Terumo : Q&A Session at the Financial Results for the Third Quarter of the Fiscal Year Ending March 31, 2026

Published February 16, 2026 at 10:22 a.m. UTC

Source: MarketScreener

Terumo Corporation February 16, 2026

Q&A Session at the Financial Results Briefing for the Third Quarter of FY25

Outlined below are the Q&As from the financial results briefing on February 13, 2025.

Motoya Kohtani: This is Kohtani from Mizuho Securities. On page 18, you were talking about the amortization of OrganOx. This says JPY 2.6 billion when you add the second half. I think at the Q2 earnings announcement, it was JPY 4 billion. If I look at the related costs in Q3, it becomes JPY 3.7 billion when adding them together, but I think you originally said these were supposed to become JPY 4.6 billion in the second half of the fiscal year. It appears that the amount has nearly doubled from the initial forecast.

I think the amortization of intangible assets for next year was also taken into consideration. I'm just looking at the evaluation of inventories changed, and the amortization cost seems to be slightly down from what was originally planned, when viewed over a long period. But it seems to me that expenses will swell slightly on a temporary basis this year and FY27?

Kojiro Otaka, General Manager of Corporate Planning Department, Terumo: As your understanding is correct, it was pre-PPA, and these amortization costs for the current fiscal year were expected to be JPY 4 billion. This had been shared provisionally, tentatively. For the final amortization and depreciation expenses, we used an external organization to reevaluate these. While we had previously made somewhat conservative estimates, the result of that external evaluation showed that they are below our initial expectations.

It says at the bottom of the page, the inventory step-up costs. Inventory acquired at the time of acquisition needs to be reevaluated at fair value under the IFRS rules. Now this is allocated across the inventory period, and there's no impact on cash flow, but on the P&L, they have to be recorded. They are expected to be JPY 4 billion this fiscal year and JPY 7 billion for next year.

Kohtani: In these two years, these temporary fees will occur. After that, there will be lower amortization costs. It will be getting closer to being in the black in terms of amortization? Otaka: Yes. We had expected the amortization of intangible assets to be JPY 9.5 billion, but it actually will be JPY 6.5 billion in terms of those amortization fees that came with the purchase of OrganOx. We expect that to be lower than previously predicted. Kohtani: Secondly, I just wanted to ask about the share of Rika. I think I heard previously that it probably will be about JPY 50 billion of the revenue. I think there were some supply chain issues and the delay in installation to CSL after that. But if we look at this now, I think it will be about JPY 30 to 40 billion in terms of the portion of revenue.

Delay in deploying Rika has had some effect, I think. This JPY 50 billion that you had previously predicted for Rika, why is that late to come online? Could you explain how you plan to achieve the original forecast?

Also, I think MAYUMI, a pulmonary embolism product, is also late in deployment. Could you just let me know on that front?

Otaka: For the revenues for Rika, we haven't disclosed those at present. As I explained last time, it has been extremely efficient in collecting plasma. As a result, it's lower than our initial assumption, but the deployment of Rika to all CSL centers has been completed in this fiscal year. We are currently improving the product and deploying promotions to increase customer and acquire customer take-up. There's nothing particular we can comment on at this time, but it is proceeding to plan steadily. In addition, it is relatively smaller in scale of customers, but we are expanding our promotions to them as well. We are looking forward to further developments in these initiatives.

As for the venous area, we continue to view this as one of our main growth pillars, and the development is proceeding as steadily.

Shinnosuke Tokumoto: This is Tokumoto speaking. My first question goes back to slide 12. About your projection on and beyond the next financial year. Can you just once again share any project that you are planning to implement for the next financial year?

I mean, passing the prices over to customers, you said that that will be implemented, but inflation is not going away. Can you talk about this? Are you taking a stronger stance than before? You also talked about profit improvements overseas. Can you share any other projects under consideration that you can share?

Otaka: Let me pick up your question about the price point and our initiatives overseas. Hagimoto, CFO, may jump in, if necessary.

First on the pricing point, we are just passing on the prices in line with the inflation, based on our contract durations. We will continue to do that as we've been doing already and go beyond next financial year. We are also getting some impact from customs. We are actually putting surcharge to absorb the impact of the tariffs. We will continue to work on those price initiatives beyond the next financial year.

