Sysmex : Summary of Consolidated Financial Results for the First Three Months of the Fiscal Year Ending March 31, 2022

Summary of Consolidated Financial Results [ IFRS ]

for the First Three Months of the Fiscal Year Ending March 31, 2022

August 6, 2021

Listed company name

:

Sysmex Corporation

Code

:

6869

Listed stock exchanges

:

Tokyo Stock Exchange

URL

:

www.sysmex.co.jp/en

Company representative

: Hisashi Ietsugu, Chairman and CEO

Contact

: Tomoo Aramaki, Executive Vice President

Corporate Business Administration

Phone

:

078(265)-0500

Scheduled date for filing of quarterly report

:

August 11, 2021

Scheduled date for dividend payment

:

―

Preparation of supplementary material for

:

Yes

quarterly earnings

Holding of earnings announcement

:

Yes

1. Results for the First Three Months of the Fiscal Year Ending March 31, 2022

(Unit: Millions of Yen)

(1) Operating results

(% changes as compared with the corresponding period of the previous fiscal year)

Net Sales

Operating profit

Profit before tax

Profit

Three months

79,363

31.2%

15,052

116.3%

14,553

124.5%

9,934

123.6%

ended Jun. 30, 2021

Three months

60,511

(11.7)%

6,957

(38.3)%

6,481

(32.9)%

4,442

(32.9)%

ended Jun. 30, 2020

Profit

Total

Basic earnings

Diluted earnings

attributable to

comprehensive

owners of the

per share (Yen)

per share (Yen)

income

parent

Three months ended Jun. 30, 2021

9,993

122.7%

11,491

131.7%

47.81

47.72

Three months ended Jun. 30, 2020

4,487

(33.0)%

4,959

84.6%

21.49

21.46

(2) Financial condition

Total assets

Total equity

Equity attributable

Equity attributable

to owners of the

to owners of the

parent

parent to total assets

As of Jun. 30, 2021

424,207

312,909

312,196

73.6%

As of Mar. 31, 2021

427,475

308,669

307,898

72.0%

2. Dividend

Dividend per share

First quarter

Second quarter

Third quarter

Year-end

Annual

(Yen)

(Yen)

(Yen)

(Yen)

(Yen)

Year ended Mar. 31, 2021

￣

36.00

￣

36.00

72.00

Year ending Mar. 31, 2022

￣

Year ending Mar. 31, 2022

37.00

37.00

74.00

(Forecast)

￣

Note: Revision of dividends

forecast for thi

s period: No

3. Financial Forecast for the Year Ending March 31, 2022

(% changes as compared with the corresponding period of the previous fiscal year)

	Net Sales		Operating profit	Profit before tax	Profit attributable to	Basic earnings
		owners of the parent	per share (Yen)
Six months	161,000	21.9%	28,000	40.0%	27,000	49.2%	19,000	50.2%	90.91
ending Sep.
30, 2021
Year ending	350,000	14.7%	60,000	15.8%	57,000	18.7%	40,000	20.7%	191.38
Mar. 31, 2022

Note: Revision of financial forecast for this period: No

4. Other Information

1. Changes in significant consolidated subsidiaries (which resulted in changes in scope of consolidation): No
2. Changes in accounting policies and accounting estimates
3. 1. Changes in accounting policies required by IFRS: No
   2. Other changes in accounting policies: No
   3. Changes in accounting estimates: No
4. Number of outstanding stock (common stock)
5. 1. Number of outstanding stock at the end of each fiscal period (including treasury stock): 209,458,432 shares as of Jun. 30, 2021; 209,443,232 shares as of Mar. 31, 2021
   2. Number of treasury stock at the end of each fiscal period:

446,952 shares as of Jun. 30, 2021; 446,876 shares as of Mar. 31, 2021

1. Average number of outstanding stock for each period (cumulative): 209,003,218 shares for the three months ended Jun. 30, 2021 208,839,381 shares for the three months ended Jun. 30, 2020

Note: Quarterly summaries of financial results are excluded from quarterly reviews.

