Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — 9M 2012/13 Earnings Presentation
52 slides from Coloplast A/s Class B's earnings presentation, Aug 13, 2013
Slide 1: Leading intimate healthcare – Roadshow presentation 9M 2012/13
Page 1 Leading intimate healthcare Roadshow presentation – 9M 2012/13 13 August 2013 Leading intimate healthcare
Slide 2: Forward-looking statements
Page 2 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 stat
Slide 3: Solid performance in 9M 2012/13
Page 3 Solid performance in 9M 2012/13 DKKm Sales • 6% organic sales growth (6% in DKK) +6% 8.665 8.174 • Satisfactory EBIT margin of 31%, both in DKK and fixed currencies 9M 2011/12 9M 2012/13 • EPS diluted increased by 23% to DKK 9.14 DKKm Operating profit • FCF increased by DKK 183m to DKK 1,650m
Slide 4: Ostomy Care growth of 8% in Q3 2012/13
Page 4 Ostomy Care growth of 8% in Q3 2012/13 % DKKm • Organic sales growth of 8% for Q3 and 7% 10 YTD 9 4.633 8 • Growth was driven by the SenSura® range 7 4.266 6 3.949 and supported by continued strong uptake of 5 3,569 3.621 the Brava™ accessories product range 4 3 2 • Solid performance in most
Slide 5: Growth rates in Continence Care impacted by UK and US
Page 5 Growth rates in Continence Care impacted by UK and US % DKKm • Organic growth was 5% in Q3 and YTD 12 growth was 6% 3.831 10 3.456 • Growth was driven by the SpeediCath® 8 3.202 2.912 portfolio of ready-to-use intermittent catheters 2.759 6 4 • Growth in Q3 impacted by distributors’ 2 increas
Slide 6: Strong Urology Care growth rates in Q3
Page 6 Strong Urology Care growth rates in Q3 % DKKm • Organic growth of 10% for Q3 2012/13. For 16 9M 2012/13 the growth was 9% 14 12 • Satisfactory growth in sales of penile implants 1.037 10 in the US 938 8 6 787 • Sales of female slings were satisfactory and 857 4 684 increasingly supported by t
Slide 7: Strong performance in Wound Care continues in Q3
Page 7 Strong performance in Wound Care continues in Q3 • Q3 organic growth for W&SC was 5% and % DKKm YTD was 4%. Wound Care sales growth was 16 5% in Q3 and 2% for the first 9 months 1.529 14 1.522 1.512 1.500 12 1.450 10 • Growth was driven mainly by Biatain® Silicone 8 6 • Europe continued to se
Slide 8: Satisfactory organic growth of 6%, despite slight decline in Chronic Care
Page 8 Satisfactory organic growth of 6%, despite slight decline in Chronic Care growth compared to FY 2011/12 level Group revenue 9M 2012/13 by segment Group revenue 9M 2012/13 by geography 9M 2012/13 sales: DKK 8.7bn 1.099 3.029 15% 3.613 6% 8% 7% 1.782 4% 5.784 9% 4% 844 DKKm (organic growth) DKK
Slide 9: Q3 gross margin improved to 68% from 67% last year
Page 9 Q3 gross margin improved to 68% from 67% last year • Gross profit for the first 9 months increased by 7% to DKK 5,837m. The gross margin was 67%, 1% point up compared with last year • The increase was driven by a higher absolute sales and production efficiencies • Q3 gross margin was 68% in D
Slide 10: Satisfactory EBIT margin of 32% in Q3 2012/13
Page 10 Satisfactory EBIT margin of 32% in Q3 2012/13 • EBIT for 9M 2012/13 increased by 14% to DKK 2,699m. EBIT margin was 31% against 29% in 9M 2011/12. In fixed currencies, the EBIT margin was also 31% • Last year included DKK 65m in non-recurring items and DKK 66m in bad debt provisions related
Slide 11: ROIC after tax up to 42%
Page 11 Increased profitability on a stable asset base brought ROIC after tax to 42% - up 6% points • Against the first 9 months of last year, the ROIC after tax increased by 6% points to 42%, on a 14% increase in EBIT and a stable asset base • The equity amounted to DKK 6,155m, corresponding to an
Slide 12: Free cash flow was up by 12%
Page 12 Free cash flow was up by 12% • Cash flow from operations up by 16% to DKK 1,947m due to higher earnings and a net gain from realised FX forward contracts against a net loss last year, partly offset by increase in working capital, tax paid and CAPEX • CAPEX increased by 25% to DKK 295m, equiv
Slide 13: Satisfactory financial performance in 9M 2012/13
