Slide 1: Leading intimate healthcare – Roadshow presentation Q1 2017/18
Leading intimate healthcare Roadshow presentation Q1 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: Coloplast delivered Q1 organic growth of 8% and an EBIT margin of 31%
Coloplast delivered Q1 organic growth of 8% and an EBIT margin of 31% Q1 Highlights • Organic revenue growth of 8% (5% in DKK) Revenue growth +8% • Negative impact from USD and USD related currencies Reported revenue (DKKm) +5% • Strong underlying growth in US Chronic Care even when adjusting for th
Slide 4: Strong growth in all business areas except Wound Care due to price reforms in Greece
Strong growth in all business areas except Wound Care due to price reforms in Greece Q1 17/18 revenue by business area Q1 17/18 revenue by geography Business Reported revenue Organic growth Share of organic Geographic Reported revenue Organic growth Share of organic area DKKm growth area DKKm growth
Slide 5: Ostomy Care grew 9% organically in Q1 driven by SenSura range and Brava accessories
Ostomy Care grew 9% organically in Q1 driven by SenSura® range and Brava® accessories Performance Comments • Q1 2017/18 organic growth of 9% (7% reported growth) 9 • The acquisition of Comfort Medical contributed 1% growth to reported revenue in Q1 8 8 7 • Satisfactory growth driven by China, US and
Slide 6: Continence Care grew 10% in Q1 driven by SpeediCath and Peristeen
Continence Care grew 10% in Q1 driven by SpeediCath® intermittent catheters and Peristeen® Performance Comments • Q1 2017/18 organic sales growth of 10% (9% reported growth) • The acquisition of Comfort Medical contributed 2% growth to 12 reported revenue in Q1 10 10 • Growth driven by SpeediCath® i
Slide 7: Urology Care grew 11% in Q1 primarily driven by US sales of Titan penile implants
Urology Care grew 11% in Q1 primarily driven by US sales of Titan® penile implants Performance Comments • Q1 2017/18 organic growth of 11% (6% reported growth) 15 • Growth mainly driven by the US, but also France and Saudi Arabia 14 • Strong growth in sales of Titan® penile implants in the US 11 11
Slide 8: Wound Care negatively impacted by healthcare reforms in Greece
Wound Care negatively impacted by healthcare reforms in Greece Performance Comments 16 • Q1 2017/18 organic sales growth of negative 5% for WSC (negative 9% 14 reported growth) • Q1 2017/18 organic growth of negative 7% for Wound Care in isolation 8 8 • Wound & Skin Care was positively impacted by c
Slide 9: EBIT in constant currencies grew 4% in Q1 2017/18
EBIT in constant currencies grew 4% in Q1 2017/18 Comments EBIT margin development (%) • EBIT fell 2% to DKK 1,207m with a reported margin of 31% 32.6 (31% in constant currencies) compared to 33% last year -1.3 • Gross margin of 67% compared to 69% same period last 31.1 year -1.3 30.5 0.6 • Negative
Slide 10: Adjusted for Mesh settlements and Comfort Medical, FCF was in line with last year
Adjusted for Mesh settlements and acquisition of Comfort Medical, FCF was in line with last year FCF development Comments • Free cash flow in Q1 was positive DKK 819m compared to negative DKK 833m in Q1 2016/17 98 99(3) 95 93 92 93 • Reported EBITDA in DKK in line with same period last year 4,023 4,
Slide 11: Updated reported growth guidance for 17/18
Updated reported growth guidance for 17/18 Guidance 17/18 Guidance 17/18 (DKK) Key assumptions • DKK 100m patent expiry • More than 1% negative price pressure of which DKK Sales growth ~7% (organic) 5-6% 100m from price reform in Greece • DKK guidance includes Comfort Medical in Q1 and Lilial in Q2-
Slide 12: Coloplast Capital Market Day 2018
Coloplast Capital Market Day 2018 18 September 2018 in Copenhagen – SAVE THE DATE! The purpose of the event is to provide institutional investors and financial analysts with the opportunity to get an update on the business and insights into key strategic themes. A formal invitation will be sent out
Slide 13: Introduction to Coloplast
Leading intimate healthcare Introduction to Coloplast
Slide 14: Coloplast has four business areas all with global sales presence
Coloplast has four business areas all with global sales presence Group revenue 2016/17 by segment Group revenue 2016/17 by geography X = Coloplast’s global market position Emerging markets 17% Continence Ostomy Care Care 40% 35% DKK DKK #1 15.5bn #1 Other 15.5bn 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 great 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 16-17bn 12-13bn 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 will drive revenue and earnings growth 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; GOP4 drives efficiency
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: Committing up to 2% of revenue in incremental commercial investments
