Coloplast A/S (COLOB) Earnings Call Transcript & Summary

Good morning to those of you here in the room, and also good morning to those of you joining us virtually today. On behalf of the Coloplast management team and on behalf of Investor Relations, I would like to welcome you today to our Capital Markets Day 2025. Before we hand over to the presenters for the plenary session, I would just say a couple of words on the -- today's agenda. If we can move to the next slide. Sorry, I have the clicker here. Perfect. Here we go. So the next around 2 hours, we'll all be here together to hear the plenary session, which will cover the group strategy, the group financials and also the strategy for the Chronic Care Commercial business unit, which is the newly established business unit. We will have a short lunch break of around half an hour. And after this, we will divide into 4 groups for the breakout sessions. So please check your name [ tag ] to see which room you're in. Some of you will have to stay here in this room, but the rest of you will actually need to go upstairs on the first floor. And you can always find the Investor Relations team or our Coloplast colleagues to lead you to the right room. I would also add that the presentations from the day are available on the QR code that you have on your name tag. So feel free to scan this to download the presentations. The breakout sessions will last between 1:00 to 5:00 with a couple of breaks in between. And after that, we will meet again downstairs here for the dinner for those of you that are joining the dinner. Finally, the dinner is ending at 6:30, but if you can, please stay also for longer. Coloplast representatives will be there for a little bit longer, so you get also an opportunity to network a bit in an informal setting. So I think that's pretty much it for now. With that, I would like to invite our Interim CEO, Lars Rasmussen to the stage. Lars, over to you.

Thank you very much, and good morning. It's very nice to see all of you here in Copenhagen. I have tried to be on many CMDs, but this is the most well attended. So we are looking very much forward to this. The strategy that we are about to present has been in the making for a bit more than a year, and we are super excited about it. So I hope that you will be that also at the end of the day. So what I'm going to -- or the way that I'm structured, what I'm going to say is, first, I will talk a little bit about our foundation, what kind of company are we, what kind of heritage are we sort of jumping from with this strategy. The next one is that I'll address the current challenges that we are having in the company. And then finally, of course, introduce you to the maybe high level, the new strategy for the next strategic period, the next 5 years. So the company is soon 70 years old. And throughout the years, our mission, our reason for being has been to make life easier for people who have an intimate health care need. And it is a truly purpose-driven organization, and that is still so also for the coming period. So these are the product areas. The company is founded on Ostomy, as you all know. For many years, that was the business area. When the company was listed, the proceeds from the listing was -- some of it invested into new subsidiaries and some were invested into creating 2 new business areas, Continence Care and Wound Care, and they have been founded and also grown organically. And then we have Interventional Urology, which is part of the acquisition of Mentor back in 2006, Voice and Respiratory Care, which is a more recent acquisition and on the Wound Care side, also Kerecis with Biologics. So those -- that's the composition of -- on the product side. And then also on the commercial side, we have invested over the years quite heavily in getting close to customers and closer to customers, especially on the chronic care side. And it's a growth journey. It's an amazing journey for the company. We have sort of chosen to show you from just before 2000 and then up to now. Back then, we had sales of DKK 3 billion. And at this point in time, it's almost 10x that, most of it organic growth and also with a nice profitability development over the years. So a pretty strong foundation that we are standing on walking or stepping into the new strategic period. So just to give a bit more background to what we are coming out of. And I'd like to start at the bottom of the slide. So if we take the environment, what have changed over the years since we started the strategy that we are now closing down, Strive25 in 2020. We had compared to now, very stable geopolitical environment. We had low inflation and low interest rates, small negative to neutral impact from pricing and also, of course, at that point in time, technology was also important. But still, that was the outset. That was in that kind of context, the strategy was formed. And then fast forward to 2025 and the strategy that we're now launching. So we have a very different geopolitical situation. We have a new reality in China. China was a growth platform for Coloplast. We had invested very, very heavily in China to take part in the market. And that's a very different situation now. It's definitely not a growth platform anymore. And now we have had in the period, high inflation and interest have also changed. And now it's stabilized within the last couple of years, but it sits in the numbers. We have a positive pricing impact, maybe a surprise that that's what we see. I know that we are going to discuss competitive bidding and so on and so forth later on. But we actually see that the market is sort of accepting that prices also have to go up, and we have also learned how to work the categories so that we do see and expect a stable-to-positive pricing environment. And then on the technology side, AI is, of course, a major enabler in many instances in the strategy period that we are stepping into now. On -- if you look at the company, in 2020, well, basically, all of Coloplast has been an organic growth journey, small bolt-on acquisitions, but very small actually. And quite a monoculture in the company. And at that point in time, U.S. and China were key growth markets. And then, of course, in the period, there has been a lot of focus on crisis management. Everybody have been through COVID-19, both companies, but also us as individuals. We also had a pretty concentrated manufacturing footprint at that point in time and an EBIT margin above 30%. And now we have added 2 business areas since through M&A. We also feel that the cultural diversity in the company has gone up. U.S. has become more important, obviously, since China has sort of diminished in importance. And we also -- due to our learnings on the supply chain side, we have also diversified our manufacturing footprint. And then we have been challenged by a number of things that I will come back to and so will Anders. So this is -- these are what we are going for in Strive25, 8% to 10% organic growth per annum and more than 30% EBIT margin. And we have not delivered in full on this strategy. We are quite aware of that. But let me come back to what we do going forward. So if we -- if I speak a little bit about the current challenges. So on the revenue side, we have suffered quite a bit on the Urology business due to a recall of some standard catheters, but it was sitting pretty heavily in our sales. And also recently on Advanced Wound Dressings. And it's for 2 different reasons. The Urology part was a sort of a sterility barrier that was compromised. So that was a true product recall and the Wound Care situation in China basically is a situation where there is a very special norm for China only that have led us to take the products out of the market because it comes with a very heavy fines if we keep it in the market without being able to live up to those technical standards. And there's absolutely no problems with the products, and there's no product complaints and so on. So it's a very different situation. But that's what we have right now. And we have mitigated the situation in Urology, and we are a bit more -- we are putting more question marks on how to mitigate the Chinese situation, but some mitigation is taking place. Then there is a strong focus on execution across Chronic Care and delivering on current innovation. I'll also come back to that a little later or at least repeat it. But going into this strategy period, we have the strongest product pipeline going into any strategy period that I can remember for the Chronic business. We have Luja catheters on the Continence Care side, and we have a number of new products also on the Ostomy Care side that are pretty big. So that we feel really, really comfortable about. On the profitability side, we have divested Skin Care. That was a low-margin business that was really not at the core of the company any longer. And we have run a pretty large profitability improvement program on Wound Care. We are reorganizing China as we speak. We are taking the company from being organized for growth to being organized for a new reality, which means that we will be significantly fewer people. Of course, the -- what happened in IU also had an impact on the cost side, and we have some layoffs in Europe on that. Then we are integrating Atos Medical, which is having an impact on the -- of course, on the cost side as planned. And then, of course, we are pruning our portfolio as we always are. So that was kind of the status. And then I would like to move into presenting the new strategy for you, but high level because the rest of the day will be about what are we going to do, and you'll also have a very good chance to meet the people who are going to make things happen in the new strategy. So if we take the market that we work in. So we have a market size in the businesses that we're in of more than DKK 100 billion. And we have a super strong position, especially in the Chronic segments. This one is a copy paste for the last 25 years because this is the fundamentals in our market. So what is driving our demand up is still demographics and emerging markets and what is holding us down to earth is health care reforms and surgical and medical trends. And this really goes to show how stable the market is because these -- those of you who have been following us, I don't know how many times you've seen this, but many. And we have decided now to create a different structure in the company. So the company is going forward for this strategic period and probably for a very, very long time, we are going to be split into 2 business units. One is Chronic Care, 75% of the business are more or less DKK 20 billion and the other one is Acute Care. And in Chronic Care, we have Ostomy and Continence, Bowel Management, Voice and Respiratory Care. They share a lot of commonalities, and they are very much about giving the users, the patients, a good experience and experience where they feel comfortable with Coloplast and where they know that they have a friend in darkness, they can always rely on us. And then we have Acute Care which is a Professional segment, where the people who use the products on a daily basis, they are health care professionals. They have a choice every single day, whether they want to use our products or somebody else's, and they have full visibility on all products that exist in the market. So a very different same situation, a very different cultural dimension that you have to it when you operate in that field. And we think that we become a stronger company because we become more inclusive by being able to host different cultures in our company. It's been very much a chronic care environment. And if you are in Chronic Care, then you are better than everybody else because that's the foundation of the company. But it, of course, also means that Urology Care, to a certain degree, Wound Care and also Kerecis that operates on the right-hand side of this. They -- we simply give them an environment which is different from the -- an opportunity to create an environment, which is different from the chronic care environment. And we think that's a prerequisite for the growth that we are going to have going forward because it needs to -- we need to be able to reflect the outer world in our inner world in Coloplast. That also means that we have organized in a different way. So I take again the bottom of this slide first. We have Chronic Care on the right-hand side and Caroline Vagner Rosenstand, who speaks just in a little while, is responsible for everything to do with Chronic Care on the Commercial side. And then we have a new member of ELT on -- which is Rasmus Just, who will be Chronic Care R&D. This is the first time we have R&D in the executive management in Coloplast. And I'll come back to why we have chosen to make that change. And on the Acute Care side, we have a new member of ELT, Fertram Sigurjonsson, who is the founder and creator of Kerecis, running Wound and Tissue Repair. And then Thomas Johns, who is still running Urology Care. So he was also in executive management before, but they together make up the Acute Care part. And then on the top, you have people in the executive leadership team who goes across all of the business units. So it's apart from myself, Anders, our CFO; and Dorthe Rønnau, who is people and culture; and Allan Rasmussen, who is heading up operations. So that's the team. And Impact4 is called Impact4 because the ambition is to serve 4 million customers. Today, we are above 2 million. So it's a doubling. We will not do all of that in this strategic period, but that's the ambition. And let me just give you a flyover of the 4 most important areas that we work on, our strategic priorities, and then I'll take a deeper dive after this. But the first one is to set the standard of care and on the customer side. So even though it is a customer-centric company, it's going to be significantly more customer-centric going into this period. We're going to work a lot with efficiency and have a number of initiatives running there. We are going to work even further on technology. And then we are going to underpin all of this with a major drive on our leadership culture, the culture of the company. So the first one to grow through innovative customer offerings. On the chronic side, as I mentioned before, we have the strongest product offering ever going into a strategic period here with SenSura Mio and Luja, but also Provox Life in Voice and Respiratory Care. And we also will have on the Acute Care, we are going to -- as we are combining Wound and Tissue Repair, we're going to step up significantly innovation also in the legacy business of Wound Care in the company. And you'll meet Fertram a little bit later today, but Fertram is an innovation or product innovation champion that you rarely see, and he already have very big plans for this area. And then we -- in this plan period also in Urology Care, we will double down on the Wound Care side or the women's health side in this with the launch of Intibia for overactive bladder. On the efficiency side, as you know, we lost a little bit on gross margin in the plan period that we are coming out of. And that's due to labor or wage inflation, but also due to increasing cost prices. So we are going to win some of that back in this plan period. So we have a new strategy for global operations, which is also gross margin accretive. We have a major drive on complexity reduction. We are going to finalize the integration of Atos Medical and Kerecis to drive synergies. And then we are going to drive scalability in Coloplast business support. So Coloplast has a huge business support center in Poland. We have centralized a lot of our business support tasks. So that's a pretty obvious thing to AI that. But we are also going to create a new center in Costa Rica to be in the same time zone as our U.S. market for a lot of the services that the business support center is delivering. And then we are going to take a major drive on AI, both to enhance the customer service, the way that people are being handled in our direct response with them and also to drive efficiency improvements across the business. And it is a 5-years dedicated technology program with several hundreds of millions set aside to get the most out of this business opportunity. And then finally, to support all of this, we are putting even more focus on the leadership development in the company to make sure that we are staying and creating an even more high-performing and customer-centric company. And last but not least, we have a lot of efforts on the sustainability side of the company because we are making single-use devices. And it's really a challenge for us to take it to the next level on sustainability because that means that we have to go into more standardized materials. That's one of the challenges that we are facing right now, how do we find a way to be more sustainable. We cannot start to deliver or to develop materials ourselves. We need to rely on our vendors to do that. And to do that, we need also to be more standardized in our material choices. So there's a number of things that goes into that. So summing this strategy up, we have strong innovation going into this strategic period. We have a couple of new companies that we are now maturing inside of the company. So that gives us a very solid foundation going into this strategic period. We have organized for it. So as you all know, structure follow strategy. And so that is in place. And I'm super proud of the team that I'm with today, and you're going to meet all of them. So I know that you'll understand why I'm saying that at the end of the day. We are going to double down, especially on the experience that the customers are having. It is not -- it's not like it's something is broken today, but we have not utilized all of the new technologies that can be utilized in order to give people a first-class experience when they call into us. And there's a lot of efficiency hidden in that also because a lot of what we do today is super manual. And we are solidifying the market-leading positions that we are having simply because we have stronger products, but we're also supporting that with better service. And then Wound and Tissue Repair, that's a new thing. And we are going for a very large share in this segment and high growth. And then we are coming back on track with Urology and launching Intibia. So that altogether, we think that's a super strong foundation for this current strategy, which leads me to our financial ambition. So we are, in a sense, downward adjusting our top line ambition from 8% to 10% to 7% to 8% 5-year CAGR. We basically acknowledge that the world has changed. And to go -- to stand here in a geopolitical environment that is so unstable as we see right now, taking the company from something that's like DKK 30 billion to DKK 40 billion in the strategic period and do that with an ambition to grow 7% to 8% organically per year. It might have been a weak ambition years back. We think where we are right now is a super strong ambition. And super hard to find companies that can grow from this scale with 7% to 8% growth every year and by the way, outgrowing the market every single year, super strong. The absolute EBIT growth in line with or above the current or the revenue growth over the period and then return on invested capital of more than 20% in the outer year in the strategy. That's what we are convinced that we are able to deliver. We think it's ambitious and doable. Thank you very much. So could you please put on the video? [indiscernible] sorry about that. [Presentation]

