Terumo Corp

Hello, everyone. Thank you for joining TELEMO Corporation's financial results briefing for the fiscal year ended March 2026 LWB's schedule today. Today's proceeding is the following. First, Mr. Hakimoto, growth executive officer and CFO, will provide an overview of the financial results. Next, Mr. Samejima, chief executive officer, and Mr. Carsten Schroeder, President of NeuroBusiness, who is joining online, will make a presentation, GS26 Final Year and Beyond, and Tezumo Neuro Growth Roadmap. Finally, we have time set aside for questions and answers. We are planning a total of 60 minutes. This webinar is available both in Japanese and English using Zoom's simultaneous interpretation function. Please use the audio switch button at the bottom of the screen as required. Please note that the materials shared on the screen will be displayed in the same language as the speaker. Materials in Japanese or English only can be viewed on our website. Should any technical issues arise with the streaming, we will notify you by email. Prior to the start of the briefing, we advise you of the following disclaimer. Today's presentation may include forward-looking statements based on our current projections, which are all subject to risks and uncertainties. Actual results may differ from these projections. We thank you for your understanding in advance. Now, Mr. Hagimoto will explain the financial results summary. Mr. Hagimoto, please go ahead. I'm Jin Hagimoto, CFO of Thermo. First, I will walk you through an overview of our financial results for the fiscal year ended March 2026. Let me begin with the key highlights. In FY25, revenue reached 1.1 trillion yen, marking our fifth consecutive year of record high sales. Supported by a favorable business environment, demand expansion in North America led overall growth, resulting in 9% year-on-year growth on a local currency basis. On the profit side, Although we recorded the impact of U.S. tariffs and one-time expenses related to acquisitions and business restructuring, we achieved record high profits in line with revenue growth. For the FY2026 guidance, we aim to deliver record highs for the sixth consecutive year in revenue operating profit and profit for the year driven by strong organic growth as well as contributions from Organox acquired last year. Please note that as of April this year, the business segment of OrganOps has been named Ketamo Organ Technologies. Next slide, please. Moving on to RPL performance. As mentioned earlier, revenue continued to grow globally, led by North America, reaching a record 1.1 trillion yen for the full year. Operating profit, and it is that operating profit also reached record highs. at 176.3 billion yen and 219.4 billion yen respectively. In the second half, the impact of U.S. tariffs became more pronounced, and geopolitical uncertainty in the Middle East persisted. Despite these challenges, we successfully maintained the profit margins at a level comparable to the previous year through pricing measures and cost controls. Looking at Q4 specifically, margins temporarily declined due to tariff impact and the recognition of one-time expenses. I will explain the details on the next slide. The next slide, please. Here, I would like to explain the one-time expenses and adjustment items recorded in FY25 as well as our outlook for FY26. As previously disclosed, during fiscal years 2024 and 2025, we conducted ongoing reviews of underperforming business businesses and projects to assess whether investments were delivering returns consistent with their original intent. As a result, in FY25, we recorded ¥48.8 billion in one-time expenses, mainly related to new acquisitions and business portfolio optimization, alongside recurring amortization from past acquisitions. Additionally, we recognized 5.5 billion yen in litigation-related expenses in Q4, which were not included in our Q3 assumptions. This relates to a class action lawsuit involving our blood and cell technologies company. They were recorded as one-time expenses to mitigate uncertainty and potential future costs associated with prolonged litigation. This does not represent any admission of legal liability or wrongdoing, nor does it affect our business operations or mid- to long-term strategy. While FY25 saw a concentration of acquisition-related and other one-time expenses, we view these as strategic investments for future growth. As a result, we are entering FY26 with a much cleaner cost base, which we believe positions us to further accelerate growth. In FY26, the absence of these one-time expenses is expected to contribute more than 10 billion yen to profit growth.

Next slide, please.

