The FINANCIAL -- Underlying Revenue grew +6.4%, led by Takeda's Growth Drivers (Gastroenterology, Oncology, Neuroscience and Emerging Markets) displaying strong growth of +11.8% over prior year. Key products Entyvio (+34.1%) and Ninlaro (+43.3%) made important contributions to revenue growth.
Underlying Revenue increased in every region, particularly the U.S. which posted double-digit growth, and Japan which grew despite a price cut in April. Emerging Markets benefited from a return to growth in China. (U.S. +14.1%, Japan +6.6%, Europe & Canada +2.0%, Emerging Markets +6.2%).
Reported revenue grew +0.4%, with the positive contribution from Takeda's Growth Drivers offsetting the negative impact of currency (-0.5pp) and divestitures (-5.6pp), mainly the long listed products sold to the Teva JV in May 2017.
Underlying Core Earnings +40.3% with margin +6.4pp predominantly driven by Opex discipline
Underlying Core Earnings grew +40.3%, reflecting revenue growth and a margin step-up of 6.4pp. Gross margin contributed 1.6pp, driven by improved product mix, and the Opex ratio improved 4.8pp, driven by improved cost consciousness as the Global Opex initiative is fully integrated into ways of working.
Reported operating profit declined -49.3%, impacted by the sale of additional products to the Teva JV in Japan, and a 106.3 billion yen one-time gain from the sale of Wako Pure Chemical Ltd., both of which were booked in Q1 FY2017. Excluding these items, operating profit increased +37.5%.
Underlying Core EPS was up +51.1%, and reported EPS declined -46.1% to 100 yen per share impacted by one-time gain on sale of Wako and the second tranche of products sold to the Teva JV. Excluding these items, EPS grew at +32.6%.
Achieved several important pipeline milestones in Q1
Vedolizumab approved for ulcerative colitis in Japan, and a subcutaneous formulation achieved the primary endpoint in a Phase 3 study as maintenance therapy in ulcerative colitis.
Primary endpoints achieved in Phase 3 studies for Alunbrig in frontline non small cell lung cancer, and Ninlaro in post-transplant multiple myeloma maintenance.
On track with plan to divest non-core assets
Year-to-date Operating Free Cash Flow decreased -90.6% due to positive R&D milestones and the impact of the sale of additional products to the Teva JV in Q1 FY2017.
Sale of non-core assets generated an additional 31.9 billion yen of cash, in line with plan.
Costa Saroukos, Chief Financial Officer, commented:
"Takeda's strong business momentum continues into 2018 as we make solid progress against our key priorities to grow the portfolio, strengthen the pipeline, and boost profitability. I am pleased to report that we made a very strong start on underlying revenue and profitability, with the underlying Core Earnings margin expanding by 640 basis points in Q1 versus prior year. This margin growth was predominantly driven by Opex discipline, which is indicative of how the Global Opex Initiative is now fully integrated into how we work through KPIs, objectives, budgets and systems."
Core Earnings represents Operating Profit adjusted to exclude amortization and impairment losses on intangible assets associated with products as well as other operating income, other operating expenses and certain other significant items that are unusual, non-recurring or unrelated to its ongoing operations.
Underlying Growth compares two periods (quarters or years) of financial results under a common basis and is used by management to assess the business. These financial results are calculated based on constant currency basis and excluding the impacts of divestitures and other amounts that are unusual, non-recurring items or unrelated to our ongoing operations.
Attributable to the owners of the company.
The forecast for consolidated results for the full year of fiscal 2018 has not been changed from the previous forecast (announced at the fiscal 2017 financial results announcement on May 14, 2018). This forecast does not include the full fiscal year 2018 estimated financial impact related to the proposed acquisition of Shire plc by Takeda. A forecast that does include the estimated financial impact of the deal will be announced by Takeda once a reasonable assumption has been confirmed.