Ended March 31, 2018 (FY2017) Terumo Corporation Managing Executive Officer

Transcription

1 Financial ca Results for the Fiscal Year Ended March 31, 2018 (FY2017) Terumo Corporation Managing Executive Officer Kazuaki Kitabatake May 9, 2018

2 Achieved Highest Ever Revenue and All s FY16YTD FY17YTD IFRS JGAAP IFRS JGAAP YoY% YoY% (FXN) Revenue % +11% Gross (53.3%) (54.3%) % +12% SG&A Expenses (29.4%) (29.1%) % +10% R&D Expenses 32.4 (6.3%) ( 7.0%) % +26% Other Income and Expenses (17.1%) 1%) (18.5%) % Adjusted (20.4%) (21.3%) % +12% before Tax 74.9 (14.6%) (18.1%) % for the Year 55.0 (10.7%) (15.5%) % USD 108 yen 111 yen Average Exchange Rate EUR 119 yen 130 yen Revenue: en e Achieved ed oerallgro overall growth driven by double digit growth in all Cardiac and Vascular businesses Adjusted operating profit: Achieved double digit growth through covering the increase of SG&A by large increase in revenue before tax: Gain on sales of investment securities is not realized on FY16 P/L in IFRS basis for the year: Largely increased owing to temporary reduction of corporate tax (15.3 BJPY) due to US tax reform in FY17 2/27

3 Commencement of Disclosure in IFRS Main differences from JGAAP (FY17) Net sales Cost of sales Gross profit JGAAP Revenue Cost of sales Gross profit IFRS SG&A expenses (*1) SG&A expenses (*1) income Equity in earnings and losses of affiliates Non operating income and expenses Ordinary income Extraordinary income and expenses Income before income taxes Income taxes Net income (loss) 3.3 (loss) (gain) Other income and expenses profit Financial income and costs (*2) Share of the profit of investments accounted for using the equity method Ordinary income before tax (gain) Impact of change From SG&A to amortization of developed technology Non amortization i of goodwill Grants related to R&D Cancellation of amortization of business commencement expenses Non operating operating, extraordinary income and expenses, and others (loss) 1.7 Reclassification from non (loss) operating income and expenses (loss) Income tax expenses 15.3 FromSG&A to income tax 0.8 for the year (*1) Incl. R&D expenses 91.3 (*2) Incl. FX gain and loss 3/27

4 Adjusted profit in IFRS basis w/ following items adjusted 1. Amortization of acquired intangible assets 2. Acquisition related costs and temporary gain or loss falling into non operating, and extraordinary income and expenses in JGAAP basis FY16YTD FY17YTD 1.Amortization of acquired intangible assets 2.Temporary gain and loss* Adjustment *Adjusted items Acquisition related cost Amortization of acquired intangible assets Lawsuit settlement Impairment loss Restructuring loss Nonlife insurance income Loss on disaster Other temporary gains and losses 4/27

5 Adjusted Variance Analysis (IFRS) Gross margin improvement 5.6 Price erosion 17.8 Increase of SG&A 7.6 Increase of R&D 1.4 Others 7.7 FX G/P increment by sales increase FY16 JGAAP Income FY16 IFRS FY16 Adjusted FY17 Adjusted FY17 IFRS FY17 JGAAP Income 5/27

6 Revenue by Region Revenue Year on Year Revenue Comparison 100% = 587.8BJPY billion yen YoY% Comments ( ) FXN FY17YTD FY16YTD 32% 20% 29% Japan Europe Americas China % +24% (+15%) +23% (+20%) +20% 34.5 (+16%) Accessand imaging devices intisalongwith vascular grafts drove overall growth in Cardiac and Vascular Company. Therapeutic apheresis grew in Blood Management Company All companies achieved double digit growth All companies made positive growth. Revenue increased by 30% in Cardiac and Vascular Company. Blood Management Company achieved double digit growth All companies achieved double digit growth 7% Asia and % 12% Others 57.9 (+11%) Blood Management Company as well as all businesses incardiacand and Vascular Company achieved double digit growth 6/27

