FY28 Business Results Financial Highlights and the Mid-term Management Plan Hisashi Ietsugu, President and CEO May 12, 29
Contents FY28 Financial Highlights Mid-term Management Plan (FY29 - FY211) FY29 Consolidated Earnings Forecast Supplementary Data - Mid-term Management Plan (Financial Targets) Forward-looking Statements This material contains forward-looking statements about Sysmex Corporation and its group companies (the Sysmex Group). These forward-looking statements are based on the current judgments and assumptions of the Sysmex Group in light of the information currently available to it. Uncertainties inherent in such judgments and assumptions, the future course of our business operations, and changes in operating environment both in Japan and overseas may cause our actual results, performance, achievements, or financial position to be materially different from any future results, performance, achievements, or financial position either expressed or implied within these forward-looking statements. 1/3
FY28 Financial Highlights 2/3
Financial Highlights Sales Income 12 11.7 111.8 24 11. 1 2 87.8 8 76.9 15. 15.1 13.5 16 6 11.9 14.5 9.8 12.7 12.9 12 1.7 4 9.1 9. 9.1 8 8. 7.4 5.7 2 4 FY24 FY25 FY26 FY27 FY28 Net sales Operating income Ordinary income Net income Net sales Operating income Ordinary income Net income FY28 111.8 15.1 12.9 8. Revised Forecast (as of Feb.3) 114. 14. 11.5 Profit targets achieved, despite impact of the high yen 6.7 Limited impact of recession on the diagnostics market Overseas business drove Group growth (Overseas sales ratio: 68%) FY27 11.7 15. 14.5 9.1 Forex impact Net sales: - 9.6 billion Operating income: - 2.7 billion % compared to a Year Earlier 11. % 1.7 % 89.3 % 87.8 % Exchange rate in the preceding 4Q report :1US$= 15.3 1EUR= 157.7 Exchange rate in this 4Q report: 1US$= 93.6 1EUR= 121.9 Exchange rate in the preceding full year :1US$= 114.3 1EUR= 161.5 Exchange rate in this full year :1US$= 1.5 1EUR= 143.5 3/3 *Forex loss (non-operating balance): 2.2 billion *Currency adjusted to the same time last year Net sales: 19.7%, Operating income: 118.7%
Breakdown of Net Sales and Operating Income.13 5.7 Net Sales *FX impact excluded from regional sales below China AP FX impact 1.3 Europe 2.4 Americas Japan 1.2 9.6 Gross margin on increased sales Operating Income Gross margin increased as a result of an improvement in cost ratio 5.3 SG&A increase 8.8 (in billions of JPY) Support costs in the Americas reclassified 2.96 billion *Factors behind the increase in SG&A R&D expenditure 1.5 billion Switch to direct-sales.77 billion Temporary factors: 1. billion Establishment of Technopark.57 billion 4 th anniversary events.46 billion 6.3 FX impact 11.7 111.8 2.7 UP 1.1 billion 15. UP.1 billion 15.1 FY27 FY28 FY27 FY28 4/3
Breakdown of Balance Sheet Assets Liabilities/Equity (in billions of JPY) Fixed assets Current assets Up8.79 Up.69 * Factors behind the increase in tangible fixed assets Technopark 4.16 billion Leased assets 3.29 billion 19. Intangible fixed assets Others Tangible fixed assets.52 1.7 Others 7.5.86 1.7.23 Notes/Account Cash receivable 118.5 Equity Liabilities Up.73 Up8.76 19. 7.2 Current liabilities 1.5 Fixed liabilities Retained earnings 3.3 Others 2.6 * Factors behind the increase in Current liabilities Short-term bank loans 5.6 billion Lease liabilities 1.52 billion 118.5 FY27 UP 9.4 billion FY28 FY27 UP 9.4 billion FY28 5/3