You also asked about the restructuring overseas. We have written it in Q4 of the slide 18, where we are planning to have JPY 5 billion for project reduction, etc. This is a one-time cost in FY26,

and we are expecting the positive impact profitability to continue beyond FY26.

Jin Hagimoto, Chief Financial Officer, Terumo: Well, let me just add one comment. Within FY25, we are running several different projects, and we will also have some positive impact from pricing measures. We, of course, are managing that. The price programs, I cannot disclose any specific numbers, but market is undergoing inflation, and we are increasing prices based on this, if not higher than inflation. We will be passing on the prices because we are delivering added values. As a company, we are just looking at having more value added so that we can increase the prices faster than the inflation. We'll continue to do that.

On the other hand, there is kind of reduction or negatives like restructuring projects. These are the initiatives that we are running for this year, as well as last year, as one-time costs. But for our programs in FY26, the very final year of GS26, we have been taking actions since FY24 to make sure that there's not going to be a negative ripple effect into FY26. All those negatives that we need to deal with, we need to consume, including the one-time negative cost, we wanted to have them just done it and done it all within this fiscal year.

Tokumoto: I just want to clarify, about restructuring, JPY 5 billion in overseas. This is some number that we didn't see in Q2, but you just added as you have made the decisions to implement? Hagimoto: Well, we've been talking all through about the necessity to go through the restructuring, but we have more precise numbers. We decided to post it here. Tokumoto: I think you also mentioned about Leverkusen, Germany, but can you just share about what kind of approaches you are getting? There's going to be some time before the production lines go up running. After negotiation, what would be the timing in which you will be starting to recognize revenue from that plant? I think that's one of the assessment points for assessing value for your stock. Can you talk a little more about the recognition of the plant? Otaka: Well, we do have signed NDA with them. We are discussing with multiple different potential customers.

For PS business, as you can see on this slide, in this financial year, we just had mid-double-digit growth. This growth is substantially very good. We have been getting good reputation for products, quality, and stable supply reliability. For revenue, is that going to be profitable? We would like to share those perspectives and deliver those targets in the next mid-term plans.

Hidemaru Yamaguchi: This is Yamaguchi from Citigroup. When we look at Q3 alone, the gross profit ratio seems slightly down. But the biggest impact on this was from tariffs, rather than from

the product mix?

Otaka: Well, the acquisition of OrganOx has also had an impact. The weakening yen in Q3 has also had an impact as well. This has affected the gross profit ratio by one point. And also the tariffs, I think these three factors have been impacting the gross profit ratio. Yamaguchi: CFO was just talking about the one-off costs. You've already explained about OrganOx. Apart from that, as for these one-off costs in FY26, do you think there will not be any other significant one-off costs or one-off losses? Hagimoto: Yes, I think your understanding is largely correct. Of course, including the balance sheet, we have made all the necessary investments, and we believe that we can complete all of these measures within this fiscal year. In addition, we do want to roll out initiatives for improving profitability in certain businesses in this period. For FY26, as the final year of GS26, we hope to end in a clean manner. Tomoko Yoshihara: I'm Yoshihara from UBS Securities. I do want to ask a question about Rika. In H2, you were planning to do production adjustment, but the impact was not that big, if I understood correctly. But when we hear your customers' comments, it seems that the market is somewhat soft, and market share shifted quite a bit, giving the impression that it seems like you are also getting some headwinds. On that basis, you mentioned about production may be adjusted next year. I know this will be very difficult for you to make a comment about your customers, but can you share a little more detail about this Rika business and how you see it's going to go?

Also, you talked about the accretion of new customers. When this business has just started, you were looking into potentially very big customers who were not your customers back then. You just talked about approaching small to midsized customers. Did something change in terms of the target customer base? Can you talk about that, please?

Otaka: We will refrain from making any comments about what's presented by other companies. In the next financial year, we are not expecting a shrinking revenue from the Plasma Innovation business. We are expecting a very stable revenue source.

Your question about expansion of customer base, our approach to large-scale potential customers, nothing has changed. It will be incremental on top of it to expand our opportunities, working with small- to medium-sized customers as well.

