Financial Results for the Fiscal Year
Ended March 31, 2024 (FY2023)
May 14, 2024
Jin Hagimoto
Chief Financial Officer
Terumo Corporation
I'm Hagimoto, Terumo's CFO. I would like to present an overview of the year-end financial results for the fiscal year ending March 31, 2024.
1
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. 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 | 2 / 14 |
2
Highlights
FY23 Results
Record highs in revenue, operating profit, and net income
Revenue growth driven by Americas and Europe, +7% companywide (excluding exchange rate effects)
Operating profit growth outpaced sales growth, +14% companywide (excluding exchange rate effects)
FY24 Guidance
Continued global growth, revenue growth +7% (excluding exchange rate effects)
Operating profit up 16% (excluding exchange rate effects) due to expansion of highly profitable businesses
©TERUMO CORPORATION | 3 / 14 |
These are the highlights of this year's financial statement.
In FY23, revenue, operating profit, and net income all reached record highs.
Revenue growth was +7% excluding exchange rate effects, driven by growth in the U.S. and Europe.
Operating profit growth outpaced sales growth, increasing by +14% when excluding exchange rate effects.
Net income surpassed 100 billion yen for the first time to reach 106.4 billion yen.
For FY24, we expect continued growth globally, with revenue growth of +7% excluding exchange rate effects.
Operating profit is expected to increase by +16%, excluding exchange rate effects, due to the expansion of highly profitable businesses.
Next slide, please.
P&L
Revenue: Record high. TIS, blood center business, Neuro, and Vascular led with double-digit growth
Operating profit: Record high. Steady progress in profit improvement measures. SG&A expenses increased due to increased headcount to expand sales of therapeutic devices in North America
100M JPY | FY22 Q4 YTD | FY23 Q4 YTD | Change | Change excluding | |
FX impact | |||||
Revenue | 8,202 | 9,219 | 12% | 7% | |
Gross Profit | 4,174 | 4,792 | 15% | 9% | |
% | (50.9%) | (52.0%) | |||
( ) | 2,383 | 16% | |||
SG&A Expenses | 2,759 | 10% | |||
% | (29.1%) | (29.9%) | |||
( ) | 616 | 12% | |||
R&D Expenses | 691 | 8% | |||
% | (7.5%) | (7.5%) | |||
( ) | -2 | - | |||
Other Income and Expenses | 59 | - | |||
Operating Profit | 1,173 | 1,401 | 19% | 14% | |
% | (14.3%) | (15.2%) | |||
( ) | 1,380 | 14% | |||
Adjusted Operating Profit | 1,568 | 8% | |||
% | (16.8%) | (17.0%) | |||
( ) | 1,161 | 21% | |||
Profit before Tax | 1,408 | ||||
% | (14.2%) | (15.3%) | |||
( ) | 893 | 19% | |||
Profit for the Year | 1,064 | ||||
% | (10.9%) | (11.5%) | |||
( ) | |||||
Average exchange rate (USD/EUR) | 135JPY/141JPY 145JPY/157JPY | ||||
©TERUMO CORPORATION | 4 / 14 |
FY22 Q4 | FY23 Q4 | Change |
2,022 | 2,389 | 18% |
990 | 1,243 | 26% |
(49.0%) | (52.0%) | |
597 | 737 | 23% |
(29.5%) | (30.9%) | |
160 | 199 | 25% |
(7.9%) | (8.3%) | |
5 | 39 | 651% |
238 | 346 | 45% |
(11.8%) | (14.5%) | |
284 | 371 | 30% |
(14.1%) | (15.5%) | |
240 | 351 | 46% |
(11.9%) | (14.7%) | |
191 | 265 | 38% |
(9.5%) | (11.1%) |
132JPY/142JPY 149JPY/161JPY
These are our P&L results.
Sales revenue for the full year exceeded 920 billion yen, a record high. Cardiac & Vascular's TIS, neuro and vascular, as well as the Blood and Cell Technologies blood center business led with double-digit growth.
Operating profit also reached a record high of 140.1 billion yen.
The increase in SG&A expenses due to an increase in employee headcount to expand therapeutic devices sales in North America was more than offset by the steady progress of profit improvement measures and the revision of pricing policy.
Net income for the year reached a record high of 106.4 billion yen.
