Financial Results for the First Quarter of
Fiscal Year Ending March 31, 2024 (FY2023)

August 9, 2023

Naoki Muto
Chief Accounting and Financial Officer
Terumo Corporation

Hello. I am the CAFO, Muto. I will give an overview of ourearnings results for the 1st quarter of the fiscal year ending
March 31, 2024.

1

Forward-Looking Statements and Use of Document
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 not intended to be guarantees of future
events or performance. Accordingly, it should be noted that actual results may
differ from those forecasts or projections due to various factors. Factors affecting
to actual results include, but are not limited to, changes in economic conditions
surrounding Terumo, fluctuations of foreign exchange rates, and state ofcompetition. Information about products (including products currently indevelopment) which is included in this material is not intended to constitute anadvertisement or medical advice.

©TERUMO CORPORATION

2 / 132

Highlights
Revenue
Strong global demand continued for highest-ever quarter
C&V and TBCT grew in double digits to drive the Group overall

Operating profit-1% YoY growth excluding FX. Steady progress toward annual guidance
Effects of profitability improvement accrued (price policy and cost reduction)

Shareholder return
Will execute 20B JPY share repurchase this fiscal year

©TERUMO CORPORATION

3 / 13

Here are the highlights of this earnings report.
Q1 sales revenue was our highest-ever for a quarter. Strong
global demand continued as sales grew 5% when excluding
FX.
Operating profit was minus 1% when excluding FX; however,during the quarter, the positive impact of our profitability
improvement measures exceeded the negative impact ofinflation for the first time, and progress is as planned towardachieving our annual guidance. Further, profit for the year
grew year-on-year, resulting in both increased sales andprofit.
In addition, it was decided at today’s Board of Directors
meeting that we will acquire up to 20 billion yen in treasury
stock during this fiscal year.
Next slide, please.

P&L
Revenue: Strong global demand continued; Double-digit growth by TIS, Blood center business,
Vascular graft to drive the Group overall
Operating profit: Price policy revision and cost reduction effects accrued. Expanded OPEX for therapeutic devices
100M JPY
Revenue
Gross profit（%）

SG&A Expenses（%）

R&D Expenses（%）

Other Income and Expenses
Operating Profit（%）

Adjusted Operating Profit（%）

Profit before Tax（%）

Profit for the Year（%）
Average exchange rate (USD/EUR)©TERUMO CORPORATION

FY22 Q1

FY23 Q1

1,973
1,016

2,153
1,098

(51.5%)(51.0%)

566

651(28.7%)(30.2%)

141154(7.1%)(7.2%)YoY%

YoY% (FXN)

9%
8%

5%
5%

15%

10%

10%

6%

-6

3

-

-

304

296

-3%

-1%

(15.4%)(13.8%)

-4%

-4%

359

345

(18.2%)(16.0%)

297

298(15.0%)(13.8%)

224

225(11.4%)
130JPY/138JPY(10.5%)

0%
1%

137JPY/150JPY

4 / 13

Here are the P&L results.
Sales revenue was driven by the TIS and Vascular graftbusinesses of the Cardiac and Vascular Company, and by
the Blood center business of the Blood and Cell
Technologies Company, all of which grew in the double digits.
Operating profit dropped slightly, but positive impacts fromthe price policy revision and cost reduction measures are
happening as expected. We will reap even greater resultsfrom these profitability improvements in the 2nd half.
At the same time, we are strengthening SG&A investment in
the expansion of therapeutic devices in growth markets likethe United States.
In profit for the year, finance cost such as FX loss decreased,
to help us secure increased profit.
Next slide, please.