Now I will explain the year-on-year profit variance for Q4. There are two key factors. First, growth margin and pricing. From Q3 onward, Tariff impacts became more significant, resulting in a 5 billion yen negative impact in Q4. Pricing had a positive effect of 3.1 billion yen. However, impairment losses of 2.2 billion yen related to the termination of certain projects led to a negative impact of 4.5 billion yen. These impairment losses are included under restructuring expenses in the previous slide. Second, R&D expenses increased. due to impairment of capitalized R&D assets in Q4. Both factors are temporary and will not have a continuing impact in FY26 or beyond. Moving on to the four-year profit variance analysis. Overall, continued demand growth and higher sales volumes were the primary drivers of profit growth. The gross profit increment by sales increase was driven mainly by overseas TIS, primarily in North America, as well as global blood solutions led by the plasma business. With regard to the gross margin pricing, pricing measures, especially in CNB, contributed positively. However, these gains were offset by the full-year impact of tariffs and impairment losses associated with discontinued projects. SG&A increased in line with business expansion and remained broadly within our expectations. I will now explain performance by company, starting with CNV, the cardiac and vascular company. Revenue increased by 7% on a local currency basis, with some performance continuing globally, particularly TIS in North America and the neuro business. In North America, all TIS product categories performed well. with volume growth contributing more significantly than pricing. The newer business continued to deliver strong growth, especially in China and Japan. The profit margin in FY25 was 24%. Q4 margin temporarily declined to 19%, mainly due to impairment losses related to a change in development locations for new products in TIS, as well as negative impact from foreign exchange on a stock basis. In FY26, we expect the margins to improve as these temporary factors subside.

Next slide, please.

Next is PMCS, the Medical Care Solutions Company. Growth in pharmaceutical solutions drove both revenue and profit growth for the company overall. This was led by the domestic CDMO business as well as the strong performance of projects overseas. In hospital care solutions, despite the impact of a business transfer in Q1 of the previous year and a supply issue with a certain product, the supply issue has since been resolved and growth in Asia contributed to higher sales. Profit increased due to the effects of pricing measures and disciplined cost control. Although the Leverkusen plant consolidated from Q3 had a negative profit impact of 3.7 billion yen, it is excluded here to clearly illustrate the performance of existing businesses. Regarding the Leverkusen plant, we continue to see strong interest, particularly from European and U.S. pharmaceutical companies, and we are making steady progress toward securing new projects. Next slide, please. Next, TBCT, the Blood and Cell Technologies Company. Revenue increased, driven by expanded deployment of Reveos, an automated whole blood processing system, as well as growth in plasma innovations with global blood solutions. Global therapy innovation also performed well, particularly in North America. Profit increased due to strong core businesses, including Reveos, and improved profitability of expanded cells of Vita. In the second half, We implemented production adjustments related to RICA. However, those remained within our expectations, and the impact on profit margins was limited. In FY26 as well, production adjustments may be made depending on circumstances, but at this stage, we expect the impact on business performance to be minimal.

We will explain the performance of thermal organ technologies. Since Q3, we have included this business in our consolidated results. In Q4, revenue was 5.1 billion yen and adjusted operating profit was 1.1 billion yen. To illustrate the growth trend, we also disclosed the four-year FY25 performance on a year-on-year basis. Revenue increased by 48% on a local currency basis. The profit margin reached 21%, respecting that a high-margin business model has already been established. The Oregon preservation market utilizing NMP is expected to continue expanding. Supported by the increase in liver transplant procedures and the expansion of our customer base, we aim to achieve growth exceeding that of the market. Let me move on to revenue by region. In the Americas, demand continued to expand, with all companies delivering strong growth. TIS pharmaceutical solutions and global blood solutions were key choices. In Europe, TIS and euro remained stable growth contributors while Pharmaceutical Solutions grew supported by strong project sales. In Japan, the CDMO business performed well, contributing to higher Pharmaceutical Solutions revenue. New role in CMV continued double-digit growth. In China, growth was driven primarily by neuro, supported by expanded market access resulting from BPP. In Asia, strong TIS performance led to C&D growth, with TVCT also delivering double-digit growth.

Next slide, please.

