Q2 2025 Coloplast A/S Earnings Call
Ladies and gentlemen, welcome to the Call of Plast.
First half [inaudible]
Giotta: 2024-2025, Earnings Released Conference Call I am Yota the Course Call Operator. I would like to remind you that all participants will be released in only mode and the conference is being recorded. The presentation will be followed by a question and answer session.
Speaker Change: You can register for questions at any time by pressing start-in-one on your telephone. For operator assistance, please press start-in-zero. The conference must not be recorded for publication or broadcast.
Speaker Change: At this time, it's my pleasure to hand over to the others, Rasmussen, interim CEO . Please go ahead.
© transcript Emily Beynon
Good morning and welcome to our half year 2024-25 conference call.
Speaker Change: I am Lars Hasmusen, interim CEO of CO2-plast, and I am joined by CFO , Anders Lundings Skogård.
Speaker Change: and our investor-relations team. We will start with a short presentation by Anas and myself and then we open up for questions.
Anders Lonning-Skoggard: So I'd like to start by saying thank you, thank you to Kristian for running the company for the last seven years, for being part of the management team for the last 17 years and for all the good work that he has done together with the team over those years.
Anders Lonning-Skoggard: There has been a number of very important decisions in Kristian's tenure among them, the acquisition of actors and characters that we are super happy with.
Anders Lonning-Skoggard: and that is why the Board of Directors decided that this is a good time to part with Kristian.
Thank you.
Anders Lonning-Skoggard: Maybe also a very natural thing after running the company for seven years, which I think that most of you will know that that's probably more than the average tenure of most CEOs for global magic companies.
Anders Lonning-Skoggard: So we are also for the time being preparing a new strategic direction for the company. We are going into a new strategy period. That work will...
Thank you very much.
Anders Lonning-Skoggard: Well, I have to say that the primary responsibility for the board is to make sure.
Thank you very much.
Speaker Change: As a result of my appointment as interim CEO , I'm stepping down for my role as Chair of the Board of Directors at Kohlerblast.
Speaker Change: I'm also stepping down from the Roes of the Czech Republic of Romania and the Nassden Committee and the Member of the Audit Committee.
Speaker Change: I will remain on the board of directors of CodePlus as an ordinary member.
Speaker Change: So I am also looking forward to coming back to the CO role for an inter-imperial. I also hold help this position from 2008.
Speaker Change: to 2018 and together with the rest of the executive leadership team will continue executing on our strategic goals by volunteering operational excellence and accelerating momentum and creating value.
Take any of these on this call, so we'll split it between us, so Anders will take the financials and I will take the management part of it.
Er, thank you very much and over to you, Arnors. [inaudible]
Anders Lonning-Skoggard: Alright, thanks last and please turn to slide number 4.
Anders Lonning-Skoggard: Good morning, everyone. We delivered 6% organic growth and a reported a bit margin before special items of 27% in the second quarter. Adjusted return on invested capital after tax and before special items was 15% on part with last year.
Anders Lonning-Skoggard: The organic growth in Q2 was below our expectations. At the high level, the quarter was marked by a high negative impact from the product we call intervention reality compared to our initial expectations and the weaker performance in our ostomy care business.
Anders Lonning-Skoggard: And after me care, on the other hand, we expect to see a rebounding growth in the second half of the year following some one-off effects in the quarter.
Anders Lonning-Skoggard: The continued impact from the product we call interventuality has led us to revise the organic growth guidance for the year we now expect organic growth to be around 7% from previously 8 to 9%.
Anders Lonning-Skoggard: As a consequence of the lower expectations on organic growth, we have also adjusted the expectations on the EBIT margin before spatial items to 27-28% from previously around 28%. I will go through the details on the guidance later on.
Anders Lonning-Skoggard: Before we move on to the strategic update for the first half of the year, let me give you an update on the local coverage determination policy.
Anders Lonning-Skoggard: The implementation of the LCD policy for skim substitutes has been postponed to the 1st of January 26th.
