Financial Results for the Third Quarter ofFiscal Year Ending March 31, 2018 (FY2017)
Terumo Corporation
Managing Executive Officera ua Kitabataketabata e
KazuakiFebruary 8,8 2018

Maintained Good Momentum despite The Negative Impact of Hurricane(billion yen)YoY%

FY16 Q3 YTD

FY17 Q3 YTD

YoY%

374.4
374
4
203.7 (54.4%)

437.0
437
0
244.7 (56.0%)

+17%
17%
+20%

+12%
12%
+15%

SG&A expenses

120.3 (32.2%)

143.6 (32.8%)

+19%

+15%

R&D Expenses

24.5 ( 6.5%)

28.7 ( 6.6%)

+17%

+14%

Operating Income58.9 (15.7%)

72.4 (16.6%)+23%+14%(Excl. Amortization)

73 1 (1973.1(19.5%)
5%)

94 3 (2194.3(21.6%)
6%)

+29%

+21%

Ordinary Income
Net Income

52.2 (13.9%)

70.7 (16.2%)+35%

31.8 ( 8.5%)

63.5 (14.5%)+99%

Average Exchange Rate

USD 107 yen
EUR 118 yen

Nett SSales
Nl
Gross Profit(FXN)

112 yen
129 yen Sales: Impact of hurricane on vascular closure device is minimal. Maintained double digit growth driven
mainlyi l bby CCardiac
di andd Vascularl CCompany Operating income: All three companies continuously made a double digit growth Ordinaryy income: Posted FX ggain of 0.2 BJPY in Q3
Q FY17,, while postedpFX loss of 3.7 BJPY in Q3
Q FY16
 Net Income: Doubled owing to temporary reduction of corporate tax (14.0 BJPY) due to US tax reform
2/24

Impact of US Tax Reform Corporate tax (Federal tax) rate was lowered from 35% to 21% due toUS taxt reformf Net income increased since the corporate tax was temporarily reduced in FY17 Q3 inaccordance with the revaluation of deferred tax assets and liabilities due to the lowered
corporate tax rate (14.0 BJPY) The temporary increase in net income occurs from the tax effect accounting, notaffecting cash flow The impact of the tax cuts is expected to continue to increase net income and cash flow The suspension of medical device tax was extended for another two years((Jan 2018‐ Dec 2019))
3/24

Operating Income Variance Analysis(billion yen)
3.9
6.9
Gross margin
improve‐
ment
26.8

58.9

FY16Q3YTD

G/P
incrementby salesincreasePriceerosion

11.2

Increase ofSG&AImpact of M&As made in FY16
/ excl. amortization +4.8
O/P
Amortization*‐ 6.8*Figures above are tentative
since PPA is still in process.
3.4
Increaseof R&D

72.4

6.8
5.0
Increase ofamortizationof goodwill,etc. (Impactof M&As
made inFY16)FX

FY17Q3YTD

4/24

FX Impact on Operating Income
Increase in impact of FX: + 0.6 BJPY in 1H → + 5.0 BJPY in Q3YTD
 Impact of JPY depreciation against EUR
 Impact of JPY depreciation against currencies of emerging countries
 USD: Decreased operational costs and expenses in USD since production halted
in Puerto Rico, temporarily affected by the impact of JPY depreciation against
USD (usually a natural hedge) Decrease in unrealized
l d gain off inventories: Reducedd d gap b
between exchange
hratesat the end of periods
Comparison of the exchange rates
at the end of periods(yen)

At the end ofSep, FY16

At the endof Dec, FY16Gap
p

USD

101

116+15EUR

113

123+10(yen)At the end ofSep, FY17

At the endof Dec, FY17Gap
p

USD

113

113

0EUR133

135+25/24

Net Sales by Region
FY17Q3YTD
FY16Q3YTD

Net Sales

Year‐on‐Year Sales Comparison
billion yen

100% = 437.0BJPY

YoY%Comments( ) FXN

33%

142.9
139.6

Japan
86.1

Europe+26%

68.3(+17%)

20%
126 3
126.3

Americas
29%
China
hi
7%
11%

Asia andOthOthers

98.9
31.2

+2%+28%(+22%)

+23%

25.3

(+18%)
50.4

42.2

+20%
(+13%)

TIS centered on access and imaging devices
ddroveoverallll growth.
h General
Gl Hospital
H i lCompany turned into positive growth owing
to strong infusion system sales along withpumps gaining momentum backAll companies achieved a double digit growth.
All companies achieved positive growth.
Cardiac and Vascular Company continuously
achieved high growth.
growth Blood Management
Company has shifted to stable growthtrajectory
Blood Management Company and allbusinesses in Cardiac and VascularCompany continuously made double
digit growth even w/ FXN
Blood Management
gCompanyp y and allbusinesses in Cardiac and VascularCompany maintained double digit growth
6/24

