[Terumo Corporation] Financial Results for the First Half of the Fiscal Year Ending March 31, 2012: Reference

Financial Results for the First Half of the Fiscal Year Ending March 31, 2012:
Reference
Analysis of Business Performance<1> Overview of the Financial Results for the First Half of the Fiscal Year Ending
March 31, 2012[1] Overview of Business Results
The global economy in this first half period (between April 1, 2011 and September 30,2011) saw a general slowdown in economic growth such as the economic recession inEurope and US and a reduction in the speed of economic expansion in emerging
countries. There were also concerns about the credit crisis in Europe and thedowngrading of US bonds, with a stronger sense of uncertainty overall. In addition,with these economic conditions as a background, there was a drastic appreciation of
the yen, causing a harsh business environment for our Group.
Under such conditions, looking at the global healthcare market, there are newopportunities for growth where we can take advantage of our strengths such asincreasing demand for medical devices driven by economic growth and theimprovement of medical standards in emerging countries, higher needs for medical
cost efficiency as strengthened medical cost reductions through various healthcare
reforms in developed countries.
Launching the target of GP1 or becoming “1 trillion Global Presence” by 2020, ourGroup kicked off a three-year mid-term management plan, “GP1: Change and Growth
2013,” starting in the fiscal year ending March 2012. Key growth strategies include not
only strengthening the internal capacity for growth through globally reinforced
development, but also targeting drastic growth by taking full advantage of thestrengths of Terumo and CaridianBCT that we acquired in April 2011. At the sametime, we will improve our financial standing through risk control, improvedprofitability, and finance. By implementing these strategies, we are looking to asustainable double-digit growth rate.
Our Group celebrated the 90th anniversary in September of this year. Dr. ShibasaburoKitasato and others founded the company in 1921, and under our corporate vision of“Contributing to Society through Healthcare,” we have expanded our range ofbusinesses to the promotion of the widespread use of disposable products for medical
safety and the development of medical devices totally supporting advanced medicaltreatment. We shall continue to develop and launch products responding to market-1-[Terumo Corporation] Financial Results for the First Half of the Fiscal Year Ending March 31, 2012: Reference

needs and further contribute to the health of people around the world by promoting
global business expansion.
As a result, our performance in the consolidated period of the first half of this fiscal
year is as follows:(Unit: millions of yen)
1H FYE Mar. 2011

Changes %1H FYE Mar. 2012
Changes %Results(Constant currency basis)

Results

Net Sales

163,918

190,718

16.3

19.5

Gross Profit

85,599103,177

20.5

25.8

Operating Income

32,706

34,632

5.9

13.2

Ordinary Income

28,174

31,291

11.1－Net Income

18,364

17,712(3.5)－(Note) The results of BCT and Harvest are included.

(Unit: millions of yen)
1H FYE Mar. 2011

Changes %1H FYE Mar. 2012
Changes %Results(Constant currency basis)

Results

Net Sales

163,918

167,151

2.0

4.7

Gross Profit

85,59988,421

3.3

7.6

Operating Income

32,706

34,6495.9

13.0

Ordinary Income28,174

31,572

12.1－Net Income

18,364

19,2905.0－(Note) The results of BCT and Harvest are excluded.

< Net Sales >Net sales increased to 190.7 billion yen or a 16.3% increase compared with the same
period of the previous year. For our existing business, net sales increased by 2% to167.2 billion yen compared with the same period of the previous year excluding
CaridianBCT and Harvest Technologies, which we completed the acquisitions of thisyear (“existing business,”).

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[Terumo Corporation] Financial Results for the First Half of the Fiscal Year Ending March 31, 2012: Reference

Geographic segments(Unit: millions of yen)Area

1H FYE Mar.

1H FYE Mar. 20122011

Results

Changes %Changes %(Constant currency basis)

Results
Japan

89,471

91,6562.4%

2.4%

Europe27,331

28,925

5.8%

6.7%

Americas28,706

26,356(8.2%)

2.3%

Asia and others

18,40920,212

9.8%

17.3%

Total of Outside of Japan

74,44775,494

1.4%

7.6%(Note) The results of BCT and Harvest are excluded.

