Financial Results for the First Quarter ofFiscal Year Ending March 31, 2019 (FY2018)

Terumo Corporation
Managing Executive Officer,
Kazuaki Kitabatake

August 8, 2018

In Line with the Guidance on the Whole
FY17 Q1Revenue
Gross Profit

FY18 Q1(billion yen)

YoY%

(億円)
YoY%(FXN)

139.3

143.0

+3%+2%

75.9 (54.5%)

79.9 (55.8%)+5%+4%

SG&A Expenses

40.2 (28.9%)

43.5 (30.4%)

+8%

+8%

R&D Expenses

8.5 ( 6.1%)

11.3 ( 7.9%)

+33%

+34%

Other Income and Expenses

1.20.8‐‐28.4 (20.4%)

25.9 (18.1%)

‐9%

‐11%

32.1 (23.0%)

30.5 (21.4%)

‐5%

‐6%

28.2 (20.2%)

23.4 (16.4%)‐17%

Operating Profit
Adjusted Operating Profit
Profit before Tax
Profit for the Year

20.3 (14.6%)
18.1 (12.6%)‐11%
USD 111 yen
109 yenAverage Exchange Rate
EUR 122 yen
130 yen Revenue: General Hospital Company and Blood Management Company drove overall growth instead ofCardiac and Vascular Company suffering an impact of JPN reimbursement price cut and shipping delay Adjusted operating profit: In line with the guidance in FY18 Q1, while delayed realization of SG&A impactedadjusted operation profit less in FY17 Q1
 Profit before tax: Posted FX loss of 2.3 BJPY in FY18 Q1, while posted gain of 0.2 BJPY in FY17 Q1
 Profit for the year: In line with the guidance w/ FX loss excluded
2/23

Adjusted Operating Profit: Adjustments
Operating profit in IFRS basis w/ following items adjusted
1. Amortization of acquired intangible assets
2. Acquisition‐related costs and temporary gain or loss
falling into non‐operating, and extraordinary income andexpenses in JGAAP basis(billion yen)

FY17 Q1

FY18 Q11.Amortization of acquired
intangible assets

3.8

3.8

2.Temporary gain and loss*‐0.2

0.9

Adjustment

3.6

4.7

*Adjusted items
 Acquisition related cost
 Amortization of acquired intangible assets
 Lawsuit settlement
 Impairment loss

 Restructuring loss
 Nonlife insurance income
 Loss on disaster Other temporary gains and losses
3/23Adjusted Operating Profit Variance Analysis (IFRS)
1.4
1.9(billion yen)
Gross margin Price
3.1
improve‐ erosion
2.5
0.4
mentJPN
Reimburse‐
G/P
ment Increase ofincrement
SG&A
1.0by sales
increase

3.6

32.1

2.5

0.30.8

4.7

FX
Increase Othersof R&D
30.5

28.4

FY17 Q1 FY17 Q1
Operating Adjusted
Profit Operating
Profit25.9

FY18 Q1 FY18 Q1
Adjusted Operating
Operating
ProfitProfit

4/23

Revenue by Region
FY18 Q1
FY17 Q1

Revenue

Year‐on‐Year Revenue Comparison
billion yen

100% = 143.0BJPY

YoY%( ) FXN

31%

44.0
44.9

Japan+7%

29.6
27.7

Europe(+2%)

20%
42.8
41.1

Americas
30%
China
8%
11%

Asia andOthers

10.9
10.2
15.7
15.3

‐2%+4%

Comments
Ended up having slightly negative growth inoverall revenue although growth in General
Hospital Company and Blood Management
Company covered the negative one inCardiac and Vascular Company suffering JPN
reimbursement price cut and shipping delay
Vascular graft and neurovascular businesses
in Cardiac and Vascular Company as well as
alliance business in General HospitalCompany drove overall growth(+6%)

All companies achieved steady growth+7%

Neurovascular business in Cardiac andVascular Company drove overall growth

(+3%)

+3%

General Hospital Company and BloodManagement Company covered the negativegrowth in Cardiac and Vascular Company(+3%)
5/23

Revenue by Business Segment
FY18 Q1
FY17 Q1

Revenue

Year‐on‐Year Revenue Comparison
billion yen

100% = 143.0BJPY

YoY%

Comments( ) FXN

56%

CardiacandVascularGeneral
Hospital

79.5+1%79.1(0%)

38.8

+5%

36.9(+5%)

27%

17%

Blood
Manage‐
ment

24.6

+5%

23.3(+5%)

