Q2 2025 Coloplast A/S Earnings Call
Ladies and gentlemen, welcome to the Coloplast.
First half,
2024-2025 Earnings Release Conference Call
Speaker Change: The presentation will be followed by a question and answer session. You can register for questions at any time by pressing starting one on your telephone. For operator assistance please press start and zero. The conference must not be recorded for publication or broadcast. The presentation will be followed by a question and answer session.
Speaker Change: At this time, it's my pleasure to hand over to the others, Rasmussen, interim CEO . Please go ahead.
Good morning and welcome to our half year 2024-25 conference call.
Speaker Change: I'm Lars Rasmussen, interim CEO of Coloplast, and I'm joined by our CFO , Anna Stonning Skogor, and our MS relations team. We will start with a short presentation by Anna and myself, and then we open up for questions.
Speaker Change: So, I'd like to start by saying thank you, thank you to Christian 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.
Speaker Change: There have been a number of very important decisions in Kristian's tenure and among them the acquisition of actors and kerasis that we are super happy with.
Speaker Change: However, we have not seen the the the evaluation that we have invested for and we have not seen the top line growth that we have invested for either or the or the periods.
Speaker Change: and that is why the Board of Directors they have decided that this is a good time to part with Christian.
Speaker Change: and I would like to underpin that there's no wrongdoing on Christian's sides, but we think that what we need at this point in time.
For more information visit www.FEMA.gov
Speaker Change: We are also preparing a new strategic direction for the company. We are going into a new strategy period.
That work will... [inaudible]
Speaker Change: and you could always ask the question, isn't this for a new CEO to decide?
Speaker Change: Well, I have to say that the primary responsibility for the board is to make sure...
Speaker Change: that there is a not data strategy at any point in time and that has been implemented and executed to the letter. And that means that the new CO coming in will have to take over that strategy and that's just how it is.
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 Coloplast.
Speaker Change: Board Member Jute Jene Nygo Andersen will be appointed Interim Chair for the duration of my tenure as Interim CEO .
Speaker Change: I'm also stepping down from the role of Chief Roman Reisen and nomination committee and member of the audit committee.
Speaker Change: I will remain on the Board of Directors of Coloplast as an ordinary member.
Speaker Change: So I am also looking forward to coming back to Coloplast in the CO role for an interim period. I also hold this period, help this position from 2008.
Speaker Change: 2018 and together with the rest of the Executive Leadership Team, we will continue executing on our strategic goals by volunteering operational excellence and accelerating momentum and creating value.
Speaker Change: 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.
Anders Lonning-Skoggard: All right, thanks last and please turn to slide number 4.
Anders Lonning-Skoggard: Good morning, everyone. We delivered 6% organic growth and then reported a bit margin before special items of 27% in the second quarter. Adjust the return on invested capital after tax and before special items was 15% on par with last year.
Anders Lonning-Skoggard: And after me care on the other hand, we expect to see a rebound in 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 8-9%.
Anders Lonning-Skoggard: As a consequence of the lower expectations on organic growth, we have also adjusted the expectations on the EBIT margin before space elitems to 27 to 28% from previously around 28%.
Anders Lonning-Skoggard: 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 update on the local coverage determination policy.
Anders Lonning-Skoggard: The implementation of the LCD policy for skin 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.
Speaker Change: With that, let's turn to a half-year strategic update. Please turn to slide number 5. [inaudible]
Speaker Change: Let's look at growth first. With our Stripes 25 strategy, we set out to actively pursue M&A opportunities to build growth and re-creation options for the mid to long-term.
Speaker Change: The two most significant investments we made, access medical and caroses, are both performing in line with our expectations with a strong future outlook. [inaudible]
Speaker Change: Next, let's turn to innovation. Last year we initiated a number of product launches in Chromic Care that will support growth during Strive 25 but also beyond this recidic period.
Speaker Change: Luja, our new intermittent catheter with a micro-hole-zone technology, is now the main growth driver in Continent Care, driven by the Mail Product. [inaudible]
Speaker Change: The launch of Lucia for Women is close to being finalized. We are very pleased with the market reception of Lucia and we see the micro-hole zone technology as the next level of standard in intermittent catheterization.
Speaker Change: In Astamikare, we initiated three launches last year, Sensua Mew Blackbacks and two Sensua Mew
Speaker Change: All of these launches are off to a good start. Given the complexity of the ostomy 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 ostomy care.
On sustainability, we continue to make good progress.
