Financial Results for the First Half ofFiscal Year Ending March 31, 2020 (FY2019)

Terumo Corporation
Chief Accounting and Financial Officer
Naoki Muto
November 7, 2019

Highest-ever 1H Revenue and Profit
1H FY18Revenue
Gross Profit(billion JPY)

1H FY19

YoY%

YoY%
(FXN)

285.0

307.3

+8%

+11%

154.6 (54.2%)

171.5 (55.8%)+11%+14%

SG&A Expenses

87.0 (30.5%)

89.6 (29.2%)+3%+6%

R&D Expenses

23.8 ( 8.3%)

24.3 ( 7.9%)

+2%

+5%

Other Income and Expenses

3.7

1.6--

Operating Profit

47.6 (16.7%)

59.2 (19.2%)

+24%

+29%

Adjusted Operating Profit

55.3 (19.4%)

67.0 (21.8%)

+21%

+27%

Profit before Tax
Profit for the Year

44.5 (15.6%)

58.1 (18.9%)+30%

34.5 (12.1%)
USD 110 JPY
EUR 130 JPY

45.7 (14.9%)
109 JPY
121 JPY+33%

Average Exchange Rates

 Revenue : Positive growth in all companies. Overall growth driven by double digit
growth of TIS business in all regions
 Adjusted Operating Profit : High growth due to increase in high margin products sales
and expenses behind the plan in Cardiac and Vascular Company
 Profit before Tax : FX loss decreased from 2.8 B JPY in 1H FY18 to 1.1 B JPY in 1H FY192/21

Adjusted Operating Profit Variance Analysis(billion JPY)
6.0
Gross
margin18.5

7.755.3

47.6
1H FY18 1H FY18
Operating Adjusted
Profit Operating
ProfitG/Pincrementby salesincrease

2.5
Price

1.0
MDR
-0.6
IT
investment
-0.4

4.1
SG&A
increase

2.8
R&D
increase

2.3
FX
7.8

67.0
59.2

1H FY19 1H FY19
Adjusted Operating
Operating
ProfitProfit

3/21

Revenue by Region
RevenueYear-on-Year Revenue Comparison
YoY%billion JPY

100% = 307.3 B JPY( ) FXN

31%19%

95.9

Japan

91.1

China8%12%

Asia andOthers(+10%)
92.6
84.3

Americas30%+4%

58.3
56.2

Europe+5%+10%(+12%)

24.4

+17%

20.9(+24%)

36.1
32.5

+11%(+15%)

1H FY19
1H FY18

Comments
Japan : Steady growth in General HospitalCompany. Double digit growth in Cardiac
and Vascular Company
Europe : Cardiac and Vascular Company,
especially double digit growth in TIS businesscovered negative growth in General Hospitaland Blood Management
Americas : Double digit growth driven byCardiac and Vascular Company centered on
TIS and Neurovascular business
China : +20% growth in Cardiac and VascularCompany
Asia and Others : Double digit growth inCardiac and Vascular, as well as BloodManagement Company

4/21

Revenue by Business Segment
RevenueYear-on-Year Revenue Comparison
YoY%billion JPY

100% = 307.3 B JPY

1H FY19
1H FY18

Comments( ) FXN

56%

CardiacandVascular

172.6
153.5

82.8

GeneralHospital

81.2

+12%

(+16%)

Driven by double digit growth of TIS
business in all regions, as well as
Neurovascular business. Positivegrowth in all businesses+2%

Driven by Alliance business continuing
double digit growth+3%

Steady sales to blood centers in US, EUand JP. Also contributed by winning atender in an emerging country

(+3%)

27%

17%

BloodManagement

51.8
50.2(+7%)

5/21

Cardiac and : Positive Growth in All Businesses.
VascularSignificant Increase in Revenue and Profit
1H FY18

1H FY19

YoY%(billion JPY)

Major Topics

Impact( ) FXN

153.5

172.6
TIS：Double digit growth in all regions+12%

Revenue(+16%)+15.3

Neurovascular : Continuous high growthcentered in USCV : Steady sales in oxygenators+3.5+0.1

