Financial Results for the Fiscal YearEnding March 31, 2015 (FY2014)
Terumo Corporation
Senior Executive Officer,
Investor Relations, Corporate Communication Dept.
Kazuaki Kitabatake

May 8, 2015

Highlights
 Hit a record high in operating income while absorbing reimbursement
price cut in Japan

Corporate

 Major contributing factors are 1. sales growth in Cardiac & Vascular,
2. Yen depreciation, and 3. thorough SG&A control under a new
business-let management
 Achieved continuous double-digit sales growth in overseas IS andNeurovascular businesses

Cardiac &VascularGeneral
Hospital Expanded sales of Ultimaster (new DES) steadily Received notification that TCVS’s quality system is in compliance with FDA
regulations, and all restrictions are lifted for its intraoperative monitoringsystem
 Retain profitability by improving portfolio mix and downsizing low margin
business accounts
 Strengthened cost control, foreseeing challenges in market environment

Blood
Management  For products, therapeutic apheresis and cell expansion, and for region,
Latin America and Asian countries achieved continuous sales growth© Terumo Corporation

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Hit a Record High in Operating and Ordinary Income(billion yen)

FY2013

FY2014

YoY%

YoY%(Excl. FX)Net Sales

467.4

489.5

+5%+1%

Gross Profit

242.0 (51.8%)

256.1 (52.3%)

+6%

+1%

SG&A Expenses

146.6 (31.4%)

159.2 (32.5%)+9%

R&D Expenses

30.1 ( 6.4%)

29.4 ( 6.0%)-3%

Operating Income

65.3 (14.0%)

67.5 (13.8%)+3%-1%(Excl. Amortization)

81.6 (17.5%)

85.1 (17.4%)

+4%

-1%

Ordinary Income

63.8 (13.7%)

70.7 (14.4%)+11%

Net Income

34.1 ( 7.3%)

38.5 ( 7.9%)+13%

Average exchange rates

US$EUR100 yen
134 yen

110 yen139 yen© Terumo Corporation

2015/5/83/28

Operating Income Variance Analysis
2.0
2.4

2.8

65.3

FX

4.9

(Billion yen)

Decreaseof DuraG/P
heart
SG&A
2.5 improveR&D, and Increase
ment byinfluence
due toProductcost
8.0of R&D
sales
mix
5.5 Improve- reduction project
force
transfer to expansion
ment
new US
in US
G/Pfacility
JP
Cardiac&67.5
increment
Vascular Reimburseby sales
mentbusinessincrease(-4.7)
Price
erosion(-3.3)FY13

FY14© Terumo Corporation

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Background of Decrease in R&D Expenses(Billion yen)
FY13
ResultFY14
Result

FY15
Guidance

R&D Expenses

30.1

29.4

35.0% against sales

6.4%

6.0%

6.7%

 FY2014: decrease in R&D expenses for DuraHeart due to the sales of its assets
 FY13: 0.9 BJPY  FY14: 0 BJPY FY2015 and beyond: further accelerate new product development centering
around interventional systems and neurovascular business, by initiatives including
full-scale operation at the newly established R&D center in west coast, US© Terumo Corporation

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Net Sales by Region(Billion yen)

Consolidated: +5% (+1%)
FY2013

FY2014( ) Excluding Foreign Exchange

Japan

Outside of Japan-3%+10% (+3%)
306.4

Europe+8% (+4%)

96.9
125.3

Americas+13% (+4%)

37%
63%
183.1

104.6

China+2% (-6%)
Asia & Others+12% (+5%)© Terumo Corporation

111.0
24.5
24.1
51.9
46.4

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Net Sales by Business Segment(Billion yen)
FY2013

FY2014( ) Excluding Foreign Exchange

BloodManagement
20%

Cardiac & Vascular
Cardiac &Vascular
47%

GeneralHospital
33%

229.2
208.4

+10% (+4%)
General Hospital-2% (-3%)
Blood Management+4% (-1%)© Terumo Corporation

161.5164.1
98.9
94.9

2015/5/87/28

Profit by Business Segment(Billion yen)

Cardiac &VascularBusiness General
Hospital
ProfitBloodManagement
Others*Operating Income(Excl. amortization)

FY2013

FY2014YoY%

YoY%(Excl. FX)

44.0 (21%)

47.5 (21%)+8%-1%

20.8 (13%)

20.8 (13%)+0%-1%

18.6 (20%)

18.5 (19%)-0%-3%-1.7-1.7--81.6 (17%)

85.1 (17%)+4%-1%•Others: profit unrelated to any business segments
FY2013 figures was reclassified for equal comparison with FY2014 figures.