4Margin Ratio Recovery from FY22 Q4
C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies

Quarterly Adjusted Operating Profit Trend

24.9%

23.5%

( ) FY23 Annual Guidance
Adjusted Operating Profit%

20.6%

C&V

(23.9%）

14.3%
13.8%

TBCT
（8.1%）
Terumo*（15.5%）

6.4%

TMCS

17.5%
11.8%
9.7%
8.6%

（10.3%）

4.9%

-5.1%

FY22 Q3©TERUMO CORPORATION

Q4

FY23 Q1* Operating profit% for Terumo

5 / 13

The graph shows the operating profitability quarterly trend of
the Group and adjusted operating profitability by company.
The previous Q4 saw a high amount of one-time expenses,
including inventory adjustment and increased fixed expenses,
causing margin decreases for Medical Care Solutions andBlood and Cell Technologies;
however, in Q1 this year both companies have seen their
margins recover.
The Medical Care Solutions margin reached a higher level
than in Q4, but remains low against the annual guidance.
This is due to the QonQ decrease in sales and the fact that
impact of profitability improvement measures is anticipatedto make its biggest contribution in the 2nd half.
Blood and Cell Technologies saw double-digit growth QonQin sales, and improved its profitability.
Next slide, please.

5Operating Profit Variance Analysis(100M JPY)

Price
Gross
G/P
+13
increment margin
Reimbur- SG&A
bysementsales
increase
price

R&D

G/P increment by sales increase
C&V and TBCT were drivers
Gross margin
Absorbed some inflation increase from
FY22 2H by cost reduction, productmix improvement

FX

Price
Global price policy revision progress

+7

SG&A
Strengthened investments for US
therapeutic devices sales expansion

FY22 Q1 FY22 Q1
OP
Adj. OP©TERUMO CORPORATIONFY23 Q1 FY23 Q1
Adj. OPOP

FX impact
1.4B JPY flow impact and -1.5B JPY
stock impact cancelled out one
another

6 / 13

Next is the profit variance analysis comparing against thesame period of the previous year.
All items are progressing as planned toward our annual
guidance.
“Gross margin” was negative year-on-year as negative
impact from inflation that worsened from the 2nd half of theprevious year exceeded the positive impact of cost
reductions and business mix improvement.
In “Price,” the positive impact of the reimbursement pricerevision was combined with the effects of the price policies
that were revised globally starting last fiscal year.
Increased expenses were due to the investment in growthmarkets by Cardiac and Vascular Company that I mentioned
earlier.
In “FX,” the impacts of flow and stock cancelled one anotherout. The FX breakdown is: 1.4 billion yen positive in flow, and6

1.5 billion yen negative in stock.
Next slide, please.

6

Profitability Improvements Included in FY23 Annual Guidance(100M JPY)©TERUMO CORPORATION

Price (= 1 Price policy)+12.0B

Gross margin+5.8B
Inflation-2.5B

Product mix improvement+1.7B

Temporary expense return tonormal

+3.0B

2 VC2

+3.6B

7 / 13

Regarding the annual guidance, this outlines the two
profitability improvement measures that I mentioned earlier.
First, the increased profit included in the annual guidance:“Price” includes 12 billion yen; and “Gross margin” includes
an anticipated 3.6 billion yen from the Group-wide
profitability improvement project VC2.
Next slide, please.

7

Profitability Improvement Progress
Q1 progress

1 Price policy

2 VC2 impact

12.0B JPY Q2

3.6B JPY Q2

2H
Q1
results

Revision©TERUMO CORPORATION

Q1 progress

2H

Reimbursement price revision
positive impact, along with
global price policy revision

Costa Rica transfer
cost reduction impact
Further impact through automation,

Expand to more products, regions
continuous impact expected

optimization and operations
improvement in Japan factories
8 / 13

I will now explain regarding the progress of profitability
improvement measures.
The price policies and VC2 are both anticipated to makelarger profit-increasing contributions in the 2nd half.
In price in Q1, in addition to the reimbursement price revision,
the global price policy revisions we began last fiscal year had
positive impact. In the 2nd half, this will expand to moreproducts and regions to bring about larger positive impact.
Next, regarding VC2: The centerpiece of our global
production optimization, the Costa Rica transfer, began tohave effect in Q1. In addition to that, we anticipate that
positive impact will begin in the 2nd half from the automationand efficiency improvement project underway at Japanfactories, centered on Ashitaka.
Next slide, please.

