Terumo Corporation · TSE:4543
Terumo — H1 FYE 3/2015 Earnings Presentation
26 slides from Terumo's earnings presentation, Nov 5, 2014
Slide 1: First Half FYE 3/2015 Results Overview
I, Kitabatake, will now give an overview of results from the first half of the financial period ending March 2015. 1
Slide 2: Results Highlights
First, the results highlights. The highlights for this first half included increased sales and profits, continuing the trend from the first quarter. Driving this was the Cardiac & Vascular Company, with double‐digit growth in overseas interventional systems and neurovascular products the main factor
Slide 3: Summary of Results
Now, the numbers: Sales increased 3% to 233.3 billion yen. Operating profit was 33 billion yen, an 8% increase over the previous period. Ordinary income increased 15% from the previous period, but this includes a positive 2.5 billion yen in foreign exchange effect. Net income was 12% increase. Becau
Slide 4: Operating Profit Waterfall
This slide is a waterfall chart showing the positive and negative factors that influenced operating profit. First, I will explain the negative factors: The factor labeled “prices” refers to the reimbursement price revision in Japan that occurred this year, of which many of you are aware. The other p
Slide 5: Sales by Region
Next is sales by region. The basic pattern of overseas regions making up for the Japan market remains the same as the previous quarter. Japan experienced a decrease of 4%, while overseas regions saw 8% growth. This resulted in overseas markets accounting for 62% of all sales. Now, by overseas region
Slide 6: Sales by Company
Now, sales by company: Companies with more overseas sales Cardiac & Vascular and Blood Management were positive, in part due to favorable exchange rates. General Hospital was negative. As the arrow in the circular graph shows, the percentage of sales from the Cardiac & Vascular Company increased to
Slide 7: Business Profit by Company
Next is business profit by company: Cardiac & Vascular and Blood Management were positive, while General Hospital was negative. Profitability remained at the same level as the previous year. I’ll now explain in more detail concerning each company. 7
Slide 8: Cardiac & Vascular Company
First, the Cardiac & Vascular Company: Sales totaled 108.9 billion yen, for growth of 8%. Business profit increased 7% to 21.5 billion yen. The aforementioned Japanese reimbursement price revision affected Cardiac & Vascular the most of any company, with a negative impact of 1.9 billion yen. However
Slide 9: General Hospital Company
Next is the General Hospital Company. Sales amounts were 78.4 billion yen; a 3% decrease from the previous period. Business profit was 9.6 billion yen, a decrease of 12%. In sales, the aforementioned consumption tax increase and market environment shifts had a 1.7‐billion‐yen negative impact. The co
Slide 10: Blood Management Company
Next, the Blood Management Company: This company has experienced a difficult market environment in Japan and abroad. Blood bags and other commodity‐type product sales have suffered. However, the company has achieved double‐digit growth overseas in therapeutic apheresis, while automated blood process
Slide 11: Products Launched in First Half FY2014
Here are the products that have been launched during the first half of FY2014. Ultimaster is listed at the top: It was launched in the first quarter in Europe, and then in Asia, Central and South America in the second quarter, and sales are growing well. 11
Slide 12: Second-Half Efforts
I’ll now outline some of our second‐half efforts. 12
Slide 13: Business-Led Management and Second-Half Sales Plans
