Business Results First Six Months of Fiscal Year Ending ... · months of the previous fiscal year)...

The Sysmex Group has adopted International Financial Reporting Standards (IFRS) from the fiscal year ended March 31, 2017. Figures are disclosed in compliance with IFRS.

Business ResultsFirst Six Months of Fiscal Year Ending March 31, 2019

Hisashi Ietsugu, Chairman and CEONovember 8, 2018

Contents

Chapter 1 Financial Highlights for the First Six Months of the Fiscal Year Ending March 31, 2019

Chapter 2 Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2019

Chapter 1

Financial Highlights for the First Six Months of the Fiscal Year Ending March 31, 2019

Net sales: Net sales increased due to higher sales of reagents, centered on the hematology, hemostasis and life science fields.

Operating profit: Despite higher R&D expenses, operating profit rose slightly as higher sales pushed up gross profit.

Exchange rate fluctuations raised net sales ¥0.44 billion and operating profit ¥0.09 billion.At the exchange rates prevailing one year earlier, net sales would have been up 3.5% year on year, and operating profit up 1.4%.

Profit attributable to owners of the parent: Profit was up slightly due to a lower tax rate, despite the impact of an exchange loss stemming from intragroup transactions (USD/CNY and others).

Exchange loss (gains): Loss of ¥1.31 billion (loss of ¥0.19 billion in the first six months of the previous fiscal year)

Capital expenditure (tangible): ¥9.37 billion Depreciation and amortization: ¥7.62 billion

Financial HighlightsFirst six months

of fiscal year ending March 31, 2019

First six months of fiscal year ended

March 31, 2018 YOY (Previous period = 100%)

Results Ratio Results Ratio

Net sales 136.1 100% 131.1 100% 103.9%Cost of sales 59.6 43.8% 56.5 43.2% 105.4%

SG&A expenses 39.7 29.2% 38.9 29.7% 102.1%

R&D expenses 8.7 6.4% 7.6 5.9% 114.1%Other income (expenses) 0.5 0.4% 0.1 0.1% 335.7%

Operating profit 28.5 20.9% 28.0 21.4% 101.8%Profit attributable to owners of the parent 19.4 14.3% 19.1 14.6% 101.5%

First six months of fiscal year ending

March 31, 2019

First six months of fiscal year ended March 31, 2018

1USD ¥110.3 ¥111.1

1EUR ¥129.9 ¥126.3

1CNY ¥16.8 ¥16.4

99.1

121.7 118.7 131.1

136.1

20.1

29.7 27.0 28.0 28.5

12.7

18.4

23.4

19.1 19.4

2015 2016 2017 2018 2019

Net salesOperating profitProfit attributable to owners of the parent

(Billions of yen)

3/23

IFRS

(First six months of years to March 31)

(Billions of yen)

Japanesestandards

1.51.5

1.5 0.2 -0.2 0.4

2018 2019

Japan

EMEAChina AP FX impact

Americas2.6

0.3 0.09

-0.8-0.6

-1.0

2018 2019

28.0

Gross profit on increased sales

SG&A expense increase

FX impact

+¥0.4 billion

R&D expense increase 28.5131.1 136.1

+¥5.0 billion

Lower gross profit due to a worsening cost of sales ratio

Increase in other income and expenses

4/23

Breakdown of Net Sales and Operating Profit

Note: FX impact excluded from sales by geographic region

Net Sales Operating Profit

(Billions of yen)

(First six months of years to March 31) (First six months of years to March 31)

321.9 325.4-2.6 2.4

-10.6

7.1

4.5

1.1 1.5

2018.3 2018.9

Cash and cash

equivalents

Property, plant and equipment

Intangible assets

+¥3.4 billion

Trade and other receivables

Other current assets

Other non-current assets

321.9 325.4

-9.4 11.7

1.3

2018.3 2018.9

Current liabilities

Non-current

liabilities

Retained earnings

Other equity

+¥3.4 billion

-0.1

Inventory

5/23

Breakdown of Assets and Liabilities/Equity

Assets Liabilities/Equity

(Billions of yen)

Current assets: Down ¥3.63 billion

Non-current assets: Up ¥7.13 billion

Liabilities: Down ¥9.59 billion

Equity: Up ¥13.09 billion

March 31, 2018 September 30, 2018 March 31, 2018 September 30, 2018

14.8

-9.2-5.3 -2.8

23.6

-21.7

-6.1 -2.8

19.4

-22.7

-7.2 -10.6

2017 2018 2019

Consolidated Cash Flows

6/23

*Includes translation differences on cash and cash equivalents.

