Leading intimate healthcare. Roadshow presentation 9M 2013/14

Transcription

1 Leading intimate healthcare Roadshow presentation 9M 2013/14

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 statements are based on Coloplast s current expectations, estimates and assumptions and based on the information available to Coloplast at this time. Heavy fluctuations in the exchange rates of important currencies, significant changes in the healthcare sector or major changes in the world economy may impact Coloplast's possibilities of achieving the long-term objectives set as well as for fulfilling expectations and may affect the company s financial outcomes. Page 2

3 Solid performance continued heading towards another record full year Highlights Satisfactory organic 9M revenue growth of 9% (6% in DKK) Adjusted 9M EBIT margin before special items 33.1% - up 2.0% compared to LY Reported 9M EBIT margin 22% - depressed by mesh provision in Q2 New long-term guidance published at CMD in June Executive management expanded from 2 to 4 Maintained guidance for 2013/14: Organic revenue growth of ~9% (~7% in DKK) Adjusted EBIT margin of 33-34% (~33% in DKK) Reported EBIT margin of 25-26% (~25% in DKK) Performance Revenue (mdkk) 9 6 8,665 9,214 10,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000 Organic growth (%) 11,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9, M 12/13 9M 13/14 Adj. EBIT (mdkk) 9,000 8,000 Adj. EBIT margin (%) 7,000 6, ,000 4,000 2,699 3,047 3,000 2,000 1, M 12/13 9M 13/ Page 3

4 9% organic growth in the first nine months of 2013/14 9M 13/14 revenue by geography Geographic area Reported revenue mdkk Organic growth In percent 9M 13/14 revenue by business area Business area Reported revenue mdkk Organic growth In percent European markets 6,128 6% Ostomy Care 3,764 8% Other developed markets Emerging markets 1,817 1,269 10% 24% Continence Care Urology Care Wound & Skin Care 3, ,264 11% 10% 10% Coloplast Group 9,214 9% Coloplast Group 9,214 9% Page 4

5 Our Ostomy Care business grew 8% driven by Sensura and Brava Comments 9M organic sales growth of 8% Key growth drivers: Performance Revenues (mdkk) Reported growth (%) Organic growth (%) SenSura portfolio in Europe and US Sensura Mio launched in 12 countries Brava accessories range especially in the US Assura portfolio in emerging markets such as Brazil and China Growth in Europe impacted partly by reform in France and lower general momentum in several key countries ,228 1,237 1,273 1,218 1, ,273 Q2 Q3 Q4 Q1 Q2 Q3 13/14 Page 5

6 Continence Care growth continues strong momentum with fourth consecutive quarter with double digit organic growth Comments 9M organic sales growth of 11% Key growth drivers: SpeediCath ready-to-use intermittent catheters - in particular the compact versions - both in Europe and in the US Conveen collecting device portfolio continues to good growth in key European markets. Recently we have had great success with a consumer campaign in France Peristeen growth remains very satisfactory Performance Revenues (mdkk) Reported growth (%) Organic growth (%) , ,085 1,074 1,039 1, Q2 Q3 Q4 Q1 Q2 Q3 13/14 Page 6

7 Urology Care performance remains strong Titan penile implant remains key growth driver Comments 9M organic sales growth of 10% Key growth drivers: Performance Revenues (mdkk) Reported growth (%) Organic growth (%) Titan penile implants is the main driver of growth (US business) Altis single incision slings continue to grow strongly both the US and in Europe Endourology products maintains solid growth especially in Europe Q2 Q3 Q4 Q1 Q2 Q3 13/14 Page 7

8 Double digit growth of 10% in Wound & Skin Care driven by good global Biatain performance Comments Performance 9M organic sales growth in WSC of 10% Revenues (mdkk) 9M organic sales growth in WC of 11% Reported growth (%) Key growth drivers: Biatain Silicone continues to drive growth in Europe Biatain and Comfeel perform well in China, Brazil and Greece Skin Care portfolio growing only moderately YTD after a strong start of the year. Interdry sales is a key growth driver Organic growth (%) Contract manufacturing of Compeed has strong growth momentum 300 Q2 Q3 Q4 Q1 Q2 Q3 13/ Page 8

