Terumo Corporation · TSE:4543
Terumo — Q3 FY2019 Earnings Presentation
23 slides from Terumo's earnings presentation, February 2020
Slide 1: Third quarter results, fiscal year ending March 2020
I am the CAFO, Muto. I will now explain the third quarter results for the fiscal year ending March 2020. 1
Slide 2: Overall results
First, the overall results. As you can see in the title, our year‐to‐date sales revenue and adjusted operating profit for the 3rd quarter were our best‐ever results. Continuing from the first half, sales revenue grew positively for all three companies. Among these, the TIS and Neurovascular business
Slide 3: Adjusted operating profit variance analysis
Next is the adjusted operating profit variance analysis, compared to the previous fiscal year. Gross profit increment by sales increase is getting less affected by the shipping delay. Compared to our annual guidance of 33 billion yen, 25 billion yen actually represented progress as planned. The 6 bi
Slide 4: FX impact
The 2.3 billion yen FX impact from the first half grew to 6.4 billion year‐to‐date in the 3rd quarter—an increase of 4.1 billion yen. I will explain what it includes. First, a 2.3‐billion‐yen impact occurred in the 3rd quarter from flow — yen appreciation against the euro, yuan, and emerging‐market
Slide 5: Revenue by region
Next is revenue by region. In the Cardiac and Vascular business in Japan, the rebound following the shipping delay in the previous fiscal year has largely passed, and growth is stable. General Hospital and Blood Management both maintained steady growth according to plan. Outside Japan, there was a v
Slide 6: Revenue by company
Next is revenue by company. The TIS and Neurovascular businesses of Cardiac and Vascular maintained double‐digit growth, driving that company as a whole. In addition, the CV business is building momentum going into the second half, with good sales of oxygenators. General Hospital continued double‐di
Slide 7: Cardiac and Vascular Company
Here is Cardiac and Vascular Company. Sales revenue was high in the 3rd quarter of the previous fiscal year due to the rebound after the shipping delay recovery, and yet sales still grew in the double‐digits when excluding FX impact. TIS continued to drive double‐digit growth outside Japan. The new
Slide 8: General Hospital Company
The General Hospital Company saw progress according to plan in both sales and profit. In sales revenue, after FX impact and a temporary drop in demand outside Japan, the medical device business is now seeing signs of recovery, for which we have strong expectations. In Pharmaceuticals, pain managemen
Slide 9: Blood Management Company
Next is Blood Management Company. In sales revenue, the Blood Center business is seeing a sales increase through its introduction of new software for the component collection system Trima, as well as by improving component collection efficiency, leading to both machines and disposables increasing in
Slide 10: Second-half outlook
Now I will explain our second‐half outlook. To begin, first‐half sales revenue progressed approximately according to plan. However, there was a further rise in operating profit due to shipping delay recovery costs and US WEB launching costs that we expected to spend but didn't, bringing the increase
Slide 11: FX outlook and coronavirus situation
depreciating against the yen, which will result in a greater negative impact than anticipated in the second half plan. The result of these positive and negative impacts will be that the rise from the first‐half 7 billion yen will end up at 5 billion yen for the year. Now I will address the Terumo si
Slide 12: Major topics from the quarter
Next, the major topics from the quarter. As a company, we received a Good Design Award for the 24th year in a row. On the business side, we want to improve our business expansion speed to seize the many opportunities we see to grow current business drivers and launch new products or acquire new tech
Slide 13: Product launches
Some products will be launched next fiscal year intead of this one, but overall we see product launches are happening according to plan. This concludes my explanation. Thank you. 12
Slide 14: Reference
“TERUMO Reference 13/22 13
Slide 15: FY19 Q3YTD Revenue and Growth by Region
FY19 Q3YTD Revenue and Growth by Region (billion JPY) Business Overseas Grand Japan Segment Subtotal Americas Total Cardiac and 38.2 225.3 64.1 103.1 30.9 27.2 263.5 Vascular (+8%) (+15%) (+10%) (+15%) (+22%) (+15%) (+14%) Out of C&V imercentanal 28.5 185.4 52.2 81.8 28.9 22A5) ZA) systems* (47%) (4
Slide 16: Operating Expenses
Operating Expenses (billion JPY) ls wes? eon Salaries & Wages 65.5 66.6 +101) +2% +5% Sales Promotion 13.3 14.6 +1.3 +10% +13% Logistical Costs 10.1 10.3 +0.3 +3% +5% Depreciation & 10.4 13.9* 435 434% «437% Amortization Others 32.7 31.4* -1.3 -4% -2% i 132.0 136.8 ; | SG&A Expenses Total (29.8%) (2
Slide 17: Quarterly Results
Quarterly Results (billion JPY) FY18 Q3 Q4 FY19 Q1 Q2 Q3 (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Revenue 158.6 155.9 152.5 154.8 162.9 , 87.6 84.3 85.2 86.3 87.2 Gross Profit (55.2%) (54.1%) (55.8%) (55.8%) (53.5%) 45.0 46.7 44.5 45.1 47.2 Seid ystems (28.4%) (29.9%) (29.2%) (29.1%) (29.0%
Slide 18: Adjusted Operating Profit: Adjustments
Adjusted Operating Profit : Adjustments (billion JPY) Operating profit 78.5 86.3 Adjustment 1. Amortization of acquired J morzat dul +11.0 +11.9 intangible assets Adjustment 2. Non-recurring profit or loss +17 +0.3* Adjusted operating profit 91.2 98.4 <General examples of adjustment items> * FY19 Q3
Slide 19: CAPEX and R&D Expenses
CAPEX and R&D Expenses Amortization of acquired intangible assets and goodwill Depreciation 33.6 FY16 JGAAP <- ~TERUMO Amortization of acquired intangible assets 43.6, 42.0 | 47.7 41.3 | FY18 (billion JPY) 75.0 63.1 49.0 34.9 a CAPEX = C.i.P. record basis 50.0 37.0 FY19 Q3YTD FY19 Guidance ™@ Expand
Slide 20: Cash Flows
Cash Flows Operating CF Investing & Financing CF +73.3 -83.3 (billion JPY) 227, 38.2 Income taxes 27.7 Depreciation and amortization Working capital increase 85.5 63.1 CAPEX 20.5 Profit 123.0 before Others tax Dividends 03 113.0 {7 ™} ——_— Cash at the CAPEX = C.i.P. record basis Cash at the end of F
Slide 21: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (billion JPY) P|] ue fw Revenue Ao7/ 0.8 2.4 Adjusted Operating 0.0 05 13 Profit <Reference> Impact when JPY is depreciated by 10% North | Latin EMEA America | America Adjusted Operating -0.1 1.0 6.5 1.3 2.0 3.6 Profit ~TERUMO 20/22 20
Slide 22: The Status of Convertible Bonds
The Status of Convertible Bonds ® Detail of the bonds (issued in Dec. 2014) *After two-for-one stock split implemented in Apr. 2019 Aggregate pee Contingent Number of shares Maturity principal amount Coupon ca ls conversion trigger | requiredto be issued (billion JPY) price (JPY) for conversion Dec.
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