• Explanation regarding the appropriate use of financial forecast and other information
• 1. Basic earnings per share have been revised from the figures indicated in the consolidated financial forecast announced on May 12, 2021, in accordance with changes in the number of shares of outstanding stock and treasury stock. No other figures in the financial forecast have been revised.
  2. The forecasts and future projections contained herein have been prepared on the basis of rational decisions given the information available as of the date of announcement of this document. These forecasts do not represent a commitment by the Company, and actual performance may differ substantially from forecasts for a variety of reasons. Please refer to "3) Consolidated financial forecast" within "1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.
  3. Supplementary financial materials (in Japanese and English) will be posted on the Sysmex website on Friday, August 6, 2021.

Content of Supplementary Materials
1. Qualitative information on quarterly financial results	2
1)	Operating performance analysis	2
2)	Financial conditions analysis	4
3)	Consolidated financial forecast	5
2. Condensed quarterly consolidated financial statements and notes	6
1)	Condensed quarterly consolidated statement of financial position	6
2)	Condensed quarterly consolidated statement of income	8
3)	Condensed quarterly consolidated statement of other comprehensive income	9
4)	Condensed quarterly consolidated statement of changes in equity	10
5)	Condensed quarterly consolidated statement of cash flows	12
6)	Notes to the condensed quarterly consolidated financial statements	13
	1. Notes related to the going concern assumption	13
	2. Segment information	13

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1. Qualitative information on quarterly financial results

1) Operating performance analysis

Future-related information contained in the text below is based on the judgement as of the end of the fiscal period under review.

During the first three months of the fiscal year ending March 31, 2022, the Japanese economy was affected by recurrent waves of the COVID-19 pandemic. Personal consumption, exports and the employment situation remained sluggish, due to a state of emergency declaration and priority measures enacted in some regions to prevent the pandemic's spread. However, exports rebounded, centered on items bound for China and other Asian markets, and imports picked up due to a resurgence in domestic production. Overseas, on the whole economic conditions rebounded, although gaps widened due to disparities in the status of vaccine rollouts. In addition, variant forms of the virus emerged, prompting a return of lockdowns and stay-at-home orders, hampering economic activity in some regions. Amid these circumstances, various countries kept monetary and fiscal policies in place. Nevertheless, the economic outlook remains opaque, due to uncertainty about when the pandemic will subside.

On the healthcare front, we expect to see major changes in healthcare systems and the healthcare environment itself due to an aging society and increasingly diverse health and medical needs, as well as the global COVID-19 pandemic. Under these conditions, the Japanese government is positioning the healthcare sector as part of its growth strategy, prompting expectations of new medical services. Looking overseas, aging populations in developed countries are driving demand for the moderation of medical costs. Economic growth in emerging markets is causing healthcare demand to increase and prompting higher levels of healthcare quality and service enhancements. At the same time, advances in the application of artificial intelligence, information and communications technology, and other leading-edge technologies to the healthcare sector are expected to provide further opportunities for growth.

Against this backdrop, Sysmex continued to develop its product portfolio in the hematology field. We launched automated hematology analyzers in Japan, the XR Series (a next-generation flagship model) and the XQ series (a compact three-part WBC differential model). We will continue with a global sales rollout after receiving regulatory approval in individual countries. We aim to help optimize operations at testing laboratories based on regional characteristics and facilities' needs.

In the life science field, we acquired IVDR*1 certification for LYNOAMP™ CK19 E, a gene amplification detection reagent based on the Sysmex-developed OSNA*2 method, as a Class C in vitro diagnostic medical device. This was the first Sysmex product to receive IVDR certification. Going forward, we will continue to promote activities aimed at increasing the clinical value of cancer lymph node metastasis testing. We will also work to acquire IVDR certification for the IVD products that we provide in Europe across various fields.

As the global general distributor, Sysmex continued to market hinotori™ to medical institutions in Japan. (The hinotori™ Surgical Robot System is the first made-in-Japanrobotic-assisted surgery system.) We are working with Medicaroid Corporation, a joint venture between Sysmex and Kawasaki Heavy Industry, Ltd., to obtain regulatory approval overseas, and we will begin introducing the system in overseas markets, as well.