Thanks, Lars, and good morning, everyone. My name is Anders, CFO at Coloplast, and I've been in the role since 2014. I will basically start out a little bit around current trading, a little bit around how we have seen Strive25, and then I will move in and speak to some of the assumptions that we are focusing on towards 2030. We released our Q3 results a few weeks ago, and we delivered an organic growth of 7% and an EBIT margin of 27%. So in line with our expectations after we adjusted the guidance back in May. So we're also confirming this year's guidance of around 7% growth and an EBIT margin between 27% and 28%. But as we also discussed back in May, but also here in August, it has been a more challenging year than we normally see in Coloplast. We have had a couple of challenges around the recalls that Lars also talked to, especially within Urology and within Wound. But on the other hand, I also think we can be very satisfied with the growth we are seeing, especially in Continence, driven by the Luja and the innovation. And I can -- I also think we can be very satisfied with the acquisitions, especially the acquisition of Atos. In terms of our margin, we are ballpark within we had anticipated. And in general, we are prudent on the way we are working with our cost base. Over the period, as Lars also referred to, it has been a mixed bag. And I will only speak to some of the main changes compared to when we launched the Strive25 back in 2020. As you can see, the growth over the period has been sitting around 7%. We grew 7%, 6% in the beginning of the period impacted by COVID. So we had quite a big impact on our Urology business. Our Chronic business was actually growing okay. But the big assumption change was really China. We actually anticipated back then that China would be around double digit, but it turned out to be -- right now, it's sitting at low single-digit level. And that's also why we are addressing the cost base in China, as Lars also referred to. Another or one positive thing over the period has been health care reforms. We have not seen any bigger health care reforms. So we've actually been able to increase price a little bit, and that is a little bit unusual in our industry. So that has been one of the positives. We have also, in the period, acquired both Atos and Kerecis, and they started to impact the organic growth from '22 and '23 and onwards. And that contributed to the around 8% we were sitting or seeing in those years. And then this year, as I referred to earlier, around 7%. That was below our expectations when we entered this year, but we are now focusing on delivering this coming out of Strive25. On the margin/EBIT growth side, we actually had a very strong start to the period, also back of COVID. We did not spend as much, and we had okay growth. But then we saw very high inflation in the double-digit territory levels. So cost prices increased on our raw materials, wages increased as well. And that had quite an impact on our EBIT margin, especially in '22, '23. And it's around 2 percentage points that we saw of impact on our gross margin. We did some acquisitions, and we're actually satisfied on where the acquisitions are today, both from a growth point of view, but also from a margin point of view. But it had an impact on the group margin. So amortization costs, we have included around DKK 300 million over the period. So that's around 1 point. And then Kerecis is currently sitting with an EBIT margin of around 13%, and that is impacting the group margin of around another 1%. So overall, over the period, you have gross margin impact of around 2% and acquisitions also around 2%. So those are the main reasons why we are sitting at the current level and the guidance of 27% to 28%. So that's really where we are closing Strive25, and then I'll move in and speak to the assumptions that we have put forward today towards 2030. Lars talked about our new financial ambition. When we have been looking at the financial ambition towards 2030, we have really looked at our shareholder value small metric that we have been focusing on for many, many years. And we are trying really to address all the key components. We will talk a lot about growth today. We will also talk quite a bit about EBIT growth. I'll also come back and share with you a little bit more insight to how we see the cash flow and return on invested capital. So we are really trying to address all elements over the next 5 years. And that's also why we have put forward not only a growth ambition or an EBIT growth ambition, but also a return on invested capital ambition in 2030. Because, as you know, we have also spent a lot of money in Strive25, something around DKK 25 billion. And the focus is now to really improve our return and improve our return on invested capital from the around 15% level we are sitting with today to the ambition of more than 20%. So that's really how you should see it towards 2030. Lars also talked to the underlying dynamics in our industry. So we are confirming the underlying market growth in the level of 4% to 5%. And we are basically also confirming the various moving parts that is impacting the growth of the market. We are expecting to continue to take market shares across all our businesses, even though we are having some slowdown in China, but we are expecting to continue to take market share. In terms of price and health care reforms, we used to have and you can say, a long-term guidance of up to minus 1% impact on our growth. We are now adjusting that to a neutral impact over the period. And I'm saying that because we are actually currently looking at a small positive price. But of course, maybe -- or maybe there will be some health care reforms in the coming years, and that will have a negative impact. But over the years, I'm expecting something around a neutral price impact on our business. And then mix. Mix is an important part of our growth driver. We will continue to upgrade our portfolio to higher-priced products. Luja is an example, but we still have a big also opportunity here in Europe, moving the Ostomy franchise from flat to convex solutions. And that is also contributing to our overall growth. And that's the main dynamics we see in the marketplace towards 2030. And speaking a little bit further to our assumptions on the top line growth. So as Lars said, we are aiming for a growth of 7% to 8% over the period. And that means that our Chronic business, we are expecting that to continue to outgrow the market, also driven by the innovation and the launches we are currently doing. We are having a very strong growth contribution from the Luja. So we have launched Luja for male. We have launched Luja for female, and we're also bringing quite a lot of new products into the market within Ostomy. So we are expecting to continue to outgrow the market on our core businesses. On the Voice and Respiratory, we will continue to grow in the level of 8% to 10%, so in level with the acquisition case we made 3 years ago. So overall, for Chronic, we are expecting that business unit to contribute quite significantly also to the group growth ambition we have. On the Wound and Tissue Repair, here, we are expecting around double-digit growth, really impacted by the Kerecis growth contribution. So as we acquired Kerecis a couple of years ago, we also put forward a growth ambition of growing the Kerecis business in the first 3 years, around 30%. We are ballpark within that. So that also means that, that will contribute quite significantly to growth also next year and the years after that. So Kerecis is really the important part of growing our Wound and Tissue Repair towards 2030. And then finally, Urology. As you know, Urology, that's really the area where we have lacking behind, especially last year and this year compared to our ambitions in the Strive25 plan. So last year, we grew around 5%, really due to strong competition within the Women's Health segment in the U.S. That has actually improved into this year. But then this year, we are impacted by this product recall that Lars also referred to earlier. So this year, we're expecting the Urology business to sit around flattish growth. Our expectations towards 2030 is a pickup, both because we are coming on the other side of the product recall, but also because we are investing into other organic opportunities and then we have Intibia. And we will also speak further to Intibia in the breakouts, but we are expecting to launch Intibia within the next couple of years, and that will also contribute to growth. So our ambition for the Urology business is to grow in the level of mid- to high single digit over the period. So these are some of the main assumptions behind our organic growth agenda. In terms of our EBIT, we are also putting forward some underlying assumptions in terms of how you should see our EBIT develop over the period. And we are saying that we are expecting EBIT to grow at or above the top line growth. And there are a couple of other, you can say, moving parts in terms of that. Firstly, on gross margin. Our gross margin will be positively impacted by higher growth on Kerecis and Atos because those 2 businesses are sitting with significantly higher gross margin versus group. Secondly, we're also expecting that our operations within the Chronic business that the gross margin with that area will be accretive but on the other hand, we are still seeing ramp-up costs. We are also seeing high inflation, especially in Hungary. On the raw material side, as I said earlier, we had a significant headwind on that in the Strive25 period. Towards 2030, I'm expecting stable levels also because the inflation levels have come down to a more -- to a lower level compared to the Strive25 period. So net-net, we are expecting gross margin to improve over the period. On the rest of the P&L, we are expecting a leverage effect for our Chronic business, and we're also expecting profitability improvements, especially in the Wound and Tissue Repair, where we have Kerecis, where when we presented the acquisition of Kerecis, we also said that we wanted to increase the EBIT margin for Kerecis to around 20% next year. That target is still intact. So we continue to focus on that. And we also expect we will continue to improve the margin for Kerecis in the years to come. And then we will do investments. And we will do investments across some of our commercial initiatives, R&D, and then we will also invest quite a bit into technology to