Getinge Ab Class B · OMXSTO:GETI_B
Getinge Ab Class B — Investor Day (September 2015)
81 slides from Getinge Ab Class B's investor day presentation, Sep 2, 2015
Slide 1: Getinge Group Capital Markets Day 2015
Getinge Group Capital Markets Day 2015
Slide 2: Transformation to One Getinge
Transformation to One Getinge Alex Myers, President & CEO Capital Markets Day 2015, September 2, 2015
Slide 3: Intense work during my first 5 months
Intense work during my first 5 months Forming a 360° view of Getinge • Extensive internal and external views of Getinge collected • Management and employee interaction • Review of ongoing and planned initiatives • Validation and stress test of the business strategy
Slide 4: We have the right strategy but we have not been able to execute
Intense work during my first 5 months My conclusions We have the right strategy but we have not been able to execute it We have the right people but a complex organization We have a clear margin challenge and need a tangible plan to address it We have significant opportunities and potential
Slide 5: Transformation to One Getinge: key highlights today
Transformation to One Getinge Actions required Key highlights today: • Announcement of an improvement program of SEK 2.5-3 billion by 2019 • Announcement of a new product structure and go-to-market model that mirrors the healthcare value pathways to reignite organic growth • Announcement of a major
Slide 6: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS
Slide 7: A fantastic legacy with extraordinary value creation
A fantastic legacy with extraordinary value creation Revenue SEK billion 30 25 20 15 10 5 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 * ** * Siemens LSS Division ** Cardiac Surgery and Vascular Surgery division of Boston Scientific
Slide 8: A truly global company
A truly global company 1 6 OO Talented Employees in over AO countries Global footprint Market Leading positions
Slide 9: Trends in the healthcare industry
Trends in the healthcare industry A changing customer landscape Increasing demands … Increasing challenges … • Proof of clinical value combined with • Centralization of customer decision-making economic value • Intensified consolidation among healthcare • Patient-centric healthcare models providers
Slide 10: Strategic Cornerstones
A strategy designed to position Getinge for profitable growth in the new healthcare environment Strategic Cornerstones 1 Documented value creation 2 Strengthen the sales model 3 Expansion in emerging markets 4 Supply chain excellence 5 Utilize and leverage synergies through increased collaboration 6
Slide 11: Strategic Cornerstones: reposition for higher organic growth
A strategy designed to position Getinge for profitable growth in the new healthcare environment Strategic Cornerstones Reposition for higher organic growth: 1 Documented value creation • Develop a unique offering that demonstrates 2 Strengthen the sales model clinical and economic value 3 Expansion
Slide 12: Strategic Cornerstones: increase competitiveness and efficiency
A strategy designed to position Getinge for profitable growth in the new healthcare environment Strategic Cornerstones Increase competitiveness and efficiency 1 Documented value creation • Create a supply chain that reflects future market 2 Strengthen the sales model conditions through footprint opt
Slide 13: Strategic Cornerstones: continued focus on acquisitions
A strategy designed to position Getinge for profitable growth in the new healthcare environment Strategic Cornerstones Continued focus on acquisitions: 1 Documented value creation • Increase exposure to therapeutic and 2 Strengthen the sales model recurring revenue streams 3 Expansion in emerging ma
Slide 14: Past three years' performance shows we have not executed our strategy
Past three years’ performance shows that we have not been able to execute our strategy Performance stagnation in the past three years • Organic growth below expectations (2014: 0.6%) • EBITA margin dropped almost 4 percentage points since 2011 • Regulatory challenges within Medical Systems
Slide 15: Inherent complexity has inhibited change and efficiency
We have the right strategy, but inherent complexity has inhibited change and efficiency Execution capabilities Getinge’s disaggregated model makes it difficult to execute common priorities and initiatives Limited economies of scale Getinge’s disaggregated model makes it difficult to gain scale advan
