Slide 1: Leading intimate healthcare – Roadshow presentation H1 2017/18
Leading intimate healthcare Roadshow presentation H1 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: Q2 organic growth of 8% and upgraded FY organic growth guidance
Coloplast delivered Q2 organic growth of 8% and upgrades FY organic growth guidance from ~7% to 7-8% Q2 Highlights Revenue growth +8% • Q2 organic growth of 8% (4% in DKK) Reported revenue (DKKm) +5% • Negative FX impact from USD/DKK. Acquisitions contributed 1% Organic growth +8% 7,990 to growth 7,
Slide 4: 8% organic growth in H1 driven by all business areas except Wound & Skin Care
8% organic growth in H1 driven by strong momentum in all business areas except Wound & Skin Care H1 17/18 revenue by business area H1 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
Slide 5: Ostomy Care grew 10% organically in Q2
Ostomy Care grew 10% organically in Q2 driven by SenSura® Mio range and Brava® accessories Performance Comments • H1 organic growth of 10% (reported growth 6%). Q2 2017/18 organic 10 growth of 10% (6% reported growth) 9 • Acquired growth was 1% in H1 resulting from acquisitions in the 8 distribution
Slide 6: Continence Care grew 8% in Q2
Continence Care grew 8% in Q2 driven by SpeediCath® intermittent catheters and Peristeen® Performance Comments 12 • H1 2017/18 organic growth of 9% (7% reported growth). Q2 2017/18 organic growth of 8% (5% reported growth) 10 10 10 • Acquired growth was 2% in H1 resulting from acquisitions in the 9
Slide 7: Urology Care grew 9% in Q2 driven by Titan penile implants
Urology Care grew 9% in Q2 primarily driven by US sales of Titan® penile implants Performance Comments • H1 2017/18 organic growth of 10% (4% reported growth). Q2 2017/18 15 organic growth of 9% (1% reported growth) • Q2 growth mainly driven by the US, but also France and Emerging 14 markets 11 11 •
Slide 8: Improved momentum in Wound & Skin Care in Q2
Improved momentum in Wound & Skin Care in Q2 offset by Compeed contract manufacturing and Greek price reform Performance Comments • H1 2017/18 organic growth of negative 1% (negative 5% reported 16 growth). Q2 2017/18 organic growth of 3% for Wound & Skin care 14 (negative 2% reported growth) • Q2 2
Slide 9: H1 17/18 revenue impacted by depreciation of USD
H1 17/18 revenue significantly impacted by the depreciation of USD and USD related currencies against DKK Comments Revenue development • H1 2017/18 reported revenue increased by DKK (DKKm) 82 8,316 354m or 5% compared to H1 2016/17 -326 7,990 • The majority of growth was driven by organic 598 growth
Slide 10: H1 EBIT margin dilution due to commercial investments
H1 EBIT margin dilution due to increased commercial investments across business areas and regions EBIT margin development (%) Comments • EBIT fell 3% to DKK 2,407m with a reported margin of 30% (31% 32.4 in constant currencies) compared to 32% last year -1.0 • Gross margin of 67% compared to 68% sam
Slide 11: Adjusted for Mesh settlements and acquisitions, FCF 12% higher
Adjusted for Mesh settlements and acquisitions, FCF was 12% higher than H1 last year FCF development Comments • Free cash flow in H1 was positive DKK 811m compared to negative DKK 648m in H1 2016/17 101(3) 98 95 93 92 93 • Reported EBITDA 46m DKK lower than same period last year 4,023 4,079 • NWC-to
Slide 12: Upgraded organic and reported growth guidance for FY 2017/18
Upgraded organic and reported growth guidance for FY 2017/18 Guidance 2017/18 Guidance 2017/18 (DKK)* Key assumptions • Negative impact of DKK 50m from patent expiry • More than 1% negative price pressure of which DKK 7-8% from ~7% ~6% from 5-6% 100m from price reform in Greece Sales growth • DKK gu
Slide 13: 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. Please contact dkasso@coloplast.com t
Slide 14: Introduction to Coloplast
Leading intimate healthcare Introduction to Coloplast
Slide 15: Coloplast has four business areas 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 16: 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 17: 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 18: Strong market positions in Europe and 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 19: LEAD20 strategy 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 19
Slide 20: 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 20
Slide 21: Growth acceleration through two key pillars
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 22: 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 22
Slide 23: EBIT margin development drivers
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 24: Global Operation Plan IV supports LEAD20
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 2020/211 • Driven primarily by continued cost efficiency, procurement savings and reduction
Slide 25: Innovative product launches 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 25
Slide 26: Clinical Performance Program to tackle biggest user issues
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 * Peo
Slide 27: Profitability uplift driven by scalability and efficiency
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 28: Continued strong 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 4.3% 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.