Net Sales by Business Segment
FY17Q3YTD
FY16Q3YTD

Net Sales

Year‐on‐Year Sales Comparison
billion yen

100% = 437.0BJPY

YoY%

Comments( ) FXN

55%

240.0

Cardiac andVascular

186 6186.6General
Hospital+29%((+23%))

120.2

+1%

119.0(0%)

28%

17%

BloodManage‐
ment

76.5

+11%68.7((+6%))All businesses except
p for ones acquired
qin
FY16 maintained continuous double digit
growth. The impact of hurricane on closure
device is minimal. Organic business
continued to achieve double digit growtheven w/ FXN
Downsizing low profit accounts outside
JPN. In JPN, made overall p
positive ggrowth
driven by infusion system and painmanagement coupled with alleviated trend
on conservative buying of pumpBlood center products mainly in emerging
countries continuously achieved double digit
growth. Therapeutic apheresis enjoyed atemporary replacement demand mainly inUS
7/24

Cardiac andVascular : Achieved Continuous High Growth in Both Sales and Profit(billion yen)
FY16
Q3YTD

FY17
Q3YTD

YoY%

Major Topics

Impact( ) FXN

FX

240.0
186 6
186.6

+29%

Sales(+23%)

61.9

BusinessProfit

47.5

+30%
(+20%)

(25%)

(26%)

+11.3

TIS: Overseas organic access devices as well asclosure devices highly drove the overall growth +28.9
Neurovascular: Hydrogel coils and suction
catheter continued drivingg overall growthg56+5.6
CV: Resumed product shipment from Ann Arbor+2.9
factory in US
Vascular ggraft: Stent ggraft acquired
qin FY16+4.7
maintained good momentum
Closure device contributed to significant increase inprofit w/ little impact of hurricane. Overall large
growth in US w/ high market price led to continuous
hi h profitability
highfit bilit
8/24

General Hospital: Turned into Positive Growth in Sales(billion yen)
FY16Q3YTD

FY17Q3YTD( ) FXN

119.0120.2

Business
Profit+1%(0%)

Sales

17 8
17.8(15%)

20.8(17%)

Major Topics

YoY%FX

Impact+1.6

General Hospital Product: Gained back the same
momentum as one in FY16 in JPN due to infusion systemwith strong growth and pumps on mildly upward trend
Downsizing overseas low profitable accounts‐0.5
Pharmaceutical and nutrition: Launched adhesion
barrier in the JPN market+0.4
Healthcare: Downsized low profitable accounts‐0.6
Alliance: Overseas business device sales to global
pharma companies for use in drug product kits grew +0.3

Downsizing overseas low profitable accounts.
+17% Profit increased mainly due to large cost reductions for(+14%) infusion system and pain management products alongwith R&D reimbursement from pharmaceutical partners
in FY17 Q2 (Alliance)
9/24

Blood Management: Continuous Trend in Profitability Improvement(billion yen)
FY16
Q3YTD

FY17
Q3YTD

YoY%

Major Topics

Impact( ) FXNFX (EUR depreciation against USD)

SalesBusinessBiProfit

68.7

10.3((15%))

76.5+11%(+6%)

12 4
12.4+20%(+19%)((16%))+3.9

Blood Center: Continuous double digit
growth in emerging countries+1.8
papheresis:
pGrew due toTherapeutic
replacement demand for the next generation+2.0of console (+1.0)

Improved profitability due to increased production
volume for blood center products thanks to strong
sales in emerging countries, along with better
product mix realized due to expansion of highly
profitable
fit bl th
therapeuticti apheresis
hi mainly
i l iin US
10/24

Major Topics in Q3 [1] CSR activities: 15th Anniversary of “Terumo Mt. FujiReforestation ProjectProject”, planting trees and maintaining
Corporate

forested areas w/ the locals (Oct)shareholders’ meeting in Nagoya and Osaka,
Osaka JPN,JPN
 Held shareholders
further promoting dialogues w/ shareholders (Nov, Dec)

 Obtained manufacture and marketing
approval for Japan’s first insulin patch pumpBusiness“MEDISAFE WITH” (Nov) Announced construction for a new building inTerumo Yamaguchi w/ investment of 30.0 BJPY
to reinforce production system for TIS (Dec)
11/24

Major Topics in Q3 [2] Resumption of “Angio‐Seal” Shipment Mid Oct: Resumed production stepwisely
 Late Dec: Electricity supply from power grid became
stabilized Early Jan: Resumed shipment to the customers after
having enough inventories accumulatedImpact
 Managed JPN and EU market w/ stocks, resulting inminimal negative impact.
Experienced backorder in US market (already cleared at
the end of Jan) Sales in Nov and Dec FY17 declined by about 50%
comparedpto monthlyy average
g12/24

