Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — H1 2015/16 Earnings Presentation
56 slides from Coloplast A/s Class B's earnings presentation, 2016
Slide 1: Leading intimate healthcare
Leading intimate healthcare Roadshow presentation – H1 2015/16
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: H1 15/16 organic growth of 7% and 33% EBIT margin
H1 15/16 organic growth of 7% and 33% EBIT margin Highlights Performance Organic revenue growth of 7% (8% in DKK) Revenue (mDKK) Gross margin of 68% compared with 69% Organic growth (%) for the same period last year EBIT margin of 33%, both in DKK and 12.000 7 7 10 11.000 10.000 constant excha
Slide 4: H1 15/16 organic growth was 7% against a market growth of ~5%
H1 15/16 organic growth was 7% against a market growth of ~5% H1 15/16 revenue by business area H1 15/16 revenue by geography Business Reported revenue Organic growth Geographic Reported revenue Organic growth area mDKK In percent area mDKK In percent Ostomy 8% European 5% 2,898 4,586 Care markets C
Slide 5: H1 growth of 8% for Ostomy Care driven by SenSura Mio and Brava
H1 growth of 8% for Ostomy Care driven by SenSura® Mio and Brava® accessories Comments Performance H1 organic growth of 8% (7% in DKK). Q2 Revenues (mDKK) organic growth of 9% Reported growth (%) Satisfactory growth in UK, Russia, the Nordic Organic growth (%) markets and Argentina offset by a l
Slide 6: Weak Q2 growth of 3% in Continence Care strongly impacted by negative growth in US
Weak Q2 growth of 3% in Continence Care strongly impacted by negative growth in US Comments Performance H1 organic sales growth of 4% (5% in DKK). Q2 organic growth of 3% Revenues (mDKK) Growth driven by the SpeediCath® portfolio Reported growth (%) of ready-to-use intermittent catheters and in
Slide 7: Solid Urology Care H1 organic growth of 8% driven by Men's and Women's Health in US
Solid Urology Care H1 organic growth of 8% driven by both Men’s and Women’s Health in US Comments Performance H1 organic growth of 8% (12% in DKK). Q2 Revenues (mDKK) organic growth of 8% Reported growth (%) Satisfactory growth in US for Titan® penile Organic growth (%) implants 17 14 15 12 Sa
Slide 8: WSC delivered 9% organic growth in H1 on back of a strong Skin Care business
WSC delivered 9% organic growth in H1 on back of a strong Skin Care business. WC is challenged in Emerging markets Comments Performance H1 organic sales growth in WSC of 9% Revenues (mDKK) (11% in DKK) and 6% for Wound Care in isolation. Q2 organic growth for WSC of 9% Reported growth (%) and 3% f
Slide 9: Operating margin of 33% impacted by efficiency gains, higher Emerging markets costs and increased R&D activity
Operating margin of 33% impacted by efficiency gains, higher Emerging markets costs and increased R&D activity Comments Performance EBIT grew 7% to DKK 2,361m with a margin of EBIT (mDKK) 33% in H1 EBIT margin (%) Q2 EBIT margin of 32% Gross margin of 68% compared to 69% last Gross margin (%)
Slide 10: Free Cash Flow increased by 23% reflecting increase in EBITDA, lower tax payments and lower capex
Free Cash Flow increased by 23% reflecting increase in EBITDA, lower tax payments and lower capex Comments Performance Free cash flow was DKK 1,186m compared to DKK 965m for H1 2014/15 FCF (mDKK) EBITDA DKK 170m higher FCF-to-Sales (%) NWC-to-sales of 25%, 1%-point higher 26 than FY 2014/15 20
Slide 11: Financial guidance for 2015/16 – revised expectations for sales growth in DKK and capex
Financial guidance for 2015/16 – revised expectations for sales growth in DKK and capex Guidance Guidance Long term 15/16 15/16 (DKK) ambition Sales growth 7-8% (organic) 6-7% 7-10% p.a. EBIT margin 33-34% (fixed) ~33% +50-100 bps p.a. CAPEX (DKKm) 600-700 ~4-5% of sales Tax rate ~23% - Page 11
Slide 12: Coloplast Capital Markets Day 2016
Coloplast Capital Markets Day 2016 22 June 2016 in Minneapolis, USA With this event we would like to provide institutional investors and financial analysts with a deep dive into our US operations as well as a general strategy update for our business areas. Further, we would like to provide the oppor