address both top line, but also improve our scalability across the company. So that's some of the underlying assumptions behind our EBIT growth ambition. And speaking a little bit more to the investments we are planning to do. You can see here on the left-hand side some of the initiatives we did throughout Strive25. We did quite a few of those, especially in the beginning of the period. So we invested quite a bit into innovation. We invested also back then quite a bit into the U.S. and we have also done a number of organic investments in other parts of the organization, especially in emerging markets. And then we did the significant inorganic investment of Kerecis and Atos. And moving into this period, Lars also talked to it, but we have initiated a number of activities to streamline certain parts of the organization, either to free up capital to invest in other more growth opportunities or improve the EBIT growth. And that also means that this year, we are including quite a significantly special items in the level of DKK 450 million. You should not expect that to continue. So already next year, it will be at a very low level compared to this year. Some of the things we are going to focus on and invest in, that is still the U.S. We still see U.S. as one of the key opportunities for us, both in Ostomy and in Continence. And you will also hear a little bit more about that in the breakouts, but we also have a big opportunity in the U.S. with one of our smaller segments called Bowel Care. So we will invest quite a bit into the U.S. again to drive growth, but also to drive market share gain. Kerecis, we will continue to invest into the Kerecis business. But at the same time, we are also committed to deliver improvement in the margin. Intibia, you will also hear a little bit further about that in the breakouts, but we are expecting to launch that within the next couple of years. And when we have gotten FDA approval, then we will initiate the commercialization, start the investments into sales force, and that's going to happen within the next couple of years. R&D and innovation continues to be an important part of our DNA, and that's definitely also an area we will continue to invest in and to drive the long-term growth and long-term value creation. Lars also talked a little bit about it. We will establish a new business center in Americas, really to address or support the U.S. business in terms of services, but also improve our scalability across the Americas business. And then finally, quite a big program where we will invest more into various technology activities, including AI. And speaking about that, Lars also referred to it, it's actually more or less across the company where we will initiate a pretty big program to support our customer experience, support our service offering. So as you know, we have a direct business in 5 different markets and where we are taking orders, we are matching prescriptions. We are handling a lot of documents to get paid. So all of this is something that we hope we can do even better through technology tools, including AI, also to the benefit of our customers. In the middle here, we have what we call the -- our foundation. So we are running the company on what I call a one IT infrastructure. And that is something we will continue to invest in to make sure we have a scalable setup across the company and as we are growing. And then on the operations part, Allan will also speak further to this in the breakout, but we will also allocate investments into technology and AI to support the program we are currently having within the global operations. So across the board, quite a lot of investments into the technology area to support the long-term financial ambition we have. And then speaking a little bit more about the cash flow assumptions. So on the tax side, we have done quite a bit over the last few years in terms of optimizing the tax structure after we have acquired Atos and Kerecis. And we are expecting to deliver a tax rate over the period in the level of 22% on an annual basis. So that's what you should expect. On the net working capital, this is also a key focus of us. We are still sitting a little bit higher than I really wanted, and we are still having the ambition of getting it to the 24% as our long-term ambition. And this is really driven by improvement in our trade receivables and reducing our DSO levels. And then finally, the CapEx ratio, we have in a number of years, been sitting around 5% throughout the Strive25 period. We have invested quite a bit into our footprint to derisk our production footprint by investing into Costa Rica, and now we're investing quite a bit into Portugal. And we are expecting to finish the Portugal investment next year. And then we are not expecting any further new facilities until 2030. And that basically means that we should expect that the CapEx ratio towards the end of this period will be in the level of 4%. So that's why we are saying 4% to 5% over the period. And that basically also means that we are aiming for a free cash flow to sales target of minimum 20%. As you can see on the chart and as I have also discussed with a number of you, that we have seen our free cash flow to sales dropping quite a bit during Strive25 due to various reasons. We need to get it up, and that's our focus in the coming 5-year plan based on the assumptions I am putting forward. And that also means that we are focusing on increasing our return on invested capital. And this is assuming no larger M&As. We are focusing on smaller bolt-ons, especially in the urology space. But in general, you should not expect any larger M&As in this strategic period. And then in terms of the cash return, we will continue to commit to the current dividend policy. And we have been paying out higher than we actually have set over the last couple of years, and that's also a little bit back to our lower cash flow than we actually anticipated. But we are expecting with the financial ambition we are putting forward and the focus on cash flow that we will, over the period come into the payout range of 60% to 80%, and then we will also initiate buybacks again. My ambition in terms of the leverage ratio will be around 1.5x EBITDA towards the end of this Impact4 period. So that's some of the key financial assumptions that we are focusing on to deliver towards 2030. Then a little bit also around our sustainability agenda. So when we launched the Strive25 strategy back in 2020, we also included sustainability as one of the key enterprise themes. And we have been working hard on improving our sustainability and our footprint across a lot of activities. And we will continue that, and we will continue to invest into delivering on our sustainability ambitions. In terms of Scope 1 and 2, we are expecting to deliver around 90% emission reduction. It's sitting around 35% versus '18, '19 today. So we are having good progress on that specific target. On Scope 3, we are reducing our [ ambition ] here. It has turned out to be much more complex to reduce emissions at the vendor level. So we are reducing our [ ambition ], but we are still focusing on this as well. And that also means that we are focusing on becoming net zero in 2045. One key activity that we will have towards 2030, that is to use less materials and especially packaging across the business. So that's really a key focus we will have in the next 5 years. On the social society and our employees, as you know, over the last 5 maybe 8 years, we have actually been successful in opening up new markets through reimbursement. We have opened up, especially within the Catheter business. So we have opened up new markets in Australia, in Japan, in Poland, in Korea, and the Atos team has also opened up new markets through higher reimbursement. This will also be a focus towards 2030, and we are actually aiming at opening up around 5 new opportunities in this period. And one of the new openings we are currently having, that is in the U.S. where there is reimbursement changes to support our growth agenda within Bowel Care. And you will hear a little bit further to that in the U.S. session, but that's one of the new opportunities we have to support our growth. On the employee part, it's basically to continue on what we have already today, both in terms of safety, but also in terms of employee engagement. We are sitting with a very high employee engagement also compared to peers. And we will continue to focus on diversity and make sure that our organization is within our code of conduct principles. But we are in an environment that is more complex today than it was back in 2020. Lars already talked to quite a bit of this. And we have, especially on the external factors, quite a few task forces running to manage either the tariff situation in the U.S. And here, the good news are that we are exempted from the tariffs. But it is something we have been focusing a lot on and been working on in order to make sure we are exempted from the U.S. tariffs as an example. We're also running a number of other task force to manage the various geopolitical situation, wars, et cetera. And I think in general, we have managed it in a pretty good way over the last, yes, 3 to 4 years. But this is really an area that has a lot of focus also internally to make sure that we can manage these risks. The other thing I will call out that is on quality. We have talked quite a bit to it over the last 6 to 9 months that we have had product recalls in Urology and now in Wound Care. We actually believe that we have a good quality management system. We are investing in it. We have invested a lot into MDR, and we also audited more than 100 days annually. But what we have seen over the last 6 to 9 months is something we have not seen or I have not seen in all the years I've been with the company. So I'm actually comfortable that we are able to handle it going forward. But it is also something we have a lot of focus on internally, and Allan will also speak a little bit further to this in his session. But there's a number of things we are trying to manage. And in general, I think actually, we have managed it in a good way. So to sum it up, Lars already talked to it. This is what we're aiming for in 2030. We think this is ambitious. We think we are working on all elements, both from a P&L and cash flow point of view. So this is how we see to create value in the next 5 years. All right. With that, I will hand it over to you, Caroline.

