Slide 1: Leading intimate healthcare – Roadshow presentation 2015/16
Leading intimate healthcare Roadshow presentation 2015/16
Slide 2: Forward-looking statements
Forward-looking statements The forward-looking statements contained in this presentation, including forecasts of sales and earnings performance, are not guarantees of future results and are subject to risks, uncertainties and assumptions that are difficult to predict. The forward-looking statements
Slide 3: Coloplast delivered 2015/16 7% organic growth and 34% EBIT margin in constant currencies
Coloplast delivered 2015/16 7% organic growth and 34% EBIT margin in constant currencies Highlights Revenue growth +7% • Organic revenue growth of 7% and 6% in Reported revenue (DKKm) +6% DKK Organic growth 14,681 13,909 − For Q4, organic revenue growth of 7% Reported growth +7% and 3% in DKK +3% •
Slide 4: 2015/16 organic growth was 7% against a market growth of 4-5%
2015/16 organic growth was 7% against a market growth of 4-5% 2015/16 revenue by business area 2015/16 revenue by geography Business Reported revenue Organic growth Share of growth Geographic Reported revenue Organic growth Share of growth area DKKm In percent In percent area DKKm In percent In perc
Slide 5: Ostomy Care grew 9% in 2015/16 driven by SenSura range and Brava accessories
Ostomy Care grew 9% in 2015/16 driven by SenSura® range and Brava® accessories Performance Comments 11 • 2015/16 organic growth of 9% (7% in DKK). Q4 organic growth of 8% 9 9 9 • Satisfactory growth in UK, China, Russia, Nordic markets and Argentina 8 8 • Satisfactory growth in SenSura® portfolio dr
Slide 6: Continence Care grew 5% in 2015/16 negatively impacted by US distributor buying patterns
Continence Care grew 5% in 2015/16 negatively impacted by US distributor buying patterns and inventory reduction Performance Comments • 2015/16 organic sales growth of 5% (3% in DKK). Q4 organic growth of 6% • Satisfactory growth in UK, France, Argentina and Russia 16 • Growth driven by SpeediCath®
Slide 7: Urology Care 2015/16 performance of 9% driven by market share gains in US
Urology Care 2015/16 performance of 9% driven by market share gains in US Men’s and Women’s Health Performance Comments • 2015/16 organic growth of 9% (10% in DKK). Q4 organic growth of 11% 15 • Satisfactory growth for Men’s Health driven by US demand for Titan® 14 penile implants 11 • Satisfactory
Slide 8: WSC delivered 2015/16 6% organic growth adversely impacted by Emerging Markets
WSC delivered 2015/16 6% organic growth adversely impacted by lower growth momentum in Emerging Markets Performance Comments • 2015/16 organic sales growth in WSC of 6% (5% in DKK), and 5% for Wound Care in isolation • Q4 organic growth for WSC of 3%, and 2% for Wound Care in isolation 15 15 • Growt
Slide 9: 2015/16 operating margin of 33% in DKK
2015/16 operating margin of 33% in DKK impacted by efficiency gains, product mix, R&D activity and currency Comments Performance 2) 33.5 • EBIT before special items grew 7% to DKK 4,846m with a reported margin of 33% in line 2) 0.5 -0.3 33.0 with last year (34% in constant currencies) 0.5 0.1 1) • Q
Slide 10: Positive impact on FCF from higher EBITDA and lower tax payments
Positive impact on FCF from higher EBITDA and lower tax payments offset by payments for Mesh settlements Performance Comments • Free cash flow was DKK 2,425m compared to DKK 2,869m for 26 2014/15 • EBITDA DKK 354m higher 21 20 • NWC-to-sales of 24%, in line with 2014/15 19 2,977 2,869 17 • Negative
Slide 11: Financial guidance for 2016/17
Financial guidance for 2016/17 Guidance 16/17 Guidance 16/17 (DKK) Long term ambition Sales growth 7-8% (organic) 5-6% 7-9% p.a. 33-34% (constant EBIT margin ~33 +50-100 bps p.a. exchange rates) CAPEX (DKKm) 700 4-5% of sales Tax rate ~23 Page 11
Slide 12: Introduction to Coloplast
Leading intimate healthcare Introduction to Coloplast
