[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference

Financial Results for the Fiscal Year Ended March 31, 2021: Reference
Analysis of Business Performance and Financial Position
Analysis of Business Performance
1. Overview of Financial Results for the Fiscal Year Ended March 31, 2021
(1) Overview of Consolidated Business Results
In December 2016 the Terumo Group devised a Mid- to Long-term Growth Strategy with a five-year horizon. The
Mid- to Long-term Vision is to become a “Global Corporation with Unique Excellence.” The Company aims tobecome recognized by medical professionals worldwide as a top brand and a trusted manufacturer. To this end, theCompany’s management is focused on earning a high level of trust globally for our total quality (which includes
the total quality of products, supply, and services). In the fiscal year under review, which is the fourth year of thisgrowth strategy, Terumo’s consolidated business results were as follows.
(million JPY)
FYE3/2020

FYE3/2021

Growth (%)

Growth excluding
the impact offoreign exchangerates (%)

Revenue

628,897

613,842

(2.4)

(1.6)

Gross profit343,932

326,623

(5.0)

(3.3)

Adjusted operating profit

124,998

115,927

(7.3)

(4.5)

Operating profit

110,611

98,386(11.1)(8.3)

Profit before tax

106,466

97,060(8.8)－

Profit for the year
Profit for the year attributableto owners of the parent

85,037

77,200(9.2)－

85,211

77,268(9.3)－

Revenue by region for the fiscal year under review is as follows:(million JPY)
Growth excluding
the impact offoreign exchange
rates (%)

FYE3/2020

FYE3/2021

Japan

196,339

201,758

2.8

2.8Europe

121,128

120,389(0.6)(2.5)

Americas191,388

180,798(5.5)(2.0)

Asia and others

120,040

110,896

(7.6)

(6.9)

Overseas total

432,557

412,084

(4.7)

(3.5)

Total

628,897

613,842

(2.4)

(1.6)

RegionGrowth (%)

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference

Revenue
Revenue totaled 613.8 billion JPY, a decrease of 2.4% versus the previous fiscal year.
In Japan, overall revenue increased by 2.8% year on year, exceeding 200 billion JPY and marking the Company’s
highest revenue on record. The impacts of the COVID-19 pandemic on Cardiac and Vascular Company weresmaller than other regions, and in General Hospital Company, there was rising demand for infection control
products and revenues in Alliance division and of narcotic analgesic were robust.
Revenue overseas declined by 4.7% in comparison with a year earlier. The impacts of the COVID-19 pandemic onGeneral Hospital Company and Blood and Cell Technologies Company were small, but these same impacts werelarger for TIS division (interventional devices) in Cardiac and Vascular Company.
Gross profit
Gross profit came to 326.6 billion JPY, a decrease of 5.0% compared with the previous fiscal year, reflecting adecline in revenue mainly due to the impacts of the COVID-19 pandemic on Cardiac and Vascular Company.
Adjusted operating profit
In the fiscal year under review, adjusted operating profit came to 115.9 billion JPY, a decrease of 7.3% year onyear, due to the decline in gross profit, despite efforts to curtail certain selling, general and administrativeexpenses.
Adjusted operating profit factors out amortization expense for intangible assets obtained during acquisitions andone-off income and expenses from operating profit. In addition, adjusted operating profit is consistent withsegment profit. We are disclosing adjusted operating profit since we are using it as a performance indicator.
We are additionally disclosing adjusted operating profit as an indicator but it is not defined by IFRS, which is theaccounting standard the group has adopted. Adjusted operating profit is also being used as an indicator for
corporate management to grasp earnings performance in each business as a part of our goal to achieve sustainablegrowth in the mid- to long-term. We believe this is also effective data for individuals using our financial
statements to assess the Terumo Group’s earnings.
Operating profit
Operating profit came to 98.4 billion JPY, a decrease of 11.1% year on year, owing to the decrease in adjusted
operating profit.
Profit before tax
Profit before tax was 97.1 billion JPY, a decrease of 8.8% versus a year earlier owing to the decrease in operating
profit.
Profit for the year attributable to owners of the parent
Profit for the year attributable to owners of the parent totaled 77.3 billion JPY, a decrease of 9.3% year on year,driven by the decrease in profit before tax.

