Terumo Corporation · TSE:4543
Terumo — Q3 FY2020 Earnings Presentation
29 slides from Terumo's earnings presentation, Feb 4, 2021
Slide 1: Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2021 (FY2020)
Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2021 (FY2020) February 4, 2021 Naoki Muto Chief Accounting and Financial Officer Terumo Corporation I am the CAFO, Muto. I will now explain the 3rd-quarter results for the fiscal year ending March 2021. 1
Slide 2: Safe Harbor for Forward-Looking Statements and Use of Document
Safe Harbor for Forward-Looking Statements and Use of Document Among the information that Terumo discloses, the forward-looking statements including financial projections are based upon our assumptions using information available to us at the time and are not intended to be guarantees of future even
Slide 3: Highest-ever Quarterly Revenue and Adjusted Operating Profit
Highest-ever Quarterly Revenue and Adjusted Operating Profit (billion JPY) YoY% FY19 Q3YTD FY20 Q3YTD YoY% (FXN) Revenue 470.1 448.6 -5% -3% Gross Profit 258.6 (55.0%) 241.3 (53.8%) -7% -5% SG&A Expenses 136.8 (29.1%) 130.7 (29.1%) -4% -3% R&D Expenses 37.0 ( 7.9%) 35.9 ( 8.0%) -3% -2% Other Income
Slide 4: Profit for the year recovery in the 3rd quarter
Profit for the year was minus 12% year-on-year, another indicator of recovery acceleration in the 3rd quarter. In the 3rd quarter, all companies saw improved product mix year- on-year, increasing gross profit and further leading to an acceleration of profit recovery. This resulted in Q3 being our be
Slide 5: Adjusted Operating Profit Variance Analysis
Adjusted Operating Profit Variance Analysis (billion JPY) 6.8 12.2 0.6 G/P 3.0 2.4 decrement R&D Gross 3.5 6.8 decrease FX by sales 1.6 margin decrease Price 98.4 -0.9 MDR SG&A 13.2 2.7 JP -0.8 decrease Reimburse- IT ment invest- 88.5 86.3 -2.6 ment -0.9 75.3 FY19 Q3YTD FY19 Q3YTD FY20 Q3YTD FY20 Q3
Slide 6: Variance analysis commentary: MDR, IT investment, SG&A, R&D, FX
from the 1st half, to minus 2.6 billion yen. European MDR and IT Investment progressed as planned, resulting in 800 million and 900 million yen negative impacts, respectively, with increased spending year-on-year. “SG&A decrease” was a 6.8-billion-yen positive impact, as limitations on access to hos
Slide 7: Revenue by Region
Revenue by Region FY20 Q3YTD FY19 Q3YTD Revenue Year-on-Year Revenue Comparison 100% = 448.6 B JPY billion JPY YoY% Comments ( ) FXN Japan: Stronger recovery in C&V quarter by quarter. Positive growth in GH since Q2. TBCT is at previous 148.3 Japan 0% year level 33% 147.8 Europe: Positive growth in
Slide 8: Revenue by region: China and Asia commentary
In China, the impact of distributor order timing in the Neurovascular business is gradually decreasing. Looking at the 3rd quarter on a standalone basis, it experienced mid-single-digit positive growth and overall showed a notable recovery. In Asia and others, there was some negative impact due to l
Slide 9: Revenue by Business Segment
Revenue by Business Segment FY20 Q3YTD FY19 Q3YTD Revenue Year-on-Year Revenue Comparison 100% = 448.6 B JPY billion JPY YoY% Comments ( ) FXN There was a decrease in demand due to postponement of procedures. Cardiac Steady recovery in the performance in 238.4 and -10% Q2 and Q3 Vascular 263.5 (-8%)
Slide 10: Cardiac and Vascular: Progressing Recovery in the Number of Procedures
Cardiac and Vascular: Progressing Recovery in the Number of Procedures (billion JPY) FY19 FY20 YoY% Major Topics Impact Q3YTD Q3YTD ( ) FXN TIS: Despite the decreased demand among 263.5 all products, saw a progressing recovery with low single digit negative growth since Q2 -17.4 238.4 Neurovascular:
Slide 11: Cardiac and Vascular profit commentary
In profit, there had been downward impact from reduced sales revenue, but the progress of recovery in the high-profitability TIS and Neurovascular businesses improved product mix so that the three months of the 3rd quarter saw a drastic increase in profitability. Next slide, please. 7
Slide 12: General Hospital: Exceeded the Impact of Decreased Demand
General : Exceeded the Impact of Decreased Demand by Solid Hospital Sales of Alliance and Infection Control Products (billion JPY) FY19 FY20 YoY% Major Topics Impact Q3YTD Q3YTD ( ) FXN General hospital products: The negative impact due to the limited number of medical examinations was mitigated by
Slide 13: Blood and Cell Technologies: Continuous Increase in Both Revenue and Profit
Blood and Cell Technologies: Continuous Increase in Both Revenue and Profit (billion JPY) FY19 FY20 YoY% Major Topics Impact Q3YTD Q3YTD ( ) FXN Blood center solutions: Driven by increase in collection demand for the COVID-19 78.7 81.0 convalescent plasma therapy as well as +3% software update for c
