[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018: Reference

Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018: Reference
Analysis of Business Performance
1. Overview of Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018
(1) Overview of Consolidated Business Results
In the first quarter of the current fiscal year (from April 1 to June 30, 2017), the global healthcare market wasunderscored by the following trends. Amid the ongoing movement in developed countries to curb medical
expenditure, policymakers in the United States pushed forward with debate looking to make revisions to theaffordable care act, which was introduced with the purpose of lowering the uninsured rate. In Japan, thegovernment continued to examine the introduction of cost-benefit analysis for pharmaceuticals and medical
devices as an approach to achieving a more focused and efficient allocation of fiscal resources.

Amid this backdrop, as a global corporation with Japanese origins, the Terumo Group continued to work toward
its Mid- to Long-term Vision of becoming recognized by medical professionals worldwide as a top brand and atrusted manufacturer. To this end, we are focused on earning a high level of trust globally for our total quality(which includes the total quality of its products, supply, and services).
Financial results for the first quarter of the fiscal year ending March 31, 2018 are as follows:

Net sales
Net sales totaled 139.3 billion yen, an increase of 11.9% compared with the same period of the previous fiscalyear.
(million yen)
Growth (%)

Growthexcluding
impact of forex
translations (%)

139,312

11.9

10.7

69,181

78,255

13.1

14.6

Operating income21,35623,355

9.4

17.0

Ordinary income

15,12322,733

50.3-

Profit attributable to owners of

10,110

16,291

61.1

-

Q1

Q1

FYE3/2017

FYE3/2018

Net sales

124,519

Gross profit

parent-1-

[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018: Reference(million yen)
Growth (%)

Growthexcluding
impact of forex
translations (%)

44,915

(1.2)

(1.2)

24,737

27,74712.2

12.0

Americas32,917

41,13025.0

21.4

Asia and others

21,41325,51919.2

18.0

Overseas total

79,06894,397

19.4

17.5Total

124,519

139,312

11.9

10.7

Regional sales

Q1

Q1

FYE3/2017

FYE3/2018

45,451

EuropeJapanIn Japan, overall sales in the region were down year on year. On one hand, we posted sales growth in the Cardiacand Vascular Company. This reflected brisk sales of access devices and the VISICUBE, an intravascularultrasound system, and AltaView, an intravascular ultrasound catheter (the latter two were released in February2017). However, this positive benefit was offset by a decline in sales in the General Hospital Company. Inaddition to inventory adjustments at distributors for general hospital products, there was also negative impact fromrefrained purchasing of infusion and syringe pumps.

Meanwhile, sales overseas increased compared with a year earlier. In the Cardiac and Vascular Company, there
was sales contribution from businesses and products acquired in the previous fiscal year, including the vascularclosure device business. We also posted sales growth at businesses across the board in this company(Interventional Systems (TIS), Neurovascular, CV, and Vascular graft businesses). Furthermore, in the BloodManagement Company, sales trends were strong to blood centers and in the field of therapeutic apheresis systems.
Gross profit
Gross profit totaled 78.3 billion yen, an increase of 13.1% compared to the same period of the previous fiscalyear. This reflects contribution in part from lower production costs at the General Hospital Company and theBlood Management Company.
Operating income
Operating income came to 23.4 billion yen, a growth of 9.4% year on year. The increase in selling, general andadministrative expenses was absorbed by a growth in gross profit.
Ordinary income
Ordinary income stood at 22.7 billion yen, an expansion of 50.3% versus the same period a year earlier. Thisreflects the increase in operating income as well as a gain on foreign exchange translations in the first quarter.
Profit attributable to owners of parent
Profit attributable to owners of parent totaled 16.3 billion yen, a rise of 61.1% year on year, owing to an increase-2-

[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018: Reference

in ordinary income and also in part attributable to a reduction in tax rate.