Now let me explain our FY26 guidance. First, I would like to explain the key assumptions underlying our FY96 guidance. The first assumption reflects the recent surge in crude oil prices stemming from the situation in the Middle East. Based on the information currently available, we have incorporated the impact of higher raw materials and related costs into our guidance. At this stage, thanks to the cooperation of our suppliers, there have been no issues affecting production or supply. The second assumption concerns US tariffs. We have assumed a tariff rate of 10% through July, and while conditions thereafter remain uncertain, we have incorporated a rate of 15% into our guidance based on our prior circumstances. Under these circumstances, for FY26, we expect revenue to grow by 8% on local currency rates. Our operating profit is projected to increase by 20% year-over-year, significantly uppacing revenue growth. mainly due to the absence of one-time expenses recorded in the previous fiscal year. FY26 marks the final year of our five-year growth strategy. GS26, we expect to achieve record high revenue and profits, and we are on track to meet the financial targets set under GS26. This slide presents our guidance by company. We aim to achieve high single-digit revenue growth across all companies. by steadily expanding high-margin growth drivers in each company. While advancing operational improvements in the introduction of new products, we expect profit growth to exceed revenue growth in all cases. In addition, the inclusion of thermal organ technologies is expected to become one of the key drivers of overall group growth. Alongside its strong revenue growth, we expect profits of 5.1 billion yen, making this business a contributor in terms of both growth potential and profitability. This slide explains the year-on-year profit variance in FY26 items. The GDP increment Buy-sell increase is the primary factor behind profit growth, reflecting continued growth across businesses such as TIS and Nuro, as well as the full-year contribution from thermal organ technologies. With regard to the gross margin, we expect a negative impact of 4.5 billion yen due to the impact of tariffs throughout the year. In addition, higher raw material costs are expected to have a negative impact of 2.5 billion yen. On the other hand, we expect a positive impact of 10 billion yen from pricing measures, as well as 7.5 billion yen from the absence of one-time expenses recorded in the previous fiscal year in cost reduction effects. associated with business restructuring, SDMA are expected to increase at a healthy level in line with business expansion. Next slide, please. This slide outlines our product expected to drive further growth, as well as our key regional expansion initiatives. From FY26 onwards, we will continue to create growth opportunities by allocating resources to growth areas and expanding sales of new products. In CMV, we will continue to focus on growth segments with large market opportunities in the therapeutic area to drive business expansion. In the access area, we will promote the adoption of radial procedures and together with the expansion of the therapeutic area, aim for further growth. In TNCS, we will further advance the creation of new value by leveraging devices, pharmaceuticals and digital solutions and expand the provision of a wide range of solutions including medical management. In addition, we aim to expand the CDNO and project businesses while accelerating overseas expansion by matching our strengths with region-specific needs. In TBCT, the rollout of Webeos is accelerating, and we will continue to expand into new regions. At the same time, by expanding software and service offerings, including the use of AI, and enhancing infrastructure through automation, we will secure competitive advantages and achieve further customer acquisition.

Next slide, please.

Finally, let me touch on shareholder returns. For FY25, we expect an annual dividend of 30 yen per share. With a payout ratio of 33%, for FY26, we plan to increase the dividend by 6 yen, bringing it to 36 yen per share with a payout ratio of 32%. We continue to prioritize growth investments while we remain committed to stable and progressive dividend increases going forward. This concludes my presentation. Thank you very much for your attention. Next. CEO Sanejima and President Schroeder will present. President Sanejima, please go ahead.

I am Hikaru Sanejima, CEO of Terumo Corporation.

Thank you very much for coming. I would like to share our perspective on the final year of GF26 and our strategic direction beyond that. He will explain the strengths and future outlook of Terunoro, which continues to drive strong growth for CNP as well as the company overall. Let me begin with our progress this fiscal year towards the key financial targets of GS26. Regarding the revenue growth, this year as well driven primarily by organic growth we are steadily expanding the top line as planned and expect revenue growth to come in within our target range as for the operating profit through continued progress in pricing measures An optimization of our cost structure, we expect to reach a level of 20% or more in FY26. In addition, while continuing to invest for growth, we plan to maintain ROIC at a level of 10% or higher. This demonstrates that we are steadily achieving both profitability and capital efficiency. In this way, in FY26, the final year of GS26, we expect to reach the target ranges initially set for all three key financial indicators, revenue growth, operating profit, and pro-week. Next, I will outline the key growth drivers supporting our performance this fiscal year. Let me start with CMV. This is fundamental swimming strong, particularly in the Along with continued testing measures mainly in North America, core products such as Ultimaster Nagomi and WEB are expected to drive revenue growth this year. Turning to TMCS, the global CDMO business continues to expand with new product launches. Project-centered products are the main growth drivers, while ongoing pricing measures are improving profitability of TMCS as well. As for TBCT, revenue growth driven by the plasma business continues and core products such as Reveos provide stable support. Finally, thermal organ technologies. As NMP adoption expands and the liberal trans-planet market grows, we are gaining market share through NETRO. As shown, this year's performance is supported by steady, time-based growth across multiple businesses underpinning our ability to achieve the GS26 financial target. With that, I will now hand over to Carsten Schroeder, President of Telmoneuro, who will outline the strong growth outlook for Telmoneuro this fiscal year.

The floor is yours.

