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Leading intimate healthcareRoadshow presentation – Q3 2011/12p Q
Leading intimate healthcare15 August 2012
Forward-looking statementsPage 2
Forward looking statements
The forward-looking statements contained in this presentation, including g p , gforecasts 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
t ti ti t d ti d b d th i f ti il blexpectations, estimates and assumptions and based on the information available to Coloplast at this time.
Heavy fluctuations in the exchange rates of important currencies significantHeavy 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.g p y p y
Leading intimate healthcare15 August 2012
Solid performance in 9M 2011/12Page 3
Solid performance in 9M 2011/12
• 6% organic sales growth in line with guidance. Growth in DKK was 8% 7 601
8.174
Sales
+8%
• Gross margin improved from 64% to 66%
• Satisfactory EBIT margin of 29%
7.601
9M 2010/11 9M 2011/12y g
• ROIC after tax of 36% against 28% last year
1.839 2.364
Operating profit
+29%
• Full year guidance for 2011/12:
• Organic growth rate around 6% (8% in
9M 2010/11 9M 2011/12
g g % ( %DKK)
• EBIT margin in fixed currencies adjusted to around 29% ( 30% in DKK)
24% 29%
Operating margin
around 29% ( 30% in DKK)
9M 2010/11 9M 2011/12
Leading intimate healthcare15 August 2012
6% organic sales growth (8% reported)Page 4
6% organic sales growth (8% reported)
8161.135
Group revenue 9M 2011/12 by segment Group revenue 9M 2011/12 by geography9M 2011/12 sales: DKK8.2bn
1 439 8%
6%3.416771 -2%
5% 1.439
5%
8%6%
5%
5.919
2.852
9%
DKKm (organic growth)
Europe Americas RoW
DKKm (organic growth)
OC CC UC WSC
Leading intimate healthcare15 August 2012
Satisfactory Ostomy Care growthPage 5
Satisfactory Ostomy Care growth
• Organic sales growth of 6% in 9M. Q3 organic
614
16
% DKKm
g g ggrowth was also 6%
• Growth in Europe still driven by very satisfying sales growth in UK but also Spain 2 7 16
5 3.47
4
3.56
9
3.62
1 3.94
9 4.26
6
6
8
10
12
14
y g g pand Italy saw satisfying performance
• Satisfying growth in China whereas growth rates declined in Russia and Brazil
2.44
2.95
7 3.1
0
2
4
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
• Biggest growth driver was the SenSura®product line
% DKKm
8 7 96
.127
115 1.17
4
10
12
14
• Ostomy Care accessories continue to perform well
911
939
955
928 1.
009 1.05
7
1.05
8
1.03
5
1.07 1.09 1 1.1
0
2
4
6
8
03Q
08/094Q
08/091Q
09/102Q
09/103Q
09/104Q
09/101Q
10/112Q
10/113Q
10/114Q
10/111Q
11/122Q
11/123Q
11/12
Revenues Reported growth Organic growth
Leading intimate healthcare15 August 2012
Continence Care continues strong growthPage 6
• Organic growth of 9% in 9M and Q3 10
12
Continence Care continues strong growth% DKKm
g g % Q
• Significant positive impact from distributor consolidation in the UK
2.75
9
2.91
2 3.20
2 3.45
6
4
6
8
10
• Satisfying sales growth driven by SpeediCath® in Europe and SelfCath® in the US 0
2
4
2007/08 2008/09 2009/10 2010/11
• Good growth in sales of urisheaths and urine bags
• Continued strong performance within bowel
% DKKm
3 4 0 928
924 1.
000
12141618
g pmanagement
746
753 78
3
751
822 84
6 883
809
884
880 9
2468
1012
Q /
02
3Q 08/09
4Q 08/09
1Q 09/10
2Q 09/10
3Q 09/10
4Q 09/10
1Q 10/11
2Q 10/11
3Q 10/11
4Q 10/11
1Q 11/12
2Q 11/12
3Q 11/12
Revenues Reported growth Organic growth
Leading intimate healthcare15 August 2012
Note: Mentor was acquired 3Q 05/06
Growth in Urology Care impacted by European businessPage 7
14
16
Growth in Urology Care impacted by European business
• Organic growth of 5% and additional 1%
% DKKm
787
857
938
6
8
10
12
g g % %growth from acquired business
• Organic growth in Q3 was 4%
684
0
2
4
2007/08 2008/09 2009/10 2010/11
• Performance remains strong within men’s health driven by sale of penile implants
• Continued challenging performance in g g pwomen’s health as sales of female slings continued to decline
• Restorelle® continued satisfactory growth
% DKKm
265
264
12141618
y g
• In Q3 growth declined in the European Urology business compared to previous quarter.