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference

Revenue results by company are as follows:(million JPY)
FYE3/2020

FYE3/2021

Revenue

350,550

328,549(6.3)

Growthexcluding theimpact offoreignexchange rates
(%)
(5.5)

(Japan)50,92450,208

(1.4)

(1.4)

(Overseas)

299,626

278,341

(7.1)

(6.2)

Revenue

170,963

175,5452.7

3.0(Japan)132,880

139,139

4.7

4.7(Overseas)

38,08336,405

(4.4)

(3.0)

Revenue

107,156

109,491

2.2

4.2(Japan)12,30912,154

(1.3)

(1.3)

(Overseas)

94,847

97,3362.6

4.9

Segment

Cardiac andVascular Company

General HospitalCompany
Blood and Cell
Technologies
Company

Growth (%)

Cardiac and Vascular Company
In Japan, sales were driven by extracorporeal membrane oxygenation (ECMO) systems in Cardiovascular division
along with flow diverter in Neurovascular division, but revenue declined slightly overall because the impacts of
the COVID-19 pandemic remain to some extent. Overseas, the same impacts were significant on TIS division(interventional devices), and Cardiovascular division in the Americas particularly. Accordingly, revenue in
Cardiac and Vascular Company totaled 328.5 billion JPY, a decrease of 6.3% year on year.
General Hospital Company
The COVID-19 pandemic impacted many products, mainly in Japan and Asia, but in Japan sales were driven by
infection control products and narcotic analgesic in Hospital systems division. Globally, the B2B business withpharmaceutical companies in Alliance division grew. Reflecting these, revenue in General Hospital Company was
175.5 billion JPY, an increase of 2.7% versus the previous year.
Blood and Cell Technologies CompanyIn Japan, sales of blood center products declined slightly due to the slowdown in demand for blood preparations
caused by the impacts of the COVID-19 pandemic. Overseas, therapeutic apheresis systems and cell processing
products saw a slowdown in demand for the same reasons, but there was an increase in collection demand for
COVID-19 convalescent plasma therapy and sales were driven by new software for blood component collection
systems. Consequently, revenue in Blood and Cell Technologies Company totaled 109.5 billion JPY, a rise of
2.2% year on year.
(2) Overview of Consolidated Financial Statements
Total assets stood at 1,351.2 billion JPY, an increase of 109.8 billion JPY. This was mainly owing to an increase in[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference

cash and cash equivalents of 33.9 billion JPY through operating activities, etc., an increase in property, plant andequipment of 35.3 billion JPY from investment in manufacturing facility, and an increase in goodwill andintangible assets of 10.3 billion JPY owing to the acquisition of a subsidiary, etc. and investment, etc., in new IT
system.
Total liabilities came to 494.5 billion JPY, an increase of 8.1 billion JPY. This was mainly attributed to an increasein bonds and borrowings of 22.6 billion JPY under noncurrent liabilities due to the proceeds from long-termborrowings and 11.8 billion JPY decrease in defined benefit liability due to an increase in pension assets.
Total equity was 856.7 billion JPY, an increase of 101.8 billion JPY. This mainly reflects an increase from posting
profit for the year under review of 77.2 billion JPY, while the booking of other comprehensive income associatedwith the impacts of yen strength in FX resulted in a 38.5 billion JPY increase, which offset the decrease of 21.1
billion JPY from dividends from retained earnings.
(3) Cash flow trends in the fiscal year ended March 31, 2021
(million JPY)
FYE3/2020

FYE3/2021

ChangeCash flows from operating activities

117,479

121,485

4,005

Cash flows from investing activities(84,714)(85,317)(602)

Cash flows from financing activities
Cash and cash equivalents at the end of the year

