Terumo Corporation · TSE:4543
Terumo — Q3 FY2023 Earnings Presentation
30 slides from Terumo's earnings presentation, Feb 7, 2024
Slide 1: Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2024 (FY2023)
Financial Results for the Third Quarter of Fiscal Year Ending March 31, 2024 (FY2023) February 7, 2024 Naoki Muto Chief Accounting and Financial Officer Terumo Corporation
Slide 2: Forward-Looking Statements and Use of Document
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 events or performanc
Slide 3: Highlights
Highlights Revenue Highest-ever quarterly and YTD results Drivers were C&V and TBCT with double-digit growth Operating profit Highest-ever quarterly and YTD results Profitability improvement (price policy and cost reduction) progressed as planned Upward revision of FY23 annual guidance Revise both r
Slide 4: P&L
P&L Revenue: Strong global demand continued; drivers TIS, blood center business, Vascular Graft grew in double digits Operating profit: Profitability improvement on schedule. SG&A expenses increased due to sales force expansion for growth of therapeutic devices sales in the US Change excluding 100M
Slide 5: OP Variance Analysis (Q3): Further profitability improvement
OP Variance Analysis (Q3): Further profitability improvement (100M JPY) Gross Price G/P increment by sales increase: margin +34 FX TIS, Neuro led the driver C&V G/P SG&A Reimbur- R&D Gross margin: increment increase sement increase by Less inflation impact and cost-reduction price sales +7 absorbed
Slide 6: OP Variance Analysis (Q3 YTD): As planned in all areas
OP Variance Analysis (Q3 YTD): As planned in all areas (100M JPY) G/P increment by sales increase: Gross Drivers were C&V and TBCT Price margin +65 Gross margin: FX G/P Reimbur- SG&A Cost reduction and business mix improvement increase R&D absorbed inflation impact increment sement increase by price
Slide 7: Quarterly Gross Margin Trend
Quarterly Gross Margin Trend FY23 guidance OP variance (disclosed in May 2023) Quarterly breakdown by item Details Q1 Q2 Q3 Q4 • Improvement of all items (100M JPY) Gross Margin accelerates in Q4 (5.8B JPY/Year) • Fall-off of one-time costs from Q4 of last fiscal year • Ease in 2H Inflation • Reduct
Slide 8: Revenue by Region: Therapeutic devices strong in Americas
Revenue by Region: Therapeutic devices strong in Americas. Asia drove high growth rate C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies, TIS: Interventional Systems, Neuro: Neurovascular, CV: Cardiovascular FY23 Q3 YTD Revenue (100M JPY) Comments FY23 Q3 YTD
Slide 9: C&V: Americas and EU drove continuing strong sales
C&V: Americas and EU drove continuing strong sales; profit progress as planned (C&V: Cardiac and Vascular, TIS: Interventional Systems) （100M JPY） Q3 YTD Q3 YTD Q3 Comments YoY ( ) FX Neutral TIS: Access and therapeutic demand expanded globally. 4,077 Volume-based procurement (VBP) in China caused 3
Slide 10: TMCS
