Coloplast delivered 8% organic revenue growth in the second quarter of its financial year, while reported revenue in DKK was up by 4% to DKK 4,035m. The H1 organic revenue growth was also 8%, while reported revenue in DKK was up by 5% to DKK 7,990m. Reported revenue was adversely affected by the depreciation of USD and dollar-related currencies against DKK.
EBIT amounted to DKK 2,407m for a 3% decline in DKK but a 4% increase at constant exchange rates. The EBIT margin at constant exchange rates was 31% against 32% in the same period last year. In DKK, the EBIT margin was 30%, against 32% last year. The EBIT result is in line with the company’s expectations.
“We deliver a strong half-year result with solid growth across our Chronic Care business and an increased momentum in our Emerging Markets. At the same time, the SpeediCath® patent expiry has had a smaller impact than initially anticipated. This allows us to upgrade our full-year growth expectations, which I’m obviously very pleased with,” said CEO Lars Rasmussen.
Organic growth rates by business area: Ostomy Care 10%, Continence Care 9%, Urology Care 10%, and Wound & Skin Care negative 1%. The Wound Care business accelerated its momentum, delivering 8% organic growth in the second quarter despite the continued negative effects of a comprehensive pricing reform in Greece.
"We’re expanding our Ostomy Care product portfolio by introducing SenSura® Mio Concave, designed specifically for the outward body profile and customised to help stoma patients avoid leakage. It will be part of the same portfolio as SenSura® Mio Convex, the company’s most successful launch to date. As a result, we have very high expectations for the new product category, SenSura® Mio Concave, which is now available and eligible for reimbursement in seven countries,” said Mr Rasmussen.
Looking at sales by geographies, the European markets contributed with 4% growth in H1, Other developed markets delivered 13% revenue growth, while Emerging Markets provided a16% increase.
Tailwind and growth ambitions in the US
As part of the plan to accelerate organic growth in the US market, Coloplast has appointed Manu Varma as Senior Vice President of Chronic Care North America. Former Senior Vice President Ed Veome will take on a new role as Vice President of Sales of Chronic Care North America.
"The US market holds great potential, and our ambition is to continue to take market share. To that end, we are investing to accelerate growth, which includes investing in and expanding our North American leadership team,” said Mr Rasmussen.
Coloplast is also expanding its Continence Care and Wound Care product portfolios in the US market by launching the SpeediCath® Flex Coudé Pro, specifically designed for the US market, and the entire Biatain® Silicone portfolio.
In addition, Coloplast has been chosen as the primary ostomy care vendor at Cleveland Clinic, one of the leading hospital chains in the USA. Coloplast will be the new main supplier of ostomy care products to all Cleveland Clinic hospitals.
Financial guidance 2017/18
Coloplast now guides 7-8% organic revenue growth, up from previously ~7%, at constant exchange rates. The change is primarily due to expectations that the patent expiry of SpeediCath® standard catheters will have a negative effect of DKK 50m instead of the previous estimate of DKK 100m and due to increased momentum in the Emerging Markets region. The guidance continues to include the effects of a comprehensive healthcare reform in Greece of DKK 100m, which is expected to impact all business areas.
Reported growth in DKK is expected to be ~6%, up from previously 5-6%, mainly due to developments in the USD/DKK exchange rate. The change is due to the upgraded guidance for organic revenue growth. Coloplast continues to expect an EBIT margin of 31%-32% at constant exchange rates and a reported EBIT margin of ~31% in DKK.
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