Slide 13: Coloplast has four business areas all with global sales presence
Coloplast has four business areas all with global sales presence Group revenue 2015/16 by segment Group revenue 2015/16 by geography X = Coloplast’s global market position Emerging markets 15% Continence Ostomy Care Care 41% 35% DKK DKK Other #1 14.7bn #1 developed 14.7bn markets 22% European market
Slide 14: Coloplast specializes in intimate healthcare needs
Coloplast specializes in intimate healthcare needs Who are our typical users How do we help them? People who have had their intestine redirected to an SenSura® Mio opening in the abdominal wall Ostomy bag Ostomy Care People in need of bladder or bowel management SpeediCath® Continence Flexible male
Slide 15: Intimate healthcare is characterized by stable industry trends
Intimate healthcare is characterized by stable industry trends Drivers Limiters Earlier detection and Growing elderly Surgical and cure, eventually 1 Demographics population increases 1 medical trends reduces addressable customer base for market for Coloplast Coloplast products treatment products Ex
Slide 16: Coloplast has strong market positions in Europe and great commercial potential outside Europe
Coloplast has strong market positions in Europe and great commercial potential outside Europe Europe Developed Emerging Ostomy Continence Urology Wound Care Addressable market 15-16bn ~12bn ~10bn 17-19bn 4-5% 5-6% 3-5% 3-5% Size in DKK Growth in % Coloplast 40 - 50% 45 - 55% 10 - 20% 5 - 15% regiona
Slide 17: Coloplast's new strategy will drive revenue and earnings growth across 4 major themes
Coloplast’s new strategy will drive revenue and earnings growth across 4 major themes 1 Superior products & innovation 2 Unique user focused market approach 3 Unparalleled efficiency 4 Strong leadership development Page 17
Slide 18: We have launched innovative products across business areas and invested in Consumer activities
We have launched innovative products across business areas and invested heavily in Consumer activities Continence Care Ostomy Care Consumer Care Consumer Wound Care Urology Care focus Page 18
Slide 19: We will continue to push for efficiency gains across Global Operations and Business Support
We will continue to push for efficiency gains across Global Operations and Business Support Global operations Business support • Efficiency improvement in the subsidiaries, HQ and business support centre 1. Reduce risk of supply 2. Improve quality of daily • Subsidiaries to focus on commercial prior
Slide 20: Expansion relies on our organisation and strong leadership development
Expansion relies on our organisation and strong leadership development is key to support growth Our organisation will grow … … and it will be even more important to hire for a career and not a job ~3,000 Build our internal Hire externally for key leadership new positions leadership pipeline competen
Slide 21: The strategy will commit up to DKK 2bn in new investments towards 2020
The strategy will commit up to DKK 2bn in new investments towards 2020 Key strategic initiatives Geographical focus areas Innovation US UK Wound care Pacific Consumer Emerging Markets Page 21
Slide 22: Profitability uplift to be driven by scalability and efficiency improvements
Profitability uplift to be driven by scalability and efficiency improvements Gross margin development, in % of revenue Cost item Development, in % of revenue -0.7%-points 28.8 28.5 28.3 28.5 28.1 28-29 Distribution +1.7%-points 67.6 68.7 68.5 68.3 66.6 -1.8%-points 5.6 4.6 4.3 ~4 4.0 3.8 Admin +0.4%
Slide 23: We will continue to deliver strong and attractive free cash flows
We will continue to deliver strong and attractive free cash flows … Taxation Net working capital CAPEX1 Reported tax rate Operating working capital in % revenue Depreciation in % of revenue CAPEX in % of revenue CAPEX DKKm 4.3% 4-5% 1) 3.5% 27.8% 25.7% 23.9% 24.1% 23.8% ~24% 2.3% 2.7% 1) 22.5% 23.0%
