Getinge Ab Class B · OMXSTO:GETI_B
Getinge Ab Class B — Investor Day (November 2018)
79 slides from Getinge Ab Class B's investor day presentation, Nov 21, 2018
Slide 1: Towards improved performance
Towards improved performance Capital Markets Day November 21, 2018 Getinge Capital Markets Day November 21, 2018 Page 1
Slide 2: Today's agenda
Today’s agenda 12.00-15.30 Strategy update Break (20 min) Acute Care Therapies Surgical Workflows Life Science Q&A Getinge Capital Markets Day November 21, 2018 Page 2
Slide 3: Towards improved performance
Towards improved performance Mattias Perjos, President & CEO Getinge Capital Markets Day November 21, 2018 Page 3
Slide 4: Getinge today
Getinge today Leading positions in well defined segments Enabling advanced healthcare 170 BSEK Addressable market 90% where it matters the most CSSD* 2-4% Cath Operating ICU Organic growth in Hospitals represent 90 % of sales, Lab Room addressable market 10% goes to Pharma, Lab & Medtech The value
Slide 5: Strong fundamentals in our business
Strong fundamentals in our business Long term growth opportunities US and Emerging Markets represent Market growth Share of Getinge’s the highest underlying growth expectations per segment* Net Sales 2017 Addressable Americas EMEA APAC Acute Care 75 BSEK 50 BSEK 45 BSEK Therapies 2-4% 54% market Sur
Slide 6: Strong fundamentals in our business
Strong fundamentals in our business Long term growth opportunities Regional differences in margins Revenue Revenue from split new products* North 57-59%* America 45-47%* 40-42%* Emerging Markets 14% Europe Capital goods *Adj gross margin Q1-Q3 2018. Consumables Service and spare parts Higher margins
Slide 7: Structured to optimize outcome from strategy
Structured to optimize outcome from strategy Balanced BA led organization – ensuring accountability and synergies Acute Care Life Surgical Therapies Science Workflows Governance Business synergy functions Sales Getinge Capital Markets Day November 21, 2018 Page 7
Slide 8: Healthcare challenges
Healthcare challenges ~17.9 million people die each year from cardiovascular diseases, making it the number 1 cause of death globally.** ~2 million American patients The world’s population is suffer from a expected to increase by Hospital Acquired Infection one billion people by 2025. annually resul
Slide 9: In these trends lie significant opportunities
In these trends lie significant opportunities Changing demographics More people, older and sicker Value based health care Macroeconomics New business and payment models ”More-for-less” Digitalization & Connectivity Healthcare systems Knowledge & value conscious healthcare Digital surgery Innovation
Slide 10: A sustainable approach in all we do
A sustainable approach in all we do Materiality analysis undertaken in 2018 3 focus areas in our sustainability program • Product quality • Environmental footprint • Social responsibility Reporting to measure progress • Sustainability reporting in accordance with GRI (Annual Report 2018) • Carbon Di
Slide 11: Significant room for improvement on gross margin
Significant room for improvement on gross margin 5 pp gap between Getinge’s adjusted gross margin and the average amongst peers 55 Structural differences 5 pp 50 Gap closing potential 5 Gross Margin, % (D&A and IAC, Items Affecting Comparability) 45 Getinge Average Peers Source: FactSet. Period: LTM
Slide 12: Largest potential for improvement is to be found in COGS
Largest potential for improvement is to be found in COGS The potential seen from a cost perspective – not taking pricing, mix and growth into account 50 Level of vertical integration, economies of scale, proportion of sales in the US 5 pp Product portfolio Factory Footprint 55 COGS – 5 (D&A and Prod
Slide 13: Significant EBITA margin improvement potential
Significant EBITA margin improvement potential The gap should be tightened both through healthy growth and by addressing productivity throughout the value chain 18 Structural differences 7 pp EBITA margin, % 11 Gap closing potential Getinge Average Peers Source: FactSet. Period: LTM. Peer Group: Wei
