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.