Consolidated Financial Results for the 1st Quarter Fiscal 2021

Olympus Corporation | Executive Officer and Chief Financial Officer | Chikashi Takeda | August 5, 2020

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Page 2 1Q FY2021 Consolidated Financial Results

Highlights

1Q Consolidated Financial Results

Revenue:

Decreased significantly in all divisions due to COVID-19

But YoY decline in revenue slowed from May to June

Operating profit:

Achieved profitability even in challenging environment by

controlling expenses

Mainstay Endoscopic Solutions Division (ESD) generated profit

Full-Year Performance Forecasts

Consolidated performance forecasts remain undecided

Outlook remains uncertain due to continued spread of COVID-19 and it is difficult to make a reasonable estimate on our financial forecasts

Page 3 1Q FY2021 Consolidated Financial Results

Consolidated Financial Results and

01 Business Review for the 1Q of

Fiscal 2021 (FY Ending March 31, 2021)

1Q of Fiscal 2021 (1) Consolidated Financial Results

  1. Revenue: Decreased in all divisions due to COVID-19
  2. Operating profit: Maintained profitability driven by ESD despite challenging environment

1Q (Apr. to Jun.)

After foreign

(Billions of yen)

FY2020

FY2021

YoY

exchange

adjustment

181.9

142.4

-22%

-19%

Revenue

1

Gross profit

116.7

87.3

-25%

-22%

(% of revenue)

(64.2%)

(61.3%)

Supplemental data

After foreign exchange and COVID-19 adjustment

-¥34.0 billion

-

Selling, general and administrative expenses

101.1

84.6

-16%

-14%

-

(% of revenue)

(55.6%)

(59.4%)

Other income and expenses

-0.9

-1.4

-

-

-

Operating profit

14.7

1.2

2

-92%

-80%

-¥11.0 billion

(% of revenue)

(8.1%)

(0.8%)

Profit before tax

13.6

0.2

-98%

(Profit before tax Rate)

(7.5%)

(0.1%)

Profit(loss) attributable to owners of parent

8.6

-2.7

-¥11.4 billion

(Profit attributable to owners of parent Rate)

(4.7%)

(-)

EPS

¥6

-¥2

Yen/U.S. dollar

Yen/U.S. Euro

JPY/CNY

¥110¥108

¥123¥118

¥16¥15

Dividend forecast for FY2021

Undecided

Page 5 1Q FY2021 Consolidated Financial Results

1Q of Fiscal 2021 (2) Endoscopic Solutions Division (ESD)

Revenue Operating Profit

(Billions of yen)

95.4

79.2

Revenue Revenue decreased due to COVID-19, but China showed growth of 3% (excl. FX)

Operating Achieved operating margin of approx. 20% (excl. FX) despite challenging

profit environment

1Q (Apr. to Jun.)

After foreign

(Billions of yen)

FY2020

FY2021

YoY

exchange

adjustment

Revenue

95.4

79.2

-17%

-14%

Operating profit

21.9

14.6

-33%

-27%

21.9

14.6

Other income and

0.2

-0.4

-

-

expenses

Operating margin

23.0%

18.5%

19.4 %

Apr.-Jun. 2019

Apr.-Jun. 2020

Page 6 1Q FY2021 Consolidated Financial Results

1Q of Fiscal 2021 (3) Therapeutic Solutions Division (TSD)

Revenue Operating Profit

(Billions of yen)

Revenue Revenue decreased in all regions with the number of elective procedures down

52.1

Operating Despite lower revenue, cost reductions led to profitability profit (loss)

38.1

1Q (Apr. to Jun.)

After foreign

(Billions of yen)

FY2020

FY2021

YoY

exchange

adjustment

Revenue

52.1

38.1

-27%

-24%

Operating profit

5.7

1.4

-74%

-69%

5.7

Other income and

0

-0.3

-

-

expenses

1.4

Operating margin

10.9%

3.8%

4.5%

Apr.-Jun. 2019

Apr.-Jun. 2020

Page 7 1Q FY2021 Consolidated Financial Results

1Q of Fiscal 2021 (4) Scientific Solutions Division (SSD)

Revenue Operating profit (loss)

(Billions of yen)

22.6

17.8

1.6

-1.6

Apr.-Jun. 2019

Apr.-Jun. 2020

Revenue Revenue decreased due to COVID-19, but China showed growth

Operating Operating loss was posted due mainly to lower revenue profit (loss)

1Q (Apr. to Jun.)

