Financial Results for the Third Quarter ofFiscal Year Ending March 31, 2017 (FY2016)
Terumo Corporation
Managing Executive Officer
Investor Relations, Corporate Communication Dept.
Kazuaki Kitabatake
February 9, 2017

Achieving Growth in Net Sales and Operating Income Excl. FX Impact

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

Operating Income(Excl. Amortization)

Ordinary Income
Net Income
Average Exchange Rate

FY15 Q3 YTD

FY16 Q3 YTD

396.0
214.6 (54.2%)
127.2 (32.1%)
23.3 ( 5.9%)
64.1 (16.2%)
79.4 (20.1%)
61.0 (15.4%)
43.5 (11.0%)

374.4
205.3 (54.8%)
121.9 (32.6%)
24.5 ( 6.5%)
58.9 (15.7%)
73.1 (19.5%)
52.2 (13.9%)
31.8 ( 8.5%)

USD 122 yen
EUR 134 yen

107 yen
118 yen(billion yen)
YoY%
YoY%(FXN)-5%-4%-4%+5%-8%-8%-14%-27%+4%+6%+5%+13%+4%+4%Sales: W/ FXN, overseas Cardiac and Vascular Company achieved a double digit growth, driving theoverall groupOperating income: Gross margin improvement by sales expansion of highly profitable products andthe reduced cost of the quality system improvement in Cardiac and Vascular Company
Ordinary income: Decreased FX loss down to 3.7 BJPY.
Net income: Extraordinary loss realized due to termination of co-development w/ ART in France
2/25

Extraordinary Gains & Losses, Income Taxes(billion yen)
FY15
FY16
Q3 YTD Q3 YTD
Operating Income

64.1

58.9

YoY%: -8%Non-operating
Income and loss

-3.1-6.7

FX
FY15
FY161H-2.4-6.6

Q30.0+2.9

Q3YTD-2.4-3.7

Ordinary Income

61.052.2

YoY%: -14%

Extraordinary
Gains & Losses+4.3-7.6

FY15 Sale of land in Hatagaya+4.4
FY16 Termination of co-development w/ ART -7.0

Income before
Income Tax

65.3

44.6

YoY%: -32%

Income Taxes Total
Tax Rate (%)

-21.8
33%

-12.8
29%

Tax effect due to past loss of valuation for
Olympus’s stocks Terumo owns

Net Income

43.5

31.8

YoY%: -27%
3/25

Operating Income Variance Analysis
3.5

4.4

7.8

Businessmix
Priceimprove- Erosion
ment(3.6)

G/P
improve12.3
ment bycost
reduction,
64.1
etc
G/P
incrementby salesincrease

FY15Q3Q3YTD
FY15YTD(billion yen)

4.9

3.1
JP
Reimburse- SG&A Increase
68.5
ment increase of R&D
Revision due to(4.2) sales force
expansionin US TIS
and neurovasculardivisions

8.0
1.6

FX AcquisitionRelatedcost

FY16 Q3Q3YTD
FY16YTD

58.9

FY16
YTD
FY16Q3
Q3YTD

Excl. FX and Acquisitionrelated cost
4/25

Net Sales by Region
Net Sales

FY16Q3YTD
FY15Q3YTD

Year-on-Year Sales Comparison
billion yen

100%＝374.4 BJPY

YoY%

Comments( ) FXN

38%

139.6

Japan

140.4
68.3

Europe

7%
11%

China
Asia andOthers(3%)

98.9Americas
26%-11%

76.4

18%

108.7
25.3
26.0

-1%-9%(5%)

44.4Good momentum remained steadily in Cardiac andVascular Company (+7%). Continuous expansion ofB2B business in global D&D. Downsizing low
profitable accounts for general hospital products
Cardiac and Vascular Company continuously
maintained good momentum (+10%).
Price decline for blood center products in BloodManagement Company-2%

Achieved double digit growth in TIS along withneurovascular, CV, and vascular graft fromCardiac and Vascular Company-5%

General Hospital Company maintained good
momentum mainly in IV catheter needles.
Cardiac and Vascular Company achieved
continuous double digit growth driven by TIS

(17%)

42.2

Continuous good momentum in Neurovascularand infusion system. Reimbursement price cut.
Ended positive YoY impact from sales of newcoronary therapeutic device

(9%)