Yoshihara: My second question is not directly related maybe to your financial performance, but your fundamentals, I think, is quite doing well. But you are also having some challenging time

over a recent year on your stock price. Can you share examples of contentious discussions you may be having within the top management team? If there's none, that's also fine. Because there could be an option for you to buy back some of your shares, can you just talk about that as an option?

Hagimoto: I will refrain from any comments about share buyback in this meeting.

But we are not happy with the stock price of today. That's how we see it also. Including OrganOx and Leverkusen, we wanted to send the message that people will hopefully be understanding that we are making investments for the better future. We will continue explaining this situation in the future as well.

The share prices are decided with many different factors. There is no single answer, no solution, one bullet to increase the share prices. But I think we can maybe send our message more clearly, loudly, so that we get to have a chance to explain why and what we are doing. This is actually a big topic within our top management meeting as well. While steadily delivering performance and achieving the target in GS26, we also need to do a good job communicating with the people in the marketplace.

Ryotaro Hayashi: This is Morgan Stanley, Hayashi. My first question is regarding TBCT. I believe that from your data, I have calculated that in Q3, apart from FX impact, the revenues are about 20% up. I think the Rika production adjustment has been taken into account in Q3. You were saying that you were able to manage that negative impact through your production lines. I just would like to hear some more details about what kind of actions, what kind of effect that's had on how are you going to absorb that drop in?

I think that you have already taken into account the production adjustments, and taking into account the earlier discussion on Reveos, I think revenues could go up possibly. Could you give me some color on that, please?

Otaka: First of all, in terms of revenues, Rika has contributed significantly to the increase in revenues. But there are also other elements, for other products such as Trima and Reveos, those are also having favorable sales. Particularly, we have secured a tender in Asia, which has contributed greatly to increased revenues.

The effect of those increased revenues and the production improvement, in terms of yield and improving production efficiencies, have led to higher operating profit margins that offset the impact of production adjustments.

Hayashi: But I think in your explanation in November, you were saying that the quality was too high. You were talking more about the business side, and I feel that's slightly different. There's a bit of a disparity with what you explained. What were your assumptions in November? This time

now, why is the negative impact on sales was smaller than expected? Has it to do with Rika?

Hagimoto: Let me add into that. You're referring to the consumables for the Rika business. Under our contract with the customer, we have agreed on inventory levels. If the net sales or the forecasts come down, then we don't need to produce beyond what is necessary. Thus, we would do some production adjustments.

This time, there were of course the actual distribution of the accumulation of inventories that brought down profits. But in terms of activities to increase productivity, we were able to bring the manufacturing costs down, that's why we didn't have such a big minus in our revenues this time.

Hayashi: The net sales for Rika disposables have gone to plan, and any negative impact on the margin has been brought down to a minimum. Is that correct? Hagimoto: Yes. Well, if we look at the PSI, we have adjusted production to keep the stock at a certain level. Overall, the structural impact has been absorbed as offset by our higher production efficiency and production adjustment. Hayashi: My second question has to do with OrganOx. Sales have already been recorded as a business that does not belong to the three Companies. In Q3, the JPY 2.9 billion sales, is that in line with your initial predictions? I think for the full year, JPY 9 billion is what you were predicting. In Q4, are you on target in terms of the pace for OrganOx's results? Otaka: We recorded sales over the two months of November and December. Compared to the previous year, it is a very high level of growth on a YoY basis. But what we were initially expecting in Q3, we have gone down compared to our prediction due to a slowdown in donors, available donors. But the demand remains extremely strong for OrganOx. I think the growth trend is on target. It was a slight depression in Q3 due to a lack of donors. Hayashi: In Q4, it will go back to the original trajectory. Is that what you're expecting? Otaka: Yes, that is our prediction. It will return to the expected trajectory for Q4. Tony Ren: I'm Tony Ren from Macquarie Capital Securities. My question is also about the OrganOx on slide number 10. Based on the data on this slide, I calculated that the revenue increased about 46%, but the adjusted operating profit increased by about 136%, so more than double. Did you do any cost improvement over there? Did you try to reduce any cost in manufacturing, SG&A, or R&D-related expenses there? Hagimoto: This is a result of OrganOx's organic growth. We did not do any specific approaches at this point in time. These were all activities that had already been planned by OrganOx prior to our acquisition.