New Products Pipeline in FY17
Category
Coronary

ProductsRegion

PTCA balloon

Category

US: Q4CVPeripheral

Stent (TRI)

★

FY18

PTA balloonb ll(TRI)

★

FY18

PTA guiding sheath (TRI)★

Drug coated balloon
Embolization coilProductsRegion

Heart‐lung machine(Re launch)(Re‐launch)◎Launched

Next generation of oxygenator◎

JP, US, EU
FY18

V i l infusion
Verticali f i pumpJP:
Launched

FY18

GeneralHospital
Products

Needleless infusion system for
Anti‐cancer drugs

Launched◎★

EU: Q4DM

Insulin patch pump◎

Launched

Blood
New software for automatedMManagementt blood
bl d collection
ll ti systemt

Distal protection device

Launched

Hydrogel coil 3D

Launched★

JP:
ApprovedJP:
LLaunchedh d

NeuroOncology

Radioembolization beads(Quirem)★

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

13/24

Revision of FY17 Guidance Net sales: Took TIS and Neurovascular’s good momentum into considerationand factored in the one‐off contribution such as replacementpdemand for
new consoles in Blood Management Company
 Operating Income: Overcoming the impact of hurricane on closure devices,
expect to achieve the guidance of 2H FY17
 Net Income: Factored in the impact of US tax reform(billion yen)

Net salesOperating
IncomeOrdinary
IncomeNet Income

Current Guidance

575 0575.0

82 082.0

79 5
79.5

53 053.0

New Guidance

588.0

92.0

89.5

76.0

Change+13 0+13.0+10 0+10.0+10 0+10.0+23 0+23.0
14/24

Reference

15/24

FY17 Q3YTD Net Sales and Growth by Region(billion yen)

Business
S
SegmenttJapanp

Cardiac andVascularOutside of Japan

G. Total

Subtotal

EuropeAmericas

China

Asia

40.5

199.5

61.5

88.0

25.5

24.5

240.0

(+9%)

(+26%)(+24%)(+30%)(+20%)(+24%)(+23%)

31.0

161.0

49.2

67.7

23.8

20.4

192.0((+9%)9%)((+27%)
27%)((+21%)
21%)((+35%)
35%)((+18%)
18%)((+24%)
24%)((+23%)
23%)

GeneralHospital

93.8

26.4

6.2

5.7

1.6

12.9

120.2

(0%)

(‐2%)

(‐1%)

(‐3%)

(+2%)

(‐3%)

(0%)

Blood
Manage‐
ment

8.4

68.1

18.4

32.5

4.1

13.0

76.5

(‐2%)

(+7%)

(+2%)

(+7%)

(+15%)(+11%)

(+6%)

142.9

294.1

86.1

126.3

31.2

50.4

437.0

(+2%)

(+18%)(+17%)(+22%)(+18%)(+13%)(+12%)Out of C&V
Interventional
S t
Systems**

G. Total*Including Neurovascular business(YoY%): FXN
16/24Operating Expenses((billionyen))
FY16
Q3YTD

FY17Q3YTD

YoY

YoY%

YoY%

Salaries & Wages

54.6

63.1+8.5+16%+11%

Sales Promotion

11.2

12.6

+1.4

+12%+8%Logistical Costs

8.4

9.4

+1.0

+12%+10%Depreciation &Amortization

18 9
18.9

27 9
27.9

+9.0
90

+47%
47%

+41%
41%

Others

27.2
120.3

30.6
143.6

+3.4

+13%+9%(32.2%)(32.8%)+23.3+19%+15%

24 5
24.5

28 7
28.7

( 6.5%)(6.6%)+4.2+17%+14%

144 8
144.8

172 3
172.3

(38.7%)(39.4%)+27.5
27 5+19%
19%

+15%
15%

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

(FXN)

17/24

Quarterly Results((billionyen))

FY16Q3((Oct‐Dec))

Q4((Jan‐Mar))FY17 Q1((Apr‐Jun)p)

Q2((Jul‐Sep)p)

Q3((Oct‐Dec))

Net Sales

129.3

139.8

139.3

145.3

152.3

GGrossP
Profitfit

68 7
68.7

74 3
74.3

78 3
78.3

81 4
81.4

85 0
85.0

(53.2%)(53.2%)(56.2%)(56.1%)(55.8%)

41.0

47.4

46.4

47.3

49.9

(31.7%)(34.0%)(33.3%)(32.6%)(32.7%)