207
197
197 21
2 228
221 23
1 240
240
227 24
2 2 2
02468
1012
q
Q /
-20
3Q 08/09
4Q 08/09
1Q 09/10
2Q 09/10
3Q 09/10
4Q 09/10
1Q 10/11
2Q 10/11
3Q 10/11
4Q 10/11
1Q 11/12
2Q 11/12
3Q 11/12
Revenues Reported growth Organic growth
Leading intimate healthcare15 August 2012
Note: Mentor was acquired 3Q 05/06
Wound & Skin Care impacted by negative growth in contract Page 8
Wound & Skin Care impacted by negative growth in contract manufacturing in Q3
• 9M organic sales growth was negative 2% 0 529
12 14
16% DKKm
g g g %and Wound Care sales growth was negative 4%
• Q3 organic growth was negative 5% while 207 1.25
8
1.45
0 1.50
0
1.5
1.51
4
6
8
10
12
Q g g ggrowth was negative 2% in Wound Care
• Contract manufacturing of Compeed®¹ declined in Q3 as a result of timing in order
1.05
4 1.12
4 1.2
-2
0
2
4
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11g
patterns
• Continued challenging wound care market conditions in Europe, mainly France, Spain
% DKKm
79 81
393
393
79
396
389
389
2
4
6
p , y , pand Greece
• China continued to deliver high growth rates
37
372
362
38
369 37
368
357
-8
-6
-4
-2
0
• Skin Care continued to deliver satisfying growth rates
¹Compeed® is a registered trademark of Johnson & JohnsonNote: 2007/08 impacted by inclusion of contract productionAll figures are Wound & Skin Care including contract manufacturing
3Q 08/09
4Q 08/09
1Q 09/10
2Q 09/10
3Q 09/10
4Q 09/10
1Q 10/11
2Q 10/11
3Q 10/11
4Q 10/11
1Q 11/12
2Q 11/12
3Q 11/12
Revenues Reported growth Organic growth
Leading intimate healthcare15 August 2012
Gross profit margin of 66% for 9M 2011/12
Page 9
Gross profit margin of 66% for 9M 2011/12• Gross profit increased by 12% to DKK 5,433m for the first 9 months
• Gross margin of 66%, 2% points up compared with same period last yearGross margin of 66%, 2% points up compared with same period last year
• Improved production efficiency and higher absolute sales was the key drivers, while exchange rates added almost 1% point
66 5 688 000
%DKKm67 9 702 000
%DKKm
4 .844
6.56
8
.433
61,560,8
59,960,1 61,3
64,6
66,5
60
62
64
66
68
5.000
6.000
7.000
8.000
2 671
1.70
8
1.73
8
1.77
5
1.92
0
58,0 56,5
59,0
62,7 60,5
62,8 63,4 64,0 64,3 66,4 65,5 65,9
67,9
60
65
70
1.600
1.700
1.800
1.900
2.000
3.73
1
3.78
9
4.02
2 4.83
4
4.99
8
5.10
3
5 5 .59,1
57,9
52
54
56
58
60
1.000
2.000
3.000
4.000
1.30
1
1.27
9 1.35
4 1.42
5
1.48
4 1.58
1
1.61
1.57
7 1. 1
45
50
55
1.100
1.200
1.300
1.400
1.500
50 0 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 9M
2011/12
40 1.000 3Q
08/094Q
08/091Q
09/102Q
09/103Q
09/104Q
09/101Q
10/112Q
10/113Q
10/114Q
10/111Q
11/122Q
11/123Q
11/12
Leading intimate healthcare15 August 2012
EBIT margin of 29% for 9M 2011/12
Page 10
EBIT margin of 29% for 9M 2011/12• Reported EBIT margin of 29% and 28% in local currencies for the first 9 months
• Reported EBIT increased by 29% to DKK 2 364m against 9M last year• Reported EBIT increased by 29% to DKK 2,364m against 9M last year
• SGA costs were 34.5% of revenue compared to 35.6% for the same period last year
• R&D to sales was 3% and below same period last year due to changes in the R&D organisation completed by the end of last fiscal year
• One-offs of DKK 65m and bad debt provisions for Southern Europe of DKK 66m included in 9M 2011/12
% DKK C t t l ti (%)
42
3 770
901
19 821,2
22,624,1 23,3
25,1
28,926,1
28,631,9
25
30
35
700
800
900
1.000
%DKKm31,4
29,4 29,2 29,8 28,9 30,3 29,9 30,4 29,1 28,2 29,5 28,6 27,6
25
30
35
DKKm Cost-to-sales ratios (%)
Dist.