9 Operating margin once again at all time high despite increasing investments in sales initiatives Comments 9M EBIT before special items grew 13% with a margin of 33%* 9M gross margin up by 1%-point 68% Key driver is improvements in production efficiency Minor negative FX impact 9M capacity costs to sales down by 0.9%- points Distribution to sales flat total of approximately 150 mdkk incremental investments in sales initiatives YTD Admin costs to sales decreasing impacted by efficiencies, lower project costs and reversal of provision R&D costs to sales decreasing Performance EBIT (mdkk) EBIT margin (%) Gross margin (%) * 34 1,050 1, Q2 Q3 Q4 Q1 Q2 Q3 13/14 * The EBIT adjustment consists of mesh provision of DKK 1,000m. Reported EBIT margin for 9M 13/14 was 22%. Page 9

10 Profitability drivers Profitability drivers key ratios Administration (%) R&D (%) COGS (%) Distribution (%) /09 09/10 10/11 11/12 12/13 13/14 YTD Page 10

11 Strong underlying cash flow - YTD FCF in line with last year due to higher on account tax payment Comments YTD free cash flow was 1,645 mdkk. This was in line with last year and thus somewhat down relative to sales: Performance FCF (mdkk) FCF-to-Sales (%) EBITDA margin before special items* increased by ~1%-point due to strong commercial performance in the company Tax payments increased relative to last year due to higher earnings and higher on account taxes Operating net working capital remains stable relative to sales at approx 24% 1,428 1,476 1,818 2,336 2,699 1, CAPEX-to-sales increased 3.4% to 3.9%. The relative increase was due to investments in machinery for new products *Special items 2013/14 includes DKK 1,000m provision for mesh. 08/09 09/10 10/11 11/12 12/13 13/14 YTD 1.0 Page 11

12 Free Cash Flow drivers Free Cash Flow drivers key ratios NWC-to-Sales (%) CAPEX-to-Sales (%) EBITDA margin (%) * /09 09/10 10/11 11/12 12/13 13/14 YTD *Before special items Page 12

13 Guidance for 2013/14 is set for continued growth and further margin expansion Guidance 13/14 Guidance 13/14 (DKK) Long term ambition Sales growth ~9% (organic) ~7% 7-10% p.a. EBIT margin - Reported 25-26% (fixed) ~25% bps p.a. - Before special items 33-34% (fixed) ~33% CAPEX (DKKm) ~500 ~4% of sales Tax rate ~25% - Page 13

14 Leading intimate healthcare Introduction to Coloplast Page 14

15 Coloplast has four main divisions with sales in both developed and emerging markets Group revenue FY 2012/13 by segment Group revenue FY 2012/13 by geography X = Global position Ostomy Care 42% # Billion DKK Continence Care 35% #1 Other developed markets 20% Emerging markets 13% 11.6 Billion DKK Wound & Skin Care 13% #4 Urology Care 10% #4 European markets 67% Page 15

16 Coloplast specializes in intimate healthcare needs Ostomy Care Who are our typical users People who have had their intestine redirected to an opening in the abdominal wall How do we help them? SenSura Mio Ostomy bag Continence Care People in need of bladder or bowel management SpeediCath Compact male urinary catheter Urology Care People with dysfunctional urinary and reproductive systems Titan Penile implant Wound Care People with difficult-to-heal wounds Biatain Silicone Foam wound dressing Page 16

17 Intimate health care is characterized by stable trends Demographics Growing elderly population increases customer base for Coloplast products Emerging markets Expanding healthcare coverage for populations in emerging markets increases addressable market Surgical and medical trends Earlier detection and cure, eventually reduces addressable market for Coloplast treatment products Healthcare reforms Economic restraints drive reimbursement reforms, introduction of tenders, and lower treatment cost Page 17

