Analyst ahead of Coloplast full-year report: Focus will be 2021/22 guidance

Expectations for the financial year of 2021/22 will be the center of attention when Coloplast releases its 2020/21 financial report.
Photo: Coloplast / PR
Photo: Coloplast / PR

The focus of the upcoming full-year financial report from Coloplast will be next year's guidance, says Senior Analyst at Sydbank Søren Løntoft Hansen.

The prognosis is expected to be in line with the company's long-term plan, Strive25, containing the goal of an organic growth rate of 7-9 percent and an EBIT (earnings before interests and taxes) margin of over 30 percent.

The analyst sees a continued uncertainty about the Covid-19 impact, even if the fourth quarter is expected to see increased results caused by vaccine rollouts and the reopening of non-essential operations and additional patients, which could reflect positively in revenue.

"Good cost management will reduce the growth in capacity costs when it comes to topline growth, which should contribute to increased profitability," the analyst writes.

Løntoft is anticipating that Coloplast will release a guidance for the next skewed fiscal year with an organic growth spanning 7-8 percent and an EBIT margin of 32-33 percent.

The greatest source of uncertainty continues to be Covid-19 and the implications of the pandemic.

Decreasing Covid-19 impact

Coloplast's ostomy care division has in the past few quarters been affected by a limited patient pool, particularly in the UK and US due to Covid-19.

This has led to increased stockpiling at retailers, which had to be solved.

The Sydbank analyst is expecting that the market conditions for the divison have improved in the fourth quarter, as vaccines have been rolled out.

It will likely be the new product generation of ostomy bags, Sensura Mio, driving growth, he says.

He also expects an organic growth for the division of 9 percent and a revenue of DKK 2004m (USD 313m) in the fourth quarter.

The urology division is also reaping the benefits of an improving world situation, which has seen the return of more non-essential surgeries. This is expected to contribute to an organic growth in the division of 14 percent and a revenue of DKK 543m (USD 85m) in the quarter.

Continence continues to be driven by Speedicath

Coloplast's Speedicath catheters are expected to drive the growth of the company's continence division, where sales of the type Speedicath Flex are thought to be likely to contribute positively.

The division has seen an improvement of market conditions, which had led to more patient access, writes Løntoft Hansen. Moreover, it makes for an easy foundation for comparison, which is reflected in the growth.

The bank thinks a fourth quarter growth of 7 percent and a revenue of DKK 1821m (USD 285m) is likely for the division.

For the last Coloplast division, skin and wound care, improvements are expected.

"We hope that more hospital activity after Covid-19 will drive the growth of wound care products," writes Løntoft Hansen, adding:

"We also expect an increasing demand for skin care products, including a positive contribution from Compeed contract production."

Growth in skin and wound care are expected to be drived by Biatain Silicone and the Biatain Fiber portfolio, and the division can according to the analyst's estimate look forward to a growth of 9 percent and a revenye of DKK 644m (USD 101m) in the quarter.

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