Financial Results for the Third Quarter ofFiscal Year Ending March 31, 2021 (FY2020)

February 4, 2021

Naoki Muto
Chief Accounting and Financial Officer
Terumo Corporation

Safe Harbor for 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 beguarantees of future events or performance. Accordingly, it should be noted that actual results may differ fromthose forecasts or projections due to various factors. Factors affecting to actual results include, but are notlimited to, changes in economic conditions surrounding Terumo, fluctuations of foreign exchange rates, andstate of competition.
The market share information in this presentation is partly derived from our own independent research.
Information about products (including products currently in development) which is included in this material is
not intended to constitute an advertisement or medical advice.

Terumo Corporation
Investor Relations Dept.
E-mail: kouhou_terumo01@terumo.co.jp©TERUMO CORPORATION

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Highest-ever Quarterly Revenue and Adjusted Operating Profit(billion JPY)

YoY%

YoY%(FXN)

448.6

-5%

-3%

258.6 (55.0%)

241.3 (53.8%)

-7%

-5%

SG&A Expenses

136.8 (29.1%)

130.7 (29.1%)

-4%

-3%

R&D Expenses

37.0 ( 7.9%)

35.9 ( 8.0%)

-3%

-2%

Other Income and Expenses

1.50.6--Operating Profit

86.3 (18.3%)

75.3 (16.8%)

-13%

-10%

Adjusted Operating Profit

98.4 (20.9%)

88.5 (19.7%)

-10%

-8%

Profit before Tax

85.5 (18.2%)

74.9 (16.7%)-12%

Profit for the Year66.9 (14.2%)

58.6 (13.1%)-12%109 JPY
121 JPY

106 JPY
122 JPY

FY19 Q3YTDFY20 Q3YTDRevenue

470.1

Gross Profit

Average Exchange RateUSDEUR

Revenue: Steady recovery in demand for Cardiac and Vascular. The COVID-19 negative impact onGeneral Hospital as well as Blood and Cell Technologies has been continuously minor
Adjusted Operating Profit: Year-on-year negative growth due to the revenue decrease.
Continuously controlled expenses based on priorities©TERUMO CORPORATION

3 / 22

Adjusted Operating Profit Variance Analysis(billion JPY)
6.8

12.2

98.4

G/Pdecrementby salesdecrease

86.30.63.0Grossmargin3.5

1.6Price
MDR-0.9-0.8
JPIT
Reimburseinvestment
ment-2.6-0.9

SG&A
decrease

2.4

FX
13.2

2.7
88.5

75.3

FY20 Q3YTD FY20 Q3YTD
Operating
Adjusted
ProfitOperating
Profit

FY19 Q3YTD FY19 Q3YTD
Operating
Adjusted
ProfitOperating
Profit©TERUMO CORPORATION

6.8

R&D
decrease4 / 22

Revenue by Region
Revenue

FY20 Q3YTDFY19 Q3YTD

Year-on-Year Revenue Comparison
billion JPY

100% = 448.6 B JPY

YoY%( ) FXN

33%

148.3
147.8Japan

Europe20%
Americas29%

China7%Asia and11%Others©TERUMO CORPORATION

33.4
37.0
48.2
55.00%

year level
Europe: Positive growth in C&V since Q2.

(-2%)
131.1
141.6

Japan: Stronger recovery in C&V quarter by quarter.
Positive growth in GH since Q2. TBCT is at previous

-1%

87.5
88.7

Comments-7%

(-4%)

-10%

Good momentum in GH and TBCT with double
digit growth
Americas: Mixed situation with a recovery andCOVID-19 resurgence in C&V. Positive growth in
GH and TBCT
China: Significant recovery as a whole(-9%)

excluding timing issue for order from-12%Asia and Others: Slow recovery in all companies,(-10%)
5 / 22

distributors in Neurovascular
due to lockdown etc. in some countries

Revenue by Business Segment
Year-on-Year Revenue Comparison

Revenuebillion JPY

100% = 448.6 B JPY

YoY%( ) FXN

53%

CardiacandVascularGeneral
Hospital

238.4

-10%
(-8%)

263.5

+1%

129.0(+1%)

127.8

29%

18%

FY20 Q3YTDFY19 Q3YTD

Bloodand Cell
Technologies©TERUMO CORPORATION

81.0+3%(+6%)78.7
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Comments
There was a decrease in demand due topostponement of procedures.
Steady recovery in the performance in
Q2 and Q3
In addition to double digit growth inAlliance, increased demand for infection
control products as well as a new productfor pain management exceeded theoverall impact from decreased demand
Despite the impact by a decrease intherapeutic apheresis cases, saw positive
growth in the US and Europe driven bycomponent collection system

