Terumo Corporation · TSE:4543
Terumo — H1 FY2023 Earnings Presentation
28 slides from Terumo's earnings presentation, Nov 14, 2023
Slide 1: Financial Results for the Second Quarter of Fiscal Year Ending March 31, 2024 (FY2023)
Financial Results for the Second Quarter of Fiscal Year Ending March 31, 2024 (FY2023) November 14, 2023 Naoki Muto Chief Accounting and Financial Officer Terumo Corporation Hello. I am the CAFO, Muto. I will explain our earnings results for the first half of the fiscal year ending March 31, 2024. 1
Slide 2: Forward-Looking Statements and Use of Document
Forward-Looking Statements and Use of Document 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 intended to be guarantees of future events or performanc
Slide 3: Highlights
Highlights Revenue Highest-ever result for a half C&V and TBCT grew in double digits to drive the Group overall Operating profit Highest-ever result for a half Profitability improvement (price policy and cost reduction) on schedule Shareholder return Will execute 20B JPY share repurchase this fiscal
Slide 4: P&L
P&L Revenue: Strong global demand continued; drivers TIS, blood center business, Vascular Graft grew in double digits Operating profit: One-time items and expected adjusted OP progress led to double-digit increase Change excluding 100M JPY FY22 Q2 YTD FY23 Q2 YTD Change FX impact FY22 Q2 FY23 Q2 Cha
Slide 5: OP Variance Analysis (Q2)
OP Variance Analysis (Q2): Less inflation impact, profitability improvement progress (100M JPY) Gross Price margin FX G/P increment by sales increase: G/P +18 SG&A R&D increase increase TIS, Neuro led the driver C&V increment Reimbur- by sement Gross margin: sales price Cost-reduction absorbed infla
Slide 6: Q2 YTD profit variance items progressing as planned
With these Q2 results, Q2 YTD profit variance items are each progressing as planned. The next slide explains this. 5
Slide 7: OP Variance Analysis (Q2 YTD)
OP Variance Analysis (Q2 YTD): As planned in all areas (100M JPY) G/P increment by sales increase: Drivers were C&V, TBCT Price Gross margin: +31 Absorbed some of inflation increase that began Gross G/P FX margin Reimbur- SG&A 2H last fiscal year through cost-reduction and increment R&D by sement in
Slide 8: Gross Margin: Substantial 2H improvement expected
Gross Margin: Substantial 2H improvement expected FY23 guidance OP variance analysis Quarterly breakdown by item Q1 Q2 Q3 Q4 Details, 2H expectation a Result Expectation • Improvement of all items (100M JPY) Gross Margin accelerates in 2H (5.8B JPY/Year) • Fall-off of temporary costs from Q4 of last
Slide 9: Gross margin improvement measures and second-half outlook
Freight contracts were previously executed separately in each region, but we will now consolidate them into global tenders. In the second half, we expect to see the positive effects of this. In profitability improvement measures, the effects of the Costa Rica production transfer are already appearin
Slide 10: Revenue by Region
Revenue by Region: Therapeutic devices strong in Americas, EU; Emerging drove high growth rate C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies, TIS: Interventional Systems, Neuro: Neurovascular FY23 Q2 YTD Revenue (100M JPY) Comments FY23 Q2 YTD YoY change
Slide 11: Revenue by region: tenders in Asia and China
during Q1, this eased in Q2 and revenue has recovered. Finally, regarding TIS Access product group purchasing: In September there was a joint tender held for 20 government ministries. The impact of this is expected to appear in the second half. In Asia, a tender in which the Blood and Cell Technolog
Slide 12: C&V: Americas, EU drove continuing strong sales
C&V: Americas, EU drove continuing strong sales; profit progress as planned (C&V: Cardiac and Vascular, TIS: Interventional Systems) （100M JPY） Q2 YTD Q2 YTD Q2 Comments YoY ( ) FX Neutral TIS: Double-digit growth outside Japan; EU and China 2,657 were drivers. Access products subject to volume- 2,3
Slide 13: TMCS: Increased sales and profit despite Nutrition divestiture
Increased sales and profit despite impact of Nutrition business divestiture, TMCS: return to normal of thermometers (TMCS: Medical Care Solutions) （100M JPY） Q2 YTD Q2 YTD Q2 Comments YoY ( ) FX Neutral 920 938 940 HCS In Japan: Sell-off of Nutrition business Hospital Care absorbed by reimbursement