Consolidated Cash Flow 15 1 1. 11.6 13.1 (in billions of JPY) 5 3.2 5.45 1.3.72 3..26 1 15 6.6 12.8 13.5 Operating CF Investing CF Financing CF FY26 FY27 FY28 Increase/decrease in cash and cash equivalents Increase/decrease in cash and cash equivalents include translation differences of cash and cash equivalents. 6/3
Projected Dividend Interim dividend Year-end dividend Total Dividend ratio (Consolidated) FY28 (Forecast) 24 26 5 *2 yen dividend increase announced (May 11) 31.9 % Increase for 7 consecutive years FY27 2 28 48 26.8 % *Including 8 yen 4 th anniversary memorial dividend 7/3
Changes in Accounting Standards Accounting Standards for Lease Direct leasing contracts Sales in Europe: - 1.3 billion Leased assets / liabilities on-balance Small impact on Operating income, Ordinary income and Net income Tangible fixed assets:+ 3.2 billion Valuation of Inventory Inventory now valuated using the weighted average cost method (essentially lower of cost or market method) COGS: +.31 billion Extraordinary loss:.34 billion Reclassification of Service Costs in the Americas Service costs reclassified from COGS to SG&A expenses SG&A expenses: + 2.9 billion Tax system revision concerning dividends from overseas subsidiaries Income tax expenses declined due to a reversal of deferred tax liabilities:.41 billion 8/3
Topics New Products Breast cancer lymph node metastasis rapid detection system: First insurance coverage in Japan Japan s first rapid influenza diagnostic kit for chickens Hematology analyzer XT-4i for medium-sized hospitals Hemostasis reagents prepared from materials produced using gene recombinant technology Reagents for Immunochemistry analyzer HISCL-2i approved Affiliates and Offices Technopark opens(expanding R&D base) A subsidiary in the Middle East (Dubai) established An Indian joint venture was made a wholly-owned subsidiary Local distributors in Benelux were made wholly-owned subsidiaries Other Developments 4 th anniversary Commemorative events Sysmex corporate logo changed Promoting Global Corporate Value Enhancement Program 9/3
Geographic Segment Information The Americas Net sales Operating income FY28 23.3 1.7 FY27 2.8.99 % compared to a Year Earlier 112.1 % 18.5 % (Sales) 25 2 19.1 2.8 (Operating income 3 23.3 2 *On a local currency basis: Net sales; 127.5 %, Operating income; 25.2 % 15 1.7 2 Reagent sales grew in tandem with greater hematology instruments sales to IHNs (Integrated Healthcare Networks), including Sutter Health Greater penetration into the Canadian hematology market following the switchover to direct sales Hematology systems selling briskly in Central and South America 1 5.99.59 FY26 FY27 FY28 1 1 Margins improved due to higher sales levels and lower fixed costs growth 1/3
Geographic Segment Information - Europe Net sales FY28 35.3 FY27 39.1 % compared to a Year Earlier 9.3 % (Sales) 5 (Operating income) 1 Operating income 5.1 4.6 111.1 % *On a local currency basis: Net sales; 11.7 %, Operating income; 125.1 % 4 3 31.5 39.1 35.3 8 6 Changes from the previous fiscal year which have negatively affected our sales Change in accounting standards for lease transactions: - 1.3 billion Distributed product lines discontinued (blood-collecting tubes): -.52 billion MOLIS software transferred: -.88 billion Sterling depreciation: - 1.2 billion Sales grew in France, Spain, as well as Emerging markets (Eastern Europe, Russia, Africa, the Middle East) Operating margin improved thanks to reagent sales growth and direct sales in France, etc. 11/3 2 1 3.5 4.6 5.1 FY26 FY27 FY28 4 2 *including Change in accounting standards for lease transactions, etc.