Cardiacand Vascular: Progressing Recovery in the Number of Procedures(billion JPY)

FY19
Q3YTD
263.5

FY20
Q3YTD

Major Topics

Impact( ) FXN

TIS: Despite the decreased demand among
all products, saw a progressing recovery withlow single digit negative growth since Q2-17.4

238.4-10%

Revenue

Adjusted
OperatingProfit(%)

YoY%

(-8%)

68.8(26%)©TERUMO CORPORATION

56.0-19%(-16%)

Neurovascular: Saw positive growth in Q3
alone with a progressing recovery in thenumber of aneurysm treatments-3.6

Cardiovascular: Impact of the decreased
demand was mitigated by the increased
revenue of hardware in Japan-3.7

Vascular graft: Continued positive growthsince Q2-0.3

Decreased due to the revenue decline.
Product mix was improved in Q3 alone with aprogressing recovery in TIS and Neurovascular(24%)
7 / 22

General : Exceeded the Impact of Decreased Demand by Solid
Hospital Sales of Alliance and Infection Control Products(billion JPY)

FY19
Q3YTD

FY20
Q3YTD

YoY%
( ) FXN

127.8

129.0

+1%

Revenue(+1%)

Major Topics

ImpactGeneral hospital products: The negative impact
due to the limited number of medical
examinations was mitigated by increased
demand for infection control products and pumps -1.7
Pharmaceutical: Sales decline in IV solutions
was mitigated by solid sales of pain
management products including a new product-0.8

DM Healthcare: Increased demand forHealthcare products including thermometers etc. +1.6
Alliance: Continued double digit growth both
inside and outside Japan
AdjustedOperatingProfit
(%)

19.8

20.5

+3%

(+4%)
(16%)

©TERUMO CORPORATION(16%)

Positive growth due to improved product mix bysolid sales of Alliance and Healthcare, as well as
continuous expense control
8 / 22+2.2

Blood and Cell
Technologies: Continuous Increase in Both Revenue and Profit(billion JPY)

FY19
Q3YTD

FY20
Q3YTD

YoY%

Major Topics

ImpactBlood center solutions: Driven by increasein collection demand for the COVID-19
convalescent plasma therapy as well assoftware update for component collection
system+3.1

Therapeutic solutions: Despite theremaining impact from the decreased
number of procedures, saw positive growthin Q3 alone-0.6( ) FXN

78.7

81.0

Revenue

Adjusted
OperatingProfit(%)+3%(+6%)

10.4

14.4

+39%(+46%)(13%)©TERUMO CORPORATION

Continuous large growth due to expense control
in addition to gross profit increase by better
product mix(18%)
9 / 22

Key Assumptions of FY20 Q4 Projection
Expect a decrease in demand due to COVID-19 resurgence mainly in theUS and Europe Current situation with restart of postponement in procedures in the US andEurope, etc. is negative for the performance Not expecting the situation to be worsened to the level in April and May 2020,as there are positive factors, e.g. start of vaccination as well as better
preparation and equipment in the medical front against COVID-19 pandemic

Started to adjust the operating level of production to optimize inventory
level, which was raised in Q1 for the purpose of BCP
While controlling SG&A Expenses to an extent, also plan to invest
appropriately based on the business performance to achieve rapid
recoveryControl R&D Expenses by prioritizing from the perspective of mid- tolong-term growth©TERUMO CORPORATION

10 / 22

Revision of FY20 Guidance(billion JPY)

Revenue
Operating Profit
Adjusted Operating Profit
Profit for the Year
Average Exchange Rate(Predicted)

USD
EUR

Original
Guidance

RevisedGuidance

600.0

600.0

90.0

97.5

(15.0%)(16.3%)

108.0

115.0

(18.0%)(19.2%)

68.0

75.0

Annual: 106 JPY
Annual: 121 JPY

Changein amount
+7.5
+7.0
+7.0

Q4: 104 JPY, Annual: 106 JPY
Q4: 126 JPY, Annual: 123 JPY

Factored in the better Q3 performance than expected
No revision for the FY20 annual dividend proposal disclosed at the financial announcementin May 2020
©TERUMO CORPORATION

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Major Topics in FY20 Q3CorporateHas received “GOOD DESIGN AWARD” for twenty five consecutive years

CardiacandVascular

Launched the intrasaccular aneurysm treatment device “WEB” in Japan

Intrasaccular aneurysm
treatment device“WEB”

Increased production capacity for contract development and manufacturingorganization (CDMO) business at Yamaguchi factory
GeneralHospitalPre-fillable syringe“PLAJEX”

