Financial Results for the First Half ofthe Fiscal Year Ending March 31, 2017 (FY2016)
Terumo Corporation
Managing Executive Officer
Investor Relations, Corporate Communication Dept.

Kazuaki Kitabatake
November 10, 2016

Overview: Achieved the Highest-ever Operation Income despite FX Impact

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

Operating Income(Excl. Amortization)

Ordinary Income
Net Income

1H FY15

1H FY16259.2
139.4 (53.8%)
84.4 (32.6%)
15.9 ( 6.1%)
39.1 (15.1%)
49.3 (19.0%)
35.8 (13.8%)
27.0 (10.4%)

245.1
136.0 (55.5%)
80.3 (32.8%)
16.3 ( 6.6%)
39.4 (16.1%)
48.6 (19.8%)
30.6 (12.5%)
20.4 ( 8.3%)(billion yen)
YoY%
YoY%(FXN)-5%-2%-5%+3%+1%-2%-14%-24%+5%+8%+5%+11%+11%+10%

USD 122 yen
105 yen
118 yen
EUR 135 yen
 Sales: Both Japan and overseas sales increased w/FXN. Cardiac and Vascular Company made a continuous
double digit growth.
Average Exchange Rate

 Operating income: Growth in profit made by sales expansion of highly profitable products mainly in TIS andthe reduced cost of the quality system improvement
 Ordinary income: Posted FX loss of 6.6 BJPY. Decrease in FX loss posted in Q2 due to decreased receivables in USD
 Net income: Decrease in profit due to sale of land in 1H FY15 and posed FX loss
2/22

Reduce the Receivables in USD to Minimize the Risk from the fluctuation of FX
Decreased receivables in USD from 600MUSD at the end of FY15 to100MUSD at the end of FY16Q2
FX loss posted in 1H FY16: 6.6BJPY (FYQ1: 5.5BJPY, FY16Q2: 1.1BJPY)
FX rate (yen)End of FY15

End of FY16Q1 End of FY16Q2

FX gain/Loss in 1H FY16(billion yen)
FY16Q1FY16Q2USD

112.68102.91101.12

-4.6

-0.9*

CNY

17.39

15.46

15.14

-0.5

-0.1

EUR

127.70114.39113.36

-0.3

0.0

--0.1

-0.1

--5.5

-1.1

Others

Total*Incl. 0.7 BJPY of FX loss realized at the payment for an acquisition of Sequent Medical

3/22

Operating Income Variance Analysis(billion yen)
2.4
4.0

9.0

39.1

1H FY15G/P
incrementby salesincrease

G/P
improvement bycost
reduction,etcBusinessmix
improvement

4.7
Price
4.5
Erosion (1.9)
1.8
JP
SG&A
Reimburseincrease Increase
mentof R&D
Revision (2.8) due tosales force
expansionin US TIS
and neurovasculardivisions

4.1
FX

39.4

1H FY16
4/22

Operating Income Variance Analysis
Cardiac andVascular

4.4
13.6

G/P
39.1 increment

1H FY15General
Hospital

0.3

Blood
Management(billion yen)

0.9

Increase
Increase
G/P
2.0
0.8
in SG&A increment in SG&A
1.4
Decreasein G/P Increasein SG&A Others(Increasemainly in R&D
expenses)

4.1
FX

39.4

1H FY165/22

Net Sales by Region
1H FY16
1H FY15Net Sales

Year-on-Year Sales Comparison

100%=245.1 BJPYbillion yen

YoYComments( ) FXN

Despite the impact of reimbursement price cut
in Japan, TIS and neurovascular business alongwith infusion system drove an overall growth

2%
37%

91.8

Japan

90.3

50.3

19%

64.7

Americas
26%

China

72.0

11%

Asia andOthers

-10%
(5%)

16.0
17.3

7%(5%)

45.5

Europe-10%-8%(12%)

27.2
29.2

-7%(9%)

Continuous growth in TIS and neurovascular.
Downsizing low profit businesses in General
Hospital Products while sales expansion in
Global D&D (B2B)
TRI and other access devices as well as
therapeutic guide wire in U.S. along with DES in
Latin Americas drove the overall growth. New
price has come into effect in Blood Management
Double digit growth driven by accessdevices and coronary therapeutic devices
through newly realigned local distribution
network with high customer coverage
Double digit growth in Cardiac and VascularCompany, and General Hospital Company

6/22

Net Sales by Business Segment
1H FY16
1H FY15

Year-on-Year Sales Comparison

Net Sales
100%=245.1 BJPYbillion yenYoY( ) FXN

50%

Cardiac andVascularGeneral
Hospital
32%

18%

BloodManage-ment

121.5

-3%

125.5(10%)

78.2

-3%

80.8(0%)

45.2

-14%

52.8(-1%)

Comments
TIS , neurovascular along withvascular graft business achieved
double digit growth, and drove anoverall growth.
Downsizing low profit businesses in EUand Latin Americas.
Maintaining double digit growth in Asia.
In Japan, infusion systems grew while
having a impact of ended distribution
for contrast agents.
Mildly gaining a momentum after having
price declines for Blood Center productsin U.S.
QoQ% in sales (FXN) from Q1 to Q2: 7%
7/22