Page 13 Satisfactory financial performance in 9M 2012/13 MDKK 9M 9M 2012/13 2011/12 • Satisfactory gross margin of 67%, up by 1% Gross profit 5.837 5.433 point against last year Gross margin 67% 66% • SGA decreased by 1% point to 33% SGA-to-sales 33% 34% • EBIT margin was 31% against 29% last year E
Slide 14: Guidance for 2012/13 largely unchanged – tax rate now around 25%
Page 14 Guidance for 2012/13 largely unchanged – tax rate now expected to be around 25% Guidance Guidance Long-term 12/13 12/13 (DKK) ambition Sales growth 6-7% (organic) 5-6% Market+ Deliver margins in line with EBIT margin 31-32% (fixed) 31-32% the best performing medical device companies *) CAPEX
Slide 15: Introduction to Coloplast
Page 15 Leading intimate healthcare Introduction to Coloplast 13 August 2013 Leading intimate healthcare
Slide 16: Our mission, values and vision
Page 16 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 13 August 2013 Leading intimate health
Slide 17: Coloplast is a leading medtech company specialising in intimate healthcare needs
Page 17 Coloplast is a leading medtech company specialising in intimate healthcare needs Group revenue FY 2011/12 by segment Group revenue FY 2011/12 by geography Full Year 2011/12 sales: DKK11.0bn Emerging markets 12% Continence Care Ostomy 35% Other Care developed 42% #1 markets 21% #1 European ma
Slide 18: Stable intimate healthcare trends
Page 18 Stable intimate healthcare trends Growing elderly population increases Demographics customer base for Coloplast products Expanding healthcare coverage for Emerging markets populations in emerging markets increases addressable market Surgical and medical trends are towards Surgical and earlie
Slide 19: Introducing Ostomy Care
Page 19 Introducing Ostomy Care Key products Disease areas • Colorectal cancer (est. 55%) • Bladder cancer (est. 10%) • Inflammatory bowel disease (est. 35%) Customer • Nurses, mainly stoma care nurses groups • People with a stoma • Wholesalers/distribution • Hospital purchasers and GPOs • Surgeons
Slide 20: The market for ostomy devices
Page 20 The market for ostomy devices Estimated market value split by region • Global market size estimated at DKK 12-13bn with 4-5% growth • Market share: 35-40% Emerging markets • European markets 40-50% • Other developed markets 10-20% European markets • Emerging markets 35-45% Other developed •
Slide 21: Introducing continence consumables
Page 21 Introducing continence consumables Disease areas • Spinal Cord Injured, SCI Key products (management products) • Spina Bifida, SB • Multiple Sclerosis, MS • Benign prostatic hyperplasia & prostatectomy patients • Elderly and diabetics Customer • Continence or home care nurses groups • People
Slide 22: The market for urinary incontinence management products
Page 22 The market for urinary incontinence management products Estimated market value split by region • Global market size estimated at DKK 8-9bn with 4-6% growth • Market share: 40-45% Emerging markets • European markets 50-60% • Other developed markets 25-35% Other developed European • Emerging m
Slide 23: Introducing Urology Care
Page 23 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 d
Slide 24: The market for urological disorders
Page 24 The market for urological disorders Estimated market value split by region • Global market size estimated at DKK 8-9bn with 3-5% growth • Market share: 10-15% Emerging markets • European markets 10-20% European markets • Other developed markets 5-15% • Emerging markets 10-20% • Main competit
Slide 25: Introducing Wound Care
Page 25 Introducing Wound Care Key products (Biatain® and Comfeel® range) 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 • Sili
Slide 26: The market for advanced wound care where Coloplast competes
Page 26 The market for advanced wound care where Coloplast competes Estimated market value split by region • Global market size estimated at DKK 13bn with 2-4% growth • Market share: 5-10% Other developed markets • European markets 5-15% • Other developed markets 0-10% Emerging European • Emerging
Slide 27: We expect continued value creation driven by...