© Terumo Corporation

2015/5/8

8/28Cardiac & Vascular: Increase in Sales and Profit(Billion yen)

SalesBusiness Profit (%)

FY2013

FY2014

YoY%

YoY%(Excl. FX)

208.4
44.0 (21%)

229.2
47.5 (21%)+10%+ 8%+4%-1%<Sales> Increase in overseas IS business and neurovascular intervention products (stent, etc.) + 17.5 BJPY Sales of CV products steadily grew

+ 3.0 BJPY

 Reimbursement price cut in Japan- 3.7 BJPY Sales of Ultimaster (new DES) continued to expand strongly<Business Profit> Reduced manufacturing cost mainly in IS business+ 1.3 BJPY FDA notified TCVS’s quality system is in compliance with the regulations,and that all injunctive restrictions are lifted for its intraoperative monitoring system© Terumo Corporation

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General Hospital: Retained Profitability in Challenging Environment(Billion yen)

Sales
Business Profit (%)

FY2013

FY2014YoY%

YoY%(Excl. FX)

164.1
20.8 (13%)

161.5
20.8 (13%)

-2%
+0%

-3%
-1%

<Sales> Japan: effects of changes in the healthcare market environment- 1.6 BJPY

 Reimbursement price cut in Japan- 1.0 BJPY Downsize low margin business accounts in EU and Americas- 0.8 BJPY Overseas B2B business for pharmaceutical companies strongly grew

+1.0 BJPY<Business Profit> Retain profitability by improving portfolio mix and downsizing low margin business accounts© Terumo Corporation

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in Emerging Countries andBlood Management: Businesses
Therapeutic Apheresis Drove the Sales Growth(Billion yen)

Sales
Business Profit (%)

FY2013

FY2014YoY%

YoY%(Excl. FX)

94.9
18.6 (20%)

98.9
18.5 (19%)+4%-0%-1%-3%<Sales> Increased sales both in whole blood collection and blood component collectionin Latin America and Asia

+ 2.4 BJPY Continued growth in overseas therapeutic apheresis and cell expansion systems+ 2.5 BJPY Japan: decrease in sales for blood center- 1.2 BJPY<Business Profit> Controlled SG&A within the range of sales growth© Terumo Corporation

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New Products Launched in FY2014
Business

ProductNew DES(Ultimaster)

Region◎◎★

EU, Latin A,Asia◎

EU, Latin A,Asia

Coronary
New PTCA balloon

Central implantable venousaccess system
Peripheral Occlusion microballoon
for B-TACEJP★

PTA balloon(below the knee)

NeuroJPBusinessProductRegion

Renal sympathetic
denervation system (RSD)

Asia &Latin A

RSD for TRI technique

Asia &Latin AAblation

Infusion
SystemNeedleless system

◎

JP

DM

Blood glucose meter◎

JPNutrition

Liquid formula (anti-reflux) ★

JP

EU

Carotid stent★

EU

Coil assist stent◎

US

Stroke device(clot retriever)◎★

EUNew DES(Ultimaster)

Stroke device(ERIC)

Blood glucose meter(MEDISAFE Fit Smile)◎ Item with large contribution to sales and profit★ Item with highly innovative technology© Terumo Corporation

2015/5/8

12/28Achieved FY14 Guidance: Record-high Operating and Ordinary Income
FY2014
Guidance(Billion yen)
FY2014
ResultNet Sales

488.0

489.5

Operating Income

64.0

67.5

Ordinary Income

62.0

70.7

Net Income

33.5

38.5

Average Exchange Rate

US$ 100 yen
EUR 140 yen

110 yen139 yenContributing factors to increase in net income Increase in operating income by sales growth and controlled SG&A Exchange gain by depreciation of yen© Terumo Corporation

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FY2015 Guidance
Assumed average exchange rate

US$ = 120 yen
EUR = 130 yen(billion yen)