Thank you, Anders. It's great to see everyone here today. So my name is Caroline. I have been with the Coloplast Group for 10 years now. I started up heading up our Strategy and M&A team, then moved a couple of years to the U.S., where I worked with both the Chronic Care team and the IU team. Back to Denmark again, worked in emerging markets. And then since the acquisitions of Atos Medical, I've been heading up Atos for the past 3.5 years. And then for the past 2 weeks, heading up the new Chronic Care Commercial organization. And that's what I will be sharing with you today, our new strategy for the new Chronic Care business unit. So in the new Chronic Care business unit, we are combining the Chronic business area, the areas that share similar characteristics and where we can really play to the strength that we have across the chronic space. Some of the more obvious commonalities between the BAs will be, as Lars also mentioned, that we're mostly talking about chronic patients. So that means patients who are initiated in the hospital setting, in the acute setting, then they are discharged into the community where they continue to use products either permanently or at least for an extended period of time. It's also industries that are characterized as being relatively stable. From a growth perspective, on average, we see around 4% to 5% growth. It can be slightly higher for some of the smaller categories. And also from a competition perspective, we see that there is quite a lot of stability in terms of who are players in the space. It doesn't mean that competition cannot be intense because it absolutely can. But from sort of a player perspective, it's relatively stable. We can also see that reimbursement levels, generally, we have good reimbursement and decent reimbursement levels. There can be occasional flare-ups as there are health care reforms. But we also continue to see that in many markets and in many patient segments, there's still more we can do in terms of establishing reimbursement and tapping into those value pools. And then what we're also seeing is that services are beginning to play a much larger role. It's becoming much more important due to the pressure that we're seeing on the health care system. So you'll hear me talking quite a lot about that later in the presentation as well. So as a quick recap, these are the 5 business areas that are now part of the Chronic Care business unit. So it's Ostomy Care, Continence Care, Bowel Care, Laryngectomy Care and then tracheostomy Care. And if we combine the revenue of these areas, it's about 75% of the group revenue. Across the board, we have strong market leadership position, perhaps with the exception of tracheostomy. As you know, tracheostomy is a newer business area for us but we have a very strong plan in place so that we also within this space can become the leaders of the segments where we choose to play. So we will use this position of strength as we embark on our new strategic period to further solidify our leadership position. And we will do that by making sure that we provide and give our customers the best experience and that will become the partner of choice for our customers. And when we say customers, remember, we're talking about patients or users. We're talking about health care professionals, and we're talking about the payers. We know that if we are truly meeting needs, we are also changing lives. And in order to be able to do so, there are a couple of things that you need to get right. Products, it all starts with having great products. It's an absolute fundamental to be able to play. So you need products that are innovative, that meets the customer needs and that are also backed by good evidence and data. Luckily, this is what we have been doing in Coloplast for the past 7 decades. This is really at the center of our company. But products alone are not enough because if you really want to be successful and due to this pressure that we're seeing on the health care system, there is a need for us to take a larger role in terms of making sure that the patients get the support and education that they need but also that we take a larger role towards the health care professionals to make sure that we can also help them alleviate some of the pressure and the burden that they're feeling every day in their work. Underneath all of this is an absolute requirement of having a very efficient operational model and a very strong commercial go-to-market model to make sure that we can win over the HCPs, that we can win and retain the patients and that we can also work on driving the adherence to treatment because that drives better outcome for the patients and obviously also value for us. Before we dive into the individual business area strategies, I'd just like to briefly introduce a framework to you that could be quite useful in terms of understanding what it is that you need to focus on and what you need to be successful with depending on where you are on the maturity curve either of the industry or in a specific region. So if we take as an example first. If we take a market where there isn't any reimbursement. There isn't any standard of care. That's what you need to focus on first. That's what you need to solve. So we will be working very intensely with the health care community, with KOLs, Advisory Board, Patient Association in order to establish a standard of care for these particular patients. We will also be working very closely with the payers to make sure that we can start to establish reimbursement. We have many, many examples of market like this across the board in many emerging and newer markets are still at this phase but also an example that both Lars and Anders mentioned, Bowel Care in the U.S. is an example of where we, over the years, have -- over the past couple of years, have worked very diligently to establish the standard of care and also work to get reimbursement, and we have just succeeded in doing that, and it will come into effect later this fall, opening up a new value pool for us. If we move to the next phase and don't sort of think of this as like when you move from one phase to another, you stopped doing what you did in the previous one. There's still a lot of work probably that you need to do to make sure that the standard of care that you have started to creating that gains sort of more traction and are more embedded into the market. So you still need to work on that with the health care professionals, you still probably also need to work with the payers to improve on the access to the products. But at this space, we can start pivoting our focus a little bit to also focus more on the patients. So this is about getting patients on treatment and on products. Visually, you can think about it, one product -- one patient at the time. We start tapping into getting new patients on products, getting community patients on products and on treatment and slowly penetrating that market as well. This is also the case for many of our markets and also our patient segments, intermittent catheter use for multiple sclerosis patients would be an example of this. We know that there are many MS patients who would benefit from using intermittent catheters but who do not do that today. So there is still a lot of work that we have to do in terms of setting the standard for this patient group and making sure that we drive the penetration of the MS patient group as well. Once there is more consensus around the standard of care, we're not discussing so much about what does good look like for these patients. Once that is established, then we can also start pivoting our focus even more towards also making sure that there is adherence to the treatment guidelines. So are people actually using the products that they're supposed to? Are they changing them as they should? Are they getting the needs or their needs covered? So an example here could be laryngectomy in the U.S., where I would say, we recently moved from having the majority of the focus on penetrating the market. There's still more we can do here but we also have to focus on how can we drive that adherence. So every -- all the patients who are on treatment on our products, how can we work with them to make sure that they are actually compliant. Tracheostomy care in U.K. is another example. If you have a tracheostomy by definition, you also have a tube. But how often do you get that tube changed? Do you use HMEs? So there's still also a lot of work that we can do around that. And then last but not least, we also have the opportunity of continuously upgrading the patients to newer innovation providing better outcomes for the patients as well. This is the case in many ostomy care markets in, for instance, the U.S. where we can continue to introduce new innovation that are even better meeting the needs of the users. So what I really like about this framework is that regardless of where we are on the maturity curve, there's always something we can do in order to unlock growth opportunities. And that's why we're quite optimistic as we're embarking on this new strategic period because we see across all BAs, they are good growth opportunities. So let's dive into some of the highlights of the individual BA strategies. On all the slides, you will see that services are mentioned. I will cover that a bit later, not to sort of say the same thing 5 times in a row. So for Ostomy Care, Ostomy is obviously the DNA of Coloplast. And with the launches, the recent launches and the coming launches that we're doing within the SenSura Mio portfolio, we have the best and most comprehensive product portfolio out there. And we'll use this strong foundation to further solidify our market leadership position in Ostomy Care and make sure that we are the #1 choice when it comes to Ostomy Care. There is a ton of potential in this portfolio and we will be executing on that to really unlock growth opportunities across the region. So one example I could take out here is the new SenSura Mio two-piece click coupling that we have recently launched. We're getting amazing feedback on it from both HCPs and from users as well. It is much better than our previous generation. And I think with this product, we are ideally positioned to tap into that hugely important two-piece segment in the U.S. We also launched a lot of products within our black bag category. We are launching and have strengthened our portfolio within the Convex category. So we do see that there's a lot of potential in terms of working with the portfolio that we have, continue to add new products to it so that we can also compensate for some of the softness that we've seen in China that both Lars and Anders also alluded to. Another quite interesting growth opportunity is within our supporting products category, so the Brava portfolio, it has actually grown to be a quite sizable category by now, and we see it as a good growth driver in particular within our direct channels, where we can really see that it's contributing to the growth that we have here. So in Ostomy Care, I think we have the best starting position we've had in years, and we're quite excited about the opportunities that we see. Moving on to IC. So in IC, we have an amazing product in Luja. And we will use that to set a new and much higher standard of care for what could look like in the IC market. And IC, there's still plenty of opportunity in terms of capturing more -- taking more share growth, there is market penetration, and there is adherence and Luja is a really strong lever in order to unlock those opportunities. We are getting amazing feedback on Luja from both users and clinicians. And as we expand and put more products into the portfolio, both in the Luja family and micro-hole technology, we can really start to see how this category is starting to set the standard in the market. So we see the shift happening towards Luja becoming the new standard. We've recently launched Luja female, which is also seeing very good performance in the market. So building on that strength and momentum that we have already created. Then there are plenty of patient groups that we still have to do more work in. I mentioned multiple sclerosis earlier on. There are also many regions in emerging markets where there isn't any access to products, there's insufficient funding. There isn't any reimbursement. There isn't a standard