Thank you, Hikaru. I'm Karsten Schroeder, President and CEO of Tehran Moneuro. I will walk you through today the growth of Tehran Moneuro to date, our key strengths and successes, and our strategy for the future. The neurovascular business provides endovascular treatment solutions for both ischemic stroke, which is a blocked artery, and hemorrhagic stroke, which is a leaking artery in the brain. DRU entered this space first through the acquisition of my convention, initially focused on coil-based therapies for hemorrhagic stroke. Since then, the business has expanded organically into a full-scale, class-leading neurovascular portfolio, addressing both ischemic and hemorrhagic stroke. Following this, the acquisition of Sequent Medical added the intracycler web embolization device, creating a new treatment category where we continue to hold global leadership. The business has consistently delivered above-market, double-sitted growth, driven by leadership in key platforms, including the web intracycler device for hemorrhagic stroke, and Sophia catheters for a stomach stroke. Our core strength lies in our ability to continuously innovate, expand, and iterate our product portfolio while building robust clinical evidence to support long-term adoption. Combined with strong commercial and operational capabilities, this allows us to successfully deliver our solutions on a global basis. Under the Terubo Neuro brand, We are focused on sustaining category leadership in core therapies, while selectively expanding into adjacent markets to deliver on our vision to restore brain health globally. A hemorrhagic stroke is fundamentally a leak or weakening in the blood artery in the brain, leading to a bubble or aneurysm. The portfolio to treat this disease state could involve placing a stent in the artery, or filling the aneurysm with numerous coils, or putting a single device, like the one pictured on the left, which is called the web intracellular device. The ischemic stroke on the right is a blockage in the artery that can be removed with a stent striver, or by suctioning out through an aspiration catheter, or both. To get to the brain from either the groin in the leg or the wrist, you can deliver therapies and devices, and that requires catheters and guide wires under therapeutic lesion access. The neurovascular business has grown to become complete and class-leading since the acquisition of my convention in 2006, with coils as the foundation for the portfolio. Growth has been driven primarily by organic innovation, complemented by the acquisition of Sequent Medical in 2016, which created a new category of intracellular devices. In 2024, my convention was rebranded as Pteromonuro, reflecting our ambition to further expand the business and advance our vision to preserve and restore brain health. Terumo Neuro has consistently delivered double-digit and above-market revenue growth. This consistent growth has been achieved with market-leading brands such as Webb for hemorrhagic and Sophia for ischemic stroke, sustained leadership in therapy lesion access, and continued overall portfolio expansion. We finished fiscal year 25 with $710 million in sales primarily coming from therapeutics. Here are the highlights of the growth strategy of Tirumo Neuro. We will continue to deliver above-market growth with three strategic pillars. First, we plan to grow its current business by introducing new products in hemorrhagic and ischemic and generate clinical evidence. The second pillar, we plan to expand production capacity and improve gross margins. Beyond these two, the growth drivers of the existing core business, we will expand into adjacent markets, using our core portfolio and clinical capabilities to drive new indications and commercial expansions. One of our key strengths lies in our ability to integrate technologies and continuously iterate on them over time. While some companies also offer both core and intra-circular devices, Jirumo Neuro's differentiation lies in how deeply and consistently we integrate and evolve these technologies over multiple generations. By combining our core core expertise with the web platform, we have established a new standard of care in specific analgesic segments and achieved strong number one positions. Since the acquisition of Sequent Medical, we have successfully advanced web from Generation 1 to the current Generation 6, supported by accumulated clinical evidence and procedural expertise, with Generation 7 already in the pipeline. This long-term disciplined approach to technology integration is what enables Theromoneuro to deliver sustainable above-market growth. Another key strength of Theromoneuro is our leadership in clinical evidence generation in neurovascular devices. We are conducting large-scale post-approval studies across key products with global patient enrollment underway in the United States, Europe, Japan, China, and beyond. Taking comprehensive long-term approach, we have built a broad body of clinical data across geographies, studies, publications, and device platforms. This depth of evidence supports regulatory approval and market access while strengthening physician confidence and establishing our technologies as standard of care. The intracellular market created by Tiro Monero is growing at an annual rate of over 10%. Tiro Monero established this market with a web embolization device, the first in-class technology refined over more than 15 years with over tens of thousands of patients treated globally. Looking ahead, we aim to maintain category leadership in intracellular therapy through continued product development. We will also expand clinical indications, including ruptured aneurysm in North America and Asia, while further strengthening clinically evidenced generation through global studies. Tirumoneura is also known for its class-leading Sophia catheter brand in ischemic stroke treatment. Aspiration catheters today are used in 90% of the cases with six French size catheters being the majority used. A new category of larger size catheters called Superbo has recently emerged. Thierry Monnier has category leadership in the six French aspiration catheter market with the Sophia Flow, with extensive clinical literature supporting its use. We plan to further develop its leadership in the emerging Super Bowl category with the introduction of the Sophia 88. The Rumo Neuro has a significant portion of its manufacturing operations in Costa Rica, benefiting from strong government support, an attractive talent pool, and a well-developed ecosystem around medical device technology. We aim to execute our long-term manufacturing strategy by improving cost of goods sold through increased automation, leveraging capabilities from the consumer interventional systems business. In parallel, we're expanding production capacity for key products while maintaining the high quality of our product offerings. We also see attractive growth opportunities as we expand into adjacent neovascular markets. The new vascular market continues to grow at around 6% annually. At the same time, new treatment areas such as tronics and dual hematoma are emerging, attracting increasing clinical interest and innovation. We approach these opportunities with deliberate focus. Rather than broader expansion, we selectively develop offerings where our existing technologies and clinical expertise can be most effectively leveraged. Chronic Cerebral Hematoma is a clear example of how expanding clinical indications allow us to expand our portfolio and capture incremental growth while maintaining strategic discipline. This summarizes our view on the future of Tizumo Neuro. Our ambition is to further drive growth in the neurovascular business while contributing to company-wide growth by developing class-leading and commercially scalable solution in our core therapies. Our pipeline includes both iterative improvement in intracelular devices and new product offerings, supported by continued expansion of clinical evidence. At the same time, we are improving operational efficiency to ensure these innovations can be scaled effectively and selectively expanding in the adjacent markets to indication expansion. Through this focused and disciplined approach, Chihumo Neuro aims to preserve and restore brain health while delivering sustainable long-term growth. It has been a pleasure to speak with you today and I look forward to the Q&A session. Thank you.