347 40
6 454
451 52
0 570 61
3
575 65
1 7 4
693 7
15,517,9
19,8
19,9
5
10
15
20
200
300
400
500
600
6,84,7 6,0 6,4 6,2 4,8 5,4 6,0 6,1 6,2 6,1 5,9 5,8
5
10
15
20 Adm.
R&D
0
5
0
100
3Q 08/09
4Q 08/09
1Q 09/10
2Q 09/10
3Q 09/10
4Q 09/10
1Q 10/11
2Q 10/11
3Q 10/11
4Q 10/11
1Q 11/12
2Q 11/12
3Q 11/12
EBIT EBIT margin
4,3 4,0 4,0 4,8 4,3 4,1 4,4 4,5 4,0 3,4 3,6 3,1 2,80 Q3
08/09Q4
08/09Q1
09/10Q2
09/10Q3
09/10Q4
09/10Q1
10/11Q2
10/11Q3
10/11Q4
10/11Q1
11/12Q2
11/12Q3
11/12
Leading intimate healthcare15 August 2012
ROIC after tax was 36% - up 9% points from 9M 2010/11Page 11
ROIC after tax was 36% up 9% points from 9M 2010/11
• The equity amounted to DKK 5,398m, corresponding to an equity ratio of 54% and return on equity of 43%q y %
• Interest bearing assets exceed interest bearing debt by DKK 142m as of 30 June 2012• Q3 ROIC after tax was 40% against 28% in Q3 last year
DKKm60%
DKKm
3.06
9
3.18
1
3.42
8
2,22,0
2,2
1,2
0 6 1 0
1,5
2,0
2,5
2 000
2.500
3.000
3.500
4.000
33%36% 38% 40% 39%
44% 43%46% 47% 49% 50%
53% 54%
28%
34% 32%35%
40%40%
50%
60%
2.29
7
1.59
3 539
-142
0,6
0,20,0
-0,5
0,0
0,5
1,0
0
500
1.000
1.500
2.000
14%18% 20% 20%
24% 26% 27%24%
28%
10%
20%
30%
-1,0 -500 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 9M
2011/12
NIBD (EoP) NIBD to EBITDA
0%3Q
08/094Q
08/091Q
09/102Q
09/103Q
09/104Q
09/101Q
10/112Q
10/113Q
10/114Q
10/111Q
11/122Q
11/123Q
11/12
Equity ratio ROIC after tax
Leading intimate healthcare15 August 2012
Free cash flow increased by 69% YTD to DKK 1.5bnPage 12
• Cash flow from operations amounted to DKK 1.684m, compared to DKK 1.203m last year Increased earnings lower increase in working capital compared to same periodyear. Increased earnings, lower increase in working capital compared to same period last year and decrease in income tax paid, were partly off-set by realised currency exchange losses
CAPEX was DKK 225m or a CAPEX to sales ratio of 3%• CAPEX was DKK 225m, or a CAPEX-to-sales ratio of 3%
• Free cash flow was up 69% to DKK 1.467m compared with the same period last year
%DKK %DKK
839
754
6 6
10,4
9,0
6 58
10
12
600
700
800
900
%DKKm
.978
16,2 15,5
19,4
17,9 20
25
2.000
2.500
%DKKm
480 57
1
306
250 25
6,6 6,5
3,2 2,5 2,8
2
4
6
200
300
400
500
04
53
1.42
8
1.47
6
1
1.46
7
9,0
4,7
7,7
5
10
15
500
1.000
1.500
N t E l di i iti d di t t
22
0
2
0
100
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 9M 2011/12
CAPEX Capex-to-sales60
376 6
0 0 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 9M
2011/12
FCF FCF-to-sales
Leading intimate healthcare15 August 2012
Note: Excluding acquisitions and divestments
Strong financial performance continued in 9M 2011/12Page 13
MDKK 9M2011/12
9M2010/11
• Continuing production efficiency driving gross margin improvement of 2% points
• SGA of 34% including one-offs of DKK 65m
Gross profit 5,433 4,860
Gross margin 66% 64%
SGA-to-sales 34% 36%gand bad debt provisions of DKK 66m
• EBIT margin up 5% points to 29%
Working capital to sales of improved by 2%
EBIT 2,364 1,839
EBIT margin 29% 24%
• Working capital to sales of improved by 2% points
• CAPEX-to-sales remains low due to
NWC-to-sales 23% 25%
CAPEX 236 194
CAPEX to sales 2 9 2 6continued discipline on investments
• ROIC after tax up by 8% points to 36%
• Free cash flow up by 69% to DKK 1,467m
CAPEX-to-sales 2.9 2.6
Free cash flow 1,467 869
ROIC after tax 36% 28%p y ROIC after tax
NIBD (142) 1,510
Leading intimate healthcare15 August 2012
Guidance for 2011/12, EBIT margin upward adjustedPage 14
Guidance for 2011/12, EBIT margin upward adjusted
Guidance11/12
Guidance11/12 (DKK)
Long-termambition
Sales growth ~6 % (organic) ~8% Market+
Deliver margins in line with EBIT margin ~29%(fixed) ~30%
gthe best performing medical
device companies *)
CAPEX (DKKm) ~300 ~4% of salesCAPEX (DKKm) 300 4% of sales
Tax rate ~25-26% -
*) The peer group includes the following listed companies: Medtronic Inc., Baxter International Inc., Covidien PLC, Stryker Corp., St. Jude Medical Inc., Boston Scientific Corp., Sonova Holding AG, Smith & Nephew PLC, CR Bard Inc., Getinge AB, WDH A/S, Shandon Weigao Group Medical
Leading intimate healthcare15 August 2012
