Published on May 2, 2008
Investor Presentation9M 2006/07: Investor Presentation 9M 2006/07 Coloplast in brief: Coloplast in brief Coloplast’s products and services help patients achieve greater independence from medical challenges in 3 areas; ostomy care, urology & continence care and wound & skin care Global market leader in urology & continence care and European market leader in ostomy care Target of 15% annual growth in value creation measured as economic profit Value creation to be realised through double-digit CAGR and continuous reduction of the cost base Aspiring for global market leadership within all business areas through organic growth and acquisitions Main risk is health care reforms in main markets leading to reduced reimbursement prices Milestones: Milestones Statutory meeting of Dansk Coloplast A/S 1957 Acq. of Mentor’s Urology Division & Selling off Sterling + Moving of US HQ to Minneapolis 2006 Announcement of 2012 objectives 2005 Factory in Hungary begins operations 2002 Several acquisitions: Amoena, Sween, SSL, HSC, Sterling 1994 – 2001 ‘3000 in 2000’ 1989 Coloplast's share is admitted for listing on the Copenhagen Stock Exchange 1983 Divisionalisation begins 1982 The first subsidiaries 1978 Amoena & Brachytherapy divested 2007 Revenue development 1957-2006: Revenue development 1957-2006 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 Coloplast has global presence: Coloplast has global presence Three key customers: Three key customers The health care professional Doctors and nurses. Primary concerns are user quality of life, product functioning and handling The end customer The user. Primary concern is quality of life The payer Concern is primarily product pricing and health economics Prof. Daniel Raudrant Hôtel Dieu, Lyon External factors - demand outlook: External factors - demand outlook Demographics Surgical and medical trends Reimbursement reforms Focus on overall treatment costs Group buying and tender bid process Emerging markets Distribution & Parallel import Health Care reforms + + + - - The demand for products and services will continue to grow in terms of volume, but pressure on prices and margins will continue Market growth within Coloplast’s business areas estimated at 4-6% Reimbursement: Reimbursement In the UK, a new consultation process is expected in September 2007 Coloplast expects no changes to reimbursement of ostomy- and continence care products and services before 2008 The German organisation is being strengthened ahead of potential effects from the health care regulation adopted 1 April 2007. Coloplast is strengthening the key account function and changes the sales force structure Income statement 9M 2006/07: Income statement 9M 2006/07 Balance sheet, cash flows and key ratios 9M 2006/07: Balance sheet, cash flows and key ratios 9M 2006/07 Impacts from acquisitions and restructurings: Impacts from acquisitions and restructurings Impacts on profitability in 9M 2006/07 Estimated full year financial impacts Revenue development - business areas: Revenue development - business areas Other Wound & Skin care 16% Urology & Continence care 40% Ostomy care 38% 6% Revenue development - geography: Revenue development - geography 80% Europe 14% The Americas 6% Rest of World 6% On track for 2012 strategy targets: On track for 2012 strategy targets Lean organisation with focus on customers, innovation and time to market New commercial organisation completed Strong growth momentum Acquisitions and divestments Integration of urology business completed within 3-6 months Brachytherapy divested (Q3) Breast Care divested (Q2) Implementation of global manufacturing strategy Relocation of production lines to Hungary progress according to plan New factories in Hungary and China completed Underlying production costs increased by 23%, sales increased by 25% Expectations and long-term targets: Expectations and long-term targets Sales growth of 22-23% in local currencies of which around 10%-points will be organic growth - UPGRADED EBITDA margin of 18-19% and EBIT margin of 12-13% Investments in tangible assets of DKK 600m Corporate tax rate of 26% - CHANGED Net costs of integration and restructuring of around DKK 360m At least a doubling of economic profit (EP) every five years, based on the 2004/05 figures Organic growth of Coloplast’s revenue to at least DKK 14 billion Operating margin (EBIT) to exceed 18% Ostomy care: Ostomy care For people who have lost their normal bowel- or bladder function due to cancer (80%) or inflammatory bowel diseases Main competitors are ConvaTec and Hollister Inc. Ambition to become global market leader and to reach two-digit market share in the US within 2-4 years Ostomy care: Ostomy care SenSura is launched in 17 countries and sales continue to exceed estimates 12% organic growth in Q3 driven by satisfactory growth in US and main European markets HSC is strengthening market position through deployment of the ‘Managed Care’ strategy Urology & Continence care - customer segmentation: Urology & Continence care - customer segmentation Location Customer Pathology DAY SURGERY BPH SUI Stones Urology surgeons Primarily Endourology REGIONAL CENTRES Highly specialised urologists Erectile Dysfunction (volume) Prostate Cancer OPERATING ROOM BPH SUI Erectile Dysfunction Prostate Cancer Urological surgeons Primarily open surgery OUTPATIENT CLINIC Nurses and Urologists SCI, MS, SB, BPH (diagnose and follow-up) WARD BPH (recovery) Pre- & post-op Care Nurses and urologists Good access to key decision-makers within a broad range of pathologies Broad product and service offerings, e.g. single-use products, urological tools, implants Urology & Continence care - market positioning: Urology & Continence care - market positioning % of global market Global market leader in continence consumables with 20-25% market share Among global market leaders in urological specialties with 10% market share Strong position in the US market established with the acquisition of urology business European market leadership reinforced with 30% market share Tyco Hollister Braun Rüsch AstraTech Ethicon Boston Scientific AMS C.R. Bard Coloplast 15% Urology & Continence care: Integration process to be completed within 3-6 months. Relocation in the US completed Acquired urology business shows organic growth on par with market growth Sales growth driven by intermittent catheters and urine bags Urology & Continence care Urology & Continence care - the product portfolio: Urology & Continence care - the product portfolio Continence Consumables Urological Specialties Continence consumables Urological Urology & Continence Care Wound care ~ € 8 billion global market: € 1.5 billion Wound care ~ € 8 billion global market Moist wound healing (MWH) Dry wound healing Chronic Acute € 1.0 billion € 1.0 billion € 1.5 billion Wound type Drugs and bio products VAC € 0.2 billion € 1.0 billion € 0.5 billion € 0.5 billion Product technology € 1.5 billion segment, growth 6-7% Wound & Skin care: Sales growth driven by Biatain foam dressings The concept of Biatain - Ibu well received by customers, but sales performance still below estimates New strategy under implementation, which is expected to deliver double-digit growth within 1-2 years Wound & Skin care 22% ConvaTec 17% Other 3M 16% Urgo 7% J&J 8% S&N 12% Mölnlycke 10% Coloplast 8% Market share MWH - EU and US Global Operations strategy: Global Operations strategy 2012 4300 employees 20% DK, 45% HU, 25% CN, 10% US/FR 10% annual volume growth 2006 3000 employees 50% DK, 20% HU, 5% CN, 25% US/FR 10% annual volume growth Achieve world-class manufacturing within the next three years Globally managed organisation with common standards for all factories and key processes 5% annual reduction in total unit cost from 2008 Global Operations strategy: Production facilities in Denmark will be consolidated from six to three sites New factories located in Zhuhai, China and Nyirbator, Hungary Machine building in China Global Operations strategy - 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Danish sites International sites Number of employees in production 2006-2012 Global Operations, status 9M 2007: Global Operations, status 9M 2007 Zhuhai, China Construction completed and organisation under establishment First machine built in Zhuhai is operational in Tatabanya Nyirbator, Hungary Construction nearly completed First machines are transferred to rented facilities Employees are being trained in Tatabanya In Denmark, training has been intensified and shop floors are being transformed into offices 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 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.