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Japan's Terumo now tracking record full-year profit

TOKYO -- Terumo's operating profit will likely climb 7% to a record 70 billion yen ($582 million) in the current fiscal year through March, helped by the weak yen and brisk demand overseas for catheters.

     This would mark the medical equipment company's first record operating profit in seven years.     

     Sales are projected to grow 4% to 488 billion yen, driven by the strong performance of the cardiac and vascular business. Lately, pricier catheters used in cardiovascular surgeries have been growing, instead of lower-priced diagnostic devices that have been traditional main sellers.

     Treatment using catheters, common in Japan, is now being broadly adopted in Europe and the U.S. Many health care providers abroad are turning to Terumo's products, which minimize the burden on the patient and have solid track records in Japan.

     The weak yen is amplifying the positive effects. Terumo had assumed an exchange rate of 100 yen per dollar for this fiscal year. But for the nine months through December, the actual rate averaged around 107 yen per dollar. With the cardiac and vascular business heavily reliant on exports, the softer yen is expected to boost operating profit by some 2 billion yen for the full year.

     At the start of this fiscal year, Terumo had anticipated a 2% profit decline to 64 billion yen, in light of a cut in government-set prices of medical equipment in Japan and heavy costs for strengthening production management in the U.S.

     But brisk overseas earnings will more than make up for the negatives. The last time it posted a record profit, in fiscal 2007, overseas operations accounted for a little less than 50% of overall sales. But the rate will likely reach some 62% this fiscal year.

     The general hospital equipment business, which provides syringes and other products with broad applications, will also see improved profitability. Last fiscal year, the segment's profit fell as sales languished for some products. But this fiscal year, efforts to shift production overseas and narrow down the customer base are paying off. High-margin contract production of drugs and blood-sugar measurement devices for other companies will also contribute.

     With the business handling blood-related equipment also doing well, all three main segments may see profit growth this fiscal year.

(Nikkei)

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