[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2019: Reference

IFRS Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2019: Reference
Analysis of Business Performance
1. Overview of Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2019(1) Overview of Consolidated Business Results
In the first quarter of the current fiscal year (from April 1 to June 30, 2018), the ongoing trend in various countries
in the global healthcare market was to cut back medical expenditures. Amid this environment, in Japan NHIreimbursement prices underwent revisions in April. And, there continues to be growing demand, mainly indeveloped countries, for better healthcare economics to achieve a more focused and efficient allocation of fiscalresources.
Amid this backdrop, in line with the Mid- and Long-term Vision, the Terumo Group, as a “Global Corporation
with Unique Excellence,” aims to become recognized by medical professionals worldwide as a top brand and atrusted manufacturer by winning a high level of trust globally for our total quality (which includes the total qualityof its products, supply, and services).
Financial results for the first quarter of the fiscal year ending March 31, 2019 are as follows:(million yen)
Q1

Q1

FYE3/2018

FYE3/2019

Growth (%)

Growthexcluding
impact of forex
translations (%)

Revenue

139,312143,0202.7

2.1

Gross profit

75,91479,8575.2

4.2

Adjusted operating profit

32,07930,544

(4.8)

(6.4)

Operating profit

28,43525,875(9.0)(11.2)

Profit before tax

28,163

23,406(16.9)-

Profit for the period

20,31018,059(11.1)-

20,33618,091(11.0)-Profit for the period attributableto owners of the parent-1-[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2019: Reference(million yen)
Growth (%)

Growthexcluding
impact of forex
translations (%)

44,010

(2.0)

(2.0)

27,74729,605

6.7

2.2

Americas41,13042,763

4.0

6.3

Asia, outside Japan

25,51926,640

4.4

2.7

Overseas total

94,39799,009

4.9

4.1

Total

139,312143,020

2.7

2.1

Regional sales

Q1Q1

FYE3/2018

FYE3/2019Japan44,915

EuropeRevenue
Revenue totaled 143.0 billion yen, a growth of 2.7% versus the same period in the previous fiscal year.
In Japan, overall revenue declined year on year. Although revenue trended briskly in the General HospitalCompany owing to demand in the pain management domain and in the alliance business with otherpharmaceutical companies, in the Cardiac and Vascular Company, there was negative impact from NHI
reimbursement price revisions and shipping delay of certain products from the Ashitaka factory.
Meanwhile, revenue overseas climbed in comparison with a year earlier. Performance was driven by brisk revenue
in the neurovascular and CV businesses in the Cardiac and Vascular Company and the alliance business in theGeneral Hospital Company, as well as by demand for blood center products and therapeutic apheresis systems in
the Blood Management Company.
Gross profit
Gross profit amounted to 79.9 billion yen, an increase of 5.2% compared with the previous fiscal year. This
mainly reflects contribution from a reduction to manufacturing costs in each company.
Adjusted operating profit
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 as we are using it as an earnings management
indicator. In the quarter under review, adjusted operating profit came to 30.5 billion yen, a decrease of 4.8% year
on year. Although gross profit improved, it was offset by a rise in selling, general and administrative expenses andresearch and development expense.
Operating profit
Operating profit totaled 25.9 billion yen, a drop of 9.0% year on year. In addition to factors impacting adjusted
operating profit, there was an increase in one-off expenses, including acquisition-related expense, and otherincome and expenses.

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Profit before tax
Profit before tax was 23.4 billion yen, a decrease of 16.9% versus the same quarter a year earlier. This reflects theposting of a forex translation loss, versus a forex translation gain in the same quarter a year earlier.
Profit for the period attributable to owners of the parent
Profit for the period attributable to owners of the parent totaled 18.1 billion yen, a drop of 11.0% year on year.
Although corporate income tax declined owing to a reduction to the federal corporate income tax rate reflecting
the tax reform in the United States, profit before tax for the first quarter was down.
Revenue results by company are as follows:(million yen)
Growth (%)

Growth excluding
impact of forex
translations (%)

