Terumo Corporation · TSE:4543
Terumo — FY2014 Earnings Presentation
28 slides from Terumo's earnings presentation, May 2015
Slide 1: Financial results for the period ending March 2015
I will now give an overview explanation of the financial results for the period ending March 2015. 1
Slide 2: Results highlights
First, the results highlights: There are two for the Group as a whole. The first is that despite it being a year for reimbursement price cuts in Japan, we were able to absorb this negative impact and increase both our revenue and income, and achieve our highest-ever operating income. The next highli
Slide 3: Consolidated results overview
First, sales were 489.5 billion yen, for a 5% year-over-year increase. Gross profit was 256.1 billion yen, for a 6% year-over-year increase. Gross profit percentage also moved from 51.8% to 52.3%, an improvement of half a percentage point. Operating income was 67.5 billion yen, a 3% year-over-year i
Slide 4: Operating income variance analysis
Next is the operating income variance analysis. We start on the left of the graph with a positive foreign exchange impact of 2.8 billion yen. Next is an increase in gross profit due to increased sales volume. Next was product mix improvement, meaning a larger proportion of high-profitability product
Slide 5: R&D expenses
I now will give some detail on R&D expenses. R&D expenses went down 0.7 billi yen, ffrom 30 billion 30.1 1 billi billion yen iin FY13 tto 29 29.4 4 billi billion yen iin FY14 FY14. Th The biggest factor behind this was that the 0.9 billion yen used in FY13 for the DuraHeart development was reduced t
Slide 6: Sales by region
Next is sales by region. The trend was largely uniform throughout this past fiscal year: Japan reimbursement price revisions led to negative sales growth, and double-digit growth overseas absorbed the domestic impact to result in 5% sales growth. Therefore, at the end of FY14, 63% of Terumo Group sa
Slide 7: Sales by business segment
I will now explain sales by business segment. Here, the trend has not changed from previously; Cardiac & Vascular continues to drive growth for the group. Cardiac & Vascular increased sales 10% and Blood Management increased sales 4%. General Hospital, which has its business centered in Japan, saw a
Slide 8: Profit by business segment
Next is profit by business segment. To put it simply, Cardiac & Vascular drove profit growth, while General Hospital and Blood Management were at the same level as the previous year. I’ll now speak about each company individually. 8
Slide 9: Cardiac & Vascular Company
First, in Cardiac & Vascular, we saw a 10% year-over-year increase in sales and a 8% increase in business p profit. Overseas IS business and neurovascular intervention p products were large g drivers of sales growth. These have shown solid growth in the past few years, and we expect them to continue
Slide 10: General Hospital Company
Next, the General Hospital Company. The first two factors listed here as affecting sales were explained in our meeting regarding the first half last year by Hiroshi Matsumura, the head of the General Hospital Company. As is written here, these factors were market conditions, and they primarily affec
Slide 11: Blood Management Company
Next is the Blood Management Company. Here, the regions of Latin America and Asia, and the product lines of therapeutic apheresis and cell expansion systems have driven growth. Market conditions have remained very harsh, however, as price pressure is expected to continue this fiscal year. I will exp
Slide 12: New product pipeline FY14
Here is the new product pipeline for FY14, with the most prominent being Ultimaster, which had a successful launch. 12
Slide 13: FY14 guidance vs actual results
Next is a comparison of our FY14 guidance and actual results. For each of the items shown here—Net sales, Operating Income, Ordinary Income, and Net Income—we exceeded guidance. As I mentioned earlier, our initial net income guidance was 37.5 billion, and then we revised that down to 33.5 billion, b
Slide 14: FY15 guidance