5/25

Net Sales by Business Segment
FY16Q3YTD
FY15Q3YTD

Net Sales

Year-on-Year Sales Comparison
billion yen

100%＝374.4 BJPY

YoY%

Comments( ) FXN

51%
50%

31%
32%

18%
18%

186.6

Cardiac andVascularGeneral
Hospital
BloodManagement

193.2

119.0
122.8

68.7
80.0

-3%

(8%)

-3%(0%)

-14%
(-2%)

Overseas TIS and global neurovascularachieved a double digit growth, driving
overall company growth
Continued downsizing low profitableaccounts in EU and Latin Americas.
In Japan, steady growth in infusion
system offset the negative impact ofended distribution for contrast agents
Most of negative YoY impact of pricedecline for blood center products in
US ended in Q3. Negative impact ofstagnant macro economy in Russia
and the Middle East countries
6/26

Cardiac and : Demonstrate Steady Performance While Having an Impact
from Acquisition-Related CostsVascular(billion yen)

FY15
Q3YTD

FY16Q3YTD

YoY%

Major Topics

Impact( ) FXN

193.2
1932

Negative Impact of FX

186.6
1866

-3%

Sales

(8%)

JPN: Reimbursement price cut. Ended positive
YoY impact from launch of new coronary- 0.4
therapeutic device in FY15Q3. Continuous
double digit growth in neurovascular
Overseas: TIS and neurovascular achieved adouble digit growth. CV and vascular graft
maintained good momentum as well

47.8

47.5

-1%

BusinessProfit

(20%)
(25%)

- 23.0+16.7

Highly profitable access devices along with coronary
therapeutic devices drove overall growth
Impact of Misago recall as well as acquisitionof Sequent Medical-2.5(25%)
7/25General : Maintain Upward Trend in Profitability
Hospital
FY15Q3YTD

FY16Q3YTD

YoY%(billion yen)

Major Topics

Impact( ) FXN

Negative Impact of FX
122.8
1228

119.0
1190

Sales-3%(0%)

Overseas: Downsizing low profitable accounts - 1.0
in EU and Latin Americas
IV catheter needles mainly drove an overall+1.5
growth in China and other regions of Asia
Japan: Increase of sales in infusion systemReimbursement price cut as well as ended
distribution of contrast agents

18.2

17.8

Business
Profit-3%(-2%)
(15%)

(15%)

- 3.8

+0.9
- 1.7

Despite an increase in pension cost due to thelowering interest rate and negative impact ofinventory valuation, profitability remained inupward trend
Q1: 14% ⇒ 1H: 14% ⇒ Q3YTD: 15%
8/25

BloodManagement : Remain in Steady Upward Trend for Profitability(billion yen)

FY15
Q3YTD

FY16
Q3YTD

YoY%

Major Topics

Impact( ) FXN

80.0800

68.7687

Sales-14%(-2%)

14.3

Business
Profit10.3-28%(-21%)(18%)

Negative Impact of FX- 9.7

Price declines for blood center products
mainly in US- 2.6

Negative impact from stagnant macro
economy in Russia and the Middle Eastcountries
Sales in apheresis system grew mainly inEurope and Latin Americas

- 0.5
+ 1.0

Profitability remained in upward trend
Q1: 12% ⇒ 1H: 14% ⇒ Q3YTD: 15%

(15%)

9/25

Major Topics in Q3
Owing to the company’s victim support activities in disasterarea highly regarded, it’s compression stockings received“The Medical Health Science Award of JMHS 2016” fromJapanese Society of Medical Health Science (Oct)Corporate
Announced adoption of IFRS (Nov)Announced 5-Year Mid- to Long-term
Growth Strategy (Dec)
Launched new arm-in blood pressure monitor w/ datatransmission system (Oct)BusinessAnnounced the acquisition of vascular closure devices
business from St. Jude Medical and Abbott Laboratory (Dec)
10/25

New Products Pipeline in FY2016
CategoryProducts

CategoryRegion

LaunchAsia

Launched★

JP

Launched

Intradermal Injection Device★

JPAdhesion barrier★

JPLaunch

DES (Ultimaster)◎★ France

Launched

CV

Disposable Centrifugal Pump(for PCPS)

DES (Ultimaster)
4.0mm

◎★

JP

Launched

RegenerativeMedicine

HeartSheetJP

To belaunchedin Q4

CoronaryImagingProductsRegion

IVUS

◎★

PTA Balloon(Below the knee, RX/OTW)

Launched in
JP・US・EUJP & USPTA Balloon
Peripheral (Below & above
the knee, RX/OTW)