Slide 16: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS
Slide 17: Performance Improvement Plan: three building blocks
Performance Improvement Plan Three building blocks to restore profitable growth RESTORE MARGINS REIGNITE GROWTH THE 'BIG 5' THE 'BIG 5' ENABLE EXECUTION
Slide 18: The Big 5 – SEK 2.5-3 billion improvement program
The Big 5 – our SEK 2.5-3 billion improvement program THE BIG 5 Restoring profit margins LEAN SUPPORT INDIRECT SPEND DIRECT SPEND PORTFOLIO COMMERCIAL & ADMINISTRATION OPTIMIZATION REDUCTION SIMPLIFICATION EXCELLENCE
Slide 19: Restoring profit margins: lean support and administration
The Big 5 - Restoring profit margins Lean support and administration To leverage scale - From a group of companies to One Getinge • Delayering and simplifying structure • Backbone consolidation • Process harmonization • Shared services
Slide 20: Restoring profit margins: indirect spend optimization
The Big 5 - Restoring profit margins Indirect spend optimization Consolidation and implementation of strategic sourcing of indirect spend • Consolidate supplier base • Leverage spend categories as one company • Negotiate centrally • Manage demand and behavior
Slide 21: Restoring profit margins: direct spend reduction
The Big 5 - Restoring profit margins Direct spend reduction Reduction of direct spend through LCC sourcing, consolidation and complexity reduction • Consolidate supplier base • Increase share of LCC sourcing • Reduce component complexity across products • Consolidate responsibility and strengthen bu
Slide 22: Restoring profit margins: portfolio simplification
The Big 5 - Restoring profit margins Portfolio simplification Rightsizing of product portfolio • Profitability transparency • Discontinue unprofitable products • Eliminate unnecessary options/product variations that do not demonstrate customer value
Slide 23: Restoring profit margins: commercial excellence
The Big 5 - Restoring profit margins Commercial Excellence A comprehensive set of ComEx initiatives globally • Improve customer segmentation and prioritization • Focus on leveraging the total Getinge portfolio • Optimize sales and service mix • Improve discount management according to customer class
Slide 24: Production footprint as a potential sixth theme
In addition to The Big 5, our production footprint is a strong potential sixth theme to further improve performance in the mid-long term
Slide 25: Production footprint – an additional key performance lever
Production footprint – an additional key performance lever in the mid-long term perspective • Historically no common approach has been taken • 28 sites globally • First steps already in place Extended Care – from 15 to 5 factories Infection Control – 10 factories, restructuring program ongoing Medic
Slide 26: Five minute break
Five minute break \ /
Slide 27: Reigniting organic growth by mirroring continuum of care
Reigniting organic growth by mirroring our customers’ continuum of care CUSTOMER-CENTRIC VALUE Reignite organic growth CUSTOMER-CENTRIC INNOVATION BASED INCREASE TOTAL PORTFOLIO CONTINUED FOCUS BUSINESS ON CUSTOMER EXPOSURE IN US APPROACH ON ACQUISITIONS CATEGORIES VALUE AND EM
Slide 28: Value proposition mirrors the continuum of care
Customer-centric: Getinge has a unique value proposition that mirrors the continuum of care Enable Surgeries Treat Acute Health Conditions Care During Recovery
Slide 29: Sales structure that mirrors healthcare value pathways
Customer-centric: A sales structure that mirrors the healthcare value pathways CUSTOMER NEEDS GETINGE SALES FORCE CUSTOMER CALL-POINT Chief surgeon A structure that follows the ENABLE Surgical Hospital Purchasing customers’ value pathways surgeries Workflows Organization allows the sales force to be
Slide 30: Product portfolio that mirrors the healthcare value pathways
Customer-centric: Product portfolio that mirrors the healthcare value pathways Surgical Workflows Acute Care Therapies Patient & Post-Acute Care Unique offering Broader offering Complete offering Infection Surgical control Workplaces Cardiac Pulmonary Vascular Recovery Mobility Hygiene > Combines ca
Slide 31: Product portfolio that mirrors the healthcare value pathways
Customer-centric: Product portfolio that mirrors the healthcare value pathways Surgical Workflows Acute Care Therapies Patient & Post-Acute Care Unique offering Broader offering Complete offering Infection Surgical control Workplaces Cardiac Pulmonary Vascular Recovery Mobility Hygiene > Combines ca