Finally, I would like to share our direction towards GS31, which we plan to announce this December. Through GS26, Telmo has built a solid foundation in revenue growth, profitability, and growing. Under GS31, building on this foundation, we intend to go beyond simply expanding sales or growing profits by further accelerating innovation We aim to create new value for patients. Looking ahead, the needs of patients and healthcare professionals will continue to become more advanced and more diverse. Leveraging our strength in technological innovation, clinically driven product development, and global business execution, Teumo will continue to boost the value creation that enhances the quality of healthcare itself. Through these efforts, we aim to achieve sustainable revenue growth and profit expansion while becoming a global top-tier medtech company. Beyond FY26, Telmo will continue striving for even higher levels of growth and performance, transforming the future of healthcare with innovation as our core driving force. Thank you very much for your attention. We will now move on to the Q&A session. This meeting is a hybrid meeting. For those of you in the room, please raise your hand if you have any questions. For those of you joining remotely, please press the raise hand button if you want to cancel. Please press the raise hand button again. Please limit your questions to two so that we can take questions from many of you. The Q&A session will be joined by Samejima, Fyodor, Hagimoto, Otaka, Head of the Management and Administration Division. We would like to open the floor for questions. From Mizuho, we would like to take a question from Kotani-san. Hello, I am from Mizuho. My first question is, is related to cost on page 16 for next year gross margin is plus 4.1 billion yen but raw material cost is also going up transportation cost is also going up as well how come this is positive I just cannot understand why because it's so far off from my assumption so could you please explain I think this has to do with WECA and Transmitix. And if possible, please share numbers. Thank you very much for your question. As was explained earlier, this year we have one-time expenses in the U.S. for production. That is included in this year's 2.5 billion yen. But this will go away.

And also restructuring costs and overseas plant restructuring expenses will actually be positive this fiscal year.

So gross margin is based on those factors. So one-time expenses will disappear this fiscal year. Understood. Next question. I would like to ask in English if possible.

Hello?