Vascular Graft : Smooth transition to direct salesof stent grafts in JP. Under reorganization in overseas +0.2

47.2
Adjusted
OperatingProfit(%)

34.5+37%(+42%)
(22%)

(27%)

Growth in profit due to TIS sales increase and substantial
improvement of product mix in overall Cardiac and VascularCompany. Some expenses behind plan due to positive
momentum in revenue
6/21

GeneralHospital : Revenue and Profit in Line with the Guidance
1H FY18

1H FY19

YoY%

Major Topics(billion JPY)
Impact( ) FXN

General hospital products : Steady momentum
excluding the FX impact
81.2

82.8+2%(+3%)

Revenue

0.0

Pharmaceutical and nutrition : Double digit
growth in pain management products andadhesion barrier+0.4

DM Healthcare : Steady momentum in DMproducts+0.1

Alliance : As planned in spite of negative impact
due to order timing issues
Adjusted
OperatingProfit
(%)

13.8

12.6

-8%

(-7%)
(17%)

(15%)

+1.2

Profitability back on guidance from Q1 in which expenses
were preceded

7/21

Blood: Returned to Positive Growth in Revenue.
Management Profitability Recovered as Planned
1H FY18

1H FY19

Major Topics

YoY%(billion JPY)
Impact( ) FXN

Blood center products : Recovered the delay
50.2

51.8

Revenue+3%(+7%)

occurred in Q1. Also contributed by winning atender in an emerging country+1.4

Therapeutic apheresis : Recoil of replacementwith the latest version of consoles

0.0

Cell processing : Driven by steady sales in US &Asia

Adjusted
OperatingProfit
(%)

7.0

6.7

-4%(+6%)
(14%)

+0.2

Huge negative impact of FX. Profitability
recovered as planned(13%)
8/21Factors for Higher Profit Than 1H Guidance and Risks in 2H
 Major factors for higher profit than 1H Guidance Product mix improvement due to higher sales in TIS and Neurovascular, production costdown in those two businesses Delay in spending pace of MDR cost Delay in spending pace of SG&A expenses
 Promotion cost : Cardiac and Vascular Company (Post Marketing Surveillance,promotion for sales expansion etc.)
 Saved expenses due to solid sales : Expenses for launching “WEB” in Neurovascular andfor market share recovery of TIS products

 Risk factors in 2H
 Revenue : FX impact, recoil from rush demand before the consumption tax increase in JP Profit : MDR cost etc.

 No revision for the FY19 guidance for now. Aim to exceed the annual guidance by
maintaining the strong momentum of 1H

9/21

Major Topics in FY19 Q2
Japan’s first domestic disposable syringe made by Terumo was selected for“Essential historical materials for science and technology” (Sep)
Corporate

Joined two U.S.-based venture capital funds (Aug)Participated in “TELEWORKDAYS 2019” as a special cooperative organization.
Led by the corporate office (Jul)Launched “Misago (TRI)”, a peripheral stent for iliac arteries supportingtherapies from the radial artery in US(Sep)Decided to increase production capacity for pre-filled
syringes at Terumo Yamaguchi D&D Corporation (Sep)A new formulation to treat osteoporosis developed by a pharmaceuticalcompany and pre-filled in “PLAJEX” received approval for manufacturing andBusinesssales within Japan (Sep)Launched “Fentanyl injection”, a prescription-only analgesic in Japan (Sep)Decided to invest 26 M EUR in new production lines for Alliance and TIS in
Belgian factory (Jul)10/21

New Products Pipeline in FY19
CategoryAccessCoronary

ProductsJP

PTCA balloonEU,Asia

Launched

JP, US

Launched

US

Launched

Intrasaccular aneurysm treatment
device (WEB)Distal access catheter

CVVasculargraft(Sofia EX)

EU, US

Mini balloon

EU, US

Aspiration catheter

JP

Launched

StentrieverJP

Launched

Next generation of oxygenator

JP

Heart lung machine (re-launch)JP

Large-bore vascular graft(Triplex Advanced)

