Terumo Corporation · TSE:4543
Terumo — FY2013 Earnings Presentation
29 slides from Terumo's earnings presentation, May 28, 2014
Slide 1: Overview of results for the period ending March 2014
I will give an overview of the results for the period ending March 2014.
Slide 2: Results highlights
First, the results highlights. A weaker yen led to increased sales and profit, but unfortunately, we missed our guidance significantly. We began securing a foothold toward improving our profitability. Those are the main highlights for the entire organization. Now for company highlights. In Cardiac &
Slide 3: Detailed results: net sales and operating income
I’ll now speak in more detail about the results. Net sales increased 16% to 467.4 billion yen. However, 49.8 billion yen of this number is due to the weaker yen, and as a result the actual growth was 4%. Operating income increased 23% to 65.3 billion yen, but again, 12.8 billion yen of this was due
Slide 4: Extraordinary income and loss
Regarding the extraordinary income and loss, we had a primary extraordinary income of 6 billion yen resulting from the settlement that we explained in the third quarter. The primary extraordinary loss was the result of impaired assets in unprofitable businesses: 7.6 billion yen in Cardiac & Vascular
Slide 5: Operating income waterfall
Our operating income went from 53.2 billion yen to 65.3 billion yen. I will explain the contributing factors using this waterfall graph. First, we had 12.8 billion yen in foreign exchange effect. There was also our 10.9 billion yen gross profit increment by sales increase, which was unfortunately ab
Slide 6: Results by company: sales
I will now explain results by company. Starting with this announcement, I will be adding to the overall results an explanation by company of sales and profit. First, company‐based sales. The figures in black are at actual foreign exchange rates: 6% for General Hospital; 24% for Cardiac & Vascular; a
Slide 7: Operating income by company
Next is operating income by company; here we show each company’s operating income excluding goodwill amortization, etc. The slide shows, from left, the results for FY2012, then FY2013, then year‐over‐year percentage change, followed by the percentage when foreign exchange is excluded. Without foreig
Slide 8: General Hospital results
I’d now like to explain for each company. For General Hospital, we had a 2% increase in sales, as shown on the right. Operating profit declined 16%, so we had a slight increase in sales and decrease in profit. Factors leading to this decrease in profit were delays in the expansion of new product and
Slide 9: Cardiac & Vascular results
Next is the Cardiac & Vascular company. Sales increased 7% and operating income increased 14%. We did have negative factors such as the TCVS quality system improvement work, but we were able to absorb them and achieve positive results. Interventional systems accounted for 3.2 billion yen in growth,
Slide 10: Blood Management results
Next, in Blood Management, we were able to expand business amid a difficult market environment to achieve 5% sales growth and 4% profit growth. Despite difficulties such as the patient blood management program and falling prices, we expanded business of high‐value‐added products such as the automate
Slide 11: Operating profit versus forecast
Next is our operating profit. Our forecast for FY2013 was 70 billion yen, and unfortunately we were unable to meet it, with the actual result at 65.3 billion yen. I’ll now explain the factors behind this result. In General Hospital, less sales than predicted in Japan and the delay in new product exp
Slide 12: Cash flow
Next is cash flow. On top of our cash balance of 78.2 billion yen at the end of FY2012, our income before tax, depreciation and amortization, and impairment loss brought our operating cash flow up by 96.3 billion yen. CAPEX, debt repayment, and dividends then brought this down by 78.9 billion yen. T
Slide 13: FY2014 forecast
Next is the FY2014 forecast, which assumes average exchange rates of 100 yen to the US dollar and 140 yen to the euro. We project 488 billion yen in sales, 64 billion yen in operating income, 62 billion yen in ordinary income, and 37.5 billion yen in net income. Year‐over‐year, we forecast a 4% incr
Slide 14: Factors behind FY2014 operating income forecast
Here are the factors behind the forecast of 64 billion yen from 65.3 billion yen in FY2013. We anticipate a weaker yen, which will result a 1.8 billion‐yen increase. We also project 15.4 billion yen gross profit increment by sales increase, in addition to increased productivity and lower costs, whic
Slide 15: Reference
@TERUMO Reference 2014/5/28 ©Terumo Corporation 15/29 15
Slide 16: Net Sales by Region
Net Sales by Region (billion yen) == FY2012 FY2013 (_) Excluding Foreign Exchange » Excluding Home Therapy Consolidated: +17% (+5%) * Japan Outside of Japan — +3% * +29% -— Europe oe 75.4 (+6%) (+3%) — Americas *26% 87.9 (+5%) ; | Ghina +38% 17.4 183.2 REIKO) 216.4 PAR) in (+13%) A 24.1 | Asia& §=4.