Page 15
Leading intimate healthcareLeading intimate healthcareIntroduction to Coloplast
Leading intimate healthcare15 August 2012
Page 16
Our mission
Making life easier for peoplewith intimate healthcare needswith intimate healthcare needs
Our values
Closeness… to better understandPassion… to make a differenceRespect and responsibility to guide usRespect and responsibility… to guide us
Our vision
Setting the global standardfor listening and responding
Leading intimate healthcare15 August 2012
Coloplast is a leading medtech company specialising inPage 17
Coloplast is a leading medtech company specialising in intimate healthcare needs
C
Americas17%
Group revenue FY 2010/11 by segment Group revenue 2010/11 by geographyFull Year 2010/11 sales: DKK10.2bn
Ostomy Care42%
Continence Care34% Rest of
world10%#1 10%#1
#1
Urology Care9%
Wound & Skin Care
15%
Europe73%
15%#4
#x Global position
Leading intimate healthcare15 August 2012
Page 18
Stable intimate healthcare trends
Growing elderly population increasescustomer base for Coloplast productsDemographics
Expanding healthcare coverage for populations in emerging marketsincreases addressable market
Emerging markets
Surgical and medical trends are towardsearlier detection and cure, eventually
d i dd bl k t fSurgical and
di l t d reducing addressable market for Coloplast treatment products
Economic restraints push for
medical trends
preimbursement reforms, introduction of tenders, and lower treatment cost
Healthcare reforms
Leading intimate healthcare15 August 2012
Introducing Ostomy CarePage 19
• Colorectal cancer (est. 55%)• Bladder cancer (est. 10%)
Key products
Disease areas
• Inflammatory bowel disease (est. 35%)
• Nurses, mainly stoma care nurses• People with a stoma
Wh l l /di t ib ti
Customergroups
• Wholesalers/distribution• Hospital purchasers and GPOs• Surgeons
• Hospital & community nursesCall pointsAssura® 1 and 2 piece2nd generation launched 1996-2000• Hospital & community nurses
• Hospital buyers• Distributors• Dealers• Wholesalers
H i
Call points 2nd generation launched 1996 2000
• Homecare companies
Distribution ofrevenues
Urostomy
SenSura® 1 and 2 pieceLaunched in 2006-2008
Easiflex®, 2 piece flexLaunched in 2003
Ileostomy
Colostomy
Leading intimate healthcare15 August 2012
The market for ostomy devicesPage 20
• Global Market size estimated at DKK 11bn with 4-5% growth
The market for ostomy devices
Estimated market value split by region
• Market share: 35-40%
• Europe 40-50%
• Americas 0-10%
RoW
Europe
• Rest of the world 35-45%
• Main competitors are ConvaTec and Hollister/Dansac Americas
Market drivers Market limiters Market trends
Marketdata does not include OC accessories
Market drivers Increasing incidence of colorectal
cancer and inflammable bowel disease, particularly in developing countries
Market limitersReimbursement system reformsUsage patterns geared towards
reuse of products outside Europe
Market trendsNational healthcare reforms
aiming to reduce price and volume Increasing influence of financial
decision makers within distribution Well developed usage patterns
with strong key opinion leaders in Europe
and hospitals Improving treatment of stoma
patients in developing economies
Leading intimate healthcare15 August 2012
Introducing continence consumablesPage 21
• Spinal Cord Injured, SCI• Spina Bifida, SB• Multiple Sclerosis, MS• Benign prostatic hyperplasia &
Disease areas Key products (management products)
• Benign prostatic hyperplasia & prostatectomy patients
• Elderly and diabetics
• Continence or home care nursesCustomer
SpeediCath® CompactMale intermittent catheter
SpeediCath®intermittent catheter
• People with incontinence problems• Wholesalers/distribution• Hospital purchasers and GPOs• Surgeons
groups
• Rehabilitation centers• Urology wards• Pediatric clinics• Elderly homes
Di t ib t d l & h l l
Launched in 10 Launched in 99/00Call points
• Distributors, dealers & wholesalers
Distribution ofrevenues Intermittent catheters
Conveen® Optima external catheterLaunched in 05/06
Conveen® Security+ urine bagLaunched 10+ years ago
Urine bagsMale ext. cathetersOther incl. bowel mgt.