After foreign

(Billions of yen)

FY2020

FY2021

YoY

exchange

adjustment

Revenue

22.6

17.8

-21%

-18%

Operating profit(loss)

1.6

-1.6

-¥3.2 billion

-¥3.0 billion

Other income and

-0.2

-0.3

-

-

expenses

Operating margin

7.3%

-

Page 8 1Q FY2021 Consolidated Financial Results

1Q of Fiscal 2021 (5) Imaging Division (IMD)

Revenue Operating profitloss Revenue Revenue decreased due to COVID-19

(Billions of yen)

10.2

6.0

-2.3

-2.7

Apr.-Jun. 2019

Apr.-Jun. 2020

Operating

Operating loss expanded due mainly to lower revenue

profit (loss)

1Q (Apr. to Jun.)

After foreign

(Billions of yen)

FY2020

FY2021

YoY

exchange

adjustment

Revenue

10.2

6.0

-41%

-39%

Mirrorless

7.7

4.8

-38%

-36%

Compact

1.2

0.6

-52%

-51%

Others

1.3

0.7

-46%

-44%

Operating profit (loss)

-2.3

-2.7

-¥0.4 billion

-¥0.5 billion

Other income and

-0.5

-0.2

-

-

expenses

Operating margin

-

-

-

Page 9 1Q FY2021 Consolidated Financial Results

Statement of Financial Position

Secured cash balance for stable business operations

Bonds/loans increased due to increase in long-term borrowings and issuance of CP

(Billions of yen)

End of Mar. End of June

Change

2020

2020

Current assets

506.7

604.4

+97.7

Inventories

167.6

183.3

+15.7

Non-current assets

509.0

494.7

-14.3

Property, plant and equipment

202.1

201.3

-0.8

Intangible assets and others

208.5

196.0

-12.5

Goodwill

98.3

97.4

-1.0

Total assets

1,015.7

1,099.1

+83.4

End of Mar. End of June

Change

2020

2020

Current liabilities

333.8

344.4

+10.6

Bonds/loans payable

81.0

111.9

+30.9

Non current liabilities

309.9

392.7

+82.8

Bonds/loans payable

199.9

284.0

+84.1

Equity

372.0

362.0

-10.0

(Equity ratio)

36.5%

32.8%

-3.7pt

Total liabilities and equity

1,015.7

1,099.1

+83.4

Interest-bearing debt: ¥395.9 billion (up ¥115.0 billion from March 31, 2020)

Page 10 1Q FY2021 Consolidated Financial Results

Consolidated Cash Flows

FCF: Minus ¥3.9 billion due to lower operating profit

Financial CF: Plus ¥111.8 billion due to increase in long-term borrowings

1Q (Apr. - Jun.)

(Billion of yen)

FY2020

FY2021

Change

Revenue

181.9

142.4

-39.5

Operating profit

14.7

1.2

-13.5

(% of revenue)

8.1%

0.8%

-7.3pt

CF from operating activities

28.4

8.4

-20.0

CF from investing activities

-15.5

-12.3

+3.2

Free cash flow

12.9

-3.9

-16.8

CF from financing activities

-11.3

111.8

+123.1

Cash and cash equivalents at end of period

113.7

270.7

+156.9

Page 11 1Q FY2021 Consolidated Financial Results

Updates: January to June

Revenue has been on a downward trend since February due to COVID-19, but the decline slowed from May to June.

It is difficult to make a reasonable estimate on our financial forecasts

YoY Revenue Comparison*

120%

110%

100%

90%

80%

70%

60%

50%

40%

30%

January

February

March

April

May

June

* After foreign exchange adjustment

ESD

TSD

SSD

IMD

Page 12 1Q FY2021 Consolidated Financial Results

Initiatives for New Normal

Accelerate new-normal initiatives in sales promotion activities to support HCPs and customers

MedPresence*

  • Real-timevirtual collaboration solution for clinical uses with high IT security technology
  • Enterprise medical virtual presence solution, that enables teams to quickly bring needed expertise into a procedure space from across the organization, around the world, and at any time safely and securely