In Japan, while I.V. solutions and general hospital products experienced difficulties as
the supply temporarily dropped due to the impact of the earthquake, “Nobori,” thedrug-eluting stent which we released in May, gained market share and increased sales.
As a result, net sales in Japan were 91.7 billion yen, representing a 2.4% increase
compared with the same period of the previous year.
Outside of Japan, interventional systems products enjoyed favorable sales in allregions. Especially in China, interventional systems achieved more than 30% growthcompared with the same period of the previous year on a constant currency basis,pushing up total sales. However, as we were affected by the appreciation of the yen,
net sales outside of Japan were 75.5 billion yen or 1.4% growth compared with thesame period of the previous year.
<Gross Profit>
Gross profit increased by 20.5% compared with the same period of the previous year,
resulting in 103.2 billion yen. While affected by the appreciation of the yen, existing
business gross profit was 88.4 billion yen, a 3.3% increase, thanks to the shift to highly
profitable products and increased production effects.
<Operating Income>In spite of the impact of new goodwill depreciation due to the acquisitions, operating
income was 34.6 billion yen, accounting for a 5.9% increase compared with the same
period of the previous year. Operating income from existing business was 34.6 billion
yen or 5.9% increase compared with the same period of the previous year, thanks toincreased gross profit and the efficient operation of SG&A expenses.
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[Terumo Corporation] Financial Results for the First Half of the Fiscal Year Ending March 31, 2012: Reference<Ordinary Income>Though affected by the drastic appreciation of the yen and payment interest due toincreased short-term loans along with acquisitions, ordinary income was 31.3 billion
yen or an 11.1% increase compared with the same period of the previous year. Existing
business was similarly affected, but was 31.6 billion yen, representing a 12.1%
increase compared with the same period of the previous year.
<Net Income>Net income was affected by the tax burden due to goodwill depreciation and droppedby 3.5% compared with the same period of the previous year to 17.7 billion yen. For
existing business, the figure was 19.3 billion yen or a 5% increase compared with thesame period of the previous year.
Next, net sales results by business segments are as follows:Business Segments(Unit: millions of yen)
1H FYE Mar. 2011

1H FYE Mar. 2012

ChangesResults

Results%Business Segments

Changes %(Constantcurrency basis)

Net Sales

77,32773,992

(4.3)

(3.4)

(Japan)62,46059,272

(5.1)

(5.1)

(Overseas)

14,867

14,719(1.0)

3.8

Net Sales

71,78278,4849.3

14.2(Japan)19,93625,64928.7

28.7(Overseas)

51,846

52,835

1.9

8.6

Net Sales

12,472

12,4780.0

3.7(Japan)5,321

4,942(7.1)(7.1)(Overseas)

7,151

7,536

5.4

11.7

Net Sales

2,089

2,195

5.1

5.9

(Japan)

1,753

1,791

2.2

2.2

(Overseas)

335

403

20.2

25.5

General HospitalBusiness

Cardiac & VascularBusiness

Blood Management
Business

Consumer Healthcare
Business(Note) The results of BCT and Harvest are excluded.

<General Hospital Business>
In Japan, our major line of products such as semi-solid nutritious foods for the chroniccare market in addition to outsourced business in the D & D (Drug & Device) field i.e.
“NESP” contributed to a sales increase. At the same time, I.V. solutions and someother products saw a decrease in sales due to the impact of the earthquake, and resulted
in a decrease in sales.
Outside of Japan, syringes and infusion pumps enjoyed good sales in Asia and Latin-4-[Terumo Corporation] Financial Results for the First Half of the Fiscal Year Ending March 31, 2012: Reference