Slide 32: Product portfolio that mirrors the healthcare value pathways
Customer-centric: Product portfolio that mirrors the healthcare value pathways Surgical Workflows Acute Care Therapies Patient & Post-Acute Care Unique offering Broader offering Complete offering Infection Surgical control Workplaces Cardiac Pulmonary Vascular Recovery Mobility Hygiene > Combines ca
Slide 33: Total portfolio approach to customers
Total portfolio approach: Sales region leadership and key account teams will focus on bringing the total portfolio to our customers 1. Sales region leadership to improve coordination Sales region leadership Sales divisions will be responsible for bringing the total portfolio to customers in the mark
Slide 34: Reigniting organic growth by mirroring continuum of care
Reigniting organic growth by mirroring our customers’ continuum of care CUSTOMER-CENTRIC VALUE Reignite organic growth INNOVATION BASED INCREASE CONTINUED FOCUS ON CUSTOMER EXPOSURE IN US ON ACQUISITIONS VALUE AND EM
Slide 35: Customer-centric value: focus going forward
Customer-centric value Focus going forward INNOVATION BASED ON INCREASE EXPOSURE IN US CONTINUED FOCUS ON CUSTOMER VALUE AND EM ACQUISITIONS > Assess innovation pipeline to > Investigate how to rebalance > Investigate acquisition to: ensure focus on customer-driven regional exposure to match growth
Slide 36: Organize to win: One Getinge
One Getinge – remove structural boundaries for performance improvement ORGANIZE TO WIN ORGANIZE TO WIN Enabling execution and results
Slide 37: From a holding-like structure to active management model
From a holding-like structure to a less complex active management model FROM… TO… Full autonomy in the business areas and no Full focus on key levers to prepare for a new commercial coordination to leverage positions / capture synergies reality and to restore growth and profitability Strategic Opera
Slide 38: Organized to follow the functional logic of key value levers
Organized to follow the functional logic of key value levers… CEO Quality/Regulatory HR Finance* Communications Alex Myers /Compliance Supply Chain Surgical Workflows EMEA Acute Care Americas Therapies Patient & Post- Asia/Pacific Acute Care > Supply Chain > Business Category Units > Sales Regions D
Slide 39: Enablers of execution of The Big 5 and customer centricity
… And thereby effectively enable execution of The Big 5 and the Customer Centricity LEVERS THE BIG 5 CUSTOMER CENTRICITY MARGIN RESTORATION GROWTH One Supply Chain Synergies Competitiveness in terms of cost, quality > Supply Chain Cost Leadership and delivery times ENABLERS Market and product portfo
Slide 40: New management from January 1, 2016
New management from January 1, 2016 Built from the inside Quality Regulatory HR Finance CEO Communications Compliance Andreas Quist Ulf Grunander Alex Myers Kornelia Rasmussen Lena Hagman Supply Chain Surgical Workflows EMEA Reinhard Mayer Joacim Lindoff Carsten Blecker Acute Care Therapies Americas
Slide 41: New management: Supply Chain
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Reinhard Mayer Alex Myers Compliance Kornelia Rasmussen Supply Chain Lena Hagman Current position: CFO Medical Systems Supply Chain Surgical Workflows EMEA Reinhard Mayer Joacim Lindoff C
Slide 42: New management: Surgical Workflows
New management from January 1, 2016 Quality Regulatory HR Finance CEO IR / Communication Andreas Quist Ulf Grunander Alex Myers Joacim Lindoff Kornelia Rasmussen Compliance Lena Hagman Surgical Workflows Current position: Executive Vice President Infection Control Supply Chain Surgical Workflows EME
Slide 43: New management: Acute Care Therapies
New management from January 1, 2016 Quality Regulatory HR Finance CEO IR / Communication Andreas Quist Ulf Grunander Alex Myers Heinz Jacqui Compliance Kornelia Rasmussen Lena Hagman Acute Care Therapies Current position: Executive Vice President Medical Systems Supply Chain Surgical Workflows EMEA
Slide 44: New management: Patient & Post-Acute Care
New management from January 1, 2016 Quality Regulatory HR Finance CEO IR / Communication Andreas Quist Ulf Grunander Alex Myers Felix Lara Compliance Kornelia Rasmussen Lena Hagman Patient & Poste-Acute Care Current position: SVP, Global Marketing & New Business Supply Chain Surgical Workflows EMEA
Slide 45: New management: EMEA