D&D

JP・US・EU

Launched in
JP & USDM

Blood glucose meter(MEDISAFE Fit Smile)

PTA balloon(Above the knee, RX/OTW)

JP・US・EU

Launched in
JP, US & EU

BloodManagement

Automated blood component
processing system

Neuro

Distal protection device

EU

Oncology

Radioembolization beads(Quirem)★

EU◎ Item with large contribution to sales and profit★ Item with highly innovative technology

To belaunched
in FY17
To belaunched
in FY17China★

JPTo belaunched
in FY17
To belaunchedin Q4
To belaunched
in FY17
Launched

IVUS“AltaView”(JP: Q4)
Disposable Centrifugal Pump
(for PCPS)“SP-200” (Asia: Q3)

Adhesion barrier“AdSpray”(JP: Q4)

11/25

New IVUS System: Aiming for the Leading Position in JP Market
 High Resolution Image

provides clearer view of lesion

 Smaller & Lighter console
Conventional

34135kgkg

 High Speed image acquisition andGuidewireprocessingIVUS

Vascularlumen
Calcification
Plaque18 xfasterthan conventional ones

Vascular wall

12/25

Completion in Acquisition of Vascular Closure Device Businessfrom St. Jude Medical and Abbott Laboratory
 Completed in Jan 20, 2017
 Purchasing price: 1.12 BUSD
 EBITDA multiple: 8 times
 Secure the leading position in access device market
 Expect stable contribution to sales and profit
 Estimated annual sales: Over 250 MUSD OPM excl. one-time costs and goodwill amortization: 30-40%
 Profit in FY16 and at the beginning of FY17 to be affected by one-time costs

13/25Acquisition of Bolton Medical: Expand Vascular Graft Portfolio
 Acquired stent graft for TAA

 Reinforce portfolio in
adjacent segments arising between
intervention and surgery
Surgery

Highly compatible
to aortic arch

Enter TAA stent graft market
Gain the access to stent graft market in US

Vasculargrafts

Hybrid device(graft and stent graft)
Adjacentsegments

AAAstent graft

Sales in FY16*: 45 MEUR
Transaction to be completed in this coming
springTAA
stent graft*Bolton Medical’s fiscal year (Jan – Dec)

14/25

Bioresorbable:Shift from Co-development w/ ART to In-house DevelopmentStent
 Terminated the contract of co-development w/ ART
 The technological hurdle is higher than expected.
 Expect longer period of time for BRS to be mainstream in the market

 Stay committed to development of BRS, considering its potential value

While paying a close attention to the market trends, pursue thedevelopment of next generation metal DES and in-house R&D for BRS

15/25

Unwind Cross Shareholding and Share Buyback of 50BJPY
 Continue business alliance w/ Olympus
 Has been expanding business between Terumo and Olympus(Endoscopic Guidewires, etc.)
 Both companies reassured no need of capital tie-up to further deepen
business alliance Sale of Olympus’s stocks
 Sell all Olympus’s stocks by the end of FY16Q4, expected to be realized
in extraordinary gains

 Share buyback of 50BJPY (at maximum)

16/25

Revision of FY16 Guidance
 Sales: Considered the delay in acquisition of vascular closure device businessand recent sales trend Revise the current guidance to include the acquisition-related cost emerging
after the previous revision No revision onto net income Negative factors Termination of contract for co-development w/ ART
Acquisition-related costs
 Positive factors
Profit on sale of Olympus’s stocks(billion yen)
Net sales

Operating
IncomeOrdinary
IncomeNet
IncomeCurrent Guidance

517.0

75.0

65.0

47.5

New Guidance

510.0

71.0

62.0

47.5

-7.0

-4.0

-3.0

-Current
Guidance

New
Guidance

ChangeAverage Exchange Rate

Current
Guidance

NewGuidance

Q4 USD: 105yen → 110yen
EUR: 115yen → 120yen

FY16 105yen → 107yen
116yen → 118yen

17/25

Reference18/25

FY16 Q3YTD Net Sales and Growth by Region(billion yen)Outside of JapanBusiness
Segment

Japan

Cardiac andVascular

37.3

149.2

46.0(+7%)(+10%)

28.5

119.8

37.6
(+8%)

47.7

(+11%)

GeneralHospital

93.5

25.5(+3%)

5.6(-11%)

5.6

BloodManagement

8.6

60.1

139.6

234.8

Out of C&V
Interventional
Systems*

G. Total

Subtotal

(-1%)

(-2%)

(-1%)