of care. So there's still a ton of work that we need to do within IC in order to make sure that there's access to treatment and that we penetrate the markets and make sure there is adherence. In IC, we -- there is typically a quite high drop-off rate. And that's why the service element here with the training and the support and the education is very, very important. So again, more about that later on. In IC, we don't -- not only do we have products that are vastly better than anything else out there but we also have significant untapped potential. So I actually think that's a pretty good place to be. So Bowel care is exciting opportunity. It is a vastly underdeveloped market. The market that is there today is one that we more or less have created but the potential could be multiple times the size of what we're seeing because there are so many patients out there suffering from chronic constipation and fecal incontinence who are not getting the products that they need and they're not getting the treatment that they need. It also takes way too long to get to treatment. So there is really a strong need here for us to continue to develop the market, expanding it and penetrating it and most of all, to set the standard. And that's what the focus will be here in the strategic period. We've mentioned the recent win that we had in the U.S. in terms of getting reimbursement within Bowel Care. So this is a good example of how can we work with the markets in order to open up new segments of -- that we can tap into and new value pools. From a product perspective, we have very good products in the market already. We recently launched the PSD light and we will be adding more over the strategic period. So from that perspective, I think we have what we need in order to drive the growth. And just like -- so while in Bowel Care, we actually -- we have established presence. But if we really want to tap into the opportunities that we see, we need to invest, and we need to scale it. So a key focus for us in the coming period will be increasing the sales pressure, scaling our business, increasing the clinical competencies in the market as well, so where we can build from the foundation we have and really accelerate from here. Just like in IC, we also have quite high drop-off rates in Bowel Care. So the service element, the training, the education, absolutely crucial. We have a ton of work ahead of us in Bowel Care but we also see a lot of opportunities. We -- I'm sure that we will learn a lot but we are quite excited about the opportunities and the prospects of this business area. In laryngectomy, we are the undisputed market leaders. We have the best product and product portfolio with Provox Life. We have -- we're the ones who set the clinical standard. We have good evidence in data for our treatment, and we have a fantastic strong commercial model with direct sales to patients at its call. And we'll utilize this strong foundation to further accelerate our market penetration. We know that it's only about 1/3 of the global patient population that have access to products and those who do probably do not use them in adherence to the clinical guidelines. So there's still a lot of potential we see in terms of both working with the newer markets to make sure there's reimbursement to penetrate them but also in the established market to make sure that we fully penetrate them that we drive the adherence. We have a model in place already, and we know that it works. So we will continue to develop that, to add new elements to it, to add more services and support and continue to increase the bar for the standard of care in the market. There's still a lot we can do in terms of driving adherence. I'm sure some of you have previously heard us talking quite a lot about HME compliance. But another area where there also needs to be compliance is on the voice prosthesis side. So if you have a voice prosthesis, how often do you get it changed? Do you wait until it's leaking or have you a scheduled replacement so that you actually can prevent that you get into a situation where it starts to leak? So a lot of parameters still and value pools that we can tap into. We also have some quite exciting innovations coming up in the strategic period where we believe there is a real opportunity for us to significantly increase the quality of life of our users. So in lary, I think we have a strong starting point. We have a very efficient model. We have a strong direct channel and many opportunities ahead of us -- so we remain confident that we can continue to perform in a good way and in the -- and continue to perform as we have over the past couple of years. In tracheostomy, we are a smaller player in a large, well-established market that is marked by moderate competition. In this market, there is a lack of a clinical standard. There's lower level of education, there's lack of support for healthcare professionals and for the users, especially at the point of discharge and into community. So it's actually a bit of mess, which can be good for us because we can be the ones who can define the industry. And if you want to do that, there are one thing that you need to get right and it's education, education, education. So we will do that working very closely with the health care professionals and also supported by the evidence and data. A key part of the strategy will be to introduce this unique end-to-end offering across the full continuum of care. So that means being there in the acute setting, be it their discharge and being there in the community sense with an integrated offering across products, services and support so that we could truly become the track partners of the industry. No one else is doing this. No one else is really focusing on the community. And with everything we know, both from the lary business area and our other chronic categories, I think we are ideally positioned to really be the ones to solve this and to provide users with the support that they need also when they leave the hospital and return to their homes. In another key focus we have in tracheostomy is, again, HME adherence. So even though the pulmonary benefits of using HMEs, if you have a tracheostomy are similar to those if you have a laryngectomy, most patients are actually not use in HME. In some markets, you do, in some markets, you don't. And in some markets, you use it sometimes. So making sure that there is a better standard for how to use the HMEs will also be a key focus for us, building on all the learnings we have within the lary space. So as you can hear, we're quite optimistic about the potential in tracheostomy. We spent the last couple of years building the model. We've also launched it in a couple of markets, and we're getting great feedback from the customers. We know that it adds value that's telling us it every day. So we have the foundation established, and now we just need to scale it from here. So on the product side, you've heard me say multiple times here that we have strong products in the market and with the recent and coming launches, we have the best and the most comprehensive product portfolio out there. So this is obviously not an excuse for us to rest on our laurels, and we will be continuing to adding new products at a good cadence over,, the strategic period. We talked a lot about SenSura Mio. We talked a lot about Luja and the micro-hole Zone Technology. So these are some of the areas where we'll be adding a lot of products. But generally, across the board, across all BAs, we want to add new products at a good cadence throughout the strategic period. And now we finally arrived at the services part that you have heard me talking about a couple of times by now. So what we mean when we say services is that other part of the equation of having a great customer experience in addition to getting a great product. Because if you are a patient getting a great product alone will not be enough in order for you to be able to live the life that you want and to manage your condition. You need a lot of support. You need education, you need training, you need issue resolution, you need a lot of these things in order to manage their conditions and live the life that you truly want and to know what to do in the different situations that you're in. And you probably need this at any time of the day, day or night, especially at that first part, when you are first discharged from the hospital, you're returning home and you don't know what to do. So you need a lot of support and education in order to really settle into this new way of living and your new situation and to master your condition. You also expect that when you are ordering product, that the process is smooth and friction-free, you don't want to worry about who's handling my prescription and how do I navigate this system that I'm now in. You just want to order it and get it delivered to your house without any hassle. You probably also want to be part of a community. You probably also want that there is some sort of support for your relatives. So basically, you just want to feel like there's somebody with you at every step of your journey holding your hand and helping you. And we will be that someone. For clinicians, we want to be the partner who can alleviate some of that pressure that you're feeling every day when you're going to work. We have seen how the burden on the health care professionals have only increased but so has the demand for support. So I think the efforts that we are now focusing on in terms of helping the patients will in itself take away some of that pressure because the health care professional doesn't have to worry about what happens to my patients after they leave the hospital. They know that they're taking good care of and that somebody are helping them. But we can also see that the HCPs are demanding much more education and not just sort of this bulk education, they want it tailored and personalized to their own needs. They want it on demand. They want it at any time, so they can go in when it suits them to make sure they get exactly the education that they need. We also want to make sure that the HCPs are equipped with pragmatic tools. So when they are doing their job, working with the patients, they have an easy way of doing that, especially the process around discharge, we want to make sure that it's a good process and efficient process so that the HCPs can focus on working with the patients and taking care of the patients and not having to worry about how to handle paperwork and navigating complex health care systems. We have a long history of working very closely with the HCPs. And in this strategic period, we will further develop that and deepen it so that we can truly be their partner of choice. Ultimately, we would like to be able to prove the value that these services are offering because we know that they add value and people are telling us this all the time but being able to prove it can drastically change the conversation that we're also having both with the HCPs and the payers. We already have a strong platform in place when it comes to services. We have our various care offerings, we have established direct channels, and we also have the offerings towards our professional segments. So this is what we will scale and develop further so that we can truly address all the needs of the users and unlock this potential by being their partner of choice. So we see great growth opportunities across all Chronic Care business areas. We have the best products. We have the most comprehensive product portfolios, and we will continue to add new products over the strategic period. We have a solid foundation when it comes to services. In our current service offering, we have an efficient direct channel, And We will utilize this to make sure that we can provide the best customer experience and be the partner of choice in the industry. So with all of this, we feel very confident that we can continue to outgrow the market while also increasing our profitability. I think we have a very strong starting position. Now that we are embarking on our new strategic period, lots of great potential. We'll dive into a couple of these in the deep dives or the breakout groups later on when we are talking about the U.S. and emerging markets. which I will also be joining those sessions. So stay tuned for more, and thank you.

