Slide 1: Leading intimate healthcare: Roadshow presentation Q1 2016/17
Leading intimate healthcare Roadshow presentation Q1 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: Q1 organic growth of 6% and 33% EBIT margin in constant currencies
Coloplast delivered Q1 organic growth of 6% and 33% EBIT margin in constant currencies Q1 Highlights Revenue growth +6% Reported revenue (DKKm) • Organic revenue growth of 6% (3% in DKK) +3% Organic growth • Inventory reductions in US by largest distributors of around 3,656 3,755 Reported growth DKK
Slide 4: Q1 organic growth was 6% driven by inventory reductions in the US
Q1 organic growth was 6% driven by inventory reductions in the US – inventory levels are now normalised Q1 16/17 revenue by business area Q1 16/17 revenue by geography Business Reported revenue Organic growth Share of organic Geographic Reported revenue Organic growth Share of organic area DKKm grow
Slide 5: Ostomy Care grew 6% in Q1
Ostomy Care grew 6% in Q1 and continues to be driven by SenSura® range and Brava® accessories Performance Comments • Q1 organic growth of 6% (3% in DKK) • Satisfactory growth in UK, China, Southern Europe and Germany • Growth in US negatively impacted by inventory reductions by major 11 distributors
Slide 6: Continence Care grew 5% in Q1
Continence Care grew 5% in Q1 impacted by US inventory reductions and lower tender value in Saudi Arabia Performance Comments • Q1 organic sales growth of 5% (1% in DKK) • Satisfactory growth in US, France, Germany and UK • Growth driven by SpeediCath® Compact catheters in particular in the US as we
Slide 7: Urology Care grew 8% in Q1
Urology Care grew 8% in Q1 driven by market share gains in Women’s Health Performance Comments 15 • Q1 organic growth of 8% (9% in DKK) • Satisfactory growth for US Women’s Health driven by Altis® slings and Restorelle® products for treatment of stress urinary incontinence and 11 pelvic organ prolap
Slide 8: Wound Care delivered 8% organic growth in Q1
Wound Care delived 8% organic growth in Q1 driven by Biatain® Silicone in Europe Performance Comments • Q1 organic sales growth of 5% for WSC (4% in DKK), and 8% for Wound 15 Care in isolation • WSC growth positively impacted by Greece, Germany and UK • Growth in Wound Care driven by Biatain® sales,
Slide 9: Q1 operating margin of 33% in DKK and constant currencies
Q1 operating margin of 33% in DKK and constant currencies Comments Performance • EBIT before special items grew 3% in DKK (8% in constant currencies) to DKK 1,226m with a 33.1 reported margin of 33% in line with last year 0.1 -0.2 (33% in constant currencies) 0.2 0.5 32.7 -0.2 0.2 32.6 • Gross margi
Slide 10: FCF adjusted for Mesh settlements and Comfort Medical increased by 12%
FCF adjusted for Mesh settlements and the acquisition of Comfort Medical increased by 12% in Q1 Performance Comments 38 • Free cash flow was a negative DKK 833m compared to a positive DKK 831m in Q1 2015/16 4,023 • EBITDA DKK 43m higher 27 26 • NWC-to-sales of 25%, 1%-point higher than FY 2015/16 20
Slide 11: Updated financial guidance in DKK for 2016/17
Updated financial guidance in DKK for 2016/17 Guidance 16/17 Guidance 16/17 (DKK) Long term ambition Sales growth 7-8% (organic) 7-8% 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: Strong market positions in Europe and 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: New strategy will drive 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
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: 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 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: 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 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 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 24: 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: 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: 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 16% • Strong retention program and innovative DtC activities 10% 6% • Increased focus on growing the business outside Europe 9% 6% • Additional
Slide 27: Appendices
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% ~106 billion DKK (~15 billion USD) market cap @ ~492 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 36.4 35.4 35.8 33.4 34.1 32.4 31.5 31.7 31.3 31.3 30.6 29.4 28.8 28.5 28.5 28.3 28.1 28.4 25.3 23.9 24.1 23.8 23.1 22.2 22.5 5.9 5.6 4.6 4.0 4.3 3.8 3.9 3.8 4.3 4.4 4.4 2.5 3.1 3.0 3.1 3.3 3.1 3.2 3.5 3.7 4.1 10/11 11/12 12
Slide 31: Coloplast revenue development by business area
Coloplast revenue development by business area Ostomy Care Urology Care 5,935 13 5,567 4,849 5,091 10 9 9 9 9 9 9 7 8 7 6 8 8 6 7 5 5 1,509 1,497 1,124 1,199 1,359 3 5 408 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 5,019 5,182
Slide 32: Revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 8,843 9,213 7,749 8,221 9 10 8 8 8 2,331 2,395 2,479 2,945 3,177 6 6 821 5 5 6 5 4 6 6 4 4 1 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 13,
Slide 33: Segment operating profit
Segment operating profit Chronic Care Urology Care Wound & Skin Care Ostomy and Continence Care 39 37 38 34 34 60 60 61 61 60 38 36 36 35 35 218 184 188 155 177 1,696 1,750 1,706 171 1,667 1,603 137 133 133 130 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 15/16 15/16 15/16 15/16 16/17 15/16 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 1.2 2013/14 2014/15 2015/16 Restricted cash, DKKbn EBIT (before special items) 4,147 4,535 4,846 0.6 0.6 0.6 0.5 Special items -1,000 -3,000 - 750 0.3 EBIT 3,147 1,535 4,096 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 increase retention and compliance for 400,000 enrolled consumers
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- Global program with shared local clinicians touch” program infrastructure Advisors available on phone Clinically validated content an
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 Broa
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 3M 2015/16 3M 2016/17 Change Revenue 3,656 3,755 3% Gross profit 2,506 2,580 3% SG&A costs -1,176 -1,215 3% R&D costs -126 -138 10% Other operating income/expenses -10 -1 nm Operating profit (EBIT) 1,194 1,226 3% Net financial items -123 2 nm Tax -246 -282 15% Net profit 825 94
Slide 54: Balance sheet
Balance sheet DKKm 31 Dec 2015 31 Dec 2016 Change Balance, total 10,810 12,883 19% Assets Non-current assets 5,077 5,968 18% Current assets 5,733 6,915 21% of which: Inventories 1,505 1,626 8% Trade receivables 2,510 2,689 7% Restricted cash 563 1,180 nm Marketable securities, cash, and cash equival
Slide 55: Cash flow
Cash flow DKKm 3M 2015/16 3M 2016/17 Change EBITDA 1,325 1,368 3% Change in working capital 509 -429 nm Net interest payments -124 -99 nm Paid tax -19 -6 -68% Other -1,062 -580 nm Cash flow from operations 629 254 -60% CAPEX1) -124 -112 -10% PPE divested 9 21 133% Acquisition 0 -1,106 nm Securities
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: ~1,500 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