Anders Lonning-Skoggard: Keros' products remain fully covered under the existing LCD policy and are supported by strong clinical evidence. As such, we currently don't expect significant impact from this delay to current trading.
Anders Lonning-Skoggard: With that, let's turn to half-year strategic update. Please turn to slide number five.
Anders Lonning-Skoggard: Let's look at growth first. With our strive to new five strategy, we set out to actively pursue M&A opportunities to build growth and value creation options for the mid to long term.
Anders Lonning-Skoggard: The two most significant investments we made as a medical in care is both performing in line with our expectations with a strong future outlook.
Anders Lonning-Skoggard: Luja, our new intermittent catheter with a micro-hole-zone technology is now the main growth driver in confidence care driven by the main product.
Anders Lonning-Skoggard: The launch of Lutja for Women is close to being finalized. We are very pleased with the market reception of Lutja and we see the micro-hole zone technology as the next level of standard in intermittent catheterization.
Anders Lonning-Skoggard: Luce will be a full product range with further product launches under the Luce brand in the coming years.
Speaker Change: In Austin, we care we initiate free launches last year since we were new blackbacks and two since we were new additions in the 2p segment.
Speaker Change: All of these launches are off to a good start. Given the complexity of the Astemic Care portfolio, these launches are not finalized yet. We will further expand these product lines over the coming quarters and years to support continued growth above the market within Astemic Care.
Speaker Change: On sustainability, we continue to make good progress across all our initiatives. I would like to call out the latest results of our employee engagement survey, where we maintain a solid score of 8.2 ahead of the industry benchmark of 7.7, which we are particularly satisfied with.
Speaker Change: Let me finish with the operational efficiency. The first half of this year marks a period in which we have initiated a number of profitability-improvement initiatives to support long-term value creation.
Speaker Change: These additional tips will have short term implication for short term items which I will speak to later on.
Speaker Change: Now let's take a closer look at today's results. Please turn to slide number six
Speaker Change: In Austin, we care organic growth was 6% for the first 6 months and growth in Danish corner was also 6% In Q2, organic growth was 4% with growth in Danish corner of 5%
Speaker Change: Ausensua Mu portfolio continues to be the main growth drive, followed by the Brahma supporting products
Speaker Change: Al-Sensua, and their sewer, Alterna and Portfolios continue to pose solid growth in emerging markets.
Speaker Change: Europe had a softer quarter, impacted by a high baseline last year and key markets like Germany and France.
Speaker Change: In the multi-market profiles, help back by slower tend activity in selected markets.
Speaker Change: Incontinence Care, Organic Growth for 7% for the first six months, and Growth in Dean's corner was 8%
Speaker Change: In Q2, organic growth was 8% and growth in Danish corner was also 8%.
Speaker Change: Speedycat, our previous generation of catheters, also contributed to growth, driven by primarily by solid contribution from emerging markets.
Speaker Change: Our Bau care business also made a solid contribution to growth driven by a pair of steam plots in Europe , while collecting devices posted flat growth.
Speaker Change: From a geographical perspective, growth was brought based with solid contribution across regions, markets where reimbursement has been recently established or improved, such as Poland, continued to perform well and grew double-digit.
Speaker Change: Royza Rispertroy Care posted 9% organic growth for the first 6 months with growth in Danish corner of also 9%. In Q2, organic growth was 7% from a high baseline last year, while growth in Danish corner was 8%.
Speaker Change: Growth in Trag last to me in Q2 was double-titted and driven by continued solid demand.
Speaker Change: From a geographical perspective, all regions contributed to growth driven by Europe and the U.S.
Speaker Change: In advance uncare, organic growth was 11% for the first six months, and growth in dingh is
Speaker Change: In Q2, organic growth was 10% and growth in Danish corner was 1%
Speaker Change: The report growth for the period includes four months' negative impact on the divestment of skin care.
Speaker Change: Kerses was the main growth contributor in a bad food care, will continue solid momentum and growth of 30% in Q2 and 31% in the first six months.