What we do believe is that, as we mentioned earlier, OrganOx's business structure is a very highly profitable one. As the revenue grows, there is room for profit improvement. What we want to also materialize is that the overall capabilities that Terumo, as a group, has. By combining those kinds of skill sets or the manufacturing capabilities of OrganOx, some of the technologies that we have with Terumo, we do hope that we can also accelerate this kind of growth in our profitability.

Ren: It is a matter of growing the revenue base, and therefore, able to cover the fixed cost. Hagimoto: Yes, exactly. Ren: My second one, I just want to go back to the CSL, your customer CSL situation, right? I mean, obviously, we know that they had a lot of changes this week. Are you foreseeing any future impact because of the changes at your largest blood plasma customer in the US. Hagimoto: Obviously, we cannot comment on CSL's specific situation. But from our point of view, we do believe that the demand for Rika's disposables, our revenue stream, is not significantly impacted.

Our understanding is that we will continue to provide the Rika's disposables to CSL. There may be some discussions about the volume in the future. At this point in time, we do not see significant changes in our projections.

Takahiro Mori: Mori from Nomura Securities. There are two questions I'd like to confirm. First is regarding Rika in Littleton. The profitability and sales growth of Rika have changed, or may change compared with the initial assumptions of the growth trajectory. I would like to know whether we should be concerned about the possibility of asset impairment at the Littleton site. Otaka: There is no change to our projections, and at this point we are not expecting any asset impairment. Mori: Secondly, in your explanation, you talked about achieving GS26. You made several references to that. But what items need to be achieved for GS26? What are the criteria for achievement in order to fulfill GS26? Hagimoto: We have three financial targets. These were announced in December 2021, and the first of these is revenue growth in the high single-digit range. The second is the operating profit

margin of 20%, and the third is ROIC of 10%. This is, of course, excluding the impact of M&A, but for ROIC of 10%, we want to achieve that as another key pillar.

Our focus is not on achieving just one of these targets. All three of these financial targets need to be achieved for us to deem that GS26 has been achieved.

Mori: So, if I understand correctly, it does not mean that the targets are set within each separate segment, but rather, GS26 needs to be achieved across segments. Is that correct? Hagimoto: Yes. There will be some variations depending on the business segment, but we have all company-wide financial targets, as an overall, which need to be achieved for us to declare GS26 to be achieved. Naoko Saito: I'm Saito from JPMorgan Securities. I just wanted to talk about the slide on OP variance analysis. I wanted to ask some detailed questions on the gross margin/price. You talked about custom tariffs and pricing measures as a breakdown. But do the others include the impact from inflation that you discussed back in Q2? You talked about some COGS impact, negative impact because of inflation. I would say majority of the impact was coming from the M&A transaction. Just wanted to see if there are all those details included in this analysis. Otaka: COGS of acquisition-related amortization are treated as adjusted items. That's included in the difference between the JPY 59.1 billion and 43.9 billion on this slide. As such, it is not counted in Gross margin/Price, which is about the impact of the gross profit increase.

As for the gross margin impact, this is also getting impact of tariffs, pricing measures, inflation, and product mix. They are all encompassed within that.

Saito: You also mentioned product mix. Is there any specific business that you saw quite a big change in product mix? Especially for Life Care and Pharmaceutical Solutions, you are operating Japanese factories. Are the margin structures to change or not change? Can you just add a little more comment about those? Otaka: On your question about Life Care, there is not much of a big change on profitability structure.

For Pharmaceutical Solutions, the revenue is growing. As it goes up, we can just absorb fixed costs as a leverage. That would be the part in which we are seeing the positive impact.

Well, this might be somewhat detailed, but as the plasma business grows, this will have a significant positive impact on the G/P increment by sales increase. However, if you look at the business structure as a whole, that impact will be negative in terms of the gross margin ratio from a mix perspective. There's that kind of structural details.

Saito: Understood well. Thank you. [END]