coloplast 26 september 2006 carnegie cph · coloplast products and services help patients achieve...

Coloplast A/SColoplast A/SCarnegie Large Cap SeminarCarnegie Large Cap Seminar

26 September 200626 September 2006

Lene SkoleLene Skole, Executive Vice President, CFO, Executive Vice President, CFO

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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 theinformation 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.

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EuropeThe AmericasRest of the world

Coloplast

Coloplast products and services help patients achieve greater independence from medical challenges in 4 areas:

Urology & continence care, ostomy care, wound & skin care and breast care.

Market leader in Europe within ostomy care, urology & continence care and breast care.

Sales by business area Q3 2005/06

Sales by geography Q3 2005/06

Ostomy careUrology & Continence careWound & Skin careBreast careOther

29%

17%

7% 41%6%

7%

10%

83%

4

Income statement Q3 YTD 2005/06

1,3481189341,105EBITDA22%20%21%EBITDA margin (%)

142

110112

119

113Index

-10-7103Discontinued activity, Sterling

16%15 %16%EBIT margin (%)

553385548Group profit

32%31%31%Tax rate-272-179-197Tax837

1,000

6,232

FY2004/05

572

678

4,569

Q3 YTD 2004/05

642

810

5,142

Q3 YTD2005/06

EBIT

Profit before tax

Net revenuemDKK

5

Balance sheet and key ratios Q3 YTD 2005/06

00-2,585 Free cash flow, acq.and divest.399306296Investments in tangible assets668458664NOPAT

5,6415,7025,974NOA, average6.86.96.6WACC, %

285163369Economic profit

424133Equity ratio, %232229Return on equity, %

2,5122,4632,737Equity

919580443Free cash flow, organic business

185,915

FY2004/05

165,943

Q3 YTD 2004/05

188,307

Q3 YTD 2005/06

AssetsROAIC, %

mDKK

6

Expectations and long-term targets

• Organic sales growth of 8-9% in local currencies• Profit margin of 12-13%• Investments in tangible assets of DKK 4-500M• Corporate tax rate of 29%

• At least a doubling of economic profit (EP) every five years, based on the 2004/05 figures

• Organic growth of Coloplast’s revenue to DKK 15 billion• A profit margin (EBIT margin) to exceed 17%

2012

2005/06

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2012 - value creation through growth and innovation

Revenue growth levers• Up-scaling investments in research and development• Faster market roll-out of new products• Establishing specialised sales forces• Investing in new geographical markets• Investing in new technology and product areas

Margin expansion drivers• Manufacturing

- Establishment of Global Operations- Relocation to Hungary and China- Machine-building facility in China and local sourcing

• Corporate procurement• Productivity improvements in all parts of the organisation through abc/Lean

8

Coloplast Innovation objectives towards 2012

Front End Innovation New Product Development Global Roll -OutFront End Innovation New Product Development Global Roll -Out

2007:10 substantial new product ideas enter New Product Development

2007:Time to market of a new product: 25 months

2007:Within first year of a product launch to reach 70% of global market potential

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SenSura - building on our innovative history...

• Developed through extensive interaction with more than 400 nurses globally

• Innovation on all product features• Fast global roll-out• Addresses the whole ostomy market for

pouches and plates

1957 1972 1978 1992 2006

SenSuraA new

standard withinostomy care

International launch4 October 2006

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• Biatain - Ibu is the first wound dressing, which may reduce pain caused by tissue damage

• The dressing has in-built ibuprofen that is released as the wound weeps

• Potential global market of more than DKK 1 billion

• Combines the Biatain foam dressing with Ibuprofen

• Launched in DE, NL, DK, SE and CH in non-adhesive and soft-hold versions

• To be launched throughout Europe during 2006

Biatain - Ibu

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Conveen Optima

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Coloplast in emerging markets- opportunities and risks

• High economic growth• Increased medical

spending• Demographics• Introduction of

reimbursement• Increase in penetration of

advanced products

• Lower reimbursement level

• Political and financial instability

• Long-term investments• Weak intellectual

property protection• Local product competition

+ -

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Estimated market potential, excl. urology

