 2023. The following is a description of our group's business activities. CMIC Group is expanding our business across our pharmaceutical solutions in which we support the development and manufacturing activities in pharmaceutical companies as well as our health care solutions to provide services to medical institutions, health care professionals, local governments and individuals.
In addition to promoting drug development and digitalization based on new drug discovery platform technologies, CMIC is expanding its business domain into the health care field and promoting business that contribute to total disease care initiatives from prevention to diagnosis, treatment and prognosis.
This table shows CMIC Group sites. As of December 31, 2022, the CMIC Group consists of 27 companies, including CMIC Holdings, the holding company and 24 consolidated subsidiaries and 1 equity method-affiliated company, 13 of which are overseas and have 62 sites, including plants and laboratories in Japan and overseas. In the fiscal year ending September 30, 2023, the second year of the midterm plan from 2022 to 2025, we will steadily implement measures to address each of these pillars in order to achieve our goals.
First, let me talk about our progress towards advancement in the health care business. We have continued from the previous fiscal year to provide comprehensive efforts, ranging from disease prevention to follow-up services, including proven vaccination and PCR test support services, along with the follow-up of infected patients. As an initiative to strengthen our digital platforms with the aim of increasing the health value of individuals, CMIC has entered into a capital and business alliance agreement with KNOCK ON THE DOOR, Inc. and has acquired it as a subsidiary.
KNOCK ON THE DOOR is currently focusing on nanacara, a platform that enables epilepsy patients and their families to share and manage daily records such as seizure frequency and medication status. In the future, KNOCK ON THE DOOR plans to expand its service with nanacara as the basis to other diseases, aiming to provide a wide range of patient-centered services. We also expect to create synergies with existing businesses such as collaboration with harmo and utilization in clinical trials.
With regard to strengthening comprehensive support for disease prevention and treatment from R&D to sales, we have established our new consulting and navigation unit to strength and support for overseas bio-venture companies entering the Japanese market as well as for companies from other industries entering the health care space to better support the diverse needs of our customers. In addition, OrphanPacific has commenced the development of glycerol phenylbutyrate, Ravicti, in Japan for the treatment of urea cycle disorders.
Regarding contribution to a sustainable society as a company involved in the business of supporting people's lives and health, the CMIC Group places a high priority on ethics and science and is proactively developing human resources who can play an active role in these areas and providing opportunities for them to do so.
Also as ongoing social contribution activities, we co-sponsored the International Children's Drawing Contest awarded the AIDS Society of Japan Prize and supported athletes with disabilities. As for the International Children's Drawing Contest, we received an award of excellence in the “Mécénat Awards 2022.
This is an overview of consolidated income statement. Sales in the first quarter of fiscal year were JPY 29,677 million, which was a 20.5% year-on-year by JPY 5,048 million. Operating income was JPY 4,270 million, which was up 26.5% year-on-year by JPY 894 million. Ordinary income was JPY 3,401 million, which was down 1.7% year-on-year by JPY 60 million. Profit attributable to owners of parent was JPY 1,950 million which was down 7.4% year-on-year by JPY 156 million. Earnings per share were JPY 111.73. As for profit and loss below operating income for the quarter, nonoperating income, such as subsidy income totaled JPY 32 million and nonoperating expenses such as foreign exchange losses totaled JPY 901 million.
Regarding foreign exchange losses, a significant foreign exchange gain was recorded in the previous fiscal year on loans to group companies denominated in foreign currencies, but foreign exchange loss was recorded in the first quarter of the current fiscal year due to the appreciation of the Japanese yen. No extraordinary income was recorded and extraordinary losses of JPY 25 million, including loss on retirement of fixed assets. Income taxes of JPY 1,615 million and net loss attributable to noncontrolling interests of JPY 91 million were recorded.
Sales and operating income by segment are shown in the table below. Sales and operating income in both our Healthcare and Pharmaceutical Solutions segment surpassed the record in the same period of the previous fiscal year due to substantial growth in local government support services for new coronavirus infections in Healthcare Solutions segment as well as solid performance in each of the businesses in the Pharmaceutical Solutions segment, orders received and order backlog by segment are shown in the table below. Orders received increased by 34.4% compared to the same period of the previous fiscal year and the order backlog increased by 11.7% compared to the same period of the previous fiscal year. The percentage of sales from reportable segments were 68% for Pharmaceutical Solutions and 32% for Healthcare Solutions. Growth in coronavirus infection related business has led to an increase in the percentage of Healthcare Solutions.
The following is a sales composition by business segment of Pharmaceutical Solutions. Sales grew in all businesses reaching JPY 20,494 million, up 15.6% year-on-year, and operating income also increased to JPY 1,722 million, up 31.8% year-on-year. The CRO business accounted for 50.6%; the CDMO business, 31.8%; and the Market Solutions business, 17.6% of total sales.
This is an overview of the Pharmaceutical Solutions CRO business. Our sales has increased compared to the previous fiscal year. Also, we have acquired orders for new development projects, and our operation ratio has improved, lifting our profit rate up and beyond the level of the previous fiscal year.
This is an overview of the Pharmaceutical Solutions CDMO business. Sales increased from the previous year due to an increase in contract production volume in Japan. Likewise, our EBITDA margin and profit rate exceeded that of the same period in the previous fiscal year. Domestically, new projects expanded steadily with the need for the stable supply of pharmaceuticals. We are strengthening our sales activities in the U.S. business while continuing to closely monitor the price trends and supply issues and energy, raw materials and so on.
This is an overview of the Pharmaceutical Solutions Market Solutions business. Sales increased from the same period of the previous fiscal year. On the other hand, our business profit margin decreased compared to the same previous in the previous fiscal year due to a surge in research and development expenses in orphan drugs.
The following is a breakdown of the sales composition of the Healthcare Solutions business. Sales and profit have increased with sales rising to JPY 9,646 million, increased by 36.5% compared to the previous fiscal year, and operating income rising to JPY 2,945 million, increased by 23.0% compared to the previous fiscal year. The sales composition is 28.1% for the Site Support Solutions business and 71.9% for the Healthcare Revolution business. The composition of the Healthcare Revolution business increased to vaccination support.
This is an overview of the Healthcare Solutions Site Support Solutions business. Sales fell below the same period of the previous year due to a decrease in new coronavirus vaccine and drug development projects. Likewise, profit rate has dropped. On the other hand, current orders received increased due an influx in clinical trial projects. To expand our business domain, we are strengthening collaboration with academia in addition to medical institutions, health care solutions, health care revolution, business overview. Sales increased from the same period of the previous fiscal year, and the business profit margin was also at a high level. Support services related to the coronavirus vaccination continue to expand. In addition, we are expanding business solutions that integrates disease prevention, health information and information technology.
Here, I'd like to explain our consolidated balance sheet. Total assets at the end of the quarter increased JPY 4,603 million from the end of the previous fiscal year to JPY 112,193 million, mainly due to increases in trade receivables, intangible assets -- and intangible assets.
Capital expenditures for the quarter totaled JPY 1,932 million, depreciation and amortization totaled JPY 1,227 million, and amortization of goodwill totaled JPY 25 million. Liabilities increased by JPY 3, 260 million compared to the end of the previous fiscal year to JPY 69,581 million due to an increase in commercial paper and a decrease in accrued bonuses and other liabilities. Net assets increased JPY 1,343 million from the end of the previous fiscal year to JPY 42,612 million, mainly due to increases in retained earnings.
That is all about an overview of financial results. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]