4
Gross margin, operating profit margin, and adjusted operating profit margin for the full year all improved from the previous year. Next slide, please.
4
OP Variance Analysis (Q4): Profitability improvements as planned
(100M JPY)
Price
+35
Gross | Reimbur- | SG&A | FX |
margin | sement | increase | R&D |
G/P | price | increase | |
+6 | |||
increment | |||
by | |||
sales | |||
increase |
FY22 Q4 FY22 Q4 | FY23 Q4 | FY23 Q4 |
OP Adj. OP | Adj. OP | OP |
G/P increment by sales increase: TIS, Neuro led the driver C&V
Gross margin:
Mitigation of inflationary effects, and cost reduction effects
Price:
Global promotion of price revision
SG&A increase:
Increased sales force for expansion of therapeutic devices sales in US
FX:
+3.6B JPY flow impact; -2.6B JPY stock impact
©TERUMO CORPORATION | 5 / 14 |
This is an analysis of the year-on-year change in for the three months of Q4.
First, the gross margin effect was due to the absence of onetime expenses in the current quarter that were recorded in the same quarter of the previous year, as well as the continued easing of inflation and the effects of cost-cutting measures that continued in Q3.
In pricing, the effect of the pricing policy review, which was expanded in the second half of the year, is being felt.
The increase in SG&A expenses is mainly due to the increase in employee headcount to expand sales of therapeutic devices such as neuro and stent grafts in North America.
Next slide, please.
5
OP Variance Analysis (Q4 YTD): As planned in all areas
(100M JPY)
Gross | Price | ||
+100 | |||
margin | Reimbur- | SG&A | FX |
G/P | sement | increase | R&D |
price | increase | ||
increment | +27 | ||
by | |||
sales | |||
increase |
FY22 | FY22 | FY23 | FY23 |
Q4 YTD | Q4 YTD | Q4 YTD Q4 YTD | |
OP | Adj. OP | Adj. OP | OP |
G/P increment by sales increase: Drivers were C&V and TBCT
Gross margin:
One-time costs offset by inflation mitigation, cost reductions, and product mix improvements
Price:
Global promotion of price revision
SG&A increase:
Increased sales force for expansion of therapeutic devices sales in US
FX:
+10.2B JPY flow impact; -5.2B JPY stock impact
©TERUMO CORPORATION | 6 / 14 |
This is an analysis of change in profit for the full year.
Gross profit growth due to higher sales exceeded our expectations as a result of strong performance in Cardiac & Vascular and Blood and Cell Technologies.
The gross profit margin effect was in line with the original plan due to the progress of profit improvement measures and the effect of product mix improvement, as well as cost reduction measures and easing inflation.
Turning to increased SG&A expenses, we have increased employee headcount to expand sales of therapeutic devices in North America, which has led to sales growth.
The breakdown of "foreign exchange effects" was +10.2 billion yen in flow, and -5.2 billion yen in stock.
Next slide, please.
6
Revenue by Region: Therapeutic devices strong in Americas, Europe: Asia drove high growth rate
C&V: Cardiac and Vascular, TMCS: Medical Care Solutions, TBCT: Blood and Cell Technologies, | ||||||
TIS: Interventional Systems, Neuro: Neurovascular, CV: Cardiovascular | ||||||
Revenue (100M JPY) | FY23 Q4 YTD | Comments | ||||
FY23 Q4 YTD | YoY change | |||||
Q4 YTD | ( ) FX Neutral | |||||
Regional | Q4 | |||||
breakdown | FY21 | 2,204 | 592 | 14% | C&V's Neuro / Vascular, TBCT's blood center | |
Americas | FY22 | 2,866 | 742 | business grew double digits even when | ||
(8%) | ||||||
FY23 | 3,280 | 898 | excluding exchange rate effects | |||
36% | Japan | 2,061 | 511 | All companies grew. Vascular performed | ||
2,074 | 503 | 2% | favorably at C&V, PS at TMCS, and the blood | |||
2,111 | 524 | center business at TBCT | ||||
1,404 | 364 | Double-digit growth in Neuro / Vascular in C&V, | ||||
23% | Europe | 20% | even when excluding exchange rate effects; | |||
1,600 | 414 | sustained growth in the TBCT blood center | ||||
(8%) | ||||||
1,915 | 525 | business | ||||
594 | 147 | 10% | All companies grew. C&V was led by double- | |||
21% | China | 719 | 153 | digit growth in TIS. TBCT's blood center | ||
(8%) | business and TMCS also performed well, with | |||||
794 | 194 | |||||
double-digit growth | ||||||
9% | ||||||
Asia and | 770 | 184 | 19% | All companies continued to grow. Double-digit | ||
12% | Others | 943 | 209 | (13%) | growth in TIS, CV, blood center business, and | |
1,118 | 249 | |||||
apheresis therapy, even when excluding | ||||||
7 / 14 | exchange rate fluctuations | |||||
©TERUMO CORPORATION |
This is revenue by region. Overseas sales drove growth, particularly in the Americas and Europe.