Slide 13: Leading intimate healthcare
Leading intimate healthcare Introduction to Coloplast Page 13
Slide 14: Coloplast has four business areas all with global sales presence
Coloplast has four business areas all with global sales presence Group revenue FY 2014/15 by segment Group revenue FY 2014/15 by geography X = Coloplast’s global market position Emerging markets 15% Continence Ostomy Care Care 36% 40% DKK Other DKK #1 13.9bn #1 developed 13.9bn markets 21% European
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 is 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: Coloplast has strong market positions in Europe and great commercial 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: Our strategy remains centred on value creation through 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: Key Value Driver #1: Many global growth opportunities with significant longer term potential
Key Value Driver #1: Many global growth opportunities with significant longer term potential Untapped pockets of growth in Europe e.g. in • UK • Germany Increase • Italy market share in • USA • Canada • Japan Build on and • Australia accelerate growth platform e.g. in • China • Brazil • Russia • Arg
Slide 20: Key Value Driver #2: Continued investment in Consumer Care activities
Key Value Driver #2: We continue to invest in Consumer Care activities to increase our interactions with the users of our products Hospital H General CARE practitioner Coloplast Distributors Pharmacies Consumer Bandagists Home Health Care DtC Page 20
Slide 21: Key Value Driver #3: More potential for efficiency improvements in production
21 Key Value Driver #3: We see more potential for efficiency improvements in our production Production by country* 5% 10% Thisted Hungary Minneapolis Mørdrup China Mankato Denmark 25% 60% US/ France Nyirbátor Tatabánya *Produced quantity of finished goods Sarlat COGS by cost type* 9% 20% Salary - Di
Slide 22: Key Value Driver #4: Continue to drive economies of scale in cost functions
Key Value Driver #4: And we believe we can continue to drive economies of scale in our cost functions Cost item Development Outlook Outlook As reported Percentage of revenue Scalability potential Investments requirements COGS 50 38.7 31.5 High Medium 0 09/10 14/15 Distribution 29.5 28.5 Medium High
Slide 23: Focus on organic value creation provides for high cash returns and continued share buy-backs
Focus on organic value creation provides for high cash returns and continued share buy-backs Comments Performance Coloplast returns excess liquidity to shareholders in the form of dividends and share buy-backs Dividend is paid twice a year – after the half-year and full-year financial reporting
Slide 24: We believe Coloplast can continue to deliver stable shareholder returns
We believe Coloplast can continue to deliver stable shareholder returns through.... Organic growth 33% Stable market trends in our Chronic Care EBIT Margin* business 13% 12% Strong retention program and innovative D-t-C 7% activities 8% 7% Increased focus on growing the business 05/06 07/08 09
Slide 25: Appendices
Appendices Ostomy Care Urology & Continence Care = Coloplast Wound & Skin Care
Slide 26: The Coloplast share (COLO'B-KO)
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on Nasdaq Copenhagen since 1983 2% 2% 14% ~106 billion DKK (~16 billion USD) market cap @ ~490 DKK per share (incl. A shares) 46% Two share classes: 29% 18m A shares carry 10 votes (family) 198m B shares carry 1 vote
Slide 27: Capital structure
Capital structure Comments Performance Overall policy is that excess liquidity is returned to shareholders through a * combination of dividends and share buy- backs Interest bearing debt will be raised in connection with a major acquisition or to support dividends Share buy-backs of DKK 500m p
Slide 28: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 45.0 40.0 36.8 38.7 35.8 36.1 36.1 34.1 35.4 35.0 33.4 30.6 32.4 31.7 31.3 31.5 27.1 29.5 29.4 30.0 28.8 28.5 28.3 25.3 28.5 28.6 23.1 23.1 22.2 22.5 23.9 24.1 25.0 20.0 15.0 5.8 5.9 4.4 5.6 4.3 3.8 4.3 4.6 4.3 10.0 3.2 3.1 3.1 4.1 4.0 3.
