Due to the impact of the COVID-19 outbreak on the Interventional Urology business and elective procedures in primarily the US, Coloplast revises full-year organic growth guidance for 2019/20 from 7-8% to 4-6% and EBIT margin guidance from ~31% in DKK to 30-31% in DKK. The global outlook for Ostomy Care, Continence Care and Wound & Skin Care remains largely intact.
As Coloplast closely monitors the impact of the coronavirus outbreak, the top priority remains the health and safety of the company’s employees, users, customers and communities.
Coloplast’s full-year guidance issued on February 6, 2020 reflected the best information available at the time and assumed that the situation surrounding the COVID-19 outbreak normalised during Q2. China is slowly returning to normal conditions, but the situation has escalated globally and Coloplast now expects an impact on the Interventional Urology business where a significant share of revenues results from elective procedures.
The organic revenue growth guidance is lowered from 7-8% at constant exchange rates and a reported growth in DKK of 7-8% to an organic revenue growth guidance of 4-6% at constant exchange rates and a reported growth in DKK of 4-6%. The EBIT margin guidance is lowered from ~31% at constant exchange rates and ~31% in DKK to 30-31% at constant exchange rates and 30-31% in DKK. Capex guidance of DKK ~850m and tax rate of 23% is unchanged.
Year-to-date, Coloplast has seen solid growth above the market, and the company’s financial performance has been in line with expectations. The key factor behind the lower organic growth expectations is a revised outlook for the Interventional Urology business, which represents around 10% of group sales. As a result of the COVID-19 outbreak, elective surgeries and procedures are expected to be postponed globally which is expected to negatively impact the financial performance of the Interventional Urology business in the second half of the financial year. The US represents around 50% of revenues in Interventional Urology and the negative impact from a decline in elective surgeries and procedures in the US is expected to be significant. The negative revenue impact is expected to be temporary and we expect the revenue loss to be recaptured once the situation normalises.
On a positive note, the situation in China in the Ostomy Care and Wound Care businesses is slowly normalising. Coloplast is monitoring the situation closely across all markets and business areas and does not currently expect to see a further material negative impact on the Ostomy Care, Continence Care and Wound Care businesses. The rate of new patients in Ostomy Care however is expected to be negatively impacted until the situation normalises as only the most acute ostomy surgeries are taking place.
Coloplast is focused on adapting our business and commercial activities to the changing situation, while continuing to service users to the best of the company’s ability. This includes a prudent focus on costs as the company navigates this difficult situation. Coloplast’s global manufacturing sites are operating as normal and in terms of production and supply chain, the company is able to fully meet demand. Coloplast is taking all necessary precautionary measures at the factories and distribution centres to keep employees safe and ensure supply including temperature checks of employees and limiting external guests. Border closures are complicating deliveries across borders and Coloplast is implementing mitigating measures to handle the situation. Coloplast is acting globally to protect all employees and will continue to comply with and support local, national and global guidelines from healthcare authorities.
The situation is developing rapidly and remains uncertain. The revised full year guidance assumes that the situation in Interventional Urology gradually normalises during the second half of the financial year, as well as a stable supply and distribution of products across the company.
Coloplast will continue to monitor and assess the impact to the business and provide an update in our Interim Financial Report for H1 2019/20 scheduled to be released on May 6, 2020.
The share buyback programme totalling up to DKK 500 million, as announced on February 6, 2020 will continue as planned and the company’s dividend policy is unchanged.
Coloplast will host a conference call tomorrow, March 18, 2020 at 8:00 CET. The call is expected to last 30 minutes. To ensure the best quality of the call please connect to the webcast here: https://edge.media-server.com/mmc/p/y58dbmcw. Please only dial-in by phone in case you want to ask questions: +45 80717045, +44 (0) 203 0095709 or +1 646 787 1226 and use pin code 6374409. The webcast will be posted on www.coloplast.com shortly after the conclusion of the conference call.
President & CEO
For more information, please contact:
Investors and analysts
Executive Vice President, CFO
Tel. +45 4911 1111
Vice President, Investor Relations
Tel. +45 4911 1800 / 4911 3376
Senior Manager, Investor Relations
Tel. +45 4911 1800 / 4911 1786
Press and the media
Senior Media Relations Manager, Corporate Communications
Tel. +45 4911 2607
Business reg. (CVR) no. 69749917
This announcement is available in a Danish and an English-language version. In the event of discrepancies, the Danish version shall prevail.
Coloplast develops products and services that make life easier for people with very personal and private medical conditions. Working closely with the people who use our products, we create solutions that are sensitive to their special needs. We call this intimate healthcare. Our business includes Ostomy Care, Continence Care, Wound and Skin Care and Interventional Urology. We operate globally and employ about 12,000 employees.
The Coloplast logo is a registered trademark of Coloplast A/S. © 2020-03.
All rights reserved Coloplast A/S, 3050 Humlebaek, Denmark.