Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — Investor Day (2014)
21 slides from Coloplast A/s Class B's investor day presentation, 2014
Slide 1: Value creation
Value creation Coloplast Capital Market Day 2014 Lene Skole, CFO Page 1
Slide 2: Today we announce our new long-term guidance
Today we announce our new long-term guidance Revenue growth EBIT margin - annual organic - - annual expansion - 7 – 10% 0.5 – 1.0% Page 2
Slide 3: Our new guidance rests on two strong pillars and a stable foundation
Our new guidance rests on two strong pillars and a stable foundation... Value creation Organic Scalable commercial business potential model Stable and attractive market fundamentals Page 3
Slide 4: Let's take a look at how we intend to drive value creation
Let’s take a look at how we intend to drive value creation Page 4
Slide 5: We have a structured approach to value creation
We have a structured approach to value creation Coloplast value driver framework High level overview Shareholder value Economic profit A B C D Revenue Operating Asset WACC growth profitability efficiency (gearing) Geographies Fixed Working EBIT Tax Business assets capital areas Price Volume Mix COGS
Slide 6: We can accelerate volume growth while managing price pressure
A We can accelerate volume growth while managing price pressure Market (all-else-equal) Coloplast efforts Net effect on Coloplast Volume Mid single Share High single digit growth gains digit growth Price ~1% < ~1% price Price price pressure optimization pressure Mix Ongoing Relatively Up value uncha
Slide 7: Our portfolio will continue to be dominated by Chronic Care
A Our portfolio will continue to be dominated by Chronic Care, but with a more balanced geographical footprint Coloplast revenue by business area Coloplast revenue by region In percent In percent WSC Emerging Markets UC Other developed markets 120 120European markets CC OC 100 100 100 100 100 100 13
Slide 8: Our investments will allow us to shift our growth momentum
A Our investments will allow us to shift our growth momentum Coloplast organic revenue growth 14 In percent 12 10 • World’s best products ~9 • Close consumer relations 8 7 • Geographical expansion 6 6 4 Market growth 4 - 5% 2 0 08/09A 12/13A 13/14E Long term Source: Coloplast annual reports Page 8
Slide 9: We see annual margin expansion potential of 0.5-1.0%
B We see annual margin expansion potential of 0.5-1.0% over the coming 3-5 years... Coloplast EBIT margin • Revenue growth In percent • Scalability • Cost discipline 34 33-34 32 29 24 19 16 14 08/09A 12/13A 13/14E Long term Source: Coloplast annual reports Page 9
Slide 10: ...deriving from scalability in our cost functions
B ...deriving from scalability in our cost functions Cost item Development Outlook Outlook As reported Percentage of revenue Scalability potential Investments requirements COGS 42.1 32.3 High Medium 0 08/09 12/13 Distribution 30.4 28.4 Medium High 0 08/09 12/13 Admin 7.0 4.5 High Low 0 08/09 12/13 R
Slide 11: Three things to drive further gross margin uplift
B Three things to drive further gross margin uplift: scalability, efficiency improvements and decreasing amortisations 1) Scalability in our Global Operations setup 1 Leverage fixed/semi-fixed overhead cost components 2) Efficiency improvements 2 Supply chain Production (pilot-to-volume ramp u
Slide 12: We currently invest to grow – especially in sales force
B We currently invest to grow – especially in sales force and expansion outside Europe Sales investments by type 12/13 to Q2 13/14 Sales investments by area 12/13 to Q2 13/14* Other Europe 15% 20% Consumer programs Other Emerging Sales force Developed 25% 60% Markets Markets 60% 20% * HQ investments
Slide 13: Our transfer pricing model makes for relatively predictable taxation
B Our transfer pricing model makes for relatively predictable taxation Coloplast taxation in perspective Reported tax rate (%) Coloplast taxation rates expected to Paid tax rate (%)* 30 decline due to lowering of DK tax rates 28 +80% of Coloplast taxes paid in DK 27.1 26 25.2 DK statutory corpor
Slide 14: Our operating setup only requires moderate capital expenditures
C Our operating setup only requires moderate capital expenditures... 9 Coloplast CAPEX (PPE*) in perspective 1600 8 CAPEX (mDKK) CAPEX/revenue (%) ~4% CAPEX-to-sales going forward 1400 7 CAPEX needed regularly for machine Depreciation/revenue (%) building and factory expansions 1200 6 5.5 Nyirba
Slide 15: ...and our business model has stable working capital requirements
C ...and our business model has stable working capital requirements Coloplast working capital in perspective Operating working capital to sales (%)* 35 Cash conversion cycle (days)** Stable working capital going forward 150 33 Relatively predictable recurring business 140 31 129 DSO ~60 days: Hi
Slide 16: Our growth agenda is fully funded via our strong cash flow
D Our growth agenda is fully funded via our strong cash flow – significant new debt will only be considered in case of M&A Coloplast financial gearing in perspective Net interest bearing debt / EBITDA (x)* Interest bearing debt / Total assets (%)** Unleveraged balance sheet – all else 40 4.5 equal –
Slide 17: That's how we intend to drive value creation – how about cash flow?
That’s how we intend to drive value creation – how about cash flow? Page 17
Slide 18: Our scalable business model means high and stable cash conversion
Our scalable business model and a strategic focus on organic growth means high and stable cash conversion... Coloplast cash flow generation 160 10 FCF (bDKK) 140 9 EBIT (bDKK) Conversion of EBIT to FCF (%) 8 120 Continued 7 100 102 6 80 strong cash flow 5 74 70 72 74 60 4 3.7 generation 3 40 2.7 2 1
Slide 19: ...which we aim to translate into attractive cash returns to our investors
...which we aim to translate into attractive cash returns to our investors Coloplast cash distribution to investors Cash payouts (bDKK) 8 110 FCF (bDKK) Conversion of FCF to cash payouts (%) 7 97 * 90 Continued 6 70 5 50 62 60 58 strong cash return 4 30 20 2.7 to investors 3 10 1.5 2.6 * 2 -10 1 0.3
Slide 20: In sum, Coloplast offers...
In sum, Coloplast offers... ...continued value creation ...stabile cash returns ...attractive risk profile Page 20
Slide 21: Our mission
Our mission Making life easier for people with intimate healthcare needs Our values Closeness... to better understand Passion... to make a difference Respect and responsibility... to guide us Our vision Setting the global standard for listening and responding = Coloplast