8

Revenue by Region
C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies,
TIS: Interventional Systems, PS: Pharmaceutical Solutions

Revenue (100M JPY)
FY23 Q1
Regional
breakdown

FY21

22%

21%

544
662
740

Japan

492
499
475

-5%

Europe

345
386
444

15%
(7%)

China

155
194
200

3%
(3%)

Asia and
Others

182
233
294

26%
(22%)

9%
14%

©TERUMO CORPORATION

Comments( ) FXN

Americas FY22
FY23

34%

FY23 Q1
YoY%
12%
(6%)

TIS, Neurovascular, Vascular graft of C&V grew indouble digits as drivers. TBCT also grew in highsingle-digits

TIS, Vascular graft of C&V were drivers. TBCT even
YoY. TMCS saw temporary sales reduction due tosell-off of nutrition business, and PS delivery
fluctuations

All companies grew, with TIS and TBCT Bloodcenter business leading

Neurovascular saw sales reduction due to inventory
adjustment. TIS and TBCT were drivers

TBCT Blood center business won tenders for large
sales increase. C&V, TMCS kept strong

9 / 13

Here is sales revenue by region. Markets outside Japan,
starting with the United States, drove growth.
Cardiac and Vascular is seeing continued strong global
demand, especially in the TIS, Neuro, and Vascular graftbusinesses.
Neuro in China and Pharmaceutical Solutions in Japan each
saw temporary decreases in sales, but both businesses
continue to drive growth and there is no impact on theannual guidance.
At the same time, Blood and Cell Technologies saw a large
increase in sales due to tenders won in Asia.
Next slide, please.

9

C&V:

EU, US drove strong sales; profit progress as planned(100M JPY)

(C&V: Cardiac and Vascular, TIS: Interventional Systems)

Q1

Comments

Q1
YoY( ) FXN

1,306

TIS:

Number of procedures in Japan recovered gradually;
overseas grew in double digits led by EU and US.
Steady China COVID recovery+94

Neurovascular:

US kept strong double-digit growth.
China impacted by distributor inventory adjustment+7

CardioVascular:

Global double-digit growth. In Japan hardware sales
returned to normal, but stayed strong in EU and Asia

+16

Vasculargraft:New hybrid product sales stayed strong in US.
Stent graft sales continued expansion+20

Profit:Revenue growth and profitability improvement offset
inflation. Strengthened SG&A investments for US
therapeutic devices sales expansion

1,168
Revenue

996
+12%
(+7%)

294

280

Segment
ProfitProfit %©TERUMO CORPORATION

269
-4%
(-3%)

FY21

FY22

FY23

29%

24%

21%
10 / 13

I will now explain the results by company. First, Cardiac and
Vascular.
Sales grew 7% when excluding FX. In businesses, TIS and
Vascular graft, and in regions, the EU and US were eachstrong, leading steady results globally.
In China, distributors delayed orders due to the view that
Neuro products would become subject to group purchasing.
In profit, increased sales, price policy, and the effect of the
Costa Rica production transfer more than made up for
inflation impact. On the other hand, the Cardiac and VascularCompany was the one whose margin was most impacted by
the FX to stock. In addition, investment was strengthened
toward expanding sales of therapeutic devices in North
America.
Next slide, please.

TMCS:

Sell-off of nutrition business, PS delivery fluctuations impacts.
Reduced sales, profit; however, progress as planned toward annual guidance(100M JPY)

(TMCS: Medical Care Solutions)

Q1

Comments

Q1
YoY( ) FXN

438

460

437

Revenue
-5%
(-6%)

64
45

Segment
Profit©TERUMO CORPORATION

Minus YoY due to sell-off of nutrition business.
Double-digit growth by infusion sets and adhesion barrierin Japan. Asia, Latin America grew in double digits todrive the business overall

-1

LCS:
Life
Care
Solutions

Thermometer, blood pressure monitor demand returned
to normal. Blood glucose self-measurement productsales decreased in Japan due to severe competition-5

PS:
Pharmaceutical
Solutions

Decreased sales in Japan and overseas even YoY due todelivery fluctuations. Production investment toward midto long-term growth progressed steadily-17