Operating CF Investing CF Financing CFNet increase/decrease

in “cash and cash equivalents”*

(Billions of yen)


Sysmex Establishes Subsidiary in Egypt and Begins Conducting Direct Sales and Services (July)

Sysmex and JVCKENWOOD Jointly Establish Creative Nanosystems Corporation (August) RIKEN GENESIS Performs Sequencing Analysis for Todai OncoPanel (October)

Sysmex Launches New Products Using the OSNA™ Method: Gene Amplification Detector RD-200 and LYNOAMP™ CK19 (May)

Sysmex Launches HISCL™ Presepsin Assay Kit for Sepsis Testing (August) Sysmex America Opens “Center for Learning” Training Facilities for Customers (August) Sysmex Partec’s CyFlow™ Counter System Receives WHO Prequalification (August) Sysmex, Toppan Printing and Riken Genesis Commence Launch of LW-100 Gene

Measurement Analyzer (for Research Use) (August) Sysmex Launches New XS-Series Product for the China Market Employing the Knockdown

Production Method (September)

Sysmex Formulates the “Sysmex Eco-Vision 2025” (May) Sysmex Selected for Inclusion in the Dow Jones Sustainability World Index for the Third

Consecutive Year (September)

Management/Business

ESG

Products/Support Sysmex Egypt

Automated Hematology Analyzer XS-Series XS-500ix

Gene Amplification Detector RD-200

7/23

TopicsMonths indicate the dates of press releases issued by Sysmex.

Sales by Business and Product Type

Results Ratio Results Ratio

Hematology 84.5 62.1% 81.6 62.2% 103.6% 103.5%Urinalysis 9.4 6.9% 9.9 7.6% 95.2% 94.7%

HU Business 93.9 69.0% 91.5 69.8% 102.6% 102.5%Immunochemistry 6.2 4.6% 4.9 3.7% 128.0% 126.9%Clinical Chemistry 1.5 1.1% 1.4 1.1% 103.6% 104.0%Hemostasis 23.0 16.9% 21.7 16.6% 105.8% 104.9%

ICH Business 30.8 22.6% 28.1 21.5% 109.5% 108.7%

Core Businesses 124.7 91.6% 119.6 91.3% 104.3% 104.0%

FCM Business 0.7 0.5% 0.8 0.6% 86.8% 86.4%LS Business 4.6 3.4% 3.4 2.6% 135.0% 133.5%Others 0.0 0.0% - - - -

Next Core Businesses 5.3 4.0% 4.2 3.3% 126.1% 124.3%

6.0 4.4% 7.1 5.4% 84.2% 84.1%

136.1 100.0% 131.1 100.0% 103.9% 103.5%

Instruments 35.5 26.1% 38.3 29.2% 92.6% 92.3%Reagents 81.6 59.9% 73.5 56.1% 111.0% 110.6%

15.4 11.3% 14.9 11.4% 103.4% 103.4%Other 3.6 2.7% 4.3 3.3% 83.8% 83.1%

By product

type

Reference: YOY atprevious year's

rate

Others*

Total Net Sales

YOY (Previousperiod = 100%)

First six months of fiscal yearending March 31, 2019

First six months of fiscal yearended March 31, 2108

By business

Maintenance Services & Parts

(Billions of yen)

* Others: Clinical laboratory information systems, sales of third-party products, etc.

