Terumo Corporation · TSE:4543
Terumo — FY2016 Earnings Presentation
30 slides from Terumo's earnings presentation, 2017
Slide 1: FY2016 Financial Results and FY2017 Guidance
I will now explain the financial results for the fiscal year ended March 31, 2017, and guidance for the fiscal year ending March 31, 2018. 1
Slide 2: Overview of FY16 results
This slide is an overview of the FY16 results. Excluding FX impacts, we achieved sales and operating income growth. And, we recorded the highest‐ever net income. At actual rates, sales growth was minus 2% and operating income was minus 6%; however when excluding FX impact however, impact, sales grew
Slide 3: FY16 results versus guidance
At our FY16 third‐quarter earnings announcement, we revised our guidance downward, but at the fiscal year year‐end end results greatly exceeded that guidance. I will explain the factors behind this. First, in sales, regarding the 4.2 billion yen above guidance; in the fourth quarter overall sales we
Slide 4: Non-operating and extraordinary gains and losses
There were no major changes in extraordinary gains and losses. After negative FX impact in the first half, we saw positive FX impact in the second half, which erased some of the initial loss. In extraordinary gains and losses, we had a gain due to the sale of Olympus shares. 4
Slide 5: Operating income waterfall
Here is the operating income waterfall graph. Positive factors were more or less in line with our plans. The increase in sales was the largest upward factor, followed by cost reduction and business mix improvement. In downward factors, the Japanese reimbursement price revision had approximately the
Slide 6: FX impact on operating income
I will now explain somewhat regarding FX impact on operating income. We initially expected 8.5 billion yen worth of negative FX impact for FY16; however, as many of you know, the year was a roller‐coaster for FX rates, with lots of up‐and‐down fluctuation. The year ultimately ended up with slight ye
Slide 7: Results by region
Next in the materials are information by region, business segment, and then the individual companies. Regionally, there were few major changes. However, in Japan, where sales had been previously in a downward trend, a strong fourth quarter brought growth to an even 0%. Outside Japan, sales shrunk ye
Slide 8: Results by business segment
By business segment, sales grew in double‐digits for Cardiac and Vascular, but were flat for the others. 8
Slide 9: Cardiac and Vascular Company
By company, in Cardiac and Vascular, little changed other than the increase in sales owing to acquisitions, in the amount of 6.3 billion yen. 9
Slide 10: General Hospital Company
In General Hospital, steady profitability improvement continued. Business profitability and profit amount both increased. 10
Slide 11: Blood Management Company
The Blood Management Company experienced lower sales and profit due to negative FX impact and price declines for major blood center products in U.S., but the company more or less achieved its plan. We expect to see improvement in FY17. 11
Slide 12: FY16 topics
I will skip over the FY16 topics slide. 12
Slide 13: New products pipeline FY16
Regarding new products pipeline, most scheduled products were released in FY16, with a few exceptions that were pushed back a few months or less into FY17, but no major delays. 13
Slide 14: FY17 guidance
Next is our FY17 guidance. We previously announced that we would adopt IFRS accounting in FY17, but this will only be starting from the end‐FY17 results. From the first through third quarters, our accounting will be according to Japanese GAAP. Therefore, the guidance shown in the main box here is al
Slide 15: FY17 guidance excluding acquisition and FX
This slide also shows FY17 guidance, excluding acquisition and FX impacts in order to show organic growth. The guidance from the previous slide is on the right, and in the blue box are the organic numbers; the FY17 guidance excluding FX and acquisition impacts is next to the FY16 numbers with the sa
Slide 16: FY17 operating income guidance waterfall