Slide 24: … and attractive cash returns despite large investments
… and attractive cash returns despite large investments in commercial and expansion activities Coloplast cash distribution to investors Comments Dividends paid out in the year (DKKm) Share buy-back (DKKm) Pay-out ratio (%)* • Coloplast returns excess liquidity to shareholders in the form of dividend
Slide 25: Our new long-term guidance will continue to deliver strong value creation
Our new long-term guidance will continue to deliver strong value creation Revenue growth EBIT margin annual organic annual improvement 7–9% 50–100 bps Page 25
Slide 26: In sum, we believe Coloplast can continue to deliver stable shareholder returns
In sum, we believe Coloplast can continue to deliver stable shareholder returns through ... 33% Comments • Stable market trends in our Chronic Care business • Strong retention program and innovative DtC activities 7% • Increased focus on growing the business outside Europe 8% 7% • Additional improve
Slide 27: Appendices
NEW! Brava® Protective Seal Leading intimate healthcare Appendices
Slide 28: The Coloplast share (COLO'B-KO)
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on Nasdaq Copenhagen since 1983 5% ~101 billion DKK (~15 billion USD) market cap @ ~467 DKK per share (incl. A shares) 10% 7% Two share classes: 2% 46% • 18m A shares carry 10 votes (family) • 198m B shares carry 1 vote (
Slide 29: Capital structure
Capital structure Comments Performance • Overall policy is that excess liquidity is 0.6x returned to shareholders through a 0.2x combination of dividends and share buy- -0.3x -0.3x -0.2x backs -0.3x -0.4x • Interest bearing debt will be raised in connection with a major acquisition or to 1,593 suppo
Slide 30: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 36.8 36.1 36.6 38.7 35.8 34.1 35.4 33.4 32.4 30.6 31.3 31.5 31.7 29.5 27.1 29.4 28.8 28.5 28.5 28.3 28.1 23.9 24.1 23.8 23.1 23.1 22.2 22.5 5.9 5.8 5.6 4.6 4.0 4.3 3.8 3.8 4.3 4.4 4.4 4.3 3.2 2.5 3.1 4.1 3.1 3.3 3.1 3.2 3.5 09/10 10/11 11
Slide 31: Coloplast revenue development by business area
Coloplast revenue development by business area Ostomy Care Urology Care 9 9 9 13 8 7 7 11 9 10 6 6 9 5 5 8 9 7 5,935 6 1,497 5,091 5,567 1,359 4,633 4,849 1,124 1,199 1,037 5 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 Continence Care Wound & Skin Care 13 16 11 10 9 10 8 8 9 7 8 7 1,
Slide 32: Coloplast revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 8 15 9 10 6 6 6 7 8 5 5 6 6 5 6 5 4 3,177 8,843 9,213 2,945 7,388 7,749 8,221 2,288 2,395 2,479 4 4 11/12 12/13 13/14 14/15 15/16 11/12 12/13 13/14 14/15 15/16 Emerging Markets Coloplast group 12 23 24 9 21 8 7 7
Slide 33: Segment operating profit
Segment operating profit Chronic Care Urology Care Wound & Skin Care Ostomy and Continence Care 40 39 37 38 61 61 34 60 60 61 36 36 35 35 218 32 198 184 188 1,703 1,696 1,750 171 1,667 1,603 137 133 133 130 110 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 14/15 15/16 15/16 15/16 15/16 14/15 15/16 15
Slide 34: We invest to pursue growth opportunities and monitor previous investments
We invest to pursue growth opportunities and monitor previous investments, recalibrating if needed We are executing on our mature markets investments We are recalibrating some investments to new realities Expansion in Breakthrough in Expansion in Expansion in Expansion in Expansion in UK US Brazil R
Slide 35: US Mesh litigation – Overview of current financial impact
US Mesh litigation – Overview of current financial impact P&L Balance Cash flow Assets Actual/Expected cash flow, DKKbn 1.2 2013/14 2014/15 2015/16 Restricted cash, DKKbn EBIT (before special items) 4,147 4,535 4,846 0.6 Special items -1,000 -3,000 - 750 0.6 0.6 0.4 0.5 EBIT 3,147 1,535 4,096 0.3 0.
