Terumo Achieves Record Revenue and Profit Growth

Terumo ((JP:4543)) has held its Q4 earnings call. Read on for the main highlights of the call.

Terumo’s recent earnings call reflected a robust financial performance, showcasing record-breaking revenue and profit growth. The company’s strategic business expansions and regional successes were key drivers of this positive sentiment. However, challenges such as significant one-time expenses and potential tariff impacts were also acknowledged. Despite these hurdles, the outlook for future growth remains optimistic, with expectations of continued revenue and profit increases.

Record-Breaking Revenue

Terumo achieved a significant milestone by surpassing JPY 1 trillion in sales revenue for the first time, marking a 12% increase over the previous year. This impressive growth was fueled by global demand and a favorable exchange rate due to a weaker yen.

Profit Growth

The company reported record-high operating profit for the fourth consecutive year, alongside unprecedented net income and free cash flow. This consistent profit growth underscores Terumo’s effective financial strategies and operational efficiency.

Future Growth Expectations

Looking ahead to fiscal 2025, Terumo anticipates a 7% revenue growth on a local currency basis, with operating profit expected to rise by 32%. These projections highlight the company’s confidence in sustaining its growth trajectory.

Regional Success

Terumo’s regional performance was strong, with all areas, particularly the Americas and Europe, experiencing double-digit growth in local currency terms. This widespread success reflects the company’s effective global strategies.

Cardiovascular and Blood Solutions Growth

The cardiovascular and Blood and Cell Technologies segments were significant contributors to Terumo’s revenue growth, showcasing the company’s strength in these critical healthcare areas.

CDMO Business Expansion

Terumo is expanding its CDMO business globally, highlighted by the acquisition of a European base. This expansion enhances its competitive edge in the CDMO market, positioning the company for future growth.

One-Time Expenses

A notable challenge was a one-time expense of JPY 24.2 billion, primarily due to portfolio optimization and restructuring efforts. Despite this, the company remains focused on long-term profitability.

Tariffs Impact

Potential U.S. reciprocal tariffs pose a risk to profits, with an estimated impact of JPY 17 billion. Terumo is uncertain about passing these costs to customers, indicating a cautious approach to this challenge.

Price Declines in China

Price declines in China due to value-based purchasing affected revenue. However, these were offset by price increases in other regions, demonstrating Terumo’s ability to adapt to market changes.

Project Discontinuation

The strategic decision to discontinue a project for a large diameter hemostatic device was made due to profitability concerns, reflecting Terumo’s focus on maintaining a profitable portfolio.

Guidance for Future Growth

CFO Jin Hagimoto provided guidance for the upcoming year, forecasting a 7% revenue growth driven by company-wide expansion, particularly in Blood and Cell Technologies. Operating profit is expected to increase by 32%, aided by the absence of last year’s one-time expenses and ongoing profit improvement measures. Terumo aims to enhance its operating margin to 18.5% and is actively managing potential tariff impacts through strategic pricing adjustments. The company continues to invest in growth, focusing on expanding its CDMO business and increasing production capacity, as evidenced by its recent acquisition of a WuXi Biologics factory in Germany.

In summary, Terumo’s earnings call conveyed a strong financial performance with record-breaking achievements and a positive outlook for future growth. Despite facing challenges such as one-time expenses and potential tariff impacts, the company remains optimistic about its growth prospects, driven by strategic expansions and regional successes.