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Carsten Blecker Alex Myers Compliance Kornelia Rasmussen LenaAfrica Europe, Middle East and Hagman Current position: President WEMEA Medical Systems & President Middle Supply Chain Surgic
Slide 46: New management: Americas
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Raoul Quintero Alex Myers Compliance Kornelia Rasmussen Americas Lena Hagman Current position: President and CEO MAQUET North America & Interim Supply Chain Surgical PresidentWorkflows an
Slide 47: New management: Asia Pacific
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Paul Lyon Alex Myers Compliance Kornelia Rasmussen Asia Pacific Lena Hagman Current position: President International Emerging Markets, Supply Chain Surgical Workflows ArjoHuntleigh and M
Slide 48: New management: Human Resources
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Andreas Quist Ulf Grunander Alex Myers Compliance Kornelia Rasmussen Human Resources Lena Hagman Current position: Executive Vice President Human Resources & Supply Chain Sustainability GetingeSurgical
Slide 49: New management: Finance
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Ulf Grunander Alex Myers Compliance Kornelia Rasmussen Finance Lena Hagman Current position: CFO Getinge Group Supply Chain Surgical Workflowsinclude: CV highlights EMEA Reinhard Mayer Jo
Slide 50: New management: Quality Regulatory Compliance
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Lena Hagman Ulf Grunander Alex Myers Compliance Kornelia Rasmussen Quality Regulatory Compliance Lena Hagman Current position: SVP Quality & Regulatory Compliance, Getinge Group Supply Chain Surgical W
Slide 51: New management: Communications
New management from January 1, 2016 Quality Regulatory HR Finance CEO Communications Andreas Quist Ulf Grunander Kornelia Alex Myers Rasmussen Compliance Kornelia Rasmussen Lena Hagman Communications Current position: Head of Group Communications, Getinge Group Supply Chain Surgical Workflows EMEA R
Slide 52: Summary: true step-change to restore performance
Summary True step-change to restore performance One company Today • Restoring profitability by implementing one Group of company structure to leverage scale companies • Sales force and product portfolio that mirrors the customer continuum of care • Scale and global presence through • Reigniting or
Slide 53: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS
Slide 54: The transformation is a three to four-year turnaround program
The transformation is a three to four-year turnaround program H2 2015 2016 2017 2018 2019 Global Regional National
Slide 55: Transformation program initiated and early achievements visible
Transformation program already initiated and early achievements are visible RESTORE MARGINS REIGNITE GROWTH EXECUTION ENABLER THE 'BIG 5' THE 'BIG 5' Indirect sourcing ongoing with first Emerging markets Group approach First level of organizational design in place impact visible launched New
Slide 56: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS
Slide 57: Financial targets 2016-2019
Financial targets 2016-2019 Excluding acquisitions TOP-LINE EBITA RETURN ON CASH GROWTH* GROWTH** EQUITY CONVERSION 2-4% > 10% > 15% > 70% Annually Annually Within the Within the period period * Organic ** EBITA result before restructuring and acquisitions
Slide 58: New dividend policy
New dividend policy Getinge’s Board of Directors has adopted a dividend policy based on the principle that future dividends will be adjusted in line with Getinge’s profit level, financial position and future development opportunities. The aim is for the dividend to correspond to 30-50% of net income
Slide 59: Fifteen minute coffee break
Fifteen minute coffee break Jah
Slide 60: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS
Slide 61: Financials 2016-2019: Healthy financial recovery
Financials 2016-2019 Healthy financial recovery Ulf Grunander, CFO
Slide 62: Financial targets 2016-2019
Financial targets 2016-2019 Excluding acquisitions TOP-LINE EBITA RETURN ON CASH GROWTH* GROWTH** EQUITY CONVERSION 2-4% > 10% > 15% > 70% Annually Annually Within the Within the period period * Organic ** EBITA result before restructuring and acquisitions
Slide 63: EBITA improvement of SEK 2.5-3 billion by 2019
The Big 5 Performance Improvement Plan EBITA improvement of SEK 2.5-3 billion by 2019 ~50% ~15% ~15% Enabler for supply ~15% chain efficiency improvements Lean Support & Indirect Spend Direct Spend Portfolio Commercial Administration Optimization Reduction Simplification Excellence S&A S&A / Net sal
