Terumo Corp

I'm Hagimoto Terimo, CFO. This presentation will provide an overview. Thank you for joining our financial result briefing. My presentation will provide an overview of the financial result for the first quarter of the fiscal year ending March 31st, 2025. These are the highlights of the financial statement. In the first quarter, revenue, operating income, and net income all reached record quarterly highs. Revenue growth was about 20% company-wide due to continued demand in all companies and the contribution of the exchange rate. Profits grew faster than sales growth due to profit improvement measures and appropriate cost control. Next slide, please. So these are our P&A results. Revenue growth was double-digit in all companies, reaching a record high of 258.2 billion yen. While some one-time demand contributed to the increase in revenue, pricing measures also contributed alongside continued demand in generally favorable business environment. I will cover the details in the following region and company pages. Operating income also grew, outpacing sales growth, reaching a record high of 44.6 billion yen. This was due to improved profit margins achieved through appropriate cost controls in response to increased sales. Although inflation has eased, we will continue to monitor changes in the macro environment such as rising raw material prices and transportation costs. Next slide, please. This is an analysis of changes in profit in the first quarter compared to the same period last year. Overall, the sales increased largely due to sustained demand. First, GP increase, incremental by sales increase, despite including some one-time factors, was driven by cardiovascular, especially TIS and neurovascular. The gross margin benefited from the effect of easing inflation and cost reduction measures, such as efficiency improvement in manufacturing. As for price, the effect of measures to revise pricing which were expanded in the previous year, has become evident. The price review implemented in the second half of last year in Japan will have a positive impact over the first half of this fiscal year. The SG&A increase is a healthy increase due to business expansion and is in line with planned figures. Effects were positive 3.8 billion yen inflow and positive 2.5 billion yen in stock. 2.2 billion yen of this positive 2.5 billion yen increase in stock is the effect of a change from this fiscal year in the exchange rate used to calculate estimation of unrealized gains on inventory. I shall explain the details of this in the following slide. Next slide, please. Here I explain the effects of the exchange rate on P&L. The recent increase in exchange rate volatility has a significant impact on the business performance. Until FY23, we have calculated the unrealized profit using the spot rate of the closing date, and this has had a positive significant impact on the profitability. From FY24, we have changed the exchange rate from the spot rate to the average rate during the inventory month supply. As the unrealized profit included within the inventory is the total of all the internal profits recorded throughout the inventory month supply period, we believe this change will be able us to more accurately capture the profit situation for the given period. As a result, due to the depreciation of Japanese yen, we have recorded an uplift of 2.2 billion yen. This change will not contribute to raising profitability at all times, but we believe it will contribute to stabilizing the impact of a foreign exchange raise to profitability. Next slide, please. This slide shows earnings by region. Although some sales growth was due to transient demand, all regions are making steady progress. In America, all companies posted double-digit growth, even when excluding exchange rate effects. In cardiovascular, the sales of neurovascular and vascular products were strong, as was the recovery of TIS, which had experienced supply issues with some access products in the same period of the previous year. In blood and cell technology, the blood center business led the way. In Japan, medical care solutions grew substantially. This was due to the effect of pricing measures in hospital care solutions, as well as a temporary sales decrease in the same period of the last fiscal year due to a delay in deliveries leading to steady progress in pharmaceutical solutions. In Europe, cardiovascular, neurovascular, and vascular grew at double-digit rates, excluding exchange rate effects. In blood and cell technology, the blood center business and atherosclerosis therapy performed well. CNB led the way in China. New rows showed significant growth as there was a decrease in sales in FI23Q1 due to inventory adjustments by distributors. In addition, TIS access products exceeded planned figures due to a rebound from order holdback. induced by start of the application of new centralized purchasing-based pricing. In emerging markets like Asia and the Middle East, while revenues declined in the TBCT blood center business, which performed well in FI23Q1, C&V's cardiology and medical care solutions, pharmaceutical solutions led the way with double-digit growth, even when excluding exchange rate effects. Next page.

I will now explain our performance by company. First is the cardiovascular company. Excluding exchange rate effects, sales revenue grew by 8% and was strong globally, especially in Europe and the U.S. In terms of growth by business segment, neurovascular and vascular led the way. In addition to continued strong demand, neuro showed a significant increase in revenues, partly due to one-time factors in the same period of the previous year. In the vascular business, strength spent grafts and surgical grafts enjoyed strong sales growth, and hybrid products also expanded steadily, especially in North America and Europe. In addition, some access products that had some Supply issues in North America have recovered. Profits increased due to an increase in sales, including one-time factors, as well as the effects of product profit improvement measures and steady progress in controlling SDNA expenses. Next slide. This is the TMCS medical care solutions. Revenue growth was strong in hospital care solutions and pharmaceutical solutions. In hospital care, the effects of pricing measures and strong sales of infusion sets and syringes continued. The price revision implemented in Japan in the second half of last fiscal year is expected to take effect in the first half of this fiscal year. In addition, a temporary increase in demand in North America was a factor that boosted sales. In the pharmaceuticals business, the CDMO business is making steady progress against the plan, which also factored in lower sales due to the delay in deliveries in the same period last year. Overseas projects in North America performed well. These increases in sales and effects of pricing measures resulted in an increase in profit. Next slide. TPCT, Bot Cell and Technology. Revenue was driven by the blood center businesses and therapeutic solutions. In the blood center business, sales of atherosclerosis collection systems and whole blood collection-related products were strong in Europe and the U.S. Rika is also developing well. Therapeutic solutions saw strong sales, mainly in the U.S. and Europe, as a result of a growing demand for cell collection for cell and gene therapies. Profits excluding exchange rate effects remained on par with FY23Q1 with profit margin at 14%. Next slide, please. Finally, I will review our assessment of the environment surrounding Teramo. First, Teramo's fundamentals are generally sound. Demand and growth potential remain unchanged, and the overall growth potential of the cardiovascular company and other companies is unfaltering. On the other hand, the macro environment, including inflation and exchange rate fluctuations, remain volatile and will require close monitoring. Due to the uncertain outlook, we plan to revise our guidance cautiously as we assess these situations. We will be accelerating our strategy In addition to steadily implementing the strategies outlined in GS26, we will thoroughly reexamine our business portfolio and then work to rapidly optimize that. In addition, as part of our efforts to strengthen innovation, we have begun corporate venture capital activities. This will accelerate the speed with which we can acquire new technologies and create an M&A pipeline. This is all from me. Thank you very much for your attention.