Thank you, Caroline, for the presentations. And now, of course, we go into the Q&A session. Before we start, as Caroline mentioned already, she will be joining the Chronic Care session, so you can also save some of the questions for her there. And then another thing that I would kindly ask you to do is to limit your questions to one at a time. We only have half an hour for the Q&As. So let's try to really give room for people here. So with that, I suggest that we start from the left here to the table. So Mark, if you can pass the microphone to Mattias to start. Thank you.

I'll combine my 2 questions into one then. So the new financial targets -- Mattias Häggblom from Handelsbanken if I didn't say that. New financial targets of a revenue CAGR of 7% to 8% imply that some of the years may be both below or above the target range. So is that how we should think about it? Or why the addition of the word CAGR to the new top line target instead of previously per annum? And combined with that, the EBIT growth in line with or above the revenue target, while at the same time, the strategy release emphasize ambition to unlock next level of efficiency gains. So what scenario would we have where EBIT only grows in line with sales?

Yes. So let me -- can you hear me? Yes. So thanks a lot, Mattias. So we are expecting to deliver the 7% to 8% growth over the period back to all the assumptions we put forward. In terms of the EBIT growth, as I said several times now, we're also expecting to deliver that in line or above revenue growth. We are also planning to do investments over the period. So we talked to some of them earlier, both investments into commercial, investments into technology but we are focusing on both driving top line growth and also improve the EBIT growth in line or above the revenue growth over the period.

Should we continue with Oliver, over to you.

It's Oliver Metzger from ODDO BHF. A question on the pricing environment. So historically, you said minus 1% to 0%, now it's more stable. So from one perspective, really to clarify. Does it mean -- because you also mentioned that potential health care reforms but you've seen the first half of a drive -- sorry, on the impact for a period, the more positive pricing in the second half more negative. And also in this context, the positive driving, is it driven by your pricing power? Or what's the key driver behind your positive ability to increase prices?

Yes. Also thank you for that question. So as I said earlier and you also discussed that over the last couple of years, we have seen a positive price across several of our businesses also here in Europe. And that is driven by us being smarter in the way we work with pricing. We have been also smarter in the way we work with the discounts rebates towards distributors. And as long as we are not seeing any bigger health care reforms, I also expect this to continue into especially the beginning of the next strategic year period. One of the areas we're having quite a lot of focus on currently, that is the U.S. As you know, the U.S. authorities announced a potential competitive bidding over the summer. And that is something that we also are focusing on and participating in the hearing process. The outcome of that, we don't know. And that's also why I expect over the period that we are going to have a neutral impact in terms of pricing due to our work on increasing prices across our portfolio, but there's also some space depending, of course, on the outcome for health care reforms. So that's how I see it over the next 5 years.

I guess let's continue to the first table and then we move on. So Jack, over to you.

Jack Reynolds-Clark from RBC. Just to kind of push a little bit on the EBIT margin guidance with the kind of the tailwinds that you run through on the gross margin side and the efficiency side, kind of EBIT growing in line with or slightly ahead of revenue implies a pretty substantial increase in kind of R&D investment and sales and marketing costs to keep that flat. So are you kind of deliberately being cautious there? Or do you kind of generally see that kind of 3 to 5 percentage points of increase there?

