Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — Non-Deal Roadshow (August 2017)
65 slides from Coloplast A/s Class B's roadshow presentation, August 2017
Slide 1: Leading intimate healthcare – Roadshow presentation 9M 2016/17
Leading intimate healthcare Roadshow presentation 9M 2016/17
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: Q3 organic growth of 8% and EBIT margin of 33% before one-off adjustment
Coloplast delivered Q3 organic growth of 8% and an EBIT margin of 33% before one-off adjustment for Veterans Affairs Q3 Highlights Revenue growth +7% • Q3 organic growth of 8% (6% reported growth) Reported revenue (DKKm) +6% • Reported revenue in Q3 negatively Organic growth 11,548 +8% 10,942 affect
Slide 4: 9M organic growth of 7% across business areas and geographies
9M organic growth of 7% with good performance across most business areas and geographies 9M 16/17 revenue by business area 9M 16/17 revenue by geography Business Reported revenue Organic growth Share of organic Geographic Reported revenue Organic growth Share of organic area DKKm growth area DKKm gr
Slide 5: Ostomy Care grew 7% organically in Q3
Ostomy Care grew 7% organically in Q3 and continues to be driven by SenSura® range and Brava® accessories Performance Comments • 9M organic growth of 7% (6% reported growth). Q3 organic growth of 7% (8% reported growth) • The acquisition of Comfort Medical contributed 1% growth to revenue in Ostomy
Slide 6: Continence Care grew 10% in Q3
Continence Care grew 10% in Q3 driven by SpeediCath® intermittent catheters and strong performance in the US Performance Comments • 9M organic sales growth of 8% (7% reported growth). Q3 organic growth of 10% (12% reported growth) • The acquisition of Comfort Medical contributed 2% growth to 12 reve
Slide 7: Urology Care grew 10% in Q3
Urology Care grew 10% in Q3 driven by US sales of Altis® slings and Titan® penile implants Performance Comments • 9M organic growth of 11% (12% reported growth). Q3 organic growth of 10% • Growth in Q3 driven by the US and Europe 15 • Strong growth in sales of Altis® slings and Titan® penile implant
Slide 8: Wound & Skin Care impacted by price reforms in Greece and France
WC negatively impacted by price reforms in Greece and France and weak momentum in Emerging Markets Performance Comments • 9M organic sales growth of 0% for WSC (1% reported growth). Q3 organic growth for WSC of 1% 8 • 9M organic growth of 3% for Wound Care in isolation, and negative 1% 6 in Q3. Woun
Slide 9: 9M EBIT in constant currencies grew 9%
9M EBIT in constant currencies & before one-off adjustment for VA grew 9% corresponding to an EBIT margin of 33% Comments EBIT margin development • EBIT grew 4% to DKK 3,705m with a reported margin of 32% (33% in constant currencies, before one-off revenue adjustment) compared to 33% last year 32.9
Slide 10: Free cash flow adjusted for Mesh, Comfort Medical and tax
FCF adjusted for Mesh settlements, acquisition of Comfort Medical and tax payments was in line with last year Performance Comments • Free cash flow was positive DKK 322m compared to positive DKK 27 1,643m in 9M 2015/16 26 • EBITDA DKK 201m higher than same period last year 22 20 20 20 4,023 • NWC-to
Slide 11: Updated financial guidance for 2016/17
Updated financial guidance for 2016/17 Guidance 16/17 Guidance 16/17 (DKK) Long term ambition Sales growth 7-8% (organic) ~6% from 7-8% 7-9% p.a. 33-34% (constant EBIT margin ~32% from ~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: 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: Strong market positions in Europe and 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: New strategy 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: LEAD20 – an update on our direction towards 2020
LEAD20 – an update on our direction towards 2020 Superior products and innovation Unique user-focused market Unparalleled efficiency approach SenSura® Mio Innovation Excellence Hospital Assortment Production ramp-up directly from Launched in 2017 Hungary/China: SenSura® Mio Convex + 500,000 enrolmen
Slide 19: Innovative product launches and consumer investments
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 19
Slide 20: Clinical Performance Program to tackle users' biggest issues