FY2015
Guidance

YoY %Net Sales

520.0+6%

Operating Income

70.0+4%

Ordinary Income

67.0-5%Net Income

39.5+3%Operating income: the impact of price erosion in Blood Management businessis minimized by recovery measures (- 2.7 BJPY)
Ordinary income: exchange gain of 6.6 BJPY posted in FY2014© Terumo Corporation

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New Product Pipeline in FY2015
BusinessCoronaryProductNew DES(Ultimaster)

Region◎◎★

EU, Latin
A, Asia

New aspiration catheter
Stent (above the knee)★

Stent for small vessel(Misago)

NeuroUSCVDMProductRegion

Disposable centrifugal pump(for PCPS)Downsized blood glucose
meterBlood
Automated blood component
Management processing systemJPJP★

JPEU

Peripheral PTA balloon(above the knee)
PTA balloon(below the knee)
Embolic particles(beads)

JPBusinessEU, USJP★

EUCoil assist stent◎JP

Liquid embolic glue★

EUDistal protection device★

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

New DES(Ultimaster)
To be launched in JP

Liquid embolic glue (PHIL)
Ready-to-use prefilled syringe type

Automated bloodcomponent processing
Distal protection device
Expect synergy with carotid stent© Terumo Corporation

system (TACSI)
Improve preparations quality
and process efficiency
2015/5/815/28

FY2015 Guidance: Impact of Currency Other than US$ and EUR
FY2014
Average exchange rate
US$= 110 yen→
EUR= 139 yen→

FY2015
Assumed average exchange rate
120 yen (+ 10 yen) 9% depreciation
130 yen ( - 9 yen) 6% appreciation(billion yen)

Net Sales

Operating Income

US$+16.8+2.0 (including goodwill amortization: -1.5)

EUR- 5.9-2.1

Other Currency+ 1.2-1.3

Total+12.1-1.4(appreciation of local currency in Asian
production countries: -2.0)© Terumo Corporation

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Retain over 10% ROE, Excluding Amortization and FX Adjustment
15%
10.9%
10%

3.0%

11.4%
2.8%

0.6%

1.4%

7.3%

7.2%

FY13

FY14

Influence of goodwill
amortization
Increase in FX translation
adjustment due to yen
depreciation

5%
ROE on the B/S0%© Terumo Corporation

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Reference© Terumo Corporation

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FY2014 Net Sales and Growth by Region(Billion yen)
Outside of JapanBusinessSegment

Japan

Cardiac &Vascular

48.3 (-2%) 180.9 (6%) 65.6 (6%) 75.2 (8%) 18.9 (-8%) 21.2 (11%) 229.2 (4%)

Out of C&V
InterventionalSystems*

36.9 (-3%) 137.6 (7%) 51.8 (7%) 51.6 (11%) 17.9 (-9%) 16.3 (11%) 174.4 (4%)

GeneralHospital

122.3 (-3%) 39.2 (-4%) 12.7 (-0%) 8.6 (-11%) 1.6 (12%) 16.3 (-4%) 161.5 (-3%)

Blood
12.6 (-9%)
Management
G. Total

Subtotal

Europe Americas China

86.3 (0%) 26.3 (-1%) 41.5 (-1%) 4.0 (-0%)

Asia

G. Total

14.4 (8%) 98.9 (-1%)

183.1 (-3%) 306.4 (3%) 104.6 (4%) 125.3 (4%) 24.5 (-6%) 51.9 (5%) 489.5 (1%)*Including Neurovascular business(YoY%): Excluding foreign exchange© Terumo Corporation

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SG&A Expenses(Billion yen)
FY2013

FY2014

YoY

YoY%

Salaries & Wages

63.8

70.5+6.7+10%

Sales Promotion

14.2

16.0+1.8+12%

Logistical Costs

10.5

11.0+0.5+5%

Depreciation &Amortization

22.7

25.1+2.4+10%

Others35.4

36.6+1.2+4%

GeneralAdministrative Total

146.6 (31.4%)

159.2 (32.5%)+12.6+9%

R&D Expenses

30.1 (6.4%)

29.4 (6.0%)-0.7-3%

SG&A Expenses Total

176.7 (37.8%)

188.6 (38.5%)+11.9+7%(%) Against net sales© Terumo Corporation

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SG&A Expenses(Billion yen)
FY2013*FY2014

