IR demo

Business Report: The 147th interim period

Takeda is a global values-based, research and development (R&D)-driven biopharmaceutical company committed to achieving our corporate purpose: better health for people and a brighter future for the world. We strive to deliver truly transformative treatments, significantly increasing the value that we bring to society.

table of content

• CEO Message • FY2024 H1 Financial Highlights, together with a link to Quarterly Results page • Commercial Updates Across Six Key Business Areas • Feature • Annual Shareholder Survey

Dear Shareholders,

I am grateful for your continued support as we enter the second half of fiscal year 2023. Our first half financial performance on a Core basis was in line with our expectations, and we are maintaining our full-year FY2023 Management Guidance.

Our confidence in the long-term strength of the business is reflected in our decision to adopt a progressive dividend policy and raise our dividend this year.

Watch the video to learn more

Watch the video to learn more about our interim period

Sound financial fundamentals are supporting investment for growth

Takeda’s Chief Financial Officer, Costa Saroukos sat down with our Global Head of Investor Relations, Christopher O’Reilly, to talk about the Company’s growth outlook, capital allocation policy, and financial position.

Click below to read the full interview.

-- this button is not here --

Christopher: This year, Takeda announced its first dividend increase in 15 years. Could you explain why the company decided to raise dividends now?

Costa: Increasing the annual dividend from 180 yen to a proposed 188 yen per share reflects the strength of our current financial position and confidence in our long-term growth prospects. Since the acquisition of Shire almost five years ago, Takeda has been generating very robust cash flow. Until recently, most of that cash had been allocated towards debt paydown, but since we reached our debt reduction target earlier this year, we can now shift towards returning more cash to shareholders. When we discuss the dividend internally, we consider various metrics including dividend payout as a percentage of Free Cash Flow and our Core payout ratio. I would like to remind investors that our reported EPS number is impacted by various non-cash or one-time items, which is why we view Core EPS as a better indicator of our fundamental business performance. Based on our sound financial fundamentals, and outlook for the future, we felt confident that now was the right time to increase the dividend and adopt a progressive dividend policy.

Christopher: Alongside the dividend increase, Takeda updated the capital allocation policy in May this year. Could you describe the new policy, and what you mean by a “progressive dividend”?

Costa: Previously, our capital allocation policy had three pillars: Invest in Growth Drivers; Deleverage Rapidly; and Shareholder Returns. Having met our debt reduction target earlier this year, we have now reduced those priorities to just two — Invest in Growth Drivers and Shareholder Returns. This signals a shift to a new chapter of growth with the aim of delivering value for patients and shareholders while maintaining a solid investment grade credit rating. We will invest in growth drivers such as Plasma-Derived Therapies and new product launches, while making strategic investments in internal R&D and targeted external bolt-on opportunities to enhance our pipeline. Our progressive dividend policy means that each year we intend to either increase or maintain our dividend. We will also consider share buybacks, when appropriate.

Christopher: How should investors think about Takeda’s growth outlook over the next few years?

Costa: In FY2023, we are facing the impact of generic entry on certain products, but this is something that we have anticipated and prepared for over many years. Patent expiries are part of the business cycle in our industry, so it’s important to keep investing to build a portfolio and pipeline that will enable us to continue to deliver innovative medicines to patients and grow the company sustainably over the long term. In the near-term, we expect to return to growth driven by our on-market Growth & Launch Products. In addition, we expect our late-stage development pipeline to fuel new product launches in the coming years, and our early-to-mid stage pipeline to further drive medium-to long-term growth.

Christopher: Finally, inflation and increases in interest rates have been hot topics in the past year. How is Takeda being impacted by changes in the macro-economic environment?

Costa: Firstly on inflation, while we have seen some pressure from rising costs, we have been able to largely offset this through increasing efficiencies across the value chain — for example through expanding the use of data and technology. And the recent increase in interest rates is not materially affecting us because several years ago we had the foresight to secure 100% of our debt at fixed interest rates with a weighted average cost of 2%. With our strong cash flow generation and well-balanced debt maturity profile, this puts us in a very sound financial position -- as recognized by the ratings agency Moody’s, which recently upgraded our credit rating to Baa1 stable. From this resilient base, we can continue to focus our efforts on investing for growth and delivering returns to our shareholders.