Increased sales and profit despite impact of Nutrition business divestiture, TMCS: return to normal of thermometers (TMCS: Medical Care Solutions) （100M JPY） Q3 YTD Q3 YTD Q3 Comments YoY ( ) FX Neutral HCS In Japan: Sell-off of Nutrition business 1,473 Hospital Care absorbed by reimbursement price
Slide 11: TBCT: Strong blood center business drove large profit increase
TBCT: Strong blood center business drove large profit increase (TBCT: Blood and Cell Technologies) （100M JPY） Q3 YTD Q3 YTD Q3 Comments YoY ( ) FX Neutral 1,278 Blood Center Revenue increase due to early orders in 1,134 Solutions: Asia and Americas that were scheduled for Q4 +129 902 Revenue Therape
Slide 12: Annual Guidance Revision to Reflect FX Impact
Annual Guidance Revision to Reflect FX Impact ( ) FX Neutral FY23 FY23 FY22 Revision Previous Revised YoY Amount (100M JPY) Actual amount guidance guidance (C)÷(A) (A) (C)-(B) (B) (C) Revenue 8,202 8,540 9,060 +520 +10% (+6%) Operating profit 1,173 1,325 1,400 +75 +19% (+14%) (%) 14.3% 15.5% 15.5% A
Slide 13: Upward Revision of Annual Guidance (FX Impact)
Upward Revision of Annual Guidance (FX Impact) Quarterly Trend (Total） Annual (Total / By Company) 2,286 2,391 Total C＆V 2,230 9,060 20%(GS26) 26%(GS26) 2,153 2,209 Original Guidance 8,540 2,132 2,119 5,445 2,077 8,540÷4 8,538 15.8%(Excluding FX) 24.0%(Original Guidance) Sales 15.5%(Original Guidanc
Slide 14: Reference
Reference ©TERUMO CORPORATION 14 / 13
Slide 15: C&V: Upward Revision of Annual Guidance (FX Impact)
C&V: Upward Revision of Annual Guidance (FX Impact) Quarterly Trend (C&V） Annual (Total / By Company) 1,420 Total C＆V 1,351 1,368 9,060 20%(GS26) 26%(GS26) 1,306 Original Guidance 8,540 5,445 1,254 1,245 1,292 1,281 8,538 15.8%(Excluding FX) 24.0%(Original Guidance) Sales 5,038÷4 15.5%(Original Guid
Slide 16: TMCS: Upward Revision of Annual Guidance (FX Impact)
TMCS: Upward Revision of Annual Guidance (FX Impact) Quarterly Trend (TMCS） Annual (Total / By Company) 533 503 500 Total C＆V 522 Original Guidance 9,060 20%(GS26) 26%(GS26) 437 494 497 2,000÷4 8,540 5,445 8,538 15.8%(Excluding FX) 24.0%(Original Guidance) Sales 433 5,038 15.5%(Original Guidance) 5,
Slide 17: TBCT: Upward Revision of Annual Guidance (FX Impact)
TBCT: Upward Revision of Annual Guidance (FX Impact) Quarterly Trend (TBCT） Annual (Total / By Company) 432 437 Total C＆V 409 20%(GS26) 26%(GS26) 394 395 9,060 389 8,540 5,445 Original Guidance 8,538 15.8%(Excluding FX) 24.0%(Original Guidance) Sales 362 1,500÷4 5,038 15.5%(Original Guidance) 5,071
Slide 18: Revenue by Segment and Region
Revenue by Segment and Region ©TERUMO CORPORATION 18 / 13
Slide 19: Quarterly Revenue Trend
Quarterly Revenue Trend FY23 Q3: +11% vs. FY22 Q3, +5% vs. FY23 Q2 (100M JPY) 3,000 2,500 2,000 1,500 TBCT TMCS C&V 1,000 500 0 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Q1 Q2 Q3 Q4 ©TERUMO CORPORATION 19 / 13
Slide 20: Profitability Improvement Progress
Profitability Improvement Progress Q4 Q4 1 Price policy 2 VC2 impact 12.0B JPY 3.6B JPY Q3 YTD Q3 YTD progress progress VC2: Group-wide production and SG&A cost-reduction project Q3 YTD Costa Rica transfer cost reduction impact, along with Global price policy revision results operations improvement
