Daito Co., Ltd. (TSE: 4577) reported consolidated results for the fiscal year ended May 31, 2026 under Japanese GAAP. Net sales were essentially flat at ¥50,650 million (+0.0%), but profitability rebounded sharply: operating profit rose 38.8% to ¥3,637 million from ¥2,620 million, ordinary profit advanced 40.9% to ¥3,812 million, and net profit attributable to owners of the parent jumped 65.7% to ¥3,161 million from ¥1,907 million. Basic earnings per share climbed to ¥107.49 from a restated ¥62.74. Daito is a generic-drug (jenerikku) maker headquartered in Toyama that is also a major contract manufacturer of active pharmaceutical ingredients (APIs) and finished drugs for other pharmaceutical companies.
Margins drive a profit surge on flat sales
The standout feature of the year was the recovery in profitability against a broadly unchanged top line. With sales flat, the near-40% jump in operating profit and two-thirds increase in net profit were driven by margin expansion rather than volume — reflecting an easing of the cost pressures that had squeezed generic-drug economics in prior years, together with a more favourable product and contract-manufacturing mix. EBITDA rose to ¥8,024 million from ¥6,952 million, underscoring the improvement in underlying earnings power across Daito's own-label generics and its API and finished-drug contract work.
Strong cash generation and a well-capitalised balance sheet
Cash flow was a highlight: operating cash flow reached ¥9,377 million, well above reported earnings, while investing activities used ¥4,388 million and financing activities used ¥6,289 million as the company invested and returned capital. Period-end cash stood at ¥954 million. The balance sheet remained robustly capitalised, with total assets of ¥73,291 million, net assets of ¥52,938 million, an equity ratio of 72.2% and book value per share of ¥1,840.13.
Daiwa Pharmaceutical merger and stock split
Two corporate actions took effect on June 1, 2025. Daito absorbed its subsidiary Daiwa Pharmaceutical (Daiwa Yakuhin Kogyo) via merger; the subsidiary was dissolved and left the scope of consolidation, consolidating the group's generic-drug and contract-manufacturing operations under the parent. On the same date, a 1-for-2 stock split took effect, and all per-share figures — including EPS and book value per share — have been restated to reflect it, making the reported year-on-year EPS comparison consistent.
Dividend raised to ¥40, with ¥45 planned
Reflecting the earnings recovery, Daito paid an annual dividend of ¥40.00 for FY2026/5 (¥20.00 interim plus ¥20.00 year-end). For FY2027/5 the company plans to lift the payout further to ¥45.00 (¥22.50 interim plus ¥22.50 year-end), implying a payout ratio of roughly 43% and signalling management's confidence in sustaining the improved profitability.
FY2027 guidance: growth resumes, net profit dips on tax
For the year ending May 2027, Daito guides to net sales of ¥54,000 million (+6.6%), operating profit of ¥4,000 million (+10.0%) and ordinary profit of ¥4,000 million (+4.9%), with EBITDA projected at ¥8,400 million. Net profit is guided modestly lower to ¥3,000 million (-5.1%), with EPS of ¥104.37 — the dip reflecting a normalisation of the tax charge rather than any deterioration in operating performance, as sales and operating profit are both set to rise.
| Metric | FY2026/5 | FY2025/5 | YoY |
|---|---|---|---|
| Net sales (¥m) | 50,650 | 50,637 | +0.0% |
| Operating profit (¥m) | 3,637 | 2,620 | +38.8% |
| Ordinary profit (¥m) | 3,812 | 2,706 | +40.9% |
| Net profit (¥m) | 3,161 | 1,907 | +65.7% |
| Basic EPS (¥) | 107.49 | 62.74 | +71.3% |
| EBITDA (¥m) | 8,024 | 6,952 | +15.4% |
| Operating cash flow (¥m) | 9,377 | — | — |
| Equity ratio | 72.2% | — | — |
| Dividend per share (¥) | 40.00 | — | — |
| FY2027/5 net sales guidance (¥m) | 54,000 | — | +6.6% |
| FY2027/5 operating profit guidance (¥m) | 4,000 | — | +10.0% |
| FY2027/5 net profit guidance (¥m) | 3,000 | — | -5.1% |
JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.