7 Revenue by Business Segment Revenue Year on Year Revenue Comparison 100% = 587.8BJPY billion yen YoY% Comments ( ) FXN FY17YTD FY16YTD 55% Cardiac and Vascular % (+19%) All businesses achieved remarkable growth with the impact of acquisition. Even with acquired assets excluded, all businesses made double digit growth 27% General Hospital % ( 1%) Infusion system and pain management products drove growth in JPN. Outside JPN, alliance business mainly in EU achieved growth 18% Blood Manage ment % (+6%) Overseas blood center products made double digit growth in emerging countries. Therapeutic apheresis grew tremendously w/ the impact of a temporary replacement demand 7/27

8 Cardiac and Vascular Revenue FY16 YTD : All Businesses Achieved Double Digit Growth in Revenue FY17 YTD YoY% Major Topics Impact ( ) FXN +24% (+19%) FX TIS: Closure devices largely contributed to the growth. All organic businesses also remained in a good momentum mainly outside JPN Neurovascular: Hydrogel coil grew globally, along w/ suction catheters growing mainly in developed countries CV: Resumed product shipment from Ann Arbor factory in US Vascular graft: Continued good momentum mainly in TAA stent graft Adjusted (%) Incl. acquired closure devices, achieved large increase in profit +24% due to the revenue expansion. Maintained high profitability (+15%) owing to the growth of high priced products and in the highpriced market. (26%) (26%) 8/27

9 General Hospital: Steadily Improved ability Revenue FY16 YTD FY17 YTD YoY% Major Topics Impact ( ) FXN +1% ( 1%) FX +1.7 General hospital products: Infusion system mainly drove growth in JPN. Downsized low profitable accounts in US and EU. Maintained good momentum in China and other Asian countries 0.8 Pharmaceutical and nutrition: Growth in adhesion barrier and pain management offset sluggish I.V. solutions 0.1 Healthcare: Downsized low profitable accounts inside and outside JPN 0.5 Alliance: Overseas device sales to global pharma companies for use in drug product kits grew +0.7 Adjusted (%) Improved profitability due to cost reduction in infusion +9% system and pain management products coupled w/ (+7%) downsizing overseas low profitable accounts for general (15%) (17%) hospital products. R&D reimbursement from pharmaceutical partners in alliance business 9/27

10 Blood Management: Gaining Back Momentum after Hitting the Bottom in FY16 FY16 YTD FY17 YTD YoY% Major Topics Impact ( ) FXN FX (EUR depreciation against USD) +4.3 Revenue +11% (+6%) Blood Center: Returned to stable growth. Achieved double digit growth in emerging countries. Therapeutic apheresis: Replacement demand dfor the next generation of console (+2.0) Adjusted (%) % ( 5%) Gap caused by the adoption of IFRS (capitalization ofr&d expenses). Maintained profitability in JGAAP basis. Temporary expenses for optimization project in US (16%) (14%) factory in FY17Q4 10/27

11 Major Topics in FY17 Won FY2017 Good Design Award (Oct) Corporate Selected as the Health and Productivity StockSelection Selection for four consecutive years (Feb) VISICUBE, AltaView Elemano2 Won two awards concerning an internal program to provide employment support for cancer patients, from MHLW and Tokyo Metropolitan Government (Feb, Mar) Established TIS Mastery Center at Ashitaka factory to promote innovation (May) Opened new facility in Southern CA, US, to enhance R&D and production in endovascular and neurovascular arenas (Sep) Business Announced construction for a new building in Terumo Yamaguchi to reinforce production system for TIS (Dec) Integrated two R&D facilities in Silicon Valley, and opened Terumo Bay Area Innovation Lab. (Jan) Announced an investment of 5.0BJPY in one of subsidiary companies, Vascutek Limited, to reinforce its production facilities (Feb) 11/27

12 New Products Pipeline in FY17 Category Products Region Category Products Region Coronary PTCA balloon US: FY18 Stent (TRI) FY18 PTA balloon bll (TRI) FY18 Peripheral PTA guiding sheath (TRI) FY18 Drug coated balloon EU: FY18 CV General Hospital Products Heart lung machine (Re launch) Next generation of oxygenator Vertical linfusion i pump Needleless infusion system for anti cancer drugs DM Insulin patch pump Launched JP, US, EU FY18 JP: Launched Launched JP: Approved Neuro Embolization coil Launched Distal protection device Launched Hydrogel coil 3D Launched Blood New software for automated Management blood collection system JP: Launched Oncology Radioembolization beads (Quirem) Itemwith largecontribution to sales and profit Item with highly innovative technology Launched 12/27