Slide 21: P&L (QoQ)
P&L (QoQ) (100M JPY) FY22 Q3 Q4 FY23 Q1 Q2 Q3 (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Revenue 2,147 2,022 2,153 2,286 2,391 Gross Profit 1,114 (51.9%) 990 (49.0%) 1,098 (51.0%) 1,185 (51.8%) 1,266 (52.9%) SG&A Expenses 615 (28.6%) 597 (29.5%) 651 (30.2%) 664 (29.0%) 707 (29.6%) R&D Expense
Slide 22: SG&A (QoQ)
SG&A (QoQ) (100M JPY) FY22 Q3 Q4 FY23 Q1 Q2 Q3 (Oct-Dec) (Jul-Sep) (Apr-Jun) (Jul-Sep) (Oct-Dec) Salaries & Wages 316 307 336 349 371 Sales Promotion 52 45 49 44 54 Logistical Costs 49 44 47 46 49 Depreciation and Amortization 60 58 58 61 65 Others 138 143 161 164 168 SG&A Expenses 615 597 651 664 7
Slide 23: SG&A (YoY)
SG&A (YoY) (100M JPY) YoY% FY22 Q3 FY23 Q3 YoY YoY% excluding FY22 Q3 FY23 Q3 YoY YoY% YTD YTD FX impact Salaries & Wages 926 1,056 130 14% 9% 316 371 55 18% Sales Promotion 142 147 5 3% -1% 52 54 2 4% Logistical Costs 140 142 2 1% -3% 49 49 -0 -1% Depreciation and 175 184 9 5% 2% 60 65 5 8% Amortiz
Slide 24: Adjusted Operating Profit: Adjustment Items
Adjusted Operating Profit: Adjustment Items (100M JPY) FY22 Q3 YTD FY23 Q3 YTD FY22 Q3 FY23 Q3 Adjusted Operating Profit 1,096 1,197 392 441 Adjustment 1. Amortization of acquired intangible assets -144 -147 -49 -50 Adjustment 2. Non-recurring profit or loss -17 5 32 -1 Operating Profit 935 1,055 37
Slide 25: CAPEX, Depreciation and Amortization, R&D Expenses
CAPEX, Depreciation and Amortization, R&D Expenses (100M JPY) FY23 Q3 FY23 FY20 FY21 FY22 YTD (100M JPY) Guidance CAPEX 772 692 758 514 800 Depreciation and Amortization 484 532 635 510 680 Amortization of 146 161 188 147 190 acquired intangible assets Others 338 371 447 363 490 CAPEX = Construction
Slide 26: Cash Flows (Q3 YTD)
Cash Flows (Q3 YTD) Operating CF Investing & Financing CF +912 -1,149 (100M JPY) 382 561 Income 325 taxes, etc. Depreciation Working and capital 514 1,057 amortization gains and 100 losses 80 CAPEX Redemption 320 of bonds Share Profit before buy back 136 tax Dividends 1,873 Others 1,636 Cash at the
Slide 27: Cash Flows (Q3)
Cash Flows (Q3) Operating CF Investing & Financing CF +376 -613 (100M JPY) 194 155 55 Income taxes, etc. 188 Working 80 393 Depreciation and capital gains and CAPEX amortization 163 losses Share buy back 183 Profit before Dividends 156 tax Others 1,873 1,636 Cash at the end CAPEX = Construction in p
Slide 28: FY23 Q3 YTD FX Impact Breakdown (Flow and Stock)
FY23 Q3 YTD FX Impact Breakdown (Flow and Stock) FX impact vs. FY22 Q3 YTD +4.0B JPY Flow +6.6B JPY: USD and EUR appreciation positive impact FY22 Q3 YTD FY23 Q3 YTD Rate (JPY) Variation Average Rate Average Rate USD 136 143 7 EUR 141 155 14 CNY 19.9 20.0 0.1 Stock -2.6B JPY: FX impact from eliminat
Slide 29: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (Flow) (100M JPY) USD EUR CNY Revenue 22 11 39 Adjusted Operating Profit 0 5 23 Impact of 1 JPY depreciation (Stock) USD EUR CNY Adjusted Operating Profit -2.5 -0.6 -2.0 ©TERUMO CORPORATION 29 / 13
Slide 30: Terumo
~“TERUMO