Geographic Segment Information - China Net sales FY28 1.1 FY27 8.1 % compared to a Year Earlier 124.4 % (Sales) 15 (Operating income) 3 Operating income 1.3.82 158.9 % 12 1.1 2 *On a local currency basis: Net sales; 13.1 %, Operating income; 166.1 % 9 6.8 8.1 2 Sales topped the 1 billion mark for the first time ever Hematology systems sales increased through direct business with customers Successful bid ratio decreased in the low-end market, following a new law on the control of purchasing / imports Urinalysis and hemostasis sales grew substantially Installations of urinalysis analyzers increased significantly due to upgrades and in the wake of reports of melamine contaminated food Margins improved due to higher sales levels and lower fixed costs growth 6 3 1.3.78.82 FY26 FY27 FY28 1 1 12/3
Geographic Segment Information - AP Net sales Operating income FY28 5.3.64 FY27 5..54 <Excluding Korea, Taiwan, and Mongolia> % compared to a Year Earlier 17.2 % 118.2 % *On a local currency basis: Net sales; 118.5 %, Operating income; 13.6 % (Sales) 7 6 5 4 4. 5. (Operting income) 1 5.3 1 1 1 Hematology systems sales fared well in Australia Sales in the hematology low-end market grew substantially in India Urinalysis sales increased as the use of automated urine sediment analysis has become widespread 3 2 1.64.54.33 FY26 FY27 FY28 1 Operating income margin improved due to greater sales and containment of SG&A expenses 13/3
Geographic Segment Information - Japan Net sales Sales to customers Intra-area Transfer Operating income FY28 69. 37.5 31.5 4.6 The Japanese market remained slow Solution proposal led to large orders from university hospitals, etc. Instruments exports (intra-group sales) increased on the back of strong overseas demands Operating income plummeted due to temporary factors (high yen, greater SG&A) * Temporary factors resulting in greater SG&A: 1. billion 4 th anniversary events:.46 billion Establishment of Technopark (excl. depreciation):.57 billion * Combined sales of Korea, Taiwan, and Mongolia: 1.76 billion FY27 66.8 37.5 29.3 7.8 14/3 <Including Korea, Taiwan, and Mongolia> % compared to a Year Earlier 13.3 % 1.1 % 17.4 % 59.4 % * Forex impact Net sales: - 3.4 billion Operating income: - 2.8 billion <Including Korea, Taiwan, and Mongolia> (Sales) (Operating income) 8 16 6 4 2 64.9 25.5 7.4 39.3 66.8 29.3 7.8 37.5 69. 31.5 4.6 37.5 FY26 FY27 FY28 Intra-group Sales: Exports to group affiliates Sales to customers: Including Korea, Taiwan, and Mongolia Operating Income 12 8 4
Mid-term Management Plan (FY29 - FY211) 15/3
External Environment Sharp forex fluctuations The yen grew strong against key currencies Continued curb on medical expenses Medical institutions seeking higher operational efficiency Greater demand for testing parameters with high medical value Industry realignment M&As among competitors in the diagnostics sector Healthcare market remained brisk amid global recession Advanced countries: Graying populations, greater demand for advanced medical care Emerging countries: Increasing populations, development of medical infrastructures Increased investment in medical / healthcare services as part of economic packages 16/31
Internal Environment (FY27 - FY28) Healthy growth overseas, despite impact of the high yen Presence established in the North America hematology market Territories for direct sales and support expanded Life science: Steady progress made, though business startup is behind b schedule Breast cancer lymph node metastasis rapid detection systems Europe: Central Europe (27), France (28), Benelux (29), Middle East (28)* The Americas: Canada (28) Asia: Thailand (27)*, India (28)* * Customer support provided directly by our subsidiaries Slower growth in the Japanese market Immunochemistry: Delayed launch of reagents for HISCL-2i analyzer Clinical chemistry: Decline in competitive edge of Sysmex products POC: NHI points assigned Tougher competition and change of sales channels for flu test kits Greater penetration into Japanese and European medical institutions Group s s managerial base strengthened on the occasion of the 4th anniversary of our foundation New Corporate Philosophy (27), New corporate logo (28), TechnoPark (Expanding R&D base) (28) 17/31
