Terumo Corporation · TSE:4543
Terumo — FY2020 Earnings Presentation
39 slides from Terumo's earnings presentation, May 12, 2021
Slide 1: Financial Results for the Fiscal Year Ended March 31, 2021 (FY2020)
Financial Results for the Fiscal Year Ended March 31, 2021 (FY2020) May 12, 2021 Naoki Muto Chief Accounting and Financial Officer Terumo Corporation I am the CAFO, Muto. I will now explain the results for fiscal year ended 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: Highlights
Highlights FY20 Q4/Q4 YTD results Revenue: Highest-ever Q4 revenue. Steady recovery in demand for Cardiac & Vascular while the COVID-19 impact remained. Increased in General Hospital and Blood & Cell Technologies driven by products contributing to infection control and therapies for COVID-19 Adjuste
Slide 4: Highlights (speaker notes continued)
yen above our guidance at the beginning of the year, making the total dividend 29 yen for FY20. Our guidance for FY21 is 9 to 11% sales revenue growth and 7 to 12% growth of adjusted operating profit. I will explain the assumptions behind this guidance in later slides. Next slide, please. 3
Slide 5: P&L Results
P&L Results Revenue: Highest-ever Q4 revenue. Despite minor decline in YTD results, the revenue of Cardiac & Vascular showed steady recovery throughout the fiscal year (C&V revenue YoY% trend Q1: -24%, Q2 and Q3: -2%, Q4: +4%) Adjusted Operating Profit: Recovered to single digit decrease in Q4 YTD r
Slide 6: P&L Results (speaker notes)
positive sales revenue growth. This in turn resulted in the Group as a whole achieving its highest-ever sales revenue in Q4. Next slide, please. 4
Slide 7: Adjusted Operating Profit Variance Analysis (FY20 Q4 YTD)
Adjusted Operating Profit Variance Analysis (FY20 Q4 YTD) (100 M JPY) Gross MDR 21 margin 7 IT G/P decrement by sales decrease: G/P 37 8 FX Significant decline in 1H, especially in Q1, invest- 144 decrement ment R&D 35 was mitigated in 2H by sales 61 12 74 decrease decrease Gross margin: 19 Price Si
Slide 8: Adjusted Operating Profit Variance (speaker notes)
With “SG&A decrease,” the level of decrease became smaller due to easing of restrictions on movement and resulting spending, to finish for a positive impact of 7.4 billion yen. “R&D decrease” had a 800-million-yen positive impact, as we reconfirmed the level of priority for each project while largel
Slide 9: Adjusted Operating Profit Variance Analysis (FY20 Q4)
Adjusted Operating Profit Variance Analysis (FY20 Q4) (100 M JPY) G/P increment by sales increase: G/P Positive revenue growth in all companies. increment by sales Partially because of COVID-19 impact in FY19 MDR increase 0 Q4 on Cardiac & Vascular in China (-2.7 B JPY) 7 IT Gross margin: invest- R&
Slide 10: Q4 Variance Analysis (speaker notes)
movement restrictions in the US and other regions were eased, leading to more normal expenditures. In “FX,” as I just explained, yen depreciation at the end of March resulted in negative impact amid inventory asset unrealized profits, which exceeded the positive flow impact for a total negative impa
Slide 11: Revenue by Region
Revenue by Region FY20 Q4 YTD Comments (C&V: Cardiac & Vascular, Revenue (100 M JPY) FY20 Q4 YTD YoY% GH: General Hospital, TBCT: Blood & Cell Technologies) Regional Q4 YTD Q4 () FXN Japan: Highest-ever revenue with 200+ B JPY. GH showed breakdown continuous growth since Q2, with double digit growth
Slide 12: Revenue by Region (speaker notes)
In Americas, the Neurovascular business and Vascular Graft business powerfully drove the Cardiac and Vascular Company in the 2nd Half, in addition to TIS making a steady recovery, to reduce negative sales growth to single digits. The General Hospital Company was stable with similar results to the pr
Slide 13: Cardiac & Vascular Company results