As you have heard, we began a system of “Business‐led management” in April this year. The Th greatest effect ff we h have seen from f this hi change h h been has b i profit; in fi we have h seen large improvements in the ability to manage profitability, resulting in significant growth during this fi
Slide 14: Planned Second-Half Product Launches
We plan to launch these products in the second half. In particular, the new neurovascular products pictured here are highly innovative ones that we will initially launch overseas. 14
Slide 15: European Hospital Portfolio Transformation and Outlook
Finally, information we were unable to convey in our press release dated October 23 regarding the transformation of Hospital business portfolio in Europe: At the time of the release, we stated that up to 260 employees would be affected, but we were unable to explain the costs that would be associate
Slide 16: Reference
“~TERUMO Reference © Terumo Corporation 2014/11/5 16/26 16
Slide 17: 1H Net Sales and Growth by Region
1H Net Sales and Growth by Region (Billion yen) f Business Japan Outside of Japan G. Total Segment Subtotal | Europe |Americas| China Asia Cardiac & Vascular 23.5 (-3%) 85.4 (6%) 31.76%) 35.6 (8%) 8.3(-9%) 10.0 (15%) 108.9 (4%) Out of C&V Interventional 18.1 (-4%) 63.4 (7%) 25.0 (7%) 23.2 (11%) 7.7
Slide 18: SG&A Expenses
SG&A Expenses (Billion yen) Salaries & Wages Sie 33.9 +2.6 +8% Sales Promotion 7.0 7.6 +0.6 +8% Logistical Costs 54 ys} -0.1 -2% Depreciation & ‘Aporisation 10.9 11.9 +1.0 +8% Others 16.8 17.6 +0.8 +6% General 9 9 Administrative Total 71.4 (31.5%) 76.3(32.8%) +4.9 +7% R&D Expenses 15.3 (6.8%) 13.6 (
Slide 19: SG&A Expenses
SG&A Expenses (Billion yen) General 0 Administrative Total 3.7 3 +2.6 +4% R&D Expenses 15.6 13.6 -2.0 -13% SG&A Expenses 0 ie: 89.3 89.9 40.6 +1% * Value adjusted by excluding FX impact ~TERUMO © Terumo Corporation 2014/11/5 19/26 19
Slide 20: Quarterly Results
Quarterly Results Billion yen Net Sales 114.9 119.2 q22a1 114.9 118.4 Gross Profit 60.1 (62.3%) 61.5 (61.6%) 63.3 (51.9%) 60.7 (528%) 62.3 (62.6%) SG&A Expenses 43.0 (37.4%) 43.7 (36.7%) 46.3 (37.9%) 44.6 (38.8%) 45.4 (38.3%) Operating Income 47.1 (14.9%) 17.8 (14.9%) 17.0 (14.0%) 16.1 (14.0%) 16.9
Slide 21: Profit Ratio, SG&A Expenses Ratio
Profit Ratio, SG&A Expenses Ratio 52.3 516 51.9 528 52.6 ~ ee (%) Gross ———— - Margin SG&A 37.4 36.7 37.9 soil 38.3 Expenses ——— Ratio 14.9 14.9 14.0 14.0 14.3 Operating eh, Margin FY13 FY14 Q2 Q3 Q4 Q1 Q2 “TERUMO © Terumo Corporation 2014/1115 21/26 21
Slide 22: CAPEX, R&D Expenses
CAPEX, R&D Expenses (Billion yen) FY2014 1H Progress to Guidance Results guidance CAPEX 42.0 21.2 50% Depreciation & 9, reeled 41.0 19.6 48% R&D Expenses 31.0 13.6 44% Depreciation & Amortization: Including intangibles CAPEX: Acquisition basis ~TERUMO © Terumo Corporation 2014/11/5 22/26 22
Slide 23: Cash Flow
Cash Flow ®@Despite corporate tax burden in Q1, operating CF at end 1H recovered well (Billion yen) @CAPEX has progressed as planned @SB of 40 BUPY will be redeemed in March, 2015. Operating CF +27.7 ation & rate tax Aart and Increase zation others in working capital api ep Investing and Financing C
Slide 24: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (Billion yen/year) US$ EUR Net Sales 1.8 0.7 Operating eae 0.3 0.4 ~TERUMO © Terumo Corporation 2014/1115 24/26 24
Slide 25: Quarterly Average Exchange Rates Trend
Quarterly Average Exchange Rates Trend 140 120 100 80 “TERUMO EUR (FY2014) 138 ak 141 137 429 131 USD (FY2014) 102 104 <—_ > = R = 99 99 100 103 at Q2 Q3 Q4 © Terumo Corporation 2014/11/5 25/26 25
Slide 26: IR Contact
IR Contact Terumo Corporation Corporate Communication (IR) Dept. E-mail: kouhou_terumo01@terumo.co.jp research. 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