30016010050230160Other (Greece, Israel, Portugal, Cyprus)

29014029010016090India, Sri-Lanka, Pakistan

350240220120150110Korea, Taiwan & Hong Kong

38020013080160100Singapore, Philippines, Malaysia, Thailand

2,4101,4001,3007102,1901,340Total

520300220160200150Middle East

2201202501401.100600Eastern & Central Europe

3502409060190130Latin America

11/1205/0611/1205/0611/1205/06mDKK

Wound & Skin care

Continence care

Ostomy care

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Global Operations - Hungary

Coloplast, Tatabanya, Hungary

• > 800 headcounts by August 2006

• DKK 2 billion sales value in 2006/07

• Utilisation is currently 80%

• Estimated additional operating profitof DKK 150M compared to Danishmanufacturing

• Subsidy of approx. DKK 150M granted by Hungarian authorities

• Dependant on job creation and the establishment of a new factory

• Decision to be made during 2006 as part of new strategy for Global Operations

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Global Operations - China

• Currently 80 employees in operations, Zhuhai

• 100,000 m2 site leased in Zhuhai for 50 years

• Projected new facility of more than 50,000 m2 in three phases

• First phase completed in June 2007

• 20,000 m2, incl. administration

• DKK 80M, excl. machines

• Activities will include a machine building facility for Coloplasts other sites

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Growth rates Q3 YTD 2005/06 in local currencies

7%11%22%

8%

9%10%

-*9%4%

GrowthQ3 YTD 2004/05

4-6%

1-3%4-6%

-#8-9%

(3)-(1)%

Estimatedmarket growth

RevenueQ3 YTD 2005/06

GrowthQ3 YTD 2005/06

4,186501341

8%18%14%

EuropeAmericasROW

5,14212%Coloplast total, 05/06 incl. Mentor’s urology business

2,1021,3741,488

891368

8%16%25%7%5%

Ostomy careUrology & Continence care- Incl. Mentors urology businessWound & Skin careBreast care

* Unless specified, revenue figures and growth rates are excluding acquisitions and divestments* * Approximate growth rate of the combined business area* # Combined wound - and skin care. European wound care market growth estimated to currently 7-8%

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Urology & continence care- Market positioning

% of global market

• Leading position in urology globally• Strong position in the US market• European market leadership

reinforced• Broad portfolio in terms of product

offerings and geographical presence

• Strong presence in hospitals, urology wards and community markets

Tyco

Hol

liste

r

Bra

un

Rüs

ch

Ast

raTe

ch

Ethi

con

Bos

ton

Scie

ntifi

c

AM

S

C.R

. Bar

d

Col

opla

st +

Men

tor

Source: Market reports, Coloplast Market Data

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Urology & continence care- Customer segmentation

Location

Customer

Pathology

DAY SURGERY

BPHSUI

Stones

Urology surgeonsPrimarily

Endourology

REGIONAL CENTRES

Highly specialisedurologists

Erectile Dysfunction (volume)

Prostate Cancer

OPERATING ROOM

BPHSUI

Erectile DysfunctionProstate Cancer

Urological surgeonsPrimarily open

surgery

OUTPATIENT CLINIC

Nurses and Urologists

SCI, MS, SB, BPH (diagnose and

follow-up)

WARD

BPH (recovery)

Pre- & post-op CareNurses andurologists

• Improved access to and strengthened relationship with key decision-makers within urology and leveraging of sales forces

• More product and service offerings, e.g. urological tools, invasive products, brachytherapy seeds

• Addressing new indications, e.g. stress urinary incontinence (SUI), kidney stones, benign prostate hyperplasia (BPH), prostate cancer, erectile dysfunction (ED)

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Continence Consumables Urological Specialties