Turned to positive growth in Q4 along with a progressing recovery in the # of procedures excl. Cardiovascular. C&V: In YTD, Vascular Graft showed positive growth, and TIS and Neurovascular improved to single digit negative (100 M JPY) Q4 YTD Q4 YTD Q4 Comments Rev. YoY () FXN TIS: Progressing recove
Slide 14: Cardiac & Vascular (speaker notes)
postponement of elective surgical procedures which require a lot of hospital resources. However, increased ECMO product sales in Japan and positive impact from certain products and regions, the business began to see positive growth and easing of negative impacts. Vascular continued positive growth f
Slide 15: General Hospital Company results
Driven by Alliance and infection control products. GH: Each sub-segment results showed gradually progressing recovery from decreased demand (100 M JPY) Q4 YTD Q4 YTD Q4 Comments Rev. YoY () FXN General hospital products: The negative impact due to the limited number of medical examinations in JP and
Slide 16: Blood & Cell Technologies Company results
Despite the impact of decreased blood transfusion demand, continued increase in both revenue and profit TBCT: thanks to better product mix driven by higher component collection system sales and expense control (100 M JPY) Q4 YTD Q4 YTD Q4 Comments Rev. YoY () FXN Blood center solutions: Driven by co
Slide 17: Blood & Cell Technologies (speaker notes)
growth of 27%. Next slide, please. 10
Slide 18: Major Topics in FY20 Q4
Major Topics in FY20 Q4 • Selected as the “Winner Company” in Corporate Governance of the Year 2020 by Japan Association of Corporate Directors Corporate • Established “DX Promotion Department” for accelerating group-wide digital transformation Cardiac & • Signed a definitive agreement to acquire al
Slide 19: FY21 Guidance
FY21 Guidance Projected revenue range in conjunction with the level of demand recovery from COVID-19 • Highest in the range: Progress in distribution of vaccines and in recovery of healthcare demand from 1H. Return to growth trajectory in 2H • Lowest in the range: Number of COVID-19 patients in 1H c
Slide 20: FY21 Guidance (speaker notes)
revenue guidance is for 670 to 680 billion yen. This represents 9 to 11% year-on-year growth. Regarding expenses, we anticipate that activity restrictions will continue to ease regardless of demand level, similarly to the trend we observed in Q4 of FY20, and therefore that expenses will not fluctuat
Slide 21: FY21 Guidance: Profit Variance Analysis
FY21 Guidance: Profit Variance Analysis (for 670 B JPY Revenue Scenario) Sales increment and gross margin: Sales Sales recovery in C&V mainly in US, resulting in increment Production and gross MDR product mix improvement level margin adjustment and IT Price: investment Others +0.8% Impact of Chinese
Slide 22: FY21 Profit Variance (speaker notes)
In other expenses, the collaboration we announced last month in plasma collection will yield sales starting next fiscal year, but will incur expenses this fiscal year for a downward impact of 0.4 percentage points. In FX, we anticipate an upward impact of 0.4 percentage points due to an expected yen
Slide 23: FY21 Guidance by Company
FY21 Guidance by Company (for 670 B JPY Revenue Scenario) Revenue Comments Amount (100 M JPY) YoY% () FXN FY19 3,506 Despite the impact from Chinese VBP of TIS products, expect double digit growth in TIS and Cardiac & 14% FY20 3,285 Vascular Graft, and close to 20% growth in Vascular (12%) Neurovasc
Slide 24: FY21 Guidance by Company (speaker notes)
therapeutic apheresis and cell processing demand, and sales expansion will absorb that impact, resulting in 5% sales revenue growth. Next slide, please. 14
Slide 25: Dividend Proposal
Dividend Proposal Stably increasing, and aim for the target dividend payout ratio of 30% over the mid to long term FY20 annual dividend: 29.0 JPY (increased by 1.0 JPY from the original guidance) Continue to increase FY21 annual dividend up to 30.0 JPY FY20 FY21 Results Guidance Profit for the Year
Slide 26: Reference
