Coloplast Q3 2024 $COLO B (+2.17%)

Financial Performance

Coloplast achieved a revenue increase of 10% to DKK 27,030 million in the financial year 2023/24, driven by organic growth of 8% and an additional increase of 4% from the acquisition of Kerecis. EBIT before exceptional items increased by 6% to DKK 7,286 million, with a slight decrease in the EBIT margin from 28% to 27% due to dilution effects from the Kerecis acquisition and exchange rate fluctuations.

Balance sheet summary

Total assets remained stable at DKK 48.073 million as at September 30, 2024. Equity increased by 4% to DKK 17,942 million, while net interest-bearing liabilities increased to DKK 21,841 million, mainly due to financing activities in connection with acquisitions.

Details of the income statement

Gross profit increased to DKK 18,269 million, with an improved gross margin of 68% compared to 67% in the previous year, supported by favorable input costs and the contribution from Kerecis. Operating costs increased by 16% to DKK 10,983 million, impacted by the Kerecis acquisition and one-off costs.

Cash flow overview

Free cash flow amounted to DKK 1,430 million, a significant improvement compared to the outflow of DKK 4,731 million in the previous year, despite a one-off tax payment in connection with the transfer of Atos Medical's intellectual property. Cash flows from operating activities amounted to DKK 2,766 million, a decrease compared to DKK 4,226 million due to higher tax payments.

Key figures and profitability ratios

ROIC after tax before exceptional items amounted to 15%, a decrease compared to 17% in the previous year, influenced by the acquisition of Kerecis. The debt ratio was 2.5x EBITDA.

Segment information

The Chronic Care division, including ostomy and incontinence care, recorded strong growth, with incontinence care increasing by 10%. Speech and respiratory care grew by 12 %, advanced wound care by 10 % and interventional urology by 7 %.

Competitive position

Coloplast continuously strengthens its market position through strategic acquisitions such as Kerecis, which are designed to promote long-term growth and profitability. The company uses its scalable infrastructure to further expand the growth potential of Kerecis.

Forecasts and management comments

For the financial year 2024/25, Coloplast expects organic growth of 8-9% and an EBIT margin before special items of around 28%. Management sees further growth potential in the Chronic Care division and continued contributions from Kerecis.

Risks and opportunities

Exchange rate fluctuations and integration costs due to acquisitions represent risks, while opportunities lie in the expansion of market share and the launch of new products such as the Luja™ catheter.

Summary of the results

Coloplast delivered a solid financial performance in financial year 2023/24 with strong sales growth, with strategic acquisitions further strengthening its competitive position. Despite challenges from exchange rate fluctuations and acquisition-related costs, the outlook for the coming financial year remains positive, with a focus on organic growth and efficiency improvements.

Positive aspects:

• Sales growthColoplast recorded strong revenue growth of 10% in the financial year 2023/24, totaling DKK 27,030 million. This growth was mainly driven by organic growth of 8% and an additional contribution of 4% from the acquisition of Kerecis.
• Improvement in gross marginGross profit increased to DKK 18,269 million, which increased the gross margin to 68% (compared to 67% in the previous year). This improvement is due to favorable cost developments in raw materials and the integration of Kerecis.
• Free cash flowColoplast achieved a remarkable turnaround in free cash flow, generating an inflow of DKK 1,430 million compared to an outflow of DKK 4,731 million in the previous year, despite an exceptional tax payment.
• Segment performanceThe various segments recorded strong growth. Significant growth was achieved in Chronic Care, particularly in ostomy and incontinence care, with incontinence care increasing by 10%. In addition, Speech and Respiratory Care grew by 12% and Advanced Wound Care also recorded growth of 10%.
• Strategic acquisitionsThe acquisition of Kerecis is expected to promote the long-term growth and profitability of Coloplast and further strengthen the company's market position.

Negative aspects:

• Rising operating costsOperating costs increased by 16% to DKK 10.983 million, influenced by the acquisition of Kerecis and additional costs related to the establishment of a new distribution center in the US.
• Exchange rate effectsEBIT margin was negatively impacted by exchange rate fluctuations, in particular the depreciation of the US dollar and a number of emerging market currencies against the DKK.
• Decrease in ROICROIC after tax before exceptional items fell to 15%, compared with 17% in the previous year, due to the acquisition of Kerecis.
• Increase in interest-bearing net debtNet interest-bearing debt increased to DKK 21,841 million, mainly due to financing activities in connection with acquisitions, which increased the debt ratio to 2.5 times EBITDA.
• Cash flow from operating activitiesCash flow from operating activities decreased to DKK 2,766 million compared to DKK 4,226 million in the previous year due to higher tax payments.