Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — Q1 2014/15 Earnings Presentation
56 slides from Coloplast A/s Class B's earnings presentation, February 2015
Slide 1: Leading intimate healthcare – Roadshow presentation Q1 2014/15
Leading intimate healthcare Roadshow presentation – Q1 2014/15
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: Disappointing organic sales growth in Q1 leads to revised guidance
Disappointing organic sales growth in Q1 of 6% leads to revised guidance for fiscal year 2014/15 Highlights Performance Revenue (mDKK) Organic revenue growth of 6% (8% in DKK) Organic growth (%) Gross margin of 69% - up 1% compared to 25,000 24,000 11 23,000 22,000 21,000 9 Q1 2013/14 20,000 19,
Slide 4: Revenue by geography and business area
Challenges emerged in the UK home care business and distributor buying patterns impacted US growth Q1 14/15 revenue by geography Q1 14/15 revenue by business area Geographic Reported revenue Organic growth Business Reported revenue Organic growth area mDKK In percent area mDKK In percent European Os
Slide 5: Ostomy Care grew 5%
Our Ostomy Care business grew 5% - SenSura® and Brava® accessories remain main contributors to growth Comments Performance Organic sales growth of 5% for Q1 14/15. Revenues (mDKK) Growth in DKK was 6%. Reported growth (%) Satisfactory growth in Germany, China and Argentina offset by negative gro
Slide 6: Continence Care growth driven by SpeediCath and Peristeen
Continence Care growth continues to be driven by SpeediCath® intermittent catheters and Peristeen® Comments Performance Organic sales growth of 8%. Growth in DKK was 10% Revenues (mDKK) Reported growth (%) SpeediCath® ready-to-use intermittent catheters, mainly the compact versions – in Organic
Slide 7: Urology Care driven by Men's health franchise
Urology Care performance driven by our Men's health franchise Comments Performance Q1 14/15 organic growth of 8%. Growth in Revenues (mDKK) DKK was 11% Reported growth (%) Organic growth (%) Titan® penile implants continues to be the main driver of growth 11 9 9 11 8 Sales of products for pelv
Slide 8: Wound Care organic growth 9%
Organic growth in Wound Care 9% mainly driven by Biatain® Silicone in Europe Comments Performance Q1 organic sales growth in WSC of 4% (7% in Revenues (mDKK) DKK). Organic growth in Wound Care alone is Reported growth (%) 9% Organic growth (%) Growth driven by Biatain® sales in particular 17 Bia
Slide 9: Operating margin of 33%
Operating margin of 33% driven by efficiency gains, negative product mix impact and sales investments Comments Performance Q1 14/15 EBIT grew 6% to DKK 1,076m with EBIT (mDKK) a margin of 33% EBIT margin (%) Q1 14/15 gross margin up by 1%-point to 69% Gross margin (%) − Driven by continued cost
Slide 10: Free Cash Flow impacted by sale of bonds
Free Cash Flow impacted mainly by sale of bonds to fund dividend payments in the quarter Comments Performance Free cash flow was DKK 915m compared to FCF (mDKK) DKK 382m in Q1 2013/14 FCF-to-Sales (%) − EBITDA DKK 75m higher 26 28 − NWC-to-sales of approx 25%, 2%-points 20 19 higher due to higher
Slide 11: Revised guidance for 2014/15
Revised guidance for 2014/15 still points towards further market share gains and continued margin expansion Guidance Guidance Long term 14/15 14/15 (DKK) ambition Sales growth 8-9% (organic) 12-13% 7-10% p.a. EBIT margin ~34% (fixed) ~34% +50-100 bps p.a. CAPEX (DKKm) ~650 ~4-5% of sales Tax rate ~2
Slide 12: Coloplast Capital Market Event 2015
Coloplast Capital Market Event 2015 7 May 2015 in London (tentatively from 1200-1800) We would like to provide institutional investors and financial analysts with the opportunity to meet with Lars Rasmussen, President & CEO, Anders-Lonning Skovgaard, EVP & CFO, Kristian Villumsen, EVP Chronic Care,
Slide 13: Introduction to Coloplast
Leading intimate healthcare Introduction to Coloplast Page 13
Slide 14: Four business areas with global sales presence
Coloplast has four business areas all with global sales presence Group revenue FY 2013/14 by segment Group revenue FY 2013/14 by geography X = Global position Emerging markets 14% Ostomy Continence Care Care 41% 12,4 36% Other developed 12,4 Billion #1 Billion #1 DKK markets 20% DKK European markets
Slide 15: Coloplast specializes in intimate healthcare needs