Leading intimate healthcare15 August 2012
The market for urinary incontinence management productsPage 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
RoW• Market share: 35-40%
• Europe 45-55%
• Americas 30-40%Europe
Americas• Rest of the world 10-20%
• Main competitors include AstraTec and Bard
Excluding indwelling catheters (Foley) and Bowel management
Market drivers Market limiters Market trends
Excluding indwelling catheters (Foley) and Bowel management
Market driversLarge, under-penetrated popula-
tion for intermittent catheters
Moving users away from old solutions (uncoated caths diapers)
Market limitersReimbursement system reforms
(single price reimbursement on product categories)
Commoditization and low-spec
Market trendsPurchasing decision centralizedDiagnose Related Groups and
tender business are increasingHealth economic approachsolutions (uncoated caths, diapers)
Patient associations’ influence is increasing
Commoditization and low spec competitors entering
Health economic approach enables price premiums
Leading intimate healthcare15 August 2012
Introducing Urology CareTreatment (surgical) of urological disorders
Page 23
Treatment (surgical) of urological disorders
• Urinary incontinence• Pelvic organ prolapse
E til d f ti
Disease areas Key products (implants and surgical disposables)
• Erectile dysfunction• Enlarged prostate• Kidney and urinary stones
• SurgeonsCustomer• Purchasing departments and
organizations• End customers
Aris® vaginal slingLaunched in 2005Women’s health - Surgical Urology
Virtue® male slingLaunched in 2009Men’s health - Surgical Urology
groups
• Urologists• Uro-gynaecologists• Gynaecologists• Purchasing departments and
organizations
Call points
Men's health
Women's health
organizations
Titan® OTR penile implantLaunched in 2008 Men’s health - Surgical Urology
JJ stentsLaunched in 1998 Disposable Surgical Urology
Distribution ofrevenues
DSU
Leading intimate healthcare15 August 2012
The market for urological disordersPage 24
The market for urological disorders
Estimated market value split by region• Global Market size estimated at DKK ~9bn with 4-6% growth
EuropeRoW• Market share: 10%
• Europe 15-25%
• Americas 0-10%
Americas
Americas 0 10%
• Rest of the world 0-10%
• Main competitors include Endo, Ethicon and BSX
Market drivers Market limiters Market trends
AmericasColoplast addressable markets only
Market driversLarge, under-penetrated
population
Lack of gold standard treatment
A i d b l ti
Market limitersCost containment Increased competition Increased scrutiny on clinical
proof
Market trendsLess invasive treatment methodsOffice-based treatmentsCost containment
I ti k fAgeing and obese population
Minimally invasive surgeries
proofCrowded IP landscape limits
opportunities
Innovation key source of competitive advantage
Leading intimate healthcare15 August 2012
Introducing Wound CarePage 25
Introducing Wound Care
Chronic wounds• Leg ulcers• Diabetic foot ulcers
Disease areasKey products (Biatain® and Comfeel® range)
• Diabetic foot ulcers• Pressure ulcers
Hospitals• Wound care committees
CustomerGroups &
Biatain® Silicone• Silicone adhesive and
foam dressing• Launched in 2010
• Specialist nurses/doctors• (Purchasers)Community• Specialist nurses/doctors • General practitioners
Biatain® Ag• Antimicrobial foam dressing• Launched in 2002
call points
General practitioners• District/general nurses • Large nursing homes
Distribution ofrevenues (WSC) Biatain® range
Comfeel® rangeSkin care Other incl Compeed
Comfeel® Plus Transparent• Transparent hydrocolloid
dressing• Launched in 1994
Biatain®• High exudate mgt.
foam dressing• Launched in 1998
Other incl Compeed
Leading intimate healthcare15 August 2012
The market for advanced wound care where Coloplast Page 26
The market for advanced wound care where Coloplast competes
Estimated market value split by region• Global Market size estimated at DKK 12-13bn with 2-4% growth
Americas• Market share: 5-10%
• Europe 5-15%
• Americas 0-10%
EuropeRoW
• Americas 0-10%
• Rest of the world 5-15%
• Main competitors include Convatec, Mölnlycke and S&N
Market drivers Market limiters Market trends
Excluding Negative Pressure Wound Therapy
Market driversAgeing, diabetes, and obesity
New and more expensive technologies (e.g. silver)
I t t b i d t i l
Market limitersHealthcare reforms Increased competitionDistribution taking an active role
Market trendsCommunity based treatmentsSimple product offeringsCost containment
Investments by industry in sales pressure driving conversion
Leading intimate healthcare15 August 2012
Page 27
Improving financial performance driven by…
• Stable chronic care sales driven by high 28,9 35 3.000 %DKKm
Stable chronic care sales driven by high investments in professionalizing sales activities
• Increased focus on growing the business
88
00
9 94
1.39
5 1.99
5
2.58
1
2.36
4
16,3 16,013,1 12,8 11,7
15,8
20,925,4
10
15
20
25
30
00
1.000
1.500
2.000
2.500
outside Europe
• Focusing on realising additional improvements in manufacturing by leveraging on new global
98
1.00 87
9
749 9 9
0
5
0
500
EBIT EBIT marginin manufacturing by leveraging on new global operations footprint
• Continuing to run an efficient business23%
30%36%
30%
40%
• Lower capex-to-sales from higher capacityutilization and leaner factory footprint 4%
15%9%
5% 8%
16%
16%18% 18%
11%
12%10%
6%10%
15%
23%
0%
10%
20%
…..Resulting in strong free cash flow generation and high return on invested capital.....