Profit:Impact of decreased sales and Japan electricity cost
inflation from FY22 2H was partially absorbed by pricepolicy positive impact

28-37%(-43%)

Profit %HCS:
Hospital
Care
Solutions

FY21

FY22

FY23

15%

10%

6%
11 / 13“TMCS” is the Terumo Medical Care Solutions Company.
In sales, the year-on-year comparison effect of the Hospital
Care Solutions sale of the nutrition business;the return to normal of device demand in the Life Care
Solutions business;
And the delivery fluctuations of Pharmaceutical Solutions
products resulted in a sales decrease.
In addition to the sales decrease, there was also impact frominflation in Japan electricity price increases, which worsened
beginning in the 2nd half last fiscal year; although there wassome positive effect from price policies, profit decreased
overall.
We anticipate that our profitability improvement measures
will take full effect in the 2nd half.
Next slide, please.

TBCT:

Large profit increase driven by solid sales to blood centers(100M JPY)

(TBCT: Blood and Cell Technologies)

Q1

Comments

Q1
YoY( ) FXN

409
345
Revenue283+19%(+14%)

60©TERUMO CORPORATION

Strong global sales of component collection systems
and whole blood products, led by Asia and US+59

Therapeutic
Solutions:

Cell collection demand expanded, especially in US.
Blood therapy products for hospitals strong in Asia

+14

Cell Therapy
Technologies:

Minus YoY due to sell-off of part of business.
Expanded investments into cell therapies maintained
steady sales of cell processing systems

-8

59
36

Segment
ProfitProfit %Blood Center
Solutions:+62%(+76%)

FY21

FY22

FY23

21%

10%

14%

Profit:Large profit increase due to increased sales.
Positive impacts of price policy and Costa Rica transfer
began

12 / 13

Next is TBCT (Blood and Cell Technologies) Company.
Sales revenue had a strong start, especially with the Blood
Center business in Asia and North America.
At the same time, there was a temporary increase in sales
due to successful tenders, that is not expected to continue in
Q2 and beyond.
Profit increased greatly due to factors including increased
sales and inventory re-evaluation at the beginning of theperiod. However, we are beginning to see the effects of pricepolicies and the Costa Rica production transfer, and expect
these to continue in Q2 and beyond.
Next slide, please.

20B JPY Share Repurchase Decision by the Board, as of Aug 9th
Shareholder return policy: Continue stable dividend increase, aim for total return ratio of 50% in GS26 period
This decision brings projected FY23 total return ratio to 52%
Plan to cancel the shares after repurchase
600

Share repurchase (100M JPY)

Total return ratio

100%

90%

80%

52%

400

500
200

25%

25%

28%

60%
40%

29%

200
0

20%
0%

FY18
©TERUMO CORPORATION

FY19

FY20

FY21

FY22

FY23 Guidance

13 / 13This is the last slide.
As a new shareholder return policies begun last fiscal year,
we announced the continuation of stable dividend increases
and our goal of a 50% total return ratio during GS26. Basedon those policies, it was decided today by the Board of
Directors that we will acquire up to 20 billion yen in treasury
stock this year as well.
This concludes my explanation of our earnings.
Thank you.

13

Reference©TERUMO CORPORATION

14 / 13

14

Revenue by Segment and Region©TERUMO CORPORATION

15 / 13

Revenue and Operating Profit Quarterly Trend
Revenue: FY23 Q1 YoY +9%, QoQ +6%
OP:(100M JPY)

FY23 Q1 YoY -3%, QoQ +24%

2,153

2,147

2,060

1,973

2,022
1,788

1,729

1,717

1,798

TBCT Revenue
TMCS Revenue
C&V Revenue
Terumo OP

362

304

296

296

FY21 FY22 FY23
Q1

©TERUMO CORPORATION

286

255

FY21 FY22 FY23
1

Q2

375

215

FY21 FY22 FY231Q316 / 13238

FY21 FY22 FY23
1

Q4

1

Margin Ratio Recovery from FY22 Q4
C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies

Quarterly Adjusted Operating Profit Trend

24.9%

23.5%

22.9%**
20.6%
C&V

17.5%

( ) FY23 Annual Guidance
Adjusted Operating Profit%(23.9%）

15.4%**
14.3%
TBCT（8.1%）
13.8%
Terumo*（15.5%）

11.8%
9.7%

6.4%

8.6%

TMCS

（10.3%）

4.9%

-5.1%

FY22 Q3©TERUMO CORPORATION

Q4

FY23 Q1* Operating profit% for Terumo** Excluding FX impact to stock

17 / 13

17

P&L (QoQ)(100M JPY)

FY22 Q1

Q2

Q3

Q4

FY23 Q1(Apr-Jun)(Jul-Sep)(Oct-Dec)(Jan-Mar)(Apr-Jun)

Revenue

1,973

2,060

2,147

2,022

2,153

Gross Profit

1,016 (51.5%)

1,054 (51.1%)

1,114 (51.9%)990 (49.0%)

1,098 (51.0%)

SG&A Expenses

566 (28.7%)605 (29.4%)

615 (28.6%)

597 (29.5%)

651 (30.2%)

R&D Expenses

141 (7.1%)

157 (7.6%)

159 (7.4%)

160 (7.9%)

154 (7.2%)

-37

35

Other Income and Expenses

-6

5

3

Operating Profit

304 (15.4%)

255 (12.4%)375 (17.5%)

238 (11.8%)296 (13.8%)

Adjusted Operating Profit

359 (18.2%)

345 (16.8%)

392 (18.2%)

284 (14.1%)

345 (16.0%)

130JPY138JPY138JPY
139JPY

142JPY
144JPY132JPY
142JPY

137JPY
150JPY

Quarterly
Average Rate©TERUMO CORPORATION

USD
EUR

18 / 13

18

SG&A (QoQ)(100M JPY)
FY22 Q1(Apr-Jun)
Labor
Promotion
Logistics
Depreciation
OthersSG&A total

Q2(Jul-Sep)

Q3(Oct-Dec)

Q4(Jan-Mar)FY23 Q1(Apr-Jun)

298
46
44
56
123
566

312
44
47
59
142
605

316
52
49
60
138
615

307
45
44
58
143
597

336
49
47
58
161
651
(30.2%)（%）(28.7%)(29.4%)(28.6%)(29.5%)

R&D

141

157

159

160

154

（%）

(7.1%)(7.6%)(7.4%)(7.9%)(7.2%)

Total

706

761

774

757

805

（%）

(35.8%)(37.0%)(36.0%)(37.4%)(37.4%)

Quarterly

USD

130JPY138JPY

142JPY132JPY

137JPY

Average Rate

EUR

138JPY

139JPY

144JPY

142JPY

150JPY©TERUMO CORPORATION

19 / 13

19

SG&A (YoY)(100M JPY)
FY22 Q1

FY23 Q1

YoY

YoY%

YoY%
excluding FX
impactSalaries & Wages
Sales Promotion
Logistics Costs
Depreciation & Amortization
OthersSG&A Expenses Total
（%）

298
46
44
56
123
566
(28.7%)

336
49
47
58
161
651
(30.2%)

38
3
4
2
39
85

13%
6%
8%
3%
31%
15%

8%
2%
4%
0%
27%
10%

R&D Expenses（%）

141(7.1%)

154(7.2%)

14

10%

6%

SG&A Expenses Total（%）

706(35.8%)

805(37.4%)

99

14%

9%

©TERUMO CORPORATION

20 / 1320

Adjusted Operating Profit: Adjustments(100M JPY)
FY22 Q1

FY23 Q1

Operating Profit
Adjustment 1. Amortization of acquired
intangible assets
Adjustment 2. Non-recurring profit or loss

304

296

46

46

9

2

Adjusted Operating Profit

359

345

<General examples of adjustment items>• Acquisition related cost

• Nonlife insurance income• Lawsuit settlement• Loss on disaster• Impairment loss

• Other one-time profit & losses• Restructuring loss
Adjustment 2. Major Non-recurring profit or loss