Coloplast specializes in intimate healthcare needs Who are our typical users How do we help them? Ostomy People who have had their intestine SenSura® Mio Care redirected to an opening in the Ostomy bag abdominal wall Continence People in need of bladder or bowel SpeediCath® management Compact male C
Slide 16: Intimate health care characterized by stable trends
Intimate health care is characterized by stable trends Growing elderly population increases Demographics customer base for Coloplast products Expanding healthcare coverage for Emerging markets populations in emerging markets increases addressable market Earlier detection and cure, eventually reduces
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 Ostomy Continence Urology Wound Care Emerging Addressable 13 -14 billion DKK ~9 billion DKK 9 -10 billion DKK ~14 billion DKK market 4 - 5% growth 4 - 6% growth 3 - 5% growth 2 - 4% growth
Slide 18: Strategy centred on profitable organic growth
Our strategy remains centred on value creation through profitable organic growth How we compete… …Where we compete 1 Develop and market the world’s best 5 Untapped potential in Europe products 6 Increased momentum in Other 2 Interact and build consumers relations Developed Markets – incl. breakthrou
Slide 19: Consumer Care focus: Coloplast Care and Direct-to-Consumer
Our Consumer Care focus is driven by two approaches; Coloplast Care retention programe and Direct-to-Consumer initiatives Hospital H General CARE practitioner Coloplast Distributors Pharmacies Consumer Bandagists Home Health Care DtC
Slide 20: Markets outside Europe hold longer term potential
Markets outside our European stronghold holds significant longer term potential Increase market share in • USA • Canada • Japan • Australia Build on and accelerate growth platform e.g. in • China • Brazil • Russia • Argentina Develop growth platform e.g. in • MENA • Mexico • India • South Africa • T
Slide 21: Operating leverage will generate funds for growth
Operating leverage will generate funds for investments in growth High value growth in Europe Generates funds for investments in growth and leaves potential for improving cost ratios Continued cost discipline Accumulated sales investments Administration (%) R&D (%) COGS (%) Distribution (%) 45,0 42,1
Slide 22: Cost efficient production with more potential
28 January 2015 22 Cost efficient production with more potential for improvements Production by country* 5% 10% Thisted Hungary Minneapolis Mørdrup China Mankato Denmark 25% 60% US/ France Nyirbátor Sarlat Tatabánya *Average usage of raw material (RM) and semi finished goods (SFG) COGS by cost type*
Slide 23: New plan for Global Operations
New plan for Global Operations have six main strategic themes securing continued efficiencies in our production Today Operational Excellence II Reduce risk of supply disruption Develop footprint Operational Excellence Improve ramp-up and Lean in volume production innovation support Redesign for manu
Slide 24: Stable return policy, high payout ratio and buy-backs
Coloplast has stable return policy and delivers high payout ratio and continued share buy-backs Comments Performance DKK 1bn share buy-back initiated in March Share buy-back (mDKK) 2014 Dividends (mDKK) First half of share buy-back program Total payouts/FCF (%) completed– second half expected to
Slide 25: We expect continued value creation driven by...
We expect continued value creation driven by... Stable market trends in our Chronic Care Organic growth business 33%* EBIT Margin Strong retention program and innovative 10% 16% D-t-C activities 10% 9% 9% Increased focus on growing the business outside Europe 03/04 05/06 07/08 09/10 11/12 13/1
Slide 26: Appendices
Appendices Page 26
Slide 27: Profitability drivers
Profitability drivers Profitability drivers – key ratios Administration (%) R&D (%) COGS (%) Distribution (%) 45.0 42.1 38.7 40.0 35.4 35.0 33.4 32.4 30.4 31.3 31.4 30.0 29.5 29.4 28.8 28.5 28.3 28.6 25.0 20.0 7.0 15.0 5.8 5.9 5.6 4.4 4.3 4.1 4.6 4.0 4.1 10.0 3.1 3.3 3.1 3.3 5.0 0.0 08/09 09/10 10/1
Slide 28: Free Cash Flow drivers
Free Cash Flow drivers Free Cash Flow drivers – key ratios NWC-to-Sales (%) CAPEX-to-Sales (%) EBITDA margin* (%) 35.8 36.8 36.2 34.1 30.6 27.1 23.7 23.1 22.2 22.5 23.9 24.8 23.1 22.0 6.5 4.3 4.6 3.8 3.2 3.1 2.5 08/09 09/10 10/11 11/12 12/13 13/14 YTD 14/15 *Before special items Page 28
Slide 29: The Coloplast share
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on NASDAQ Copenhagen since 1983 2% 9% ~ 118 billion DKK (~ 18 billion USD) market 4% cap @ ~535 DKK per share (Incl. A shares) 45% Two share classes: 33% 18m A shares carry 10 votes (family) 7% 202m B shares carry 1 v