Speaker Change: I cross 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, a hit 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 initiative to support long-term value creation.
Speaker Change: We are initiating further copyright and activities which will position us well for the next strategic period and will support profitability improvement beyond this year.
Speaker Change: These additional initiatives will have short-term implication for short-term items with 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 after-mechan, 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: I was into a new portfolio, continues to be the main growth driver, followed by the Brahma supporting
Speaker Change: Al Sensua, Andersua, Elterna, 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, growth is held back by slower, tender activity intellected markets.
Speaker Change: in Consonance Care, Organic Growth for 7% for the first six months, and Growth in Dean's Corner
Speaker Change: In Q2, organic growth was 8% and growth in Danish corner was also 8% [inaudible]
Speaker Change: Growth in the quarter was driven by the male, Luther Ketter, which performs stronger across the key European markets.
Speaker Change: Speedycat, our previous generation of catheters also contributed to growth driven by primarily by solid contribution from emerging markets.
Speaker Change: Our boule-cared business also made a solid contribution to growth driven by a Parisian plus in Europe , while collecting devices posted flat growth.
Speaker Change: From a geographical perspective, growth was broad-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. Thank you very much.
Speaker Change: Royza Respiratory Care posted 9% organic growth for the first six 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 Laundex to me in Q2 was high single digit, and driven by an increase in the number of patients served in existing and new markets, as well as an increase in patient value driven by the poor works life portfolio.
Speaker Change: Growth in Traglostomy in Q2 was double dated and driven by continued solid demand. [inaudible]
Speaker Change: From a geographical perspective, all regions contributed to growth driven by Europe and the U.S.
Speaker Change: In Iran's uncare, organic growth was 11% for the first six months, and growth in Danish
Speaker Change: In Q2, organic growth was 10% and growth in Danish corner was 1% [inaudible]
Speaker Change: Caresis was the main growth contributor in advanced food care, with continued solid momentum and growth of 30% in Q2 and 31% in the first six months.
Speaker Change: Growth in the quarter was brought based with solid contributions from inpatient and outpatient
Speaker Change: Kyrgyz's operating profit, Martin, excluding PBA amortization was 12% in the quarter and in the first six month in line with the expectations.
Speaker Change: The advanced wound dressing business grew 3% organically in the quarter and also 3% in the first six months.
Speaker Change: and 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 last year.
Speaker Change: From a product perspective, biotensilicone, biotens fibre, and the newly-lawned biotensuba absorber were the main growth contributors in the dressing segment.
Speaker Change: In intimate spirituality, organic growth was 0% for the first six months and growth in Danish
Speaker Change: In Q2, organic growth was negative 1% and reported growth in Danish corner was 1% [inaudible]
Speaker Change: which was above our previous expectations. The higher than expected impact in the quarter was due to a higher level of customers lost than initially expected.
Speaker Change: The negative impact of the product recall in Q2 was only partly offset by positive growth contribution from men's self, women's self, and the duality business.
Speaker Change: From geographical perspective, the U.S. was the main growth, the contributor in Q2 while Europe detracted from growth due to the product record.
Please turn to slide seven.
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: Gross Prophet for the first six months amounted to 9.5 billion Danish Kroner, corresponding to a gross margin of 68% on power last year.
Speaker Change: The gross margin was positively impacted by favorable development input costs, price increases and country and product mix, partly offset by ramp up costs at our manufacturing sites and cost
Speaker Change: The glass margin also includes a small positive impact from currencies of around 10 basis points.
Speaker Change: Operating expenses for the first six months amounted to a 5.7 billion Danish corner at 6% increase from last year.
Speaker Change: The distribution to sales ratio for the first six months was 33% compared to 32% last year.
Speaker Change: The distribution costs also include around 30 million Danish corner extraordinary 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.
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Speaker Change: The R&D to Sales Radio for the first six months was 3% of sales on power last year.
Speaker Change: Overall, this resulted in an 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: Financial item 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, driven mostly by interest expenses related
Speaker Change: The Ordinary Tax Expense in the first six months was 17 million Danish coroner with an ordinary tax rate of 22% on par with last year.
Speaker Change: Adjusted for the carousel's IP transfer and net profit before special items in the first six month was 2.7 billion Danish
Please turn to slide number 9.
Speaker Change: The underlying development in the operating caseload was positive driven by most driven mostly by lower income tax paid and an increase in operating profit.
Speaker Change: Casplo from Investing Activities was an outflow of 442 million Danish Corona, compared to an outflow of 554 million Danish Corona last year. Capix in the first six months was 4% of sales on par with last year.