Slide 14: TBCT: Strong blood center business drove large profit increase
TBCT: Strong blood center business drove large profit increase (TBCT: Blood and Cell Technologies) （100M JPY） Q2 YTD Q2 YTD Q2 Comments YoY ( ) FX Neutral 841 740 Blood Center Earlier timing of Asia tenders increased Solutions: sales. Whole blood collection product 582 sales strong in Latin America,
Slide 15: Reference
Reference ©TERUMO CORPORATION 12 / 11 12
Slide 16: Revenue by Segment and Region
Revenue by Segment and Region ©TERUMO CORPORATION 13 / 11
Slide 17: Quarterly Revenue Trend
Quarterly Revenue Trend FY23 Q2: +11% vs. FY22 Q2, +6% vs. FY23 Q1 (100M JPY) 2,500 2,000 1,500 TBCT TMCS 1,000 C&V 500 0 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 X Q1 Q2 Q3 Q4 Q5 ©TERUMO CORPORATION 14 / 11
Slide 18: Profitability Improvement Progress
Profitability Improvement Progress 1H progress 1H progress 1 Price policy 2 VC2 impact 12.0B JPY Q2 3.6B JPY Q2 2H 2H 2H 2H VC2: Group-wide production and SG&A cost-reduction project Reimbursement price revision 1H positive impact, along with Costa Rica transfer results cost reduction impact global
Slide 19: P&L (QoQ)
P&L (QoQ) (100M JPY) FY22 Q2 Q3 Q4 FY23 Q1 Q2 (Jul-Sep) (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) Revenue 2,060 2,147 2,022 2,153 2,286 Gross Profit 1,054 (51.1%) 1,114 (51.9%) 990 (49.0%) 1,098 (51.0%) 1,185 (51.8%) SG&A Expenses 605 (29.4%) 615 (28.6%) 597 (29.5%) 651 (30.2%) 664 (29.0%) R&D Expense
Slide 20: SG&A (QoQ)
SG&A (QoQ) (100M JPY) FY22 Q2 Q3 Q4 FY23 Q1 Q2 (Jul-Sep) (Oct-Dec) (Jan-Mar) (Apr-Jun) (Jul-Sep) Salaries & Wages 312 316 307 336 349 Sales Promotion 44 52 45 49 44 Logistical Costs 47 49 44 47 46 Depreciation and Amortization 59 60 58 58 61 Others 142 138 143 161 164 SG&A Expenses 605 615 597 651 6
Slide 21: SG&A (YoY)
SG&A (YoY) (100M JPY) YoY% FY22 Q2 FY23 Q2 YoY YoY% excluding FY22 Q2 FY23 Q2 YoY YoY% YTD YTD FX impact Salaries & Wages 610 685 75 12% 7% 312 349 37 12% Sales Promotion 90 93 3 3% -1% 44 44 -0 -0% Logistical Costs 91 94 2 2% -1% 47 46 -1 -0% Depreciation and 115 119 4 3% 0% 59 61 2 0% Amortization
Slide 22: Adjusted Operating Profit: Adjustment Items
Adjusted Operating Profit: Adjustment Items (100M JPY) FY22 Q2 FY23 Q2 FY22 Q2 FY23 Q2 YTD YTD Adjusted Operating Profit 704 756 345 411 Adjustment 1. Amortization of acquired intangible assets -95 -97 -49 -50 Adjustment 2. Non-recurring profit or loss -49 6 -40 8 Operating Profit 560 665 255 368 <G
Slide 23: CAPEX, Depreciation and Amortization, R&D Expenses
CAPEX, Depreciation and Amortization, R&D Expenses (100M JPY) FY23 Q2 FY23 FY20 FY21 FY22 YTD (100MGuidance JPY) CAPEX 772 692 758 327 800 Depreciation and Amortization 484 532 635 335 675 Amortization of 146 161 188 97 175 acquired intangible assets Others 338 371 447 238 500 CAPEX = Construction i
Slide 24: Cash Flows (Q2 YTD)
Cash Flows (Q2 YTD) Operating CF Investing & Financing CF +536 -536 (100M JPY) 226 368 Income taxes, etc. 270 Depreciation Working 664 and 327 capital 100 amortization gains and losses CAPEX 156 47 Redemption Profit of bonds before tax Dividends Others 1,873 1,873 Cash at the end CAPEX = Constructio
Slide 25: Cash Flows (Q2)
Cash Flows (Q2) Operating CF Investing & Financing CF +421 -149 (100M JPY) 51 188 82 Income taxes, etc. 191 Working 42 Depreciation capital 366 and gains and amortization losses CAPEX Others 156 Profit 1,873 before tax 1,601 Cash at the end CAPEX = Construction in progress record basis Cash at the e
Slide 26: FY23 Q2 YTD FX Impact Breakdown (Flow, Stock)
FY23 Q2 YTD FX Impact Breakdown (Flow, Stock) FX impact vs. FY22 Q2 YTD +2.5B JPY Flow +4.0B JPY: USD, EUR appreciation positive impact FY22 Q2 YTD FY23 Q2 YTD Rate (JPY) Variation Average Rate Average Rate USD 134 141 7 EUR 139 153 15 CNY 19.9 19.7 -0.1 Stock -1.5B JPY: FX impact from elimination o
Slide 27: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity Annual impact of 1 JPY depreciation (Flow) (100M JPY) USD EUR CNY Revenue 22 11 39 Adjusted Operating Profit 0 5 23 Impact of 1 JPY depreciation (Stock) USD EUR CNY Adjusted Operating Profit -2.5 -0.6 -2.0 ©TERUMO CORPORATION 24 / 11
Slide 28: Terumo
~“TERUMO 25