Terumo Corporation · TSE:4543
Terumo — Q3 FY2013 Earnings Presentation
26 slides from Terumo's earnings presentation, Feb 4, 2014
Slide 1: FY2013 Third-Quarter Results
I would like to explain the results from FY2013 third-quarter.
Slide 2: Highlights from the third quarter results
First, let me go over the highlights from the third quarter results. First, our overall company results: We achieved both increased sales and profit, partially due to favorable currency conversion with a weaker yen. However, progress on growing our operating income was slightly slower than the forec
Slide 3: Overall results
Now I will explain the overall results. The yen has weakened compared to the previous year, with the average rate up to the 3rd quarter at 99 yen to the dollar and 132 yen to the euro. This currency tailwind contributed to 17% growth in sales year on year, for 345.3 billion yen. This revenue number
Slide 4: Sales and growth by business segment and region
This chart shows sales and growth by business segment and region. The growth shown inside parentheses excludes foreign exchange impact and the home therapy business that was transferred in February 2013. Please look at the growth rate shown on the bottom right. As I explained on the previous slide,
Slide 5: SG&A expenses
Now I will explain SG&A expenses. This slide shows results without foreign exchange. General administrative expenses increased 2% over the same period of the previous year and R&D expenses increased 4%, for a total growth of 3%. We were thus able to control SG&A expenses to keep it within our sales
Slide 6: Operating income variance analysis
Here is the operating income variance analysis. Foreign exchange accounted for an increase of 10.4 billion yen, and increased sales had a 5.6 billion yen positive impact on gross profit. The increase in costs due to new product launches and the depreciation of new equipment were negative factors. As
Slide 7: Quarterly profit movement
This shows quarterly profit movement over the past year. We have made steady improvement since the 4th quarter of last fiscal year. The 3rd quarter result is a slight improvement over the 2nd quarter, with 17.8 billion yen, though it shows a slower rate of growth. 7
Slide 8: Profit margin improvement excluding foreign exchange
I will now explain the progress of profit margin improvement, excluding foreign exchange. Gross margin improved steadily in the first and second quarters, but lost 0.5 points in the third with the impact of slowing domestic sales in General Hospital. However, because we succeeded in controlling expe
Slide 9: Progress compared to forecast
I will now speak about our progress compared to forecast. Sales are at 75% of forecast, and therefore just about on schedule. Operating income is slightly behind at 69%. In the fourth quarter, however, Smart Pumps and other ME products in General Hospital will see an expansion in sales prior to the
Slide 10: Operating cash flow
Operating cash flow remains essentially as projected. There is no change in our policy of properly balancing growth investment, debt repayment, and dividends. 10
Slide 11: Progress of pipeline product launches
I’ll now speak about company efforts. First, the progress of pipeline product launches from the mid‐term plan. In the third quarter, in Cardiac & Vascular, we launched the new PTCA balloon “Hiryu Plus” in Japan. In Blood Management, we also released the data management system “TOMEs” in Europe. Furt
Slide 12: Ultimaster drug-eluting stent
New drug‐eluting stent “Ultimaster” received the CE mark in Europe. In Europe, Central and South America, and Asia, we will begin launching in June. Our goal for the product is 15 billion yen in sales globally in fiscal year 2016. “Ultimaster”, like “Nobori”, employs a bioresorbable polymer and ablu
Slide 13: Neurovascular intervention new products