Slide 64: Timeline for realization of The Big 5 improvements
Timeline for realization of The Big 5 improvements % of total EBITA impact realized by year 100% ~80% ~40% ~10% 2016 2017 2018 2019 Comments • Quick wins from indirect sourcing and commercial excellence already in 2016 • Majority of expected impact in 2017 and 2018 • Full realization of The Big 5 in
Slide 65: Restructuring costs 2015-2019
Restructuring costs 2015-2019 (MSEK) Restructuring charge to P&L Restructuring paid 1 000 800 600 400 200 0 540 800 800 630 480 750 110 480 100 150 2015 2016 2017 2018 2019 Comments • No additional restructuring costs relating to FDA consent decree charged after 2015 • The Big 5 initiatives adding S
Slide 66: Key ratios 2016-2019
Key ratios 2016 - 2019 MSEK 2014/2015E 2016/2017E 2018/2019E Avg. Avg. Avg. Cash conversion 69% 74% 73% Net debt/EBITDA ~4.3x ~3.0x ~1.5x Return on equity 8.5% 12.0% 15.0% Earnings per share (SEK) ~6.5 ~10.0 ~18.0 Comment • Tax rate estimated at 27.0 %
Slide 67: Currency effects 2014-2016
Currency effects 2014-2016 Estimated annual currency effects MSEK 2014 2015 2016 Translation +150 +230 Hedging -200 -240 +200 Comment • Currency rates from 2016 and onward assumed to be on par with 2015 rates
Slide 68: Capital expenditures
Capital expenditures Capital expenditures stable at approx. 3% of revenues Capital expenditures (MSEK) Comments 1 200 Stable capital expenditures investments expected going forward 1 000 Value expected to approach ~3% of 800 revenues in the long term 600 Planned IT/IS investments of SEK 400 ~1
Slide 69: External working capital & cash conversion
External working capital & cash conversion Capital efficiency expected to continue to improve year-on-year Working capital days Cash conversion 120 85% 80% 75% 100 70% 65% 60% 80 55% 2013A 2014/2015 2016/2017 2018/2019 2013A 2014/2015 2016/2017 2018/2019 Averages Averages Comments 112 days in 2013
Slide 70: Funding maturity profile 2015-2019
Funding maturity profile 2015-2019 Healthy funding portfolio from a wide variety of sources Financial liabilities maturity 2015-2019 (SEK billion) drawn undrawn 10,0 8,0 6,0 4,0 2,0 0,0 2015 2016 2017 2018 >2019 Comment 2018: Syndicated bank loan and Swedish bond loan are maturing, refinancing wil
Slide 71: Getinge Group
GETINGE GROUP
Slide 72: Net debt
Net debt Improving net debt position and favorable funding conditions Net debt and funding cost data 2014/2015E 2016/2017E 2018/2019E Avg. Avg. Avg. Net debt YE (b) ~22.0 ~19.0 ~15.0 Net debt/EBITDA ~4.3x ~3.0x ~1.5x Avg. interest rates 3.1% 2.8% 2.5% Hedge ratio ~70% ~70% ~45% Financial net (M) -70
Slide 73: Summary
Summary • Improved profitability • Stronger cash flow • Deleverage balance sheet
Slide 74: Financial communication: Reporting structure
Financial communication Reporting structure
Slide 75: Functional organization and segment reporting
Reporting structure Functional organization and segment reporting A pragmatic solution with a customer-need segment approach • The three Business Category Units as reporting segments + Corporate functions • Surgical Workflows • Acute Care Therapies • Patient & Post-Acute Care • Corporate functions •
Slide 76: Functional organization and segment reporting
Reporting structure Functional organization and segment reporting Surgical Acute Care Patient & Post- Corporate Total Workflows Therapies Acute Care functions Getinge Group Net sales, SEK M Adj. for x-rates, acquisitions and divestments Gross Profit Gross margin, % Operating costs, SEK M EBITA befor
Slide 77: Getinge today, performance improvement plan, transformation roadmap
1 GETINGE TODAY 2 PERFORMANCE IMPROVEMENT PLAN 3 TRANSFORMATION ROADMAP 4 NEW FINANCIAL TARGETS 5 FINANCIALS 6 NEXT STEPS & OUTLOOK 2015
Slide 78: The next steps
The next steps • Focus on organizational design • Securing implementation • Continued customer focus
Slide 79: Outlook 2015
Outlook 2015 Remains unchanged • Organic revenue growth is expected to improve in 2015 • The outcome of the ongoing discussions with the US FDA is expected to have a negative financial impact of approx. SEK 500 M on operating profit for 2015. • FX effects are expected to negatively impact 2015 pre-t
Slide 80: Summary
Summary • The strategy is right • One Getinge • Mirror the customer continuum of care • Transformation journey
Slide 81: Getinge Group
GETINGE GROUP