Slide 17: SG&A Expenses
SG&A Expenses (billion yen) General Administrative Total 142.2 146.6 4.4 +3% R&D Expenses 29.6 30.1 +0.5 +2% SG&A Expenses Total 171.8 176.7 +4.9 +3% * Value adjusted by excluding FX impact >Enhance sales force in Americas (Interventional Systems and Neurovascular Intervention) »R&D expenses: New pr
Slide 18: SG&A Expenses
SG&A Expenses (billion yen) Salaries & Wages 53:2 63.8 +10.6 +20% Sales Promotion 125 14.2 +1.7 +14% Logistical Costs 10.2 10.5 +0.3 +4% Depreciation & Awe 18.3 2210 +4.4 +25% Others 3t2 35.4 +4.2 +13% General fs 0 Administrative Total 125.4 (31.2%) 146.6 (31.4%) +21.2 +17% R&D Expenses 27.1 (6.7%)
Slide 19: FY2013: Net Sales and Growth by Region
FY2013: Net Sales and Growth by Region (billion yen) Business Outside of ers General 125.8 38.3 ee bee 15.9 164.1 Hospital (1%) (3%) (-3%) (- (- ss (12%) (2%) Cardiac & 49.5 161.1 59.0 65.4 19.0 17.7 210.6 Vascular (7%) (7%) (4%) (8%) (15%) (5%) (7%) ae 38.2 120.6 46.5 423 180 137 1587 Systems (9%)
Slide 20: Q4 Alone: Net Sales and Growth by Region
Q4 Alone: Net Sales and Growth by Region (billion yen) Business Outside of Japan G. Total ers General 30.1 10.0 3.7 22 0.4 3.8 40.2 Hospital (6%) (-1%) (2%) (-16%) (35%) (4%) (4%) Cardiac & 2a 43.9 15.9 diet 5.3 5.1) 56.7 Vascular (10%) (8%) (1%) (9%) (19%) (21%) (8%) Teen 97 33.4 12.6 11.9 54 38 43
Slide 21: Profit Ratio, SG&A Expenses Ratio (Excluding FX)
Profit Ratio, SG&A Expenses Ratio (Excluding FX) (%) 511 520 515 51.5 Gross 20 Margin SG&A 39.2 39.3 37.3 36.6 37.8 Sarto 14.7 14.9 13.7 11.8 Operating 9.7 Margin Q4 Qi Q2. Q3 4 FY12 -FY13 @TERUMO 2014/5/28 ©Terumo Corporation 21/29 21
Slide 22: Quarterly Results
Quarterly Results (eV Vab? || CHAGAS || @H IAs || CRTs (Jan-Mar) (Apr-Jun) (Jul-Sep) (Oct-Dec) Net Sales Gross Profit SG&A Expenses Operating Income Average Exchange Rate @TERUMO 106.5 O22 (49.0%) 41.6 (39.1%) 10.6 (9.9%) USD 92 yen EUR 122 yen 111.1 57.0 (51.3%) 43.7 (39.3%) 13.3 (12.0%) 99 yen 129
Slide 23: Profit Ratio, SG&A Expenses Ratio (Q Ave. Exchange Rate)
Profit Ratio, SG&A Expenses Ratio (Q Ave. Exchange Rate) (%) Gross oa ™ Y a Margin 9 [ 49.0 51.3] [523] [516] [519 SG&A — Expenses 39.1 39.3 37.4 36.7 37.9 Ratio 12.0 14.9 14.9 14.0 Operating Sl — = Margin Q4 Qi Q2 Q3 a4 FY2012 FY2013 @TERUMO’ 2014/5/28 ©Terumo Corporation 23/29 23
Slide 24: CAPEX, R&D Expenses
CAPEX, R&D Expenses (billion yen) FY2013 FY2013 FY2014 YoY Guidance Result Guidance CAPEX 50.0 46.6 (93%) 42.0 4.6 Depreciation & Naor eanen 37.0 39.9 (108%) 41.0 +14 R&D Expenses 30.0 30.1 (100%) 31.0 +0.9 %: Progress to guidance Depreciation & Amortization: Including intangibles CAPEX: Acquisition
Slide 25: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion yen / year) Net Sales 1.8 0.7 Operating income 0.3 0.4 @TERUMO 2014/5/28 ©Terumo Corporation 25/29 25
Slide 26: Changes of Quarterly Average Exchange Rates
Changes of Quarterly Average Exchange Rates 141 JPY 137 ‘ 129 1) a> 130 _ 122 EUR (FY2013) A =a 105 a 0 403 _- — ~ EUR (FY2012) E —_—— a =—— + —a~ USD a ps 90 ——~ Bass PA ----- + USD (FY2012) 81 5 80 79 Q1 Q2 Q3 Q4 @TERUMO 2014/5/28 ©Terumo Corporation 26/29 26
Slide 27: Progress in FY2013 New Product Pipeline
Progress in FY2013 New Product Pipeline Business Region Business Product Stent (above the knee) JP Automated blood component EU aH processing system (PRP method) Balloon (below the knee) FY14 Automated blood component Ey Stent (below the knee) Sy processing system (BC method) Coil assist stent China
Slide 28: New Product Pipeline in FY2014
New Product Pipeline in FY2014 Balloon (above the knee) Peripheral Balloon (below the knee) Neuro Coil assist stent New DES (developed in house) Coronary New PTCA balloon Renal sympathetic i RSD) Ablation denervation system (RSD) RSD for TRI technique @TERUMO JP, US US EU EU Asia, LatinA Asia, Latin
Slide 29: 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