8/23

Net Sales by Geographic Region


March 31, 2019


March 31, 2018

YOY (Previous period =

100%)Results Ratio Results Ratio (Yen) (Local

currency)

Net Sales 136.1 100% 131.1 100% 103.9% -

Region

Americas 29.2 21.5% 28.6 21.8% 102.2% 103.0%

EMEA 37.0 27.2% 34.7 26.5% 106.6% 103.7%

China 36.1 26.6% 34.0 26.0% 106.2% 104.2%

AP 11.4 8.4% 11.4 8.7% 100.6% (101.7%)

Japan* 22.2 16.3% 22.3 17.0% 99.9% -

Net Sales by Geographic Region (Sales to External Customers)


March 31, 2019


１USD ¥110.3 ¥111.1１EUR ¥129.9 ¥126.3１CNY ¥16.8 ¥16.4

Exchange Rates

(Billions of yen)

38.5%

Percentage of Sales in Emerging Markets

Net sales:¥136.1 billion

38.8%

Net sales:¥131.1 billion

9/23

* Includes sales to IDEXX and other external customers


First six months of fiscal year ending March 31, 2019

20.8

26.5 26.3 28.6 29.2

1.3 1.2

1.7

2.9

1.5

2015 2016 2017 2018 2019

**

*

Geographic Segment Information: Americas


March 31, 2019


March 31, 2018

YOY (Previous period = 100%)(Yen basis) (Local currency

basis)

Sales 29.2 28.6 102.2% 103.0%

Operating profit* 1.5 2.9 52.2% 52.6%

(Billions of yen)

202.4 218.3

250.1 257.7 265.3

13.410.3

16.5

26.3

13.8

2015 2016 2017 2018 2019

*

*

*

Mill

ions

ofU

SD

**

*

IFRS

*

Sales were up due to higher sales of hematology reagents and hemostasis instruments in the United States, as well as increased sales of urinalysis new products in Central and South America.

Operating profit was down, as the impacts of a revision in intragroup transaction prices and higher SG&A expenses and service costs outweighed the rise in sales.

• United States: Sales rose, due to expansion of the installed instrument base, which pushed up hematology reagent sales, as well as higher sales of hemostasis instruments.

• Central and South America: Despite higher sales of urinalysis new products centered on Brazil, sales fell due to the ongoing impact of lower sales of hematology instruments.

10/23

Japanesestandards

Bill

ions

of y

en

Net sales Operating profit(First six months of years to March 31)

Net sales Operating profit*Revision in intragroup transaction prices


Local Currency Basis

IFRSJapanesestandards


March 31, 2019


March 31, 2018

YOY (Previous period = 100%)

(Yen basis) (Local currency basis)

Sales 37.0 34.7 106.6% 103.7%

Operating profit* 3.1 2.7 112.5% 109.4%

214.7 257.9 270.9 274.9 285.0

16.9 16.5 21.7 22.0

24.1

2015 2016 2017 2018 2019

Geographic Segment Information: EMEA*

(Billions of yen)

（単位：億円）

Mill

ions

ofE

UR

29.8 34.8

32.0 34.7 37.0

2.3 2.2 2.52.7

3.1

2015 2016 2017 2018 2019

*

*

*

*

*

*Europe, the Middle East and Africa

*

*

*

**

Despite depreciation in the value of emerging-market currencies, sales grew as a result of higher sales in the hematology and life science fields.

The sales increase pushed up gross profit and a revision in intragroup transaction prices caused the cost of sales ratio to improve, pushing up profit.

• Five major countries: Sales rose due to higher sales in France in the hematology field and the contribution of increased new product sales in Spain in the life science field.

• Eastern Europe, Russia: Despite depreciation of the Russian ruble, sales grew thanks to higher sales in the hemostasis field.

• Middle East, Africa: Sales grew, mainly due to increased hematology reagent sales stemming in Burkina Faso.

11/23

Bill

ions

of y

en



*Revision in intragroup transaction prices

Local Currency Basis



1,236.1

1,575.8 1,782.0

2,073.6 2,159.7

185.5 182.7

94.1

224.3

331.1

2015 2016 2017 2018 2019

Geographic Segment Information: China

（単位：億円）

20.6

30.6 28.4

34.0 36.1

3.0 3.5

1.4

3.6

5.5

2015 2016 2017 2018 2019

*

*

*

*


March 31, 2019


March 31, 2018

YOY (Previous period = 100%)(Yen basis) (Local currency

basis)

Sales 36.1 34.0 106.2% 104.2%Operating profit* 5.5 3.6 150.6% 147.6%

*

*

*

*

*

*

Despite lower instrument sales, sales in the region grew due to favorable expansion in the immunochemistry field and higher reagent sales in the hematology and hemostasis fields.

