FinancialFii lR
Resultsl ffor theh Fi
First Q
Quarter off
Fiscal Year Ending March 31,
31 2017 (FY2016)
Terumo Corporation
Managing Executive Officer
Investor Relations, Corporate Communication Dept.
Kazuaki Kitabatake
Augustg 4,, 2016

Overview: Achieved 10% Growth in Operating Income despite FX Impact(billion yen)

Net Sales
Gross Profit
SG&A expenses
R&D Expenses

Operating Income(Excl. Amortization)

Ordinary Income
Net Income
Average Exchange Rate

FY2015 Q1

FY2016 Q1

YoY%

128.7
69.0 (53.7%)
41 7 (32.5%)
41.7(32 5%)
7.9 ( 6.1%)
19 4 (15.1%)
19.4(15 1%)
24.5 (19.1%)
20.6 (16.0%)
14.5 (11.3%)

124.5
69.8 (56.0%)
40 3 (32.3%)
40.3(32 3%)
8.1 ( 6.5%)
21 4 (17.2%)
21.4(17 2%)
25.9 (20.8%)
15.1 (12.1%)
10.1 ( 8.1%)‐3%+1%‐3%3%+3%+10%+6%‐27%‐30%

USD 121 yen
EUR 134 yen

108 yen
122 yen

YoY%(Excl. FX)+5%+11%+6%+10%+22%+17%

 Sales: Excluding FX, both Japan and overseas sales increased. TIS especially drove the growth.
pg income: Double digit
g growthgdriven byy the sales expansion
pof TIS products
pand lowered cost for Operating
TCVS quality system improvement
 Ordinary income: Posted FX loss of 5.5 BJPY in FY16Q1, while posted gain of 1.8 BJPY in FY15Q1
 Net income: 4% of increase, excluding non‐operating loss by FX impact© Terumo Corporation

2015/8/4

2/24

Extraordinary Gains & Losses, Income Taxes(billion yen)
FY2015Q1

FY2016Q1FX

FY15Q1FY16Q1+1.8+18‐5.5

Non‐operating Income and loss

1.1‐6.2O diOrdinaryIncomeI20 620.6

15 115.1

Extraordinary
Gains & Losses+0 0+0.0‐0.000

Income before Income Tax

20.6

15.1

YoY%: ‐27%

Income Taxes Total
Tax Rate (%)

6.1
30%

5.033%In FY15Q1, lowered tax
burden ratio due tothe period adjustment

Net Income

14.5

10.1

YoY%: ‐30%

Y Y% ‐27%
YoY%:27%© Terumo Corporation

2015/8/4

3/24

Operating Income Variance Analysis(billion yen)

0.6
08
0.8

Price
1.4
erosionJP
2.4
3.9(FY15Q1:
reimburse‐2.1)
0.8
ment
G/P
SG&Arevision increase Increasepimprove‐
off R&D
4.7 ment by
due tocost
sales force
reduction,
pexpansion
G/P/etc
in US TIS
increment
and neuro‐
by salesvasculariincrease
divisions,Enterprisetax
O off profit
Outfi iimprovement,
4 BJPY attributes to the marketing activities
Businessmix
improve‐ment© Terumo Corporation

23
2.3
FX

2015/8/4

4/24

Profit Improvement through Marketing Activities Cardiac and Vascular: Increase profit by Ultimaster sales expansion+1.5 BJPY Improve profitability by the sales shifting from Nobori to Ultimaster sold at apremium price Europe: Focus on highly profitable market

 Cardiac and Vascular: Increase profit by sales expansion for access devices+0.9 BJPY North America: Shift from conventional access devices to TRI specified ones
 Europe: Focus on highly profitable access devices

 General Hospital: Promote profit‐driven management+0.4 BJPY Asia, Latin America: Raise selling price for low profitable products (syringes, etc)
 Japan, Asia: Shift sales toward value added products (infusion pumps, etc)
© Terumo Corporation

2015/8/4

5/24

Operating Income Variance Analysis
Cardiac andVascular

1.910.2

GeneralHospital

0.1BloodManagement(billion yen)

0.4

Increase Decrease
1.80.6in SG&A in G/P Increasein SG&A Decrease
IIncreasein G/Pin SG&A

1.0Others

2.3FX

G/Pincrement© Terumo Corporation

2015/8/4

6/24

Net Sales by Region
Net Sales
100%＝124.5 BJPY

FY16 Q1
FY15 Q1

Year‐on‐Year Sales Comparison
pbillion yen

YoY%Comments( ) Excl. FX

37%Japan3%

Europe‐4%(7%)