Reference ©TERUMO CORPORATION 16 / 28 16
Slide 27: FY20 New Product Pipeline
FY20 New Product Pipeline Category Products Region Launch Category Products Region Launch Steerable sheath JP Launched Vascular Stent graft for abdominal aortic aneurysm US Launched Coronary graft PTCA balloon China Launched Syringe pump JP Launched (manufactured by Essen Technology) General Imaging
Slide 28: FY21 New Product Pipeline
FY21 New Product Pipeline Category Products Region Category Products Region Coronary Drug-eluting stent JP Infusion pump JP General Biodegradable drug-eluting microsphere EU hospital Small size syringe pump JP products Oncology Peripheral embolization coil JP FN syringe(16mm needle) JP Peripheral em
Slide 29: Revenue by Segment and Region
Revenue by Segment and Region ©TERUMO CORPORATION 19 / 28 19
Slide 30: Operating Expenses
Operating Expenses (100 M JPY) FY19 Q4 FY20 Q4 YoY% YoY YoY% FY19 Q4 FY20 Q4 YoY YoY% YTD YTD (FXN) Salaries & Wages 898 928 29 3% 4% 232 240 8 3% Sales Promotion 197 128 -68 -35% -34% 51 43 -8 -16% Logistical Costs 139 144 5 4% 4% 35 37 2 6% Depreciation & Amortization 189 191 2 1% 2% 50 49 -1 -2%
Slide 31: Quarterly Results
Quarterly Results (100 M JPY) FY19 Q4 FY20 Q1 Q2 Q3 Q4 (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) (Jan-Mar) Revenue 1,588 1,313 1,520 1,653 1,652 Gross Profit 853 (53.7%) 689 (52.5%) 816 (53.7%) 908 (54.9%) 854 (51.7%) SG&A Expenses 477 (30.1%) 401 (30.5%) 458 (30.2%) 447 (27.1%) 488 (29.5%) R&D Expens
Slide 32: Adjusted Operating Profit: Adjustments
Adjusted Operating Profit: Adjustments (100 M JPY) FY19 Q4 YTD FY20 Q4 YTD FY19 Q4 FY20 Q4 Operating Profit 1,106 984 244 231 Adjustment 1. Amortization of acquired intangible assets 157 146 38 38 Adjustment 2. Non-recurring profit or loss -13 29 -16 5 Adjusted Operating Profit 1,250 1,159 266 274 <
Slide 33: CAPEX, Depreciation and R&D Expenses
CAPEX, Depreciation and R&D Expenses (100 M JPY) FY21 FY17 FY18 FY19 FY20 Guidance CAPEX 436 608 895 772 850 Depreciation 420 440 477 484 530 Amortization of acquired intangible assets 145 146 157 150 155 Others 276 294 320 334 375 CAPEX = C.i.P. record basis FY20 results (77.2 B JPY): Continued inv
Slide 34: Cash Flows (FY20 Q4 YTD)
Cash Flows (FY20 Q4 YTD) Operating CF Investing & Financing CF (100 M JPY) +1,215 -876 231 Long-term 64 539 Income debt taxes Working capital Depreciation 772 500 and 700 Dividends amortization 971 Debt 212 repayment 93 CAPEX & redemption Others of bonds Profit before tax 2,008 1,669 Cash at the Cas
Slide 35: Cash Flows (FY20 Q4)
Cash Flows (FY20 Q4) (100 M JPY) Operating CF Investing & Financing CF +480 -170 39 162 255 136 Income Working 86 taxes capital Depreciation CAPEX Others and 2,008 221 amortization Profit 1,698 before tax Cash at the Cash at the end of FY20 Q3 CAPEX = C.i.P. record basis end of FY20 Cash at the end
Slide 36: FY21 Guidance: Profit Variance Analysis
FY21 Guidance: Profit Variance Analysis (for 670 B JPY Revenue Scenario) (100 M JPY) Sales increment and gross margin: Production Gross level Sales recovery in C&V mainly in US, resulting in margin adjustment product mix improvement 50 50 Price: 30 Impact of Chinese VBP started in FY20 2H continues
Slide 37: Details of FY20 FX Impact (Flow and Stock)
Details of FY20 FX Impact (Flow and Stock) Q4 YTD FX impact -3.5 B JPY: -2.4B JPY(Q3 YTD) plus -1.1 B JPY(Q4) +0.8 B JPY from flow: Positive impact of JPY depreciated against EUR and CNY, and negative impact of currencies depreciated in emerging countries such as Brazil (JPY) FY19 Q4 average FY20 Q4
Slide 38: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (100 M JPY) USD EUR CNY Revenue 17 8 27 Adjusted Operating Profit 0 5 15 <Reference> Impact when JPY is depreciated by 10% North Latin EMEA Asia America America EUR Others CNY Others Adjusted Operating Profit -1 10 65 13 23 36 ©TERUMO
Slide 39: ~“TERUMO
~“TERUMO Sii-Ahead TOO® 29