Signed the agreement with the French company Diabeloop SA. for joint
development of automated insulin delivery (AID) solution
Received CE mark for the insulin patch pump “MEDISAFE WITH”

Automated insulindelivery system
Insulin patch pump
“MEDISAFE WITH”

Launched the platelet-rich plasma collection system “SmartPrep” in Japan
Blood and Cell
Technologies

Coalition set up to find solutions to the challenge of safe, sustainable andadequate blood in Africa©TERUMO CORPORATION

12 / 22

Platelet-rich plasmacollection system“SmartPrep”

FY20 New Product Pipeline
Category

Products
Steerable sheath

Coronary

Imaging
Oncology

PTCA balloon(manufactured by EssenTechnology)
IVUS catheter

Cardiovascular

ChinaJPEU

Peripheral embolization plug

USGeneral
hospital
Launched products
Pharmaceutical

JP, US Launched

Balloon guide catheter

EU

Carotid stentJP

Launched

Intrasaccular aneurysm
treatment device (WEB)JP

Launched

Oxygenator

JP

Launched

Heart lung machine (re-launch)JP

Launched

Surgical stabilizer©TERUMO CORPORATION

Category
Vasculargraft

JP

Biodegradable drug-eluting
microsphere

Flow diverter
NeurovascularRegion Launch

Products
Stent graft for abdominal aortic
aneurysm

US

Launched

Syringe pumpJP

Launched

Safety IV catheter

JP

Syringe pump for open TCIEU,Asia

Launched

JP

LaunchedJP

To belaunched
in FY21JP

Launched

JP

Launched

Strong opioid analgesic(Fentanyl citrate tape for 1 day use)
Continuous glucose monitoringsystem

DM andconsumer
Blood glucose monitoring system
healthcare

Global Launched

13 / 22

Region Launch

ThermometerReference©TERUMO CORPORATION

14 / 22

FY20 Q3YTD Revenue and Growth by Region(billion JPY)

Overseas

BusinessSegment

JapanCardiac andVascular36.6 (-4%)

201.8 (-9%)

59.9 (-7%)

Out of C&V,
TIS and
Neurovascular

26.3 (-8%)

166.5 (-9%)

102.6 (+2%)

GeneralHospital
Bloodand Cell
Technologies

Total

Subtotal

Europe Americas

Total

China

Asia

91.6 (-8%)

26.8 (-12%)23.5 (-12%)238.4 (-8%)

48.8 (-7%)

73.6 (-7%)

24.7 (-14%)

19.4 (-12%)

192.9 (-9%)

26.4 (-1%)

7.3 (+10%)

6.4 (+13%)

1.7 (-7%)

11.0 (-12%)

129.0 (+1%)

9.0 (-1%)

72.1 (+6%)

20.4 (+12%)33.1 (+7%)

4.9 (+17%)

13.6 (-5%)

81.0 (+6%)

148.3 (+0%)

300.3 (-5%)

87.5 (-2%)

131.1 (-4%)

33.4 (-9%)

48.2 (-10%)448.6 (-3%)(YoY%): FXN©TERUMO CORPORATION

15 / 22Operating Expenses
FY19 Q3YTD(billion JPY)

FY20 Q3YTD

YoY

YoY%

YoY%
(FXN)

Salaries & Wages

66.6

68.7

+2.1+3%+5%Sales Promotion

14.6

8.6

-6.0

-41%

-41%

Logistical Costs

10.3

10.6

+0.3

+3%+4%

Depreciation &Amortization

13.9

14.2

+0.3

+2%+4%

Others31.4

28.5-2.9-9%-8%

SG&A Expenses Total

136.8 (29.1%)

130.7 (29.1%)-6.2-4%-3%

R&D Expenses

37.0(7.9%)

35.9 (8.0%)-1.1-3%-2%

Operating Expenses
Total

173.8 (37.0%)

166.5 (37.1%)-7.3-4%-3%©TERUMO CORPORATION

16 / 22

Quarterly Results
FY19 Q3(billion JPY)

Q4

FY20 Q1

Q2

Q3(Apr-Jun)(Jul-Sep)(Oct-Dec)

131.3

152.0

165.3

85.3 (53.7%)

68.9 (52.5%)

81.6 (53.7%)

90.8 (54.9%)

47.2 (29.0%)

47.7 (30.1%)

40.1 (30.5%)

45.8 (30.2%)

44.7 (27.1%)

R&D Expenses

12.7 (7.8%)

13.6 (8.6%)

11.2 (8.5%)

11.9 (7.8%)

12.8 (7.7%)

Other Incomeand Expenses

-0.2

0.4

0.5-0.1

0.2

Operating Profit

27.1 (16.6%)

24.4 (15.3%)

18.1 (13.8%)

