Soaring inflation, on especially raw materials and energy, is a key point of interest for Coloplast in 2023. The Danish medtech group is also hoping for better times in China after Beijing opted to ease the strict anti-contagion restrictions that have curbed growth across several Coloplast divisions during this year, CEO Kristian Villumsen maintained in relation to Coloplast’s year-end report published on Nov. 7.

Energy – and costs thereof – has produced stiff headwind for Coloplast’s outlook in 2022 – also marking the company’s first real instance of trouble with the matter.

”Energy is costing us a lot of time as of late. In the old days – before Covid-19 – energy was purchased for EUR 50 per MWh,” the chief exec explains, with energy prices in 2023 hedged at an estimated EUR 400 per megawatt hour.

Also increasing raw material prices entered a double-digit inflationary environment this year.

Light, however, glows at the end of the tunnel, with freight rates now simmering down following unprecedented spikes during and after the pandemic, while energy prices have yet to hit EUR 400 per MWh as expected by the Coloplast CEO.

Soaring inflation has cautioned Coloplast to curb gross margin outlook for 2022/23.

Here, the medical technology company expects organic growth in revenue of 6-8& and an earnings margin before interest and taxes of 28-30%. Coloplast thus risks booking an operating margin well below company’s own long-term strive25 ambitions entailing and EBIT margin above 30%.

Chinese upswing overdue

Coloplast also continuously monitors developments in China after having seen a negative impact on both Ostomy and Wound Care businesses as a result of the Beijing’s Zero Covid policy.

Since the annual report, the Chinese government has eased some of its demands regarding quarantine and testing.

It may take some time for policy changes to take effect, and Coloplast has yet to see any impact from the development.

”Naturally, we continue to closely monitor developments, but our assessment remains unchanged. A substantial part of our workforce is still quarantined and unable to move around, access to hospitals is limited and as expected, fewer operations are carried out than before the pandemic,” Coloplast tells MarketWire.

Through its large sales force in China, Coloplast has a reliable insight into activity levels in the market. The annual report showed no signs of betterment in terms of daily, weekly and monthly growth of new patients, Villumsen stated.