Page 27 We expect continued value creation driven by... • Stable market trends in our Chronic Care 30% 29,5% 25,4% business 25% 20,9% 20% 16,3% 16,0% 15,8% • Increased focus on growing the business 15% 13,1% 9,3% 11,7% outside Europe 10% 10% 10% 5% 8% 8% 7% 6% 7% 6% 6% 0% • Additional improvements i
Slide 28: Coloplast value proposition
Page 28 Coloplast value proposition Close relationships with nurses and end- Stable long-term growth users provide leading market positions potential within Ostomy & Continence Care US and Emerging Markets hold high Growth and expansion potential as well as the Surgical Urology potential and Wound C
Slide 29: Appendices
Page 29 Appendices 13 August 2013 Leading intimate healthcare
Slide 30: The Coloplast share (COLO'B-KO)
Page 30 The Coloplast share (COLO’B-KO) Share Capital Ownership The Coloplast share listed on NASDAQ OMX Copenhagen since 1983 8% 1% 7% Market cap. DKK ~72.5bn (USD ~13.0bn) 44% @ DKK 330 per share (incl. A shares) 32% Two share classes: • 18.0 million A shares carry 10 votes 8% (family) Holders of
Slide 31: Cash returns and share buy-backs
Page 31 Cash returns and share buy-backs DKKm Ratio • Extraordinary dividend of DKK 3.00 per 1.200 50% share in May 2013 • Share buy-back programme of DKK 1bn: 1.000 40% • First part of DKK 500m completed in June 800 2012 30% • Second part started in February. As per 30 600 June share buy-backs effe
Slide 32: Debt policy and capital markets exposure
Page 32 Debt policy and capital markets exposure • New debt raised in case of a major acquisition • Interest bearing assets and bank & cash NIBD/EBITDA Interest cover ratio ratio exceeded interest bearing debt by DKK 791m 2,5 90 Debt • All committed credit facilities expired in Q3 2012/13 • Majority
Slide 33: Coloplast updated its strategy in March 2012 aiming for higher growth and returns
Page 33 Coloplast updated its strategy in March 2012 aiming for higher growth and returns Our value creation will come from increased growth Aiming for continued higher total shareholder based on a strong new product pipeline combined with returns through continued cost discipline • Continued growth
Slide 34: Growth in Emerging Markets driven by Ostomy Care and Wound Care
Page 34 Our growth in Emerging Markets will be driven by Ostomy Care and Wound Care Emerging Markets breakdown per business area Comments Percent of CP sales Ostomy Ostomy • Assura® line is the main brand ~60 Care Care but SenSura® is growing rapidly Wound Wound • Mature products like Comfeel® ~20 a
Slide 35: Geographical expansion holds significant longer term potential
Page 35 Geographical expansion holds significant longer term potential Build on and accelerate growth platform e.g. in • China • Brazil • Russia Develop growth • Argentina platform e.g. in • MENA • Mexico • India • South Africa • South East Asia • Selected ROLA markets Selected markets 13 August 201
Slide 36: Underlying demographic development supports future growth
Page 36 Underlying demographic development supports future growth 13 August 2013 Leading intimate healthcare
Slide 37: Current global reform landscape
France Page 37 - Announced planned savings of 350mEUR total implemented over 5 years. It’s been proposed that Current global reform landscape reimbursements prices for Ostomy and Continence products could be lowered by up to 5% with implementation from September 2013. - French healthcare authorities
Slide 38: Global operations footprint and cost structure
14 August 2013 38 Page 38 Global operations footprint and cost structure Design principles Production by country* • Consolidate on fewer sites 5% to reduce overheads 10% Thisted Hungary • Leverage international Mørdrup platform in Global China Operations Denmark 25% • Improve efficiency in labour 60