Summary of Mid-term Management Plan Aim at further growth based on the longl ong-term management vision A Unique & Global Healthcare Testing Company Core Strategies (formulated at April, 27) Targets of Mid-term Plan (FY211) Net Sales: 14 billon CAGR: approx. 1% (FY9-FY11) Global Niche No.1 Focus on Asia Focus on Life Science Group key objectives and action plans 1. Sustaining growth in the hematology field 2. Accelerating growth of non-hematology* fields in in-vitro diagnostics 3. Accelerating commercialization of Life Science business 4. Strengthening R&D 5. Strengthening corporate structure Mid-term Management Plan Operating Income: 18.5 billion CAGR: approx. 2% (FY9-FY11) Operating Income Ratio: 13.2% ROE: 12.% FCF: 8.4 billion (Exchange rate for the Mid-term Management Plan: 1US$= 95 1EUR= 125) FY27 FY28 FY29 FY21 FY211 Non-hematology: in-vitro diagnostics fields excluding hematology but including hemostasis, urinalysis, immunochemistry, clinical chemistry and others. 18/31
Mid-term Management Plan Key objectives and action plans (1) 1. Sustaining growth in the hematology field Further expanding market share in NA US: Canada: Increasing penetration into large commercial labs and IHNs Promoting sales by increasing brand recognition and expanding direct sales territories Sustaining growth in Europe (Advanced countries) Promoting solution-oriented sales by tapping into direct-sales systems Expanding sales in Emerging countries Encouraging activities to new equipment purchase facilities Encouraging instrument upgrades and switchover to system products Strengthening customer support by introduction of SNCS* Expanding product portfolio, strengthening marketing SNCS: Sysmex Network Communication Systems Customer support service through on-line network 19/31 1 8 6 4 2 <Hematology segment Targeted sales by destination> 87.6 72.4 79.3 5.5 5.9 26.1 2.9 14. 6.1 6.6 27.5 24.6 6.9 7.4 29.3 29. 14.5 15. FY29 FY21 FY211 Japan Americas Europe China AP
Mid-term Management Plan Key objectives and action plans (2) 2. Accelerating growth of non-hematology fields in in-vitro diagnostics Consolidating our status as a comprehensive supplier in Asia, including Japan China: Increasing product portfolio in hemostasis, immunochemistry, and clinical chemistry fields Expanding local production of reagents (clinical chemistry, etc.) AP: Strengthening marketing in clinical chemistry and immunochemistry fields Enhancing solution-oriented sales Promoting ISO certification support business Japan: Expanding testing parameters for immunochemistry reagents Broadening product lines of Sysmex-branded hemostasis reagents Broadening product lines in clinical chemistry and microbiology fields 5 4 3 <Non-Hematology segment Targeted sales by destination> 46.8 43.3 4. 2.5 2. 7.2 1.7 6.3 5.2 1.9 8.3 9.7 4.4 4.7 5. 2 Extending global reach in hemostasis and urinalysis fields Broadening product lines of Sysmex-branded hemostasis reagents Exploring opportunities in the urinalysis market through alliances 2/31 1 2.3 2.6 21.2 FY29 FY21 Fy211 Japan Americas Europe China AP
Mid-term Management Plan Key objectives and action plans (3) 3. Accelerating commercialization of Life Science business Facilitating launch of rapid r lymph node metastasis detection systems Breast cancer Europe, Japan: Introduced to a greater number of institutions US, AP: Commencing market introduction Expanding applicable cancer types, including colon cancer Driving R&D of cervical cancer screening technology Commencing clinical research (US) Accelerating diabetes-related research projects Clinical research of minimal-invasive glucose monitoring and simulations of clinical conditions Seeking opportunities created by microarray technology Expanding the microarray business through alliances (DNA chips) 21/31