20%
Americas26%

7%
10%‐8%(5%)‐6%China(10%)

Asia andOthers‐7%(7%)

Despite the impact of reimbursement pricecut in Japan, TIS and neurovascular drove anoverall growth
DoubleDbl digit
di it growthth forf Cardiac
C di andd Vascular,Vlespecially in TIS and neurovascular.
Downsizing low profit businesses in General
Hospital
TRI and other access devices drove thedouble digit growth in Cardiac and Vascular.
Price declines in Blood Management
Cardiac and Vascular company made adouble digit growth mainly in TIS
products through increasing customer
products,
coverage with newly realigned local
distribution network
Maintained a steady growth both Cardiac
and Vascular, and General Hospital© Terumo Corporation

2015/8/4

7/24Net Sales by Business Segment
FY16 Q1
FY15 Q1

Net Sales
100%＝124.5 BJPY

Year‐on‐Year Sales Comparison
pbillion yen

YoY%( ) Excl. FX

51%

Cardiac andVascular1%
(12%)

‐3%

GeneralH i lHospital

(0%)

Blood
Management

‐14%

31%

18%

(‐3%)

Comments
Global sales of coronary therapeutic
devices and access devices drove
overall growth.
In Japan, achieved double digit
growth despite the impact ofprice cut
reimbursement p
Downsizing low profit businesses in
EU and Latin America. Maintaining
steady momentum in Asia. In Japan,sales of infusion systems (pumps andinfusion lines) grew
Price declines for Blood Center
products mainly in US© Terumo Corporation

2015/8/4

8/24

Cardiac and : Double Digit Growth in Profit despite the Negative Impact of FX
and Reimbursement Price Cut in Japan
Vascular(billion yen)
FY2015Q1Q

FY2016
Q1
Q

YoY%

Major Topics

Impact( ) Excl. FX

63.2

63.7

1%

Sales

(12%)

19.5
14.1

38%

BusinessBi
Profit(60%)
(22%)

(31%)

Negative impact of FX‐6.9

Japan: Sales of coronary therapeuticdevices ggrew despite
p the negativegimpact of reimbursement price cut+1.5

Overseas: Coronary therapeutic devices
and access devices grew at double digit+ 5.9

Increase in business profit due to global
expansion of highly profitable coronary
therapeutichd
devices andd access ddevices.
Continuous efforts to reduce production costs
Lowered cost for improvement on quality
system in TCVS
© Terumo Corporation

2015/8/4

9/24

Maintain Steady Profitability despite Decrease in Sales Due toGeneral : Reimbursement
Price Cut in Japan and Downsizing of Low Profit
Hospital Businesses(billion yen)
FY2015
Q1FY2016
Q1YoY%( ) Excl. FX

39.538.4Sales‐3%(0%)

Major Topics

Impact‐1.2

Negative Impact of FX
Overseas: Downsizing of low profit
businesses in EU and Latin America
IV catheter needles drove the sales
growth in Asia

‐0.4+0.404

Japan: Increase of sales in infusion system +0.5(pumps and infusion lines)
Reimbursement price cut and transfer of‐0.6
g for contrast agentsgdistribution rights

BusinessProfit

5.6(14%)5.2‐7%(‐6%)

Despite an increase in pension cost due to thelowering interest rate and negative impact ofinventory valuation, profitability remained inmildly upward trend(14%)© Terumo Corporation

2015/8/4

10/24

Blood: Decrease Both in Sales and Profit Due to Negative Impact
Management of FX and Price Decline Overseas(billi yen))(billionFY2015
Q1

FY2016Q1

YoY%

Major Topics

Impact( ) Excl. FX

Sales

‐2
2.8
8

Price declines for Blood Centerproducts mainly in US

‐0.6

‐14%
26 026.0

Business
ProfitNegative impact of FX

22 4
22.4

‐50%

5.4
2.7(21%)

( 3%)
(‐3%)

((‐42%)
42%)

In addition to the decrease in G/P caused bythe factors above, start‐up cost for newffactoryin Vietnam andd increase in R&D also
llowered business profit(12%)© Terumo Corporation

2015/8/4

11/24

Major Topics
Issued 30 BJPY of straight bond at the lowest interest rate ever (Apr)Vascutek won Queen’s Award for Enterprise in the Innovation category (May)

Corporate

Exhibited “Heart Sheet” at Ise‐Shima Summit (May)Announcement on the acquisition of U.S.‐based Sequent Medical for new
neurovascular aneurysm embolization device technology (Jun)Launched a regenerative medicine product “HeartSheet” in Japan (May)Business FDA lifted all shipping restrictions at TCVS (Jun) Adhesion barrier “Adspray” obtains domestic approval for the first time inspray type adhesion barrier in Japan (Jun)