So also the reason why we are putting forward an EBIT growth is also to have a little bit more flexibility over the period in order to invest into opportunities we see to drive the top line growth. And we are committed to drive the top line growth, as we have said now many times, 7% to 8% and also improving the EBIT growth at or above the top line growth. And then we also committed to support our growth agenda through various initiatives, investments and that's why we have a lot of focus on continuing to have a scalable business, continue to optimize our operations. That's also why we are now establishing a business center in Costa Rica. So we are both working on freeing up funds to support the growth but also to support our ambition of increasing over the period. And that's why we are putting forward the financial ambition that we are putting forward today towards 2030.

Thank you, Jack. Then we move to Veronika.

Okay. I'll go next Veronika Dubajova from Citi. Apologies this is going to be a blunt question but I think it's one we all have. Obviously, Lars you took over as interim CEO, you got on the conference call and you said the reason we're making a CEO change is because the business is not growing 8% to 10%. You're here today talking about ambition to grow 7% to 8%. So just trying to understand what has changed in your and the boards and the management teams thinking about that revenue growth potential. And I guess is there a single business you'd flag as where your assumptions and ambitions have changed? Or is this a more broad-based reflection of reality?

So maybe I could elaborate a little bit on the answer because I'm quite certain I wasn't that blunt. So we have not delivered on the previous strategic ambition. And I think we have all been talking quite a lot to -- it's a different world. And we are setting targets for the next 5 years with a very different outset. And I think that's basically the answer to it. So if we have had an ambition of 7% to 8% growth in 2020, I guess you would not have approved. And now we are in 2025, and it's a very different situation. It's a very different environment that we're operating in. And that's why we think 7% to 8% is -- both are realistic but also an ambitious target for us.

So let's continue here at the third table with Hassan. Mark, if you can pass the microphone here. Thank you. Here at Table #3. Yes.

Hassan Al-Wakeel from Barclays. Lars, you also mentioned on the call or when we met after the call about the strategic review of the Interventional Urology business. Can you provide some more color on the thought process here on the IU portfolio? And perhaps outside of Entyvio, what gives you conviction that these businesses will contribute meaningfully to growth in that some of these challenges aren't structural?

Yes. So right now, we are [ challenging ] that also, it's quite obvious and we speak to it a lot. But the fact also is that in our organic product portfolio of new products, we have products that we are quite excited about that are going to be launched in the coming periods on the men's health side. And then we top it off with Entyvio, which is a women's, primarily a women's health but also women's health but primarily a women's health product as it's approximately 2/3, 1/3 women and males or men for that type of procedure. So that is why we think that we actually have both pretty good visibility but also strong stronger growth ahead of us. So that's the background.

Thanks, Lars. I believe we can move on to the second row here. So let's start with Martin.

Martin Parkhoi from SEB. Just also a question of what you have included in your guidance because I guess that we you have realized that last guidance was too ambitious, and there has been some kind of hiccups every single year, U.S. distribution, product recall #1, product recall #2. In the new guidance, have you embedded that you are actually working in a complex business where there are some things which goes against you sometimes. So you maybe have included that. I don't want to call your buffer because then you won't answer that but have you included that mistakes happens?

So now we've talked to it quite a few times, Martin. We believe that the 7% to 8% that we are today putting forward towards 2030 is ambitious but also realistic growth target for Coloplast given the current environment. And again, we are in a market that is growing 4% to 5%. So we are also expecting us to take market share across the board. And we think we have a strong portfolio and a strong business in order to deliver the 7% to 8% towards 2030. But there's also no doubt that we have had some hiccups over the last 12 to 18 months that we did not expect. And we also need to work through those hiccups also into the coming year. the wound care situation in China will impact us next year as well. But we have said it many times now, we are believing to deliver the 7% to 8%. We believe it's ambitious but also realistic, so that's how you should see it.

I think it's fair to say that, of course, any guidance will be able to contain that something goes wrong. We just think that too much have gone wrong recently.

Thank you. I believe, Aisyah you are next. So same table, please.

Aisyah Noor, Morgan Stanley. Just one for Caroline on innovation. You've presented in one of your slides, a very busy launch pipeline out to 2030 across the Chronic Care business. Just trying to understand what's different about the strategy today, the launch strategy today versus the last '25 period. How much of these are incremental upgrades versus breakthrough innovation? How much goes into existing reimbursement categories versus creating new categories? And then how much of it is realizing the potential of ongoing projects like halo versus bringing to market new products, not in the portfolio today?

Thank you. So obviously, as you know, we have Rasmussen joining in a couple of weeks. So we'll be also setting the strategy for -- from the R&D side. But what I can say about what we have in the pipeline is that at the beginning of the period, it is very much obviously products that are fitting into the Mio, for instance, and the Luja portfolio already. So those established products and categories. And then I think we should wait a little bit until we have Rasmussen in place also to comment on what comes later out in the period.

But maybe I could add to it that -- we want to make a kind of step change on some of the ways that we do innovation because we have said all of us that we have a great portfolio that we are working with going in to this strategic period. But we have also in the strategic period we are coming out of, we have had a lot of pressure on not least our gross margin. And we basically can't afford to develop products the way that we have done in the past going forward. So there's something about what kind of products or materials can you use. There's something about what is the cost, not just of the product but of the manufacturing process that comes with that product. So it's a more integrated competency and the more technically able competency that we need on board going forward that we have today to be able to deliver accretion on the gross margin and thereby also potentially on the EBIT. And it is not a discipline that can be handled alone by global operations after the development of a product but it is something that has to be integrated much earlier in the process. So that's also why the R&D function becomes part of the ALC. And if you see competency wise, what we're also doing with the new ALC, we have Allan, who has strong competencies in -- on the technological side. Rasmus will join and Fertram also joined. So in that sense, it's a more balanced executive leadership team on the commercial and on technological side. And we think that's super important to be able to continue to both be super competitive in the market but also on what it costs to be super competitive in the market. So it's -- I'm trying to unfold a little bit what the thinking is behind some of the changes that we are doing but we see that, that is needed. And it is just a change that we go for.

So let's continue with the same table. Carsten, over to you.

Carsten from Danske. Can you elaborate a little bit more on what you just said because I was a little bit in doubt whether I heard higher innovation rate or lower innovation rate.

So on that side, I think the answer will be the same as you've heard in many years, Carsten. And that is we don't put a pot of gold on the table and then the organization can see what they can do innovation-wise. With that, it works the other way around. And that's also why we can tell you what we have spent on R&D, but we cannot tell you what we will spend. even though that would be super nice for all of us. But if we have the right projects, the right ideas, we also find the money to fund them. And we think that's the most healthy way to go about it. So this was not about the -- what do we spend on R&D. This is about the predictability of gross margins for new products that are in the pipeline is about the predictability of what will be the CapEx for those 2 products that are coming through. And that we are not strong enough on today. We think, and therefore, we want to take a drive on that. So that is part of why Allan later on will talk about that this period will be gross margin accretive for the company.

Thank you. Let's move to the next table. We can start with David over there.

David Adlington from JPMorgan. Maybe just again on your assumptions for the guidance just including Chronic Care. I just wondered what magnitude of price reductions you've assumed from the competitive bidding process. One of your peers has assumed 30% price cuts. Is that something you'd agree with? And are those headwinds baked into your guidance?

Yes. Let me take that, David. So we also got that question a number of times when we released our Q3 results a few weeks ago. So we are not going to be specific on what we are assuming in terms of competitive bidding at this point in time. As we also talked about back then, competitive bidding is going to impact around 12% of our revenue in the U.S., so it's ostomy continence and tracheostomy. And out of that, around 50% is related to this competitive bidding area. So that's the numbers we are currently having. You're moving into the hearing process, more or less as we speak. And then we expect a conclusion sometime later this year. And if there will be an impact, it would be from '27. But we have not talked to the impact as such. And as I said earlier, I'm still expecting over the period to have a round neutral impact from pricing because we also see some opportunities to work on prices in a positive way. But still, there could potentially be some health care reforms and now we are working through the competitive bidding situation.

Thank you. Let's continue with Richard and then Lisa on the same table.

