Terumo Corporation · TSE:4543
Terumo — Q3 FY2015 Earnings Presentation
23 slides from Terumo's earnings presentation, February 2016
Slide 1: Third quarter results, fiscal year ending March 2016
I will now explain the results for the third quarter of the fiscal year ending March 2016. 1
Slide 2: Results overview
First, please refer to page 2, which contains the results overview. We maintained good results l iin the h fi first and d second d quarters, and d the h third hi d quarter was a goodd result l as well. ll As of the end of the third quarter, the year-to-date revenue, operating income, ordinary income
Slide 3: Ordinary income and net income
In ordinary income, we saw a smaller rate of growth, at 4%, and this was due to foreign exchange h rate iimpact. IIn the h third hi d quarter off 2014 2014, we posted d FX gain i off 8 8.1 1 billi billion yen. This fiscal year, we posted a 2.4-billion-yen FX loss, or a total swing of over 10 billion
Slide 4: Operating income variance factors
I will now discuss operating income. Similar to the second quarter result, the growth of gross profit fi through h h revenue expansioni was the h llargest contributing ib i ffactor. IImprovement of gross profit also increased through cost reduction. There were three main factors behind cost reductio
Slide 5: Operating income variance by company
This shows our operating income variance by company. We created this to illustrate how the h current T Terumo strategy iis playing l i out. Cardiac & Vascular is the company that drives our growth, and is expanding its gross profit significantly. We are investing resources in a way that supports thi
Slide 6: Foreign exchange impact
Next, regarding foreign exchange: The yen depreciated against the dollar but appreciated i d against i the h euro. IIn emergingi country currencies, i the h yen d depreciated i d against the yuan but appreciated against currencies of Latin America. This uneven currency situation has made it difficul
Slide 7: Revenue by region
Next, revenue by region. The patterns we saw in the first and second quarters remain unchanged, h d though h h JJapan saw a smallll iincrease. R Regions i outside id JJapan grew iin d double- bl digits. Europe was negative, due to the effects of business portfolio transformation and foreign exchange
Slide 8: Revenue by company
Next, revenue by company. This, too, remains generally unchanged from the first two quarters. Cardiac C di & V Vascular l grew even more, reaching hi a 10% growth h rate. From slide nine onward, I will give an overview of each company. 8
Slide 9: Cardiac & Vascular Company
I will now discuss the individual companies. The Cardiac & Vascular Company saw large increases in revenue, business profit, and business profitability. Growth continued in revenue especially, with Interventional Systems products outside Japan and Neurovascular products in North America serving as d
Slide 10: General Hospital Company
Next, about the General Hospital Company: Revenue declined slightly in Europe due to the h bbusiness i portfolio f li transformation f i we undertook d k there, h which hi h lled d to greatly l iimproved d profitability but virtually flat revenue growth. This focus led to improvement of operating pr
Slide 11: Blood Management Company
The decline in prices that we mentioned at the beginning of the fiscal year was more or l less completed l dd during i the h third hi d quarter, so we will ill see the h ffullll effects ff off those h llower prices during the fourth quarter. However, sales of automated blood component collection and
Slide 12: Other topics
Now, for other topics. In the third quarter we revised our interim dividend, and then period-end dividend forecast, form 16 yen to 19 yen. In November we established the Terumo Corporate Governance Guideline. We also had three products receive the Good Design Award. Our new drug-eluting stent, Ultim
Slide 13: FY15 new product pipeline
Next, I will discuss our FY15 new product pipeline. Ultimaster, the biggest contributor f from the h pipeline, i li llaunched h d iin JJapan one month h earlier li than h expected.d 13
Slide 14: Revised year-end guidance
Another item is that we have adjusted our year end guidance, with a press release today. As you may know, we revised our guidance upward in September, but kept guidance numbers for the second half unchanged at that time. Now, we have revised our guidance further upward to reflect the third quarter r
Slide 15: Share repurchase and ROE
Finally, regarding the repurchase of our own shares, which was announced today. Between February 5th and March 31st, we plan to repurchase 50 billion yen worth of our own stock. The purpose of this is to improve capital efficiency, and we have discussed this matter internally under our Corporate Gov
Slide 16: Reference
“TERUMO Reference 16/23 16
Slide 17: FY15 Q3YTD Net Sales and Growth by Region
FY15 Q3YTD Net Sales and Growth by Region (Billion yen) i Outside of Japan oes Japan 1 : F . : G. Total Segment | Subtotal | Europe |Americas| China Asia Cardiac & Wereaatlr: 37.8 (+5%) 155.5(+12%) 49.6 (+4%) 67.1(+11%) 20.5(+41%) 18.3(+12%) 193.2(+10%) Out of C&V Interventional 29.0 (+5%) 122.8(+15
Slide 18: Operating Expenses
Operating Expenses (Billion yen) FY14 FY15 YoY % Salaries & Wages 62.4 57.5 +5.4 +10% +5% Sales Promotion 11.6 12.6 +1.0 +9% +5% Logistical Costs 8.2 8.3 +0.1 +1% -0% Dente sta % 18.4 21.0 426 414% — +4% Amortization Others 26.6 27.8 +1.2 +5% +1% SG&A Expenses Total 116.9 (32.1%) 127.2 (32.1%) +10.3
Slide 19: Quarterly Results
Quarterly Results (Billion yen) | FY14.Q3 Q4 | FY15Q1 | Q2 Q3 (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Net Sales 129.9 126.3 128.7 130.5 136.8 Gross Profit 67.8 (52.2%) 65.4 (51.7%) 69.0 (637%) 70.4 (53.9%) 75.3 (55.0%) SG&A Expenses 40.5 (31.2%) 42.4 (33.5%) 41.7 (325%) 42.7 (327%) 42.9 (3
Slide 20: CAPEX, R&D Expenses
CAPEX, R&D Expenses (Billion yen) FY2015 FY15 Q3YTD Progress to Guidance Result Guidance CAPEX 29.0 21.3 73% Rrorcatene 45.0 33.2 74% R&D Expenses 35.0 23'S) 67% Depreciation & Amortization: Including intangibles CAPE: Acquisition basis <Downward revision in FY15 CAPEX guidance to 29 BUPY from 36 BU
Slide 21: Cash Flow
Cash Flow Operating CF Investing and Financing CF (Billion yen) +51.6 -44.8 I| | Depreci- — Corpo- S255 ation& sale tax Amorti- and Increase zation others in working Ww capital and CAPEX _ Sale of oth ive, «ACE ers Rivest sion ot ae own = securities shares ovidend SE Others Income before 136.5 129.7
Slide 22: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (Billion yen) Net Sales 1.8 0.7 Operating Income 0.1 0.2 = For US$, sales expansion in U.S. drove higher FX sensitivity at sales. However, the increase in overseas production ratio since acquisition of CaridianBCT resulted in less impact of yen depreciation against US$ a
Slide 23: 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