I will now explain the Terumo first-half earnings results for the period ending March 31,
2018.
On October 19th, we revised our earnings outlook, and our first-half numbers do not differ
greatly from the numbers we announced then. Some numbers improved slightly, butthere were no big changes.
Due to strong first-half earnings, we issued a release today announcing an increased
dividend. We had planned on issuing dividends of 22 yen each in the first and second
halves of the year for an annual total of 44 yen per share. Now we have increased thefi h lf difirst-half
dividend
id d bby one yen, to 23 yen. WWe also
l expect to iincrease theh second-half
d h lfdividend by one yen, to 23 yen, for an annual total of 46 yen.

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I will now explain the earnings results for the first half.
Now, some main points from this announcement:
In all sales and income areas we achieved our highest‐ever numbers.
In sales, the Cardiac & Vascular Company did well, with all four of its businesses achieving
double‐digit sales growth, leading to robust 30% growth of the company’s combined sales year‐on‐year. This drove group‐wide sales growth of 16%. When excluding acquisitions, the growthrate was still a strong 9%.
9%
In operating income, each of the three companies posted year‐on‐year growth of over 20%, withoverall group operating income growing 22%.
In operating income, the amount was a highest‐ever 39.1 billion yen in the first half of FY15,
then 39.4 billion yen in the first half of FY16; this year the first half operating income was 47.9billion yen; therefore, first‐half operating income has now been the highest‐ever for threestraight fiscal years.
Strong operating income combined with no FX losses to grow net income 61%, for a result of 33
billion yen. All incomes increased another 1 billion yen respectively above the numbers weannounced
d alongl
with
ith theth recentt forecast
ft revision.
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Here is the operating income variance analysis.
As you can see, sales growth was the biggest factor driving increased gross profit, which led tohigher operating income. The contribution of gross margin improvement was 5.4 billion yen;
when breaking this amount down, we see existing business portfolio improvement accountingfor 1.4 billion yen, and businesses acquired last fiscal year accounting for a gross margin
improvement of 2 billion yen. Those were the two main pieces of the total 5.4 billion yen.
Price erosion, investment in SG&A, R&D, and goodwill followed the same trend we saw in thefirst quarter, with little variance.
In the first quarter, there was a negative FX impact of 1.5 billion yen; however, the first half has
ended with a positive FX impact of 0.6 billion yen.

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The next slide shows sales by region. In Japan, sales grew 1% year‐on‐year in the first half. The
first quarter saw a decrease of 1%, but then grew in the second quarter to bring the first half
positive at 1%.
Outside Japan, year‐on‐year sales growth exceeded 20% in all regions, continuing the first‐quarter trend. Growth centered in Cardiac & Vascular, which grew 35% outside Japan. BloodManagement also had double‐digit growth outside Japan.

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Next is sales by business segment.
Just as in the first quarter, the Cardiac & Vascular and Blood Management companies sales grew,
while General Hospital Company saw decreased sales. However, the rate at which the Cardiac &Vascular and Blood Management companies grew at a higher percentage in the first half
compared to the first quarter, while the General Hospital Company grew its sales in the second
quarter after a 4% decrease in the first quarter, thereby reducing the amount of negative sales
growth to 1% for the first half.

5I will now give more explanation of business segment results.
As I mentioned, all four businesses of the Cardiac & Vascular Company grew sales in the double‐digits. First, in the TIS business, our newly acquired Vascular Closure Device performed very well.
The sales of the acquired business were far above plan
plan, and existing businesses also maintained
good results. Even alone, the existing business saw double‐digit growth. Then when combinedwith the acquired business, growth was extremely strong.
As the slide indicates, existing business grew sales by 5.8 billion yen.
One other point is that the neurovascular business grew the most in the first half of any of thefour businesses of Cardiac & Vascular company. Even when excluding acquired businesses, theneurovascular business grew 37% year‐on‐year. Among the two segments within neurovascular,
the coil products of the aneurysm business had struggled to grow in the last fiscal year, but thefavorable results of clinical study on hydrogel coils contributed to significant growth. In addition,
the non‐coil segment including stents and suction catheter also grew well, contributing to theoverall 37% organic growth of neurovascular.
In CV, the consent decree was completely lifted to allow shipment of products from the AnnArbor Plant. This has had a positive effect on the blood‐monitoring business. Going into thesecond half, heart‐lung machine shipments will also resume, resulting in further improvement.
Business profit grew strongly, continuing the trend of improved business profitability at 26%. As
a result, the amount of business profit increased a robust 24%.

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In General Hospital, I mentioned earlier that growth was negative in the first quarter; however,the second quarter saw positive growth, so while the first half ended up negative overall, thedecrease was softened.
The major negative impacts were the ending of certain businesses,
businesses which we announced in thefirst quarter, and downsizing of accounts inside and outside Japan in Healthcare. In addition,
there had been a small downturn in first‐quarter sales due to distributor inventory buildup at theend of the previous fiscal year, but sales recovered in the second quarter.
These factors combined to result in negative sales growth of 1% in the General HospitalCompany for the first half.
Business profit grew 20%; a significant improvement. Also, the first half saw businessprofitability of 17%; the number was 15% in the first quarter and 19% in the second quarter,improving greatly.
Of course a portion of this second‐quarter improvement is due to the ongoing efforts to improvegross profitability
profitability, but in addition,
addition there were expenses that did not occur in that quarter asexpected. R&D expenses were also less than plan because sample products sales for consigned
development activities in the Alliance Business occurred sooner than expected, reducing theamount for the second quarter. Therefore, the General Hospital company business profitability
improvement in the second quarter resulted in a very good direction and numbers, but it isimportant to note that they will not continue at the same pace going forward. Gross profitability
is steadily improving on an ongoing basis, though, with the downsizing of low‐profit businesses
overseas and increased sales of high‐value‐added pumps and related systems.

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In Blood Management, sales and business profit continue to steadily recover.
As we have mentioned previously, fiscal year 2016 was a bottoming‐out period for the BloodManagement Company, when American blood center product prices dropped as planned.
However, at the same time the profitable businesses of blood centers in emerging markets,therapeutic apheresis, and cell processing are driving strong sales growth, which is contributing
to expansion of business profit.

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Since time is short, I will skip over the major topics slide.

9Regarding the FY17 product pipeline, development is currently progressing as planned.
This concludes my explanation.
Thank you very much.

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