Mid-term Management Plan Key objectives and action plans (4) 4. Strengthening R&D Speeding up product development Improving product flow Reinforcing collaborations (expediting practical application of joint development projects) Acquiring new technologies Realizing Disease management concept Commercializing high value added analysis parameters Promoting R&D in life science (cancer, lifestyle diseases) Technopark in Kobe 22/31
Mid-term Management Plan Key objectives and action plans (5) 5. Strengthening corporate structure Group-wide campaigns for environmental conservation Offering eco-friendly products Resource conservation, lighter / smaller products Reducing animal-derived materials Reducing production / logistics costs Strengthening business management for the Group Rebuilding ERP Improving / speeding up business information management Strengthening risk management Developing HRs for global assignments and reconstructing the personnel system 23/31
FY29 Consolidated Earnings Forecast 24/3
Consolidated Earnings Forecast FY29 Consolidated Earnings Forecast Net sales: 116 billion Operating income: 13 billion Operating margin: 11.2 % Net income: 8.1 billion Net income margin: 7. % Investment plan Capital Expenditure: 6 billion Depreciation: 7.5 billion R&D Expenditure: 1.8 billion 14 Planned exchange rate: 1US$= 95 1EUR= 125 25 Sales 12 1 8 6 4 2 87.8 11.9 1.7 7.4 11. 13.5 12.7 9. 11.7 15. 14.5 9.1 111.8 116. 15.1 13. 12.9 13. 8. 8.1 2 15 1 5 Income FY25 FY26 FY27 FY28 FY29 Sales Operating Income Ordinary Income Net Income 25/31
Projected Dividend Interim dividend Year-end dividend Total Dividend ratio (Consolidated) FY29 25 25 5 31.6 % (Forecast) FY28 24 26 5 2 yen dividend increase announced (May 11) 31.9 % 26/31
Supplementary Data 27/3
補足資料 Mid-term Management Plan (Financial Targets) Consolidated profit and loss Sales and operating income by geographical region Capital expenditure FY29 FY21 FY212 Growth Growth Japan 37. 38. 12.7% 4. 15.3% Overseas 79. 89. 112.7% 1. 112.4% Net Sales 116. 127. 19.5% 14. 11.2% Opareting Income 13. 15.2 116.9% 18.5 121.7% Ordinary Income 13. 15.2 116.9% 18.3 12.4% Net Income 8.1 9.5 117.3% 11.5 121.1% FY29 FY21 FY212 Growth Growth Japan Sales to customers 38.4 39.8 13.6% 42.4 16.5% Intra-group Sales 32.3 35.4 19.6% 39.6 111.9% Sales 7.7 75.2 16.4% 82. 19.% Opareting Income 2.8 3.3 115.8% 4.1 124.2% Americas Sales 25.5 29.7 116.5% 34.5 116.2% Opareting Income 2.6 3.6 138.5% 4.9 136.1% Europe Sales 35.1 38.2 18.8% 41.4 18.4% Opareting Income 4.5 5.1 113.3% 5.6 19.8% China Sales 11.1 12.9 116.2% 14.6 113.2% Opareting Income 1.4 1.7 118.1% 2. 116.5% Asia Pasific Sales 5.9 6.4 18.5% 7.1 11.9% Opareting Income.65.75 115.4%.9 12.% FY29 FY21 FY211 Capital expenditure 6. 6. 6.5 Depriciation 7.5 7.5 7.5 R&D expenditur 1.8 12. 13. 28/31
(Sales) 5 4 3 2 1 Mid-term Management Plan (Financial Targets) - Sales and operating income by geographical region - 35.1 4.5 Europe 38.2 5.1 41.4 5.6 FY29 FY21 FY211 (Sales) 2 16 12 8 4 11.1 1.4 (Operating income) China 12.9 1.7 1 8 6 4 2 (Operating income) 14.6 2. 5 4 3 2 1 (Sales) 1 8 6 4 2 Japan (Operating income) <Including Korea, Taiwan, 15 and Mongolia> 7.7 32.3 38.4 2.8 75.2 35.4 39.8 3.3 82. 39.6 42.4 4.1 FY29 FY21 FY211 Intra-group Sales: Exports to group affiliates Sales to customers: Including Korea, Taiwan, and Mongolia Operating Income 12 9 6 3 8 6 4 2 (Sales) 4 32 24 16 8 (Sales) 5.9.65 25.5 2.6 Americas 29.7 3.6 (Operating income) 1 34.5 4.9 FY29 FY21 FY211 AP <Excluding Korea, Taiwan, 1 and Mongolia> 6.4.75 (Operating income) 7.1.9 1.5 1.2.9.6.3 8 6 4 2 FY29 FY21 FY211 29/31 FY29 FY21 FY211.
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