Terumo Corporation · TSE:4543
Terumo — H1 FY2013 Earnings Presentation
31 slides from Terumo's earnings presentation, Nov 6, 2013
Slide 1: Second quarter and first half FY ending March 2014 results
I will now explain the results from the 2nd quarter and first half of fiscal year ending March, 2014.
Slide 2: First half results highlights
First, let me go over the highlights from the first half results. Due to factors including the weak yen, we achieved our sales and profit goals for the first half and saw profitability improvement over the previous quarter as well. By segment, our Interventional Systems business in Europe and U.S.,
Slide 3: Financial results
Here are our financial results. The yen has gotten weaker compared to last year, and the first half average rate was 99 yen to the dollar and 130 yen to the euro. This weak yen helped spur our sales to 226 billion yen, or an 18% increase from the previous period. This sales figure includes a 27.1 bi
Slide 4: Growth by business segment and region
This chart shows growth by business segment and region. Parentheses indicate the growth rate, excluding currency exchange and the home therapy business that was transferred out of the portfolio in February. In General Hospital, the commissioned portion of our domestic Drug & Device business and our
Slide 5: SG&A expenses
I will now explain the status of SG&A expenses. SG&A increased 20%, but only 5% when currency exchange is excluded. General administrative expenses were focused on strengthening sales force in the Europe Interventional Systems and neuro endovascular businesses. We continue to spend R&D funds on proa
Slide 6: Operating income variance analysis
I will now share our operating income variance analysis. Our profit was affected positively by the 8.1 billion yen in currency exchange, and increased sales. Negative factors included expenses incurred in launching new products and depreciation of newly introduced manufacturing equipment. These fact
Slide 7: Revenue trends for the past four quarters
I will now explain revenue trends for the four quarters of the past year. We can report good numbers, and we look forward to continuing improvement in profitability as set forth in our mid-term plan. 7
Slide 8: Gross profit and operating margin trends
As this graph shows, we have achieved steady improvement in our gross profit and operating margins, even when excluding the effects of currency exchange. 8
Slide 9: Results compared with first half projections
Here are our achievements in comparison to our projections for the first half. We had the tail wind of currency exchange, but our results were more or less what we originally projected. 9
Slide 10: Operating cash flow
Next, I will speak about our operating cash flow. We were able to achieve an operating cash flow of 37.6 billion yen thanks to an increase in profit before taxes and a partial corporate tax refund that resulted from the reorganization of US subsidiaries. We balanced the distribution of this cash flo
Slide 11: Efforts in the first and second halves
Now I will explain our efforts in the first and second halves. 11
Slide 12: Interventional Systems: IVUS performance
In the Interventional Systems business, the domestically sold intravascular ultrasound IVUS performed well with sales of 2.8 billion yen, and grew to a 30% market share. The new IVUS catheter launched in May enables observation of lesions that were previously inaccessible, and will more broadly supp
Slide 13: Peripheral intervention: Attendant Delta occlusion balloon
In peripheral intervention for the abdominal area, we began sales of our occlusion balloon Attendant Delta, which is capable of delivering chemo treatment directly to cancer-affected areas of the liver. The balloon profile has been designed to be smaller and thereby increases accessibility. It has a
Slide 14: Blood Management business growth drivers
In our Blood Management business, two products drove the 6% growth we experienced in the first half. First was our automated blood processing system. We offer a whole blood automated processing system that contributes to more efficient work at blood centers and consistent blood preparations quality.