18 Coloplast has strong market positions in Europe and great commercial potential outside Europe Europe Developed Emerging Ostomy Continence Urology Wound Care Addressable market billion DKK 4-5% growth ~9 billion DKK 4-6% growth 9-10 billion DKK 3-5% growth ~14 billion DKK 2-4% growth Size in DKK Growth in % 13-14bn 4-5% ~9bn 4-6% 9-10bn 3-5% ~14bn 2-4% Coloplast market share 40-50% 15-25% 35-45% 50-60% 25-35% 15-25% 10-20% 5-15% 5-15% 5-15% 0-10% 10-20% Key competitors Key drivers and limiters Ageing population Increasing access to healthcare Health care reforms Re-use of products outside Europe Ageing population IC penetration potential Up-selling Health care reforms Commoditization Ageing, obesity Underpenetration Cost consciousness Clinical requirements Less invasive/office procedures Ageing, obesity, diabetes New technologies Healthcare reforms Competition Community treatment Page 18

19 Our strategy is aiming at increasing both revenue growth and margins Value creation will come from increased growth based on a strong new product pipeline combined with continued cost discipline and operational excellence in manufacturing Continued growth in the core developed markets in Europe Increased growth in the developed markets outside Europe Further expansion and growth in Emerging Markets Stabilization of the European Wound Care business Globalization of Urology Care A strong new product pipeline Continued cost discipline and operational excellence Page 19

20 Our strategy stands on three geographical legs all with interesting potential Europe Developed markets outside Europe Emerging markets Strong potential for market share gains Capture profitable growth based on high market share Educate, create and grow selected markets Page 20

21 Markets outside our European stronghold holds significant longer term potential Increase market share in USA Canada Japan Australia Develop growth platform e.g. in MENA Mexico India South Africa South East Asia Selected ROLA markets Build on and accelerate growth platform e.g. in China Brazil Russia Argentina Selected markets Page 21

22 Operating leverage will generate funds for investments in growth High value growth in Europe Continued cost discipline Generates funds for investments in growth and leaves potential for improving cost ratios Administration (%) R&D (%) COGS (%) Distribution (%) /09 09/10 10/11 11/12 12/13 13/14 YTD Incremental sales investments 11/12 12/13 13/14e Page 22

23 13 August 2014 Cost efficient production with more potential for improvements 23 Operational Excellence focus focus areas Lean in volume production Production by country* Re-design for manufacturing Global sourcing and supplier relations management Focus on fixed costs and environment Thisted Mørdrup 10% 5% Hungary China Cost effective distribution Design for manufacturing & fast ramp-up Sarlat Tatabánya Nyirbátor 25% 60% Denmark US/ France Minneapolis Average usage of raw material (RM) and semi finished goods (SFG) Mankato COGS by cost type* Innovation & Competency Centre High Volume Production Specialised Production 9% 19% 9% 49% 15% Salary - Direct Salary - Indirect Materials (RM & SFG) Depreciations & amortisations Other Zhuhai *FY 2012/13 Cost of goods sold, DKK 3,678 million Page 23

24 Coloplasts return policies include high payout ratio and continued share buy backs Comments Performance DKK 1bn share buy-back initiated in March 2014 Share buy-back (mdkk) Dividends (mdkk) 1,258 mdkk returned to shareholders via share buyback and dividends YTD 13/14 First half of share buy-back program nearly complete (414 mdkk by 30 June 2014) second half expected to commence in FY14/15 Total payouts/fcf (%) , mdkk interim dividend paid in Q3 13/14 next dividend payment will be after Q4 13/14 Future dividends not impacted by mesh provision made in Q2 13/ , , ,105 1, /09 09/10 10/11 11/12 12/13 13/14 YTD Page 24

25 We expect continued value creation driven by... Stable market trends in our Chronic Care business Organic growth EBIT Margin 33% * Increased focus on growing the business outside Europe 16% 10% 10% 9% 9% Additional improvements in manufacturing by leveraging on global operations footprint European leverage will provide funds for further investments in sales Low CAPEX-to-sales ratio from high capacity utilisation and lean factory footprint Resulting in strong free cash flow generation and high return on invested capital 03/04 05/06 07/08 09/10 11/12 13/14 YTD FCF to sales ROIC after tax 11% 6% 4% 5% 46% * 18% 03'04 05/06 07/08 09/10 11/12 13/14 YTD * Adjusted for mesh provision of DKK 1,000m Page 25