**Christopher**: This year, Takeda announced its first dividend increase in 15 years. Could you explain why the company decided to raise dividends now? **Costa**: Increasing the annual dividend from 180 yen to a proposed 188 yen per share reflects the strength of our current financial position and confidence in our long-term growth prospects. Since the acquisition of Shire almost five years ago, Takeda has been generating very robust cash flow. Until recently, most of that cash had been allocated towards debt paydown, but since we reached our debt reduction target earlier this year, we can now shift towards returning more cash to shareholders. When we discuss the dividend internally, we consider various metrics including dividend payout as a percentage of Free Cash Flow and our Core payout ratio. I would like to remind investors that our reported EPS number is impacted by various non-cash or one-time items, which is why we view Core EPS as a better indicator of our fundamental business performance. Based on our sound financial fundamentals, and outlook for the future, we felt confident that now was the right time to increase the dividend and adopt a progressive dividend policy. **Christopher**: Alongside the dividend increase, Takeda updated the capital allocation policy in May this year. Could you describe the new policy, and what you mean by a “progressive dividend”? **Costa**: Previously, our capital allocation policy had three pillars: Invest in Growth Drivers; Deleverage Rapidly; and Shareholder Returns. Having met our debt reduction target earlier this year, we have now reduced those priorities to just two — Invest in Growth Drivers and Shareholder Returns. This signals a shift to a new chapter of growth with the aim of delivering value for patients and shareholders while maintaining a solid investment grade credit rating. We will invest in growth drivers such as Plasma-Derived Therapies and new product launches, while making strategic investments in internal R&D and targeted external bolt-on opportunities to enhance our pipeline. Our progressive dividend policy means that each year we intend to either increase or maintain our dividend. We will also consider share buybacks, when appropriate. **Christopher**: How should investors think about Takeda’s growth outlook over the next few years? **Costa**: In FY2023, we are facing the impact of generic entry on certain products, but this is something that we have anticipated and prepared for over many years. Patent expiries are part of the business cycle in our industry, so it’s important to keep investing to build a portfolio and pipeline that will enable us to continue to deliver innovative medicines to patients and grow the company sustainably over the long term. In the near-term, we expect to return to growth driven by our on-market Growth & Launch Products. In addition, we expect our late-stage development pipeline to fuel new product launches in the coming years, and our early-to-mid stage pipeline to further drive medium-to long-term growth. **Christopher**: Finally, inflation and increases in interest rates have been hot topics in the past year. How is Takeda being impacted by changes in the macro-economic environment? **Costa**: Firstly on inflation, while we have seen some pressure from rising costs, we have been able to largely offset this through increasing efficiencies across the value chain — for example through expanding the use of data and technology. And the recent increase in interest rates is not materially affecting us because several years ago we had the foresight to secure 100% of our debt at fixed interest rates with a weighted average cost of 2%. With our strong cash flow generation and well-balanced debt maturity profile, this puts us in a very sound financial position -- as recognized by the ratings agency Moody’s, which recently upgraded our credit rating to Baa1 stable. From this resilient base, we can continue to focus our efforts on investing for growth and delivering returns to our shareholders.

FY2024 H1 Financial Highlights

Our financial performance on a Core basis in the first half of FY2023 was in line with our expectations and reflected the temporary headwinds we face this fiscal year, largely from generic competition. Reported operating profit and net profit were impacted by non-Core items booked in the second quarter, including non-cash impairment of intangible assets. Top-line performance continues to be driven by strong performance from our Growth and Launch Products, which grew 13% at Constant Exchange Rate and represent 42% of total revenue.

Item	FY2024 Q1	FY2023 Q1	vs. prior year (Actual % change)	vs. prior year (CER % change)
Revenue	1,208.0	1,058.6	+14.1%	+2.1%
Operating Profit	382.3	326.3	+17.1%	+4.5%
Margin	31.6%	30.8%	+0.8pp	-
Net Profit	276.8	233.4	+18.6%	+3.9%
EPS (Yen)	176	150	+17.5%	+2.9%

View the quarterly results

The graphic shows that Japan reached 12, Oceania 15, China 12, US 14 and Eucan 21.

Commercial Updates Across Six Key Business Areas

Growth in our key business areas in the first half of FY2024 was driven largely by our Growth & Launch Products*, which delivered revenue of XXX billion yen (+XX% on a constant exchange rate), which represents XX% of the total revenue.