Speaker Change: Growth in the quarter was bought based with solid contributions from inpatient and outpatient
Speaker Change: Kyrgyz's operating profit margin excluding PBA amortization was 12% in the quarter and in the first six months in line with the expectations.
Speaker Change: Europe was the main growth contributor in Q2 driven by Germany, growth in the quarter was negative impacted by China, which detracted from growth, partly impacted by a high baseline
For more information visit www.FEMA.gov
Speaker Change: In intense reality, organic growth was 0% for the first 6 months and growth in Danish corner was 1%
Speaker Change: In Q2, organic growth was negative 1% and reported growth in Danish corner was 1%.
Speaker Change: Golfing Q2 was negatively impacted by the voluntary product we call in the bladder health and surgery segment.
Speaker Change: which was above our previous expectations. The higher and expected impact in the quarter was due to a higher level of customers lost then initially expected.
Speaker Change: The negative impact of the product we call in Q2 was only partly offset by positive growth contribution from men's health, women's health and the duality business.
Speaker Change: From a geographical perspective, the U.S. was the main and growth of the contributor in Q2 while Europe detracted from growth due to the product record.
Please turn to slide 7.
For more information visit www.FEMA.gov
Speaker Change: Fun exchange rates had a small positive impact of 42 million Danish Kroner on reporter revenue mainly related to the appreciation of the US dollar and British pound against a Danish Kroner.
Please turn to Slide 8
Speaker Change: The glass martin also includes a small positive impact from currencies of around ten basis points.
Speaker Change: Auburn expenses for the first six months amounted to a 5.7 billion Danish corner at 6% increase from last year.
Speaker Change: The distribution costs also include around 30 million Danish corner extra ordinary costs related to the new distribution center in the U.S.
Speaker Change: I'm now pleased to say that our US distribution is now operating at a normal service level and we don't expect further extraordinary cost related to this.
For more information visit www.FEMA.gov
Speaker Change: The admin to sales ratio for the first six months was 4% compared to 5% last year and includes impact from a high baseline as well as benefit from synergies from the access medical integration.
Speaker Change: Yarn D to sales ratio for the first six months was 3% of sales on power last year.
Speaker Change: Overall, this resulted in operating profit before special items of 3.8 billion Danish Kroner in the first six months and a 5% increase compared to last year.
Speaker Change: David Martin in the first six months continues to include negative impact of around 100 basis points from the inclusion of services including PPA and Motization Costs in line with expectations.
Speaker Change: Financial items in the first six months were a net expense of 385 million Danish Kroner compared to a net expense of 418 million Danish Kroner last year. We are both led by interest expenses related to the financing of the access medical acquisition.
Speaker Change: The ordinary tax expense in the first six months was 17 million Danish Kroner, with an ordinary tax rate of 22% on par with last year.
Speaker Change: The total tax expense in the first six months was 1.3 billion Danish corner impacted by the transfer of carousels in intellectual property from Iceland to Denmark, and as a result of the extraordinary tax expenses, the effective tax rate in the first six months amounted to 40%.
Speaker Change: Adjusted for the chaos of this IP transfer, net profit before special items in the first six months was 2.7 billion Danish Kroner or 7% increase compared to last year. Adjusted diluted earnings per share before special items increased by 7% to 11.83 Danish Kroner.
Please turn to slide number nine. [inaudible]
Speaker Change: The underlying development in the operating cashflow, both positive, driven by most, driven mostly by lower income tax paid and increase in operating profit.
Speaker Change: Casplo from investing activities, roads and outflow of 442 million Danish Corona, compared to an outflow of 554 million Danish Corona last year. Capix in the first six months, roads for percent of sales on par with last year.
Speaker Change: As a result, the free castle for the first six months was an inflow of 2.3 billion Danish Corona compared to an outflow of 1.3 billion Danish Corona last year.
Speaker Change: Excluding the positive impact from the skin, care, divestment and the negative impact from the tax payment related to the Air Susmetical IP transfer last year, the adjusted free cash flow for the first six months was an inflow of 2.1 billion days corner or an 80% increase compared to a just the free cash flow last year.