Although affected by a revision in intragroup transaction prices, operating profit surged due to an improved cost of sales ratio stemming from higher reagent sales.• Hematology: Although instrument sales decreased, sales in this field

rose due to favorable reagent sales.

• Hemostasis: Favorable performance in fibrin reagents pushed up sales.

• Urinalysis: Sales in this field dropped due to lower instrument sales in comparison with the corresponding period of the previous fiscal year, when the launch of a new product prompted a demand surge.

• Immunochemistry: Sales expanded, as reagent sales grew (centered on reagents for infectious disease), stemming from a higher installed instrument base.

12/23

Bill

ions

of y

en


Mill

ions

ofC

NY

Net sales Operating profit*Revision in intragroup transaction prices


(Billions of yen)



Despite the impact of a major tender acquisition in the same period of the previous fiscal year in South Asia, sales were flat due to higher sales in Southeast, Taiwan and South Korea.

Operating profit rose due to an improved cost of sales ratio, stemming from higher reagent sales, despite the impact of a revision in intragroup transaction prices and increased SG&A expenses.

• Southeast Asia: Sales rose due to increases centered on the hematology field in Thailand.

• South Asia: Sales declined in comparison with the same period of the preceding fiscal year, which when we acquired large tenders in India and Bangladesh.

• South Korea, Taiwan: Sales increased due to higher sales in the hematology field in Taiwan and South Korea.

Geographic Segment Information: AP（単位：億円）

7.5 8.5

9.7

11.4 11.4

0.7 0.9

1.0 1.1

1.4

2015 2016 2017 2018 2019


March 31, 2019


March 31, 2018

YOY (Previous period =

100%)(Yen basis)

Sales 11.4 11.4 100.6%*

Operating profit* 1.4 1.1 127.8%

(Billions of yen)

*

*

* Excluding the impact of exchange rates on currencies in the AP region, sales would have been up 1.7%.

*

13/23

Billions of yen

Net sales




Operating profit

19.0 19.2 21.0 21.1 20.9

1.2 1.9 1.2 1.1 1.3

34.2

45.1 45.9 49.6 47.7

54.5

66.368.2

72.0 70.0

12.6

21.6

17.6

19.317.5

2015 2016 2017 2018 2019

Geographic Segment Information: JapanFirst six months of fiscal year ending

March 31, 2019


March 31, 2018

YOY (Previous period

= 100%)Sales 70.0 72.0 97.3%

Sales to external customers

22.2 22.3 99.9%

Japan 20.9 21.1 99.0%IDEXX and others 1.3 1.1 116.1%

Intra-area transfers 47.7 49.6 96.1%

Operating profit* 17.5 19.3 90.7%

*

*

*

(Billions of yen)

**

Sales fell, despite higher reagent sales in Japan and a rise in sales to IDEXX, affected by the dissolution of a joint venture with bioMérieux and lower sales at affiliated companies overseas.

Operating profit decreased due to higher R&D expenses, as well as the impact of lower sales to affiliated companies overseas.

• Japan: Due to the impact of the dissolution of a joint venture with bioMérieux, sales fell despite rises in sales centered on the hematology, immunochemistry and life science fields.

• IDEXX and others: Sales of hematology instruments for animals to IDEXX were up.

14/23

Billions of yen


Intra-Area Transfers: Exports to Group Affiliates, Others

Sales to External Customers: IDEXX and Others

Sales to External Customers: Japan

Operating Profit



Chapter 2

Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2019

249.8 281.9

300.0

51.7 59.0 59.0

40.6 39.2 39.5

2017 2018 2019

Net sales Operating profit Profit attributable to owners of the parent(Fiscal years to March 31)

(Billions of yen)

(Up 6.4%)

(Up 0.7%)

(Down 0.1%)

16/23

Consolidated Earnings ForecastFigures in red have been revised subsequent to May 2018 announcement.Figures in parentheses are as announced in May 2018.