Speaker Change: As a result, the free caselo 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 access medical IP transfer last year, the adjusted free cash flow for the first six months, was an inflow of 2.1 billion days corner on 80% increase compared to adjusted free cash flow last year.
Speaker Change: The trailing 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 five Danish Corona PCR, corresponding to a total interim dividend payout of approximately 1.1 billion Danish
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: Growth in Interventuality is now expected to be around zero percent. [inaudible]
Speaker Change: A slowdown in China to losing the digit from previously around mid-signal digit impacted by consumer segment and mostly relevant fostering care.
Speaker Change: High uncertainty related to timing of tenders in emerging markets, most related to ostomy care.
Speaker Change: The assumptions on their remaining business areas are largely in line with the expectations laid out in November 24.
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 two percentage point negative impact from currencies related to a weaker US dollar and around 1.5 percentage points negative impact from the skin care department. [inaudible]
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 in line with the expectations laid out in November 24.
Speaker Change: He would also like to mention that our financials include an assumption that impact from the US tariffs will be immaterial.
Speaker Change: In terms of facing, we expect a gradual improvement on both organic growth and EBIT margin in the second half of the year compared to the first half of the year.
Speaker Change: For 24.25 I now expect around 450 million Danish corner in special items. The additional special items are related to additional profitability improvement initiatives to benefit us beyond this financial year and a write down of assets. [inaudible]
Speaker Change: The net financial expenses for 24.25 are still expected to be around 800 million Danish corners impacted by the U.S. dollar impacting our hedges.
Speaker Change: Before going into the Q&As, I would also like to thank Christian for a strong collaboration and teamwork in the last 17 years.
Speaker Change: of which more than a decade under the Executive Leadership Team. So, thanks a lot to Christian.
Speaker Change: All right, with that, thank you very much. Operator, we are now ready to take questions.
Speaker Change: We will now begin the question and answer session. Anyone who wishes to ask a question may press start in one on their telephone.
Speaker Change: You will hear a tone to confirm that you have entered the queue.
Speaker Change: If you wish to remove yourself from the question, kill your May press, start in two. [inaudible]
Speaker Change: in the interest of time, please limit yourself to two questions. Anyone who has a question may press star in one at this time. The first question comes from the line of Jack Reynolds Clark
Jack Reynolds-Clark: Hi there, thank you for taking the questions, a couple for me please. [inaudible]
Speaker Change: We're one to you, Lars. What do you think needs to be improved to drive the kind of value creation and top line growth that you committed on in your opening statement today?
Speaker Change: and then one of FERPA Anders on bladder health. Why has the recovery here been slower than you expected? 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 thanks you to Christian for leading the company for the last seven years.
Speaker Change: Modicisiveness in the management team, so we need to make decisions that that [inaudible]
Speaker Change: who benefits the top-line growth of the company. If you look at the numbers that has been presented in this...
Speaker Change: 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, it's not something to do with Etos and Kerases. It's more broad-based, actually both Etos and Kerases are delivering on the business case that we...
Speaker Change: Head of 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: So, as you might recall, we unfortunately had this recall, it started out in December . Good news were that we were back in the market from February .
Speaker Change: But we have not seen any improvements yet. So that's also why our Q2 number was sitting around the 0% growth and our April trading is still not looking in our favor.
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.
Nils Granholm-Leth: Thank you for taking my questions. Last can you talk about the candidates that you would evaluate? So would that include both internal and external candidates?
Speaker Change: for the CEO role. Secondly, since you're still planning to host this CMD on the 2nd of September , would that also include launching new financial targets for the coming five-year periods? Thank you.
Speaker Change: So, if we had an obvious in certain candidate, we would have presented that person today.
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.
Speaker Change: Research at any internal candidate that might be interested in pop-up, they will of course be part of that search.
Speaker Change: But that's how it is at this point in time. On the capital market days, we are going to do a full-fledged strategic work that we are going to present there with everything that goes with that.
Speaker Change: So including an update to your financial targets for the coming five-year period.
Yes, that's correct.
Speaker Change: and do you think some of this lowdown 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.
So 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.
Speaker Change: That can happen. And no one is being laid off because of a profit warning. What we have looked at is
What are the external explanations for the weaker performance? [inaudible]
Speaker Change: and what are the interim ones? We think the board was of the perception that...
and a lot of it was internally driven. [inaudible]
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: and that last year and that impacted this year's growth. We are confident that that will come back in Q-3 and Q-4.