Speaker Change: The training 12 month cash conversion was 81% while the free cash flow to sales ratio was 15%.
Speaker Change: Networking Capital was around 26% of sales impacted by lower level of sales in Q2.
Speaker Change: Lastly, the board of directors approved a half year interim dividend of 5 Danish Kroner per share, corresponding to a total interim dividend payout of approximately 1.1 billion Danish Kroner.
Speaker Change: Now let's look at the financial guidance for the year. Please turn to slide 10.
Speaker Change: As mentioned earlier, we now expect organic revenue growth for the year to be around 7% with the following updated assumptions.
Speaker Change: A slowdown in China to losing a digit from previously around mid-signal digit impacted by a consumer segment and mostly relevant faster-me-care.
Speaker Change: Hi, on certainty, related to timing of tenders in emerging markets, mostly related to the ostomy care.
Speaker Change: Next, the report of revenue growth in Danish corner is now expected to be around 4%, from previously around 7%,
Speaker Change: which includes the lower organic growth expectations, around 2% is point negative impact from currencies related to a weaker US dollar and around 1.5% is point negative impact from the skin care management.
Speaker Change: The EBIT margin, before special items, is now expected to be 27-28%. The updated expectation on the EBIT margin is related to the lower organic growth outlook to be partly offset by prudent cost management.
For more information visit www.FEMA.gov
Speaker Change: The remaining expectations on the EBIT margin before special items are largely aligned with the expectations laid out in November 24.
Speaker Change: Here I would also like to mention that our financials include an assumption that impact from the US tariffs will be immaterial.
Speaker Change: Products in our chronic care categories, which cover ostomy, consonants and rice and respiratory care, are all currently exempted from the terrorists. We have some exposure in advance from care and in spirituality, however, as mentioned, the impact from this exposure is not significant for the group.
Speaker Change: Grounds are expected to have limited positive impact on the EBIT margin driven primarily by the British pound and the Hogangarian for end.
Speaker Change: Before going into the Q&As, I would also like to thank Kristian for a strong collaboration and teamwork in the last 17 years, of which more than a decade on their negative leadership team. So thanks a lot to Kristian.
Speaker Change: All right, with that, thank you very much, the operator, we are now ready to take questions.
We will now begin the question and answer session.
Speaker Change: Anyone who wishes to ask a question may press start on one on their telephone. [inaudible]
Speaker Change: You will hear a tone to confirm that you have entered the queue.
Speaker Change: The first question comes from the line of Jack Reynolds Clark with our BC Capital Markets. Please go ahead.
Jack Reynolds-Clark: Hi there, thank you for taking the questions, a couple for me please.
in your opening statement today.
and then one for Anders on Blood of Health.
Speaker Change: Why has the recovery here been slower than you expected? And what are your expectations around recovery going forward? Is this still a good business over the next year, year and a half?
Thanks.
So, thanks for the question, Jack.
Speaker Change: So what needs to be improved, as I said, at the beginning, and I can see that there's more people coming on, so first I'd like to start again by saying thank you to Kristian for leading the company for the last seven years.
Speaker Change: Mortisysiveness in the management team. So we need to make decisions that...
Speaker Change: who benefits the top line growth of the company. If you look at the numbers that has been presented in this...
A significant impact also on the boss line.
Speaker Change: and Edjas and also what we are investing for in new product development and in the professionalization of our whole go-to-market process is more top-line growth and that have not materialized.
Speaker Change: That is our focus. That is what we are going for.
and I would also like to reiterate [inaudible]
It's not something to do with Etos and Kerases [inaudible]
Speaker Change: on the business case that we had over putting in when we were acquiring those companies. So, it's more broad-based, but it's all about execution in the company. It's focusing on top-line growth.
Speaker Change: Yes, thanks Jack for your second question around our product within the Euality.
Speaker Change: and we actually thought that we would start to see some improvements in Q2.
Speaker Change: 0% and that really means that we are not expecting any recovery until next year within this specific area in uology.
That's great. Thanks very much.
Speaker Change: The next question comes from the line of Niels Granholm Les with Carnegie, please go ahead.