Slide 14: Ready for the next step, to improve margins and cash flows
Ready for the next step, to improve margins and cash flows Step 1 Step 2 Re-ignite growth Productivity Actions taken in 2017 Global QMS and ERP to ensure compliance and drive synergies Innovation and portfolio management to ensure pricing power and productivity in the value chain Harmonize processes
Slide 15: Improving factory footprint
Improving factory footprint Global Quality Management System is an enabler for structural improvements in footprint Sweden Solna – Ventilators and anesthesia machines Växjo – Disinfection equipment Getinge – Sterilization equipment China Germany Suzhou – Surgical tables, cardiovascular Hechingen – C
Slide 16: Build to last – step by step
Build to last – step by step Effective and sustainable change is built upon a Strategy-Structure-Systems-Skills wave iteration Strategy Structure Systems Skills Getinge Capital Markets Day November 21, 2018 Page 16
Slide 17: Culture is key for bringing the strategy to life
Culture is key for bringing the strategy to life Transformation starts from the top – our leaders set the tone Getinge Capital Markets Day November 21, 2018 Page 17
Slide 18: Carsten Blecker
Carsten Blecker Chief Commercial Officer Getinge Capital Markets Day November 21, 2018 Page 18
Slide 19: 10 Regions, 40 Subsidiaries, Conducting Business in +150 countries
10 Regions, 40 Subsidiaries, Conducting Business in +150 countries Region North Eastern Central Asia Eastern DACH Europe Region North South America West Japan Middle Region East & Africa South Latin Asia / America Pacific Getinge Capital Markets Day November 21, 2018 Page 19
Slide 20: US represents the largest market and growth opportunity
US represents the largest market and the largest growth opportunity for Getinge 35,0% 6,7% 5,5% 5,3% 4,6% 3,8% 2,9% 2,8% 2,5% 2,2% USA Germany China Japan France Great Britain Australia Italy Sweden India Getinge Capital Markets Day November 21, 2018 Page 20
Slide 21: Six strategic commercial work streams to drive growth
Six strategic commercial work streams to drive growth Leveraging local entrepreneurship while assuring global best practice sharing Commercial Strategy 2018+ Two-Pillar Ambition Provide professional education to drive Establish Getinge as the partner of choice adoption of innovative therapies for fo
Slide 22: Building on promising customer satisfaction surveys
Building on promising customer satisfaction surveys in Top 10 Getinge markets Net Promoter Score 17 38 45 Competitors 23 50 27 Detractors (0-6) Neutral (7-8) Promoters (9-10) Top 10 450 Countries Interviews Getinge Capital Markets Day November 21, 2018 Page 22
Slide 23: We will continue to stay laser-focused
We will continue to stay laser-focused on key performance indicators Q1-Q3 2018 Solid Sales & Order +6,2% +4,7% Momentum Sales Orders ≈ All Product Divisions & Regions organic -2,3 Strong Focus on Days Sales Cash Management Outstanding R12 Diligent Resource +1,2% OPEX Management In Global Sales Tact
Slide 24: Lars Sandström
Lars Sandström Chief Financial Officer Getinge Capital Markets Day November 21, 2018 Page 24
Slide 25: Getinge's financial targets
Getinge’s financial targets Dividend Organic Earnings policy net sales Per Share 2-4% 2-4% annual average growth >10% 30-50% average growth average growth of net income Getinge Capital Markets Day November 21, 2018 Page 25
Slide 26: Opportunities to improve working capital
Opportunities to improve working capital 1 day: SEK 65 M 129 128 127 126 125 124 123 122 4 3 2 1 0 2016 2017 Q3 2018 2019 2020 2021 Getinge Capital Markets Day November 21, 2018 Page 26
Slide 27: Efficient allocation of CAPEX going forward
Efficient allocation of CAPEX going forward Depreciation and Amortization of non acquired assets versus CAPEX Quarter by quarter in 2018 MSEK 93 MSEK 400 350 +80 +3 CAPEX SEK 93 M higher than 300 +10 D&A Q1-Q3 2018 250 200 150 100 Capitalized R&D IT & other intangibles 50 Maintenance & other tangibl