26 Appendices Page 26

27 Coloplast revenue development by business area Revenue Reported growth Organic growth Ostomy Care Continence Care /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/13 3 Urology Care Wound & Skin Care /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/ Page 27

28 Coloplast revenue development by geography Revenue Reported growth Organic growth Europe Other Developed Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 Emerging Markets Q2 Q3 Q4 Q1 Q2 Q3 Page 28

29 The Coloplast share (COLO B-KO) Coloplast share listed on NASDAQ OMX Copenhagen since 1983 ~100 billion DKK market ~ 470 DKK per share Two share classes: Share Capital Ownership 8% 2% 4% 45% 35% 18m A shares carry 10 votes (family) 202m B shares carry 1 vote (freely traded) Free float approx. 55% (B shares) Active sell-side analyst coverage by 25 brokers Holders of A-shares & family Foreign Institutionals Other shareholders 6% Danish Institutionals Coloplast A/S Non-reg. shareholders As per 30 September, 2013 Page 29

30 Capital structure Comments Performance No interest bearing debt will only be raised in connection with a major acquisition Excess liquidity is returned to shareholders in a combination of dividend and share buybacks NIBD (mdkk) NIBD/EBITDA 1.2x 0.6x 2,297 1, x -0.3x -0.4x -0.1x * Share buy-backs of DKK 500m per year expected 539 Dividend paid twice per year -1, ,744 08/09 09/10 10/11 11/12 12/13 13/14 YTD * LTM EBITDA - adjusted for mesh provision of DKK 1,000m Page 30

31 Healthcare reform landscape France - Healthcare authorities increasingly reluctant to provide brand-specific reimbursement for wound care products. - Regular periodic review of OC and CC pending, postponed to 2014/15. Intensifying reform pressure Stable reform environment UK Germany Holland Health and social bill now being implemented; government seeing efficiency savings through of Clinical Commissioning Groups (CCGs). No immediate reforms foreseen, but new healthcare initiatives always possible. OC reimbursement pressure. Spain Italy Greece United States European Court of Justice ruling on VAT increase (to 21%) for med devices unlikely to have impact on Coloplast. Healthcare spending review (for regions) could include med device spending caps and co-pays. Economic situation still volatile. - Merger of sickness funds > Healthcare reform ongoing, budget pressures and process could lead to volatile policymaking Page 31

32 Introducing Ostomy Care Disease areas Colorectal cancer (est. 45%) Bladder cancer (est. 10%) Diverticulitis (est. 15%) Inflammatory bowel disease (est. 10%) Other (est. 20%) Key products Customer groups Call points Nurses, mainly stoma care nurses People with a stoma Wholesalers/distribution Hospital purchasers and GPOs Surgeons Hospital & community nurses Hospital buyers Distributors Dealers Wholesalers Homecare companies SenSura 1 and 2 piece Launched in Sensura Mio, 1 piece Launched in 2011 Distribution of revenues* Urostomy Ileostomy Colostomy *Excluding baseplates and accessories Assura 1 and 2 piece 2nd generation launched Easiflex, 2 piece flex Launched in 2003 Page 32

33 Introducing Continence Care Disease areas Spinal Cord Injured, SCI Spina Bifida, SB Multiple Sclerosis, MS Benign prostatic hyperplasia, BPH & prostatectomy patients Elderly Key products Customer groups Continence or home care nurses Wholesalers/ distributors Hospital purchasers and GPOs Main call points Rehabilitation centers Urology wards Distributors, dealers & wholesalers SpeediCath Compact Male intermittent catheter Launched in January 2011 SpeediCath intermittent catheter Launched in 99/00 Distribution of revenues Intermittent catheters Urine bags Male ext. catheters Bowel mgt. Conveen Optima external catheter Launched in 05/06 Conveen Security+ Launched in October 2013 Page 33