FCF to sales ROIC
Leading intimate healthcare15 August 2012
Our new strategy remain ambitiousPage 28
Aiming for continued higher total shareholder Our value creation will come from increased growth
based on a strong new product pipeline combined with
gy
g greturns through continued cost optimizations
• Stable and predictable top-line growth
O i th b k t
• Continued growth in the core developed markets in Europe
• Organic growth above market
• Increased investments in growth
• Continued high margins
• Increased growth in the developed markets outside Europe (US, Canada, Japan and Australia)Continued high margins
• Strong cash flow generation
• Increasing ROIC
• Further expansion and growth in Emerging Markets
• Stabilization of the European Wound• Stabilization of the European Wound Care business
• Globalization of Urology Care
• A strong new product pipeline
• Continued cost optimizations
Leading intimate healthcare15 August 2012
Page 29
Coloplast value proposition
Close relationships with nurses and end-Close relationships with nurses and end-users provide leading market positions within Ostomy & Continence Care
Stable long-term growthpotential
US and Emerging Markets hold highpotential as well as the Surgical Urologyand Wound Care businesses
Growth and expansionpotential
Strong customer driven i ti biliti
Focus on providing more value for money for end users and public payersinnovation capabilities for end users and public payers
Solid financial performance High return on invested capitalStrong free cash flow generation
Leading intimate healthcare15 August 2012
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Appendices
Leading intimate healthcare15 August 2012
The Coloplast sharePage 31
The Coloplast share
The Coloplast share has been listed on Share Capital OwnershippNASDAQ OMX Copenhagen since 1983
Market cap. DKK ~52bn (USD ~8.7bn) 44%
7%
8%4%
@ DKK 1,160 per share
Two share classes: 3 6 illi A h 10 t
44%
26%
• 3.6 million A shares carry 10 votes (family)• 41.4 million B shares carry 1 vote
(freely traded)
11%
Holders of A-shares & family Danish InstitutionalsForeign Institutionals Coloplast A/S(freely traded)
• Free float approx. 53% (B shares)
Active sell side analyst coverage by 24
Other shareholders Non-reg. shareholders
Active sell-side analyst coverage by 24 brokers
As per 30 September, 2011
Leading intimate healthcare15 August 2012
Cash distributionPage 32
Cash distribution
• Ordinary dividend of DKK 14.00 per shareRatioDKKm Ordinary dividend of DKK 14.00 per share in 2010/11
• ~32% pay-out ratio for 2010/11
Sh b b k f DKK 1b40%
50%
1.000
1.200
• Share buy-back programme of DKK 1bn to be completed by 2012/13
• First half of the share buy-back was 30%
600
800
started in February 2012 and completed by 29 June 2012
10%
20%
200
400
0%0 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Dividends Share buy-back Pay-out ratioy y
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Page 33
Our current capital structure policyp p y
• New debt raised in case of a larger acquisitionDebt
• Minimum DKK 1 bn in cash and marketable securitiesCapital
• Minimum DKK 1 bn in cash and marketable securitiesreserve
• Excess liquidity is returned to shareholders in the form of dividend and share buy-backs
• Pay-out ratio around 30%• Share buy-backs of DKK 500m per year• Potential extraordinary dividends
Dividend policy
unchanged • Potential extraordinary dividendsunchanged
Leading intimate healthcare15 August 2012
Debt policy and capital markets exposurePage 34
eb po cy a d cap a a e s e posu e
I t t b i t d b k & h• Interest bearing assets and bank & cash exceeded interest bearing debt by DKK 142m
L t itt d dit f iliti f DKK35
40 2,5
Interest cover ratio
NIBD/EBITDA ratio
• Long-term committed credit facilities of DKK 1bn, fully utilized
• Short-term committed credit facilities of DKK 4bn expire in Q3 2012/13
25
30
35
1,5
2,0
DKK 4bn, expire in Q3 2012/13
10
15
20
0 5
1,0
0
5
0,0
0,5
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
NIBD/EBITDA Interest coverage
Leading intimate healthcare15 August 2012
Underlying demographic development supports future growthPage 35
Underlying demographic development supports future growth
Leading intimate healthcare15 August 2012
Current global reform landscape… France- Periodic review OC and CC postponed to
2014/15
Page 36
2014/15- Austerity measures announced by French
Ministry of Health. 350 million Euro over a 5 year period on medical devices.
UK- Restructure of NHS and efficiency savings
Germany- No immediate med dev reforms foreseen, but
continued savings measures.
Spain- Reimbursement process frozen but under
revision (law of margins)- Price categories discussed- Co-payment introduced for pensioners in OC
Greece- Economic situation still unstable could
potentially lead to further price cut - Merger of sickness funds
Reforms under way
Intensifying reform pressure
United States- 2010-14: Healthcare reform - 2013 -> ”Super Committee” cuts take effect
ItalyJuly 31 the senate approved an austerityIntensifying reform pressure
Stable reform environment
- July 31 the senate approved an austerity package that would cut 5 billion Euro over the next 3 years. The package still needs final approval.
