Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — Non-Deal Roadshow (November 2018)
67 slides from Coloplast A/s Class B's roadshow presentation, November 2018
Slide 1: Leading intimate healthcare – Roadshow presentation 2017/18
Leading intimate healthcare Roadshow presentation 2017/18
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: 8% organic growth for sixth consecutive quarter and for 2017/18
Coloplast delivered 8% organic growth for the sixth consecutive quarter and 8% organic growth for 2017/18 2017/18 Highlights • CEO Lars Rasmussen steps down and Board of Directors appoints Revenue growth Kristian Villumsen as new CEO Reported revenue (DKKm) +8% • Full year organic growth of 8% (6% r
Slide 4: 8% organic growth in 2017/18 vs. market growth of 4-5%
8% organic growth in 2017/18 driven by strong performance across business vs. market growth of 4-5% FY 17/18 revenue by business area FY 17/18 revenue by geography Business Reported revenue Organic growth Share of organic Geographic Reported revenue Organic growth Share of organic area DKKm growth a
Slide 5: Ostomy Care grew 9% organically in 2017/18
Ostomy Care grew 9% organically in 2017/18 driven by SenSura® Mio range and Brava® supporting products Ostomy Care performance Comments • FY organic growth of 9% (reported growth 6%). Q4 2017/18 organic 10 growth of 9% (6% reported growth) 9 9 • Acquired growth was 1% in 2017/18 and in Q4 • Growth i
Slide 6: Continence Care grew 8% in 2017/18
Continence Care grew 8% in 2017/18 driven by SpeediCath® intermittent catheters and Peristeen® Continence Care performance Comments 10 • FY 2017/18 organic growth of 8% (7% reported growth). Q4 2017/18 9 organic growth of 7% (7% reported growth) 8 8 • Acquired growth was 2% in 2017/18 resulting from
Slide 7: Interventional Urology grew 10% in 2017/18
Interventional Urology grew 10% in 2017/18 primarily driven by US sales of Titan® penile implants Interventional Urology performance Comments • FY 2017/18 organic growth of 10% (6% reported growth). Q4 2017/18 organic growth of 10% (11% reported growth) • 2017/18 growth mainly driven by the US 11 11
Slide 8: Wound Care grew 5% in 2017/18 driven by China and Europe
Wound Care grew 5% in 2017/18 driven by China and Europe Wound & Skin Care performance Comments • 2017/18 organic growth of 3% in Wound & Skin Care (negative 0% 16 reported growth). Q4 organic growth of 4% (2% reported growth) 14 • 2017/18 organic growth of 5% for Wound Care in isolation and 6% 12 o
Slide 9: FY 17/18 reported revenue and FX headwinds
FY 17/18 reported revenue driven by strong organic growth of 8% but significantly impacted by FX headwinds Comments Revenue development • FY 2017/18 reported revenue increased by DKK 921m or (DKKm) 185 6% compared to FY 2016/17 -463 16,449 • The majority of growth was driven by organic growth 1,229
Slide 10: FY 2017/18 EBIT margin of 31%
FY 2017/18 EBIT margin of 31% impacted by commercial investments and restructuring costs Comments EBIT margin development (%) • EBIT increased 1% to DKK 5,091m with a reported margin of 31% (31% in constant currencies) compared to 32% last year 32.4 • Gross margin of 67% in DKK compared to 68% same
Slide 11: Adjusted for Mesh and acquisitions, FCF on par with 2016/17
Adjusted for Mesh settlements and acquisitions, FCF was on par with 2016/17 FCF development Comments • Free cash flow in 2017/18 was positive DKK 3,414m compared to DKK 1,632m in 2016/17 98 99 95 93 92 93 • Reported EBITDA 81m DKK higher than 2016/17 4,023 4,079 4,058 • NWC-to-sales of 23% compared
Slide 12: Organic growth guidance for FY 2018/19
Organic growth guidance for FY 2018/19 Guidance 2018/19 Guidance 2018/19 (DKK)* Key assumptions • Up to 1% negative price pressure Sales growth ~8% 8-9% • DKK guidance includes growth from Lilial and IncoCare (organic) • Incremental investments of up to 2% of revenue • Restructuring costs of DKK 25m
Slide 13: Introduction to Coloplast
Leading intimate healthcare Introduction to Coloplast
Slide 14: Four business areas with global sales presence
Coloplast has four business areas all with global sales presence Group revenue 2017/18 by segment Group revenue 2017/18 by geography X = Coloplast’s global market position Emerging markets 17% Continence Ostomy Care Care 40% 36% DKK DKK #1 16.4bn #1 Other 16.4bn developed European markets markets 23
