1 Conference call presentation 21 August 28 Q3 2
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.
3 9M Key messages 7 organic sales growth and 5 reported growth. Excluding Germany organic growth exceeded 9 Sales 5,982 +5 6,37 Gross profit increased by 4 with an underlying gross profit margin of 6 3 increase in underlying EBIT and maintaining 16 underlying EBIT margin Share buy back of DKK 313m Full year guidance revised primarily due to adverse trends in our European urology business and Wound & Skin Care combined with lower than expected productivity gains 9M 2 9M 2 Operating profit +14 786 893 9M 2 9M 2 Operating margin 13 14 9M 26/27 9M 2
4 Sales overview Organic sales growth of 7 driven by satisfactory performance in Ostomy Care 7 and Urology and Continence Care 8 but less satisfactory growth in Wound and Skin Care of 5 Sales by business area /(organic growth) 1,8 (5) 2,665 (7) Growth in Europe of 6 impacted by HSC. Satisfactory sales growth of 1 in Americas from Ostomy and Continence Care. RoW sales were 14 up primary from Asian markets, especially China 2,562 (8) OC UCC WSC 7 4 2 5 Sales by region 441 /(organic growth) (14) 842 (1) Organic growth Exchange rates Contract Mfg. Reported growth 5,24 (6) Europe Americas RoW
5 Ostomy Care Organic sales growth of 7 impacted by lower than expected sales primarily in German HSC. Excluding the German market organic growth was 11. Reported growth was 4 Biggest growth driver continues to be the SenSura product line, where the 1pc product has satisfactory growth rates and the 2pc now has been in introduced in all major markets Coloplast maintains position as market leader 16 14 12 1 8 6 4 2 14 2,131 2,442 2,957 22/3 23/4 24/5 25/6 2 9M 2 3,165 3,474 2,665 12 1 895 94 98 897 8 6 852 86 4 823 2 4Q Revenues Reported growth Organic growth
6 Urology and Continence Care Organic sales growth of 8 and reported growth of 3 impacted by negative currency developments Very good growth in sale of intermittent catheters. High growth rates in the surgical urology business in the US. High growth rates in bowel management from sale of Peristeen product range 45 4 35 3 25 2 15 1 5 1,326 1,467 1,71 22/3 23/4 24/5 25/6 2 9M 2 2,337 3,31 2,562 8 7 6 88 5 4 3 826 85 833 858 825 2 81 1 4Q Revenues Reported growth Organic growth
7 Wound and Skin Care Organic sales growth of 5 and reported growth of 16 impacted by currencies and contract manufacturing Market is seeing increasing price pressure in the main European markets Growth is driven by continued progress in Biatain foam bandages for chronic wounds with good sales growth in Biatain Ibu, albeit from low levels 16 14 12 1 8 6 4 2 975 1,54 1,124 22/3 23/4 24/5 25/6 2 9M 2 1,27 1,258 1,8 Challenging market conditions within hydrocolloid bandages segment 18 16 14 12 3 311 324 323 347 355 377 1 8 6 4 2 4Q Revenues Reported growth Organic growth
8 Gross Profit development Gross profit increased by 4 to DKK 3,715m. Adjusted for currencies the growth was 9 Production costs increased by 7 partly because of higher than expected production costs of Biatain and SenSura product range Gross profit margin was 59, currencies impacted 1 negatively 6, 64 1,3 64 5, 4, 3, 2, 1, 3,464 61.7 61.5 3,731 3,789 6.8 59.9 4,22 6.1 4,834 3,715 58.9 62 6 58 56 54 52 1,25 1,2 1,15 1,1 59.7 1,148 6.3 1,2 58.6 1,213 61.8 1,273 1,284 6.8 57.3 1,169 1,262 58.6 62 6 58 56 54 52 22/3 23/4 24/5 25/6 2 9M Gross profit Gross profit-margin 5 1,5 Gross Profit 4Q Gross profit margin 5