We have now initiated a very ambitious Clinical Performance Program to tackle the biggest issues users face What really matters to people using catheters? What really matters to people living with a stoma? 45 %* of users describe UTIs are their 93 % worry about leakage2 greatest challenge in life1 *
Slide 21: 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 22: Leadership development to support growth
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 23: 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 Commercial investments in pockets of growth Innovation US UK Wound care Pacific Consumer New investments in Emerging Markets Page 23
Slide 24: Profitability uplift from scalability and efficiency
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 4.0 3.8 ~4 Admin +0.4%
Slide 25: Strong and attractive free cash flows
We will continue to deliver strong and attractive free cash flows … Taxation Net working capital CAPEX2 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 26: 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 divide
Slide 27: Long-term guidance: 7–9% growth, 50–100 bps margin
Our long-term guidance will continue to deliver strong value creation Revenue growth EBIT margin annual organic annual improvement 7–9% 50–100 bps Page 27
Slide 28: Stable shareholder returns
In sum, we believe Coloplast can continue to deliver stable shareholder returns through ... 32% Comments • Stable market trends in our Chronic Care business 16% • Strong retention program and innovative DtC activities 10% 7% • Increased focus on growing the business outside Europe 9% 6% • Additional
Slide 29: Appendices
Leading intimate healthcare Appendices
Slide 30: The Coloplast share (COLO'B-KO)
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on Nasdaq Copenhagen since 1983 ~116 billion DKK (~18.5 billion USD) market cap @ ~540 DKK 10% per share (incl. A shares) 7% 2% Two share classes: 46% • 18m A shares carry 10 votes (family) • 198m B shares carry 1 vote (f
Slide 31: 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 32: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 35.4 36.8 36.1 36.6 36.0 35.8 33.4 34.1 32.4 31.5 31.7 32.0 31.3 29.4 28.8 30.6 28.5 28.3 28.5 28.1 28.2 26.4 23.9 24.1 23.8 23.1 22.2 22.5 5.9 5.6 4.6 4.0 4.3 3.8 4.1 4.4 4.4 3.8 4.3 3.7 2.5 3.1 3.1 3.3 3.1 3.2 3.5 3.8 4.1 10/11 11/12 12
Slide 33: Revenue development by business area
Coloplast revenue development by business area Ostomy Care Urology Care 5,935 13 5,567 4,694 12 4,849 5,091 10 7 11 9 9 9 9 9 8 7 7 8 6 7 5 5 6 1,124 1,199 1,359 1,497 1,574 5 12/13 13/14 14/15 15/16 YTD 16/17 12/13 13/14 14/15 15/16 YTD 16/17 Continence Care Wound & Skin Care 16 13 10 10 9 9 5,019
Slide 34: Revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 18 8,843 9,213 7,749 8,221 7,049 9 10 8 9 8 5 2,395 2,479 2,945 3,177 6 6 2,694 5 5 5 4 6 6 4 2 12/13 13/14 14/15 15/16 YTD 16/17 12/13 13/14 14/15 15/16 YTD 16/17 Emerging Markets Coloplast group 24 23 21 14,681
Slide 35: Segment operating profit
Segment operating profit Chronic Care Urology Care Wound & Skin Care Ostomy and Continence Care 38 38 36 40 34 34 61 38 39 61 60 60 59 35 35 205 167 165 188 155 177 185 1,696 1,750 1,706 1,737 1,755 171 133 130 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 15/16 15/16 16/17 16/17 16/17* 15/16 15/16 1
Slide 36: Exchange rate exposure and hedging policy
Exchange rate exposure and hedging policy Financial guidance for 2016/17 12 months exposure from 10% Hedging Policy initial exchange rate drop To achieve the objective of a stabile Profit 50 before Tax we hedge: DKK GBP USD HUF EUR 0 Average exchange rate • Balance sheet items in foreign currency 20
Slide 37: Mesh litigation timeline
Mesh litigation timeline Sept. 9, 2014: Verdict vs Feb. 7, 2016: April 28, 2017 July 23, 2012: May 2, 2014: Sept. 5, 2014: BSC Mar. 5, 2015: Verdict for Bard/BSc Verdict vs Ethicon Verdict vs Bard Feb. 28, 2013: Feb. 2014: Coloplast provision Verdict vs Ethicon TX State Verdict vs Ethicon MO State C
Slide 38: US Mesh litigation – current financial impact
US Mesh litigation – Overview of current financial impact P&L Balance Cash flow Assets Actual/Expected cash flow, DKKbn 2013/14 2014/15 2015/16 Restricted cash, DKKbn 1.2 1.2 EBIT (before special items) 4,147 4,535 4,846 0.8 0.8 Special items -1,000 -3,000 - 750 0.6 0.6 EBIT 3,147 1,535 4,096 0.5 0.