Slide 15: 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 16: 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 17: 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 17-18bn 13-14bn 11-12bn 18-20bn 4-5% 5-6% 3-5% 2-4% Size in DKK Growth in % Coloplast 40 - 50% 45 - 55% 10 - 20% 5 - 15% reg
Slide 18: LEAD20 strategy across 4 major themes
Coloplast’s LEAD20 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 18
Slide 19: Long-term guidance for the LEAD20 strategy period
Long-term guidance for the LEAD20 strategy period aimed at accelerating growth and long-term value creation Revenue growth EBIT margin annual organic constant currencies 7–9% >30% Page 19
Slide 20: Growth acceleration through two key pillars and GOP4
Growth acceleration to be driven through two key pillars and GOP4 will continue to drive unparalleled efficiency Two pillars to drive growth I. Accelerated organic investments I. Invest up to 2% of topline p.a. in new incremental investment cases Understanding II. Emerging markets, US, selected coun
Slide 21: Increased investments in R&D and commercial opportunities
We have increased our investments into R&D and commercial opportunities in the US and Emerging markets Investment allocation Investment allocation by type FY 15/16 to FY 17/18 FY 15/16 to FY 17/18 Up to 2% of Coloplast sales Up to Sales & marketing expansion invested per year 2% R&D Other (IT, Admin
Slide 22: Up to 2% of revenue in incremental investments for 18/19
For 18/19 we will commit up to 2% of revenue in incre- mental investments in commercial initiatives and innovation Understanding users’ lives in full Innovation Consumer R&D ~4% of sales Creating life-changing products and services Supporting beyond expectations Page 22
Slide 23: Global Coloplast Care and DtC presence
Our global Coloplast Care and DtC presence enables us to support users across countries and business areas Over 1M consumers in our database Over 1M conversations with users across the globe Over 30 countries with a consumer setup New Bowel Care program implemented in 2018 Coloplast Care & DTC offer
Slide 24: Clinical Performance Program to tackle biggest user issues
We have 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 * Peo
Slide 25: Digitalization of new products
Through digitalization of new products, we will take the next step towards our mission of making life easier for our users Digitalization in product development as first important milestone Payers Digitalization • We have a mission of making life easier Direct for people with intimate healthcare Glo
Slide 26: EBIT margin development drivers
EBIT margin development is a function of scalability, cost discipline, investments and M&A Illustrative Natural leverage Possible incremental Future drivers of EBIT margin effect depending on investment of up to 2% organic growth level of revenue per year EBIT will be positively impacted by: + Lever
Slide 27: Global Operations Plan 4 supports LEAD20
Global Operation Plan 4 aims to support LEAD20 through continued unparalleled efficiency and financial discipline Global Operations Plan 4 1. Reduction of manufacturing in Denmark EBIT margin contribution, bps Manufacturing FTE’s in Denmark, Ultimo FY GOP 3 GOP 4 700 600 50 500 375 21% 200 100 Salar
Slide 28: Profitability supported by scalability and efficiency gains
Profitability supported by scalability and efficiency gains enabling additional investments within distribution and R&D Gross margin development, in % of revenue Cost item Development, in % of revenue +0.4%-points 28.3 28.5 28.1 28.1 28.7 28-30 Distribution -1.4%-points 68.7 68.5 68.3 68.1 67.3 0%-p
Slide 29: Global Business Support and IT landscape
A global Business Support and IT landscape enables Coloplast to scale faster and more efficiently Global Business Services Global business services handle the majority of all global support % of group processes 100% ~90% 100% IT infrastructure Finance/ Master Data Global Business & support accountin
Slide 30: Continued strong free cash flows
We will continue to deliver strong and attractive free cash flows … Taxation Net working capital CAPEX(2) Reported tax rate Net working capital in % revenue Depreciation in % of revenue CAPEX in % of revenue CAPEX DKKm 4.1% 3.7% 4-5% 27.8% 25.2% 25.1% 23.9% 24.1% 23.8% 23.4% ~24% 2.8% 2.4% 23.0% 23.