12/24New Products Pipeline in FY2016
Category

ProductsRegion

LaunchDES (Ultimaster)◎★ France

LaunchedDES (Ultimaster)
4 0mm (Diameter)
4.0mm

◎★

JPIVUS◎★

JPCategory

ProductsRegion

Disposable Centrifugal Pump
(for PCPS)

CV

Asia

Coronary

Imaging

PTA Balloon(Below the knee, RX/OTW)

JP・US・ Launched inEU
JP&US

PTA Balloon
Peripheral (Below & abovethe knee, RX/OTW)
PTA balloon(Above the knee, RX/OTW)

NeuroDistal protection device

Oncology

Radioembolization beads(Quirem)

RegenerativeHeartSheetMedicine★

JP

Intradermal Injection Device★

JPAdhesion barrier★

JPLaunched

D&D

JP・US・ Launched inEU
JP&USDM

Blood glucose meter(MEDISAFE Fit Smile)

China

JP・US・ Launched in
EU
JP,US&EU

Blood
Automated blood componentp★
Management processing system

JPEU

★

EU◎ ItemIwithi h large
lcontribution
ib i to sales
l andd profitfi★ Item with highly innovative technology

Threebrands
Thb d offUltimasternew PTA balloons(France)(JP, US, EU)

HeartSheet (JP)13/24

Impact of FX onto Sales and Operating Income
Fluctuation of FX (yen)Currency
Q2Q3

Impact onOperatingIncome

If JPY
Appreciated100‐9.898+1.6
16

If JPY
Appreciated
110

‐8.1

‐4.7

If JPY
Appreciated
14 8
14.8

‐2.5

‐1.1

‐5.5‐3.3‐25.925 9‐7.575Q4FY16Guidance
110

USD

FY16Guidance
125

EUR

FY16Guidance
17.0

CNY
OthersFY16Guidance
3.1(Asia,(Ai L.
L America,
Aietc.)

e.g. Thai Baht

T lTotal

Impact onSales

FY15Q1～FY16 Guidance
FY15Q1(billion yen)

If JPY
Appreciates
2.8Additi
Additionall impact
it on theth currentt FY16 guidanceid

14/24

Impact of FX in FY2016: Non‐operating FX Losses andTerumo’s Countermeasures Non‐operating FX losses due to JPY Appreciation (‐5.5 BJPY)
 USD

End of FY15: 113.0 JPY → End of FY16Q1: 103.0 JPY‐4.6 BJPY CNY

End of FY15: 17.4 JPY → End of FY16Q1: 15.5 JPY‐0.5 BJPY EUR

E d off FY15:End
FY15 128.0
128 0 JPY → End
E d off FY16Q1:FY16Q1 114
114.00 JPY‐0.3
0 3 BJPY For other currencies, the impact of FX is limited.

 Decrease USD based asset (End of FY15: 600 MUSD → 90 MUSD) Decreased USD based cash on hand through the acquisition of Sequent Medical (Jul) Streamlined the payment terms among the internal group (Q1)
p y financingg to capitalp injection
j(Q1)
(Q )
 Switched from intercompany→Given 100 JPY/USD and 110 JPY/EUR at the end of FY16Q2,
0 9 BJPY off additional
0.9dditil non‐operating
ti FX llosses tto bbe expectedt d15/24

The Acqusition of Sequent Medical, Inc.
The “WEB” New Neurovascular
AAneurysm EEmbolizationb li i SSystem

 Impact on FY16 Guidance (tentative)(billion yen)

ImpactpSales+ 0.8

Operating Income‐ 3.6

N t Income
NetI

‐ 4.3
43

Purchasing price: 40 BJPY at maximum

Consolidation to be in Aug. FY16

A new technology to change the market

Currently in process of PPA

 Mid‐term potential sales: 10 BJPY

16/24

R fReference

17/24

FY16Q1 Net Sales and Growth by Region(billi yen))(billionBusinessSegmentJapan

Cardiac andVascularOutside of Japan

G. Total

Subtotal Europe Americas

ChinaAsia

12.8(+13%)

50.9(+11%)

16.7(+10%)

21.4(+11%)

6.8(+13%)6.0(+16%)63.7(+12%)

Out of C&V
Interventionall
Systems*

9.9(+17%)40.9(+13%)

13.6(+11%)

15.9(+14%)

6.4(+12%)

5.0(+17%)50.8(+14%)

GeneralHospital

30.1
(‐0%)

8.3(+2%)2.1(‐10%)