Speaker Change: Secondly, we have also this year some tender-facing activities going on within emerging markets. So we have, you can say we are expecting a strong emerging markets growth in the second half of the year, but that also impacted our Q2.
And then finally the third explanation, that is China. [inaudible]
Speaker Change: So, as you might recall, we have for some years now been looking at a growth in China, an ostomy around mid-single digit.
Speaker Change: We are now seeing that the growth in China is coming down to a low single digit and within Austin, 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.
and we will again take market shares.
Speaker Change: because the underlying mark growth is sitting around to the 4% and this will also be driven by the new innovation that we have launched over the last year so we are confident that our astronomy will improve in Q3 and Q4.
Thank you very much.
Martin Parcoy: The next question is from the line of Martin Parkhi with Tab, please go ahead.
Yes, and my friends Hacker from SCC. [inaudible]
Martin Packer: Life You Never Lift, and 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?
Martin Packer: You know, further restructuring even a kitchen sink to repair a new setting for an upcoming CEO .
So, thank you Martin and I will take the first one [inaudible]
Martin Packer: 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.
Martin Packer: Of course they don't come out of nothing, or out of the blue, so the most important thing.
Martin Packer: that is seen as superior when we are looking at product quality and service levels, because that is what it takes to grow above the market.
Martin Packer: 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 markets.
Martin Packer: When we look at the products that we are bringing into 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...
Martin Packer: You should not expect special items to continue at this level into next year. Next year will be the final year of integration and it will be at a significantly lower level.
Thank you very much.
Speaker Change: Hi, yes, thank you for taking my questions. I would like to continue with Martin 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. Thank you very much.
Speaker Change: Annabling you to grow where you're growing and without that you might have seen a deceleration from the 7% 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 and this is clearly for a metacompany the number one thing to focus on. Thank you.
Speaker Change: I asked her in anything else with regards to quality that we should be picking up here because to my understanding it was the packaging in intervention neurology that was.
Speaker Change: 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, let me take the last one first because, yes, you are absolutely right.
Speaker Change: Equality issue that makes you not deliver or a kind of a hiccup in your, in the way that you operate your distribution, it ends in the same situation that the customers do not get the products that they order.
You can't...
Speaker Change: The vulnerable users at the end of the whole value chain. So, it was not implying that there are any quality issues or flaws that you should be nervous about. We have to all do everything that you 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.
Speaker Change: You started the call saying, Coloplast 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.
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, when I say that we have invested, we have invested...
Speaker Change: There were some billions in acquiring two high-growth platforms to the company, our companies with Elthos, Ayn Kereches, [inaudible]
Speaker Change: You could say that the base business of the company is not going to the June that we have invested for.
Speaker Change: and that's the problem. So is that 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.
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: The board dictates any targets for the management team. It is the management team's expectations of what they can do with the company that we are looking at. And they should be ambitious, of course. And we are happy that they are.
Thank you.
Speaker Change: The next question is from Anchal Verma with JP Morgan, please go ahead.
Anshul Verma: Hi, good morning. One for you, Lars. Does the fall-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% a bit more than by 2526. That's next year.
Anshul Verma: and margins for carriages this quarter, which 12%. So there's a lot more to do there. Could you share some more light on the underperformance of the margins there? And how should we be thinking of the carriages margin expansion going forward? 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 H1? 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 H2? Yeah.
Anshul Verma: Thank you and Ansel for your question, Christians. So if you take, if we take the textbook
Anshul Verma: Now, this is not according to textbook at all because it's it's always preferable that [inaudible]
Anshul Verma: that the sitting CEO is proposing the targets for the next strategic period.
so
If we were to...
Anshul Verma: Wait until we have a new CEO and that new CEO would be somebody from outside.
Anshul Verma: Then that would also be reasonable that a person like that would have to spend at least half a year, maybe nine months to form his own opinion of the company and then craft a strategy.
Anshul Verma: It could mean that we would be two years without... [inaudible]
Salli Stratidic Direction. [inaudible]
We can't have that. So it will be...
Anshul Verma: It would be like this, we are creating a strategy and that would be created of course in the Executive Management team.
Anshul Verma: and the 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, or that we have decided.
Anshul Verma: The first task any board has is to make sure that there is an ambitious strategy and that it is being implemented and executed on. That is the task that the board has. We cannot be without it.
Anshul Verma: Yes, and to let me take your second question related to carousel's margin improvement.