14,010(7,436)(21,447)

166,898

200,770

33,871

Cash flows from operating activities
Net cash provided by operating activities was 121.5 billion JPY. The main factors for this were profit before tax of
97.1 billion JPY, depreciation and amortization of 53.9 billion JPY, income taxes paid of 23.1 billion JPY, andincrease in inventories of 22.0 billion JPY.
Cash flows from investing activities
Net cash used in investment activities was 85.3 billion JPY. The main factors for this were expenditures of 62.3billion JPY for purchase of property, plant and equipment following capital expenditures for a manufacturing
facility, etc. and expenditures of 20.8 billion JPY for purchase of intangible assets following investment in a newIT system, etc.
Cash flows from financing activities
Net cash used in financing activities was 7.4 billion JPY. The main factors for this were expenditures of 40 billion
JPY for the repayment of short-term borrowings, proceeds of 70 billion JPY from long-term borrowings
expenditures of 10 billion JPY due to redemption of corporate bonds, and Payments of dividends of 21.2 billion
JPY.

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference(Reference) Cash flow indicators
FYE3/2019

FYE3/2020

FYE3/2021

Equity ratio (%)

62.3

60.8

63.4

Market cap-based equity ratio (%)

224.0

225.4

223.8

Interest-bearing debt to cash flow ratio (year)

2.2

2.3

2.4

Interest coverage ratio (x)

83.8

122.8

114.3

Note: Equity ratio = Shareholders’ equity/Total assets
Market cap-based equity ratio = Total market capitalization/Total assets
Interest-bearing debt to cash flow ratio = interest-bearing debt/cash flowInterest coverage ratio = cash flow/total interest payments*All of the above is calculated on a consolidated basis.
*Market capitalization = fiscal year-end share price multiplied by the total number of shares outstanding
excluding treasury stock*The cash flow above is the cash flow provided by operating activities as stated in the consolidated statements ofcash flows. The interest-bearing debt includes all liabilities posted in the consolidated statement of financial
position on which the company pays interest. Also, the figure for interest expenses paid in the consolidatedstatements of cash flows was employed as the amount for interest payments.
(4) Mid- to Long-term Outlook
The medical device market is expected to expand going forward mainly due to a rise in chronic illnesses intandem with an increase in the number of seniors. Meanwhile, as a rise in medical spending squeezes government
coffers, there will be a growing shift to healthcare that emphasizes value and efficiency. In addition, the industry
overseas will continue to undergo reorganization, owing mainly to acquisitions, resulting in companies ofenormous scale, more concentration, and a growing oligopoly.
Amid this business environment, we are implementing its Mid- to Long-term Growth Strategy. The fiscal year
ended March 31, 2018 was the first year of this strategy. We were off to a smooth start in the first fiscal year
towards our goal to achieve the Mid- to Long-term Growth Strategy, with the results contributed by the businesses
acquired in the fiscal year ended March 31, 2017. In the second year, the fiscal year ended March 31, 2019, in thefirst half there were shipping delays of certain products at Ashitaka factory, but in the second half the delays werefully resolved. The fiscal year ended March 31, 2020 and the fiscal year ended March 31, 2021, the third andfourth years of the Mid- to Long-term Growth Strategy, were impacted by the COVID-19 pandemic, but in eachyear the initial profit forecast was exceeded. In the fiscal year ending March 31, 2022, the fifth year, the Company
will work on (1) harnessing its collective strengths and brand power to pursue synergies between businesssegments in each region, (2) optimization of global organization and operations, (3) digitalization and businessmodel transformation, (4) evolved human resources management that seeks to visualize human capital globallyand increase their expertise, and (5) deepening of core technologies that will become a strength, in order toachieve sustainable growth in 2022 and beyond.