Can you hear me? Yes, great. So I don't get a chance to pick your brain too much, so it's going to be a somewhat comprehensive question, but bear with me. So in terms of terminal neural, I've got three concerns. One, web device. You will have new entrants enter the market within the next two years. I think you have seen the announcement from Risa Medical with their Cintra. I think they disclosed clinical trial results in March. Galaxy Medical Seal, they filed PMA. So you're going to see new entrants. Can you defend your market share in the intra-sacral device? The second point is the aspiration catheters. You have a ton of competition in the super board space. I thought Sophia 88 was great with the... the Super Board, but you've got Cereglide 92, you have Route 92 Medical, Imperative Care, Rapid Pulse, there's a lot of competition in the Super Board space. The somewhat, you know, annoying thing is that they're all doing clinical trials, locking up hospitals, disrupting sales. How do you push back with the SOFIA? Finally, CSTH. This is a new topic for most Japanese analysts. The middle meningeal artery embolization space is obviously a very interesting space. Some people say that it is greater than stroke or aneurysm in terms of its potential market. However, we have seen squid from BALT, onyx from Medtronic, and true fill from J&J have already entered the space with indications in MMAE for CSTH. I understand you're trying to expand these, you know, indication with fill. And yes, Phil does have some advantage, I think, in the ease of preparation, the ability to reach the similarities, but is that enough to crack this market when you're going to be probably a fourth, fifth, or sixth entering the market? Thank you.

Okay, so there's three questions rolled into one. So let me talk about the intra-cycler segment first. As you saw on the slide earlier, We are on generation seven with our web device, and we continue to have new sizes. We continue to have a small delivery system with a 17 system. We continue to expand our clinical indications and roll out on a global basis. We already have competition in certain geographies. And we believe that we can maintain a leading market share through continued iteration of this device and continued expansion of the clinical indications around the key markets in the world. As far as aspiration catheters are concerned, you are right. The 88 large-bore segment is primarily driven by US-based companies. We have our distal access catheter, the SOFIA 88, and we will be conducting the necessary work to get to an aspiration indication and to create the SOFIA flow. Flow is our name for the SOFIA catheter, which has an aspiration indication, which is particular to the U.S. market. And we are also working on additional sizes and lengths for the SOFIA catheter portfolio. So again, it's a question of iteration in completing our leading portfolio over time. Chronic subdual hematoma is indeed a new phenomenon, essentially by embolizing the MMA, but you need two things to do it. You need a catheter and you need a liquid embolic. We have a leading catheter with our headway dual, which is the most used catheter in this particular segment, and we are leveraging the strength of the catheter over into the liquid embolism. And we will be investing money also to do a necessary clinical trial for Phil in the United States. Thank you very much. You're welcome.

We have a question from Yoshihara-san from UBS. This is Yoshihara from UBS Securities. CNB, if we look at CNB only, And the actual track record and the plan, especially profit margin, is going to improve significantly. That is your assumption. Therefore, maybe 24 will become 27. Three-point improve. This is adjusted operating margin. One of expenses and organic. What are your expectations? And the lending results? I think the landing result was certainly less than the company forecast, but can this all be explained by one of factors? Thank you very much for your explanation. CNB profit margin. Two points or so from this year to next fiscal year, there will be an improvement. That is because, as I mentioned earlier, in Americas, there was cancellation of production project, and one point is one-off factor involved. And in overseas plants, there are reduction in force in CNV. This fiscal year, this is going to be positive, which means more than 2 billion in positive in this fiscal year. And finally, foreign exchange. This fiscal year, the stock impact of foreign exchange in cardio and vascular, there was some impact. which will increase profit margin next fiscal year. Especially BIS North America and Terminal Europe, where profitability is high, there will be growing a lot and contributing significantly as well. That is also a factor.

Thank you very much.