13 FY18 Guidance (IFRS) FY17 FY18 FY YoY% Results Guidance CAGR Revenue % +9% (%) (18.5%) (18.8%) Adjusted (%) (21.3%) (21.1%) +5% +14% +3% +11% for the Year % +23% Average Exchange Rate USD 111 yen EUR 130 yen 105 yen 130 yen 13/27

14 FY18 Annual Guidance: Adjusted (IFRS) G/P increment by sales increase Gross Margin Price improvement Erosion (JP reimbursement 5.0) Increase of SG&A 8.0 Increase of R&D 1.5 FX FY17 FY17 Adjusted FY18 Adjusted FY18 14/27

15 FY18 Guidance Revenue Adjusted Comments billion yen YoY% billion yen YoY% Cardiac FY18 and Vascular FY % % +5% % 83.6 W/ slowdown in CV and vascular graft businesses, JP reimbursement revision, and FX taken into account, maintain same momentum General Hospital % 17% % 7% 26.8 Commencement of depreciation for Yamaguchi factory. Lowered profitability owning to increase of R&D cost (Alliance and DM) Blood Management % 14% % +9% 15.1 Slight decrease in revenue because of temporary demand for therapeutic apheresis console in FY17. Upward trend for operating profit 15/27

16 New Products Pipeline in FY18 Category Products Region Category Products Region Access Closure device for distal radial approach PTCA balloon JP US CV Next generation of oxygenator Next generation of blood parameter monitoring system JP, US EU, US, Asia Coronary PTCA bll balloon JP, EU, Ai Asia Peripheral Neuro DES (Ultimaster Tansei) Stent (TRI) PTA balloon (TRI) PTA guiding sheath (TRI) JP, EU, Asia JP, US JP, US JP, US Drug coated balloon EU Distal access catheter (Sofia EX) Coil assisted balloon EU, US EU, US Vascular graft General hospital product TAA stent graft (low profile) EU AAA stent graft (Anaconda w/ smaller diameter) Portable vascular access imaging device DM Insulin patch pump JP Blood Manage ment New software for automated blood collection system New disposable kits for automated blood component processing system EU JP EU, US, Asia EU, US, Asia Item with large contribution to sales and profit Item with ihhighly hl innovative i technology 16/27

17 DM Business: Distribute Global No.1 CGM in Japan Distribute US Dexcom s Continuous Glucose Monitoring devices exclusively in Japan Beginning sales in FY18, gradually launch new products over the next few years Considering a collaboration to integrate CGM with an insulin pump platform Prospect of Japan Market Terumo s Business Directions Therapeutic Pen, needle etc. Product line expansion Diagnostic Pump CGM Dexcom CGM Version up New products Development Collaboration to integrate CGM w/ pump Become the only provider of total solutions SMBG Improved precision Cuurent Mid to Long term 17/27

18 Increased FY17 Year end Dividend up to 27.0JPY Maintain stably increase in dividends even after the adoption of IFRS, and aim for the target dividend payout ratio of 30% over the mid to long term Increased dfy17 annual dividend id d up to 50.0JPY0JPY Continue to increase FY18 annual dividend up to 54.0JPY IFRS basis FY17 FY18 Results Guidance for the year EPS (JPY) Dividend proposal/share Interim JPY 50.0JPY 54.0JPY Year end 23.0 Interim 23.0 Year end 27.0 Interim 27.0 Year end 27.0 IFRS dividend payout ratio 19.3% 22.9% 18/27

19 Reference 19/27

20 FY17 Revenue and Growth by Region Business Outside of Japan Japan Segment Subtotal t Europe Americas China Ai Asia G. Total Cardiac and Vascular Vascular (+6%) (+22%) (+20%) (+26%) (+16%) (+20%) (+19%) Out of C&V Interventional Systems* 40.8 (+5%) (+22%) 67.4 (+17%) 92.0 (+29%) 31.6 (+15%) 26.8 (+20%) (+19%) General Hospital ( 1%) 36.1 (+1%) 8.7 ( 1%) 8.1 (0%) 2.3 (+14%) 17.1 (0%) ( 1%) Blood Manage ment 11.9 ( 1%) 92.8 (+7%) 25.2 (+4%) 44.1 (+8%) 5.3 (+17%) 18.1 (+8%) (+6%) G. Total (+1%) (+16%) (+15%) (+20%) 41.5 (+16%) 67.6 (+11%) (+11%) *Including Neurovascular business (YoY%): FXN 20/27