Slide 39: Operational Excellence focus areas in our production
Page 39 Operational Excellence focus areas in our production Lean in volume production Expected to contribute Re-design for manufacturing with 50 – 100 bps to Global sourcing and supplier relations gross margin annually management over the next 1 to 2 years with the current Focus on fixed costs and
Slide 40: Introducing Ostomy Care Accessories
Page 40 Introducing Ostomy Care Accessories Brava™ is a new range of ostomy accessories designed to reduce Market • Market size estimated at DKK ~1.5bn leakage or care for skin, to make our end-users feel secure. Brava™ fundamentals • Market growth estimate of 6-8% was launched in April 2012 and the
Slide 41: Introducing Skin Care
Page 41 Introducing Skin Care Key products Disease areas Moisture associated skin damage • Incontinence • Skin folds Preventative skin care Customer Hospitals groups & • Wound care committees call points • Specialist nurses/doctors • (Purchasers) Sween® • Skin care products of distinction Community
Slide 42: Product market for US Skin Care
Page 42 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 Ageing and obese population Cost containment Product and
Slide 43: Introducing Bowel Management
Page 43 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 Irrigati
Slide 44: Executive management
Page 44 Executive management Lars Rasmussen, CEO (54) With Coloplast since 1988 Educational background E*MBA, Scandinavian International Management Institute, 1995 BSc (Eng), Aalborg University, 1986 Management assignments with other Danish companies MT Højgaard A/S (BM) TDC A/S (BM) Lars Rasmussen,
Slide 45: Corporate responsibility – external recognitions
Page 45 Corporate responsibility – external recognitions 13 August 2013 Leading intimate healthcare
Slide 46: Income statement – 9M 2012/13
Page 46 Income statement – 9M 2012/13 9M 9M DKK million 2012/13 2011/12 Net revenue 8,665 8,174 Gross profit 5,837 5,433 Gross margin 67.4% 66.5% SG&A costs -2,874 -2,817 R&D costs -286 -257 Other Operation Inc/exp 22 5 Operating profit (EBIT) 2,699 2,364 EBIT margin 31.1% 28.9% Net financial items
Slide 47: Balance sheet – at 30 June 2013
Page 47 Balance sheet – at 30 June 2013 Q3 Q3 DKK million 2012/13 2011/12 Balance sheet total 8,637 9,980 Equity 6,155 5,372 Equity ratio (%) 71% 54% Net interest bearing debt -791 -142 Net debt to equity (%) -13% -3% Net debt to EBITDA -0.2 0.1 Invested capital 6,660 6,552 13 August 2013 Leading in
Slide 48: Cash flow – 9M 2012/13
Page 48 Cash flow – 9M 2012/13 9M 9M DKK million 2012/13 2011/12 EBITDA 3,070 2,740 Change in working capital -352 -196 Net interest payments, etc. 3 -307 Paid tax and other -774 -553 Cash flow from operations 1,947 1,684 CAPEX -295 -236 Other -2 19 Cash flow from investments -297 -217 Free cash flo
Slide 49: Production sites
Page 49 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 Minneapolis • Urology car
Slide 50: Production sites – Tatabánya, Tata, Nyírbátor, Zhuhai, Sarlat
Page 50 Tatabánya • Ostomy care products • Adhesives HU • Continence care products • Number of employees in production: ~1,100 • Postponement & packaging Tata • Cross docking • Warehousing HU • Distribution & shipping • Number of employees: ~200 Nyírbátor • Catheter care products • Wound care produc
Slide 51: Contact Investor Relations
Page 51 Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ian S. E. Christensen Gunilla Jensen Vice President IR Coordinator Investor Relations Tel.: direct: +45 4911 3621 / Tel. direct: +45 4911 1301 / office: +45 4911 1800 office: +45 4911 1800 Fax: +45 4911 1555 Fax: +45 4911 1555 dk
Slide 52: Coloplast
Coloplast