Overseas growth covered the negative
one in JPN, which suffers JPN reimburse‐
ment price cut and shipping delay,achieving slightly positive overall growth

Achieved steady growth in JPN by andlarge. Alliance business mainly in EUdrove overseas growth

Blood center products made double
digit growth in emerging countries
such as ones in Latin America and Asia
6/23

Cardiac and: Decrease in Profit in Line with FY18 1H Guidance
Vascular(billion yen)
FY17Q1FY18Q1YoY%

Major Topics

Impact( ) FXN

79.1

TIS: Impact of JPN reimbursement price cut and79.5

shipping delay. Sales for therapeutic devices in+1%

Revenue(0%)

Cardiology declined‐1.0

Neurovascular: Achieved double digit growth+1.2

CV: Made a steady growth in relaunched heart lungmachine in US+0.1

Vascular graft: Annualized the impact by acquisitionof Bolton Medical
21.2+0.2

19.9

Adjusted
OperatingProfit(%)‐6%

In TIS and neurovascular, SG&A and R&D expenses were(‐7%)

realized as planned in FY18 Q1, while aforementioned
expenses in FY17 Q1 fell behind the plan then

(27%)

(25%)
7/23

General : Achieved Stable Growth in Profit while
Hospital Maintaining Profitability
FY17Q1FY18Q1

YoY%(billion yen)

Major Topics

Impact( ) FXN

General hospital products: Infusion system drove
growth in JPN. Outside JPN, infusion pumpshowed steady growth in Asia
36.938.8

Revenue+5%Pharmaceutical and nutrition: Adhesion barrier(+5%)

and pain management grew, coupled w/ good

+0.5

sales of I.V. solutions+0.5

DM Healthcare: Steady momentum mainly in DM+0.1

Alliance: Made a large growth in‐ and outside JPN.
Achieved over 20% growth

Adjusted
OperatingProfit(%)

5.9(16%)

6.2
(16%)

+0.8

+6%

Maintained high profitability thanks to factors such as(+10%)

lowered manufacturing cost.
Increased profit owing to steady sales expansion
8/23

: Revenue Grew Steadily despite Decreased ProfitBloodManagement Due to Increased R&D Expenses(billion yen)

FY17Q1FY18Q1

Major Topics

YoY%Impact( ) FXN

Blood center products: US made stable growth.

Revenue

23.3

24.6

+5%

Achieved double digit growth in emerging(+5%)

countries such as ones in Latin America and Asia

+1.1

Therapeutic apheresis: Replacement w/ latest
version of console

Adjusted
OperatingProfit
(%)

3.6

3.4(15%)

(14%)

‐5%

Decreased profit owing to increase of R&D(‐15%)

expenses (about 0.6 BJPY)

+0.3

9/23

Major Topics in FY18 Q1Corporate

Terumo joined “IkuBoss Alliance”, promoting diversified workstyle (Jun)Launched “VeinViewer” portable vascular access imaging device (Apr)Launched “RelayPro” TAA stent graft in EU (Apr)Acquired CE marking for “Ultumaster Tansei”
the drug eluting stent followed by its launch in EU (Apr)BusinessMade an agreement w/ U.S.‐based DexCom, Inc. and gained the exclusive
right to distribute its Continuous Glucose Monitoring (CGM) devices
exclusively in Japan (May)Won The Award of the Society of Polymer Science, Japan fordevelopment of spray type adhesion barrier first time in JPN (May) Acquired CE marking for “Kanshas” drug coated balloon (DCB) catheter
used in the treatment of lower extremity for the first time amongst
Japanese companies (Jun)
10/23New Products Pipeline in FY18
Category
AccessCoronary

Products
Closure device for distal
radial approach

JPPTCA balloon

USPTCA balloon

JP, EU, Asia

DES (Ultimaster Tansei)

EU: Launched
JP, Asia:
FY18 2H

Category

CV◎

Vasculargraft

New software for automatedblood collection system
Blood
Manage‐ New disposable kitsmentfor automated blood component
processing system

EU, US,Asia

DMPTA guiding sheath (TRI)★

JP, US

EU, US

Launched

JP

JP, US

Coil assisted balloon★

Insulin patch pump★

EU, USTAA stent graft (low profile)

EU, US, Asia

Launched

PTA balloon (TRI)(Sofia EX)

Next generation of blood
parameter monitoring system

JP, US

Portable vascular access imaging
deviceJP, US

Distal access catheter

◎

EU★

CE
◎★ Acquiredmarking

RegionAAA stent graft(Anaconda w/ smaller diameter)