Net sales: ¥300.0 billion (¥310.0 billion)

Operating profit: ¥59.0 billion (¥62.0 billion)

Operating margin: 19.7%(20.0%)

Profit attributable to owners of the parent: ¥39.5 billion (¥42.5 billion)Profit attributable to owners of the parent to net sales: 13.2% (13.7%)

Planned Investment

Capital expenditure: ¥24.0 billion (Tangible only)

Depreciation and amortization: ¥17.0 billion

R&D expenditure: ¥19.5 billion

Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2019

Assumed Exchange Rates

Full Year(Announced in

May 2018)

Full Year(Revised in Nov. 2018)

Second Half(Revised in Nov. 2018)

Previous Year

(Fiscal year Ended March 31,

2018)

1 USD ¥110.0 ¥110.1 ¥110.0 ¥110.9

1 EUR ¥130.0 ¥129.9 ¥130.0 ¥129.7

１CNY ¥16.5 ¥16.6 ¥16.5 ¥16.8

(Revised Forecast)

Revised Earnings Forecast

Differences from Previous Forecast (Billions of yen)

Reasons for the RevisionsSales were lower than initially forecast, mainly in the Japan and EMEA regions. The lower-than-expected sales caused profit to fall below forecast. These factors, plus the recording of an exchange loss, caused net sales, operating profit, profit before tax and profit attributable to owners of the parent to fall below the previous forecast.

Previous forecast Current forecast(Revised November 2018) Change

Previous results(Fiscal year endedMarch 31, 2018)

Growthrate(Announced May 2018)

Ratio Ratio

Net sales 310.0 100.0% 300.0 100.0% -10.0 281.9 100.0% +6.4%

Operating profit 62.0 20.0% 59.0 19.7% -3.0 59.0 21.0% -0.1%

Profit attributable to owners of the parent 42.5 13.7% 39.5 13.2% -3.0 39.2 13.9% +0.7%

Assumed Exchange Rates

Full year(Announced May 2018)

Full year(Revised in Nov. 2018)

Second half(Revised in Nov. 2018)

Previous year’s results(Fiscal year ended March 31, 2018)

1USD ¥110.0 ¥110.1 ¥110.0 ¥110.91EUR ¥130.0 ¥129.9 ¥130.0 ¥129.71CNY ¥16.5 ¥16.6 ¥16.5 ¥16.8

17/23

Ratio

(Billions of yen)

Previous forecast

(Announced in May 2018)

Current forecast

(Announced in Nov. 2018)

Change(Against previous

forecast)

Percentagechange

(Against previousforecast)

Fiscal year ended March

31, 2018

Net sales 310.0 300.0 -10.0 -3.2% 281.9

Region

Americas 68.5 66.6 -1.9 -2.8% 62.5

EMEA 83.7 79.7 -4.0 -4.8% 75.5

China 81.0 80.0 -1.0 -1.2% 72.0

AP 26.9 25.2 -1.7 -6.3% 24.4

Japan 49.9 48.5 -1.4 -2.8% 47.4

Full year(Announced May 2018)

Full year(Revised in Nov. 2018)

Second half(Revised in Nov. 2018)

Previous year’s results

(Fiscal year ended March 31, 2018)

１USD ¥110.0 ¥110.1 ¥110.0 ¥110.9１EUR ¥130.0 ¥129.9 ¥130.0 ¥129.7１CNY ¥16.5 ¥16.6 ¥16.5 ¥16.8

18/23

Revised Earnings Forecast for the Fiscal Year Ending March 31, 2019 (by Geographic Region)

Lower Instrument Sales: Reasons and Countermeasures

Main Reasons Countermeasures

・ Lengthening instrument upgrade cycle・ Delayed launch of new products

caused by an initial failure (XW-100 and automated hematology slide preparation unit)

・ Increasingly severe competition from local companies in China

Promote demand for instrument upgrades・ Provide added value through XN (new function + CaresphereTM)・ Accelerate development of next-generation instruments