Leading intimate healthcare15 August 2012
Emerging Market exposure 8% of global sales
Page 37
Emerging Market exposure 8% of global sales
Global sales
04/05 05/06 06/07 07/08 08/09 09/10 10/11
BrazilGlobal sales
Russia04/05 05/06 06/07 07/08 08/09 09/10 10/11
India
ChinaEmerging Market sales
04/05 05/06 06/07 07/08 08/09 09/10 10/11
ChinaBRIC (45%)
Other countries (55%)04/05 05/06 06/07 07/08 08/09 09/10 10/11
Leading intimate healthcare15 August 2012
Global operations footprint and cost structure
3816 August 2012Page 38
Design principles
Global operations footprint and cost structure
Production by country*• Consolidate on fewer sites
to reduce overheads
• Leverage international platform in Global Operations
MørdrupThisted
10%5%
Hungary
ChinaOperations
• Improve efficiency in labour and material Tatabánya Nyirbátor
Sarlat
60%25% Denmark
US/ France
Minneapolis
Mankato
8%20%
COGS by cost type*
* Average usage of raw material(RM) and semi finished goods(SFG)
Innovation & Competency Centre
High Volume Production
13%
11%
20%Salary - Direct
Salary - Indirect
Materials (RM & SFG)
Zhuhai
High Volume Production
Specialised Production47%
SFG)Depreciations & amortisationsOther
*FY 2010/11 Cost of goods sold, DKK 3,604 million
Leading intimate healthcare15 August 2012
Operational Excellence focus areas in our productionPage 39
Operational Excellence focus areas in our production
Lean in volume production
O ti l
Re-design for manufacturing
Global sourcing and supplier relations management Operational
Excellencemanagement
Focus on fixed costs and environment
Cost effective distribution
Design for manufacturing & fast ramp-up
Leading intimate healthcare15 August 2012
Introducing Skin CarePage 40
Introducing Skin Care
Moisture associated skin damage• Incontinence• Skin folds
Disease areasKey products
• Skin foldsPreventative skin care
Hospitals• Wound care committees
Customergroups &
Sween®• Skin care products of distinction• Launched in 2003-2005
• Specialist nurses/doctors• (Purchasers)Community• Specialist nurses/doctors • General practitioners
call points
General practitioners• District/general nurses • Large nursing homes
Product mix
BarriersCleansers/BathingMoisturizersTextileOther
InterDry ™ Ag• Textile with antimicrobial silver
complex• Launched in 2006
Critic-Aid® Clear / AF• Only 5 ingredients; simple
yet effective products• Launched in 2005
Other
Leading intimate healthcare15 August 2012
Product market for US Skin CarePage 41
Product market for US Skin Care
• US Market size estimated at USD ~1bn with ~5% growth
• Market share: 5-10%
• Main competitors include
• Medline IndustriesMedline Industries
• Sage Products
• ConvaTec
Market drivers Market limiters Market trendsMarket driversAgeing and obese population
Nursing shortage
Moisture associated skin damage
Market limitersCost containment Increased competition with
private label Increased scrutiny on Health
Market trendsProduct and protocol standardizationVendor consolidationCost containment
Focus on prevention Increased scrutiny on Health
Economic outcomes
Leading intimate healthcare15 August 2012
Introducing Bowel ManagementPage 42
Introducing Bowel Management
Faecal incontinence (management products only)
Disease areas Key products
Customer groups• Spinal Cord Injured, SCI• Spina Bifida, SB• Multiple Sclerosis, MS
Customergroups & call points
Peristeen® Anal Irrigation• Launched in 2003 • Updated in 2011
Call points• Rehab centers• Pediatric clinics• Urology wards
Anal plug• Launched in 1995
p
Distribution of revenuesMarket drivers• Growing awareness • Huge under-penetrated and un-
served population• New devices addressing the many
Market dynamics
Peristeen® Anal IrrigationA l l• New devices addressing the many
unmet needsMarket limiters• Still taboo area and non-focus for
professionals (doctors)
Anal plug
• Very little patient awareness• Training required (nurses, patients)• Lack of reimbursement
Leading intimate healthcare15 August 2012
Executive management Page 43
Executive management
Lars Rasmussen, CEO (53)With Coloplast since 1988
Educational backgroundE*MBA, Scandinavian International Management Institute, 1995BSc (Eng), Aalborg University, 1986BSc (Eng), Aalborg University, 1986
Management assignments with other Danish companies MT Højgaard A/S (BM)TDC A/S (BM) Lars Rasmussen, CEO
Lene Skole, CFO (53)With Coloplast since 2005
Educational backgroundBCom, Copenhagen Business School, 1986The A.P. Møller Group International Shipping Education, 1980