23.8 (15.6%)

33.4 (20.2%)

Adjusted
Operating Profit

31.4 (19.3%)

26.6 (16.7%)

21.7 (16.5%)

29.6 (19.5%)

37.2 (22.5%)

USD

109 JPY

109 JPY

108 JPY

106 JPY

105 JPY

EUR

120 JPY

120 JPY

119 JPY

124 JPY

125 JPY(Oct-Dec)(Jan-Mar)

Revenue

162.9

158.8

Gross Profit

87.2 (53.5%)

SG&A Expenses

Average
ExchangeRate©TERUMO CORPORATION

17 / 22Adjusted Operating Profit: Adjustments(billion JPY)

FY19 Q3YTDFY20 Q3YTD

86.3

75.3

Adjustment 1. Amortization of acquired
intangible assets+11.9+10.8

Adjustment 2. Non-recurring profit or loss

+0.3+2.4 *

98.4

88.5

Operating Profit

Adjusted Operating Profit<General examples of adjustment items>• Acquisition related cost
• Lawsuit settlement* FY20 Q3YTD main items inAdjustment 2. Non-recurring profit or loss

Amount• Impairment loss

Business reorganizing cost

+0.4

• Restructuring loss

Others+2.0• Nonlife insurance income• Loss on disaster• Other one-time profits & losses©TERUMO CORPORATION

18 / 22

CAPEX, Depreciation and R&D Expenses

CAPEX & Depreciation

89.5
80.0

Amortization of acquired
intangible assets
60.8
47.7

43.6 42.0

44.0

14.5

14.6

15.7

CAPEX
27.6

29.4

32.0

Depreciation

FY17©TERUMO CORPORATION

50.0

51.7
36.1
10.8
25.3

14.7
15.7
35.3

CAPEX = C.i.P. record basis

R&D Expenses
41.3(billion JPY)

47.7

50.6

48.0
35.9

FY18

FY19

FY20 Q3YTD
19 / 22

FY20 Guidance

Lease depreciation(IFRS16) is not included inFY19, FY20 Q3YTD resultsand FY20 GuidanceContinue investment inproduction capacity andspace, R&D as well as IT in
FY20
Further promote R&D
activities mainly for TIS,
Neurovascular and TBCTCapitalized R&D expenses
are included in CAPEX
FY18:

2.4

FY19:

4.8

FY20 Q3YTD:

4.3

FY20 Guidance: 5.4

Cash Flows

Operating CF+73.5

Investing & Financing CF-70.6(billion JPY)

19.2
40.3
Depreciation
andamortization

74.9

Incometaxes

22.6
Working
capitalincrease

10.0

CAPEX

70.0

Redemptionof bonds

40.0

51.7
Debt
repayment
Long-termdebt

21.1

Dividends

OthersProfitbefore tax©TERUMO CORPORATION

209.6

169.8

166.9

Cash at theend of FY1917.8

CAPEX = C.i.P. record basis
Cash at the end of each period is equal to “cash and cash equivalents” on B/S

20 / 22

Cash at theend of FY20 Q3

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

USD

EUR

CNY

Revenue

1.7

0.8

2.4

Adjusted Operating Profit

0.0

0.5

1.3

<Reference> Impact when JPY is depreciated by 10%NorthLatin
America America

Adjusted Operating Profit©TERUMO CORPORATION

-0.1

1.0

EMEA

Asia

EUROthers

CNYOthers

6.5

1.3

2.0

3.6

21 / 22

The Status of Convertible Bonds
Detail of the bonds (issued in Dec. 2014)
Maturity

Aggregateprincipal amount(billion JPY)

Dec. 2019*After two-for-one stock split implemented in Apr. 2019

CouponConversion
Price(JPY)

Contingentconversion price(JPY)

50.0

0.0%

1,912

2,486

Approx. 26 M sharesDec. 2021

50.0

0.0%

1,912

2,486

Approx. 26 M shares

Total

100.0

Number of sharesrequired to be issued
for conversion

Approx. 52 M shares

The status of conversion (as of Jan. 31, 2021)
Amount of shares issued for conversion(% against the total amount of bonds)

Number of shares issued for conversion(% against total number of issued shares)

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

26 M shares (3.4%)

Convertible bonds
due Dec. 2021

49.0 B JPY (98.0%)

25 M shares (3.4%)

Total

99.0 B JPY (99.0%)

51 M shares (6.8%)

Bonds

Allocated treasury shares to the shares issued for conversion• Status of treasury shares: 4 M shares(at the end of Jan. 2021, treasury stock cost per share: 1,949 JPY, % against total number of issued shares: 0.5%)©TERUMO CORPORATION

22 / 22