[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2016: Reference

Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2016: Reference
Analysis of Business Performance
1. Overview of Financial Results for the First Quarter of the Fiscal Year Ending March 31,
2016(1) Overview of Consolidated Business Results
During the first quarter of the current fiscal year (from April 1 to June 30, 2015), the global healthcare
industry continued to undergo a transformation. In the United States the business environment wasimpacted by the reorganization of major healthcare insurance companies. The U.S. Supreme Court
decided to uphold subsidies for health insurance. Meanwhile in Europe, there was concern that
Greece’s financial crisis would ripple over and negatively impact the region’s macro economy. InJapan, the government established the Japan Agency for Medical Research and Development(AMED) in April 2015. Operations are already underway. AMED’s core responsibility is to conduct
research and development in the medical field and to maintain an R&D environment.
Amid this environment, the Terumo Group is pursuing its goal of “becoming a company with a global
presence,” and in line with its business-led management structure, Terumo is promoting managementthat aims to achieve sustainable and profitable growth.
The following are highlights of performance at each company during the first quarter of the current
fiscal year.
● In the Cardiac & Vascular Company, performance trended steadily in the overseas interventional
systems and neurovascular intervention businesses. In FY2014, sales of the "Ultimaster", a drugeluting stent, were launched in Europe, Asia, and Central and South America. Ultimaster sales grewsolidly in all three regions in the first quarter.
● In the General Hospital Company, the company strived to improve its profitability through portfolio
reorganization by the expansion of the Drug and Device and the DM businesses, both of which
generate a high earnings.
● In the Blood Management Company, with responding to the market environment austere as
evidenced in part by the downward pressure on prices in the United States, the company increased
sales for therapeutic apheresis systems and cell expansion systems, and automated blood component
collection system mainly in emerging countries.
A partial revision was made to the management of earnings at Terumo’s overseas subsidiaries.
Accordingly, starting October 1, 2014, earnings at consolidated subsidiaries Harvest Technologies
Corporation and Harvest Technologies GmbH are being posted under the Blood Management
Company reporting segment, as opposed to the Cardiac & Vascular Company. The segment-1-[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2016: Reference

information for the first quarter of the fiscal year ended March 31, 2015 disclosed herein has been
prepared to conform to the revised reporting segments.
Financial results for the first quarter of the fiscal year ending March 31, 2016 are as follows:Net sales
Net sales totaled 128.7 billion yen, an increase of 11.9% compared with the same period in theprevious fiscal year.
(million yen)
GrowthQ1

Q1

FYE 3/2015

FYE 3/2016

Growth (%)

excluding
impact of forex
translations (%)

Net sales

114,945

128,660

11.9

5.3

Gross profit

60,706

69,04713.7

7.4

Operating income

16,114

19,44920.7

18.4

Ordinary income

14,44920,592

42.5

－

8,394

14,504

72.8－

Profit attributable to ownersof parent(million yen)
GrowthRegional sales

Q1

Q1

FYE 3/2015

FYE 3/2016Growth (%)

excluding
impact of forex
translations (%)

Japan

43,41443,9861.3

1.3

Europe26,03325,868(0.6)

1.7

Americas28,40335,85426.2

7.1

Asia, outside Japan

17,094

22,951

34.3

17.8

Overseas total

71,531

84,673

18.4

7.7

Total

114,945

128,660

11.9

5.3

In Japan, net sales totaled 44.0 billion yen, a rise of 1.3% in contrast with the same period a year
earlier. Sales in the General Hospital Company rose owing to a recovery from the slowdown indemand that was triggered by a change in the market environment, including the consumption tax
hike in FY2014 and the division of functions at medical institutions. Meanwhile net sales overseas
totaled 84.7 billion yen, a growth of 18.4%, owing to a substantially expansion in sales of-2-

[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2016: Reference

interventional systems and neurovascular intervention businesses in the United States, Europe, andAsia, and the sales growth in the Blood Management Company.
Gross profit
Gross profit totaled 69.0 billion yen, a growth of 13.7% in contrast with the same period a year earlier.
This was primarily attributable to an expansion in sales of high-value-added products abroad.
Operating income
Operating income totaled 19.4 billion yen, an expansion of 20.7% versus the same period a year
earlier, as the increase in gross profit overshadowed the increase in selling, general and administrative
expenses.
Ordinary income
Ordinary income was 20.6 billion yen, an increase of 42.5% in comparison with the same period ayear earlier, reflecting a growth in operating income and foreign exchange gains owing to a weakeryen.
Profit attributable to owners of parentProfit attributable to owners of parent came to 14.5 billion yen, an increase of 72.8% in contrast withthe same period in the previous year, owing to a decline in extraordinary loss, and a decline in thecorporate tax rate owing to revisions to the tax system and adjustments to taxes for previous fiscalyears.
Net sales results by company are as follows:(million yen)
Q1