Anshul Verma: And yes, as you mentioned, our ambitions for caruses when we acquired the company was a kick-a-growth of 30% over a three-year period, and improved the underlying EBIT margin to 20% in 25-26.
Anshul Verma: So we are looking at the 20% when we finish next year.
Anshul Verma: Please also remember that we are not expecting to hire a lot more people in the back office functions. It is really in the front line where we are hiring people to drive the growth agenda.
Anshul Verma: So it's really scale that the needs to drive the margin improvement in the carousass business.
Anshul Verma: Two-year-second, or your third question around OstemiCare, as I mentioned earlier.
Anshul Verma: We have some tender-facing in emerging markets between the first half of this year and the second half of this year. It is something we have also seen in the past.
Anshul Verma: The specific markets in the emerging markets, one of them is Russia, there's also some attempt activities going on in the Middle East.
Anshul Verma: 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 urgent markets to grow for positively.
That's very clear. Thank you.
Anshul Verma: The next question is from Graham Doyle with UBS, please go ahead.
Speaker Change: Or I suppose the concern, is there something else that's happening, and maybe if you didn't make this change, you feel like the situation could deteriorate further. I think people just like reassurance on that front. And then maybe just a quick one, you flight 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 in the second half. Thank you.
Thanks, Graham, so yes, it is a big change.
Speaker Change: And no, it's not an easy decision when that kind of change.
Speaker Change: Is that a disaster? No, it's not. This is something that we can definitely correct for.
Speaker Change: Do we have the confidence at the board level that it's going to be significantly different if we don't do something about it?
Speaker Change: No, we didn't think that and once you have had that... [inaudible]
Speaker Change: Some of the Christians that I have gotten this morning from, [inaudible]
Speaker Change: Journalist, why don't you just make a search and then announce this at the point in time where you have somebody ready?
Speaker Change: You do that. You will start contacting a number of people in the markets. This is a listed company and there can start to be rumors.
Speaker Change: and we would have to be not completely honest and straightforward and the same would go for Christian. We didn't think that that was the right way to do it and it was not in any way a good way for Christian to stop and for us to stop the collaboration with Christian. [inaudible]
So yes it can seem as if it's abrupt.
Speaker Change: 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.
Speaker Change: And that's what it is. There's nothing hidden. There's nothing that we have discovered that would have blown up if we didn't go about it or something like that. It's simply down to which for is even stronger execution than what competence is doing right now.
Speaker Change: 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 .
Speaker Change: Okay, thanks a lot. I really appreciate the color. Thank you guys.
Thank you.
Speaker Change: The next question comes from the line of Shubhangi Gupta with HSBC, please go ahead.
Speaker Change: What, which one should we think to be the biggest global fan?
Speaker Change: Yeah, so thanks a lot for your questions, let me speak to those. The first question related to our Wunkeh addressing service business.
We had a soft Q2 with around 3% of their growth.
Speaker Change: We are also expecting our dressings business to improve in the second half of the year.
Speaker Change: Then to your second question around the, you can say the long-term growth ambitions.
Speaker Change: As last has talked to quite a bit, we are now preparing for a new strategy.
Speaker Change: But there's no doubt there are 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 people see more lights on this at the new strategy in September .
Miss Gupta, you're done with your questions? [inaudible]
Yes, thank you [inaudible]
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?
Let me take those two questions, Marianne, thanks.
Speaker Change: In terms of Intibia, 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 had 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 yeah, we are looking at a housing digit levels in the coming period.
Speaker Change: Okay, thank you. Maybe just a quick follow-up on the first question. Does that mean you expect are you could return to mid-to-high single-digit growth over the midterm if intibia is successful?
Speaker Change: Right now we are in the middle of, or we are coming to an end of the clinical studies.
Speaker Change: 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.
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 write down was about, Apology, that was published somewhere and I missed it. And then second of all.
Lisa Clive: Profiles. 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 year, thanks.
Thank you.
Lisa Clive: in relation to the second question, how we see the margin of profitability improve over the coming period.
Lisa Clive: and how we see the financials that develop towards 2030, that's again something we will be more transparent about at the capital market in September .
Lisa Clive: But one key driver in this short term that would be the carousass margin improvement that I talked to earlier. We are expecting a carousass will improve with 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.
Lisa Clive: 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: Yeah, so 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.
Speaker Change: But it's really in the consumer and it's really the consumer sentiment that has impacted our growth and we are now looking at something around the low single 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.