79,5350.6(0.1)

13,491

11,296(16.3)(16.3)(Overseas)

65,566

68,2394.1

3.2

Revenue

36,86738,812

5.3

5.0(Japan)

28,94730,165

4.2

4.2(Overseas)

7,919

8,646

9.2

7.9

Revenue

23,333

24,5955.4

5.0(Japan)

2,422

2,494

3.0

3.0

(Overseas)

20,911

22,100

5.7

5.3

Segment

Cardiac andVascularCompanyGeneral HospitalCompanyBloodManagement
Company

Q1

Q1

FYE3/2018

FYE3/2019

Revenue

79,057(Japan)Cardiac and Vascular Company
In Japan, revenue decreased year on year. Although revenue were brisk in the neurovascular business and for
vascular closure devices in the TIS business, there was negative impact from revisions to NHI reimbursement
prices and due to shipping delay of certain products from the Ashitaka factory.
Meanwhile, overseas revenue growth was driven by demand for access devices and oncology products in the TIS
business, and coils for the embolization of cerebral aneurysms, which use hydrogel, and suction catheters, in theneurovascular business.
Accordingly, revenue in the Cardiac and Vascular Company totaled 79.5 billion yen, a growth of 0.6% year onyear.
General Hospital Company
In Japan in the hospital systems business, demand was brisk in the pain management domain, including for Acelio
Intravenous Injection 1000mg — an intravenous injectable acetaminophen antipyretic analgesic, and for AdSpray,a spray type adhesion barrier. In addition, there was an expansion in B2B business with pharmaceutical companies-3-[Terumo Corporation] Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2019: Referencein the alliance business. Consequently, in the General Hospital Company revenue amounted to 38.8 billion yen, anincrease of 5.3% versus the period a year earlier.
Blood Management Business
Revenue was strong to blood centers, mainly in North America and emerging markets. In addition, revenues grewin the field of therapeutic apheresis system in Europe. Consequently, revenue in the Blood Management Company
totaled 24.6 billion yen, a rise of 5.4% year on year.
(2) Overview of Consolidated Balance Sheets
Total assets at the end of the first quarter stood at 1,093.2 billion yen, an increase of 14.2 billion yen versus March
31, 2018. Although trade and other receivables decreased 5.2 billion yen and cash and cash equivalents were down
4.9 billion yen, goodwill and intangible assets increased 13.5 billion yen, in part reflecting positive impact from adepreciation in the yen’s value versus the US dollar compared with March 31, 2018. In addition, inventories
increased 8.2 billion yen and property, plant and equipment rose 4.4 billion yen.
Liabilities totaled 494.6 billion yen, a decrease of 33.9 billion yen. This was mainly attributable to a 15.4 billion
yen decline in bonds and borrowings (non-current liabilities) due to the conversion of convertible bonds, and a
10.4 billion yen drop in current tax liabilities.
Equity was 598.5 billion yen, an increase of 48.1 billion yen. This was mainly attributable to an overall increase inretained earnings of 8.4 billion yen reflecting the posting of profit for the period attributable to owners of theparent while dividend payments detracted from retained earnings. Another positive factor was an increase of 20.4
billion yen in elements that comprise other equity. This reflects a rise in forex translation gains at overseas sales
offices, owing to a depreciation in the yen’s value versus the US dollar compared with March 31, 2018. There wasalso a gain of 19.4 billion yen owing to a decrease in treasury stock deducted from equity.
(3) Forecasts, including the Consolidated Financial Results for the Fiscal Year Ending March 31, 2019
We downwardly revised our first half and full-year consolidated financial forecasts for revenue, operating profit,
profit before tax and profit for the year attributable to the owners of the parent. This reflects shipping delay forcertain products from the Ashitaka factory, which produces cardiovascular products. This was announced in ourJuly 4 press release “Terumo Announces Shipping Delays for Products from Ashitaka Factory”. For details refer tothe “Terumo Revises the First-Half and Full-Year Results Forecast for FY 2018,” which we released on August 8,
2018.

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