Slide 31: Attractive cash returns despite large investments
…and continue to provide attractive cash returns despite large investments in commercial and expansion activities Coloplast cash distribution to investors Comments • Coloplast returns excess liquidity to Dividends paid out in the year (mDKK) (1) Share buy-back (DKKm) Pay-out ratio (%) (2) shareholde
Slide 32: Stable shareholder returns going forward
In sum, we believe Coloplast can continue to deliver stable shareholder returns through ... 31% Comments • Stable market trends in our Chronic Care business • Strong Coloplast Care retention program and innovative DtC 10% activities 8% 9% • Increased focus on growing the business outside Europe • Ad
Slide 33: Appendices
Leading intimate healthcare Appendices
Slide 34: The Coloplast share (COLO'B-KO)
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on Nasdaq Copenhagen since 1983 ~133 billion DKK (~20 billion USD) market cap @ ~615 DKK per 13% share (incl. A shares) 6% Two share classes: 2% 46% • 18m A shares carry 10 votes (family) • 198m B shares carry 1 vote (fre
Slide 35: Capital structure
Capital structure Comments Net interest bearing debt • Overall policy is that excess liquidity is returned to shareholders through a combination of dividends and share buy- 0.1x 0.1x -0.3x -0.2x backs -0.3x • Interest bearing debt will be raised in connection with a major acquisition or other specia
Slide 36: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 31.9 32.7 36.8 36.1 36.6 36.3 31.3 31.5 31.7 34.7 28.3 28.5 28.1 28.7 28.1 25.2 23.9 24.1 23.8 23.4 4.0 4.3 3.8 4.0 3.9 4.3 4.4 4.4 4.4 4.1 3.1 3.2 3.5 3.7 4.0 13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18 Admin-to-Sales (%)
Slide 37: Revenue development by business area
Coloplast revenue development by business area Ostomy Care Interventional Urology 6,291 6,643 13 5,567 5,935 5,091 9 10 10 8 9 9 9 9 10 7 10 6 7 7 5 5 6 6 6 1,740 1,359 1,497 1,641 1,199 13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18 Continence Care Wound & Skin Care 13 16 10 10 9 5,543
Slide 38: Revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 9,213 9,394 9,941 15 8,221 8,843 10 8 11 8 8 6 5 6 3,642 3,791 6 2,479 2,945 3,177 5 6 6 4 5 4 4 2 13/14 14/15 15/16 16/17(1) 17/18 13/14 14/15 15/16 16/17 17/18 Emerging Markets Coloplast group 24 23 16,449 21 15
Slide 39: Q4 revenue and EBIT development
Coloplast Q4 revenue and EBIT development Revenue development EBIT margin development (%) (DKKm) 51 0.1 -78 4,234 0.4 -28 0.0 33.4 309 0.1 -0.3 33.2 3,980 33.1 -0.2 Revenue Q4 Organic Acquired Currency Currency Revenue Q4 2016/17 growth operations effect effect ARS(1) 2017/18 Reported ∆ Gross ∆ ∆ Ad
Slide 40: Segment operating profit
Segment operating profit Chronic Care Interventional Urology Wound & Skin Care Ostomy and Continence Care 59 59 59 39 58 58 38 38 38 37 36 35 36 34 35 1,875 1,899 166 169 164 228 1,793 1,793 1,777 154 212 138 191 194 162 Q4 16/17 Q1 17/18 Q2 17/18 Q3 17/18 Q4 17/18 Q4 16/17 Q1 17/18 Q2 17/18 Q3 17/1
Slide 41: Exchange rate exposure and hedging policy
Exchange rate exposure FY 2018/19 and hedging policy Revenue FX exposure 2018/19(1) 12 months exposure from 10% initial exchange rate drop(1) Other 15% USD -330 -140 CNY, JPY, AUD, BRL & ARS EUR 11% 41% -250 GBP -160 14% HUF 0 110 GBP 19% Revenue (DKKm) EBIT (DKKm) USD Financial guidance for 2018/19
Slide 42: Mesh litigation timeline
Mesh litigation timeline April 28, 2017: Verdict vs Ethicon Sep. 7, 2017: April 12, 2018: Verdict vs Bard PA State Court: Verdict vs Ethicon NJ State Court: USD 20M PA State Court: USD 68M (DKK 125.3M) USD 57.1M (DKK 410.3M) Sept. 9, 2014: (DKK 358.6M) Verdict vs BSC June 5, 2018: May 2, 2014: TX St
Slide 43: 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 13/14 14/15 15/16 16/17 17/18 Restricted cash, DKKbn Actual 1.2 1.2 Expected EBIT (before special items) 4,147 4,535 4,846 5,024 5,091 0.8 0.8 0.6 0.7 0.7 Special items -1,000 -3,0
Slide 44: Health reform landscape
Health reform landscape – expected negative impact of up to 1% per year Europe Rest of World • France: Reimbursement pressure on OC and CC • U.S.: Healthcare reform implementation ongoing • Greece: Reimbursement pressure on all BAs • Argentina: Macroeconomic challenges • Germany: Reimbursement press
Slide 45: CARE increases retention and product 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 46: DtC marketing program reaches 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 46
Slide 47: 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 47
Slide 48: 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 49: 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 50: Introducing Ostomy Care Supporting Products
Introducing Ostomy Care Supporting Products Market fundamentals Key products Brava® is a range of ostomy supporting products • Market size of DKK 2-3bn designed to reduce leakage or care for skin, to make • Market growth of 6-8% • Market share 30-35% Brava® Protective Seal our end-users feel secure.