Slide 39: Timeline of SpeediCath patent litigations
Timeline of SpeediCath® patent litigations Injunction issued against Hollister Inc. and Teleflex Medical GmbH in the European Patent Regional Court Düsseldorf “Landgericht Office (EPO) Düsseldorf” Coloplast files an validates injunction against Coloplast’s Product: VaPro, VaPro Plus, VaPro Hollister
Slide 40: Health reform landscape
Health reform landscape Europe Rest of World • France: Reimbursement pressure on WC. Reimbursement review • U.S.: Healthcare reform implementation ongoing of OC and CC • Brazil: Macroeconomic and political challenges • Germany: Reimbursement pressure on OC and CC • Russia: Macroeconomic and politica
Slide 41: CARE program for retention and compliance
CARE helps us increase retention and improve product compliance for in excess of 500,000 enrolled consumers We co-develop CARE content with CARE is a personal and “high- Global program with shared local clinicians touch” program infrastructure Advisors available on phone Clinically validated content
Slide 42: DtC marketing program reaching 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 42
Slide 43: Generic model for distribution and reimbursement
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 43
Slide 44: Comfort Medical – a direct-to-consumer business model
Comfort Medical – a direct-to-consumer business model Business model Comfort Medical has an inflow of patients from 3 different sources: • On December 20, 2016, Coloplast acquired Comfort Medical for a cash consideration of USD 160m equal to approx. DKK 1.1bn on a cash and debt-free basis Inside Sal
Slide 45: Rationale behind the Comfort Medical acquisition
The rationale behind the acquisition of Comfort Medical is in line with and contributing to our US ambition Rationale behind acquisition 1 An opportunity to secure patient access to superior Coloplast products 2 Large attractive value pool to tap into 3 Business model with proven commercial concept
Slide 46: Progressing with new ambition in Wound Care
In Wound Care we are progressing with our new ambition 1 Shape the standard Endorsements Publications Build a strong product 2 PIP portfolio 3 Accelerate in EU Ramp-up Strengthen position 4 in the US New structure New management New investment plan Secure leading position 5 in China Revised targetin
Slide 47: Introducing Ostomy Care
Introducing Ostomy Care Disease areas Key products Distribution of • Colorectal cancer (est. 45%) revenues* • Bladder cancer (est. 10%) • Diverticulitis (est. 15%) Urostomy • Inflammatory bowel disease (est. 10%) Ileostomy • Other (est. 20%) Colostomy Customer groups • Nurses, mainly stoma care nurs
Slide 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 Broa
Slide 54: 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 55: The Coloplast organisation
The Coloplast organisation Coloplast Group Chronic Care Strategic Business Units Chronic Care Strategic Business Units Ostomy Care Continence Care Wound & Skin Care Urology Care Marketing Marketing Marketing Sales Sales R&D R&D Sales Regions Global Operations (incl. Global R&D) Global Business Suppo
Slide 56: 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 57: Corporate responsibility – UN Global Compact member
Corporate responsibility – Member of UN Global Compact since 2002 and recognized externally THE INCLUSION OF COLOPLAST A/S IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF COLOPLAST A/S BY MSCI
Slide 58: Income statement
Income statement DKKm 9M 2015/16 9M 2016/17 Change Revenue 10,942 11,548 6% Gross profit 7,471 7,854 5% SG&A costs -3,537 -3,728 5% R&D costs -380 -436 15% Other operating income/expenses 8 15 nm Operating profit (EBIT) 3,562 3,705 4% Net financial items -31 -85 nm Tax -812 -833 3% Net profit 2,719
Slide 59: Balance sheet
Balance sheet DKKm 30 June 2016 30 June 2017 Change Balance, total 11,280 12,247 9% Assets Non-current assets 4,634 5,729 24% Current assets 6,646 6,518 -2% of which: Inventories 1,502 1,742 16% Trade receivables 2,769 2,845 3% Restricted cash 1,152 769 -33% Marketable securities, cash, and cash equ
Slide 60: Cash flow
Cash flow DKKm 9M 2015/16 9M 2016/17 Change EBITDA 3,955 4,156 5% Change in working capital 291 -1,512 nm Net interest payments -84 17 nm Paid tax -321 -326 2% Other -2,139 -667 -69% Cash flow from operations 1,702 1,668 -2% CAPEX1) -386 -423 10% PPE divested 9 45 nm Acquisition 0 -1,144 nm Securiti
Slide 61: Manufacturing setup
Manufacturing setup Production by country (Volume)* 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 Competen
Slide 62: Production sites
Production sites Denmark US Mørdrup Minneapolis • Adhesives production • Urology care products • Wound care products • Number of employees in production: ~150 • Ostomy care products • Continence care products • Pilot development work Adhesives, Continence care and Wound care • Number of employees in
Slide 63: 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: ~ 900 • Number of employees in production: ~1,700 Tata • Pos
Slide 64: Contact Investor Relations
Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ellen Bjurgert Rasmus Sørensen Anne-Sofie Søegaard Sine Flinck Director, Investor Relations Senior Manager, Investor Relations IR Coordinator Student Assistant Tel. direct: +45 4911 3376 Tel. direct: +45 4911 1786 Tel. direct: +45 4911 1
Slide 65: 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