For 17/18 we are committing up to 2% of revenue in incremental commercial investments Understanding users’ lives in full Innovation Consumer R&D 3-4% of sales Creating life-changing products and services Supporting beyond expectations Page 21
Slide 22: EBIT margin development: scalability, cost discipline, investments and M&A
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 investment of up to 2% on growth level of revenue per year EBIT will be positively impacted by: + Leverage effe
Slide 23: Global Operation Plan IV supports LEAD20 through efficiency
Global Operation Plan IV aims to support LEAD20 through continued unparalleled efficiency and financial discipline GOP4 Highlights • Deliver 150 basis points in EBIT margin improvements with full effect from 2020/21 • Driven primarily by continued cost efficiency, procurement savings and reduction o
Slide 24: Innovative products launched 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 24
Slide 25: Clinical Performance Program to tackle the biggest issues users face
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 * Pe
Slide 26: 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 -0.4 %-points 28.5 28.3 28.5 28.1 28.1 28-30 Distribution +0.5 %-points 67.6 68.7 68.5 68.3 68.1 -0.6 %-points 4.6 4.3 4.0 3.8 4.0 ~4 Admin +0
Slide 27: We will continue to deliver strong and attractive free cash flows
We will continue to deliver strong and attractive free cash flows … Taxation Net working capital CAPEX2) Reported tax rate Net working capital in % revenue Depreciation in % of revenue CAPEX in % of revenue CAPEX DKKm 4.3% 4-5% 27.8% 3.5% 25.2% 25.1% 25.2% 2.9% 23.9% 24.1% 23.8% ~24% 2.8% 23.0% 23.3
Slide 28: 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 Dividends paid out in the year (mDKK)¹) Share buy-back (DKKm) Pay-out ratio (%)²) • Coloplast returns excess liquidity to shareholders i
Slide 29: Coloplast can continue to deliver stable shareholder returns
In sum, we believe Coloplast can continue to deliver stable shareholder returns through ... 31% Comments • Stable market trends in our Chronic Care business 16% • Strong retention program and innovative DtC activities 10% 8% • Increased focus on growing the business outside Europe 9% 6% • Additional
Slide 30: Appendices
Leading intimate healthcare Appendices
Slide 31: The Coloplast share (COLO'B-KO)
The Coloplast share (COLO’B-KO) Share Capital Ownership Coloplast share listed on Nasdaq Copenhagen since 1983 ~116 billion DKK (~19.4 billion USD) market cap @ ~537 DKK 11% per share (incl. A shares) 7% 2% Two share classes: 46% • 18m A shares carry 10 votes (family) • 198m B shares carry 1 vote (f
Slide 32: Capital structure
Capital structure Comments Performance • Overall policy is that excess liquidity is returned to shareholders through a combination of dividends and share buy- 0.1x -0.3x -0.2x backs -0.3x -0.4x • Interest bearing debt will be raised in connection with a major acquisition or to support dividends 826
Slide 33: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 31.9 32.6 36.8 36.1 36.6 36.3 31.3 31.5 31.7 29.7 34.5 28.3 28.5 28.1 28.1 25.2 24.6 23.9 24.1 23.8 4.0 4.3 3.8 4.0 4.0 5.0 4.3 4.4 4.4 4.4 3.1 3.2 3.5 3.7 3.8 13/14 14/15 15/16 16/17 YTD 17/18 13/14 14/15 15/16 16/17 YTD 17/18 Admin-to-S
Slide 34: Coloplast revenue development by business area
Coloplast revenue development by business area Ostomy Care Urology Care 6,291 13 5,567 5,935 11 5,091 10 9 10 8 9 9 9 9 7 10 6 7 7 6 7 5 6 1,613 1,359 1,497 1,641 1,199 5 434 13/14 14/15 15/16 16/17 YTD 17/18 13/14 14/15 15/16 16/17 YTD 17/18 Continence Care Wound & Skin Care 16 13 10 9 10 10 6 9 5,
Slide 35: Revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 18 9,213 9,394 15 8,221 8,843 13 10 8 8 8 2,945 3,177 3,642 6 6 5 2,392 2,479 5 4 4 6 6 928 4 3 2 13/14 14/15 15/16 16/17 YTD 17/18 13/14 14/15 15/16 16/17¹) YTD 17/18 Emerging Markets Coloplast group 24 23 15,528
Slide 36: Q1 2017/18 revenue impacted by USD depreciation against DKK
Q1 2017/18 revenue significantly impacted by the depreciation of the USD against the DKK Comments Revenue development • Q1 2017/18 reported revenue was DKK 200m or (DKKm) 48 4,093 5% higher than in Q1 2016/17 -138 3,955 • The majority of growth is driven by organic 290 growth contributing DKK 290m o
Slide 37: Segment operating profit
Segment operating profit Chronic Care Urology Care Wound & Skin Care Ostomy and Continence Care 60 60 59 59 59 40 39 38 37 38 38 36 35 34 34 1,755 1,793 1,793 166 165 166 205 212 1,706 1,737 155 138 177 185 162 Q1 16/17 Q2 16/17 Q3 16/17(1) Q4 16/17 Q1 17/18 Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17
Slide 38: Exchange rate exposure and hedging policy
Exchange rate exposure and hedging policy Financial guidance for 2017/18 12 months exposure from 10% Hedging Policy DKK GBP USD HUF EUR initial exchange rate drop Average exchange rate 2016/17(1) 853 674 2.41 744 To achieve the objective of a stabile Profit 75 before Tax we hedge: Spot rate, 24 Janu