Stent (TRI)

Drug coated balloon

Products
Next generation of oxygenator

Generalhospital
product

Peripheral

NeuroRegion

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

11/23

Status of Shipping Delays from Ashitaka Factory
Background Discovered that there were challenges in the procedure that optimizes the sterilization process=> Shipments of certain products from this factory were placed on hold in late May
 Gradually resumed shipment form June onwards, yet found it more time‐consuming to confirm
each sterilization chamber and each type of sterilization method
 Return to the former level within Aug. 2018

Further actions to take Quick expansion of sterilization capacity by utilizing other manufacturing sites incl. externalfacilities
 For some products, consider production transfer from Ashitaka Factory to other ones

Impact on the guidance
 JPN: The impact was seen from June, and is expected to last until August Overseas: Until June, limited impact thanks to no shipping delays from overseas factories,
coupled w/ a fair amount of inventories. However, Q2 is expected to see impacts to some extent

12/23

Revision of FY18 Guidance
Key points of revision 1H: Revised due to the impact of shipping delays from Ashitaka factory 2H: In line with the current guidance in FY18 2H (No change) Average exchange rate from Q2 onwards USD=105 yen, EUR=130 yen (billion yen)
<FY18 1H>

Revenue

Adjusted
Operating Profit

OperatingProfit

Profitfor the Year

Current Guidance

293.0

61.5

54.5

39.5

New Guidance

282.0

55.0

48.0

34.5

Change

‐11.0

‐6.5

‐6.5

‐5.0

<FY18>

Revenue

Adjusted
Operating Profit

OperatingProfit

Profitfor the Year

Current Guidance

608.0

128.5

114.5

83.5

New Guidance

597.0

122.0

108.0

78.5

Change

‐11.0

‐6.5

‐6.5

‐5.0
13/23

Pursue Regional Strategy in China
Acquisition of Essen Technology Co., Ltd. (announced in July 24)
“Tivoli” drug eluting stent for Chinese market
Upfront payment of 14.0 BJPY + milestone payment,
to be funded from cash on handEnter Chinese DES market, which will become the world largest, w/ Chinese domestic products,
and create synergy w/ Terumo’s existing distribution channel and other products
Expect closing within calendar year 2018

The local joint company acquired regulatory approval of peritoneal dialysis solution(announced in Aug 6)
Joint company between Terumo and Wego group, “Wego Terumo”Terumo’s technology and knowhow of familiarizing new treatment + Wego’s distribution network
Wego will commence sales within calendar year 2018
14/23

Reference

15/23

FY18 Q1 Revenue and Growth by Region(billion yen)

BusinessSegment
Cardiac andVascular
Out of C&V
Interventional
Systems*

GeneralHospital
BloodManage‐ment
G. TotalJapan

Outside of Japan
Subtotal

EuropeAmericas

China

Asia

G. Total

11.3

68.2

21.3

30.4

9.0

7.5

79.5

(‐16%)

(+3%)

(+2%)

(+7%)

(+3%)

(‐5%)

(0%)

8.4

55.3

17.1

23.5

8.4

6.3

63.7

(‐18%)

(+3%)

(+2%)

(+6%)

(+3%)

(‐5%)

(0%)

30.2

8.6

2.1

1.7

0.6

4.2

38.8

(+4%)

(+8%)

(+10%)(+5%)(+14%)

(+7%)

(+5%)

2.5

22.1

6.2

10.6

1.3

4.0

24.6

(+3%)

(+5%)

(+2%)

(+5%)

(‐1%)

(+13%)

(+5%)

44.0

99.0

29.6

42.8

10.9

15.7

143.0

(‐2%)

(+4%)

(+2%)

(+6%)

(+3%)

(+3%)

(+2%)

*Including Neurovascular business(YoY%): FXN
16/23

Operating Expenses(billion yen)

FY17 Q1

FY18 Q1

YoY

YoY%

YoY%

Salaries & Wages

20.0

21.7+1.7+8%+8%Sales Promotion

4.1

4.5+0.4+9%+8%Logistical Costs

3.0

3.2+0.2+9%+9%Depreciation &Amortization

3.4

3.4+0.0+0%+1%

Others

9.7
40.2

10.7
43.5+1.0+11%+10%(28.9%)(30.4%)+3.3+8%+8%

8.5

11.3

( 6.1%)(7.9%)+2.8+33%+34%

48.7

54.8

(35.0%)(38.3%)+6.1+13%+13%

SG&A Expenses Total
R&D Expenses
Operating Expenses
Total

(FXN)