Richard from Goldman Sachs. A question on China. So I'd be interested to hear more on what has actually happened in China in the last 5 years to go from a double-digit growth expectation to low single-digit growth reality. And it sounds like you are scaling back your investment in that market. So in context of scaling back our investment, what assumptions for growth are embedded in your guidance for China?

Mid-single-digit growth going forward in China. And what has happened is the decision internally in China, not in Coloplast but in China to do more of those products themselves and also financial situation where there's less spend -- less growth in the public sector on health care than in the previous period. But it's the prime thing about it is a decision to be more self-supplying of many of the products that we have.

Lisa Clive from Bernstein. Caroline's presentation highlighted how service to clinicians and patients is increasingly important. How do you capture value that in tender processes, which by nature are quite structured to focus on price? How does that happen in Europe today? And is there any read across to a potential competitive bidding situation in the U.S. Medicare Home Care segment?

Yes. So obviously, as I also alluded to, I think, when we are at the point where we can actually prove the data, the value of the services, we can have a different conversation with the payers, and we can also start building that into, for instance, tenders because we know the value that it adds and actually the savings that are coming from it. So that is a key focus area in the coming period. and something that we need to continue to work on. As far as I am concerned, it's not a parameter in the competitive bidding process right now.

Thank you. Let's move to Julien on the next table.

Julien Dormois from Jefferies. It relates to wound care. We haven't spoken a lot about Kerecis and so on. You have guided for double-digit growth over the period for the division as a whole. Could you just help us understand what are the building blocks between Kerecis and the non-Kerecis business?

Yes. So we said -- our assumption for the wound tissue repair is to deliver double-digit growth over the period. And this double-digit growth is really driven to a significant part by Kerecis but we're also expecting that the dressings business will contribute with growth. But short term, this year and also into next year, we have this situation in China where we have done a product recall. And as we talked about at the Q3 announcement, the product recall will impact this year, something around [ 80 million ] in the second half of the year, and some of that will also move into next year until we lap this Q4 of next year. But we're also expecting over the period that the dressings business will contribute to growth but the majority of the growth is coming from Kerecis.

Thank you. Let's move to Martin.

Martin from Nordea. Just a question also to what's baked into our targets here. Do have INTIBIA baked in at all? Or has that just left us pure upside if you get commercial traction with that one?

So in terms of INTIBIA, we have built in to our urology franchise. So in order to move from the current level, flattish to mid-single digit and high single digit, we are expecting to commercialize INTIBIA over the next couple of years. So it starts to contribute to growth for Urology from mid towards the end of the strategic period.

Any further questions from the audience? Otherwise, let's do another around with Mattias, Martin and Veronika. So Mattias, first.

Mattias Häggblom from Handelsbanken. So Caroline, after successfully leading Atos Medical for a number of years, with now Chronic Care is your responsibility. What are all the things you shared with us today is at the top of your agenda ahead?

So I think, first of all, is a new situation that we're in, and I will be focusing on the people side of things and creating a good team to lead the combined business. So I think that is always the first priority to get the right people in place and build a strong team. And then I think execution is a key theme because we have so many opportunities with the options that we have to make sure that we're very diligently making sure that we can tap into that. And then I think the service part of it is a huge theme, where we can do much more. So that will be a key focus for us and a key priority to really move the needle on that one.

Thank you, Caroline. I think we can move to Martin next. But while you're getting the microphone, there's one online, and that's for you, Lars. So where are we with the search for the new CEO role?

Yes. So the search is ongoing. As I have said a couple of times, it's a global search. And that's a very strong interest for the position, no wonder. And there's a nomination committee, of course, established by the Board that is running that search and -- and as always, from common interest and the lending everything in the right way, it takes time for positions like this. So that's where we are. It's progressing well, and I think that's the best I can say about it. If there's no time horizon that anybody knows of at this point in time.

Thank you, Lars. Martin?

Martin from SEB. Just a couple of financial questions because I'm not sure we actually have a session later. So Anders, if we look at your targets, again, the 5-year period, it has been obvious for many years that you -- the environment has changed. Will you be looking into these new targets a little bit more frequently and not just went wait for 5 years because it has been at least obvious for some years that they were difficult. And then second question, just you call it an ambition to get to a net debt-to-EBITDA level of 1.5. Why not have an ambition to have it higher and pay out a little bit more?

Yes. So first -- to your first question. So we have now today shared our financial ambition towards 2030, so growing organically 7% to 8% and delivering EBIT growth in line or above the top line growth, and at the same time, improve our return on invested capital to around 20% or above 20%. So that's what we're aiming for. And we have put forward the various assumptions on growth, on EBIT, et cetera, cash flow. And this is what we are focusing on to deliver. We have also shared some of the main risks, and we are comfortable that we're able to deliver this towards 2030. But you're right. And in the previous strategic period, especially the upper end of that growth guidance we did not deliver. And now we believe that we have an ambitious growth guidance, but also realistic that we're able to deliver in a market that is growing 4% to 5%. So that's what we are focusing on. In terms of the debt leverage, yes, I'm saying around 1.5x. And that also includes some smaller bolt-ons from an acquisition point of view and where we are evaluating that, that's within the urology space but we are seeing around 1.5.

Thank you, Anders. I think we have Veronika next, I believe, so we can just go over here in the front.

I'm also going to ask a financial one. Just Anders, if you can walk us through the mechanics of how the returns on invested capital improved to 20%, especially if you're not expecting margins to improve in a meaningful way, what gets you from that current 15% to roughly 20%. It's a pretty big lift mathematically to get there. So if he can walk us through the moving parts there?

Yes. So overall, we are, as I said many times now, expecting to grow organically 7% to 8%. We're also expecting to grow our EBIT at or above the top line growth. We are this year having quite a significant special items that I'm also not expecting will continue. And then we have strong focus on cash flow. And I also laid forward a number of the cash flow assumptions towards 2030. And as you recall, we have also utilized our balance sheet to acquire Atos and Kerecis, and that impacted our invested capital significantly. So I'm not expecting that our invested capital will increase at the same level, of course. So there's a lot of focus on the earnings growth, and that will drive cash flow growth and that will drive improvement in our return on invested capital from the around 15%. We are sitting with today to the ambition of getting more than 20% in 2030.

Thank you. Let's move to Oliver here.

That's Oliver from ODDO. One question on your biggest segment, Ostomy Care. So you talked about a lot about the product and how they contribute. But if you look from a regional perspective, for years, you talked about the U.S., the growth contribution, which comes from the U.S. So can you elaborate a little bit about how do you see the regions contributing the outperformance for the next years?

Yes. And I'm sure we'll dive more into details in the breakout session here. But as I mentioned, one of the new products that we launched is the two-piece click coupling, which is a really strong product to tap into this very, very important two-piece segment that we have in the U.S. So that is in the U.S. And I think historically, we probably have had some challenges with the product solution that we had. So now we have a much better product that are getting great feedback, which can help us get the position that we believe that we should have in this market as well. So that will be a key driver.

So we have 2 minutes left, and I believe Julien, Carsten, you. Good, we can go with Julien.

Yes. Two quick follow-ups also on the financials. You have highlighted you want to resume share buyback. Is it fair to assume that the [ 500 million ] that you used to buy back over the years is a fair assumption for the coming years? And the second one relates to M&A. You have no major deals, more bolt-ons. Is there any interest from your side to invest in distribution in the U.S. in case competitive bidding gets to pass because it will likely lead to a lot of consolidation in the distribution space in the country?

Yes. To your first question, Julien, share buybacks, we are expecting to get back to that later in the strategic period. we have not said how much but we are expecting in the next 2 to 3 years to initiate that again. In terms of our interest in doing M&A in the service distribution part of our U.S. business, we are so far focusing a lot on improving our Comfort Medical. That's our distribution deal in the U.S. And we have been focusing a lot on improving that, and it's also going to be an important part of the service and the U.S. strategy that we were also -- that we also will share a little bit more about later today. So our focus is really to utilize what we have through the Comfort Medical offering and also utilize all the new launches we are bringing to the U.S. more or less as we speak. But we will share a little bit more insights around this in the U.S. breakout later on.

Thank you, Anders. That's all that we have time for right now. So next stop is lunch. It will be served outside. Investors, Caroline will join the Chronic Care session, so you can ask more follow-ups there and Anders and Lars will be also hanging around during the day. So please find them and ask some follow-ups if you would like to. Thank you very much.

Thanks.