Terumo Corporation · TSE:4543
Terumo — FY2019 Earnings Presentation
34 slides from Terumo's earnings presentation, May 2020
Slide 1: Financial Results for FYE March 2020
I am the CAFO, Muto. I will explain the financial results for the fiscal year ended March 2020. 1
Slide 2: Overview of FY2019 results
First, an overview: As the title expresses, despite some COVID-19 impact, Terumo achieved its highest-ever revenue and operating profit. Revenue, particularly that of the Cardiac and Vascular business in China, was affected by COVID-19 in Q4; however, impact on the total for the 2019 fiscal year was
Slide 3: Comparison with original guidance
Here is the comparison with original guidance that we announced at the beginning of FY19. Cardiac and Vascular finished below revenue guidance due to sluggish sales of drug-eluting stents in Japan and elsewhere, in addition to the impact of COVID-19 in the 4th quarter. However, adjusted operating pr
Slide 4: Guidance comparison (continued)
accurately express its business. Next slide, please. 3
Slide 5: Adjusted operating profit variance analysis
Here is the adjusted operating profit variance analysis. Due to sales of the TIS business of Cardiac and Vascular, and some Blood and Cell Technologies products, coming in below volume plans, gross profit increment by sales increase was 30.8 billion yen, lower than the 33 billion-yen guidance. In ad
Slide 6: Adjusted operating profit variance (continued)
the 3.2-billion-yen guidance. Spending on MDR increased in the 2nd half̶the 4th quarter in particular̶but reconsideration of some product updates and shortened testing periods led to reduction of these costs, in addition to the postponement of system audits that were scheduled for March. In any case
Slide 7: Revenue by region
Next is revenue by region. In Japan, the pain management and Alliance businesses of the General Hospital Company grew in double digits, driving growth overall. Outside Japan, all regions grew in the high single digits or double digits, when excluding FX impact. In China, double-digit growth continue
Slide 8: Revenue by business segment
Here is revenue by business segment. In Cardiac and Vascular, the Neurovascular business grew nearly 20% in the fiscal year, driving the company overall. There was COVID-19 impact centered in China in the 4th quarter, but the company still maintained double-digit growth. In General Hospital, good pe
Slide 9: Cardiac and Vascular Company
First, Cardiac and Vascular. Revenue and profit both grew in double digits when excluding FX impact. TIS was impacted by COVID-19 in the 4th quarter, especially in China, but it maintained double-digit growth for the fiscal year when excluding FX impact. In the Neurovascular business, COVID-19 impac
Slide 10: Cardiac and Vascular (continued)
7% year-on-year, and 16% when excluding FX impact. Next slide, please. 7
Slide 11: General Hospital Company
Next is the General Hospital Company. Despite a temporary decrease in demand for General Hospital products outside Japan, the Pharmaceutical and Alliance business grew in double digits to drive the company as a whole. DM Healthcare saw increased demand in Japan for thermometers in the 4th quarter, d
Slide 12: Blood and Cell Technologies
Next is Blood and Cell Technologies. Revenue growth was driven by a software update to the Trima automated blood component collection systems for blood centers, and disposable products. In addition, in the 4th quarter, there was a contribution from increased demand for collection of convalescent pla
Slide 13: Dividend for FY2019
Regarding the dividend for the end of FY19, we have assessed the COVID-19 impact and decided not to change the anticipated dividend of 14 yen, making the total annual dividend amount 28 yen. This is a one-yen year-on-year dividend increase. Next slide, please. 10
Slide 14: FY19 major topics (skipped)
We will skip over the FY19 major topics. Next slide, please. 11
Slide 15: Terumo Group contribution to COVID-19 response
This slide regards the COVID-19 crisis. As was noted in the press, the Cardiac and Vascular Company contributed ECMO systems for the treatment of severe COVID-19 patients. General Hospital products including thermometers and hand sanitizer contributed to preventing the spread of the infection, while
Slide 16: Product launch pipeline
There are several products which will enter the market in FY20 rather than FY19, but overall the pipeline is on track for product launches. Next slide, please. 13
Slide 17: FY2020 guidance withheld
Regarding guidance for fiscal year 2020, it is extremely difficult to rationally figure out, so we will refrain from issuing guidance at this time. We will disclose our guidance as soon as circumstances permit us to do so. We ask for your kind understanding in this matter. Some Terumo Group companie
Slide 18: COVID-19 impact on Cardiac and Vascular
I will now explain our thinking regarding the COVID-19 impact on the Cardiac and Vascular Company. The vertical axis of the graph shows revenue, and the horizontal axis shows the procedure segments of Urgent, Elective (time-sensitive), and Elective (non-time-sensitive). Within the same cardiovascula
Slide 19: Signs of recovery in May
Asian countries, and Japan. Because May is still in progress, we cannot say with certainty, but we see signs, albeit faint, of a recovery, so we anticipate a bottoming out in April and May. Next slide, please. 15
Slide 20: COVID-19 impact on General Hospital and Blood and Cell
Many General Hospital Company products relate to healthcare infrastructure and hospitalization. Also, many of the products and technologies of the DM and Alliance businesses are used in treating chronic illnesses, so we expect impact on them to be comparatively small. In the Blood and Cell Technolog
Slide 21: April group revenue impact
There is impact on April revenue of the group as a whole, with a percentage year-on-year decrease in revenue in the mid-teens. I want to reemphasize that we do see signs of recovery for Cardiac and Vascular in May, and we will continue to carefully monitor for recovery momentum. Next slide, please.