Now for the FY15 guidance. First, our assumed average foreign exchange rates: We are assuming 120 yen to the dollar dollar, up from last year’s assumed rate of 100 yen. For the euro, 130 yen to the euro, down from 140 yen last year. With these assumed foreign exchange rates, our sales guidance is 52
Slide 15: FY15 new product pipeline
Now I will speak about the FY15 new product pipeline. The most prominent product this year will be the Ultimaster, this time because of its launch in Japan, which is expected to increase sales in Japan. 15
Slide 16: Impact of foreign currencies
This slide explains the impacts of currencies other than the U.S. dollar or euro. Previously, we discussed the effects of foreign exchange only in terms of the U.S. U S dollar and euro, euro but recently, we have seen greater fluctuations in other currencies. This has clouded our ability to predict
Slide 17: ROE
This is the final slide. ROE is a subject of much recent discussion. Terumo’s ROE as shown on the balance sheet was 7 7.3% 3% in FY13 FY13, and 77.2% 2% in FY14 FY14, but we have included two other important factors here on this graph. First is the one written on top, the influence of goodwill amort
Slide 18: Reference
“TERUMO Reference © Terumo Corporation 2015/5/8 18/28 18
Slide 19: FY2014 Net Sales and Growth by Region
FY2014 Net Sales and Growth by Region (Billion yen) i Outside of Japan Business Japan i se : ] G. Total Segment Subtotal | Europe |Americas} China Cardiac & 48.32%) 180.9(6%) 65.6 (6%) 75.2(6%) 18.98%) 21.2 (11%) 229.2 (4% Vaeeular -3(2%) 180.9 (6%) 65.6 (6%) 75.2 (6%) 18.9(-8%) 21.2 (11%) 229.2 (4%
Slide 20: SG&A Expenses
SG&A Expenses (Billion yen) Salaries & Wages 63.8 70.5 +6.7 +10% Sales Promotion 14.2 16.0 +1.8 +12% Logistical Costs 10.5 11.0 +0.5 +5% Depreciation & morieation 227 25.1 +2.4 +10% Others 35.4 36.6 le +4% General 9, aministrativer otal 146.6 (31.4%) 159.2 (325%) +126 +9% R&D Expenses 30.1 (6.4%) 29
Slide 21: SG&A Expenses (FX adjusted)
SG&A Expenses (Billion yen) General 9 Administrative Total 154.3 159.2 4.9 +3% R&D Expenses Biles 29.4 -2.0 -~6% SG&A Expenses 0 aaa 185.6 188.6 43.0 +2% * Value adjusted by excluding FX impact ~TERUMO © Terumo Corporation 2015/5/8 21/28 21
Slide 22: Quarterly Results
Quarterly Results (Billion yen) | Q4 Q1 FY14 Q2 Q3 | Q4 |_ (Jan-Mar Apr-Jun Jul-Sep Oct-Dec (Jan-Mar Net Sales 12251 114.9 118.4 129.9 126.3 Gross Profit 63.3(51.9%) 60.7 (52.8%) 62.3(52.6%) 67.8(52.2%) 65.4(51.7%) SG&A Expenses 38.6(31.6%) 37.9(33.0%) 38.5(32.5%) 40.5(31.2%) 42.4(33.5%) R&D Expense
Slide 23: Non-operating Income & Expenses, Extraordinary Gains & Losses, Income Taxes
Non-operating Income & Expenses, Extraordinary Gains & Losses, Income Taxes (Billion yen) Operating Income Non-operating Income & Expenses Exchange rates End of Mar. 2014 End of Mar. 2015 Difference -1.5 +3.2 FXgaininFY2014 +6.6 US$ 102.9 120.2 (+17.3) EUR 141.7 130.3 (-11.4) Transformation of produ
Slide 24: CAPEX, R&D Expenses
CAPEX, R&D Expenses Py2014 FY2015 Guidance Result Guidance CAPEX 42.0 41.4 (99%) 42.0 Depreciation & 41.0 40.7 (99%) 45.0 Amortization * R&D Expenses SLO 29.4 (95%) 35.0 (Billion yen) YoY +0.6 +4.3 +5.6 Depreciation & Amortization: Including intangibles CAPEX: Acquisition basis (%): against guidance
Slide 25: Cash Flow
Cash Flow @Financed 100 BJPY by CB, invested 50 BJPY in short-term financial asset ®@Despite corporate tax burden, operating CF recovered well @SB of 40 BJPY was redeemed in March, 2015. The share repurchase of 3 BUPY was conducted Operating CF Investing and Financing CF (Billion +73.1 aco: 0: l he
Slide 26: Foreign Exchange Sensitivity
Foreign Exchange Sensitivity FY2014 (Billion yen) Net Sales 1.8 0.8 Operating Income 0.3 0.4 FY2015 (Billion yen) Net Sales 1.8 0.7 Operating Income 0.1 0.2 ~TERUMO © Terumo Corporation 2015/5/8 26/28 26
Slide 27: Quarterly Average Exchange Rates Trend
Quarterly Average Exchange Rates Trend Jey SUR 143 a0 140 138 141 FY2013 SS Se. 131 129 119 120 uss 1I8 FY2014 102 104 _ eT FY2013 99 99 100 80 ey Q2 Q3 a4 ~TERUMO © Terumo Corporation 2015/5/8 27/28 27
Slide 28: 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