©TERUMO CORPORATIONFY23 Q1

Restructuring loss

2

Others21 / 1321

CAPEX, Depreciation and R&D Expenses(100M JPY)
FY20

FY21

FY22

FY23 Q1

FY23
Guidance(100M JPY)

CAPEX

772

692

758

135

Depreciation
Amortization of
acquired intangible assets
Others

484

532

635

163

675

800

146

161

188

46

175

338

371

447

117

500

CAPEX = C.i.P. record basis excluding lease. Lease depreciation (IFRS16) is not included in Depreciation

FY23 Q1(13.5B JPY): Continued investment mainly for TIS, Neurovascular, PS, TBCT in production
capacity, Plasma Innovations, R&D as well as IT infrastructure (SAP). Investment on construction ofa new plant building in the premises of the Kofu Factory to strengthen production system for CDMO
business etc.
FY23 Guidance ROE 8.5%, ROIC 7.0%
FY20
R&D Expenses©TERUMO CORPORATION

491

FY21
518

FY22
616

FY23 Q1

FY23
Guidance154

650

22 / 1322

Cash Flows (Q1)
Investing & Financing CF-387

Operating CF
+114

180

298

(100M JPY)

176

Depreciation Income
andtaxes, etc.
amortization

Profitbefore tax

188

Working
capitalgains andlosses

135

CAPEX

1,873

100

Redemptionof bonds

154
143
Dividend

3

Others
1,601

Cash at the endof FY22 Q4©TERUMO CORPORATIONCAPEX = C.i.P. record basis
Aligned with period-end account balance "Cash and cash equivalents" on B/S

Cash at the endof FY23 Q1

23 / 1323

FY23 Q1 FX Impact Breakdown (Flow, Stock)
FX impact vs. FY22 Q1 -0.1B JPY
Flow +1.4B JPY: EUR, CNY appreciation positive impact
Rate (JPY)FY22 Q1
Average rate

FY23 Q1
Average rate

Variation

EUR

138

150

11

CNY

19.6

19.6

-0

Stock -1.5B JPY: FX impact from elimination of unrealized profit on inventory assets• Rapid JPY depreciation in June, variation between average rate and quarter-end rate resulted in negative impact

Rate (JPY)FY22
End of March

FY23
End of June

Variation

USD

134

145

11

EUR

146

158

12

©TERUMO CORPORATION

24 / 13

Foreign Exchange Sensitivity
Annual impact of 1 JPY depreciation (Flow)(100M JPY)

USD

EUR

CNY

Revenue

22

11

39

Adjusted Operating Profit

0

5

23

USD

EUR

CNY

-2.5

-0.6

-2.0

Impact of 1 JPY depreciation (Stock)
Adjusted Operating Profit©TERUMO CORPORATION

25 / 13

Product Pipeline
Major Product Launch, Approval Status
Segment
Therapeutic (TIS)

Therapeutic (TIS)

General Name

Product Name

Drug-eluting coronary stent

Ultimaster Nagomi

Peripheral coil system

To FY22

FY23 Target

JP launched

EU launch

AZUR Family

Hydro Coil, Framing CoilCX, Soft3D(JP)Vascular Plug(US)launched*

Hydro Coil, CX
China launch
Sales expansion in US
by indication extended

Nagomi

RelayPro

Stent graft (Vascular graft)Thoracic aorta stent graft

Relay Series

RelayPro US launched,
JP indication extended

Infusion access (HCS)

I. V. catheter

Surflo ZEROJP launched

Sales expansion in JP

Diabetes (LCS)

Continuous glucose monitor G6

JP NHI
coverage expanded

Sales expansion in JP

Cell therapy technologies

Cell expansion system

Globally launched

Global sales expansion

Quantum Flex

TIS: Interventional Systems, HCS: Hospital Care Solutions, LCS: Life Care Solutions*Hydro Coil, Framing Coil and CX globally launched excluding China©TERUMO CORPORATION

26 / 13

AZUR

Surflo ZERO

G6

Quantum Flex

27