Slide 22: New products for the fiscal year
Here are the new products for this fiscal year. I will skip over the details of these. Next slide, please. 17
Slide 23: Liquidity and cash allocation
Next, I will speak briefly on situation of liquidity and cash allocation. First, regarding liquidity: We moved swiftly to secure 40 billion yen during the previous fiscal year, and currently have sufficient cash on hand. For further preservation purposes, we have concluded additional commitment-line
Slide 24: Thank you for your attention
Thank you for your attention. 18
Slide 25: Reference
Reference (TERUMO CORPORATION “TERUMO 19
Slide 26: FY19 Revenue and Growth by Region
fll FY19 Revenue and Growth by Region (billion JPY) Business Overseas Japan - Total Segment Subtotal | Europe | Americas | China Asia *Including Neurovascular business (YoY%): FXN. creRvio comPoRA TON 20 128 “TERUMO 20
Slide 27: Operating Expenses
Jl Operating Expenses billion JPY) ( YoY% Salaries & Wages 87.4 89.8 +2.4 +3% +6% Sales Promotion 18.2 19.7 +1.4 +8% +10% Logistical Costs 13.6 13:9) +0.3 +2% +5% D iation & peceection 14.3 18.9* +4.6 +32% +35% Others 45.1 42.3* -2.9 -6% 4% SG&A Expenses Total 178.7 (29.8%) 184.5 (29.3%) +5.9 +3% +6
Slide 28: Quarterly Results
Mi Quarterly Results FY18Q4 FY19Q (J (Apr-Jun) Revenue (billion JPY) Average USD : 110 JPY i 110 JPY 107 JPY 109 JPY 109 JPY Exchange + + Rate EUR 125JUPY 123 NPY 119 JPY 120 JPY ~ 120JPY csreauno conoaaon 22 (28 “TERUMO 22
Slide 29: Adjusted Operating Profit: Adjustments
J Adjusted Operating Profit: Adjustments (billion JPY) Operating Profit 106.6 110.6 Adjustment 1. Amortization of acquired + + intangible assets 14.6 15.7 Adjustment 2. Non-recurring profit or loss +0.9 -1.3* Adjusted Operating Profit 122.1 125.0 <General examples of adjustment items> + Acquisition
Slide 30: CAPEX and R&D Expenses
MMM CAPEX and R&D Expenses. (billion JPY) ye ; — -xpand investment in Amortization of 89.5 production capacity and acquired space as well as IT in FY19 intangible assets Amortization of acquired . and goodwill intangible assets | Under IFRS since FY17, ell + Depreciation includes / ATT amortization
Slide 31: Cash Flows
fl Cash Flows Operating CF Investing & Financing CF +117.5 -73.6 (billion JPY) 24.8 52.4 income EEE taxes Working Depreciation capital and increase amortization 35 — Others Dividends Short-term 1230 Profit debt before tax i~_ = Cash at the CAPEX =C.i.P. record basis Cash at the end of FY18 Cash at t
Slide 32: Foreign Exchange Sensitivity
[ Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (billion JPY) | vs cue | cer | Revenue ili 0.8 2.4 Adjusted Operating Profit 0.0 (Or) 1.3 <Reference> Impact when JPY is depreciated by 10% North Latin Las pt ta Cae am | ao Adjusted Operating Profit -0.1 1.0 6.5 aks: 2.0 3.6 {©TERUM
Slide 33: 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 | principal amount i conversion price | required to be issued (billion JPY) for conversion Dec. 2019 50.0
Slide 34: IR Contact
[Ml 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 intende