Terumo Corporation · TSE:4543
Terumo — Q3 FY2014 Earnings Presentation
23 slides from Terumo's earnings presentation, March 2015
Slide 1: Third Quarter Results, Financial Period Ending March 2015
Hello, my name is Kazuaki Kitabatake. I will explain the 3rd quarter results of the financial period ending March 2015. Please open to the second slide. 1
Slide 2: Highlights of the results
First, highlights of the results. Similarly to the first and second quarters, we were able to absorb the effects of the Japan reimbursement price revision to achieve increases in both sales and profit. In the 3rd quarter, Japan sales in particular saw an increase. In results by company, double-digit
Slide 3: Q3 YTD sales and profit
Again, sales and profit both increased in the 3rd Quarter YTD. Sales were 363.2 billion yen, for a 5% year-over-year increase. Operating income was 52.9 billion yen, for a 10% year-over-year increase. This was led by a significant increase in sales. Ordinary income increased 18% to 58.7 billion yen,
Slide 4: Factors in Q3 YTD operating income
This slide shows the factors contributing to the 3rd Quarter YTD operating income amount. The largest positive impact came from the increased gross profit resulting from sales expansion. The improvement of product mix, and gross profit improvement by cost reduction, continued from the 2nd Quarter. W
Slide 5: Sales by region
This shows sales by region. The decrease in Japan sales was less severe, and sales outside Japan grew, leading to positive growth overall in sales. Outside Japan, Europe, the United States, and Asia, excluding China, achieved double-digit growth. China experienced negative growth of 2%. This was the
Slide 6: Sales by company
Cardiac & Vascular and Blood Management saw sales growth, and General Hospital growth was negative, as was the case prior to the 3rd quarter. However, General Hospital sales did increase enough to stem the negative growth some. Looking at only the 3rd quarter, General Hospital Company sales increase
Slide 7: Business profit by company
This slide shows business profit by company. Cardiac & Vascular and Blood Management both saw year-over-year improvement in business profit, but without significant increases. Up to the 2nd quarter of this fiscal year, the General Hospital company had seen less business profit compared to the previo
Slide 8: Cardiac & Vascular Company results
I will now explain the results of each company. In the Cardiac & Vascular Company, there were no significant changes. Overseas sales of interventional systems and neurovascular intervention products continue to be the main driver. Japan price reimbursement revisions impacted Cardiac & Vascular more
Slide 9: General Hospital Company results
In the General Hospital Company, sales increased greatly in the 3rd quarter. In the 1st quarter, the rise in consumption tax hurt sales, and in the 2nd quarter they were also weak due to the adjustment in hospital operations that had a temporary negative impact, as explained previously by Mr. Matsum
Slide 10: Blood Management Company results
In the Blood Management Company, we saw a continued increase in both sales and profit, driven by emerging markets such as Central and South America and Africa. The main-driver products have been therapeutic apheresis and the automated blood processing system, unchanged from previously. One item of c
Slide 11: Quarterly movement in sales and SG&A
This shows movement by quarter. The FY2014 3rd quarter saw 129.9 billion yen in sales, for a 9% increase over the FY2013 3rd quarter, when sales were 119.2 billion yen. It was also a robust 10% increase from the previous quarter. SG&A expenses also increased compared to the previous quarter, but not
Slide 12: Quarterly gross margin, SG&A ratio, operating profitability
This shows quarter-to-quarter movement, this time by gross margin, SG&A ratio, and operating profitability. In the 2nd quarter, SG&A ratio was 38.3%, and then decreased to 36.9% in the 3rd quarter, resulting in a rise in operating profitability, to 15.3%. 12
Slide 13: Products launched in second half of FY2014
This slide shows the products scheduled for launch in the second half of FY2014. The peripheral PTA balloon for below the knee, neurovascular coil assist stent and clot retriever stroke device, and DM blood glucose monitor have all now been launched. This concludes my explanation. Thank you for your
Slide 14: Reference
“TERUMO Reference © Terumo Corporation 2015/2/3 14/23 14
Slide 15: Q3 YTD Net Sales and Growth by Region
Q3 YTD Net Sales and Growth by Region (Billion yen) i Outside of Japan Saas Japan . e ; : G. Total Segment Subtotal | Europe |Americas| China Asia Cardiac & Werauley 36.0(-2%) 132.0(6%) 48.8(6%) 54.8(9%) 12.9(-12%) 15.5 (15%) 168.0 (4%) Out of C&V Interventional 27.6 (-3%) 99.8(7%) 38.8(8%) 36.9(13%
Slide 16: SG&A Expenses
SG&A Expenses (Billion yen) Q3 YTD Q3 YTD aig | ryan | YOY | YON Salaries & Wages 47.2 52.1 +4.9 +10% Sales Promotion 10.6 11.6 +1.0 +9% Logistical Costs 8.1 8.2 +0.1 +1% Depreciation & 16.7 18.4 +1.7 +10% Amortization . . . Others 25.4 26.6 +1.2 +5% General © @ Administrative Total 108.0 (31.2%) 11
Slide 17: SG&A Expenses (excluding FX impact)
SG&A Expenses (Billion yen) Q3 YTD Q3 YTD @ General 0 Administrative Total 113.3 116.9 +3.6 +3% R&D Expenses 23.1 20.9 -2.2 -10% oa 136.4 137.8 +14 +1% otal *Value adjusted by excluding FX impact ~TERUMO © Terumo Corporation 2015/2/3 17/23 17
Slide 18: Non-operating Income & Expenses, Extraordinary Gains & Losses, Income Taxes
Non-operating Income & Expenses, Extraordinary Gains & Losses, Income Taxes (Billion yen) Q3 YTD | Q3 YTD FY2013 | FY2014 Operating Income 48.3 52.9 Non-operating +1. +5. FX gains +8.1 Income & Expenses 1.7 5.8 Exchange rates End of Mar. 2014 End of Dec. 2014 _ Difference US$ 102.9 yen 120.6 yen (+1
Slide 19: CAPEX, R&D Expenses
CAPEX, R&D Expenses (Billion yen) FY2014 Q3 YTD Progress to Guidance FY2014 guidance CAPEX 42.0 30.8 D iation & Amortization 41.0 30.1 R&D Expenses 31.0 20.9 73% 73% 67% Depreciation & Amortization: Including intangibles CAPEX: Acquisition basis ~TERUMO © Terumo Corporation 2015/2/3 19/23 19
Slide 20: Cash Flow
Cash Flow @Financed 100 BJPY by CB, invested 90 BJPY in short-term financial asset ®@Despite corporate tax burden in Q1 and Q3, operating CF recovered well. @SB of 40 BJPY will be redeemed in March, 2015 (Billion yen) Operating CF Investing and Financing CF +42.4 -18.3 Depreci- Corpo- ation & rate t
Slide 21: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (Billion yen/year) Net Sales 1.8 0.7 Operating Income 0.3 0.4 ~TERUMO © Terumo Corporation 2015/2/3 21/23 21
Slide 22: Quarterly Average Exchange Rates Trend
Quarterly Average Exchange Rates Trend JPY 140 120 100 80 ~TERUMO EUR (FY2014) 143 ‘138 141 137 129 131 USD (FY2014) 115 102 104 i i —i— 99 99 100 103 ai Q2 Q3 a4 © Terumo Corporation 2015/2/3 22/23 22
Slide 23: IR Contact
IR Contact Terumo Corporation Corporate Communication (IR) Dept. E-mail: [email protected] research. 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