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Terumo’s Earnings Call: Record Revenue Amid Challenges

Terumo’s Earnings Call: Record Revenue Amid Challenges

Terumo ((JP:4543)) has held its Q1 earnings call. Read on for the main highlights of the call.

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During the recent earnings call, Terumo conveyed a mixed sentiment, marked by robust revenue and profit growth, particularly in the Americas and cardiovascular segments. However, the company also expressed concerns over tariff impacts, temporary revenue declines in certain segments, and a decrease in free cash flow.

Record-High Quarterly Revenue

Terumo reported a record-high quarterly revenue of JPY 260 billion for Q1, overcoming negative currency impacts and surpassing last year’s Q1 figures, which had been boosted by temporary demand spikes.

Strong Operating Profit Growth

The company achieved a significant increase in operating profit, reaching JPY 55.9 billion. This growth outpaced revenue due to improved gross margins, effective cost management, and favorable currency and onetime gains.

Cardiovascular Segment Success

The cardiovascular segment experienced a 7% revenue growth on a local currency basis, driven by strong U.S. performance. TIS and Neuro were pivotal, with the operating margin improving by 5 points to 29%.

Positive Impact of Pricing Strategies

Pricing strategies, particularly in the U.S. and the delayed VBP in China, exceeded expectations and significantly contributed to profit increases.

Strong Performance in the Americas

The Americas saw double-digit growth in local currency, with all companies contributing robustly, thus driving global sales.

Free Cash Flow Decrease

Free cash flow decreased to JPY 10.5 billion, a reduction of JPY 4.2 billion year-on-year, primarily due to increased inventories and tariff impacts.

Temporary Revenue Declines in Certain Segments

Segments like TBCT and TMCS experienced temporary revenue declines due to delayed orders, business divestitures, and supply chain issues.

Tariff Impact Concerns

The full-year tariff impact is now estimated at JPY 10 billion, with most effects anticipated in the second half of the fiscal year.

Organizational Restructuring Costs

Expenses related to organizational restructuring were highlighted, with expectations of recurring costs in future quarters.

Forward-Looking Guidance

Terumo maintains its full-year guidance despite challenges. The company expects a JPY 10 billion tariff impact but plans to counteract this through strategic pricing measures. The record-high revenue and operating profit achievements are expected to continue, driven by pricing strategies and cost control.

In conclusion, Terumo’s earnings call reflected a positive outlook with record-high revenues and profits, despite facing challenges such as tariff impacts and temporary revenue declines. The company’s strategic pricing and strong performance in key segments like cardiovascular and the Americas are expected to drive future growth.

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