Cardiac and : Double Digit Growth in Profit Driven by Highly Profitable Access andCoronary Therapeutic DevicesVascular(billion yen)

1H FY15

1H FY16

YoY%Major Topics

Impact( ) FXN

Negative impact of FX
125.5

121.5

-3%

Sales

(10%)

29.3

33.0

13%

BusinessProfit

Japan: Bouncing back an impact of
reimbursement price cut, sales ofcoronary therapeutic devices andneurovascular business have been
continuously growing.
Overseas: Coronary therapeutic devices
and access devices have been
continuously growing at double digit- 16.4+1.7+10.6

Highly profitable access devices andcoronary therapeutic devices drove anoverall growth in profit.

(32%)
(23%)

(27%)

Impacts of recall for Misago andacquisition of Sequent Medical

-1.3
8/22

General : Mildly Upward Trend in Profitability despite Decrease in Sales due toHospital Reimbursement Price Cut in Japan and Downsizing of Low Profit Businesses(billion yen)

1H FY15

1H FY16YoY%( ) FXN

80.8

78.2

Sales-3%(0%)

Major Topics

ImpactNegative Impact of FX

Overseas: Downsizing of low profitbusinesses in EU and Latin Americas.
IV catheter needles and others drove
the sales growth in Asia.
Japan: Increase of sales in infusion system
Reimbursement price cut and ended
distribution for contrast agentsBusinessProfit

11.7

11.2

-4%
(-5%)

(15%)

(14%)

- 2.8
- 0.9
+1.1
+1.0

- 1.4

Despite a remaining impact of increase inpension cost due to the lowering interest rateand inventory revaluation, profitability
remained in mildly upward trend.
Business Profit Margin: Q1: 14% ⇒ Q2: 15%

9/22

Blood: Year-on-year Negative Impacts of Price Decline for Blood Center
Management products in U.S. Is Nearly Over in 1H of FY2016(billion yen)

1H FY15

1H FY16

YoY%

Major Topics

Impact( ) FXN

52.8-14%
(-1%)

-35%

10.06.5(19%)- 6.9

Price declines for Blood Center
products in US- 1.4

Sales in apheresis system grew
mainly in Europe and Latin Americas

+ 0.7

45.2

Sales

Business
ProfitNegative impact of FX(14%)(-28%)

Regaining momentum in sales of Blood Center
products in Asia and Japan.
Profitability remained in mildly upward trend
along with increase in sales from FY16Q1 toFY16Q2
Business Profit Margin: Q1: 12% ⇒ Q2: 17%
10/22

Major Topics in Q2
Established a new affiliated company in Singapore to retain investment capital forthe growth (Aug)
Corporate

Heartsheet received “the Minister of Health, Labour and Welfare Award of theAnnual Merit Awards for Industry-Academia-Government Collaboration” (Aug) The three products below won “Good Design Award” on FY2016 (Sep)

UltimasterInfusion “Terupack eco”

Leukomed C Film Dressing

 Automated blood component processing system “TACSI” was launched in Japan (Jul)Business

Ultimaster w/ diameter of 4mm was launched in Japan (Aug)“MEDISAFE FINETOUCH ⅡLANCING DEVICE” was launched in Japan (Sep)
11/22

New Products Pipeline in FY2016
Category

Products

Category

ProductsRegionRegion

LaunchDES (Ultimaster)◎★ FranceLaunched

CV

Disposable Centrifugal Pump
(for PCPS)

DES (Ultimaster)
4.0mm (Diameter)◎★

JP

Launched

Regenerative
Medicine

HeartSheet★

JP

Launched

IVUS

◎★

JP

Intradermal Injection Device★

JP

To belaunched
in FY17Adhesion barrier★

JPApproved
Launch in Q4

Asia

Coronary

Imaging

PTA Balloon(Below the knee, RX/OTW)

Launched in
JP・US・EU
JP&US

PTA Balloon
Peripheral (Below & above
the knee, RX/OTW)

D&D

JP・US・EU

Launched in
JP&US

DM

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)

★

China

★

JP

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

Automated blood component
DES (Ultimaster)
4.0mm (Diameter) (JP:Q2) processing system “TACSI”(JP:Q2)

Adhesion barrier(JP: Launch in Q4)12/22

Revision of FY16 Guidance Revising FY16 Guidance considering the FX impact and acquisition of Sequent
Medical(billion yen)

Net Sales

Operating
IncomeOrdinary
IncomeNetIncome

Original Guidance

517.0

75.0

71.0

52.5

New Guidance

517.0

75.0

65.0

47.5

---6.0-5.0

Gap to Original Guidance

FX rate2H of FY16
FY16: USD=105 yen, EUR=115 yen: USD=105 yen, EUR=116 yen

 Influential events / points in 2H FY2016
 No change in good momentum in TIS overseas
 Temporary impact on profit given the completion of closure devices’ acquisition
 Net income and ordinary income might change due to FX at the end of FY16