JP

Category
Generalhospital

Closure device for distal
radial approach

Peripheral Stent (TRI)

NeuroRegion Launch

Pharmaceutical

Products
Next generation of syringe pumpJP

Narcotic analgesic for
postoperative pain management(Fentanyl injection)JP

Launched

Adhesion barrier (AdSpray mini)JP

Launched

Continuous glucose monitoringsystem

JP

Launched

Blood glucose monitoring system

JPDM andconsumer Insulin patch pump
healthcare
Next version of blood pressure
monitorNext version of thermometer
Blood
Management

Region Launch

Fill and finish system for cell therapy
processing (FINIA)

JP

Launched

JP
JP
Global Launched

11/21

Reference

12/21

1H FY19 Revenue and Growth by Region(billion JPY)

BusinessSegment

Japan

Cardiac andVascular

Overseas
SubtotalEurope

Americas

China

Asia etc.

GrandTotal

24.8

147.9

(+17%)

42.2(+14%)

67.2(+15%)

20.5(+27%)

18.0(+23%)

172.6

18.7

122.3

(+21%)

34.4(+17%)

53.7(+20%)

19.1(+28%)

15.0(+26%)

140.9

GeneralHospital

65.0

17.8

(+0%)

4.3

(+1%)

4.1

(+5%)

1.2

(+6%)

8.2

(-4%)

82.8

Blood
Management

6.1

45.7

11.8

21.3

(+6%)

2.7

(+8%)

9.9

(+20%)

51.8

95.9

211.4

58.3

92.6

24.4

36.1

307.3

Out of C&V
Interventional
Systems*

Grand Total(+11%)(+11%)

(+3%)

(+5%)

(+5%)

*Including Neurovascular business(+8%)(+13%)(+2%)(+10%)(+12%)(+24%)(+15%)(+16%)(+20%)

(+3%)

(+7%)

(+11%)(YoY%): FXN13/21

Operating Expenses(billion JPY)

1H FY18

1H FY19

YoY

YoY%

YoY%

Salaries & Wages

43.3

44.0+0.7+2%+5%Sales Promotion

8.7

9.5+0.8+9%+12%

Logistical Costs

6.6

6.8+0.3+4%+7%

Depreciation &Amortization

6.9

9.1*

+2.2+32%+34%

Others

21.6
87.0-1.3-6%-4%(30.5%)

20.3*
89.6

(29.2%)+2.6+3%+6%

23.8(8.3%)

24.3(7.9%)+0.6+2%+5%

110.7

113.9+3.2+3%+6%

SG&A Expenses Total
R&D Expenses
Operating Expenses
Total(38.8%)(37.1%)(FXN)*Reclassification between Depreciation & Amortization and Others due to IFRS 16 (Lease Accounting)

14/21

Quarterly Results(billion JPY)

FY18 Q2(Jul-Sep)

Q3(Oct-Dec)

Q4(Jan-Mar)

FY19 Q1(Apr-Jun)

Q2(Jul-Sep)

Revenue

142.0

158.6

155.9

152.5

154.8

Gross Profit

74.7

87.6

84.3

85.2

86.3

SG&A Expenses(52.6%)(55.2%)(54.1%)(55.8%)(55.8%)

43.5

45.0

46.7

44.5

45.1

(30.5%)(28.4%)(29.9%)(29.2%)(29.1%)

R&D Expenses

12.4

12.3

11.6

11.8

12.5

Other Incomeand Expenses

2.9

0.6

2.1

0.4

1.3

21.7

30.9

28.2

29.2

30.0

Operating Profit
Adjusted
Operating Profit
Average
ExchangeRates(8.8%)(7.7%)(7.5%)(7.8%)(8.1%)(15.3%)(19.5%)(18.1%)(19.1%)(19.4%)

