Terumo Corp

So, hello everybody, and thank you very much today for ascending Terumo's financial results for the third quarter of the fiscal year ending March 31st, 2026. Today, before proceeding, I would just like to give an overview, and Mr. Hagimoto-san, CFO of Terumo, will give an explanation, followed by time for question and answer, making a total of 45 minutes for today. For this webinar, there is simultaneous interpreting available via the Zoom, where you may listen to English or Japanese in either direction. Please do use the globe button at the bottom to choose English or Japanese. The materials displayed on screen will be English only. If you require English disclosure materials, please refer to Terumo's webpage. If there are any problems during the, we will let you know by email if there are any problems with connection throughout. Also, there is just one disclaimer before beginning. All of the explanation that we're about to give is based on current results. And all of these, they are based on assumptions using information available at the time. Accordingly, it should be noted that actual results may differ from those forecast or predictions due to various factors. So with that, I would like to hand over to CFO Mr. Hagimoto for an overview of the financial results. Thank you. Hello, this is Hagimoto, CFO of Teramo. Let me walk you through the highlights of our financial results. Thank you very much for your participation today. So this is the highlights of our financial results for the third quarter of the fiscal year ending March 26. First of all, the highlights. Strong earnings results exceeding guidance. So for revenue with the highest ever results both for the quarter and the third quarter year to date. We had strong sales led by North America with 9% growth excluding the FX impact.

In particular,

Revenue reached record highs both for the quarter, in particular demand growth in North America remained strong, resulting in a year-on-year increase of 9%, excluding index impact. In regard to profits, adjusted operating profit and profit for the year all reached record highs in the Q3 year-to-year basis. Although we recorded certain one-time expenses from the first half of the fiscal year, Our globally implemented pricing measures and appropriate cost control enabled us to deliver results that exceeded the pace assumed in our 25 guidance, fiscal 25 guidance. Please note that from starting from this quarter, the consolidated results will be the leather, cues and plant and organox, both of which were acquisitions announced earlier in this fiscal year. Next slide, please. So moving on to our P&L performance, revenue reached a record high of 831.6 billion on a Q3 year-to-date basis. The expansion of global demand continued with the cardiac and vascular company and the blood and cell technologies company serving as the main drivers. Operating profit and adjusted operating profit also achieved growth exceeding that of revenue, reaching record highs of 144.9 billion yen and 173.5 billion yen respectively. While the tariff impact began to materialize partway through the second quarter and continued to affect results in the third quarter as anticipated, we were able to offset these impacts through ongoing pricing measures and disciplined cost control, resulting in progress that exceeded our performance forecast. On a standalone Q3 basis, the operating profit margin declined. This was mainly due to the recognition of one-time expenses in the second half of the year, as explained during our second quarter earnings announcement. Next slide, please. So this is the year-on-year OP variance analysis for Q3. I will explain the Q3 year-to-date results on the next page. However, there are two major movements to highlight for Q3. The first is the impact of tariffs. In this chart, the tariff impact is included within gross margin and pricing. And as a breakdown of the gross margin effect, the tariff impact amounted to a negative 4.2 billion yen. At the same time, pricing measures contributed a positive 3.5 billion yen, partially offsetting the negative impact from tariffs. The second point is the recognition of profit and loss from newly acquired businesses. The Leverkusen plant recorded a loss of 1.6 billion yen, while Organox contributed a profit of 0.5 billion yen. Regarding the Leverkusen plant, we will take a disciplined and cautious approach to capital expenditures for production line preparations and proceed step by step as the certainty of customer contracts increases. Next, this slide shows the quarter three year-to-date OP variance analysis. Overall revenue growth driven by the continued expansion of demand made a significant contribution. The GP increment by sales increase was driven primarily by overseas TIS, mainly in North America, as well as global blood decisions, particularly in the plasma business. With regard to the gross margin pricing measures in the cardiac and vascular company made a significant positive contribution to profit. However, as the impact of tariffs became more pronounced, this positive effect was partially offset. So while the negative effect from tariffs increased in quarter three, on a year-to-date basis, the positive effect from pricing more than offset the tariff impact. SG&As increased due to business expansion and remained largely unaligned with our insubstances. R&D expenses decreased slightly year on year. This was due not only to the impact of impairment losses on capitalised R&D recorded last year, but also to a review of R&D priorities and a disciplined focus on selecting themes. Going forward, we will continue to invest in priority areas. As for foreign exchange, the impact was negative both on a flow and stock basis compared with the previous year. I will now explain the performance by company. First, let me start with CNV, the cardiac and vascular company. Revenue increased 8% on a local currency basis with strong performance continuing globally, particularly in North America. By business segment, growth was driven by TIS and Teramo Neuro, contributing to revenue growth for the company overall. TIS was primarily driven by North America, with solid performance continuing across all product categories. Volume growth contributed more significantly than pricing measures. In Teramo Neuro, strong growth continued in both China and Japan. The profit margin improved to 26%, supported by various initiatives, including pricing measures, profitability improvement, and a review of unprofitable regions. However, due to negative impact from foreign exchange on a stock basis, the profit margin for Q3 on a three-month basis declined year-on-year. Next slide.