Management assignments with other Danish companies: DFDS A/S (BM)( )Tryg (BM) Lene Skole, CFO
Leading intimate healthcare15 August 2012
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Corporate responsibility – key elements
Corporate governanceGlobal Compact
Phthalate free products available
Minimal use of animal testing
Quality and safety
Responsible procurement
Helping suppliers to improve or find alternatives
testing
Code of ConductResponsible lobbying Anti-corruption Environment
CO2 reductionsWaste reduction
Injuries reduced Repetiti e ork red ced S
Alternatives to PVC
‘Access to Healthcare’ programmeRepetitive work reduced
Diverse workplaceEmployees Society programme
Community engagement
Leading intimate healthcare15 August 2012
Page 45
Corporate responsibility – performance 2010/11Employees
• New Code of Conduct and strengthened compliance
setup, including guidelines and mandatory e-learning
External reporting
setup, including guidelines and mandatory e learning
• Reduction in workplaces with highly repetitive work from
7 2 % to 2 2 % in four years7.2 % to 2.2 % in four years
SRI index membershipsEnvironment and safety
• 7 % absolute reduction in CO2 emission this year
• Phthalate-free alternatives to 90% of our products which
contain phthalates
• Access to Healthcare: Strategic partnerships programme
Leading intimate healthcare15 August 2012
Income statement – 9M 2011/12Page 46
Income statement 9M 2011/12
9M 9M2011/12 2010/11
DKK million
Net revenue 8,174 7,601
Gross profit 5,433 4,860G i 66 5% 63 9%Gross margin 66.5% 63.9%
SG&A costs -2,817 -2,708R&D costs -257 -327Other Operation Inc/exp 5 14Other Operation Inc/exp 5 14
Separate items 0 0Operating profit (EBIT) 2,364 1,839EBIT margin 28.9% 24.2%
Net financial items -227 -99
Net profit, continuing activities 1,585 1,288
Leading intimate healthcare15 August 2012
Balance sheet – At 30 June 2012Page 47
Balance sheet At 30 June 2012
DKK million 9M 2011/12
9M 2010/11
Balance sheet total 9,980 8,493E it 5 398 3 987Equity 5,398 3,987Equity ratio (%) 54% 47%
Net interest bearing debt -142 1,510N t d bt t it (%) 0% 38%Net debt to equity (%) 0% 38%Net debt to EBITDA 0.0 0.5
Invested capital 6,564 6,793
Leading intimate healthcare15 August 2012
Cash flow – 9M 2011/12Page 48
Cash flow 9M 2011/12
DKK million 9M 2011/12
9M 2010/11
EBITDA 2 740 2 229EBITDA 2.740 2.229Change in working capital -196 -385Interest and tax -847 -641Other -13 0Cash flow from operations 1.684 1.203
CAPEX (excl. M&A) -236 -194M&A 0 -160Oth 19 20Other 19 20Cash flow from investments -217 -334
Free cash flow 1.467 869
Dividends -587 -422Trading of Coloplast shares -206 -380Other cash changes -144 -25Total -937 -827Total -937 -827
Change in net debt 530 42
Leading intimate healthcare15 August 2012
Production sitesPage 49
TCC MørdrupDK
• Adhesives • Wound care products • Continence care products• Coloplast Consumer Products• Number of employees in production: ~340
TCC Thisted • Machine development• Ostomy care products
DK• Ostomy care products• Number of employees in production: ~180
MinneapolisUS
• Urology care products• Number of employees in production: ~50
Mankato • Skin care productsMankatoUS
• Ostomy care accessories• Number of employees in production: ~55
Leading intimate healthcare15 August 2012
TatabányaHU
• Ostomy care products, • Adhesives
Page 50
HU • Continence care products• Number of employees in production: ~1,100
Tata• Postponement & packaging
Cross dockingTataHU
• Cross docking• Warehousing• Distribution & shipping• Number of employees: ~165
NyírbátorHU
• Catheter care products, • Wound care products• Number of employees in production: ~730
ZhuhaiCN
• Continence care products• Ostomy care products• Machine buildingCN • Machine building• Number of employees in production: ~1,000
Sarlat Disposable s rgical rolog prod ctsSarlatFR
• Disposable surgical urology products• Number of employees in production: ~150
Leading intimate healthcare15 August 2012
Contact Investor RelationsPage 51
Contact Investor RelationsHoltedam 1DK-3050 HumlebækDenmark
Ian S. E. ChristensenVice President Investor Relations
Gunilla JensenIR CoordinatorTel : direct: +45 4911 3621 /Investor Relations
Tel. direct: +45 4911 1301 / office: +45 4911 1800Fax: +45 4911 1555 [email protected]
Tel.: direct: +45 4911 3621 / office: +45 4911 1800Fax: +45 4911 1555 [email protected]
Henrik NordManager, Investor RelationsTel. direct: +45 4911 3108 / office: +45 4911 1800office: +45 4911 1800Fax: +45 4911 1555 [email protected]
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