Slide 1: Financial outlook
Financial outlook Coloplast Capital Markets Day 2018 Anders Lonning-Skovgaard, Executive Vice President & CFO
Slide 2: Long-term guidance for the LEAD20 strategy period
Our long-term guidance for the LEAD20 strategy period is aimed at accelerating growth and long-term value creation Revenue growth EBIT margin annual organic constant currencies 7–9% >30% • . Page 2
Slide 3: Since 2015 we have delivered strong revenue growth and profitability coupled with cash returns
Since 2015 we have delivered strong revenue growth and profitability coupled with significant cash returns Revenue growth EBIT margin and ROIC Cash return Revenue (DKKm) Reported EBIT margin (%) Dividend paid out in the period2 (DKKm) Organic growth (%) ROIC after tax (%) Share buy-back (DKKm) Repor
Slide 4: Emerging market currencies continue to impact negatively
Currently, Emerging market currencies continue to impact negatively Revenue FX exposure 12 months exposure from 10% initial exchange rate drop1 Guidance 2017/181 Guidance 2017/181 -29% drop in ARS2 -330 15% USD -13% -130 drop in BRL2 11% 41% -240 -10% GBP drop in USD2 -160 14% 19% -9% 0 drop in JPY2
Slide 5: Increased investments into R&D and commercial opportunities in the US and Emerging markets
1 DELIVERING ANNUAL ORGANIC REVENUE GROWTH OF 7-9% We have increased our investments into R&D and commercial opportunities in the US and Emerging markets Investment allocation Investment allocation by type FY 15/16 to 9M 17/18 FY 15/16 to 9M 17/18 Up to 2% of Coloplast sales Up to Sales & marketing
Slide 6: Increased investment level is fuelling growth momentum across regions and business areas
1 DELIVERING ANNUAL ORGANIC REVENUE GROWTH OF 7-9% The increased investment level is fuelling our growth momentum across regions and business areas Organic growth contribution per region Organic growth contribution per business area Organic growth FY 15/16 to 9M 17/18 (DKKm) Organic growth FY 15/16
Slide 7: We can accelerate volume growth while managing price pressure
1 DELIVERING ANNUAL ORGANIC REVENUE GROWTH OF 7-9% We can accelerate volume growth while managing price pressure Market (all-else-equal) Net effect on Coloplast + Demographics Market share Volume + Access to healthcare gains ÷ Surgical/medical trends ÷ Healthcare reforms Up to ~1% Price ÷ Competitio
Slide 8: Pricing pressure of up to negative 1% per year driven by healthcare reforms
1 DELIVERING ANNUAL ORGANIC REVENUE GROWTH OF 7-9% We continue to see pricing pressure of up to negative 1% per year driven by healthcare reforms Healthcare reform in Greece causing majority of price Chronic care reimbursement review expected in France pressure in 2017/18 during 2018/19 • Healthcare
Slide 9: ASPs positively impacted by innovation and upselling/upgrade opportunities
1 DELIVERING ANNUAL ORGANIC REVENUE GROWTH OF 7-9% Our ASPs are positively impacted by continued innovation and upselling/upgrade opportunities New innovation in mature markets Portfolio upgrade in Emerging markets Hydrophilic upgrade in US SenSura® Mio Convex/Concave SenSura® SpeediCath® Family Con
Slide 10: EBIT margin development: scalability, cost discipline, investments and M&A
2 DELIVERING ANNUAL EBIT MARGIN OF >30% IN FIXED CURRENCIES EBIT margin development is a function of scalability, cost discipline, investments and M&A Natural leverage Possible incremental Illustrative effect driven by investment capacity of up to organic growth 2% of revenue per year >30% ~31.0% EB
Slide 11: Global Operations Plan 4 will continue to contribute to gross margin accretion
2 DELIVERING ANNUAL EBIT MARGIN OF >30% IN FIXED CURRENCIES Global Operations Plan 4 will continue to contribute to gross margin accretion Global Operations Plan 4 1. Reduction of manufacturing in Denmark EBIT margin contribution, bps Manufacturing FTE’s in Denmark, Ultimo FY GOP 3 GOP 4 700 600 50b
Slide 12: Continued leverage effect in SG&A drives further commercial investments
2 DELIVERING ANNUAL EBIT MARGIN OF >30% IN FIXED CURRENCIES Continued leverage effect in SG&A drives further commercial investments Cost item Development, in % of revenue Future drivers of cost ratios 28.3 28.5 28.1 28.1 29.1 28-30 + Leverage effect on distribution costs in Europe driven by Distribu
Slide 13: Global Business Support and IT landscape enables Coloplast to scale
2 DELIVERING ANNUAL EBIT MARGIN OF >30% IN FIXED CURRENCIES A global Business Support and IT landscape enables Coloplast to scale much faster and more efficiently Global Business Services Global business services handle the majority of all global support % of group processes 100% ~90% 100% IT infras
Slide 14: For 18/19 we will commit up to 2% of revenue in incremental commercial investments
2 DELIVERING ANNUAL EBIT MARGIN OF >30% IN FIXED CURRENCIES For 18/19 we will commit up to 2% of revenue in incremental commercial investments Understanding users’ lives in full Innovation Consumer R&D ~4% of sales Creating life-changing products and services Supporting beyond expectations • . Page
Slide 15: 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 CAPEX(2) Reported tax rate Net working capital in % revenue Depreciation in % of revenue CAPEX in % of revenue CAPEX DKKm 4.0% 5.0% 4.0% 3.0% 25.2% ~24.0% 23.0% 23.3% 23.0% ~23.0% 23.8% 23.6% 627 661 491
Slide 16: Continue to provide attractive cash returns despite large commercial investments
…and continue to provide attractive cash returns despite large investments in commercial activities Coloplast cash distribution to investors Dividends paid out in the year (mDKK) (1) Share buy-back (DKKm) Pay-out ratio (%) (2) 100 84 78 77 82 77 80 We will continue to return excess cash to sharehold
Slide 17: 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 Group - Ostomy Care /