Sumitomo Pharma: Raises FY2027 outlook, profit below prior year

Sumitomo Pharma raised its forecasts for revenue, core operating profit, operating profit and net profit for the fiscal year ending March 2027. The revised revenue forecast is ¥25 billion above the previous outlook, while core operating profit, operating profit and net profit are all expected to fall short of the prior-year results.

Revenue is expected to expand, but earnings are not forecast to recover to the prior-year level. Earnings per share were raised to ¥211.07 from the previous forecast of ¥172.89, but remain below the prior-year actual of ¥268.99. Revenue growth is not expected to translate directly into higher bottom-line profit.

For the first half of fiscal 2027, revenue, core operating profit, operating profit and net profit attributable to owners of the parent all exceeded the forecasts announced on July 31. Compared with the same period a year earlier, revenue increased, but each profit measure declined.

The company attributed the revenue increase to strong sales in the U.S., including Gemtesa, and a yen that was weaker than assumed. Selling, general and administrative expenses and research and development costs were slightly below expectations excluding foreign-exchange effects, helping profit exceed the forecast.

In explaining the full-year forecast revision, the company cited stronger-than-expected U.S. sales, a change to its foreign-exchange assumptions and higher costs associated with expanding sales.

• U.S. sales: U.S. revenue is expected to exceed plan, led by Gemtesa, a treatment for overactive bladder.
• Foreign-exchange assumption: The full-year average exchange-rate assumption was changed to ¥157.0 per U.S. dollar from ¥155.0.
• Sales-related costs: Higher revenue is expected to boost gross profit, while costs to expand sales are also forecast to rise.
• Profit forecasts: Operating profit and net profit were raised to reflect the increase in core operating profit.

Stronger U.S. sales and the weaker yen drove the forecast revision. The outlook also factors in higher sales-related costs, and core operating profit, the company's own management measure, is still forecast to fall below the prior-year result. Core operating profit excludes impairment losses, business restructuring costs and changes in the fair value of contingent consideration from operating profit, so the two measures should be viewed separately.