The HISCL™ TARC Assay Kit, a Th2 chemokine (TARC) kit Sysmex developed with Shionogi & Co., Ltd., received approval as an additional indication as an auxiliary for assessment of aggravation risk in patients who have tested positive for SARS-CoV-2. Assessment of aggravation risk in the initial stage of onset of COVID-19 can lead to optimal measures in an individual manner, such as inpatient treatment for those at high risk and hotel quarantine or at-home treatment for low-risk patients. Sysmex will contribute to research on COVID-19 and the establishment of its diagnosis and treatment through a variety of tests, including PCR, antigen, antibody and cytokine tests, as well as existing hematology and hemostasis tests.

*1 In Vitro Diagnostic Medical Devices Regulation (IVDR):

Also referred to as Regulation (EU) 2017/746, the IVDR is a new legal regulation that applies to the marketing, sales, and distribution of in vitro diagnostic medical devices in the European market. The IVDR entered into force on May 26, 2017, repealing the current European Directive on in vitro diagnostic medical devices (98/79/EC). The transition period runs through May 26,

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2022. It is divided into four classes, with class A as the lowest risk and class D the highest risk.

*2 OSNA method:

Abbreviation of the One-Step Nucleic Acid Amplification method, developed by Sysmex, which enables detection of lymph node metastasis.

Net sales by destination

		Three months ended	Three months ended	YoY
		June 30, 2020	June 30, 2021
		(Previous
		Amount	Percentage of	Amount	Percentage of
		period = 100)
		(Millions of yen)	total (%)	(Millions of yen)	total (%)
Japan	9,380	15.5	12,226	15.4	130.3
	Americas	13,975	23.1	18,160	22.9	129.9
	EMEA	18,214	30.1	25,244	31.8	138.6
	China	13,843	22.9	17,363	21.9	125.4
	Asia Pacific	5,096	8.4	6,368	8.0	124.9
Overseas subtotal	51,130	84.5	67,136	84.6	131.3
Total	60,511	100.0	79,363	100.0	131.2

In Japan, sales of hematology and urinalysis instruments rose, as did sales of coagulation and immunochemistry reagents as well as instrument and reagents sales in the life science field related to COVID-19 testing. As a result, sales in Japan rose 30.3% year on year, to ¥12,226 million.

Overseas, testing demand recovered from the previous corresponding period, when demand was affected by COVID-19. Reagent sales rose as a result, mainly in the hematology and urinalysis fields. In addition, the impact of yen depreciation. Consequently, overseas sales increased 31.3% year on year, to ¥67,136 million. The overseas sales ratio rose 0.1 percentage point, to 84.6%.

Selling, general and administrative (SG&A) expenses expanded 13.6%, to ¥21,503 million, owing to a partial resumption of sales activities that had been constrained across all regions in the previous corresponding period.

As a result, during the first three months of the fiscal year ending March 31, 2022, the Group recorded consolidated net sales of ¥79,363 million, up 31.2% year on year. Operating profit rose 116.3%, to ¥15,052 million; profit before tax surged 124.5%, to ¥14,553 million, and profit attributable to owners of the parent expanded 122.7%, to ¥9,993 million.

Performance by segment

(1) Japan

In Japan, sales of hematology and urinalysis instruments rose, as did sales of coagulation and immunochemistry reagents as well as instrument and reagents sales in the life science field related to COVID-19 testing. As a result, sales in Japan rose 27.9% year on year, to ¥13,445 million.

On the profit front, performance was affected by higher SG&A and R&D expenses, but gross profit increased due to higher sales and an improvement in the cost of sales ratio. Accordingly, segment profit (operating profit) rose 85.5%, to ¥11,494 million.

(2) Americas

In North America, sales of instruments, reagents and maintenance services increased due to a resurgence in testing demand in the hematology field and sales increase of instruments. Along with the alliance with Siemens Healthcare Diagnostics Inc., sales of instrument and reagents increased in the urinalysis field. As a result, sales in the region grew 30.1%, to ¥16,776 million.

Segment profit (operating profit) amounted to ¥596 million, compared with a segment loss of ¥404 million in the corresponding period of the previous fiscal year. Although SG&A expenses increased, this performance was attributable to higher sales and gross profit, stemming from an improved cost of sales ratio.

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