Just to make sure, I want to confirm, that is stock 4.7 billion in company-wide CNB only? How much? mostly all coming from CNB. I see. And then my second question to you is RICA business. As Hajimoto-san explained at the beginning, there is going to be a risk of adjustment, I understood. And in CSL's financial results, supply and demand being not good, we hear, and CSL in itself seems to be losing share from competition or losing share to competition. How is this factored in into this flexible use plan? There can be some adjustment, but it will not affect property. You said what? What is the logic? For us, the CSL sales, and for Rika, this is almost all the sales of Rika. And as of now, from CSL, we are receiving orders and looking at the orders from CSL now. The order level is within what we expected. There can be some ups and downs in the order level that we experienced in the past years, but that impact to the total of DCT is going to be very small, we expect. With CSL, we are confirming circumstances on ongoing basis as necessary. And as a result, what we thought would affect our results are all affected and all factored in into our expectation. Moving on, Mori-san of Nomura Securities, please. This is Mori from Nomura Securities. My first question is slide 15. Leverkusen plant included and without Leverkusen plant you have the disclosure and if we exclude Leverkusen then the Leverkusen impact is going to be bigger than the last fiscal year why is Leverkusen impact is going to be greater and when will this situation start improving can you explain further about Leverkusen and this is about Leverkusen this fiscal year we are booking costs for Now, correction, that is last fiscal year. Last fiscal year, cost for Leverkusen was booked last fiscal year, and this fiscal year will be booked for the full year. And finally, Leverkusen investments will reach a full-fledged stage. That is the background. And here, by your plant to injection, you are going to convert the plant into, and how much have you progressed, and have you received clearance? From multiple pharma companies, we have signed NDAs, and we will conduct promotions and development going forward. We are moving ahead. And if I may add, clean room construction is progressing as planned. I say thank you. My second question is about organoids. Crude prices are high and inflation is ongoing, which means organ transplant costs must be going up. As operating profit margin, can you maintain 20%? Do you expect to maintain 20%? Because the top line will not affect profit margin, what is going to be the impact on profitability to organ locks coming from inflation and higher crude prices? Crude Japanese plants and Asian plants, will be impacted a lot from crude. Therefore, but for organox business, we do not expect big impact. With sales increasing, as you said, profit is going to expand. This is the structure of the business. And if I may add, the transportation itself is not included in our business model. The transportation part can be mostly ignored. People in transportation can pass on costs and pricing, but you are a machine business. You don't receive as much cost pressure. You are not receiving cost pressure that much. More than 90% of the businesses in US, the Middle East circumstance, is not as much impactful compared to the Far East or Japan. Thank you. Moving on to Citigroup.

Yamaguchi-san, please.

Can you hear me now? I have just unmuted. Yes, I have two brief questions. The first is, in the next mid-term plan, the growth, the KGAR, I think you said, is going to go up, and there are more business segments now, and when you aim for the next mid-term period, you will achieve this growth level, and then is there going to be further growth after the We want to aim for higher goals compared to the current GS26. And upon this direction, we want to get into December. I see. The raw material cost increase impact is going to be 2.5 billion yen. But what is the impact coming from the Middle East? Are there any comments? Inside the slide, the 2.5 billion yen is raw material cost increase that is coming from the Middle East. Middle East circumstances resulting in raw material cost increases in the fiscal year's earnings forecast. And as you are very well aware, tariff impact. Tariff, maybe you can get the tariff paid back to you. Maybe you can get payment returns. Yes, there are many uncertainties as of this point. Therefore, as of this point, and still there is the 10% tariff applied up to the end of July. This is the assumption up to the end of July. So far, it used to be 15%. And there is still a possibility the tariff may go back up to 15%. And repayment back of tariff. There are such movements emerging, we are aware. in the U.S. And there is still time available for appeal, but we have not factored this possibility in our forecast. Thank you. Then SMBC Nikko Securities, Tokumoto-san, please. This is Tokumoto from Nikko Securities. I have two questions for you. The first is guidance.

PMCS.

Excluding Leverkusen, you are going to increase a lot of profits. But this profit margin improvement and profit increase between CDMO versus Japanese existing business, can you give me the split? What is going to be the profit margin improvement between CDMO and existing Japanese business? Can you give me the breakdown? Thank you very much for pointing out. Last fiscal year, FY25, in fentanyl, there were out of stocks. But this year, this is going to recover. In addition, in NCS, Japan, and global, there will be pass-ons, pass-throughs taking place this fiscal year. In addition, CDMO business is going to expand. These are the factors and contributors for profit margin improvement in FY2026, which means in the whole of TCMS there will be improvements. Yes. And secondly, I want to ask about neural strategy. First of all, brain aneurysm in the next five years, as there was also a question earlier, the competition will start stretching up in the next five-year time period. Amongst this background, how are you going to innovate? What are the innovations are you going to come up with? There can be more pro-divertus and mesh, and there can be more improvements. But Striker is also catching up with similar innovations. So brain aneurysm versus Striker, what is your strategy? And also the aspiration, brain stroke may be more vulnerable compared to scent, and having strength and retriever having the combination business, you may not have this in your pipeline. So I would like to hear about your big strategy. Please wait until the translation is finished.

Yeah, thank you very much for the question.