9 EBIT development EBIT up by 14 to DKK 893m, adjusted for currencies and special items the growth was 3 Distribution and R&D costs increased as expected from higher acivitiy, whereas admin costs decreased slightly from prudent cost control YTD EBIT margin was 14, underlying margin was 16 1,5 1, 95 9 85 8 99 16.2 988 16.3 1, 16. 879 13.1 1,32 12.8 14.2 22/3 23/4 24/5 25/6 2* 9M EBIT EBIT-margin 893 18 16 14 12 1 8 6 4 2 4 35 3 25 2 15 1 5 5 4 3 2 1 255 43.9 13.3 12.3 11.7 11.1 3.1 238 45.4 4.1 12. Cost to sales ratios 293 41.4 3.7 14.2 EBIT 44.6 14. 246 4.9 4Q 11.9 4Q * 42.4 11.1 11.3 3.7 R&D SG&A Adm. 16.1 34 EBIT-margin 43.2 4.4 1.4 212 38.3 9.4 4.6 15.8 341 18 16 14 12 1 8 6 4 2 * Q4 2 adjusted for HSC Impairement of DKK 283m
1 Balance sheet The equity amounted to DKK 2,312m corresponding to an equity ratio 29, slightly lower than last period. Return on equity was 38 Net interest bearing debt was DKK 3,632, up by 32 compared with last year, related to acquisition of own shares ROIC after tax for the first 9 months was 12 up by 2-points compared with same period last year 4, 3,5 3, 2,5 2, 1,5 1, 5 1,473 1.23 1,465 1.13 867.64 2.2 3,69 3,181 2. 2.12 3,632 2.5 2. 1.5 1..5 45 4 35 3 25 2 15 1 5 34 41 9 8 42 13 31 1 29 29 29 14 9 14 2/3 3/4 4/5 5/6 * 9M NIBD NIBD to EBITDA. 4Q * Equity ratio ROIC * Q4 2 adjusted for HSC Impairement
11 Cash Flow Cash flow from operations increased by 27 to DKK 652m impacted by lower taxes paid and income from hedging contracts partly offset by increasing net working capital CAPEX amounted to DKK 474m corresponding to a capex to sales ratio of 8 related to factory investments in Hungary and China as well as US headquarters expansion Free cash flow before acquisitions was DKK 242m compared with DKK 14m last year 8 7 6 5 4 3 2 1 1.3 9. 578 544 6.4 6.2 399 415 745 9.3 7.5 4 3 2 2 1 22/3 23/4 24/5 25/6 2 9M CAPEX Capex-to-sales 474 1, 12 9 1 8 7 8 6 5 6 4 122 2.2 3.7 919 14.7 64 9. 4.6 37 224 242 22/3 23/4 24/5 25/6 2 9M FCF FCF-to-sales 3.8 16 14 12 1 8 6 4 2
12 Guidance Guidance old Guidance new Long-term Targets Organic sales growth ~8 ~7 Approx. 1 EBIT margin (fixed currencies) 16-17 ~15 18-2 Economic profit - - x2 per 5yrs. CAPEX () 7-8 75-8 - Tax rate ~28 ~28 - Fixed currencies Approx. 7 sales 15 EBIT Currency -3-4 sales - 1 EBIT margin + + Contract mfg. + 2 sales = In DKK Approx. 5-6 sales 14 EBIT
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14 Appendices
15 Underlying EBIT margin Q3 Q3 13.1 3.1 16.2 14.2.4.3 14.9 Reported EBIT margin Nonrecurring items (DKK 182m) Underlying EBIT margin Reported EBIT margin Nonrecurring items (DKK 29m) Contract mfg. technical dilution Underlying EBIT margin
16 Income statement DKK million 9M 9M 2 2 Net revenue 6,37 5,982 Gross profit 3,715 3,561 Gross margin 58.9 59.5 SG&A costs -2,61-2,65 R&D costs -268-218 Operating profit (EBIT) 893 786 EBIT margin 14.2 13.1 Net financial items 11-97 Net profit, continuing activities 65 513
17 Balance sheet DKK million Q3 Q4 Q3 Balance sheet total 8,25 7,75 7,893 Equity 2,312 2,398 3,31 Equity ratio () 29 31 34 Net interest bearing debt 3,632 3,181 2,759 Net debt to equity () 157 133 83 Net debt to EBITDA 2.12 2. 1.71 Invested capital 7,242 6,874 7,729 Economic profit 283-227 27
18 Cash flow DKK million Q3 2 Q3 2 EBITDA 1,289 1,22 Change in working capital -65-371 Interest and tax -38-236 Other 6-82 Cash flow from operations 652 513 CAPEX -41-43 M&A -3 777 Cash flow from investments -413 374 Free cash flow 239 887 Dividends -396-184 Share buy-back -29-372 Other cash changes Total -686-556 Increase in net debt 447-331