Key insights
- Terumo Corp. reported record revenue, driven by North American demand. Despite a stock decline, analysts see undervaluation and upside potential. Strong financial health and growth initiatives suggest positive future performance. While not a direct US equity, it reflects global demand for medical devices, a sector relevant to US-listed companies.
Terumo Corporation reported record-breaking financial results for the fiscal year 2025, ending March 2026, with total revenue reaching 1.1 trillion yen, marking a 9% year-on-year growth. Despite macroeconomic challenges, the company maintained strong profitability metrics, with an operating profit of 176.3 billion yen and a gross profit margin of 53%. The stock saw a slight decline of 0.41% following the earnings announcement, bringing shares near their 52-week low. The stock has declined 27% over the past year, yet InvestingPro analysis suggests the stock is currently undervalued, placing it among companies on the Most Undervalued list.
Terumo Corporation demonstrated robust growth across all major financial metrics, achieving record sales for the fifth consecutive year. The growth was primarily driven by strong demand in North America and solid performance across all business segments, including Cardiac and Vascular, Medical Care Solutions, and Blood and Cell Technologies. Despite facing macroeconomic headwinds, the company maintained its profitability through effective pricing measures and cost controls.
Terumo expects the absence of one-time expenses to contribute positively to profit growth in FY 2026. The company anticipates operating margins to reach 20% or more, supported by ongoing pricing measures and cost controls. Additionally, Terumo’s strategic initiatives in expanding its neurovascular business and optimizing its manufacturing operations are projected to drive future growth. Analysts share this optimism, with consensus ratings pointing to a buy recommendation and price targets suggesting 46% upside potential. InvestingPro assigns Terumo a "GREAT" financial health score of 3.08 out of 5, reflecting strong fundamentals. Investors seeking deeper insights can access Terumo’s comprehensive Pro Research Report, one of 1,400+ available reports that transform complex Wall Street data into actionable intelligence.
Terumo executives highlighted the company’s ability to sustain growth despite external challenges. They emphasized the success of strategic initiatives, such as the expansion of the neurovascular business and the optimization of manufacturing operations, as key contributors to the company’s performance. The executives remain optimistic about the company’s future prospects, with expectations of continued revenue and profit growth.
During the earnings call, analysts inquired about the company’s strategies to mitigate tariff impacts and manage raw material costs. Terumo’s management outlined their approach to offset these challenges through pricing measures and operational efficiencies. Additionally, questions were raised about the company’s expansion plans in the neurovascular segment, to which executives responded with details on ongoing product development and clinical trials.
Unknown Moderator, Moderator/IR Representative, Terumo Corporation: Hello, everyone. Thank you for joining Terumo Corporation’s financial results briefing for the fiscal year ended March 2026 out of your busy schedules today. Today’s proceeding is the following. First, Mr. Hagimoto, Group Executive Officer and CFO, will provide an overview of the financial results. Nextly, Mr. Samejima, Chief Executive Officer, and Mr. Carsten Schroeder, President of Neuro Business, who is joining online, will make a presentation, GS26 final year and beyond, and Terumo 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. Mr. Hagimoto will explain the financial results summary. Mr. Hagimoto, please go ahead. I’m Jin Hagimoto, CFO of Terumo. 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 FY 2025, revenue reached JPY 1.1 trillion, marking our 5th consecutive year of record high sales.
Jin Hagimoto, Group Executive Officer and Chief Financial Officer (CFO), Terumo Corporation: 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 FY 2026 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 OrganOx has been named Terumo Organ Technologies. Next slide, please. Moving on to our PL performance. As mentioned earlier, revenue continued to grow globally, led by North America, reaching a record JPY 1.1 trillion for the full year.
Operating profit and adjusted operating profit also reached record highs at JPY 176.3 billion and JPY 219.4 billion, 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 impacts 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 FY 2025 as well as our outlook for FY 2026.
As previously disclosed, during fiscal years 2024 and 2025, we conducted ongoing reviews of underperforming businesses and projects to assess whether investments were delivering returns consistent with their original intent. As a result, in FY 2025, we recorded JPY 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 JPY 5.5 billion 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 FY 2025 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 FY 2026 with a much cleaner cost base, which we believe positions us to further accelerate growth. In FY 2026, the absence of these one-time expenses is expected to contribute more than JPY 10 billion to profit growth. Next slide, please. Now I will explain the year-on-year profit variance for Q4. There are 2 key factors. First, gross margin and pricing. From Q3 onward, tariff impacts became more significant, resulting in a JPY 5 billion negative impact in Q4. Pricing had a positive effect of JPY 3.1 billion. However, impairment losses of JPY 2.2 billion related to the termination of certain projects led to a negative impact of JPY 4.5 billion.
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 FY 2026 or beyond. Moving on to the full 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 measures, especially in C&V, 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 C&V, the Cardiac and Vascular Company. Revenue increased by 7% on a local currency basis, with strong 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 neuro business continued to deliver strong growth, especially in China and Japan. The profit margin in FY 2025 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 FY 2026, we expect margins to improve as these temporary factors subside. Next slide, please. Next is TMCS, the Medical Care Solutions Company. Growth in pharmaceutical solutions drove both revenue and profit growth for the company overall.
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