Terumo : "Financial Results for the Third Quarter of FYE 3/2022"（with note）(572.2 KB)

Financial Results for the Third Quarter of

Fiscal Year Ending March 31, 2022 (FY2021)

February 9, 2022

Naoki Muto

Chief Accounting and Financial Officer

Terumo Corporation

I am the CAFO, Muto. I will now explain the 3rd-quarter results for the fiscal year ending March 2022.

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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 be guarantees of future events or performance. Accordingly, it should be noted that actual results may differ from those forecasts or 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 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: [e-mail]

©TERUMO CORPORATION

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Highlights

FY21 Q3/Q3 YTD results

Revenue: Highest-ever quarterly and Q3 YTD revenue. Continued recovery of demand in Cardiac & Vascular, steady performance in other companies

Adjusted Operating Profit: Over 20% profit increase in Q3 YTD, despite the negative effects anticipated at the beginning of the fiscal year, as well as effects of cost inflation and lower production level

Upward revision of FY21 guidance

Added 12.0 B JPY to revenue. No change in profits

Temporary decline in number of procedures and other healthcare demand is anticipated in Q4 due to COVID-19 resurgence. Also, despite some expected cost increase due to inflation and lower production level, we aim to achieve the guidance by expense control

©TERUMO CORPORATION

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First, the highlights from the quarter.

Q3 standalone revenue grew 8% from the previous year. Year-to-date revenue also grew 17%. The Cardiac and Vascular Company entered a COVID-19 recovery pattern, growing 12% from the previous year. With strong demand, Blood and Cell Technologies Company grew the next most.

Adjusted operating profit slowed slightly in the 3rd quarter amid continued production adjustment to normalize inventory down from COVID safety stock levels, as well as impact from higher freight and raw materials costs caused by global supply chain disruption. Year-to-date profit grew 21% from the previous year.

In light of these 3rd-quarter results, we will revise the annual guidance for revenue only, upward by 12 billion yen. Although we anticipate a temporary Q4 decrease in healthcare demand due to COVID Omicron variant impact, we decided to account for Q3 exceeding expectations and exchange rate positive with the upward revision. However, despite normalization of factory capacity utilization, issues including cost increases from supply chain disruption and rising wages in the US will continue into the 4th quarter. Although we intensify our expense control onward, we determined that an upward revision of profit guidance could not be made.

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P&L Results

Revenue: Highest-ever quarterly and Q3 YTD revenue. Cardiac & Vascular demand recovery continued, especially in TIS. In Q3, despite normalized demand of thermometers and infection prevention products, disposable products demand further recovered and performance remained steady overall

Adjusted Operating Profit: Despite the negative impacts of production level adjustment and volume-based procurement (VBP) in China, as well as cost inflation and lower production level, product mix improvement and positive FX impact contributed to 21% YTD growth

	100 M JPY	FY20 Q3 YTD	FY21 Q3 YTD	YoY%	YoY% (FXN)		FY20 Q3	FY21 Q3	YoY%
	Revenue	4,486	5,235	17%	12%		1,653	1,788	8%
	Gross Profit	2,413	2,788	16%	10%		908	926	2%
	(%)	(53.8%)	(53.3%)				(54.9%)	(51.8%)
	SG&A Expenses	1,307	1,463	12%	8%		447	507	13%
	(%)	(29.1%)	(27.9%)				(27.1%)	(28.4%)
	R&D Expenses	359	375	4%	1%		128	128	0%
	(%)	(8.0%)	(7.2%)				(7.7%)	(7.2%)
	Other Income and Expenses	6	-6	-	-		2	-5	-
	Operating Profit	753	945	25%	17%		334	286	-15%
	(%)	(16.8%)	(18.0%)				(20.2%)	(16.0%)
	Adjusted Operating Profit	885	1,072	21%	13%		372	330	-11%
	(%)	(19.7%)	(20.5%)				(22.5%)	(18.5%)
	Profit before Tax	749	930	24%			343	278	-19%
	(%)	(16.7%)	(17.8%)				(20.7%)	(15.5%)
	Profit for the Year	586	717	22%			268	217	-19%
	(%)	(13.1%)	(13.7%)				(16.2%)	(12.1%)
	Average Exchange Rate(USD/EUR)	106JPY/122JPY	111JPY/131JPY				105JPY/125JPY	114JPY/130JPY
©TERUMO CORPORATION		4 / 24

Here are the P&L results.

The third row shows year-to-date revenue of 523.5 billion yen, for a

17% year-on-year increase. Adjusted operating profit was 107.2 billion yen, for a 21% year-on-year increase and 20.5% profitability on revenue. The second row from right shows Q3 standalone numbers. Revenue was

178.8 billion yen, for an 8% year-on-year increase. Adjusted operating profit was 28.6 billion yen, for an 11% year-on-year decrease, and 18.5% profitability on revenue.

The next slide shows a waterfall chart illustrating these numbers.

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Adjusted Operating Profit Variance Analysis (Q3 YTD)

(100 M JPY)

Gross

margin

Price-27

JP NHI

-2 SG&A R&D FX

	Production	MDR	Others
G/P	Adjustment
-2
increment
	IT
by sales
	-2
increase

FY20	FY20	FY21	FY21
Q3 YTD	Q3 YTD	Q3 YTD	Q3 YTD
OP	Adj. OP	Adj. OP	OP
©TERUMO CORPORATION	5 / 24

G/P increment by sales increase:

The revenue increased in all companies, particularly Cardiac & Vascular, compared with FY20 Q3 YTD impacted by COVID-19

Gross margin:

Negative effects of cost inflation (freight, raw material, and labor cost), and lower production level, were exceeded by positive impact of product mix improvement from sales increase in Cardiac & Vascular, especially TIS

Price:

Decline mainly due to VBP in China for TIS products

SG&A:

Large increase compared with FY20 Q3 YTD in which expense usage was slow due to COVID-19

FX:

Positive impact from flow mainly by CNY and EUR. Small impact from stock

This is the year-to-date adjusted operating profit variance analysis compared to the previous year.

Revenue increases from each company helped to raise gross profit. Further, in gross profitability on revenue, cost increases due to 3rd- quarter shipping and raw materials inflation was downward factors. However, the positive effect of product mix improvement in TIS and other businesses exceeded downward impacts, to total a positive 300 million yen.

Impacts from price erosion, production adjustment, SG&A, and EU regulatory changes were higher than the COVID-affected previous year, but are the result of sales activities and normalization, and indicate progress happening as planned.

The steady progress of R&D and other costs, such as startup costs for the source plasma business, is a little slow due to COVID-19.

FX impact was a positive 7.1 billion yen. The impact on stock is minor.

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