Terumo Corporation · TSE:4543
Terumo — H1 FY2016 Earnings Presentation
22 slides from Terumo's earnings presentation, November 2016
Slide 1: Overview of First Half FY2016 Financial Results
I, Kitabatake, will now give an overview of the financial results of the first half of the fiscal year ending March 2017. 1
Slide 2: Financial Results Overview
This page is the financial results overview. As is written at the top, we achieved our highest‐ever operating income despite significant foreign exchange impact. Even with FX impact, operating income increased 1% year‐on‐year to reach 39.4 billion yen. Last fiscal year’s figure had been the highest‐
Slide 3: Non-operating Foreign Exchange Impact
I will now briefly discuss the non‐operating aspects of foreign exchange fluctuation. After Q1’s 5.5 billion yen FX loss, we have taken and previously announced our measures to lessen FX impact. The chief measure has been to minimize the amount of dollar‐denominated receivables. When we look at Q1 a
Slide 4: Operating Income Variance Analysis
This slide shows the operating income variance analysis. The largest factor was increased gross profit due to higher sales, similarly to the first quarter. One item that bears explanation is the increased gross profit achieved through cost reduction. The gross profit margin when excluding FX was the
Slide 5: Operating Income Variance Analysis by Company
The next slide shows operating income variance analysis by company. Cardiac and Vascular Company remained the main factor in income improvement, i t similarly i il l tot the th first fi t quarter. t With the th General G l Hospital H it l Company, C we had a 100‐million‐yen negative impact from gros
Slide 6: Net Sales by Region
Next is net sales by region. As I mentioned, when excluding FX impact, each region achieved year‐on‐year sales improvement. I will go into a few details on this. In Europe, we improved 5% in sales, and here it attributes that to the downsizing of low‐profit businesses in the General Hospital Company
Slide 7: Net Sales by Business Segment
Looking at net sales by business segment, Cardiac and Vascular saw 10% growth when excluding FX impact. General Hospital and Blood Management were approximately zero. The Blood Management Company has bottomed out, with the fourth quarter of last fiscal year and first quarter of this fiscal year bein
Slide 8: Cardiac and Vascular Company
Cardiac and Vascular was most affected by FX rates, with negative sales growth when including FX, but positive sales growth of 10% when excluding FX. In business profit there was little change in trend what has driven, but this year g included negative p impacts from the Misagog recall and cost of o
Slide 9: General Hospital Company
In General Hospital, sales were approximately the same as the previous year when excluding FX impact. Negative impacts there included downsizing of low‐ profit businesses in the EU and Latin America. The Japan reimbursement price cut had effect, and the endingg of distribution for contrast agents g
Slide 10: Blood Management Company
In Blood Management, I already mentioned that sales improved from Q1 to Q2, and in business profit as well, the company saw an increase from 12% to 17% quarter‐to‐quarter. One reason for this increase was the increase in sales, and y R&D spending additionally, p g was somewhat higher g in the first
Slide 11: Major Topics (skipped)
There are several major topics listed here, but due to time constraints I will skip over them. 11
Slide 12: New Product Pipeline Progressing Well
The new product pipeline is progressing well. 12
Slide 13: Revision of FY16 Guidance
I will now show two additional slides. The first is regarding our revision of our FY16 guidance. We revised the FX rates for the second half, changing from 110 yen to 105 yen to the US dollar, and from 125 yen to 115 yen to the EUR. We g Sales and operating revised our outlook to reflect that rate c
Slide 14: Adoption of IFRS
Finally, regarding accounting standards, we officially decided today that we will adopt IFRS as our accounting standard in the next fiscal year, or the year ending March 31, 2018. Our reasons for doing so include wanting to move to a global standard, and to make our financials, which are currentlyy
Slide 15: Reference
“TERUMO Reference 15/22 15
Slide 16: 1H FY16 Net Sales and Growth by Region
1H FY16 Net Sales and Growth by Region Business Outside of Japan Japan . ; Segment Europe |Americas| China Cardiac and 24.5 97.0 30.4 42.0 128 Vascular (+8%) (+10%) (+8%) (+10%) (+15%) Out of C&V Interventional 18.9 77.7 24.7 31.1 12.1 Systems* (+10%) (+12%) (+9%) (+12%) (+14%) General 61.5 16.8 3.8
Slide 17: Operating Expenses
Operating Expenses (eiion yen) Salaries & Wages 38.2 36.3 -1.9 -5% Sales Promotion 8.1 75 -0.6 -7% +3% Logistical Costs 5.5 5.5 -0.0 -0% +5% Dobos lu 14.0 12.4 16-11% +0% Amortization Others 18.6 18.6 +0.0 +0% +9% | SG&A Expenses Total 84.4 (32.6%) 80.3 (32.8%) 4.1 -5% 45% | | R&D Expenses 15.9 (6.1
Slide 18: Quarterly Results
Quarterly Results (billion yen) FY15Q2 Q3 Q4 FY16Q1 Q2 (Jul-Sep) (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) Net Sales 130.5 136.8 129.0 124.5 120.6 Gross Profit 70.4 (53.9%) 75.3 (55.0%) 70.3 (54.4%) 69.8 (56.0%) 66.3 (55.0%) SG&A Expenses 42.7 (32.7%) 42.9 (31.3%) 42.8 (33.1%) 40.3 (32.3%) 40.1 (33.3%
Slide 19: CAPEX and R&D Expenses
CAPEX and R&D Expenses Amortization of intangibles capex Denreiation (billion Yen) MICAPEX was peaked out in FY2013 18.5 159 “ HCAPEX is projected to be at the same level as depreciation 255 and amortization CAPEX: CIP basis 35.5 ® Further promote R&D 16.3 activities for TIS and neurovascular busine
Slide 20: Cash Flow
Cash Flow Operating CF Investing and Financing CF +39.8 - 34.1 (billion yen) Corpo- OB Acquisition of EE rate Tax Depreci- Increase Issuance of sequent in Straight Bond Medical oe Working ~ i CAPEX ation & Capital S 3om Amorti- zation Income before 149.7 * is _»@ Others 155.44} ~ Cash atend * Cash a
Slide 21: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion yen) =a Net Sales Operating Income 0.0 -0.2 0.3 “TERUMO 21/22 21
Slide 22: 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