Slide 39: Mesh litigation timeline
Mesh litigation timeline Sept. 9, 2014: Verdict vs Feb. 7, 2016: April 28, 2017 Sep. 7, 2017 July 23, 2012: May 2, 2014: Sept. 5, 2014: BSC Mar. 5, 2015: Verdict for Bard/BSc Verdict vs Ethicon Verdict vs Ethicon Verdict vs Bard Feb. 28, 2013: Feb. 2014: Coloplast provision Verdict vs Ethicon TX Sta
Slide 40: 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 13/14 14/15 15/16 16/17 Restricted cash, DKKbn EBIT (before 1.2 1.2 special items) 4,147 4,535 4,846 5,024 0.8 0.8 Special items -1,000 -3,000 - 750 0 0.6 0.6 0.6 0.5 0.5 EBIT 3,14
Slide 41: LEAD20 – an update on our direction towards 2020
LEAD20 – an update on our direction towards 2020 Superior products and innovation Unique user-focused market Unparalleled efficiency SenSura® Mio Concave approach To be launched in 2018 & 2019 Innovation Excellence Production ramp-up directly from SenSura® Mio Hungary/China: Hospital Assortment + 50
Slide 42: Efficiency gains across Global Operations and Business Support
We will continue to push for efficiency gains across Global Operations and Business Support Global Operations Plan 4 Business support • Efficiency improvement in the subsidiaries, HQ and business support centre • Subsidiaries to focus on commercial priorities 1. Risk reduction & stability in supply
Slide 43: Health reform landscape
Health reform landscape Europe Rest of World • France: Reimbursement pressure on WC. Reimbursement review • U.S.: Healthcare reform implementation ongoing of OC and CC • Brazil: Macroeconomic and political challenges • Greece: Reimbursement pressure on all BAs • Russia: Macroeconomic and political c
Slide 44: 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 45: 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 45
Slide 46: 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 46
Slide 47: In Wound Care we are progressing with our new ambition
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 48: 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 49: 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 50: 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 51: 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 52: 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 53: 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 54: 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 55: 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 56: 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 Urology Care Marketing Marketing Marketing Sales Sales R&D R&D Sales Regions R&D Global Operations Global Business Support Functions Pa
Slide 57: 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 58: Corporate responsibility – Member of UN Global Compact since 2002
Corporate responsibility – Member of UN Global Compact since 2002 and recognized externally THE INCLUSION OF COLOPLAST A/S IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF COLOPLAST A/S BY MSCI
Slide 59: Income statement
Income statement DKKm Q1 2016/17 Q1 2017/18 Change Revenue 3,755 3,955 5% Gross profit 2,580 2,666 3% SG&A costs -1,215 -1,325 9% R&D costs -138 -158 14% Other operating income/expenses -1 24 nm Operating profit (EBIT) 1,226 1,207 -2% Net financial items 2 14 nm Tax -282 -281 0% Net profit 946 940 -
Slide 60: Balance sheet
Balance sheet DKKm 31 Dec 2016 31 Dec 2017 Change Balance, total 12,883 12,193 -5% Assets Non-current assets 5,968 5,871 -2% Current assets 6,915 6,322 -9% of which: Inventories 1,626 1,686 4% Trade receivables 2,689 2,755 2% Restricted cash 1,180 584 -51% Marketable securities, cash, and cash equiv
Slide 61: Cash flow
Cash flow DKKm Q1 2016/17 Q1 2017/18 Change EBITDA 1,368 1,366 0% Change in working capital -435 226 nm Net interest payments -99 20 nm Paid tax -6 -554 nm Other -574 -51 -91% Cash flow from operations 254 1,007 nm CAPEX1) -112 -196 75% PPE divested 21 9 -57% Acquisition -1,106 nm Securities 110 -1
Slide 62: Manufacturing setup
Manufacturing setup Production by country (Volume)¹ 4% 6% Hungary Thisted China Minneapolis 18% Mørdrup Denmark Mankato US/France 72% Nyirbátor Tatabánya Sarlat COGS by cost type² 9% Salary - Direct 22% 12% Salary - Indirect Materials (RM &SFG) Innovation & 9% Competency Centre Depreciations & amort
Slide 63: 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 64: 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: ~ 950 • Number of employees in production: ~1,600 Tata • Pos
Slide 65: Contact Investor Relations
Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ellen Bjurgert Rasmus Sørensen Anne-Sofie Søegaard Sine Flinck Director, Investor Relations Senior Manager, Investor Relations IR Coordinator Student Assistant Tel. direct: +45 4911 3376 Tel. direct: +45 4911 1786 Tel. direct: +45 4911 1
Slide 66: 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