Slide 51: 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 CC Othe
Slide 52: 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 53: Introducing Interventional Urology
Introducing Interventional Urology 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 Cus
Slide 54: Introducing Wound Care
Introducing Wound Care Disease areas Key products Distribution of revenues Chronic wounds (WSC) • Leg ulcers Biatain® range • Diabetic foot ulcers Comfeel® range • Pressure ulcers Skin Care Wound Care other Customer groups Contract manufacturing & call points Hospitals Biatain® Silicone Biatain® Sil
Slide 55: 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 SC Other Customer groups & call points Sween® EasiCleanse Bath® Hospi
Slide 56: 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 5-6bn with 4-5% growth + Increased focus on prevention + Increased importance of utilization • Market share: 7-9% management •
Slide 57: 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 Interventional Urology Marketing Marketing Marketing Sales Sales R&D Sales Regions R&D Global Operations Global Business Support Functi
Slide 58: 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 59: Responsible operations reduces risks and supports growth
Responsible operations reduces risks, stimulates employee engagement and supports growth Empowering People Acting respectfully Minimising footprint Access to Healthcare Inclusion and diversity Renewables Partnership programme to improve Year-on-year increase in women in top 100% electricity from ren
Slide 60: Income statement
Income statement DKKm FY 2016/17 FY 2017/18 Change Revenue 15,528 16,449 6% Gross profit 10,571 11,066 5% SG&A costs -4,994 -5,374 8% R&D costs -574 -640 11% Other operating income/expenses 21 39 86% Operating profit (EBIT) 5,024 5,091 1% Profit/loss after tax on investments in associates -2 0 nm Ne
Slide 61: Balance sheet
Balance sheet DKKm 30 Sep 2017 30 Sep 2018 Change Balance, total 12,050 11,769 -2% Assets Non-current assets 5,856 6,179 6% Current assets 6,194 5,590 -10% of which: Inventories 1,692 1,725 2% Trade receivables 2,890 2,877 0% Restricted cash 531 12 -98% Marketable securities, cash, and cash equivale
Slide 62: Cash flow
Cash flow DKKm FY 2016/17 FY 2017/18 Change EBIT 5,024 5,091 1% Depreciation and amortisation 611 625 Change in working capital -1,406 -422 -70% Net interest payments 69 23 -67% Paid tax -395 -874 nm Other -652 -82 -87% Cash flow from operations 3,251 4,361 34% CAPEX1) -685 -669 -2% PPE divested 36
Slide 63: Manufacturing setup
Manufacturing setup Production by country (Volume)¹ 2% Hungary 5% Mørdrup 15% Thisted4 Tatabánya China Minneapolis Sarlat Nyirbátor Denmark Mankato US/France Zhuhai 78% Costa Rica COGS by cost type² 9% Salary - Direct 21% 12% Salary - Indirect Materials (RM &SFG) 9% Innovation & Specialised Producti
Slide 64: Production sites
Production sites Denmark US Mørdrup Minneapolis • Pilot development work Ostomy care, • Interventional Urology products Continence care and Wound care • Number of employees in production: ~100 • Adhesives production • Number of employees in production: ~225 Thisted Mankato • Ostomy care products • S
Slide 65: Production sites
Production sites Hungary China Tatabánya Zhuhai • Ostomy care products • Continence care products • Adhesives • Ostomy care products • Continence care products • Machine building • Interventional Urology products • Number of employees in production: ~1,050 • Number of employees in production: ~1,700
Slide 66: Contact Investor Relations
Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ellen Bjurgert Rasmus Sørensen Anne-Sofie Søegaard Sine Flinck Vice President, Investor Relations Senior Manager, Investor Relations IR Coordinator Student Assistant Tel. direct: +45 4911 3376 Tel. direct: +45 4911 1786 Tel. direct: +45
Slide 67: 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 Group - Ostomy Care /