13/22

Adoption of International Financial Reporting Standards (IFRS)Adopting IFRS from the fiscal year ending March 31, 2018
Q1-Q3 in FY18
End of FY18

Generally Accepted Accounting Principle in Japan(Japanese GAAP)International Financial Reporting Standards (IFRS) basis

The purpose of adopting global standard “IFRS”
To improve the comparability of the financial statements on global scaleTo enhance the management capability and the corporate governance bystandardizing basis of accounting among group

The major impact on profit due to adoption of IFRS Goodwill will no longer be amortized under Japanese GAAP

14/22

Reference

15/22

1H FY16 Net Sales and Growth by Region(billion yen)

Outside of Japan

BusinessSegment

Japan

Cardiac andVascular

24.5

97.0

30.4

42.0

12.8

11.8

121.5

(+8%)

(+10%)(+8%)(+10%)(+15%)(+12%)(+10%)

18.9

77.7

24.7

31.1

12.1

9.8

96.6

(+10%)(+12%)(+9%)(+12%)(+14%)(+15%)(+11%)

GeneralHospital

61.5

16.8

3.8

3.7

1.0

8.3

78.2

(-1%)

(+4%)

(-11%)

(+3%)

(+9%)

(+12%)(+0%)

BloodManagement

5.7

39.5

11.2

19.0

2.2

7.1

45.2(+3%)

(-2%)

(+1%)

(-4%)

(-3%)

(-0%)

(-1%)

91.8

153.3

45.5

64.7

16.0

27.2

245.1

(+2%)

(+6%)

(+5%)

(+5%)

(+12%)

(+9%)

(+5%)

Out of C&V
Interventional
Systems*

G. Total*Including Neurovascular business

Subtotal

Europe Americas China

Asia

G. Total(YoY%): Excluding foreign exchange

16/22

Operating Expenses(billion yen)
1H FY15

1H FY16

YoY

YoY%

YoY%
(FXN)

Salaries & Wages

38.2

36.3

-1.9

- 5%+6%

Sales Promotion

8.1

7.5

-0.6

- 7%+3%

Logistical Costs

5.5

5.5-0.0- 0%+5%

Depreciation &Amortization

14.0

12.4-1.6- 11%+0%Others

18.6

18.6+0.0+ 0%+9%

SG&A Expenses Total

84.4 (32.6%)

80.3 (32.8%)-4.1- 5%+5%

R&D Expenses

15.9 (6.1%)

16.3 (6.6%)+0.4+3%+11%

Operating Expenses
Total

100.3 (38.7%)

96.6 (39.4%)-3.7- 4%+6%(%) Against net sales
17/22

Quarterly Results(billion yen)

FY15Q2Q3Q4FY16Q1

Q2(Jul-Sep)(Oct-Dec)(Jan-Mar)(Apr-Jun)(Jul-Sep)

Net Sales

130.5

136.8

129.0

124.5

120.6

Gross Profit

70.4 (53.9%)

75.3 (55.0%)

70.3 (54.4%)

69.8 (56.0%)

66.3 (55.0%)

SG&A Expenses

42.7 (32.7%)

42.9 (31.3%)

42.8 (33.1%)

40.3 (32.3%)

40.1 (33.3%)

R&D Expenses

8.0 (6.1%)

7.4 (5.4%)

9.9 (7.7%)

8.1 (6.5%)

8.2 (6.8%)

19.7 (15.1%)

25.0 (18.3%)

17.6 (13.6%)

21.4 (17.2%)

18.0 (14.9%)

24.8 (19.0%)

30.1 (22.0%)

22.5 (17.4%)

25.9 (20.8%)

22.6 (18.8%)

USD

122 yen

121 yen

115 yen108 yen

102 yenExchange Rate EUR

136 yen

133 yen

127 yen

122 yen

114 yenOperatingIncome(Excl.
Amortization)
Average

18/22

CAPEX and R&D Expenses(billion Yen)

Amortizationof intangibles
46.6
and goodwill
41.4 40.7
39.9

44.7

44.0

39.0

CAPEX was peakedout in FY2013

31.5
16.3
16.3

17.7

18.5

20.2

21.1
15.9
9.2

23.6

23.0

CAPEX

Depreciation

30.1

29.4

24.5

35.5

33.1

16.3

FY14

25.5

CAPEX: CIP basis

R&DExpenses

FY1311.9

CAPEX is projected
to be at the samelevel as depreciation
and amortizationFY151H FY16 Further promote R&D
activities for TIS andneurovascularbusiness in US
FY16 Guidance

19/22

Cash Flow
Operating CF+39.8

Investing and Financing CF- 34.1

(billion yen)

27.9
10.9
21.1

30.5

149.7*

Depreciation &Amortization

30.0
0.9

Acquisition of
Corpo7.3
Issuanceof
Increase
Sequent
rate Tax
Dividends
Straight Bond Medicalin
15.9
Working
CAPEX
CapitalIncomebeforeTax

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

13.0Others

155.4*Cash at endof Sep. 201620/22

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

21/22

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 actual
results 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.

22/22