Slide 28: Cash Flows set to improve over time
Cash Flows set to improve over time Headroom for paying down debt and expected cash pay outs related to provisions Operating Cash Flow Cash Flow after Net Investments MSEK MSEK 1.200 1.120 1.000 801 1.000 800 800 600 600 400 401 400 298 200 47 200 0 -1 0 -200 Q1 2018 Q2 2018 Q3 2018 Q1 2018 Q2 2018
Slide 29: Extended debt maturity profile
Extended debt maturity profile and a large proportion of un-utilized committed credit facilities Maturity profile 2018-2022 3,000 MSEK 2.2 7 Average interest rate, %* BSEK Un-utilized committed credit facilities 2,500 2,000 Duration going from 1.3 years to 2.3 years 1,500 Q4 2017 1.3 Q1 2018 1.2 1,0
Slide 30: Increased earnings and more efficient use of capital
Increased earnings and more efficient use of capital should result in a declining leverage over time Leverage Q4 2017 - Q1 2018 3,5 3,3 3,0 3,2 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Definition of Leverage: Net interest bearing Debt to Adjusted EBITDA Getinge Capital Markets Day November 21, 2018 Page 30
Slide 31: Net Sales and Operating Cost in major currencies
Net Sales and Operating Cost in major currencies Translation flows Q1-Q3 2018 (reported) 8 000 6 000 -49 MSEK Translation effects on EBITA Q1-Q3 2018 4 000 2 000 0 -2 000 -4 000 -6 000 -8 000 USD EUR GBP CNY JPY SEK Other Net Sales Operating Cost Difference Getinge Capital Markets Day November 21, 2
Slide 32: Transaction effects and outlook for FY 2018
Page 32 November 21, 2018 Getinge Capital Markets Day -200 -169 SEK -169 M on EBITA Outlook for FY 2018 MSEK MSEK Transaction effects on EBITA Q1-Q3 2018 10 0 5 -40 -35 -30 -25 -20 -15 -10 -5 AUD/SEK Transaction effects Q1-Q3 2018 EUR/JPY USD/JPY EUR/TRY USD/CAD GBP/PLN AUD/USD CNY/SEK GBP/CNY JPY/S
Slide 33: Summary
Summary Lars Sandström, CFO Getinge Capital Markets Day November 21, 2018 Page 33
Slide 34: Lena Hagman
Lena Hagman Executive Vice President Quality and Regulatory Compliance Getinge Capital Markets Day November 21, 2018 Page 34
Slide 35: Attention to Quality System & Compliance
Attention to Quality System & Compliance Strengthened organization and Global QMS roll out – enabling productivity improvements going forward 2014 2015 2017 2018 • Underinvested in • Entering Consent • Intense • Intense QMS and Quality Decree with FDA remediation remediation organization • Ring-fenc
Slide 36: Remediation status on CD sites
Remediation status on CD sites - US sites remediated by end of 2018 Is the product documentation Site Is the QMS remediated? remediated? Wayne Yes Yes Merrimack Yes Yes 2-3 years Hechingen Yes until fully remediated Getinge Capital Markets Day November 21, 2018 Page 36
Slide 37: General update on Quality & Regulatory compliance related issues
General update on Quality & Regulatory compliance related issues • Warning Letter issued to Fairfield, NJ, September 2018 • Gaps already identified internally and addressed Q4 2017 • No patient risk related findings • Progress according to plan • No material financial impact • Quality system prepara
Slide 38: Quality & Regulatory Compliance Strategy
Quality & Regulatory Compliance Strategy Purpose and targets Status • Move away from remediation • Remediation according to plan • Move from local independent quality systems to one • Base fully roll-outed Q1 2019 and prepared to overarching quality system support Business Area strategies • Less Cer
Slide 39: Status on the European Medical Device Regulation process
Status on the European Medical Device Regulation process • Progress according to internal plan • Finalized according to Notified Body agreements • Current Medical Device Directive (MDD) certification can be re-issued and effective until 2024 • Pruning the portfolio Getinge Capital Markets Day Novemb
Slide 40: Short Break
Short Break Getinge Capital Markets Day November 21, 2018 Page 40