1.8(+3%)0.5(+5%)4.0(+8%)38.4(+0%)

BloodManagement

2.525(‐0%)

19.9
199(‐3%)6.0
60(+5%)

9.7
97(‐6%)

1.1
11(‐3%)

3.1
31(‐9%)

22.4
224(‐3%)

G. Total

45.5
455(+3%)

79.1
791(+6%)

24.7
247(+7%)32.9
329(+5%)8.484(+10%)

13.0
130(+7%)124.51245(+5%)*I l di Neurovascular*Including
Nl businessb i(Y Y%) Excluding(YoY%):
E l di fforeigni exchange
h18/24

Operating Expenses(billion yen)YoY%

FY2015 Q1

FY2016 Q1

YoY

YoY%

Salaries & Wages

19.1

18.1

‐1.0

‐ 5%+5%

S l Promotion
Salesi41
4.1

38
3.8

‐0.303‐ 6%+3%
3%

Logistical Costs

2.8

2.8+0.0+ 0%+5%

Depreciation &Amortization

6.96.2‐0.7‐10%+0%Others

8.89.4+0.6+ 5%+13%

SG&A Expenses Total

41.7 (32.5%)

40.3 (32.3%)‐1.4‐ 3%+6%

R&D Expenses

7.9 (6.1%)

8.1 (6.5%)+0.2+3%+10%

Operating Expenses Total

49.6 (38.6%)

48.4 (38.8%)‐1.2‐ 2%+6%(Excl FX)(Excl.

(%) Against net sales
19/24

Quarterly Results(billion yen)
FY15 Q1(Apr‐Jun)

Q2(Jul‐Sep)

Q3(Oct‐Dec)

Q4(Jan‐Mar)FY16Q1(Apr‐Jun)

Net Sales

128.7

130.5

136.8

129.0

124.5

Gross Profit

69.0 (53.7%)

70.4 (53.9%)

75.3 (55.0%)

70.3 (54.4%)

69.8 (56.0%)

SG&A Expenses

41.7 (32.5%)

42.7 (32.7%)

42.9 (31.3%)

42.8 (33.1%)

40.3 (32.3%)

R&D Expensesp

7.9 ( 6.1%))

8.0 ((6.1%))

7.4 ((5.4%))

9.9 ((7.7%))

8.1 ((6.5%))

Operating Income

19.4 (15.1%)

19.7 (15.1%)

25.0 (18.3%)

17.6 (13.6%)

21.4 (17.2%)(Excl. Amortization)

24.5 (19.1%)

24.8 (19.0%)

30.1 (22.0%)

22.5 (17.4%)

25.9 (20.8%)

Average

USD

121 yen

122 yen

121 yen

115 yen108 yenExchange Rate

EUR

134 yen136 yen

133 yen

127 yen

122 yen

20/24

CAPEX and R&D Expenses(billion Yen)

Amortizationof Intangibles
and Goodwill

CAPEX was peakedout in FY2013
16.3

17.7

18.5

20.2

4.6
23.6

23.0

CAPEX

Depreciation

24.5

6.1

25.5

CAPEX is projected
to be at the samelevel as depreciation
and amortization

CAPEX: CIP basis

 Further promote R&D
activities for TIS andneurovascularbusiness in US

21/24

Cash Flow
Operating CF+10.4

Investing and Financing CF+ 6.9(billion yen)

7.3
Dividends

8.1
10.7

15.1

149.7*

IncomebeforeTax

Corpo‐C
7.3
Depreci‐ rate Tax
ation &Amorti‐
Increasezation
inWorking
Capital

30.0

6.1
CAPEX

Issuance ofStraight Bond

9.7
Others

167.0*Cash at end * Cash at end of fiscal year is consistent with “Cash and deposits” on B/S. Cash at endof Jun. 2016
of Mar. 201622/24

Foreign Exchange Sensitivity(billion yen)

USD

EUR

E l A
Excl.
Amortizationi i
I l Amortization
Incl.
Ai i

Net Sales

141.4

14
1.4050.5

Operating Income

0.0

‐0.2

0.3

23/24

IR ContactTerumo CorporationpCorporate Communication (IR) Dept.
E‐mail: kouhou_terumo01@terumo.co.jp
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 thetime and are not intended to be guarantees of future events or performance. Accordingly, it
should be noted that actual results may differ from those forecasts on projections due to variousfactors. Factors affecting to actual results include, but are not limited to, changes in economic
conditions surrounding Terumo,
Terumo fluctuations of foreign exchange rates
rates, and state of competitioncompetition.
The market share information in this presentation is partly derived from our own independent
research.
h24/24