Terumo Corporation · TSE:4543
Terumo — Q1 FY2020 Earnings Presentation
29 slides from Terumo's earnings presentation, August 2020
Slide 1: First-quarter results, fiscal year ending March 2021
I am the CAFO, Muto. I will now explain the first-quarter results for the fiscal year ending March 2021. 1
Slide 2: Terumo Group overview
First, I will give an overview of the Terumo Group as a whole. In sales revenue, Cardiac and Vascular was impacted by COVID-19, but impact on the General Hospital and Blood and Cell Technologies companies was very light, resulting in a 14% decrease in revenue for the Terumo Group, and an 11% revenue
Slide 3: COVID-19 impact on revenue and profit
As the title suggests, the Cardiac and Vascular Company was affected by COVID-19, but there was only light impact on General Hospital and Blood and Cell Technologies, resulting in a lessening of the total COVID-19 impact on revenue and profit. Next slide, please. 2
Slide 4: Adjusted operating profit variance analysis
This is the variance analysis of adjusted operating profit, compared to the same quarter of the previous fiscal year. “Gross profit decrement by sales decrease” had a negative impact of 9.1 billion yen, primarily due to the loss of sales in the Cardiac and Vascular Company. “Gross margin” decrease h
Slide 5: Variance analysis (continued)
fiscal year. This is because there was no price revision in the first half of the previous fiscal year due to the consumption tax increase that took effect then. European “MDR” had an impact of 400 million yen, while IT investment amortization expenses were 300 million yen. These were not significan
Slide 6: Revenue by region
Next is revenue by region. In Japan, there was some COVID-19 impact on Cardiac and Vascular sales, but in General Hospital, which accounts for the largest proportion of Japan sales, there was also increased demand for some products due to COVID-19, making General Hospital sales stable, for a total J
Slide 7: Revenue by business segment
Next is revenue by business segment. Due to postponement of elective procedures both for interventional procedures and outpatient procedures, Cardiac and Vascular Company had seen impact on its demand, but there began to be a recovery in revenue along with the recovery of procedure numbers in June a
Slide 8: Cardiac and Vascular Company
Here is Cardiac and Vascular Company. Revenue was impacted by COVID-19 in all businesses, resulting in 21% negative sales growth when excluding FX. TIS business was negatively impacted overall by decreased demand. The Neurovascular business demand was greatly impacted, because most aneurysm cases ar
Slide 9: Cardiac and Vascular Company (continued)
Quarter, our efforts toward building inventory for BCP and stable supply purposes led to improved production cost, and this lessened some of the decreased profit impact. Next slide, please. 6
Slide 10: General Hospital Company
Next, the General Hospital Company. Sales revenue was affected by decreased demand and limitations on care involving certain General Hospital Products and Pharmaceuticals. In DM Healthcare, demand expanded for thermometers and other healthcare products used in COVID-19 measures. In the Alliance busi
Slide 11: Blood and Cell Technologies
Next is Blood and Cell Technologies. In sales revenue, amid concerns about a lack of donors affecting the blood center business, the highly efficient blood component collection system drew attention, and further, blood centers moved to build inventory from a BCP perspective, leading to increased dem
Slide 12: Blood and Cell Technologies (continued)
profitability blood component collection system sales. In addition, strong cost control, especially in SG&A, led to a large increase in profit. Next slide, please. 8
Slide 13: Topics for the first quarter
Here are the topics for the 1st Quarter. One topic for the Terumo Group was that we made a 2.4-million- dollar donation to support the WHO and others in the fight against COVID-19. In company topics, there were new product approvals and launches, showing that Terumo is making steady progress for sus
Slide 14: New product pipeline