Slide 41: Global leader in Cardiovascular and Intensive Care
Global leader in Cardiovascular and Intensive Care Acute Care Therapies Jens Viebke, President
Slide 42: Acute Care Therapies
Acute Care Therapies The Business Area in Brief Solutions for life support and therapy in acute health conditions for • Intensive Care • Cardiovascular Surgery • Cardiovascular Interventions The addressable market • SEK 85 billion with expected organic growth of 2-4% per year Getinge Capital Markets
Slide 43: Leading positions in all sub segments
Leading positions in all sub segments The Business Area from a reporting perspective Acute Care Therapies Share of ACT’s Market growth Product Area Net Sales* estimate** Products Position Critical Care 25% 4-5% ICU Ventilators, Anesthesia, Hemodynamic Monitoring 1-4 Vascular Systems 20% 4-5% Covered
Slide 44: Highest profitability in Cardiac Systems and Cardiopulmonary
Highest profitability in Cardiac Systems and Cardiopulmonary Highest growth in Cardiopulmonary and Critical Care Gross Margin Cardiac Systems Cardiopulmonary Critical Care Vascular Systems Source: Getinge Q3 2018, LTM Organic Growth Getinge Capital Markets Day November 21, 2018 Page 44
Slide 45: Leading offerings towards distinctive needs
Leading offerings towards distinctive needs Our offering seen from a customer’s perspective Intensive Care Systems Cardiovascular Surgery Cardiovascular Interventions Critical Care NICU Ventilation ICU Ventilation Adv Monitoring Anesthesia HD Monitoring ICU Ventilation Cardiopulmonary Extracorporeal
Slide 46: Strong global leader in key areas in the hospital
Strong global leader in key areas in the hospital Sharp offering concentrated to three areas Intensive Care Systems Cardiovascular Surgery Cardiovascular Interventions Hospital Areas Intensive Care Units Cardiovascular ORs Cathlabs, hybrid ORs Products Ventilators Heart-Lung Machines, Heater-Cooler
Slide 47: Benefitting from the leadership in Coronary Artery Bypass Surgery
Benefitting from the leadership in Coronary Artery Bypass Surgery Getinge has the broadest offering Getinge Capital Markets Day November 21, 2018 Page 47
Slide 48: Benefitting from the leadership in Coronary Artery Bypass Surgery
Benefitting from the leadership in Coronary Artery Bypass Surgery CABG compared to Percutaneous Coronary Intervention (PCI) with stents 1. Better outcomes for a large patient subgroup CABG cases CABG cases CABG growth Region 2. Attractive from a total economic outcome perspective 2016 2022 2016-2022
Slide 49: Positive growth signs, but profitability needs to be improved
>10 XX Positive growth signs, but profitability needs to be improved Growth has returned to a healthy level Opportunities to improve EBITA 2 pp 2-4% 6.3% 20% 18% Market growth in Acute Care Average EBITA Acute Care Therapies segment, organic Therapies organic amongst peers, Adj EBITA margin, net sal
Slide 50: Short term actions for margin improvement
Short term actions for margin improvement • Sub-assembly outsourcing to best cost suppliers • Improved category and vendor management • Process and organizational optimization post remediation efforts • Selective sales focus on higher margin growth opportunities Getinge Capital Markets Day November
Slide 51: Focus areas long term
Focus areas long term Reinforce capability Growth through to develop and sell Innovation integrated solutions Strategic Improve partnerships productivity in operations Enabled by connectivity and digitalization Getinge Capital Markets Day November 21, 2018 Page 51
Slide 52: Expand the offering in order to capture growth in value segment
Expand the offering in order to capture growth in value segment Ventilation Anesthesia ECLS Premium segment 80% Premium Acute Care Therapies’ present position, from where we expand our of the portfolio offering. today Servo-U Flow-i Cardiohelp The value segment Acute Care Therapies will 20% Value in
Slide 53: Summary key activities long term