Slide 36: Exchange rate exposure and hedging policy
Exchange rate exposure and hedging policy Financial guidance for 2016/17 based on below 12 months exposure from 10% Hedging Policy assumptions for the company’s principal currencies initial exchange rate drop To achieve the objective of a stabile Profit 50 before Tax we hedge: DKK GBP USD HUF EUR 0
Slide 37: Mesh litigation timeline
Mesh litigation timeline Sept. 9, 2014: Verdict vs Feb. 7, 2016: July 23, 2012: May 2, 2014: Sept. 5, 2014: BSC Mar. 5, 2015: Verdict for Bard/BSc Verdict vs Bard Feb. 28, 2013: Feb. 2014: Coloplast provision Verdict vs Ethicon TX State Verdict vs Ethicon MO State Court CA State Court: Verdict vs Et
Slide 38: Health reform landscape
Health reform landscape • France: Reimbursement pressure on WC, OC and CC. • U.S.: Healthcare reform implementation ongoing Reimbursement review of OC and CC in 2016/17 • Brazil: Macroeconomic and political challenges • UK: Efficiency savings under NHS reform • Russia: Macroeconomic and political ch
Slide 39: CARE helps us increase retention and improve product compliance
CARE helps us increase retention and improve product compliance for more than 400,000 enrolled consumers We co-develop Care content with Care is a personal and “high-touch” Global program with shared local clinicians program infrastructure Advisors available on phone Clinically validated content and
Slide 40: With our DtC marketing program we reach into the community
With our DtC marketing program we reach into the community We operate in numerous channels to expose our service …and with the reach we get several benefits and product offering… Expose innovative products Ensure product accessibility Ensure successful experience Page 40
Slide 41: The generic model for distribution and reimbursement of our products
The generic model for distribution and reimbursement of our products Prescription & Insurance Product Payer Reimbursement price Distribution Prescription & Insurance Consumer $ Product DtC Marketing • Campaigns • Community • Relationships • Information Coloplast Page 41
Slide 42: Introducing Ostomy Care
Introducing Ostomy Care Disease areas Key products Distribution of revenues* • Colorectal cancer (est. 45%) Urostomy • Bladder cancer (est. 10%) • Diverticulitis (est. 15%) Ileostomy • Inflammatory bowel disease (est. 10%) Colostomy • Other (est. 20%) Customer groups • Nurses, mainly stoma care nurs
Slide 43: Introducing Ostomy Care Accessories
Introducing Ostomy Care Accessories Market fundamentals Key products Brava® is a range of ostomy accessories designed to • Market size of DKK 2bn reduce leakage or care for skin, to make our end- • Market growth of 6-8% • Market share 25-30% Brava® Protective Seal users feel secure. Brava® was laun
Slide 44: Introducing Continence Care
Introducing Continence Care Disease areas Key products Distribution of revenues • Spinal Cord Injured, SCI Intermittent catheters • Spina Bifida, SB Urine bags • Multiple Sclerosis, MS Male ext. catheters • Benign prostatic hyperplasia, BPH & prostatectomy patients Bowel management • Elderly Custome
Slide 45: Introducing Bowel Management
Introducing Bowel Management Disease areas Market dynamics Faecal incontinence + Growing awareness (management products only) + Huge underpenetrated and Customer groups unserved population + New devices addressing the many • Spinal Cord Injured, SCI • Spina Bifida, SB unmet needs • Multiple Sclerosi
Slide 46: Introducing Urology Care
Introducing Urology Care Treatment (surgical) of urological disorders Disease areas Key products Distribution of revenues • Urinary incontinence • Pelvic organ prolapse Men’s health • Erectile dysfunction Women’s health • Enlarged prostate • Kidney and urinary stones Single use devices Customer grou
Slide 47: Introducing Wound Care
Introducing Wound Care Disease areas Key products Distribution of revenues (WSC) Chronic wounds Biatain® range • Leg ulcers Comfeel® range • Diabetic foot ulcers • Pressure ulcers Skin Care Wound Care other Customer groups Contract manufacturing & call points Biatain® Silicone Biatain® Ag Hospitals
Slide 48: Introducing Skin Care