FYE 3/2015

FYE3 /2016

Net sales

53,48063,19518.2

8.8(Domestic)

11,756

11,317

(3.7)

(3.7)

(Overseas)

41,72351,87724.3

12.4

Net sales

38,00539,484

3.9

1.8(Domestic)

28,91630,1594.3

4.3(Overseas)

9,088

9,325

2.6(6.3)

Net sales

23,45925,980

10.7

3.0(Domestic)

2,740

2,509(8.4)(8.4)(Overseas)

20,71823,471

13.3

4.5

Segment

Cardiac & VascularCompanyGeneral HospitalCompany
Blood Management
Company

Growth excluding

Q1

Cardiac & Vascular Company-3-

Growth (%)

impact of forex
translations (%)

[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2016: Reference

In the interventional systems business in Japan, sales declined 3.7% year-on-year. This reflected adecline in sales of coronary and peripheral stents owing to a temporary change in the market andcompetitive environment. Meanwhile, in the interventional systems business in overseas markets,sales of products for transradial coronary intervention (TRI: a technique using a catheter toapproach the coronary artery from a vein in the wrist) increased and sales of the Ultimaster, drugeluting stent, were brisk in Europe and other regions. Sales in the neurovascular intervention
business grew in all regions.
Consequently, sales in the Cardiac & Vascular Company totaled 63.2 billion yen, a growth of
18.2% in comparison with the same period in the previous fiscal year.
General Hospital Company
In Japan, sales rose 4.3% year-on-year, owing in part to an expansion in sales of high-value-added
products, including infusion systems and blood glucose monitoring systems. Overseas sales were up
2.6% reflecting an expansion in sales of high-value-added products in accordance with thereorganization of its portfolio.
Accordingly, sales in the General Hospital Company came to 39.5 billion yen, an increase of 3.9%
in contrast with the same period a year earlier.
Blood Management Company
In Japan, blood donation numbers continued to trend downward. In light of this, sales declined due
to negative impact to demand for blood collection products, including blood bags. Meanwhile,
overseas sales increased for therapeutic apheresis systems and cell expansion systems. Sales werealso brisk for automated blood component collection systems, mainly in emerging countries.
Consequently, sales in the Blood Management Company amounted to 26.0 billion yen, a growth of
10.7% in contrast with the same period in the previous fiscal year.
(2) Overview of Consolidated Balance Sheets
Total Assets
As of June 30, 2015, total assets came to 983.0 billion yen, a decrease of 9.1 billion yen comparedwith March 31, 2015. Current assets were 400.6 billion yen, a decline of 11.9 billion yen owing inpart to a reduction in cash and deposits.
Non-current assets totaled 578.1 billion yen, an increase of 2.2 billion. Property, plant and equipment
increased 2.9 billion yen, intangible assets decreased 2.2 billion yen, and investments and other assets
rose 1.5 billion yen.
Total Liabilities
Liabilities totaled 394.7 billion yen, a decline of 23.9 billion yen. Current liabilities were 103.3 billion-4-[Terumo Corporation] Financial Results for the First Quarter of Fiscal Year Ending March 31, 2016: Referenceyen, a decrease of 26.6 billion yen, owing in part to the payment of income taxes payable.
Non-current liabilities came to 291.4 billion yen, an increase of 2.8 billion yen, reflecting an increasein long-term loans payable.
Total Net assets
Net assets totaled 588.3 billion yen, an increase of 14.8 billion yen.
Accordingly, the company posted an equity ratio of 59.8%, an increase of 2.0 points versus March31, 2015.
(3) Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2016
The business environment is likely to remain murky going forward, including changes in the businessclimate for medical devices. However, Terumo is reiterating its consolidated financial forecasts.
Amid this business environment, to achieve its goals, the Terumo Group aims to introduce and expand
sales of high-value-added products that contribute to the improvement of healthcare economics.
Furthermore, the Company plans to embark on the reduction of manufacturing costs and the fullfledged implementation of SG&A cost efficiency measures.

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