America, increasing sales on a constant currency basis, but results were substantiallyaffected by the appreciation of the yen.
Consequently, net sales of General Hospital Business were 74 billion yen or a 4.3%
decrease compared with the same period of the previous year.
<Cardiac & Vascular Business>
In Japan, our drug-eluting stent “Nobori,” which was launched in May, increased itssales and secured market share, while our intravascular ultrasound-imaging catheter,“ViewIT,” saw favorable increase in sales.
Outside of Japan, Nobori which had been also launched in Europe, Asia, and Latin
America has steadily increased its share and sales, while in North America, TRI(interventional treatment of approaching the coronary artery from the blood vessels ofthe wrist), became widely used and interventional systems products thus favorably
drove sales.
As a result, net sales for Cardiac & Vascular Business saw an increase of 9.3% to 78.5
billion yen compared with the same period of the previous year, though there was theaffect of the appreciation of the yen.
<Blood Management Business>
In Japan, sales of blood bags decreased compared with the same period of the previousyear.
Outside of Japan, “TACSI,” our automated centrifuge & separator integration system,
saw favorable growth in Europe to drive the total business, but due to the impact of theappreciation of the yen, net sales for Blood Management Business remained nearly thesame compared with the same period of the previous year at 12.5 billion yen.
<Consumer Healthcare Business>
In Japan, the business was impacted by a slowdown in consumption due to theearthquake. However, net sales increased by 5.1% compared with the same period of
the previous year to 2.2 billion yen.
<2> Forecast for the Fiscal Year Ending March 31, 2012
In consideration of recent foreign exchange conditions, we updated the exchange rate
forecasts for the second half to be 1 dollar = 75 yen and 1 Euro = 103 yen. We alsoplan to make additional investments on quality system improvements at our US
subsidiary, which reached the agreement on terms of consent decree with Food andDrug Administration (FDA) in March. By reflecting the impact of these factors upon
the premises of the forecasts, we are revising “Forecast for the Fiscal Year ending
March 2012” that we announced on July 28, 2011 as follows.

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Please note that annual average exchange rate forecast, based on this forecast revision,are 1 dollar = 77 yen and 1 Euro = 108 yen.
Forecast for the fiscal year ending March 31, 2012
(Full year)(Unit: millions of yen)
Revised Forecast

Net Sales

390,000

383,000(7,000)16.7

Operating Income

67,00062,600(4,400)(0.0)

Operating Income Rates

17.2%

16.3%

－

－

Operating Income

74,60070,000(4,600)

9.1

19.1%

18.3%

－

－

Ordinary Income

65,00058,000(7,000)1.9

Net Income

38,50032,500(6,000)

0.5

9.9%

8.5%

－

－

46,10039,900(6,200)

17.6

11.8%

10.4%

－

－

Excl. Amortization of Goodwill

Operating Income Rates
Excl. Amortization of Goodwill

Net Income Rates
Net Income
Excl. Amortization of Goodwill

Net Income Rates
Excl. Amortization of Goodwill

Changes

Changes (%)
year on year

Previous Forecast<3> Summary of Statements of Cash Flows for the First Half of the Fiscal YearEnding March 31, 2012
(Unit: millions of yen)
1H FYE Mar. 2011

1H FYE Mar. 2012

Results

Results

Net Cash Provided by (Used in) Operating Activities

21,23526,934

Net Cash Provided by (Used in) Investing Activities(10,175)(228,896)

11,060(201,961)

Net Cash Provided by (Used in) Financing Activities(13,165)

216,407

Effect of exchange rate change on cash and cash equivalents(3,490)(2,767)

Net increase (decrease) in cash and cash equivalents(5,596)

11,677

Cash and cash equivalents at beginning of period

84,877

82,660Cash and cash equivalents at end of period

79,281

94,338

Free Cash Flow

This English translation has been prepared for general reference purposes. The Company is not responsible for any
consequence resulting from the use of the English translation in place of the original Japanese text. In any legal
matter, readers should refer to and rely upon the original Japanese text of the tanshin (Financial Results) dated asof October 27, 2011-6-