New products in neurovascular intervention have led to greatly expanded sales. First, the “Scepter” occlusion balloon that was launched in the first half in Japan: It has accounted for 10 million dollars globally as of the third quarter, and has expanded its world share to an estimated 30%. The coil
Slide 14: Results forecast for this period
Now for our results forecast for this period. We project average foreign exchange rates of 102 yen to the dollar and 139 yen to the euro in the fourth quarter. We will adjust our annual projected rate to 100 yen to the dollar, and 134 yen to the euro. However, there is no change to our projections o
Slide 15: Stock split announcement
Here is the final slide. At a meeting of our Board of Directors held February 4, it was decided to conduct a stock split. The purpose of this is to reduce the per‐share price, thereby facilitating access to investors and improving stock liquidity. This will also fulfill the Tokyo Stock Exchange’s re
Slide 16: Reference
Reference @TERUMO ce 2014/2/4 Terumo | 16
Slide 17: Net Sales by Region
Net Sales by Region (billion of yen) Consolidated: +18% (+4%) * = Q3 YTD Q3 YTD FY2012 FY2013 ( ) Excluding Foreign Exchange * Excluding Home Therapy Japan Outside of Japan —>4 +2% * +32% r— Europe +33% we) (45% (+3%) I— Americas 91% 2) (+5%) 139.7 (2 153.7 Ae china +39% 12.5 (+10%) 17.3 Asia& +39%
Slide 18: Net Sales by Business Segment
Net Sales by Business Segment (billion of yen) +59 +269 = 5% 26% Q3YTD Q3YTD (+1%) (+6%) FY2012 - FY2013 (_) Excluding Foreign Exchange » Excluding Home Therapy +26% (+4%) * 117.5 Bee) Si I/ General Cardiac & Blood Hospital Vascular Management @TERUMO aw 2014/2/4_OTerumo Corporation 18/26 18
Slide 19: Q3 Alone: Net Sales and Growth by Region
Q3 Alone: Net Sales and Growth by Region (billion of yen) Business Janan Outside of G. Total Segment P Japan Total Americas China Asia & Others 22 0.3 4.2 General 32.9 9.8 3.1 : ; ‘ 42.7 Hospital (- 5%) (8%) (6%) — (-2%) (8%) (16%) (- 3%) Cardiac & 12.6 40.5 15.0 16.2 4.9 44 53.1 Vascular (8%) (7%)
Slide 20: Gross Margin Variance Analysis
Gross Margin Variance Analysis (%) 2042 ‘ant Price 0.3 — productivity erosion Device —0.5— F. taxinUS Effect of temporary fact 51.9% eesti; 51.7% Q3YTD, FY12 (inventory re- evaluation, etc) Q3 YTD Q3 YTD FY2012 FY2013 <Reference> 1H Results 52.4% +2.2 -1.1 -0.5 -0.3 -0.9 51.8% @TERUMO a 2014/2/4 Ter
Slide 21: SG&A Expenses
SG&A Expenses (billion of yen) Q3 YTD Q3 YTD : Salaries & Wages 38.8 47.2 +8.4 +422% Sales Promotion 9.0 10.6 +16 +19% Logistical Costs 7.6 8.1 +0:5 +6% Depreciation & Amortization 1312 16.7 are} ts) +26% Others 22.9 25.4 425 +11% General Administrative Total 91.5 (31.0%) 108.0 (31.2%) +16.5 +18% R&
Slide 22: Gross Margin, SG&A Expenses Ratio, Operating Margin
Gross Margin, SG&A Expenses Ratio, Operating Margin ee (%) Gross Sp emg a _ Maram 50.9] [490] {51.3 52.3 51.6 | SG&A Expenses Ratio 37.0 39.1 39.3 37.4 36.7 Operating Sa ee Margin 13.9 12.0 14.9 14.9 Q3 Q4 a1 Q2 Q3 FY2012 FY2013 @TERUMO ce 2014/2/4 Terumo Corporation 22/26. |
Slide 23: CAPEX, R&D Expenses
CAPEX, R&D Expenses (billion of yen) FY2013 Q3 YTD, FY2013 Forecast Result CAPEX 45.0>50.0° 40.4 (81%) D iation & Arodeeion 37.0 29.3 (79%) R&D Expenses 30.0 22.4 (75%) * Advanced Yamaguchi factory 5 billion JPY investment originally planned in FY14 %: Progress to forecast CAPEX: acquisition basis D
Slide 24: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity (billion of yen / year) Net Sales 1.8 0.7 Operating income 0.3 0.4 @TERUMO cee 2014/2/4 _OTerumo Corporation 24/26 24
Slide 25: Changes of Quarterly Average Exchange Rates
Changes of Quarterly Average Exchange Rates JPY 137 129 131 —A 130 —— 122 EUR (FY2013) A 105 wt 110 103 7 EUR (FY2012) 5 = 98 —: a. J — yy gg US$ (FY2013) 100 a 90 99 ser (CR a a----"- nal US$ (FY2012) 10 80 79 cl Ql Q2 Q3 Q4 @TERUMO ce 2014/2/4 Terumo Corporation _—-25/26. | 25
Slide 26: IR Contact
/R 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