34 Introducing Urology Care Treatment (surgical) of urological disorders Disease areas Urinary incontinence Pelvic organ prolapse Erectile dysfunction Enlarged prostate Kidney and urinary stones Key products (implants and surgical disposables) Customer groups Surgeons Purchasing departments and organizations End customers Virtue male sling Launched in 2009 Men s health - Surgical Urology Altis single incision sling Launched in 2012 Women s health - Surgical Urology Call points Urologists Uro-gynaecologists Gynaecologists Purchasing departments and organizations Distribution of revenues Men's health Women's health Titan OTR penile implant Launched in 2008 Men s health - Surgical Urology JJ stents Launched in 1998 Disposable Surgical Urology DSU Page 34

35 Introducing Wound Care Disease areas Chronic wounds Leg ulcers Diabetic foot ulcers Pressure ulcers Key products (Biatain and Comfeel range) Customer Groups & call points Hospitals Wound care committees Specialist nurses/doctors (Purchasers) Community Specialist nurses/doctors General practitioners District/general nurses Large nursing homes New Biatain Silicone Silicone adhesive and foam dressing Launched in 2013 Biatain Ag Antimicrobial foam dressing Launched in 2002 Distribution of revenues (WSC) Biatain range Comfeel range Skin Care Wound Care other Contract manufacturing Biatain High exudate mgt. foam dressing Launched in 1998 Comfeel Plus Transparent Transparent hydrocolloid dressing Launched in 1994 Page 35

36 Introducing Ostomy Care Accessories Market fundamentals Customer groups & call points Market value by geography Market size of DKK 1.5-2bn Market growth of 5-7% Market share 15% Main competitors include: Hollister Adapt, ConvaTec, 3M Cavilon, Eakin Nurses, mainly stoma care nurses People with a stoma Wholesalers/distribution Hospital purchasers and GPOs Surgeons Emerging markets Brava is a range of ostomy accessories designed to reduce leakage or care for skin, to make our end-users feel secure. Brava was launched in April 2012 and the range includes 10 different products. Key products Brava Mouldable Ring Durable to reduce leakage Brava Elastic Tape Elastic so it follows the body and movements Brava Adhesive Remover Sting free and skin friendly Brava Skin Barrier Reducing skin problems without affecting adhesion Brava Lubricating Deodorant Neutralizing odour Other developed markets European markets Page 36

37 Introducing Skin Care Disease areas Moisture associated skin damage Incontinence Skin folds & Obesity Prevention of skin impairments Key products Customer groups & call points Hospitals Clinical Specialists Supply Chain Value Analysis Committee Community Wound Clinics Long Term Care Home Health Agencies Distribution Sween Broad line of skin care products Designed to increase consistency of care EasiCleanse Bath Disposable Bathing Wipes Improves Patient Experience Product mix Barriers Cleansers/Bathing Moisturizers Textile Other Critic-Aid Clear / AF Skin Protectant Suitable for neonate to geriatric patients InterDry Ag Textile with antimicrobial silver complex Unique solution for skin on skin issues Page 37

38 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 Aging and obese population CMS Value Based Purchasing Increase focus on prevention Increase importance of utilization management Market limiters Consolidation of Providers Increased competition from both Channel and Manufacturers Market trends Increase size and vertical integration of health systems Increasing importance of prevention Increasing importance of utilization management Increasing scale and vertical integration of market leaders Page 38

39 Introducing Bowel Management Disease areas Faecal incontinence (management products only) Key products Customer groups & call points Market dynamics Customer groups Spinal Cord Injured, SCI Spina Bifida, SB Multiple Sclerosis, MS Call points Rehab centers Pediatric clinics Urology wards Market drivers Growing awareness Huge under-penetrated and unserved population New devices addressing the many unmet needs Market limiters Still taboo area and non-focus for professionals (doctors) Very little patient awareness Training required (nurses, patients) Lack of reimbursement Peristeen Anal Irrigation Launched in 2003 Updated in 2011 Distribution of revenues Anal plug Launched in 1995 Peristeen Anal Irrigation Anal plug Page 39