Slide 30: Revenue development by business area
Revenue Reported growth Organic growth Coloplast revenue development by business area Ostomy Care Continence Care 12,000 11 12000 10 10 10 9 8 9 8 8 8 10,000 9 10000 7 7 7 8 8 6 6 8 7 5 5 8,000 8000 4 7 2 6000 5,091 0 6,000 4,633 4,849 4,438 4,266 3,831 4,081 3,949 -2 4,000 3,202 3,456 4000 -4 2000
Slide 31: Revenue development by geography
Revenue Reported growth Organic growth Coloplast revenue development by geography Europe Other developed 4 5 6 5 5 5 6 13 15 4 6 4 8,221 9 10 7,388 7,749 9 7 6,675 7,000 6 4 5 4 1,874 1,987 2,288 2,395 2,479 09/10 10/11 11/12 12/13 13/14 09/10 10/11 11/12 12/13 13/14 Emerging Markets 23 20 13 24 14
Slide 32: Coloplast Care retention program
Coloplast Care is a retention program bringing us closer to our consumers Objective Through Coloplast Care we… Key benefits C Connect to consumers and form lifetime bond An online support programme Enrollment through all relevant consumer touch points NPD gain and retention of new users when A Advis
Slide 33: Direct-to-Consumer activities new marketing channel
Direct-to-Consumer activities is a new marketing channel Objective Objective DtC is direct, individualized marketing… Examples of DtC investments New website Expertise Market to the individual’s need Conversion, Customized message up-selling and Specific products cross-selling to and dialogue and se
Slide 34: Grow Emerging Markets business by 25% per year
We aim to grow our Emerging Markets business by 25% per year through focused execution in selected markets We have selected core growth markets We have a clear EM value creation strategy Core China Argentina 1 Expand China growth Brazil Greece markets Russia Poland 2 Expand Brazil New
Slide 35: US Mesh litigation – financial impact
US Mesh litigation – Overview of current financial impact TBD Summary Financial Impact Q1 14/15 Coloplast estimate a total of around 7,000 claims EBIT 1,076 against the company. A total DKK 1.5bn has been EBIT before special items 1,076 provisioned and this is currently considered sufficient EBIT
Slide 36: Mesh litigation status and events
Mesh litigation status & events leading up to 1 bDKK provision Nov. 13, 2014: July 23, 2012: June 2013: Aug. 15, 2013: April 3, 2014: May 2, 2014: Sept. 5, 2014: Verdict vs BSC Verdict vs Bard Verdict for Verdict vs Bard Verdict vs Ethicon Coloplast provision Verdict vs Ethicon BSC MDL (FL): CA Stat
Slide 37: Capital structure
Capital structure Comments Performance NIBD (mDKK) No interest bearing debt – will only be raised in connection with a major acquisition NIBD/EBITDA * Excess liquidity is returned to shareholders in 1.2x a combination of dividend and share buy- 0.6x backs 2,297 0.2x Share buy-backs of DKK 500m
Slide 38: Healthcare reform landscape
Healthcare reform landscape Intensifying reform pressure France Still awaiting periodic review of OC and CC. Price cut Stable reform environment in WC implemented Oct` 2014 UK Health and social bill now being implemented; government seeking efficiency savings through Clinical Commissioning Groups (C
Slide 39: Introducing Ostomy Care
Introducing Ostomy Care Key products • Colorectal cancer (est. 45%) Disease areas • Bladder cancer (est. 10%) • Diverticulitis (est. 15%) • Inflammatory bowel disease (est. 10%) • Other (est. 20%) Customer • Nurses, mainly stoma care nurses groups • People with a stoma • Wholesalers/distribution • H
Slide 40: Introducing Ostomy Care Accessories
Introducing Ostomy Care Accessories Brava® is a range of ostomy accessories designed to reduce leakage Market or care for skin, to make our end-users feel secure. Brava® was fundamentals • Market size of DKK 2bn launched in April 2012 and the range includes 10 different products. • Market growth of
Slide 41: Introducing Continence Care
Introducing Continence Care Key products Disease • Spinal Cord Injured, SCI areas • Spina Bifida, SB • Multiple Sclerosis, MS • Benign prostatic hyperplasia, BPH & prostatectomy patients • Elderly Customer groups • Continence or home care nurses • Wholesalers/ distributors • Hospital purchasers and
Slide 42: Introducing Bowel Management
Introducing Bowel Management Disease areas Faecal incontinence (management Key products products only) Customer Customer groups groups & • Spinal Cord Injured, SCI call points • Spina Bifida, SB • Multiple Sclerosis, MS Call points • Rehab centers • Pediatric clinics Peristeen® Anal Irrigation Anal
