Terumo : Financial Results for the First Half of Fiscal Year Ending March 31, 2023 (FY2022)(with note)

Financial Results for the 2nd Quarter (First Half) of Fiscal Year Ending March 31, 2023 (FY2022)

November 10, 2022

Naoki Muto

Chief Accounting and Financial Officer

Terumo Corporation

I am the CAFO, Muto. I will now explain the 2nd-quarter results for the fiscal year ending March 2023.

1

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. 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

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2

FY22 Q2 Results Highlights

Revenue

First time exceeding 200 billion yen; highest-ever revenue

Number of procedures and healthcare demand recovered, all regions outside Japan grew year-on-year even when excluding FX

Plasma Donation System "Rika" sales began

Operating Profit

Despite cost increases due to inflation, gross profit grew year-on-year in double digits

Portfolio alignment (A part of Cell Therapy Technologies in TBCT) Adjusted operating profit bounced back to increase year-on-year

©TERUMO CORPORATION

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First, the highlights of this earnings announcement.

Revenue returned to a growth pattern, with all three companies growing positively year-on-year. The Group achieved quarterly revenue exceeding 200 billion yen for the first time, for its highest- ever result.

The recovery of both number of procedures and healthcare demand was steady, and all regions outside Japan grew year-on-year even when excluding FX impact.

In addition, the Plasma Innovation began sales in this quarter.

In profit, although impact from inflation caused cost increases, it was exceeded by increased revenue to result in double-digit 11% gross profit growth.

We continue to align our portfolio. As part of this, we sold the Autologous Biologics business, a part of Cell Therapy Technologies in Blood and Cell Technologies Company and booked 3.5 billion yen as impairment of the goodwill from that business.

Finally, the turnaround in this quarter to increased adjusted operating profit year-on-year is a very good sign.

3

P&L Results

Revenue was 400 billion yen, gross profit exceeded 200 billion yen for highest-ever result

Operating profit includes 3.5 billion yen loss from sale of autologous cell preparation business In adjusted operating profit, Q2 standalone returned to year-on-year increase

100M JPY	FY 21	FY 22	Change vs.	Change
Q2 YTD	Q2 YTD	FY21 Q2	excluding FX
	impact
Revenue	3,446	4,033	17%	5%
Gross Profit	1,862	2,070	11%	2%
%	(54.0%)	(51.3%)
（ ）
SG&A Expenses	955	1,171	23%	9%
%	(27.7%)	(29.0%)
（ ）
R&D Expenses	247	297	20%	8%
%	(7.2%)	(7.4%)
（ ）
Other Income and	-2	-42	-	-
Expenses
Operating Profit	659	560	-15%	-16%
%	(19.1%)	(13.9%)
（ ）
Adjusted Operating Profit	741	704	-5%	-10%
%	(21.5%)	(17.5%)
（ ）
Profit before Tax	653	546	-16%
%	(18.9%)	(13.5%)
（ ）
Profit for the Year	500	403	-19%
%	(14.5%)	(10.0%)
（ ）

FY21	FY22	Change vs.
Q2	Q2	FY21 Q2
1,729	2,060	19%
920	1,054	15%
(53.2%)	(51.1%)
490	605	23%
(28.4%)	(29.4%)
130	157	20%
(7.5%)	(7.6%)
-3	-37	-
296	255	-14%
(17.1%)	(12.4%)
339	345	2%
(19.6%)	(16.8%)
293	250	-15%
(16.9%)	(12.1%)
221	179	-19%
(12.8%)	(8.7%)

©TERUMO CORPORATION

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Here are the P&L results.

Revenue exceeded 400 billion yen year-to-date. This was a 17% increase from the same quarter of the previous year. Positive impact by FX was 41 billion yen. Positive growth was 5% when excluding FX. In Q2 standalone, revenue grew 19% year-on-year to reach 206 billion yen. Positive impact by FX was 24 billion yen.

Gross profit was impacted by macro environmental changes, it continued the trend from the 1st quarter to reach the highest-ever result for a quarter, 100 billion yen.

Operating profit was 25.5 billion yen, which includes the impairment that I just mentioned. This resulted in a temporarily low level, but we will book the capital gain by sale of Nutrition business in 2nd half, then no impact remains in the full financial year.

Adjusted operating profit for the standalone 2nd quarter turned around to grow positively, which in turn lessened the YTD profit decrease.

Next slide, please.

4

Operating profit variance analysis (Q2)

	by incrementG/P increasesales	margin:Gross	pricereimbursement	increase, Price
	+5
			revision
			-7
FY21 Q2	FY21 Q2
Operating	Adjusted
Profit	Operating
	Profit

©TERUMO CORPORATION

		FX
increase: SG&A	increase spend R&D	impact	255
		FY22 Q2	FY22 Q2
		Adjusted	Operating
		Operating	Profit
		Profit

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(100M JPY)

G/P increment by sales increase: Stability increase same amt. as Q1 Gross margin:

Inflation impact increases, but mix steadily improving, impact was similar as Q1

Price:

Price increase impact more than Q1

SG&A, R&D increase:

Within plan; control while spending as necessary in 2nd half

FX:

Yen depreciation more than Q1

Here is the 2nd-quarter standalone variance analysis.

"GP increment by sales increase" was 5.1 billion yen, the same amount as in the 1st quarter.

"Gross margin" was the same amount as the 1st quarter, and though inflation impact remained, mix improvement continued steadily.

In "Price," the price increase effect was 500 million yen, expanding from the 1st quarter.

In "SG&A, R&D increase," we invested where necessary while maintaining control and staying within plan thanks to prioritizing expenses in company, region and HQ.

In "FX," it continued positive impact by yen depreciation from Q1. As the result, the turnaround in this quarter to increased adjusted operating profit year-on-year.

Next slide, please.

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