21 Expenses (IFRS) FY16 YTD FY17 YTD YoY YoY% YoY% (FXN) Salaries & Wages % +11% Sales Promotion % +11% Logistical Costs % +15% Depreciation & Amortization % +7% Others % +9% SG&A Expenses Total (29.4%) (29.1%) % +10% R&D Expenses (6.3%) (7.0%) % +26% Expenses Total (35.7%) (36.1%) % +13% 21/27

22 Quarterly Results JGAAP FY16Q4 (Jan Mar) FY17 Q1 (Apr Jun) Q2 (Jul Sep) IFRS Q3 (Oct Dec) Q4 (Jan Mar) Revenue Gross SG&A Expenses 47.4 (34.0%) R&D Expenses 9.2 Other income and Expenses (53.2%) (54.5%) (54.7%) (54.6%) (53.5%) 40.2 (28.9%) 41.2 (28.4%) 43.8 (28.7%) 45.9 (30.4%) (6.6%) (6.1%) (6.7%) (7.0%) (8.2%) (20.4%) 28.7 (19.8%) 29.4 (19.3%) 22.0 (14.6%) 17.7 (12.6%) Adjusted (23.0%) (22.6%) (21.5%) (18.1%) Average USD 114 yen 111 yen 111 yen 113 yen 108 yen Exchange Rate EUR 121 yen 122 yen 130 yen 133 yen 133 yen 22/27

23 CAPEX and R&D Expenses CAPEX 29.4 Amortization of acquired intangible assets and goodwill R&D Expenses Depreciation Amortization of acquired intangible assets CAPEX = C.i.P. record basis FY14 FY15 FY16 FY17 FY18 Guidance JGAAP < > IFRS Expand investment in production capacity and space as well as IT infrastructure in FY18 Adopt IFRS from FY17 Include intangible assets except for acquired ones and capitalized development expenses Exclude amortization of goodwill 41.3 Further promote US based R&D activities for TIS and neurovascular Capitalized p development expenses are included in CAPEX FY17 :0.8BJPY FY18 Guidance :2.1BJPY 23/27

24 FY17 Cash Flow (IFRS) CF Investment and Finance CF Depreci ation and amortization Income taxes 10.0 Increase of working capital 43.6 CAPEX Repayment for shortterm debt Finance 15.8 Dividends 11.9 Others before tax Cash at end of FY16 CAPEX = C.i.P. record basis Cash at end of each fiscal year is consistent with cash and cash equivalents on B/S Cash at end of FY17 24/27

25 Foreign Exchange Sensitivity USD EUR CNY Revenue Adjusted <Reference> Impact of +/ 10% fluctuation ti Adjusted North America Latin America EMEA Asia EUR Others CNY Others /27

26 The Status of Convertible Bonds Dtil Detail of the bonds (Issued in Dec. 2014) Maturity Aggregate principal amount Coupon Conversion price (yen) Contingent conversion trigger price (yen) Number of shares required to be issued for conversion Dec, % 3,868 5, M shares Dec, % 3,868 5, M shares Total M shares Allocated treasury shares to the shares issued for conversion Status of treasury shares (as of the end of Mar. 2018): Treasury stock cost per share: 3,896JPY, Number of treasury shares: 26.1M shares, % against total number of issued shares: 6.9% Status t of conversion (as of Mar 31, 2018) Bonds Amount of shares issued for conversion (% against the total amount of bond) Number of shares issued for conversion (% against total number of issued shares) Convertible Bonds due Dec, 2019 Convertible Bonds due Dec, BJPY (12.9%) 1.7M shares (0.44%) 0.06 BJPY (0.1%) 0.02M shares (0.004%) 26/27

27 IR Contact Terumo Corporation Corporate Communication (IR) Dept. E mail: kouhou_terumo01@terumo.co.jp 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 on 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 of competition. The market share information i in this presentation is partly derived dfrom our own independent d research. 27/27