40 Introducing NPWT Market fundamentals Customer groups & call points Market value by geography Market size of USD 2.5bn* Market growth of 5% Market share 0% * Addressable market for Coloplast approx. USD 1bn Main competitors include: KCI, S&N Hospitals Wound care committees Specialist nurses/doctors (Purchasers) Community Specialist nurses/doctors General practitioners District/general nurses Large nursing homes Other developed markets Emerging markets European markets extricare 2400 Negative Pressure Wound Therapy (NPWT) Pump is a lightweight, portable and battery-powered device that works with anatomically fitted NPWT dressings to create a negative pressure environment. A drainage tube connects to a canister adjacent to the pump that collects exudates and bodily fluid. This may promote and expedite wound healing. Today, NPWT is primarily a hospital market. extricare was pilot-launched in Q1 2013/14 in Brazil and Switzerland. Key products extricare Pump Lightweight and portable Easy-to-use Affordable extricare dressings Simple, all-in-one dressings 6 sizes and shapes extricare foam kit Foam, film, suction bell Large and small sizes Page 40

41 Coloplast Executive Management Lars Rasmussen President, CEO Born 1959 With Coloplast since 1988 Anders L.-Skovgaard EVP, CFO Born 1972 With Coloplast since 2006 Allan Rasmussen EVP, Global Operations Born 1967 With Coloplast since 1992 Kristian Villumsen EVP Chronic Care Born 1971 With Coloplast since 2008 Further information is available from Page 41

42 Corporate responsibility external recognitions Page 42

43 Income statement DKK million 9M 2013/14 9M 2012/13 Net revenue 9,214 8,665 Gross profit 6,304 5,837 Gross margin 68.4% 67.4% SG&A costs -2,988-2,874 R&D costs Other Operation Inc/exp EBIT before special items 3,047 2,699 EBIT margin 33.1% 31.1% EBIT after special items 2,047 2,699 EBIT margin 22.2% 31.1% Net financial items Page 43

44 Balance sheet DKK million 30-Jun Sep-13 Balance sheet total 9,121 9,364 Equity 5,423 6,769 Equity ratio (%) 59% 72% Invested capital 6,075 6,320 Page 44

45 Cash flow DKK million 9M 2013/14 9M 2012/13 EBITDA 2,362 3,070 Change in working capital Net interest payments, etc Other Paid tax and other -1, Cash flow from operations 1,988 1,947 CAPEX Other 20-2 Cash flow from investments Free cash flow 1,645 1,650 Dividends -2,320-1,476 Trading of Coloplast shares Other cash changes 0-1,417 Total -2,759-3,332 Net cash flow for the year -1,114-1,682 Page 45

46 Production sites TCC Mørdrup DK TCC Thisted DK Adhesives Wound care products Continence care products Coloplast Consumer Products Number of employees in production: ~350 Machine development Ostomy care products Number of employees in production: ~175 Sarlat FR Disposable surgical urology products Number of employees in production: ~170 Minneapolis US Urology care products Number of employees in production: ~80 Mankato US Skin care products Ostomy care accessories Number of employees in production: ~70 Page 46

47 Tatabánya HU Ostomy care products Adhesives Continence care products Number of employees in production: ~1,200 Tata HU Postponement & packaging Cross docking Warehousing Distribution & shipping Number of employees: ~210 Nyírbátor HU Catheter care products Wound care products Number of employees in production: ~850 Zhuhai CN Continence care products Ostomy care products Machine building Number of employees in production: ~1,000 Page 47

48 Contact Investor Relations Holtedam 1 DK-3050 Humlebæk Denmark Ian Christensen Vice President Investor Relations Tel. direct: / office: Fax: dkisec@coloplast.com Nick Fridberg Senior IR Manager Investor Relations Tel. direct: / office: Fax: dknf@coloplast.com Ellen Bjurgert IR Manager Investor Relations On maternity leave Sara Fredskov Munch IR Coordinator Tel.: direct: / office: Fax: dksafrm@coloplast.com Page 48

49 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 49