Hematology

・ Delayed US launch of UN Series・ Falling sales by alliance partners

(United Kingdom, France)

Urinalysis

・ Decreasing sales by alliance partners (mainly in EMEA)

・ Falling unit sales in China

Hemostasis

・ Delay of reserving WHO prequalification for EHC products

FCM

Reinforce sales promotions of new products・ Enhance competitive strength by launching transport products (China)

(XN-1500, includes automated hematology slide preparation unit)・ Recommence sales of the XW-100 (US）

Reinforce sales promotions in the Chinese market・ Expand knockdown production and enter middle and lower market

Augment sales promotion in the FCM field・ Enhance sales promotion by obtaining WHO-PQ (prequalification)

(obtained in August 2018)

Reinforce sales activities・ Deliberate sales measures with alliance partners・ Deliberate sales measures with distributors to reinforce sales activities in China

Strengthen regulatory application activities and sales structure・ Continue efforts to obtain FDA approval for the UC-3500, urine chemistry

analyzer (US)・ Commence direct sales and service in France and the United Kingdom (from

the second half)

19/23

Others (Special factors)・ Impact from dissolution of a joint

venture with bioMérieux・ Falling sales of third-party products(mainly in EMEA)

Test results

Quality control data

Instrument logs

We will gradually make it possible to connect instruments in fields other than hematology.

Caresphere

Inputs Data Aggregation, Management, Analysis Value Provided

Applications

Platforms

Lab management

Operations management

Quality management

Clinical support

CaresphereTM

Providing a New Network Solution

Convert data to valuable information(New Business Model)

Test operation records

We plan to gradually add applications.Depending on type, apps can be made fee-based (item billing, etc.)

Globally standardized platforms using IoT and the cloud

Lower healthcare costs(Higher lab productivity)

Reduced patient burden(Shorter waiting time)

Higher diagnostic precision(Clinical suggestions)

Healthcare collaboration(Standardization of testing data)

20/23

LaboratoryHematology

Hemostasis

Others

XN (new function), etc.

Electronic medical chartsand others

Medical careinformation system

21/23

No change from our initial forecast at the beginning of the year

Dividend Forecast

Proposal corresponds to 17th consecutive year of increases

Interim dividend

Year-end dividend Total Dividend

ratio

Initial forecast for fiscal year ending March 31, 2019

¥34 ¥34 ¥68 35.9%

3.125 3.75 5 6.5 912 12.5 14 15 17

20 2738

5258

66 68

18.9%22.6%

17.8% 17.9% 20.0%26.8%

31.9% 29.4%27.0% 29.1% 29.1% 27.1% 29.6%27.5% 29.7%

35.1% 35.9%

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Dividend (annual) retroactively converted tobasis following stock split on April 1, 2014

Dividend payout ratio (consolidated)

(Forecast)

(Yen)

22/23

Notes: Two-for-one stock split conducted on November 18, 2005Two-for-one stock split conducted on April 1, 2011Two-for-one stock split conducted on April 1, 2014

Dividend Increases for the 17th Consecutive Year (Forecast for the Fiscal Year Ending March 31, 2019)

Sysmex aims to maintain a proper balance between aggressive investment, which is designed to sustain steady high growth, and returns to our shareholders as our earning power increases. In terms of returns to shareholders, we intend to provide a stable dividend on a continuous basis and aim for a consolidated payout ratio of 30% under our basic policy of sharing the successes of our operations in line with business performance.

Note: Figures are according to IFRS from the fiscal year ended March 31, 2016

(Fiscal years to March 31)

Forward-Looking StatementsThis material contains forward-looking statements about Sysmex Corporation and its Group companies (the Sysmex Group). These forward-looking statements are based on the current judgments and assumptions of the Sysmex Group in light of the information currently available to it. Uncertainties inherent in such judgments and assumptions, the future course of our business operations and changes in operating environments both in Japan and overseas may cause our actual results, performance, achievements, or financial position to be materially different from any future results, performance, achievements or financial position either expressed or implied within these forward-looking statements.

Contact:IR & Corporate Communication Dept.Corporate Communication Div.Phone: +81-78-265-0500Email: [email protected]/en

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