In the Americas, sales grew 8% excluding exchange rate effects due to strong sales of therapeutic devices such as neuro and vascular-related products and double-digit growth in the blood center business.
In Japan, despite negative factors such as a decrease in sales due to the divestiture of the nutrition business and a drop in demand for thermometers, sales were higher than in the previous year, driven by sales in the fields of Cardiac & Vascular and Blood and Cell Technologies.
In Europe, growth was +8% excluding exchange rate effects as a result of continued strong sales of therapeutic devices such as neuro and stent grafts.
7
In China, while there was some impact from restrained purchasing by distributors as access products were subject to VBP. TIS maintained double-digit growth even when excluding exchange rate effects. The new prices will not begin to apply until FY24.
Emerging economies such as Asia and the Middle East led the way in terms of growth. Growth continued in all companies, particularly in the Cardiac & Vascular's TIS and Cardiovascular businesses and in Blood and Cell Technologies' blood center business and apheresis therapy.
Next slide, please.
7
C&V: Continued global demand, driven by double-digit growth in Vascular and Neuro
(C&V: Cardiac and Vascular, TIS: Interventional Systems) | (100M JPY) | ||||||||||||||
Q4 YTD | Q4 | Comments | Q4 YTD | ||||||||||||
YoY | |||||||||||||||
( ) FX Neutral | TIS: | Access and therapeutic demand expanded globally. | |||||||||||||
5,557 | |||||||||||||||
4,806 | Volume-based procurement (VBP) in China caused | +451 | |||||||||||||
3,971 | distributors to hold off from buying; however | ||||||||||||||
double-digit growth continued | |||||||||||||||
Revenue | 16% | Neuro- | Stroke device market share recovered in US and | ||||||||||||
(9%) | 1,217 1,480 | vascular: | Europe. China decreased due to return to normal | +122 | |||||||||||
1,027 | after FY22 initial inventory buildup by new | ||||||||||||||
22% | distributors; demand remains steady | ||||||||||||||
Cardio- | Japan hardware demand returned to normal, but | +76 | |||||||||||||
1,122 1,239 | |||||||||||||||
vascular: | US and Asia sales stayed strong | ||||||||||||||
932 | |||||||||||||||
Adjusted | Vascular | US and Europe were drivers. Hybrid product and | +102 | ||||||||||||
10% | Graft: | stent graft sales expansion continued | |||||||||||||
Operating | 286 | 319 | |||||||||||||
(7%) | 209 | ||||||||||||||
Profit | |||||||||||||||
12% | |||||||||||||||
FY21 | FY22 | FY23 | FY21 | FY22 | FY23 | Profit: | Increased sales and profitability improvement. | ||||||||
SG&A increased due to sales force expansion for | |||||||||||||||
Profit% | 23% | 23% | 22% | 20% | 23% | 22% | growth of therapeutic devices sales in US | ||||||||
©TERUMO CORPORATION | 8 / 14 |
I will next review business performance by company. First is the Cardiac & Vascular Company.
Excluding exchange rate effects, revenue grew 9%, exceeding the full-year forecast.
Its Vascular and neuro businesses performed well globally, particularly in the Americas and Europe.
Although there have been supply issues with some access products as well as the Neuro businesses' stroke device, we are steadily recovering market share.
Vascular also continues to expand sales of hybrid products and stent grafts.
Profits increased due to higher revenues and progress with profit-improvement measures.
Next slide, please.
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Terumo Corporation published this content on 15 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 May 2024 11:16:35 UTC.