The enhanced product portfolio

Continenceconsumables

Urological

IntermittentCatheters

35% of revenue

Urine Bags16% of revenue

Urisheaths14% of revenue

IndwellingCatheters

1% of revenue

AbsorbentProducts

1% of revenue

Global marketBDKK 3

9% growth

Global marketBDKK 2,54% growth

Global marketBDKK 1

2% growth


Global marketnot assessed

Coloplast globalmarket share

25-30%


~20%


25-30%


~4%

Coloplast globalmarket sharenot assessed

Men’s Health5% of revenue

Women’s Health4% of revenue

DisposableSurgical Urology14% of revenue


Global marketBDKK 1,2

18% growth



~25%


~10%


~5%

Brachytherapy3% of revenue

Global marketBDKK 1

6% growth


~7%

BowelManagement

<1% of revenue

Global marketBDKK ~1

2% growth


~1%

Urology & Continence Care

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• Integration projects on track• Retention of key personnel successful• New headquarter in Minnesota, US, being

established• Integration of sales organisations in all

countries ongoing• Coloplast procurement, logistics, IT platform

and reporting systems being implemented

Urology - key integration tasks

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Ostomy care

• For people who have lost their normal bowel- or bladder function

• Almost 80% related to cancer• Hide-away and Easiflex products

are main growth contributors• SenSura product platform in test

marketing• 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

0

20

40

60

80

100

0 1 2 3 4 5 6 7 8 9Market value (BDKK)

market share (%) Europe AmericasRoW

CompetitorsColoplast

28%

22

9%

9%4%

33%

19% 15%

11%

ColoplastMedlineSageS&N3MConvaTecOthers

13%

13%

10%

15% 12%

20%

18%

ColoplastConvaTecS&NMölnlyckeJ&JUrgoOthers

European wound care market (MWH)6bn DKK

US wound- and skin care market4-4½bn DKK

Wound & Skin care• Wound dressings for people with difficult to heal wounds, e.g. leg ulcers,

diabetic ulcers, pressure sores• Skin care products primarily for elderly people with skin problems in

hospitals or long-term care • Biatain - Ibu launched and well-received

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Estimated effects in 2005/06 from acquisitions and divestments (mDKK)

Rochester

Capital gainSterling Medical Services (reported separately as discontinued activity)Capital gain (after tax)

Investments in tangible assetsDepreciation of assetsStock of finished goodsSynergiesUS relocation costsIntegration costsSales gainedMentor

#130*103*103

-77

100-2000-100-705010

30-40100315-105-10-6-125959

30-6060-8017450450114

Previous comm.Est. FY 05/06Q3

* After tax # Pre-tax

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€ 1.3 billion€ 1.3 billion

Wound care - global market definition

Moistwound healing

Drywound healing

ChronicAcute

€ 0.6 billion

€ 0.9 billion€ 1.5 billion

Wound type

Drugs and bio products

VAC

€ 0.1 billion

€ 0.6 billion

€ 0.4 billion

€ 0.2 billion

Prod

uct t

echn

olog

y

€ 1.3 billion segment, growth 7-8%

Active

Compression € 0.9 billion

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Wound care market growth - European MWH

• European market growth for moist wound healing technologies is declining; rapid decline in market growth for silver dressings

• Coloplast is gaining market shares in the silver dressings market; in the market for traditional MWH dressings, Coloplast’s market share is under pressure

-10%

0%

10%

20%

30%

40%

50%

60%

70%

03/04 Q4 04/05 Q1 04/05 Q2 04/05 Q3 04/05 Q4 05/06 Q1 05/06 Q2

EU Antibacterials MWH EU Adv.MWH EU Trad. MWH EU Wound Care

Wound care market growth by segments

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Breast care

• For women who have had their breast removed, typically due to breast cancer

• Attached, lightweight and soft breast forms, partial breast shapers, lingerie and swimwear

• Sales up through new product introductions. Growth in both the European and US markets

• Incidence of cancer in women is increasing, but number of breast-saving surgeries increasing as well, resulting in overall market decline

Global breast care market1bn DKK

7%8%

15%

22%

48%

Coloplast Trulife/CampAnita ThämertOthers

coloplast 26 september 2006 carnegie cph · coloplast products and services help patients achieve...

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