Coloplast Q3 Growth Hits 6%; EBIT Margin Slips on Currency, Kerecis

Coloplast posted 6% organic revenue growth in its fiscal third quarter, matching the lower end of its full-year guidance range. Strong performance in Chronic Care outside China and Interventional Urology offset continued pressure in Biologics. Reported revenue in Danish kroner grew 6% as currency impact was neutral in the quarter. EBIT before special items rose 5% in constant currencies to DKK 1,929 million. The reported EBIT margin slipped to 26% from 28% a year ago. Currency knocked off about 110 basis points, and the Kerecis acquisition added roughly 60 basis points of drag. Excluding those items, the underlying margin was stable.

CEO Gavin Wood, who took the top job in May, said the quarter reinforced his view of Coloplast as a fundamentally strong company. "What stands out to me is the strength of our Chronic Care business, the significant untapped potential in the US, and the quality of our people," Wood said in the earnings release. He added that his first 100 days had reinforced his conviction that Coloplast operates in attractive markets with leadership positions and significant growth opportunities. Wood outlined his priorities for driving long-term value creation but did not disclose specific financial targets beyond the existing guidance.

Ostomy Care grew 5% organically, with strong double-digit growth in the US and solid performance in Europe and emerging markets outside China. Continence Care delivered 8% growth, driven by the Luja product in Europe and double-digit gains in the US. Voice & Respiratory Care grew 6%, with laryngectomy products performing well while tracheostomy had a softer quarter. Interventional Urology continued its strong run at 7% growth, powered by the US Men's Health business.

The Biologics slump continued. Wound & Tissue Repair grew 3% overall. Advanced Wound Dressings rose 4%, benefiting from good US momentum and favorable phasing in Germany and the Middle East, partly offset by a product return in China. Biologics sales declined 6% and the segment posted an EBIT margin before PPA amortization of negative 5% due to a reimbursement change. Kerecis, the wound care unit acquired last year, delivered roughly 0% organic growth and a 0% EBIT margin for the full year so far, in line with the company's expectations.

For the nine months ended June 30, organic growth was 6% and EBIT in constant currencies rose 5%. Reported revenue grew 3% as the currency drag widened to 3 percentage points. EBIT before special items was DKK 5,599 million, down 2% from a year ago on a reported basis. The EBIT margin was 26%, against 27% last year, with currency knocking off about 90 basis points and Kerecis another 50 basis points. Net profit before special items reached DKK 4,289 million, up DKK 510 million from a year earlier after adjusting for a non-recurring tax impact, helped by lower net financial items due to gains on exchange rate adjustments. Adjusted diluted EPS before special items rose 14%.