Terumo Corporation · TSE:4543
Terumo — Q1 FY2018 Earnings Presentation
23 slides from Terumo's earnings presentation, September 2018
Slide 1: Overview of First Quarter Financial Results
I will now give an overview of the Terumo financial results for the first quarter of the period ending March 2019. Previously, we have had an earnings call for the first‐quarter announcements; however, due to the Ashitaka matter, we have decided to ask you to gather so we can offer direct explanatio
Slide 2: Quarterly results overview
With that, I will now explain the quarterly results. Looking overall, despite the Ashitaka situation, the first‐quarter results alone came out in line with our guidance for the period. I will now discuss specific items. This period differs from previous trends for Terumo performance in two ways: The
Slide 3: Adjusted Operating Profit under IFRS
Starting this fiscal year, we adopted IFRS accounting, and with that began using the item “Adjusted Operating Profit.” I will explain how that number is calculated. In the first quarter, the main item adjusted was amortization of acquired intangible assets, and the remainder was composed an accumula
Slide 4: Adjusted operating profit variance analysis
Next is the adjusted operating profit variance analysis. Gross profit increment by sales increase was the largest factor; however, the Cardiac and Vascular company, which has the highest margins, did not grow significantly. Because the General Hospital and Blood Management companies grew the most, t
Slide 5: Revenue by region
Next is revenue by region. In Japan, revenue came out slightly negative, with the General Hospital and Blood Management companies nearly absorbing the negative Cardiac and Vascular number. Outside Japan, the Ashitaka situation has not yet had the same revenue impact as in Japan, due to the following
Slide 6: Results by company
I will now explain in more detail for each company. 6
Slide 7: Cardiac and Vascular Company
First, Cardiac and Vascular Company: The TIS business saw negative growth due to the reimbursement price revision and the Ashitaka Factory shipping delay issues. Growth was positive outside Japan, but could not completely cover for Japan, resulting in a slight decline for TIS overall. Neurovascular
Slide 8: General Hospital Company
Next is General Hospital Company. Alliance grew robustly inside and outside Japan, at over 20% year‐on‐year. In Healthcare, diabetes management products showed steady growth. Pharmaceutical and nutrition, I.V. solutions paired with AdSpray and pain management for good overall growth. Adjusted operat
Slide 9: Blood Management Company
Next is Blood Management. The company saw steady growth with blood center products in emerging markets and therapeutic apheresis. Adjusted operating profit was negative year‐on‐year; however, this was due to the significant year‐on‐year increase in R&D expense. This increase will slow down in the se
Slide 10: Major topics from the first quarter
Next, the major topics from the first quarter. Major projects were launched on schedule which are expected to contribute to future performance. For example, the Bolton stent graft “Relay Pro” was launched in the EU in April. The drug‐eluting stent “Ultimaster Tansei” also launched in the EU in April
Slide 11: 2018 product pipeline
There are other products in the 2018 pipeline, but I will keep my explanation to those with movement in the first quarter. 11
Slide 12: Ashitaka Factory shipment delays
Now I will explain the shipment delays at the Ashitaka Factory. We have already covered the cause of the occurrence in the press release, so I will give an update on the progress since then, addressing that progress on three different levels. The first is restoration of sterilization capacity. All e
Slide 13: Revision of FY2018 guidance
Next, regarding revision of our FY2018 guidance. Taking into account the impact of the Ashitaka Factory situation, we have revised the FY2018 guidance as follows: For the first half, we have reduced the revenue guidance by 11 billion yen, both the adjusted operating profit and operating profit by 6.
Slide 14: Regional strategy in China
Next, our regional strategy in China. In August we announced our acquisition of Essen Technology, a drug‐eluting stent manufacturer in China. In addition, on Monday of this week, we announced the acquisition of regulatory approval of a peritoneal dialysis solution by Wego Terumo, a joint company of
Slide 15: Reference
“TERUMO Reference 15/23 15
Slide 16: FY18 Q1 Revenue and Growth by Region
FY18 Q1 Revenue and Growth by Region (billion yen) Business Outside of Japan : G. Total Segment Subtotal Europe | Americas Cardiacand = 113 68.2 aig) 30.4 9.0 75 79.5 Vascular (665) (43%) (42%) (47%) (43%) (5%) (0%) Out of C&V 8.4 55.3 17.1 23.5 8.4 6.3 63.7 Interventional (18%) 3%) (02%) (06%) (33%
Slide 17: Operating Expenses
Operating Expenses billion yen [ a * “ “ SEE: Salaries & Wages 20.0 21.7 +1.7 Sales Promotion 4.1 45 +0.4 +9% +8% Logistical Costs 3.0 BY +0.2 +9% +9% Depteslalione: 3.4 3.4 +0.0 +0% +1% Amortization Others 9.7 10.7 +1.0 +11% +10% 40.2 43.5 SG&A Expenses Total (28.9%) (30.4%) aries} +8% +8% 8.5 11.3
Slide 18: Quarterly Results
Quarterly Results (billion yen) FY17Q1 Q2 Q3 Q4 FY18 Q1 (Apr-Jun) (Jul-Sep) (Oct-Dec) (Jan-Mar) (Apr-Jun) Revenue ilsis).3} 145.3 alby2,3) 150.8 143.0 7B) 79.5 83.2 80.7 79:9) Gross Profit (54.5%) (54.7%) (54.6%) (53.5%) (55.8%) 40.2 41.2 43.8 45.9 43.5 SG&A Expenses (28.9%) (28.4%) (28.7%) (30.4%)
Slide 19: CAPEX and R&D Expenses
CAPEX and R&D Expenses Amortization of Intangibles and Goodwill 44.7 45.4 39.1 \ Depreciation Amortization of acquired intangible assets 43.6 479 (billion yen) 60.0 Expand investment in production capacity and space as well as IT infrastructure in FY18 IFRS basis from FY17 > \Include intangible asse
Slide 20: Cash Flow
Cash Flow Operating CF Investment and Finance CF an (billion yen) +12.5 -17.4 Depreci- ation and Income amorti- taxes zation Increase of working capital Profit CAPEX before Others tax = E& Dividends Cash at end of CAPEX = C.i.P, record basis Cash at end of FY17 Cash at end of each fiscal year is con
Slide 21: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion yen) a Revenue 1.6 0.8 2.0 Adjusted Operating 0.0 05 10 Profit <Reference> Impact of +/-10% fluctuation North | Latin EMEA America | America Adjusted Operating -0.1 0.9 6.0 413} 7) a3) Profit ~“TERUMO 21/23 21
Slide 22: The Status of Convertible Bonds
The Status of Convertible Bonds @ Detail of the bonds (Issued in Dec, 2014 Aggregate principal ee TST Conversion price Maturity amount (billion yen) (ven) Dec, 2019 50.0 0.0% 3,853 Dec, 2021 50.0 0.0% 3,853 Total 100.0 @ Status of conversion (as of Jul 31, 2018 Amount of shares issued for conversion
Slide 23: 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