Summary key activities long term To grow with the market and improve earnings Long term actions for growth Long term actions for productivity improvement • R&D focus on solutions significantly improving patient • Development and utilization of technology platforms outcomes and/or treatment cost acro
Slide 54: Surgical Workflows
Safer surgeries Reduced infections Efficient operations Surgical Workflows Stéphane Le Roy, President
Slide 55: Surgical Workflows
Surgical Workflows The Business Area in Brief Surgical Workflows offering • Sterilization: Equipment and consumables for safe and efficient reprocessing of instruments used in operations • Operating Rooms: Tables, lights and other high- quality equipment • Advanced software for efficient and secure
Slide 56: A leading offering in key areas in the hospital
A leading offering in key areas in the hospital Integrated solutions to manage patient, staff and instrument workflows to optimize surgical efficiency Complete Range of Sterile Flow Equipment & Consumables Supported by: • Global service network • Global academy Global • Getinge Hospital Position #1-
Slide 57: Providing efficiency and enable surgeries
Providing efficiency and enable surgeries In the Eco Systems of Sterile Flow and Surgical procedures Addressable market of 62 Billion SEK Organic Sterile flow growth of 2-4% • Industry specific trends: Low Temp Sterilization, Global Outsourcing of CSSD’s, Position Automation, Digitalization #1-3 • C
Slide 58: New Royal Adelaide Hospital in Australia
New Royal Adelaide Hospital in Australia One of the largest projects in Getinge’s history Getinge Capital Markets Day November 21, 2018 Page 58
Slide 59: Markets trends impacting the Surgical Workflows business
Markets trends impacting the Surgical Workflows business Ageing population and increased need Increase in minimal invasive surgery, for healthcare ambulatory care & Robotic surgery Globalization and importance of new Digitalization enabling new solutions markets and possibilities to improve efficien
Slide 60: Our digital strategy
Our digital strategy Present and future Today Tomorrow Digital Healthcare Software for OR Scheduling and Patient flow Digital Equipment Connectivity and remote Big data and predictive maintenance of our equipment maintenance Digital Customer Experience iPad real time service reporting Online educati
Slide 61: Disciplined product segmentation and frugal innovation
Disciplined product segmentation and frugal innovation Sterile flow Surgical Procedure Premium segment Getinge’s present position, from ~95% where we expand our offering. of the portfolio today Sterilizers Washers Tables Lights CSU systems The high end of value segment Getinge will enter the value ~
Slide 62: Healthy revenue growth, but falling short on margins
Healthy revenue growth, but falling short on margins EBITA needs to be improved going forward Outperforming market growth Significant profitability gap vs. industry standard 12 pp 2-4% 5.3% 15% 3% Market growth in Surgical Workflows Average EBITA Surgical Workflows segment, organic growth, organic Q
Slide 63: Ongoing actions for margin improvement
Ongoing actions for margin improvement Continuous focus on productivity improvement • Purchasing rationalization • Productivity and manufacturing efficiency in production sites • Discipline in expense control • Service efficiency (First time fix, smart scheduling) Getinge Capital Markets Day Novembe
Slide 64: Reinforce our core offering, capture emerging niche opportunities
Reinforce our core offering, capture emerging niche opportunities Strong potential in all product categories Gross Margin Sterile Flow Eco System Surgical Procedure Eco System Infection Control IT Solutions IT Solutions Surgical Workplaces Source: Getinge, Q3 2018, R12 Organic Growth Getinge Capital
Slide 65: Focus areas for long term growth and margin improvement