Online training and demonstrations

  • Online training, demonstrations, seminars, etc. to support HCPs and customers even in COVID-19 pandemic environment
  • Pursue new approaches to customers centered on digitization

Online demonstration for

Online

seminar for medical

microscope

device

*Introduced in the US and Europe

Page 13 1Q FY2021 Consolidated Financial Results

Committed to Corporate Reforms

FY2021

Great chance to accelerate transformation to a truly global medtech company for sustainable growth

Focus the

Structural reform

Successful launch of

Continued steady

Driving

corporate

of fixed costs

next-gen GI endoscopy

investment in product

efficiency in our

portfolio

system EVIS X1

development for future

R&D operations

growth

Olympus and Japan Industrial Partners signed a memorandum of understanding to transfer Olympus's Imaging Business

EVIS X1 has been launched in EMEA (Europe, Middle East & Africa), Australia, India and Hong Kong on April 23 and in Japan on July 3

Page 14 1Q FY2021 Consolidated Financial Results

Continue investments needed for sustainable growth

Securing liquidity of approx. ¥350-400 billion*

  • Cash balance: approx. ¥270 billion**
  • Issued ¥50 billion of corporate bonds (5yr and 10yr) in July
  • In addition, commitment line of credit: approx. ¥100 billion

Strengthen business development activities

  • Consider necessary M&A while strengthening financial flexibility
    • As of the end of July 2020 **As of the end of June 2020

Page 15 1Q FY2021 Consolidated Financial Results

02 Appendix

Supplementary Materials: 1Q of Fiscal 2021 Factors that Affected Consolidated Operating Profit

14.7

FY2020

Operating profit

Decrease in

sales -21.3

Declined in all divisions due to COVID-19

COGS ratio worsened due to decline in factory operation

Changes in

cost of sales

-4.3

1Q (Apr.-Jun.)

Decrease in T&E and sales promotion expenses etc. due to COVID-19

Others

-0.5

Decrease in

SG&A expenses +14.4

1.2

Impact of

FY2021

foreign

Operating profit

exchange

-1.7

Page 18 1Q FY2021 Consolidated Financial Results

Supplementary Materials: 1Q of Fiscal 2021 by Segment

1Q (Apr. to Jun.)Supplemental data

After foreign

Billions of yen

FY2020

FY2021

YoY

After foreign exchange

exchange and

adjustment

COVID-19

adjustment

ESD

Revenue

95.4

79.2

-17%

-14%

-

Operating profit

21.9

14.6

-33%

-27%

-

TSD

Revenue

52.1

38.1

-27%

-24%

-

Operating profit

5.7

1.4

-74%

-69%

-

SSD

Revenue

22.6

17.8

-21%

-18%

-

Operating profit

1.6

-1.6

-¥3.2 billion

-¥3.0 billion

-

IMD

Revenue

10.2

6.0

-41%

-39%

-

Operating profit

-2.3

-2.7

-¥0.4 billion

-¥0.5 billion

-

Others

Revenue

1.6

1.3

-18%

-18%

-

Operating profit

-0.6

-0.4

+¥0.2 billion

+¥0.2 billion

-

Elimination and

Operating profit

-11.5

-10.1

+¥1.4 billion

+¥1.3 billion

-

Corporate

Consolidated Total

Revenue

181.9

142.4

-22%

-19%

-¥34.0 billion

Operating profit

14.7

1.2

-92%

-80%

-¥11.0 billion

Page 19 1Q FY2021 Consolidated Financial Results

Supplementary Materials: Expenditures etc.

1Q (Apr. to Jun.)

Billions of yen

FY2020

FY2021

(Billions of yen)

FY2020

FY2021

21.2

R&D expenditures* (a)

21.2

18.7

Capitalization of R&D

3.3

3.4

18.7

expenditures (b)

17.4

R&D expenses in P/L

17.9

15.3

15.4

15.4

(a-b)

14.6

(Billions of yen)

FY2020

FY2021

Amortization

1.7

2.0

End of Mar, 2020

End of Jun, 2020

R&D assets

47.7

49.2

*Capitalization of R&D expenditures (b) are included in R&D expenditures and capital expenditures.

R&D expenditures*

Capital expenditures*

Depreciation

Amortization

Page 20 1Q FY2021 Consolidated Financial Results

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Olympus Corporation published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 06:06:12 UTC