Here is the new product pipeline for this fiscal year. I wonʼt go into the details, but product launches are currently on schedule. However, we will carefully watch to see if COVID-19 impact will affect any anticipated releases. Next slide, please. 10
Slide 15: FY20 guidance assumptions
Next is our FY20 guidance. First, I will explain our guidance assumptions. Regarding sales, we anticipate that the 1st Quarter was where sales bottomed out, and that there will be a recovery thereafter. Many aspects of the COVID-19 2nd Wave impact remain unclear, so we have not assumed those impacts
Slide 16: Guidance assumptions (continued)
2nd Quarter onward, we will monitor the spread of COVID-19 and how each country responds to it, and watch our own results, adjusting our production activity volume to gradually decrease inventory toward normal levels. Next slide, please. 11
Slide 17: FY20 guidance
Here is our FY20 Guidance. In sales revenue, we expect to see a recovery pattern, back up to a 5%-level decrease from the 10% level of the 1st quarter, and then to a 2% decrease year-on-year when excluding FX impact. In adjusted operating profit, we hope to restore the year-on-year decrease from the
Slide 18: Revenue guidance by company
Next is our revenue guidance by company. Cardiac and Vascular experienced decreased demand due to postponed elective procedures in the 1st Quarter, but we anticipate that it will recover in the 2nd Half and end up around minus 8% for the year, and minus 5% when excluding FX impact. In General Hospit
Slide 19: Quarterly sales trend outlook
This is the last slide. I will explain how we envision the quarterly sales trend, based on last fiscal yearʼs results. The 1st Quarter saw a little over 10% decline in sales revenue. However, looking at monthly sales of Cardiac and Vascular, which was the most affected by the virus: While there was
Slide 20: Reference
Reference (©TERUMO CORPORATION “TERUMO 15
Slide 21: FY20 Q1 Revenue and Growth by Region
fll FY20Q1 Revenue and Growth by Region z| JPY) easiness] Japan| Overseas Japan toa | easiness] Japan| Subtotal | Europe | Americas | China Asia (YoY%): FXN *Including Neurovascular business ceTERUMO CORPORATION 16 24 “TERUMO 16
Slide 22: Operating Expenses
Ml Operating Expenses YoY% ee FY19 Q1 FY20 Q1 YoY% (FXN) Salaries & Wages Sales Promotion (billion JPY) Logistical Costs Depreciation & Amortization ceTERUMO CORPORATION 17 124 “TERUMO
Slide 23: Quarterly Results
MH Quarterly Results Average USD 110UPY 107 JPY (billion JPY) FY20 Q1 109JPY 108 JPY Exchange ; 7 H Rate EUR : 123 JPY i 119 JPY 120 JPY : 119 JPY (©TERUMO CORPORATION “TERUMO 18
Slide 24: Adjusted Operating Profit: Adjustments
Ml Adjusted Operating Profit: Adjustments Operating Profit 29.2 Adjustment 1. Amortization of acquired intangible assets +4.0 Adjustment 2. Non-recurring profit or loss +0.8 Adjusted Operating Profit 33.9 <General examples of adjustment items> + Acquisition related cost + Lawsuit settlement Adjustme
Slide 25: CAPEX, Depreciation and R&D Expenses
(©TERUMO CORPORATION — CAPEX & Depreciation (billion JPY) Amortization of acquired intangible assets 7 60.8 / _ 52.5 43.6 44.0 e 42.0 / rot 14.5 14.6 15.7 16.1 12.1 3.9 2. \ Depreciation CAPEX = C.iP. record basis — R&D Expenses 477 SO 48.0 41.3 FY17 FY18 FY19 FY20Q1 FY20 Guidance 20 /24 Ml CAPEX, D
Slide 26: Cash Flows
Ml Cash Flows Operating CF Investing & Financing CF 417.4 +27.7 (billion JPY) | I | Redemption of bonds Dividends 17 70.0 Others Income taxes Depreciation Working 17, and capital amortization increase Profit CAPEX Long-term before tax debt 212.0 166.9 —_ma ~_ = Cash at the CAPEX = C.L.P. record basi
Slide 27: Foreign Exchange Sensitivity
Ml Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (billion JPY) Le es es | 0.8 2.4 Revenue Le Adjusted Operating Profit 0.0 0.5 1.3 <Reference> Impact when JPY is depreciated by 10% | __ Asia a Sees 3.6 Adjusted Operating Profit -0.1 1.0 6.5 les} 2.0 22 124 (©TERUMO CORPORATION “TE
Slide 28: The Status of Convertible Bonds
Ml The Status of Convertible Bonds I 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 ii jal amount | Coupon Price conversion price required to be issued (JPY) (JPY) for conversion Dec. 2019 50
Slide 29: IR Contact
fi IR Contact Terumo Corporation Investor Relations 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 intended