Introducing Skin Care Disease areas Key products Product mix • Moisture associated skin damage Protectants & Antifungals • Incontinence Cleansing/Bathing • Skin folds & obesity Moisturizers • Prevention of skin impairments Textile Customer groups & call points Sween® EasiCleanse Bath® Hospitals • Br
Slide 49: Product market for US Skin Care
Product market for US Skin Care Market drivers/limiters US Skin Care at a glance + Aging and obese population • US market size estimated at DKK + CMS Value Based Purchasing + Increased focus on prevention 5-6bn with 4-5% growth + Increased importance of utilization • Market share: 7-9% management •
Slide 50: The Coloplast organisation
The Coloplast organisation Coloplast Group Chronic Care Strategic Business Units Chronic Care Strategic Business Units Ostomy Care Continence Care Wound Care Skin Care Urology Care Marketing Marketing ID SD Marketing Sales Sales Marketing Marketing R&D R&D Sales Sales R&D R&D Sales Regions R&D Globa
Slide 51: Coloplast Executive Management
Coloplast Executive Management Lars Rasmussen President, CEO • Born 1959 • With Coloplast since 1988 Anders Lonning-Skovgaard Allan Rasmussen Kristian Villumsen EVP, CFO EVP, Global Operations EVP Chronic Care • Born 1972 • Born 1967 • Born 1970 • With Coloplast since 2006 • With Coloplast since 199
Slide 52: Corporate responsibility – Member of UN Global Compact since 2002
Corporate responsibility – Member of UN Global Compact since 2002 and recognized externally Page 52
Slide 53: Income statement
Income statement DKKm FY 2014/15 FY 2015/16 Change Revenue 13,909 14,681 6% Gross profit 9,533 10,032 5% SG&A costs -4,562 -4,692 3% R&D costs -442 -509 15% Other operating income/expenses 6 15 nm Operating profit (EBIT) before special items 4,535 4,846 7% Special items -3,000 -750 nm Operating prof
Slide 54: Balance sheet
Balance sheet DKKm 30 Sep 2015 30 Sep 2016 Change Balance, total 10,817 11,007 2% Assets Non-current assets 5,052 4,843 -4% Current assets 5,765 6,164 7% of which: Inventories 1,473 1,518 3% Trade receivables 2,467 2,679 9% Restricted cash 72 457 nm Marketable securities, cash, and cash equivalents
Slide 55: Cash flow
Cash flow DKKm FY 2014/15 FY 2015/16 Change EBITDA 2,020 4,624 129% Change in working capital 393 1,126 nm Net interest payments -266 -60 nm Paid tax -1,178 -365 -69% Other 2,368 -2,297 nm Cash flow from operations 3,337 3,028 -9% CAPEX -617 -649 5% Securities 100 30 -70% Other 49 16 nm Cash flow fr
Slide 56: Manufacturing setup
Manufacturing setup Production by country* 5% 5% Hungary Thisted China Minneapolis 20% Mørdrup Denmark Mankato US/France 70% Nyirbátor Tatabánya Sarlat COGS by cost type** 9% Salary - Direct 21% 13% Salary - Indirect Materials (RM &SFG) 8% Innovation & Depreciations & amortisations Competency Centre
Slide 57: Production sites
Production sites Denmark US Mørdrup Minneapolis • Adhesives production • Urology care products • Wound care products • Number of employees in production: ~100 • Ostomy care products • Continence care products • Pilot development work Adhesives, Continence care and Wound care • Number of employees in
Slide 58: Production sites
Production sites Hungary China Tatabánya Zhuhai • Ostomy care products • Continence care products • Adhesives • Ostomy care products • Continence care products • Machine building • Urology care products • Number of employees in production: ~1,000 • Number of employees in production: ~1,400 Tata • Po
Slide 59: Contact Investor Relations
Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ellen Bjurgert Anne-Sofie Søegaard Kristine Husted Munk Director, Investor Relations IR Coordinator Student Assistant Tel. direct: +45 4911 3376 Tel. direct: +45 4911 1924 Tel. direct: +45 4911 3266 Office: +45 4911 1800 Office: +45 4911
Slide 60: Our mission, values and vision
Our mission Making life easier for peoplé with intimate healthcare needs Our values Closeness... to better understand. - Passion... to make a difference Respect and responsibility... to 0 guide | US: Our vision Setting the global standard for listening and responding: Coloplast A/S - Ostomy Care / C