Let me talk about hemorrhagic stroke first. You have multiple ways to treat aneurysms, ruptures or unruptures. You have coils, you have flow diverters, you have intracellular devices, you have stand assistive coilings. Tirumo Neuro has the most complete portfolio. We are the only company with coils who has class 1A evidence of randomized clinical trials with our hydrocoils. We are the market leader in intracellular And we are also very strong in stent-assisted coiling and flow diverters. And we have a pipeline project to continue to iterate on all four categories. That is for hemorrhagic stroke. As far as ischemic stroke is concerned, Sophia is the class leader in this segment. And we are expanding the segment also by adding new sizes to this portfolio over the next couple of years. And we do have a combination in each of the major geographies, Europe, United States, China, and Japan. We also have a standard tree available, and we offer the combination technique of standard tree plus aspiration catheter.

Thank you very much.

I have a related question. Full diverter, I think, Fret has a strong pipeline. In China, Chinese companies, including Microboard, they are selling their version of the product. However, application expansion is still under preparation. When you think about the next five years or annualism in force 12, how big do you think that the Chinese companies will be in the future? How big of a threat are they going to be?

We should not underestimate the Chinese companies. There are a lot of Chinese companies now in China in neurovascular as they are in peripheral or in cardiology and obviously they would like to expand internationally meaning moving out of China and some of these Chinese companies also have highly differentiated products so I would not only see them as a competitive threat I would also see them as a source of new product innovation.

Thank you. Thank you very much.

We have received some comments from you. Competition is becoming more intensified. Renewal, ceremonial competitive advantage and including competitiveness is something that we need to think about and tuck-in type M&A is something that we might consider in the future. Next, we have Tony Ren from Macquarie Capital.

Hi, Tony Ren from Macquarie. Thank you for taking my questions. I have two as well. The first one is I would like to ask you about the TMCS, particularly the pharmaceutical solutions. On page 9, it said in Japan, The CDMO business did very well. Could you help me understand what proportion it comes from Lacan B, A-size Lacan B? Recently, there is a delay of FDA's approval of the Lacan B auto-injector in induction therapy. I would like to get some sense. How does it affect your Japan CDMO business? So that's my first one. My second question is, again, going back to Rika. I think as the other analyst mentioned, we are really seeing a very unusual situation of oversupply. In my experience, this type of oversupply lasts a few years. I would like to see how you have incorporated that into your near-term or mid-term plan. Possibly it will be something in the growth strategy 31, but I just wanted to see whether you have incorporated that into your medium-term planning, probably at least five years. Thank you.

Thank you very much for the question. So the first question related to the TEN-B, the impact that is included in FY25 last fiscal year's results is not large at this moment. We anticipate the majority of the activity sales to be conducted from FY26 onwards. Based on the delayed situation, From our point of view, we are preparing based on ASI's kind of purchase order that has been put in place, and we do not see a notable difference from what we have anticipated in the early years. So I think it's fair to say that there may be some differences in what the ASI sales situation may be. Despite that situation, what we are as a provider are still at a very steady growth that we are foreseeing for FY26. Based on the second question, for DECA devices, of course, we are still anticipating what the future structure within GS31 would look like for DECA at this moment. But for this fiscal year, FY26, I think it's fair to say that we have incorporated any kind of demand changes that CSL have put forward to us, and based on those numbers, we do not foresee a significant difference from what we've anticipated in the planning phases for FY26. So, again, what we would consider for the next five-year plan, GS31, is something that we would like to clarify and announce at December when we announce the overall GS31 plans.

Okay, thank you very much. Very good. I'll be looking forward to GS31. Thank you.

Thank you. I am Hayashi from Morgan Stanley. Can you hear me?

Yes, we can. I have one question. Maybe it was already covered earlier. This fiscal year, FY26, your sales plan, if you exclude forex, growth rate is also disclosed by segment.

Thermal medical solutions is 8% growth for sales. This company, I think in the past, was only able to grow by mid-single digit or low-single digit percentage. But this time around, you're expecting 8% growth, so what's different now?

Could you please share with us your thoughts? Each business is growing. I guess it's CDMO, but please confirm whether my thinking is correct.

That 8% growth is relatively high. Could you please tell us why?

Yes, there are three factors.

First of all, in FY25, There was a shortage, and second is global pricing pass-through, and that will be added onto the sales value. And pharmaceutical business, we are receiving orders from pharma companies, and they will promote sales growth.

So that means that these are contents you have covered from the past. We are receiving many more hands up, but this is now time to finish. This is time to finish the meeting. We will close the questions and answers session. For the questions we were not able to take today, please contact our IR department individually. With this, we conclude Tedema Corporation's financial results presentation for the year ending March 2026. Thank you very much for your participation.