8.29.2

8.5

9.6

10.6

(6.4%)(6.6%)(6.1%)(6.6%)(7.0%)

19.5

17.7

23.4

24.5

24.5

(15.1%)(12.6%)(16.8%)(16.9%)(16.1%)

24.5

24.2

30.6

31.8

31.9

(19.0%)(17.4%)(22.0%)(21.9%)(21.0%)

USD

109 yen

114 yen

111 yen

111 yen

113 yenEUR

118 yen

121 yen

122 yen

130 yen

133 yen

SG&A Expenses
R&D Expenses
OperatingIncome(Excl.
Amortization)
Average
Exchange
Rate

18/24

CAPEX and R&D Expenses(billion yen)

41.4 40.7

Amortizationof Intangibles
aandd Goodwill
Good
44 7
44.7

56.0
45 445.4

42.0

39.1
31.5
20.2

17 7
17.7

20 8
20.8

28.6

46 5
46.5

28.5
21.9

CAPEX
24.5

23.0

24.6

20.0

27.5

Depreciation
40 0
40.0
29.4

33.1

33.6

28.7 *R&DExpenses
FY14

FY15

FY16

FY17
Q3YTD

FY17
Guidance

 Expand investment inproduction capacity
and space as well as
IT infrastructure inFY17
 Amortization ofintangibles andgoodwill are
projected to increase
due to M&As
made in FY16
promote US‐ Further pbased R&D activities
for TIS andneurovascular*Investment into venture technologies was booked in other than R&D expenses. (1.5 BJPY)

19/24

Cash Flow
Operating CF+72.3(billion yen)

Investment and Finance CF‐23.4

22.6
42.0

71.3

Depreci‐
ation andamorti‐
zationCorporatetax

18.4
Increase ofworking
capitalFinance
28.6

Repayment
for short
short‐
term debt

1.1
15.8
Dividends

CAPEX

139.9

105.4

Incomebeforetax

Cash at end of
FY16

Others

154 3
154.3

120.0

CAPEX = C.i.P. record basis
Cash at end of each fiscal year is consistent with “cash and deposits” on B/S

Cash at end of
FY17 Q3
20/24FY17 Foreign Exchange Sensitivity(billion yen)

USD

EUR

CNY

Excl.
Amortization

Incl.
Amortization

Net Sales

1.6

1.60.8

1.8

Operating
Income0.0‐0.2

0.50.9<Reference> Impact of +/‐10% fluctuation
North
Latin
America America

Operatingpg
Income

‐1.8
1808
0.8

EMEA

Asia

EUR

OthersCNY

Others

56
5.6

10
1.0

14
1.4

33
3.3
21/24

(Reference) IFRS Basis Adopting International Financial Reporting Standards (IFRS) from the year‐
end financial announcement for FY17 Schedule for disclosure
FY17 Q1‐Q3: Japanese GAAP
FY17 yyear‐end financial announcement : IFRSJapanese GAAPFY17Q3YTD

ReferenceIFRSFY17Q3YTD

Net Sales

437.0

437.0

Operating
Income (%)

72 4
72.4

87 087.0(16.6%)(19.9%)(billion yen)

AdjustedOperating
Income (%)

94 3
94.3

97 5
97.5

(21.6%)(22.3%)Net Income

63 5
63.5

76 2
76.2

Impact‐+14.6+3.2+12 7+12.7

Adjusted Operating Income: Business profit, that is, O/P for IFRS basis w/ cost of M&A, amortization of intangibles, and temporary cost deducted

22/24

The Status of Convertible Bonds
 Detail of the bonds(Issued in Dec. 2014)
Aggregateprincipal
amount(billion yen)

CouponConversion
price(yen)Dec, 2019

50.0

0.0%

3,868

5,028

12.9M shares

Dec, 2021

50.0

0.0%

3,868

5,028

12.9M shares

Maturity

Total

100 0
100.0

Contingent
conversion
trigger price(yen)Number ofshares required
to be issued forconversion

25 9M shares
25.9M

 Status of conversion (as of Jan 31, 2018)
Bonds

Convertible Bonds
due Dec, 2019

AAmount
t off shares
hiissuedd forf conversioniN b off shares
Numberhiissued
d ffor conversioni(% against the total amount of bond)(% against total number of issued shares)

5.47 BJPY (10.9%)

1.4M shares(0.37%)

 Allocated treasury shares to the shares issued for conversion• Number of treasury shares: 27.8M shares (7.3% of total number of issued shares as of the end of Dec, 2017)
23/24

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.
Th market
Thek sharehinformation
i fi ini thishi presentation
i iis partly
l dderivedi d ffrom our own iindependentddresearch.
h24/24