Speaker Change: for the CEO role. Secondly, since you're still planning to host this CMD on the second of September , would that also include launching new financial targets for the coming five-year periods? Thank you.
Thanks for watching!
Speaker Change: So if we had an obvious insert in candidate, we would have presented that person today.
Speaker Change: So, we don't have that and it's the responsibility of the board to make sure that there is a CO succession as it is the responsibility of any leader to make sure that there's somebody to
Speaker Change: Replace themselves. I think we have a pretty strong pipeline of talent but we don't have a person that we consider to be ready at this point in time.
and Peter Lukacs.
Speaker Change: A full-fledged strategic work that we are going to present there with everything that goes for that.
Thanks for watching!
Speaker Change: So including an update to your financial targets for the coming five year period.
© transcript Emily Beynon
Yes, that's correct.
Thank you.
Hassan al-Waqeel: The next question comes from the learn of Hassan Al, Joaquil, with Parkleys, please go ahead.
current strategy and midterm targets.
Speaker Change: And do you think some of this flow down overall could be attributable to share dynamics? I guess I'm trying to understand your confidence in the recovery assumed over the course of the rest of the year. Thank you.
Bye-bye.
So, we...
We have made a profit warning.
Speaker Change: One of the rare ones and that's because we are not delivering on the organic growth targets that we have in the markets right now.
What are the external explanations for the weaker performance?
Speaker Change: and what are the internments? We think the port was of the perception that...
A lot of it was internally driven.
Delivery issues or quality issues, for example, and that is not.
Speaker Change: Good enough. We have customers who are in a super vulnerable position and we cannot let them down so of course we take that super seriously.
Speaker Change: When it comes to IU and the strategy on IU, we are working on that right now, so in a sense it would be too early to talk about it, we will come back to that when we meet in September .
Speaker Change: So I'll take the third one in terms of OstemiCare.
and then finally the third explanation that is China.
Speaker Change: So as you might recall, we have for some years now been looking at a growth in China, in Austin, around mid-Singular Dittit.
Speaker Change: We are now seeing that the growth in China is coming down to a low single digit and it will be an ostomy and we saw that here in the second quarter and I'm actually expecting it will stay around that in the second half of this year.
Speaker Change: because the underlying market growth is sitting around to the 4% and this will also be driven by the new innovation that we had launched over the last year so we are confident that our will improve in Q3 and Q4.
Thanks for watching!
Thank you very much.
© transcript Emily Beynon
Speaker Change: The next question is from the line of Martin Parcoy with Seb, please go ahead.
Yes, I'm Martin Parker from ACP.
Life you never let...
Speaker Change: Just the two questions I think is also to you. The first question is going back to the organic roadway. Do you ever consider that maybe your ambitions for the organic roadway is just too high?
Speaker Change: As I recall it in the last couple of years in your period as CEO .
Speaker Change: Is it could it be that sometimes that there is no buffer if your guidance like a fallout with the follow-up at all so your business actually just has been too high?
Speaker Change: You know, further restructuring even a kitchen sink to repair a new setting for an upcoming seal.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
So, thank you Martin and I will seek the first one.
Speaker Change: Yes, I think it's tough targets. It was also tough targets back in the days. It's like we have never had anything else but tough targets. Of course they don't come out of nothing or out of the blue. So the most important thing.
Speaker Change: that is seen as superior when we are looking at product quality and service levels.
Speaker Change: and because that is what it takes to grow above the market.
Speaker Change: Then you can always discuss how much about the market, but we think it needs to be convincingly. So therefore, the gross targets that we're having will always be pointing to something which is about the market.
For more information visit www.FEMA.gov
Speaker Change: When we look at the products that we are bringing to the market, when we look at the difference that we have compared to the companies that we are competing with, and they are great companies also of course, then we think that we deserve more growth than what we have at least in this quarter. So yes, we have tough targets, but they are not going to go away. [inaudible]
Speaker Change: and this is in order to improve our profitability and value creation from next year.
Thank you very much.