Net sales results by company are as follows:(million yen)
Growth (%)

Growth excluding
impact of forex
translations (%)

79,05724.1

22.4

12,78913,491

5.5

5.5(Overseas)

50,91065,56628.8

26.7

Net sales

38,38336,867

(3.9)

(4.3)

(Japan)30,11328,947

(3.9)

(3.9)

(Overseas)

8,269

7,919

(4.2)

(5.6)

Net sales

22,387

23,3334.2

3.0(Japan)

2,499

2,422

(3.1)

(3.1)

(Overseas)

19,88820,911

5.1

3.8

Segment

Cardiac andVascularCompany
General HospitalCompany

Blood
Management
Company

Q1

Q1

FYE3/2017

FYE3/2018

Net sales

63,699(Japan)Cardiac and Vascular Company
In Japan, sales in the TIS business rose year on year underpinned by strong sales of access devices and theVISICUBE, an intravascular ultrasound system, and AltaView, an intravascular ultrasound catheter.
Meanwhile in the TIS business overseas, sales trended briskly for access devices, including vascular closure
devices. In addition, we posted sales growth at businesses across the board in the company(TIS, Neurovascular,CV, and Vascular graft businesses). Accordingly, overseas sales in this company rose substantially overall.

In light of this performance, net sales in the Cardiac and Vascular Company were 79.1 billion yen, a growth of
24.1% year on year.
General Hospital Company
In Japan, sales performance exacerbated by negative impact due to distributor inventory adjustments and refrainedpurchasing of infusion and syringe pumps. In addition to terminating the supply of some pharmaceutical andhealthcare products and downsizing related accounts to improve profit margins, we expect the majority of orders
in the Alliance business to arrive in the second half, which differs from trends in the previous fiscal year.

Reflecting these factors, net sales in the General Hospital Company were 36.9 billion yen, a decrease of 3.9%
versus the same period a year earlier.
Blood Management Business
Sales were strong to blood centers in Latin America and Asia. Also therapeutic apheresis system sales grew,-3-[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018: Reference

mainly in the Americas.

Consequently, net sales in the Blood Management Company totaled 23.3 billion yen, a rise of 4.2% year on year.
(2) Overview of Consolidated Balance Sheets
Assets
As of June 30, 2017, total assets stood at 1,041.1 billion yen, an increase of 19.7 billion yen compared to March
31, 2017.

Current assets amounted to 372.6 billion yen, an increase of 23.4 billion yen, primarily attributable to a rise in
cash and deposits.

Non-current assets came to 664.6 billion yen, a decrease of 3.5 billion yen. Property, plant and equipment
increased 2.8 billion yen, intangible assets were down 6.8 billion yen, and investments and other assets rose 600
million yen.
Total Liabilities
Liabilities came to 537.4 billion yen, a rise of 5.6 billion yen.

Current liabilities totaled 114.4 billion yen, a decline of 134.0 billion yen primarily attributable to the repaymentof short-term loans payable.

Non-current liabilities were 423.0 billion yen, an increase of 139.5 billion yen, as Terumo incurred debt, boosting
its long-term loans payable.
Total Net Assets
Total net assets totaled 503.6 billion yen, a growth of 14.1 billion yen.
Accordingly, Terumo’s equity ratio stood at 48.3%, a rise of 0.4 percentage points compared with March 31,
2017.
(3) Forecasts, including the Consolidated Financial Results for the Fiscal Year Ending March 31, 2018
We are retaining our consolidated financial forecasts for the first half and full year, which we released on May 10,
2017. The business environment is expected to remain murky, including uncertainty over changes in the businessenvironment for the medical device and pharmaceuticals industries, and foreign exchange rates. Nonetheless, theTerumo Group remains focused on achieving the goals it has set for itself. We plan to pour energies into severalareas. We look to develop and expand sales of high value-added products that contribute to the improvement ofhealthcare quality and efficiency. We also aim to continue to improve production costs, and effectively manage
SG&A spending.
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