17/23

Quarterly Results(billion yen)

FY17 Q1(Apr‐Jun)

Q2(Jul‐Sep)

Q3(Oct‐Dec)

Q4(Jan‐Mar)

FY18 Q1(Apr‐Jun)

Revenue

139.3

145.3

152.3

150.8

143.0

Gross Profit

75.9

79.5

83.2

80.7

79.9

(54.5%)(54.7%)(54.6%)(53.5%)(55.8%)

40.2

41.2

43.8

45.9

43.5

(28.9%)(28.4%)(28.7%)(30.4%)(30.4%)

8.5

9.8

10.7

12.4

11.3

(6.1%)(6.7%)(7.0%)(8.2%)(7.9%)

Other incomeand Expenses

1.2

0.2

0.6

‐ 0.4

0.8

Operating Profit

28.4

28.7

29.4

22.0

25.9

(20.4%)(19.8%)(19.3%)(14.6%)(18.1%)

SG&A Expenses
R&D Expenses

Adjusted
Operating Profit

32.1

32.8

32.7

27.4

30.5

(23.0%)(22.6%)(21.5%)(18.1%)(21.4%)

USD

111 yen

111 yen

113 yen108 yen109 yenEUR

122 yen

130 yen

133 yen

133 yen

130 yenAverage
Exchange
Rate

18/23

CAPEX and R&D Expenses
Amortizationof Intangibles
and Goodwill
44.7

45.4

39.1

(billion yen)Amortizationof acquired
intangible
assets60.0

43.6 42.0

43.0

31.5
20.8

20.2

14.0

14.5

CAPEX

11.2 10.6
24.6

24.5

27.6

Depreciation

3.8
6.8

29.0

CAPEX = C.i.P. record basis  Further promote R&D
47.5
41.3

33.1

33.6

11.3

R&DExpenses
FY15 Expand investment inproduction capacity andspace as well as IT
infrastructure in FY18
 IFRS basis from FY17
Include intangible
assets except for
acquired ones andcapitalized development
expenses

FY16

FY17

JGAAP <‐ ‐> IFRSFY18 Q1

FY18Guidance

activities mainly for TIS,
neurovascular and BloodManagement Company
 Capitalized development
expenses are included inCAPEX
FY17:0.8BJPY
FY18 Q1:0.4BJPY
FY18 guidance :2.1BJPY
19/23

Cash Flow
Operating CF+12.5

23.4

167.8

Profitbeforetax

10.6

13.5

Depreci‐
ation andamorti‐zationIncometaxes

Investment and Finance CF‐17.4(billion yen)

8.0
Increase ofworking
capital

11.2

CAPEX
9.5

Others3.3

162.9

Dividends

Cash at end of
FY17

CAPEX = C.i.P. record basis
Cash at end of each fiscal year is consistent with “cash and cash equivalents” on BS

Cash at end of
FY18 Q1
20/23

Foreign Exchange Sensitivity(billion yen)

USD

EUR

CNY

Revenue

1.6

0.8

2.0

Adjusted Operating
Profit

0.0

0.5

1.0

EMEA

Asia

<Reference> Impact of +/‐10% fluctuation
NorthLatin
America America

AdjustedOperatingProfit‐0.10.9

EUROthers

CNYOthers

6.0

1.3

1.7

3.3

21/23

The Status of Convertible Bonds
 Detail of the bonds (Issued in Dec, 2014)
Maturity

Aggregate principal
amount(billion yen)

CouponConversion price(yen)Contingent
conversion trigger
price (yen)Number of shares required
to be issued for conversion

Dec, 2019

50.0

0.0%

3,853

5,009

12.9M shares

Dec, 2021

50.0

0.0%

3,853

5,009

12.9M shares

Total

100.0

25.9M shares Status of conversion (as of Jul 31, 2018)
Bonds

Amount of shares issued for conversion

Number of shares issued for conversion(% against the total amount of bond)(% against total number of issued shares)

Convertible Bonds
due Dec, 201928.03 BJPY (56.1%)

7.2M shares (1.91%)

Convertible Bonds
due Dec, 2021

3.53 BJPY (7.06%)

0.9M shares (0.24%)

31.56 BJPY (31.6%)

8.2M shares (2.16%)

Total

Allocated treasury shares to the shares issued for conversion•Status of treasury shares: 19.7M shares(as of the end of Jul. 2018, treasury stock cost per share: 3,896JPY, % against total number of issued shares: 5.1%)

22/23

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.

23/23