Speaker Change: Next question from Maja Stephanie Pataki with Kebler Sivre, please go ahead.
Speaker Change: Hi, yes, thank you for taking my questions. I would like to continue on your discussion with Martin. You have Laura now mentioned that you invested into growth and the growth acceleration did not come through as anticipated.
Speaker Change: I guess we shouldn't just look at the quarter where we had the product recall as well impacting, but...
Speaker Change: That was the exit rate of your tenure, that's number one and the second question is like you have Lars mentioned now a couple of times, the importance of quality and this is clearly for a meta company, the number one thing to focus on.
Speaker Change: Has there been anything else with regard to the quality that we should be picking up here because...
Speaker Change: To my understanding, it was the packaging in intervention neurology that was that was the issue and not the product itself. So is there anywhere anything else where quality is not meeting the standards that you and the board would like to see? Thank you.
Speaker Change: Thank you, Maya, that we took the last one first because, yes, you are absolutely right, that it was a quality issue with the packaging in the IU product, that was the cause. And then we had the
Speaker Change: A quality issue that makes you not deliver or a kind of a hiccup in the way that you operate your distribution, it is in the same situation that the customers do not get the products that they order.
and that is what I'm talking to is that.
You can't.
Speaker Change: Nervous about it. We have told you everything that we know in this department.
Speaker Change: I'm not sure that I could understand your first question about the investment with the 2% could you elaborate a little bit on that?
Yeah, I'll try to make it work here.
I mean, you started the call saying, like, you know, you...
Speaker Change: Coloplas has been investing into growth and yet we have not seen the acceleration in top-line growth and value creation to come through in the sense that was anticipated or hoped for. The question always, you know, the question always...
Speaker Change: is now were those investments enabling you to grow at the level that you were growing and if it would not have come through then there would have been a deceleration and top line growth.
Speaker Change: That's a very good question. So, so we, when I say that we have enlisted, we...
or Componence with Atos and Kyrgyz's. [inaudible]
Speaker Change: You could say that the base business of the company is not growing to the tune that we have invested for.
Speaker Change: and that's the problem. So is there too much focus on the acquisitions and too little on the base business? No matter what it is, we cannot say that we are not growing.
Speaker Change: Fouli, or sort of firing on all cylinders just because of external issues because the world is of course becoming more complex. Of course there are many things that are different than they were two years ago, but the assessment that we have had at the board is...
Speaker Change: We have created them ourselves and that is something that we would like to...
Speaker Change: Correct. So therefore, yes it is an ambitious growth target that we are put forward.
Speaker Change: Now I can see it because I am in a different chair now but it is not the ... it is not the ...
Thank you. Thank you.
Speaker Change: The board that dictates any targets for the management team, it is the management team's expectations of what they can do with the company that we're looking at. And they should be ambitious, of course, and we're happy that they are.
Thank you.
The next question is from [inaudible]
Chalverma, with JP Morgan, please go ahead.
Charles Verma: Hi, good morning. One for you, Lars, just to follow up on the CMD, is there any risk that the strategy targets that are put out by yourself on the board might need to be revised when the new CEO takes over as the new CEO may have a vision of their own? And then a couple for you, Anders, when the character acquisition was announced, that was a target put out for 20% and a bit more, by 2526, that's next year.
Charles Verma: And then the last one is just a follow-up on ostomy care. Could you expand on why the tender activity in ostomy was slower in each one? Was there any specific markets that stood out? And what gives you confidence that the tender slowdown is more permanent and it will pick up in each two?
Speaker Change: Thank you and answer for your questions, Christians. So, if you take the textbook.
Charles Verma: Now, this is not according to textbook at all because it's always preferable that
Charles Verma: that the sitting CEO is proposing the targets for the next strategic period.
So, um,
if we were to…
It could mean that we would be two years without you [inaudible]
Thessalon, the strategic direction. [inaudible]
We...
Charles Verma: We can't have that so it will be it will be
Speaker Change: It would be like this, we are creating a strategy and that would be created of course in the executive management team.