Focus areas for long term growth and margin improvement Growth through Growth through Innovation focus in US and Emerging Markets Growth through Profitability Customer through Centricity Efficiency Getinge Capital Markets Day November 21, 2018 Page 65
Slide 66: Growing with Biopharma customers
Growing with Biopharma customers Life Science Harald Castler, President
Slide 67: Life Science
Life Science The Business Area in Brief Equipment, technical expertise and consultation to prevent contamination in • Pharma and Medical device production • Lab • Medical Research The addressable market • SEK 23 billion with expected organic growth of 3-5% per year Getinge Capital Markets Day Novemb
Slide 68: Strong positions in attractive customer segments
Strong positions in attractive customer segments The Business Area from a reporting perspective Life Science Market growth estimate* Products Position 3-5% Sterilizers, Washers, Sterile Transfer, Isolators 1-4 Sterilizers Washers Isolators Sterile Transfer *Organic growth estimate mid term, CAGR, ba
Slide 69: Large potential to grow within Biopharma
Large potential to grow within Biopharma The Business Area from a customer’s perspective Pharma & Medical Device Lab Medical Research Production Sterilization and cleaning solution for Dedicated washers and sterilizers for Solutions for washing and sterilization of pharma and medical device producti
Slide 70: Life Science customers 2017
Life Science customers 2017 Getinge Capital Markets Day November 21, 2018 Page 70
Slide 71: The Biopharma value stream
The Biopharma value stream UPSTREAM DOWNSTREAM VIRAL ULTRA- MEDIA CELLS, BANKING CLARIFICATION CLEARANCE FILTRATION/ FORMULATION PREPARATION AND TESTING DIAFILTRATION FILLING LINE AFFINITY VIRUS SEED STERILE CRYOP- PRODUCTION CHROMA- REMOVAL POLISHING EXPANSION FILTRATION RESERVATION TOGRAPHY FILTRA
Slide 72: The Filling Line
The Filling Line Controlled environment Sterile API Component Tub Transfer Terminal Handling Washing Sterilization Sterilization FILLING Closure Component Sterility Labware Processing Sterilization Testing Cleaning & Sterilization Getinge Capital Markets Day November 21, 2018 Page 72
Slide 73: B Braun – one of the world's largest suppliers of infusion systems
B Braun – one of the world’s largest suppliers of infusion systems Successful delivery driving additional orders Getinge Capital Markets Day November 21, 2018 Page 73
Slide 74: Positive growth signs, but opportunity to improve margins
Positive growth signs, but opportunity to improve margins EBITA needs to be improved going forward Growth on a healthy level Move closer to Peer average on EBITA 7 pp 3-5% 12.5% 19% 12% Market growth in Life Science growth Average EBITA Life Science Adj EBITA segment, organic in organic order amongs
Slide 75: Sterile Transfer has good opportunities
Sterile Transfer has good opportunities both on growth and margins Gross Margin Sterile Transfer Isolators Washers Sterilizers Aftermarket Sterilizers Washers Sterile Transfer Isolators Aftermarket Source: Getinge Organic Growth Getinge Capital Markets Day November 21, 2018 Page 76
Slide 76: Key activities short term
Key activities short term To grow with the market and improve earnings • Lean manufacturing Washers Capacity up 25% Cogs down 4% • Leverage design improvements Sterilizers Capacity up 15% Cogs down 5% • Insourcing of semi finished Beta-bags (15% of volumes) Cogs down 5% Inventory and quality improve
Slide 77: Focus areas long term
Focus areas long term Growth through Grow with Innovation together Biopharma with customers customers Leverage on Profitability aftermarket through business Efficiency Getinge Capital Markets Day November 21, 2018 Page 78
Slide 78: GETINGE – Passion for Life
Se ba | GETINGE PASSION FOR LIFE
Slide 79: Forward looking information
Forward looking information This document contains forward-looking information based on the current expectations of the Getinge Group’s management. Although management deems that the expectations presented by such forward-looking information are reasonable, no guarantee can be given that these expec