Next is the waterfall for operating income guidance. The far right and left bars denote the FY17 guidance and FY16 result, respectively. The 76.6‐billion‐yen FY16 result is adjusted to exclude the 4.5 billion yen in acquisition impact, bringing the “starting line” to 81.1 billion yen. Sales increase
Slide 17: FY17 guidance by company
The next slide shows FY17 guidance by company, but these numbers include acquisition impacts, which are all in the Cardiac and Vascular Company, with the other two companies not having had major acquisitions. These numbers do not include FX impact. With these acquisition acquisition‐inclusive inclus
Slide 18: FY17 new product pipeline
This slide shows the FY17 new product pipeline. This concludes my presentation. Thank you. 18
Slide 19: Reference
“TERUMO Reference 19/30 19
Slide 20: FY16 Net Sales and Growth by Region
FY16 Net Sales and Growth by Region Outside of Japan Japan Segment Subtotal Europe | Americas Cardiac and 51.0 210.6 64.7 92.0 Vascular (-1%) (+14%) (+9%) (+149) Out of C&V para 38.8 170.1 53.1 69.1 Systems” (-2%) (+16%) (+11%) (+17%) General 123.8 34.1 78 78 Hospital (-0%) (+2%) (7%) (+5%) Blood 12
Slide 21: Operating Expenses
Operating Expenses FY2015 FY2016 (billion yen) YoY% (Excl. FX) Salaries & Wages Tish 74.6 =(0}/5) -1% +8% Sales Promotion The: 15.6 -1.6 -9% -2% Logistical Costs 11.0 2) +0.2 +2% +6% pepraeanen & 274 27.5 40.1 40% —-+10% Amortization Others 37.4 338.8 +1.4 +4% +11% 168.1 167.7 SG&A Expenses Total (3
Slide 22: Quarterly Results
Quarterly Results (billion yen) FY15 Q4 FY16 Q1 Q2 Q3 Q4 (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) (Jan-Mar) Net Sales 129.0 124.5 120.6 129.3 139.8 69.7 69.2 65.8 68.7 74.3 Gross Profit (54.0%) (55.6%) (54.6%) (53.29%) (53.2%) 42.2 SE Hy/ 39.6 41.0 47.4 BGSAE<nenses (32.7%) (31.9%) (32.9%) (31.7%) (3
Slide 23: CAPEX and R&D Expenses
CAPEX and R&D Expenses Amortization of Intangibles 46.6 and Goodwill 447 39.9 41.4 40.7 31.5 \ Depreciation 30.1 29.4 33.1 FY2013 FY2014 FY2015 ~TERUMO (billion yen) 45.4 39.1 CAPEX: CIP basis 41.0 33.7 FY2016 FY2017 Guidance ™@ Expand investment in production capacity and space as well as IT infras
Slide 24: Cash Flow
Cash Flow Operating CF Investment and Finance CF +80.9 7125.2 | I | (billion yen) TaX increase of Issuance a 14.7 oy Corporate ne Depreci- . working — of straight tion and : amor capital bond and repay borrow ment of i nen bank loans SB and 14.5 before loans Buybacks 149.7 i ai CAPEX Others _—_ = Ca
Slide 25: Financing Capital for M&As by Self-financing and Low-Interest Debt
Financing Capital for M&As by Self-financing and Low-Interest Debt ™@ Make use of low interest rate while considering financial soundness ® Financing since the introduction of minus interest rate policy >Jan, 2017 Syndicate loans(*) 30.0 BJPY >» Apr, 2017 Syndicate loans;*) 120.0 BJPY >» Apr, 2017 S
Slide 26: FY17 Foreign Exchange Sensitivity
FY17 Foreign Exchange Sensitivity (billion yen) CNY Excl Incl Amortization | Amortization Net Sales 1.8 seule 0.0 0.2 0.5 0.9 Income <Reference> Impact of +/-10% fluctuation Operating Income North Latin fare eel America | America [| EUR | Others | Others 1.4 he) -1.8 1.0 ~TERUMO 26/30 26
Slide 27: FY17 Guidance: Adoption of IFRS
FY17 Guidance: Adoption of International Financial Reporting Standards (IFRS) ® Adopting International Financial Reporting Standards (IFRS) from the year- end financial announcement for FY2017 ™® Schedule for disclosure FY17 Q1-Q3 : Japanese GAAP FY17 year-end financial announcement: IFRS i Japanese
Slide 28: Dividends and EPS
Dividends and EPS 160.0 Y°" 140.0 120.0 — Dividend Payout Ratio 100.0 80.0 60.0 — 40.0 29.0 20.0 0.0 FY13 ~TERUMO Dividend per Share 30.5 FY14 EPS FY15 150 FY16 50.0% ~ 40.0% ~ 30.0% 20.0% 10.0% 0.0% 28/30 28
Slide 29: ROE
ROE Achieved 10% range Net Income 34.1 38.5 50.7 54.2 16% Sr aback Share Buyback | Share Buyback — aa2BIPY 3.0 BIPY | GL.OBIPY us 10.8% 8% ROE 4% | Equity 0% Fy13 FY14 FY1S FY16 “TERUMO (billion yen) 800 700 600 500 400 300 29/30 29
Slide 30: IR Contact
IR Contact Terumo Corporation Corporate Communication (IR) Dept. E-mail: [email protected] 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 i