Speaker Change: and that a new CEO , the Council Board, will have to have a personality where that person can live with, taking over a strategy with the goals and direction that we have.
and what we have decided.
Speaker Change: That will have to be the terms and I can't see that we can do it in any other ways because as I said at the beginning.
that the first task any board has [inaudible]
and Jens Stoltenberg.
Speaker Change: Yes, and to let me take your second question related to Carsten's margin improvement.
Speaker Change: And yes, as you mentioned, our ambitions for caruses when we acquired, the company was Caker Growth of 30% over a three-year period, and improved the underlying EBIT margin to 20% in 2526.
Speaker Change: We are on track. We are also seeing a strong, gross margin.
Speaker Change: So it's really scale that needs to drive the margin improvement in the carousass business.
Speaker Change: To your second or your third question around ostomy care, as I mentioned earlier.
We have some tender facing in emerging markets.
Speaker Change: between the first half of this year and the second half of this year. It is something we have also seen in the past.
and it is really related to some of...
Speaker Change: The specific markets in the emerging markets, one of them is Russia, there's also some pretend activities going on in the Middle East.
Speaker Change: And we are confident that we will have these tenders coming in in the second half of this year impacting your ostomy care and our emerging market to grow up to positively.
For more information visit www.FEMA.gov
That's very clear. Thank you.
Graham Doyle: The next question is from Granholm Doyle with UBS. Please go ahead.
Graham Doyle: Morning Larsen Anders, thanks a lot for taking my questions, just two for me, but I'm a little slightly bigger picture, but this feels like quite a big change and quite a sudden change.
Graham Doyle: Or I suppose this is the concern, is there something else that's happening and maybe if you didn't make this change you feel like the situation could curate further I think people just like reassurance on that front.
Graham Doyle: and then maybe just a quick one. You flagged under some corrective actions that you're taking at the moment in terms of improving growth. Could you sort of talk a little bit more about those and maybe how you see them playing out in the second half? Thank you.
Thanks, Graham. So, yes, it is a big change.
Graham Doyle: And no, it's not an easy decision when that kind of change.
Graham Doyle: Is that a disaster? No, it's not. This is something that we can definitely correct for.
Graham Doyle: Where we have a conference, the dismissals are that it must be significant according to, if we do not try something about it.
Graham Doyle: No, we didn't think that. And once you have had that...
Thanks for watching!
Graham Doyle: From Journalist this, why don't you just make a search and then announce this at the point in time where you have somebody ready?
Graham Doyle: You do that. You will start contacting a number of people in the markets. This is a listed company.
and that can start to be robust.
Graham Doyle: and we would have to be not completely honest and straightforward and the same would go for Kristian, we didn't think that that was the right way to do it and it was not in any way a good way for Kristian to stop and for us to stop the collaboration with Kristian.
So, yes, it can seem as if it's abrupt.
Graham Doyle: But we think it was the right thing to do at this point in time and we also think it was timely so in the sense that we didn't sit on it for too long but we are acting on that we are not seeing the pickup that we would like to see.
Graham Doyle: It's simply down to that which for is even stronger execution than what the company is doing right now.
Graham Doyle: They are currently being executed, so we are not able to give you more light until they are done and we will share more information around this in our Q3 call in August .
For more information visit www.FEMA.gov
Speaker Change: Okay, thanks a lot, I really appreciate the color, thank you guys.
© transcript Emily Beynon
Speaker Change: The next question comes from the line of Shubanki, Gupta with HSBC, please go ahead.
Speaker Change: Hi, thanks for taking my question. So my first question is on your wound care segment. Could you give some color on what was the growth in the segment X-carrices and how should we think about in H2?
Speaker Change: And second, on your long-term organic growth targets of 8-10% so which one should we think to be the biggest growth targets there?
Speaker Change: Yeah, so thanks a lot for your questions, let me speak to those. The first question related to our Wunke addressing business, we had a soft Q2 with around a 3% growth.
Speaker Change: It was also impacted by China, so our Chinese home care business had a negative impact on our growth.