Slide 29: Coloplast revenue development by business area
Coloplast revenue development by business area Ostomy Care Continence Care 12.000 13 12.000 10 11 10 10 9 9 7 8 8 10.000 8 9 8 10.000 7 6 6 7 7 5 5 5 8.000 8.000 5 4 5,567 6.000 5,019 6.000 4,633 4,849 5,091 0 4,438 3,831 4,081 4.000 4.000 2,898 2,557 -5 2.000 2.000 0 -10 0 1 11/12 12/13 13/14 14/15
Slide 30: Coloplast revenue development by geography and total
Coloplast revenue development by geography and total Europe Other developed 8 19 6 5 6 6 15 5 6 5 5 10 10 4 9 8,221 8,843 7 6 5 7,388 7,749 5 4,586 4 2,288 2,395 2,479 2,945 1,531 11/12 12/13 13/14 14/15 YTD 11/12 12/13 13/14 14/15 YTD Emerging Markets Coloplast total 12 8 24 23 14 6 7 7 9 7 8 7 14
Slide 31: Segment operating profit
Segment operating profit Chronic Care: Ostomy and Continence Care Wound & Skin Care 350 50 2.500 70 45 300 60 61 61 60 60 60 40 39 40 2.000 250 37 36 37 1,622 1,703 1,667 1,603 218 35 1,552 50 195 198 200 184 184 30 1.500 40 25 150 1.000 30 20 20 100 15 500 10 10 50 5 0 0 0 0 Q2 14/15 Q3 14/15 Q4 14
Slide 32: We aim to grow our Emerging Markets business through focused execution in selected markets
We aim to grow our Emerging Markets business 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 MENA South A
Slide 33: US Mesh litigation – Overview of current financial impact
US Mesh litigation – Overview of current financial impact TBD Summary Financial Impact A total of DKK 4.5bn has been provisioned which is currently Q2 FY FY considered sufficient (DKK 4bn provision net of insurance coverage) 15/16 14/15 13/14 EBIT 2,361 1,535 3,147 P&L 14/15 – DKK 3bn in special
Slide 34: 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 35: Healthcare reform landscape
Healthcare reform landscape Intensifying reform pressure U.S.: Healthcare reform implementation Stable reform environment ongoing Brazil: Macroeconomic and political challenges Russia: Macroeconomic and political France: Reimbursement challenges review of OC and CC in FY 15/16 UK: Efficiency savings
Slide 36: Coloplast Care is a retention program aiming to connect with more than 1 million consumers
Coloplast Care is a retention program aiming to connect with more than 1 million 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 u
Slide 37: Direct-to-Consumer activities is a new marketing channel in Coloplast
Direct-to-Consumer activities is a new marketing channel in Coloplast 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 di
Slide 38: 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 38
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 G
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 (implantable and single use devices) Disease areas • Urinary incontinence • Pelvic organ prolapse • Erectile dysfunction • Enlarged prostate • Kidney and urinary stones Customer • Surgeons groups • Purchasing departme
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 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 46: Product market for US Skin Care
Product market for US Skin Care • US market size estimated at DKK 7-8bn with ~ 5% growth • Market share: ~5% • Main competitors include • Medline Industries • Sage Products • ConvaTec Market drivers Market limiters Market trends Aging and obese population Consolidation of Providers Increase si
Slide 47: The Coloplast organisation
The Coloplast organisation Coloplast Group Chronic Care Chronic Care Strategic Business UnitsBusiness Units Strategic 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 Global
Slide 48: 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 49: Corporate responsibility – external recognitions
Corporate responsibility – external recognitions Page 49
Slide 50: Income statement
Income statement DKKm H1 2014/15 H1 2015/16 Change Revenue 6,748 7,256 8% Gross profit 4,624 4,959 7% SG&A costs -2,213 -2,352 6% R&D costs -213 -248 16% Other operating income/expenses 15 2 nm Operating profit (EBIT) 2,213 2,361 7% Net financial items -93 -100 8% Net profit 1,612 1,741 8% Key ratio
Slide 51: Balance sheet
Balance sheet DKKm 31 Mar 2015 31 Mar 2016 Change Balance, total 10,620 10,602 0% Assets Non-current assets 4,736 4,593 -3% Current assets 5,884 6,009 2% of which: Inventories 1,467 1,455 -1% Trade receivables 2,507 2,663 6% Restricted cash 288 634 nm Marketable securities, cash, and cash equivalent
Slide 52: Cash flow
Cash flow DKKm H1 2014/15 H1 2015/16 Change EBITDA 2,452 2,622 7% Change in working capital -1 597 nm Net interest payments -130 -7 nm Paid tax -1,097 -253 -77% Other -361 -1,865 nm Cash flow from operations 863 1,094 27% CAPEX -325 -227 -30% Securities 403 319 -21% Other 24 - nm Cash flow from inve
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: ~250 Sarlat • Disposable surgical urol
Slide 54: Production sites
Production sites Tatabánya • Ostomy care products • Adhesives HU • Continence care products • Number of employees in production: ~1,300 • Postponement & packaging Tata • Cross docking • Warehousing HU • Distribution & shipping • Number of employees: ~300 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