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference

The consolidated forecast of financial results for the year ending March 31, 2022 is as follows. Furthermore, theimpact of the spread of COVID-19 is expected to continue in 2021 as well. Although it remains difficult toprovide an accurate forecast of the regions affected, period and scale of the impacts, in formulating the numerical
data for the earnings forecast, the Company has developed best-case and worst-case scenarios. The best-casescenario is where progress in the vaccine rollout and recovery in healthcare demand along with an expected return
to a growth trend are seen from the first half of the fiscal year. The worst-case scenario is where infections follow
a similar trend around the world as 2020 and the pandemic is finally brought under control in the second half,leading to a recovery. The earnings forecast falls in a range between these scenarios.
The impacts on each reporting segment in the worst-case scenario at the bottom of this range is a temporary
decline in demand in Cardiac and Vascular Company due to the postponing of non-urgent procedures. In addition,
careful attention is needed because the level of decline and time needed for a recovery will differ depending on thebusiness domain and region. However, the Company views impacts on General Hospital Company and Blood andCell Technologies Company as limited in nature because of the many products related to healthcare infrastructure
and products for chronic illnesses.
Consolidated forecast for the fiscal year ending March 2022
(million JPY)
FYE3/2021

FYE3/2022

Financial Results

Financial Results

Rate ofChange(%)

ChangeForecast
Revenue

613,842

Adjusted operating
profit115, 927

Adjusted operating
profit ratio

18. 9%

Operating profit

98,386

Operating profit ratio

16. 0%

670,000

56, 157

9. 1~680, 000~66, 157~10. 8124,000

8,072

7. 0~130, 000~14, 072~12. 1－－

107, 000

8, 6138. 8~113, 000~14, 613~14. 9－－18. 5%~19. 1%

16. 0%~16. 6%

Profit for the year
82, 000
4, 731
6. 1
attributable to owners
77, 268~86, 500~9,231~11. 9of the parent
Actual exchange rate for the fiscal year ended March 31, 2021: 1 USD equals 106 JPY and 1 EUR equals 124 JPY
Exchange rate assumption for the fiscal year ended March 31, 2022: 1 USD equals 107 JPY and 1 EUR equals 128
JPY[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference(5) Basic policy for profit distribution, dividend payouts in the fiscal year ended March 31, 2021 and payout
plan for the fiscal year ending March 31, 2022
As a measure to secure high profit margins and sustainable growth, Terumo Group adequately and actively
reinvests profits to constantly enhance its corporate value. This is consistent with the group’s pledge to distributeprofits to shareholders and maximize the value of its investments.
As for the distribution of profits to shareholders, Terumo will continually aim to steadily increase its dividend
payouts to shareholders and has set a mid- to long-term dividend payout ratio target of 30%.
In the fiscal year ended March 31, 2021, the Company plans to pay cash dividends per share of 29 JPY. Initially,
the Company left the dividend forecast unchanged at 28 JPY per share in light of the impacts of the COVID-19
pandemic, but taking into account the results of the fiscal year under review, the fiscal year-end dividend is 15
JPY per share, and the interim dividend, which has already been paid, was 14 JPY per share.
In the fiscal year ending March 31, 2022, the Company plans to pay an annual cash dividend of 30 JPY per share(interim dividend of 15 JPY).

Cautionary note:
Forward-looking statements, including earnings forecasts, contained in Terumo’s disclosure materials are based on
currently available information and assumptions believed to be reasonable by management. This is not a promise orguarantee by Terumo that it will achieve these goals. Please note that the actual results or outcomes could differ due
to a number of factors. Key elements that are likely to have an impact on actual earnings performance include
economic conditions surrounding the Company’s business environment, volatility in foreign exchange rates, andcompetition.

[Terumo Corporation] Financial Results for the Fiscal Year Ended March 31, 2021: Reference2.

Basic stance on the selection of accounting standards

We have adopted International Financial Reporting Standards (IFRS) and applied them to the financial
results from the fiscal year ended March 31, 2018. The goal is to strengthen our corporate governance andimprove the precision of our management by enhancing the comparability of financial data internationally incapital markets and by standardizing our rules globally.