Slide 29: 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 • Coloplast returns excess liquidity to Dividends paid out in the year (mDKK) (1) Share buy-back (DKKm) Pay-out ratio (%) (2) shareholde
Slide 30: Stable shareholder returns
In sum, we believe Coloplast can continue to deliver stable shareholder returns through ... 30% 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 31: Appendices
Leading intimate healthcare Appendices
Slide 32: 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 (~18.6 billion USD) market cap @ ~530 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 33: 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 34: Key Value Ratios
Key Value Ratios Profitability drivers Free Cash Flow drivers 32.9 36.8 36.1 36.6 36.3 31.3 31.5 31.7 31.9 29.5 34.1 28.3 28.5 28.1 28.1 25.2 24.5 23.9 24.1 23.8 4.0 4.3 3.8 4.0 4.0 4.3 4.4 4.4 4.4 4.1 3.1 3.2 3.5 3.7 3.9 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 35: Revenue development by business area
Coloplast revenue development by business area Ostomy Care Urology Care 6,291 13 5,567 5,935 5,091 10 10 9 10 8 9 10 9 9 7 3,250 10 6 7 6 7 4 5 6 1,641 1,199 1,359 1,497 5 859 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 13 16 10 9 9 10 9 5,01
Slide 36: Revenue development by geography and total
Coloplast revenue development by geography and total Europe Other Developed Markets 19 9,213 9,394 15 8,221 8,843 13 10 8 8 4,838 8 2,945 3,177 3,642 6 6 5 2,479 5 4 6 6 1,803 4 4 4 2 3 13/14 14/15 15/16 16/17 YTD 17/18 13/14 14/15 15/16 16/17(1) YTD 17/18 Emerging Markets Coloplast group 24 23 15,5
Slide 37: Segment operating profit
Segment operating profit Chronic Care Urology Care Wound & Skin Care Ostomy and Continence Care 60 59 59 59 40 39 38 37 58 38 36 36 35 36 34 1,755 1,793 1,793 1,777 166 165 166 205 212 1,737 154 191 138 185 162 (1) Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 17/18 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Q2 1
Slide 38: Exchange rate exposure and hedging policy
Exchange rate exposure FY 2017/18 and hedging policy Revenue FX exposure 2017/18(1) 12 months exposure from 10% initial exchange rate drop(1) Other 15% -330 USD -130 CNY, JPY, AUD, BRL & ARS EUR 11% 41% -240 GBP -160 HUF 0 14% 75 GBP 19% Revenue (DKKm) EBIT (DKKm) USD Financial guidance for 2017/18
Slide 39: Mesh litigation timeline
Mesh litigation timeline April 28, 2017 Verdict vs Ethicon Sep. 7, 2017 April 12, 2018 Verdict vs Bard PA State Court: Verdict vs Ethicon PA State Court: NJ State Court: USD 20M USD 57.1M USD 68M (DKK 125.3M) Sept. 9, 2014: (DKK 358.6M) (DKK 410.3M) Verdict vs BSC May 2, 2014: TX State Court: Mar. 5
Slide 40: US Mesh litigation – 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 1.2 EBIT (before 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 0.7 0.6 0.6 0.5 0.5 EBIT
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 program increases retention and 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: DtC marketing program reaches 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: Generic model for distribution and reimbursement
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: Progressing with new ambition in Wound Care
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 – UN Global Compact member
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 H1 2016/17 H1 2017/18 Change Revenue 7,636 7,990 5% Gross profit 5,202 5,361 3% SG&A costs -2,445 -2,662 9% R&D costs -290 -321 11% Other operating income/expenses 5 29 nm Operating profit (EBIT) 2,472 2,407 -3% Net financial items -35 5 nm Tax -560 -554 -1% Net profit 1,877 1,
Slide 60: Balance sheet
Balance sheet DKKm 31 Mar 2017 31 Mar 2018 Change Balance, total 12,511 12,751 2% Assets Non-current assets 5,903 6,110 4% Current assets 6,608 6,641 0% of which: Inventories 1,742 1,679 -4% Trade receivables 2,819 2,894 3% Restricted cash 796 702 -12% Marketable securities, cash, and cash equivalen
Slide 61: Cash flow
Cash flow DKKm H1 2016/17 H1 2017/18 Change EBITDA 2,769 2,723 -2% Change in working capital -1,284 -545 -58% Net interest payments -88 49 nm Paid tax -255 -736 nm Other -584 -73 -88% Cash flow from operations 558 1,418 nm CAPEX1) -262 -327 25% PPE divested 45 9 -80% Acquisition -1,144 -293 nm Secur
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 Tatabánya
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