Slide 43: Introducing Urology Care
Introducing Urology Care Treatment (surgical) of urological disorders Key products (implants and surgical disposables) Disease areas • Urinary incontinence • Pelvic organ prolapse • Erectile dysfunction • Enlarged prostate • Kidney and urinary stones Customer • Surgeons groups • Purchasing departmen
Slide 44: Introducing Wound Care
Introducing Wound Care Key products Disease areas Chronic wounds • Leg ulcers • Diabetic foot ulcers • Pressure ulcers Customer Hospitals Groups & • Wound care committees call points • Specialist nurses/doctors • (Purchasers) Biatain® Silicone Biatain® Ag • foam dressing with • Antimicrobial foam dr
Slide 45: Introducing Wound care – NPWT
Introducing Wound care – NPWT as a new product category extriCARE® 2400 Negative Pressure Wound Therapy (NPWT) Pump is Market • Market size of USD 2bn a lightweight, portable and battery-powered device that works with fundamentals • Market growth of 5% anatomically fitted NPWT dressings to create
Slide 46: Introducing Skin Care
Introducing Skin Care Key products Disease areas • Moisture associated skin damage • Incontinence • Skin folds & Obesity • Prevention of skin impairments Customer Hospitals groups & • Clinical Specialists call points • Supply Chain • Value Analysis Committee Sween® EasiCleanse Bath® Community • Broa
Slide 47: Product market for US Skin Care
Product market for US Skin Care • US market size estimated at USD ~1bn with ~ 5% growth • Market share: 5-10% • Main competitors include • Medline Industries • Sage Products • ConvaTec Market drivers Market limiters Market trends Aging and obese population Consolidation of Providers Increase s
Slide 48: Coloplast Executive Management
Coloplast Executive Management Lars Rasmussen President, CEO • Born 1959 • With Coloplast since 1988 Anders L.-Skovgaard Allan Rasmussen Kristian Villumsen EVP, CFO EVP, Global Operations EVP Chronic Care • Born 1972 • Born 1967 • Born 1971 • With Coloplast since 2006 • With Coloplast since 1992 • W
Slide 49: Corporate responsibility – external recognitions
Corporate responsibility – external recognitions Page 49
Slide 50: Income statement
Income statement DKKm Q1 2014/15 Q1 2013/14 Change Revenue 3,301 3,063 7.8% Gross Profit 2,263 2,093 8.1% Gross margin 68.6% 68.3% - SG&A costs -1,081 -988 - R&D costs -110 -94 - Other Operation Inc/exp 4 2 - Operating profit (EBIT) 1,076 1,013 6.2% EBIT margin 32.6% 33.1% - Net financial items -28
Slide 51: Balance sheet
Balance sheet DKKm 31-Dec-14 31-Dec-13 Change Balance sheet total 9,663 8,603 12.3% Equity 5,395 6,090 -11.4% Equity ratio 55.8% 70.8% - Invested capital 6,437 6,592 -2.4% ROIC before tax 69% 63% ROIC after tax 52% 47% Net asset value per share 25 28 -10.7% Page 51
Slide 52: Cash flow
Cash flow DKKm Q1 2014/15 Q1 2013/14 Change EBITDA 1,194 1,119 6.7% Change in working capital 276 88 - Net interest payments, etc. -5 71 - Paid tax and other -471 -683 - Cash flow from operations 646 602 - CAPEX -153 -114 -34.2% Securities 419 -108 - Other 3 2 - Cash flow from investments 269 -220 -
Slide 53: Production sites
Production sites TCC Mørdrup • Adhesives • Wound care products DK • Continence care products • Coloplast Consumer Products • Number of employees in production: ~350 TCC Thisted • Machine development • Ostomy care products DK • Number of employees in production: ~175 Sarlat • Disposable surgical urol
Slide 54: Production sites
Production sites Tatabánya • Ostomy care products • Adhesives HU • Continence care products • Number of employees in production: ~1,250 • Postponement & packaging Tata • Cross docking • Warehousing HU • Distribution & shipping • Number of employees: ~230 Nyírbátor • Catheter care products • Wound ca
Slide 55: Contact Investor Relations
Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ian Christensen Ellen Bjurgert Vice President Manager Investor Relations Investor Relations Tel. direct: +45 4911 1301 Tel. direct: +45 4911 3376 office: +45 4911 1800 office: +45 4911 1800 Fax: +45 4911 1555 Fax: +45 4911 1555 dkisec@co
Slide 56: Our mission, values and vision
Our mission Making life easier for people with intimate healthcare needs Our values Closeness… to better understand Passion… to make a difference Respect and responsibility… to guide us Our vision Setting the global standard for listening and responding Page 56