Coloplast delivered organic growth of 8% in the third quarter of the 2016/17 financial year. When measured in Danish kroner, revenue was up by 6% to DKK 3,912m.
Reported Q3 revenue was adversely affected by a DKK 90m one-off revenue adjustment made after Coloplast identified incorrect management of contractual obligations relating to an agreement with the U.S. Department of Veterans Affairs for the period 2009-2017. The matter relates to continence care products and has not affected the organic growth rate for the reporting period. Coloplast has recently renewed the contract with the U.S. Department of Veterans Affairs and the company has now opened a dialogue with the U.S. Department of Veterans Affairs in order to resolve the matter.
EBIT was up by 9% at constant exchange rates, adjusted for the one-off revenue adjustment for the U.S. Department of Veterans Affairs for, and up by 4% in DKK to DKK 3,705m. The EBIT margin was at 33% at constant exchange rates and before the one-off adjustment, which was in line with last year’s percentage.
Q3 organic growth rates by business area: Ostomy Care 7%, Continence Care 10%, Urology Care 10%, and Wound & Skin Care 1%.
By geographies, the European markets contributed 4% growth. “Other established markets” and Emerging Markets both delivered 14% revenue growth.
- “We’re delivering a satisfactory Q3 result with many of our major markets performing well, including the UK and the USA. The integration of Comfort Medical in the USA continues to progress to plan, and our US Chronic Care business reported double-digit organic sales growth in the third quarter. Also, our Emerging Markets business delivered 14% organic growth in the third quarter, driven by strong growth momentum in China and Russia,” said Coloplast CEO Lars Rasmussen.
- “Pricing reforms in Greece and France had a negative impact on sales growth in the Wound and Skin Care business in the third quarter, but the effect was offset by a stronger momentum for the Wound Care business in China and for the Skin Care business in the USA,” said Mr Rasmussen.
New products to drive growth
Coloplast continues to launch new products in all core markets, including the SpeediCath® Flex catheter, which is now available in fourteen markets. Feedback on the product has been very positive.
In the Ostomy Care business, Coloplast is now relaunching the SenSura® Mio Convex, after having expanded production capacity in Hungary to accommodate market demand. The relaunch is progressing to plan.
Financial guidance for 2016/17
We continue to expect organic revenue growth of 7–8% at constant exchange rates. The guidance for organic revenue growth has not been affected by the one-off revenue adjustment of DKK 90m. The guidance for reported revenue growth is revised to 6% in DKK instead of as previously 7–8%, due to the one-off revenue adjustment of DKK 90m and to exchange rate developments with especially the depreciation of the USD and GBP having a negative impact.
The EBIT margin guidance remains at 33–34% at constant exchange rates. The EBIT margin guidance at constant exchange rates includes the one-off revenue adjustment of DKK 90m. The reported EBIT margin guidance in DKK is revised to about 32% instead of as previously about 33%, due to the one-off revenue adjustment of DKK 90m and to exchange rate developments with especially the depreciation of the USD and GBP having a negative impact.