YoY

YoY%

154.3

159.2+4.9+3%

R&D Expenses

31.3

29.4-2.0-6%

SG&A Expenses
Total

185.6

188.6

+3.0+2%

GeneralAdministrative Total* Value adjusted by excluding FX impact© Terumo Corporation

2015/5/821/28

Quarterly Results
Q4(Jan-Mar)Q1 FY14(Apr-Jun)

Q2(Jul-Sep)(Billion yen)
Q3
Q4(Oct-Dec) (Jan-Mar)

Net Sales

122.1

114.9

118.4

129.9

126.3

Gross Profit

63.3(51.9%)

60.7 (52.8%)

62.3(52.6%)

67.8(52.2%)

65.4(51.7%)

SG&A Expenses

38.6(31.6%)

37.9 (33.0%)

38.5(32.5%)

40.5(31.2%)

42.4(33.5%)

R&D Expenses

7.7( 6.3%)

6.7 ( 5.8%)

6.9( 5.8%)

7.4( 5.7%)

8.4( 6.7%)

Operating Income

17.0(14.0%)

16.1 (14.0%)

16.9(14.3%)

19.9(15.3%)

14.6(11.5%)

Average Quarterly US$
Exchange Rate EUR

103 yen

102 yen104 yen

115 yen

119 yen141 yen

140 yen138 yen

143 yen

134 yen© Terumo Corporation

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Non-operating Income & Expenses, Extraordinary Gains & Losses, Income Taxes(Billion yen)
FY2013

FY2014

Operating Income

65.3

67.5

Non-operating
Income & Expenses-1.5+3.2

Exchange rates End of Mar. 2014 End of Mar. 2015
US$102.9
120.2
EUR141.7
130.3

FX gain in FY2014+6.6

Difference(+17.3)(-11.4)Extraordinary
Gains & Losses

-10.9

-6.7

Transformation of productportfolio in EU- 5.6
Impairment loss
FY2013 -15.0
FY2014 - 1.6

Income Taxes Total
Tax Rate (%)

-18.8
36%

-25.6
40%

Influence of tax system revision

Net Income34.1

38.5© Terumo Corporation

2015/5/823/28CAPEX, R&D Expenses(Billion yen)

FY2014
Guidance

Result

FY2015
Guidance

CAPEX

42.0

41.4 (99%)

42.0+0.6

Depreciation &Amortization *41.0

40.7 (99%)

45.0+4.3

R&D Expenses

31.0

29.4 (95%)

35.0

+5.6

YoY

Depreciation & Amortization: Including intangibles
CAPEX: Acquisition basis(%): against guidance© Terumo Corporation

2015/5/824/28

Cash Flow
Financed 100 BJPY by CB, invested 50 BJPY in short-term financial asset
Despite corporate tax burden, operating CF recovered well.
SB of 40 BJPY was redeemed in March, 2015. The share repurchase of 3 BJPY was conducted.

Investing and Financing CF-39.0

Operating CF
+73.1
31.0
40.7

64.0

95.6
*

Incomebeforetax

Cash at end
of FY2013

Depreciation &Amortization

Corporate tax
andothers

50.0
*

0.6
Increasein working
capitalandothers(Billion yen)

103.3

41.4
CAPEX

Issuanceof CB
andothers

Negotiablecertificatesof deposit

45.0

Redemp14.0
8.1
tion of SB,
Repayment Dividend, Othersof debt
sharerepurchaseCash at endof FY2014*Cash at end of fiscal year is consistent with “Cash and deposits” on B/S.
*Negotiable certificates of deposit is represented in “Securities” on B/S.
© Terumo Corporation

129.7*2015/5/825/28

Foreign Exchange Sensitivity
FY2014(Billion yen)
US$EURNet Sales

1.80.8Operating Income

0.3

0.4

FY2015(Billion yen)
US$

EUR

Net Sales

1.80.7

Operating Income

0.10.2© Terumo Corporation

2015/5/826/28

Quarterly Average Exchange Rates Trend

JPY

EUR
140

140

138

143
137

120

129

US$102

131

115

141
134
119

FY2013
FY2014FY2014104

FY20131009999

100

Q1Q2

Q3

10380

© Terumo Corporation

Q4

2015/5/827/28

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
not intended to be guarantees of future events or performance. Accordingly, it should be notedthat 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, fluctuations of foreign exchange rates, and state of competition.
The market share information in this presentation is partly derived from our own independentresearch.

© Terumo Corporation

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