Executive Vice President and Chief Financial Officer (CFO) Masaya Saito
Fiscal 2024 was a year in which we implemented a strategic and aggressive financial approach to sustainably increase our corporate value.
In order to build a strong foundation for medium- to long-term growth, we actively carried out large-scale investments with the aim of strategically expanding our business portfolio and further improving our presence in the global market. Specifically, we made two large-scale M&A investments: one in Yu Yang Sun Pharmaceuticals, which aimed to strengthen our business foundation in Asia and establish Oral Medicine / Health Food Business as a new pillar of growth based on the concept of being a "pharmaceutical company that does not rely on medicines," and the other in Mono Pharmaceuticals, which aimed to expand our pharmaceutical and medical device business in the European market. In addition, we systematically promoted capital investments, including the expansion of production facilities, such as the renovation of our mother factory, the Ueno Factory, in order to strengthen the competitive advantage of Core businesses, such as eye care and skin care.
As part of our financial approach for fiscal 2024, we have issued Euro-yen convertible bonds with stock acquisition rights due in 2032 in order to efficiently raise the funds necessary for aggressive growth investments while maintaining financial soundness. These funds will be used to repay borrowings related to the acquisition of Yu Yang Sun and to purchase treasury shares to improve capital efficiency, thereby contributing to the soundness of our financial base and securing funds for further growth investments in the future.
Regarding shareholder returns, based on our policy of stable and continuous returns, we have increased the annual dividend by 9 yen from the previous fiscal year to 36 yen. On the other hand, we have also carefully examined the significance of each of our cross-shareholdings and are working to reduce them, thereby reducing our capital costs.
Medium- to Long-Term Growth Strategy
In May 2025, we announced our first medium- to long-term growth strategy. It outlines specific strategies for realizing a sustainable society where people can live healthy and happy lives, as envisioned in ROHTO Group Comprehensive Management Vision 2030, and milestones looking ahead 10 years (to 2035).
We expect to achieve sales of 365 billion yen and operating profit of 46 billion yen in three years' time in fiscal year 2027, and sales of 415 billion yen and operating profit of 54 billion yen in six years' time in fiscal year 2030. We will continue to actively invest in growth and foundations for the future, and promote the strengthening of our long-term growth foundations.
Meanwhile, we will demonstrate resilient profitability, achieving an operating profit margin of 12% or more and an EBITDA margin that we expect to improve annually from 16.9% in fiscal 2024 to 18% or more by 2030. In terms of efficiency, we will ensure an ROE of 10% or more and simultaneously achieve a "sound financial position," "growth investment," and "improved shareholder returns."
Our cash allocation policy is to strategically allocate cash generated primarily from Core businesses to growth investments and shareholder returns.
Growth investments will include continuing to strengthen our existing Core businesses, such as eye care, skin care, and oral medications and food products, as well as investments in Ophthalmology area, Regenerative medicine related technologies, CDMOs (contract development, manufacturing, and finance organizations) leveraging our proprietary development capabilities, and global market expansion. Specifically, we will develop sustainable growth drivers through research and development to create innovative technology and science, capital investments to strengthen our production and supply systems to meet growing demand, digital transformation/IT investments aimed at improving company-wide productivity, and strategic M&A aimed at expanding our business portfolio and developing new global markets. We believe that these investments, linked to the strengthening of non-financial capital such as human capital and sustainability-related assets, will lead to medium- to long-term growth and improved cash generation capabilities.
Our growth strategy to achieve our medium- to long-term vision must be driven by a unified financial and non-financial strategy. Rather than simply pursuing financial targets, we aim to create value by strengthening non-financial capital, such as sustainability, corporate governance, and the development of diverse human resources.
Investment decisions for our businesses take into consideration not only changes in the market environment and financial value, but also non-financial value such as sustainability and customer loyalty. We view each business cycle as approximately 2-3 years for cosmetics, 3-5 years for over-the-counter drugs, 10-15 years for prescription drugs, 2-10 years for food, 10-20 years for cell therapy, and 3-5 years for CDMO, and make decisions based on whether they will lead to our sustainable growth and increased corporate value.
With regard to shareholder returns, we will continue to pay dividends in line with profit growth, focusing on stable and continuous returns from a long-term perspective, and strive to enhance returns to shareholders. Taking into consideration the state of business performance, changes in the business environment, and the balance with medium- to long-term growth investments, we aim for stable, progressive dividend growth, aiming for a consolidated dividend payout ratio of 30.0% or more and a DOE (dividend on equity) of 3.5% or more. Regarding share buybacks, we will consider and implement them after comprehensively taking into account factors such as optimizing our capital structure, investment opportunities, and the state of our company's valuation in the market.
Furthermore, to build relationships of trust with shareholders, investors, and other stakeholders, I, as CFO, and the person in charge of investor relations, will continue to hold dialogues in a variety of formats, leading to appropriate information disclosure and deepening mutual understanding, which will lead to reduced capital costs and increased corporate value.
Executive Vice President ROHTO Pharmaceutical Co., Ltd.
Chief Financial Officer (CFO)
Masaya Saito