24.8

35.9

30.9

33.9

33.1

(17.4%)(22.6%)(19.9%)(22.3%)(21.4%)USD

111 JPY

113 JPY

110 JPY

110 JPY

107 JPY

EUR

130 JPY

129 JPY

125 JPY

123 JPY

119 JPY
15/21

Adjusted Operating Profit : Adjustments(billion JPY)

1H FY18

1H FY19

Operating profit

47.6

59.2

Adjustment 1. Amortization of acquired
intangible assets+7.5+7.8

Adjustment 2. Non-recurring profit or loss

+0.2+0.0*

Adjusted operating profit

55.3

67.0

<General examples of adjustment items>
 Acquisition related cost  Nonlife insuranceincome Lawsuit settlement
 Loss on disaster Impairment loss Other one-time Restructuring loss
profits & losses* 1H FY19 main items inAdjustment 2. Non-recurring profit or loss

AmountBusiness reorganization cost

+0.9

Disaster insurance income for Puerto Ricofactory-1.216/21

CAPEX and R&D Expenses
Amortization ofacquired
intangible assets
and goodwill
39.1

45.4
20.8

(billion JPY)
75.0

Amortizationof acquired
intangible
60.8
assets43.6 42.0
14.5

44.0
14.6

CAPEX

49.0

43.2

14.7
22.9
7.9

24.6

27.6

29.4

34.3

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

Depreciation
33.6

15.0

41.3

50.0

47.7
24.3

R&D
Expenses
FY16

 Expand investment inproduction capacity andspace as well as IT in FY19
 Under IFRS since FY17
 Depreciation includes
amortization of nonacquired intangible
assets & depreciation ofcapitalized R&Dexpenses

FY17

JGAAP <- -> IFRSFY18

1H FY19FY19Guidance

activities mainly for TIS,
Neurovascular and BloodManagement Company Capitalized R&D expenses
are included in CAPEX
FY18: 2.4
1H FY19: 2.3
FY19 guidance : 3.2
17/21

Cash Flows
Operating CF+49.7

リレーションシップ ID rId4 のイメージ パーツがファイルにありませんでした。

25.1

Depreciationandamortization

58.1

Investing & Financing CF-55.3

11.3
Incometaxes

22.1
Working
capitalincrease

43.2

CAPEX

123.0

Cash at theend of FY18

Profitbeforetax(billion JPY)

10.0Dividends

2.0Others

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

117.4

Cash at theend of 1H FY1918/21

Foreign Exchange Sensitivity
Annual impact of 1 JPY depreciation(billion JPY)

USD

EUR

CNY

Revenue

1.7

0.8

2.2

Adjusted Operating
Profit

0.0

0.5

1.2

<Reference> Impact when JPY is depreciated by 10%
AdjustedOperating
ProfitNorthLatin
America America
-0.1

1.0

EUR

6.5

EMEA

Others

CNY

1.3

1.9

AsiaOthers

3.619/21

The Status of Convertible Bonds
 Detail of the bonds (issued in Dec. 2014)*After two-for-one stock split implemented in Apr. 2019

Maturity

Aggregateprincipal amount(billion JPY)

Dec. 2019

50.0

0.0%

1,919

2,495

approx. 26 M sharesDec. 2021

50.0

0.0%

1,919

2,495

approx. 26 M shares

Total

100.0

CouponConversion price(JPY)

Contingent
conversion trigger
price (JPY)

Number of sharesrequired to be issued
for conversion

approx. 52 M shares Status of conversion (as of Oct. 31, 2019)
Amount of shares issued for conversion

Number of shares issued for conversion

Convertible Bonds
due Dec. 201950.0 B JPY (100.0%)

26 M shares (3.4%)

Convertible Bonds
due Dec. 2021

35.4 B JPY (70.9%)

18 M shares (2.4%)

Total

85.4 B JPY (85.4%)

44 M shares (5.8%)

Bonds(% against the total amount of bond)(% against total number of issued shares)

Allocated treasury shares to the shares issued for conversion•

Status of treasury shares: 11 M shares(at the end of Oct. 2019, treasury stock cost per share : 1,949 JPY, % against total number of issued shares : 1.5%)

20/21

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.

21/21