Terumo Corporation · TSE:4543
Terumo — Q3 FY2016 Earnings Presentation
25 slides from Terumo's earnings presentation, 2017
Slide 1: Third Quarter Results, FYE March 2017
This is Kitabatake speaking. I will now explain the results of the 3rd quarter of the fiscal year ending d March h 2017. 1
Slide 2: Overview of Q3 results
Please open to page two of the materials. This is a broad overview of the 3rd quarter results. As in the first and second quarters, we saw increased revenue and operating income when excluding FX effects. Year‐on‐year, sales increased 4%, while gross profit grew 6%. Operating income grew 4%. Similar
Slide 3: Extraordinary gains and losses
Within extraordinary gains and losses, FX loss improved 2.9 billion yen in the third quarter due to yen depreciation. d An extraordinary loss was the termination of our co‐development with ART company, in which we had purchased exclusive acquisition rights and investment securities, by writing off t
Slide 4: Operating income variance analysis
The next slide shows our operating income variance analysis. In it we are displaying the operating income calculated before FX negative effect and acquisition‐related acquisition related costs. costs As I mentioned earlier earlier, our operating income grew 4% when excluding FX effects. When excludi
Slide 5: Sales by region
Looking at sales by region, we see that sales increased outside Japan when excluding FX. In Japan, we had h d a slight l h decrease. d This h was d due to the h previous fiscal f l year’s ’ third‐quarter h d Ultimaster launch boost not being present this fiscal year. 5
Slide 6: Sales by business segment
Next is sales by business segment. There was little change from last time, so I will move to the next topic. 6
Slide 7: Cardiac and Vascular results
The next slide begins company results, first with Cardiac and Vascular. The company saw the most negative effects ff off FX, but b the h TIS and d neurovascular l outside d Japan continued d to grow in double digits, driving the company to solid continued growth when excluding FX. In business profit
Slide 8: General Hospital results
The next slide shows General Hospital results. Sales were more or less flat when excluding FX, b this but h does d not mean there h was no growth. h As we have h previouslyl explained, l d the h company has h been reducing low‐profitability accounts in the EU and Latin America, and ended distributio
Slide 9: Blood Management results
In Blood Management, one of the most important issues has been how to make up for the reduction d in business b profitability f b l resulting l from f price declines d l mainly l in US. Looking k at theh fiscal f l year’s quarterly results, we see that business profitability has improved steadily ov
Slide 10: Major topics from the third quarter
The next slide discusses major topics from the third quarter, but I will move to the next item. 10
Slide 11: Launch status of FY2016 new products
Slide 11 shows the launch status of our FY2016 new product pipeline. Some items are now expectedd to launch l h in FY2017, but b most are on schedule. h d l The h few f that h willll launch l h next fiscal f l year are not drastically late, but rather experiencing slight delays. This includes radioe
Slide 12: New IVUS system
We just launched the new IVUS system this fiscal year, and it includes three main improvements f from the h previous version. The h ffirst is that, h as you can see on the h lleft f off the h slide, l d the h image resolution has improved greatly. While it may not be readily apparent, we are told by
Slide 13: Acquisition of vascular closure device business
Now, regarding the acquisition of the vascular closure device business from St. Jude Medical and Abbott Laboratories. We finally completed the purchase process on January 20th. Since the closing took longer than expected, we were unable to speak much on the d l b deal, but now that h iit is i closed
Slide 14: Bolton Medical acquisition
Next, regarding the Bolton Medical acquisition. We are still in the process of finalizing the purchase, h anddh hope to ddo so within h this h ffiscall year. We receive two important benefits from this purchase: First is that we acquire a TAA stent graft product. Second is that we acquire a product
Slide 15: End of ART co-development project
The next slide is about the end of ART co‐development project that I already mentioned when explaining l extraordinary d gains and d llosses. We h had d to this h point b been working k to d develop l a stent using the bioresorbable stent technology of ART and the coating technology of Terumo. Howev
Slide 16: Unwinding of cross-shareholding with Olympus
Today both Terumo and Olympus issued a press release announcing the unwinding of our cross‐ shareholding. h h ld We signed a business alliance contract with Olympus in 2001; since then we cooperated on joint businesses, and we further strengthened that relationship by entering into a capital allianc
Slide 17: Revision to FY2016 guidance
Now, the final slide. This concerns a revision to our FY2016 guidance. Business performance remains unchanged from previous guidance as we have more or less seen the expected FX rates. However, the costs of our three large acquisitions in this fiscal year have increased significantly. The costs of t
Slide 18: Reference
“TERUMO Reference 18/25 18
Slide 19: FY16 Q3YTD Net Sales and Growth by Region
FY16 Q3YTD Net Sales and Growth by Region (billion yen) Business Outside of Japan ante Japan : . . G. Total Segment Subtotal | Europe |Americas| China | Asia Cardiac and 37.3 149.2 46.0 643 204 18.6 186.6 Vascular (1%) (+11%) (+7%) (+10%) (+19%) (+169) (+8%) Out of C&V eneaticnal 28.5 119.8 37.6 47.
Slide 20: Operating Expenses
Operating Expenses (billion yen) FY15 FY16 0, YoY% Salaries & Wages 575 55.2 -2.3 -4% +6% Sales Promotion 12.6 1152 -1.4 -11% -2% Logistical Costs oo 8.4 +0.1 +1% +5% Bee 21.0 19.1 1.9 9% — +2% Amortization Others 27.8 28.0 +0.2 +0% +9% 127.2 1219 y 5 H SG&A Expenses Total (32.1%) (32.6%) 5.3 4% +5%
Slide 21: Quarterly Results
Quarterly Results (billion yen) FY15 Q3 Q4 FY16Q1 Q2 Q3 (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Net Sales 136.8 129.0 124.5 120.6 129;3 7 75.3 70.3 69.8 66.3 69.2 Giese Heth (55.0%) (54.4%) (56.0%) (55.0%) (53.6%) 42.9 42.8 40.3 40.1 41.5 SG&A Expenses (31.3%) (33.1%) (32.3%) (33.3%) (32.1
Slide 22: CAPEX and R&D Expenses
CAPEX and R&D Expenses Amortization of intangibles 46.6 and goodwill 44.7 33.1 FY13 FY14 Fy1isS MICAPEX was peaked out in FY2013 MCAPEX is projected to be at the same level as depreciation and amortization ® Further promote R&D activities in US for TIS and neurovascular business (billion yen) 44.0 3
Slide 23: Cash Flow
Cash Flow Operating CF Investing and Financing CF 7 +53.9 + 60.6 (billion yen) 92. Acquisi Sa Sequent Dividends Medical M2 capex 0.2 2.2 — Others - Corpo- | Issuance of Dep oe rate Tax nerease Straight Bond ay we a and Loans Amorti- Orking now vation Capital Payable 64.2 Income before Tax Cash atend
Slide 24: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion yen) Net Sales 1.4 1.4 0.5 Operating Income 0.0 -0.2 0.3 “TERUMO 24/25 24
Slide 25: IR Contact
IR Contact Terumo Corporation Corporate Communication (IR) Dept. E-mail: kouhou_terumo01@terumo.co.jp 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