Speaker Change: driven by our strong European growth, driven by new innovation, and also partly driven by our US. So we are expecting that the Wuncare addressing business will improve.
Speaker Change: Then to your second question around the long-term growth ambitions.
Speaker Change: As Lars has talked to quite a bit, we are now preparing for a new strategy.
Speaker Change: and here we will speak to the various drivers, areas that we expect to improve in order to deliver on our growth and value creation ambitions in 2030. So we will share more lights on those in September .
Speaker Change: But there's no doubt that a lot of the things that we are currently doing that we will also continue to do and then as last set there are also areas that we need to correct to improve with the growth.
Speaker Change: So yeah, we will share more lights on this at the new strategy in September .
Ms. Koopta, you're done with your questions.
Yes, thank you.
Speaker Change: The next question comes from the line of Marianne Bulot, with Bank of America, please go ahead.
Good morning, thank you for taking my questions.
Speaker Change: And then my second question is on the US chronic care. Could you quantify if there was any kind of customer losses or marketer losses due to the distribution center issue and if you expect any shares regain now that the center is fully up and running?
Yes, let me take those two questions, Marianne, thanks.
Speaker Change: In terms of Tibia, we are running, as you know, the clinical studies and we are expecting to have an outcome of those studies around summer time this year, so I really hope that we will have more insights later.
Speaker Change: driven by the new launches and yes as you know we have some impact or quite significant impact from the delivery challenges we had last year in the second half and into our Q1.
Speaker Change: So we are looking at a housing digit levels in the coming period.
Speaker Change: Thank you. Maybe just a quick follow-up on the first question. Does that mean you expect IU could return to mid-to-high single-digit growth over the midterm if intba is successful?
Speaker Change: and we really hope that we are going to have a thumbs up and then we move into the next phase with the purpose of launching the solution and with the purpose of increasing our growth within Uology in the next strategic period.
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Okay, thank you very much.
Speaker Change: Next question from the line of Lisa Clive with Bernstein, please go ahead.
Lisa Clive: Hi, could you just give us some detail on what the asset right down was about, Apologies if that was published somewhere and I missed it. And then second of all.
Lisa Clive: But you've invested quite a bit on what are very attractive sort of long-term growth.
Profiles,
Speaker Change: Should we assume the potential for a substantial amount of operating leverage in the midterm or is this going to be much more gradual? Appreciate that you've given us some sort of long term targets, but just thinking about the ramp up of profitability over the next years. Thanks.
Speaker Change: Lisa, thanks a lot for your questions. In terms of the asset, the write downs, we have included in the special items. I will also be more specific on that in Q3, Q4.
Speaker Change: We have initiated a number of activities that should improve our march in moving into next year.
Speaker Change: and how we see the financials that develop towards 2030, that's against something we will be more transparent about at the capital markets in September .
Speaker Change: But one key driver at this short term that will be the carousass margin improvement that I talked to earlier, we are expecting a carousass will improve the underlying margin to around 20% already from next year. So that is one of the key drivers.
and just a quick follow-up on China.
Speaker Change: You have an Oscar me business there, Wound Business there, Oscar me a self pay, Wound I understand is almost entirely in the hospital, both have been weak, understand around the consumer. But how should we think about
Speaker Change: Both of those markets really longer term. There's clearly been a lot of price pressure in China around things like BVP. There's also been a big ramp up in local competition. Are you sort of confident in the outlook in China for both of those divisions? Thanks.
Speaker Change: In terms of China, as I said earlier, our assumption has been recently that we were growing around mid-single digit, both in ostomy and wound.
Something around the low-signal digit as I talked to earlier.
Speaker Change: So with that, I would like to say thank you very much for listening in. I hope that we have.
Speaker Change: sort of on the score that we are very confident in our strategy and also our ambitious targets, but we have something to mend when it comes to our execution and I'm confident that we are going to.
Speaker Change: to get out on top of that. So thank you very much and looking forward to meeting you later on this year. Thanks.
Speaker Change: Ladies and gentlemen, the conference is now over. Thank you for choosing course call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
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