Slide 15: Launch status of mid-term plan pipeline products
I will now touch on the launch status of pipeline products included in our mid- term plan. The chart on this slide lists the pipeline products from our mid-term plan which were scheduled for launch this period. We launched all products on time, just as in the first quarter. 15
Slide 16: Glidesheath slender
The Glidesheath slender is a TRI sheath. Sheaths which are inserted from the wrist of course need to have a narrow outer diameter; this product has been further slimmed down. The inner diameter remains the same, though. This means we are able to provide gentler care to elderly and female patients wh
Slide 17: Efforts planned for the second half
I will now explain the efforts we plan for the second half. In order to achieve our goals for the next period and our mid-term plan, we will continue to launch new pipeline products as well as enhanced existing ones, while also expanding the number of countries and regions where we sell. Our first-h
Slide 18: Pipeline products scheduled for second half launch
This shows pipeline products scheduled for launch in the second half. In the Interventional Systems, we plan to expand our neuro intervention field product. We will also launch the needleless line, which is one of our solution in the “total safety” initiative for the General Hospital segment. 18
Slide 19: Hiryu Plus
Hiryu Plus has been just launched this month. It features a three-layer balloon construction that maintains pressure resistance while improving flexibility. We have also made improvements to the shaft structure to give the overall system more maneuverability. We believe this product will breathe new
Slide 20: Closing remarks and exchange rate assumptions
Through these and other efforts, we have been able to achieve our initial plan for revenue. We ask for your continued support. In currency exchange, we maintain 95 yen to the dollar and 123 yen to the euro for the second half. This concludes my remarks for the second quarter and first half of the ye
Slide 21: Reference
Reference 2013/11/6 CTenme Comerston 24/31 | 21
Slide 22: Net Sales by Region
Net Sales by Region Consolidated: +19% (+5%)* a Japan Outside of Japan — +3% * +33% (+6%) 90.0*Ick) 100.2 KYA) (billion of yen) Le! 1H 1H FY2012 FY2013 (_) Excluding Foreign Exchange « Excluding Home Therapy +33% 34.4 (+3%) +31% 41.4 (+5%) ; 8.0 Ch +39% m2 (411%) J 11.2 —— Europe — Americas Asia & +
Slide 23: Net Sales by Business Segment
Net Sales by Business Segment (billion of yen) +7% | +25% 1H ~~. (+2%) (+6%) FY2012 —- FY2013 (_) Excluding Foreign Exchange * Excluding Home Therapy +28% . (+6%) 75.6 Bey 34.3 Ce General Cardiac & Blood Hospital Vascular Management @TERUMO 2018/11/6 Terumo Corporation 23/31 23
Slide 24: Q2 FY2013 Net Sales and Growth by Region
Q2 FY2013 Net Sales and Growth by Region (billion of yen) Business Japan Outside of G. Total Segment Japan Total Europe | Americas | China Asia & Others 2.8 2.3 0.3 4.2 General 32.0 9.7 d : L . 41.7 Hospital (2%) (3%) (12%) (2%) (8%) (20%) (2%) Cardiac & 12.0 38.6 13.8 16.1 46 4.2 50.6 Vascular (8%)
Slide 25: Gross Profit Variance Analysis
Gross Profit Variance Analysis (%) Lowered 05 - plant Price —60.3— productivity erosion Device FX taxin US Effect of temporary factors 52.4% occurred in 51 8% 1H Mar. 2013 (inventory re- evaluation, etc) 1H 1H FY2012 FY2013 <Reference> Q1 Results 53.9% +1.8 -2.2 -0.4 -0.3 -1.5 51.3% @TERUMO ee 2013/
Slide 26: SG&A Expenses
SG&A Expenses Salaries & Wages Sales Promotion Logistical Costs Depreciation & Amortization Others (billion of yen) 1H FY2012 1H FY2013 YoY YoY % 25.4 31.3 45.9 +23% 5.7 7.0 +13 +24% 5.0 5.4 +04 +8% 8.6 10.9 +2.3° +27% 15.2 16.8 +1.6 +10% General Administrative Total 59.9 (31.2%) 71.4 (815%) +115 +1
Slide 27: Gross Profit, SG&A Expenses, Operating Income
Gross Profit, SG&A Expenses, Operating Income (%) Gross ——___ Profit (s09] [509] [490] [513] [523 } —__.—___*___ *"——+ SG&A Expenses (376 | {370} [391] [393] {37.4 | Operating 9.9 [12.0 | meme? (8) Q2 Q3 Q4 Q1 Q2 FY2012 FY2013 @TERU MO eee 2018/11/68 __@Terumo Corporation 27/31 27
Slide 28: CAPEX, R&D Expenses
CAPEX, R&D Expenses FY2012 FY2013 1H FY2013 Result Forecast Result CAPEX"t Depreciation & Amortization’? 32.6 R&D Expenses 27.1 *1 CAPEX: acquisition basis *2 Including intangibles (billion of yen) 25.2 (56%) 37.0 18.9 (51%) 30.0 15.3 (51%) %: Progress to forecast @TERUMO 2013/11/6 ©Terumo Corporati
Slide 29: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion of yen / year) Net Sales 1.8 0.7 Operating Income 0.3 be @TERUMO ___eco 2018/11/6 __ @Terumo Corporation 29/31 29
Slide 30: Changes of Quarterly Average Exchange Rates
Changes of Quarterly Average Exchange Rates JPY 429 131 130 a 122 EUR (FY2013) oc a 10 10 103 98 = — EUR (FY2012) 90 99 99 a US$ (FY2013) L--7 92 , —----r i~ _suss$ (FY2012) 81 80 70 79 Q1 Q2 Q3 Q4 @TERUMO ec 2019/11/8 _GTerumo Corporation —30/31_| 30
Slide 31: 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