(+2%)

(-1%)

*Including Neurovascular business(+11%)(+12%)

(-2%)

(+6%)

Europe Americas China(+19%)

18.6(+16%)

186.6

19.2

(+18%)

15.4(+20%)

148.3

(-0%)

1.5

(+21%)

12.7

119.0

16.7

29.0(-4%)

3.5

(+4%)

10.9

68.7

68.3

98.9

25.3

42.2

374.4(-1%)

(+3%)

64.3

(+5%)

20.4

Asia

G. Total(+17%)

(+9%)

(-3%)

(+9%)

(+8%)

(+10%)

(+0%)

(-2%)

(+4%)

(YoY%): FXN

19/25

Operating Expenses(billion yen)
FY15
Q3YTD

FY16
Q3YTD

YoY

YoY%

YoY%

Salaries & Wages

57.5

55.2

-2.3

-4%+6%

Sales Promotion

12.6

11.2

-1.4

-11%

-2%

Logistical Costs

8.3

8.4

+0.1

+1%

+5%

Depreciation &Amortization

21.0

19.1

-1.9

-9%

+2%

Others

27.8
127.2

+0.2

+0%+9%(32.1%)

28.0
121.9

(32.6%)

-5.3

-4%

+5%

23.3(5.9%)

24.5(6.5%)+1.2+5%+13%

150.5

146.4

-4.1

-3%+6%

SG&A Expenses Total
R&D Expenses
Operating Expenses
Total(38.0%)(39.1%)(FXN)(%) Against net sales
20/25

Quarterly Results(billion yen)

FY15 Q3Q4FY16Q1

Q2

Q3(Oct-Dec)(Jan-Mar)(Apr-Jun)(Jul-Sep)(Oct-Dec)

Net Sales

136.8

129.0

124.5

120.6

129.3

Gross Profit

75.3

70.3

69.8

66.3

69.2

SG&A Expenses
R&D Expenses
Operating Income(Excl. Amortization)(55.0%)(54.4%)(56.0%)(55.0%)(53.6%)

42.9

42.840.3

40.1

41.5

(31.3%)(33.1%)(32.3%)(33.3%)(32.1%)

7.4

9.9

8.1

8.2

8.2

(5.4%)(7.7%)(6.5%)(6.8%)(6.4%)

25.0

17.6

21.4

18.0

19.5

(18.3%)(13.6%)(17.2%)(14.9%)(15.1%)

30.1

22.5

25.9

22.6

24.5

(22.0%)(17.4%)(20.8%)(18.8%)(19.0%)

Average

USD

121 yen

115 yen108 yen

102 yen109 yenExchange Rate

EUR

133 yen

127 yen

122 yen

114 yen

118 yen

21/25

CAPEX and R&D Expenses
Amortizationof intangibles
and goodwill

46.6
39.9

(billion yen)
44.7

41.4 40.7

44.0
32.4

31.5
16.3

17.7

23.6

23.0

CAPEX

Depreciation

30.1

29.4

20.2

24.5

24.8

18.5
14.2

18.3

FY14

CAPEX is projected
to be at the samelevel as depreciation
and amortization
25.5
CAPEX: CIP basis

35.5

33.1
24.5

R&D
Expenses

FY13

CAPEX was peakedout in FY2013

35.0

FY15

FY16 Q3YTD

 Further promote R&D
activities in US for TIS
and neurovascularbusiness
FY16 Guidance

22/25

Cash Flow
Operating CF+53.9

Investing and Financing CF+ 60.6

(billion yen)

27.9
14.5

130.0

32.444.6

149.7*

IncomebeforeTax

Depreciation &Amortization

23.3
Corporate Tax

Acquisition ofSequent Dividends
Medical24.8
CAPEX

0.2
Increase Issuance ofStraight Bond
inWorking and Loans
PayableCapitalCash at end * Cash at end of fiscal year is consistent with “Cash and deposits” on B/S.
of Mar. 2016

2.2
Others264.2*Cash at endof Dec. 201623/25

Foreign Exchange Sensitivity(billion yen)

USD

EUR

Excl. Amortization

Incl. Amortization

Net Sales

1.4

1.4

0.5

Operating Income

0.0-0.2

0.3

24/25

IR 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 notintended 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 various factors. Factors affecting to actualresults include, but are not limited to, changes in economic conditions surrounding Terumo, fluctuationsof foreign exchange rates, and state of competition.
The market share information in this presentation is partly derived from our own independent research.

25/25