Highlights
· Organic revenue growth was 6%. Revenue in DKK was up by 3% to DKK 3,755m.
· Organic growth rates by business area: Ostomy Care 6%, Continence Care 5%, Urology Care 8% and Wound & Skin Care 5%.
· As expected, growth in the US Chronic Care business was adversely affected by inventory reductions at large distributors, and inventory levels are now back to normal.
· The South Korean healthcare authorities have enhanced subsidy schemes for intermittent catheters effective 1 January 2017 to cover approximately 25,000 South Koreans.
· The acquisition of US distributor Comfort Medical was approved at the end of December at a value of DKK 1.1bn.
· Management estimates that more than 95% of the lawsuits in the US alleging injury resulting from the use of transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence have been settled at the date of this report.
· EBIT was up by 3% measured in DKK and 8% at constant exchange rates, to DKK 1,226m. The EBIT margin was 33% at constant exchange rates, against 32% last year. Measured in DKK, the EBIT margin was 33%, which was in line with the year-earlier period.
· The net profit for the reporting period was up by 15% to DKK 946m, while diluted earnings per share were also up by 15% to DKK 4.46.
· The free cash flow was negative at DKK 833m, DKK 1,664m less than in the same period of last year. Adjusted for payments made in connection with lawsuits alleging injury resulting from the use of transvaginal surgical mesh products and the acquisition of Comfort Medical, the free cash flow was an inflow of DKK 1,439m against DKK 1,284m in Q1 2015/16.
· The second part of the share buy-back programme totalling DKK 1bn running until the end of the 2016/17 financial year is expected to be launched in Q2 2016/17.
Financial guidance for 2016/17
· We expect revenue growth of 7-8% at constant exchange rates and of 7-8% in DKK.
· We expect an EBIT margin of 33-34%, at constant exchange rates and of about 33% in DKK.
· Capital expenditure is expected to be about DKK 700m.
· The effective tax rate is expected to be about 23%.