Slide 14: Key Assumptions of FY20 Q4 Projection
Key Assumptions of FY20 Q4 Projection Expect a decrease in demand due to COVID-19 resurgence mainly in the US and Europe Current situation with restart of postponement in procedures in the US and Europe, etc. is negative for the performance Not expecting the situation to be worsened to the level
Slide 15: Q4 outlook commentary
gradually correct for inventory that we built up from a BCP perspective when the first COVID-19 wave hit; we believe this will be a burden on our gross profit. We will continue to control our SG&A and R&D spending as we have in recent quarters. Overall, we anticipate a slightly weaker 4th quarter th
Slide 16: Revision of FY20 Guidance
Revision of FY20 Guidance (billion JPY) Original Revised Change Guidance Guidance in amount Revenue 600.0 600.0 - 90.0 97.5 Operating Profit +7.5 (15.0%) (16.3%) 108.0 115.0 Adjusted Operating Profit +7.0 (18.0%) (19.2%) Profit for the Year 68.0 75.0 +7.0 Average Exchange Rate USD Annual: 106 JPY Q4
Slide 17: Guidance and dividend commentary
depending on how the COVID-19 resurgence goes, expenditures could remain at the same level as those of the 3rd quarter. Regarding dividends: Taking into account the continuing COVID-19 resurgence, uncertainty, and risks, we will maintain the guidance we issued in May. Next slide, please. 11
Slide 18: Major Topics in FY20 Q3
Major Topics in FY20 Q3 Corporate Has received “GOOD DESIGN AWARD” for twenty five consecutive years Cardiac and Launched the intrasaccular aneurysm treatment device “WEB” in Japan Intrasaccular aneurysm treatment device Vascular “WEB” Increased production capacity for contract development and manuf
Slide 19: FY20 New Product Pipeline
FY20 New Product Pipeline Category Products Region Launch Category Products Region Launch Steerable sheath JP Vascular Stent graft for abdominal aortic US Launched graft aneurysm Coronary PTCA balloon (manufactured by Essen China Syringe pump JP Launched Technology) General hospital Safety IV cathet
Slide 20: Reference
Reference ©TERUMO CORPORATION 14 / 22 14
Slide 21: FY20 Q3YTD Revenue and Growth by Region
FY20 Q3YTD Revenue and Growth by Region (billion JPY) Business Overseas Japan Total Segment Subtotal Europe Americas China Asia Cardiac and 36.6 (-4%) 201.8 (-9%) 59.9 (-7%) 91.6 (-8%) 26.8 (-12%) 23.5 (-12%) 238.4 (-8%) Vascular Out of C&V, TIS and 26.3 (-8%) 166.5 (-9%) 48.8 (-7%) 73.6 (-7%) 24.7
Slide 22: Operating Expenses
Operating Expenses (billion JPY) YoY% FY19 Q3YTD FY20 Q3YTD YoY YoY% (FXN) Salaries & Wages 66.6 68.7 +2.1 +3% +5% Sales Promotion 14.6 8.6 -6.0 -41% -41% Logistical Costs 10.3 10.6 +0.3 +3% +4% Depreciation & Amortization 13.9 14.2 +0.3 +2% +4% Others 31.4 28.5 -2.9 -9% -8% SG&A Expenses Total 136.
Slide 23: Quarterly Results
Quarterly Results (billion JPY) FY19 Q3 Q4 FY20 Q1 Q2 Q3 (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Revenue 162.9 158.8 131.3 152.0 165.3 Gross Profit 87.2 (53.5%) 85.3 (53.7%) 68.9 (52.5%) 81.6 (53.7%) 90.8 (54.9%) SG&A Expenses 47.2 (29.0%) 47.7 (30.1%) 40.1 (30.5%) 45.8 (30.2%) 44.7 (27.1%
Slide 24: Adjusted Operating Profit: Adjustments
Adjusted Operating Profit: Adjustments (billion JPY) FY19 Q3YTD FY20 Q3YTD Operating Profit 86.3 75.3 Adjustment 1. Amortization of acquired intangible assets +11.9 +10.8 Adjustment 2. Non-recurring profit or loss +0.3 +2.4 * Adjusted Operating Profit 98.4 88.5 <General examples of adjustment items>
Slide 25: CAPEX, Depreciation and R&D Expenses
CAPEX, Depreciation and R&D Expenses CAPEX & Depreciation 89.5 (billion JPY) 80.0 Amortization of acquired intangible assets Lease depreciation 60.8 (IFRS16) is not included in 51.7 50.0 FY19, FY20 Q3YTD results 47.7 43.6 42.0 44.0 14.7 and FY20 Guidance 15.7 36.1 15.7 14.5 14.6 Continue investment
Slide 26: Cash Flows
Cash Flows Operating CF Investing & Financing CF +73.5 -70.6 (billion JPY) 19.2 40.3 Income 22.6 10.0 taxes CAPEX Redemption Depreciation Working of bonds and capital 70.0 40.0 amortization increase 51.7 74.9 Debt repayment 21.1 Long-term Dividends debt 17.8 209.6 Profit Others before tax 166.9 169.
Slide 27: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (billion JPY) USD EUR CNY Revenue 1.7 0.8 2.4 Adjusted Operating Profit 0.0 0.5 1.3 <Reference> Impact when JPY is depreciated by 10% North Latin EMEA Asia America America EUR Others CNY Others Adjusted Operating Profit -0.1 1.0 6.5 1.
Slide 28: The Status of Convertible Bonds
The Status of Convertible Bonds Detail of the bonds (issued in Dec. 2014) *After two-for-one stock split implemented in Apr. 2019 Aggregate Conversion Contingent Number of shares Maturity principal amount Coupon Price conversion price required to be issued (billion JPY) (JPY) (JPY) for conversion De
Slide 29: Terumo
~TERUMO SiijAhead VOOE 23