Coloplast A/S B Aktie

Ladies and Gentlemen, welcome to the Coloplast Full Year 2025-'26 Earnings Release Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Gavin Wood, incoming President and CEO. Please go ahead, sir.

Good morning, everyone, and welcome to Coloplast. Full Year 2025-'26 Conference Call. I'm Gavin Wood, President and CEO of Coloplast, joined by our CFO, Anders and our Investor Relations team. Today, we will take you through our fourth quarter results and fourth quarter and full year results. More importantly, we will share how we are sharpening our priorities and the choices we are making to unlock the full potential of Impact4 -- and then we will open the call for questions. Please turn to Slide #3. As communicated yesterday, we have revised our financial ambition towards 2030. We now expect organic growth of 5% to 7% per year, and EBIT margin in constant currencies in the mid-20s over the period and return on invested capital around 20% in 2029-'30. The revised ambition reflects 2 things: a more challenging external environment and our decision to invest more in the areas that will strengthen Coloplast in the long term.

Our ambition remains to outperform the market, supported by our strength in Chronic Care, attractive opportunities in Interventional Urology and a more focused Wound & Tissue Repair business. Our additional investment will mainly focus on the innovation pipeline beyond Impact4 and commercial opportunities in U.S. Chronic Care and Interventional Urology. Changes in the external environment reflected in our revised guidance include pressure from price reforms and inflation as well as impact from the reimbursement change in U.S. biologics. Anders will take you through the financial assumptions later. Let me first explain the strategic choices behind the revised ambition. Please turn to Slide #4. In Q3, I set out 5 priorities for the business. Today, I want to update you on how we are advancing them. We are concentrating our resources behind the first 2, sustaining the strength of Chronic Care and increasing our focus on the U.S. Chronic Care remains at the core of Coloplast and central to our priorities. It represents more than 75% of group sales and is our main engine of growth, profitability and cash generation.

This year, Luja continued to gain traction. We expanded the SenSura Mio portfolio and our direct businesses continued to deliver strong service levels and growth. We are now increasing investment beyond the current launch cycle to build the next generation of products in chronic care. We increased R&D expenditure by 13% this year, enabling a higher activity level. Our internal R&D capabilities will remain a key strength of our competitiveness, complemented by a more systematic approach to external ideas and technologies, our most important Continence Care innovation is the U.S. where several years of investment are beginning to translate into tangible results. We now have a broader market access through key Chronic Care business, which delivered strong double-digit growth this year. In Ostomy Care, our market share has increased to around 20% with our position in the acute channel even stronger and continuing to gain momentum.

Our targeted innovation with a new 2-piece click coupling is paying off and accelerating share gains in this segment. In Interventional Urology, our U.S. Men's Health business is in great shape. The business delivered double-digit growth. We've integrated Uromedica into our Men's Health platform, and we are now preparing for the phased launch of Titan Prime in the coming quarters. We will invest in these strong platforms to further strengthen our position and drive sustained share gains and growth. At the same time, we need to future-proof our operating model in light of the dynamic environment, leveraging AI and digital initiatives, particularly in our Comfort Medical direct-to-consumer business. Our third priority is Wound & Tissue Repair with the focus firmly on restoring profitable growth in Biologics. We are concentrating Kerecis on the inpatient segment, where growth remains double digit and Kerecis has the strongest right to win. By end of Q4, approximately 85% of our U.S. biologics sales came from inpatient and 15% from outpatient, showing how significantly the business has already shifted.

The outpatient reimbursement change has structurally altered the market. Our conviction in the category and Kerecis, however, remains high. In less than a decade, Kerecis has built a strong competitive position based on its proprietary technology, extensive body of clinical evidence and continuous product innovation. Highlights this year include a new compact product platform and a new data on chronic and burn wounds. In chronic wounds, a real-world study of 80 patients demonstrated superior clinical effectiveness with Kerecis fish skin grafts compared with the standard of care for treating severe hard-to-heal Stage III and IV pressure ulcers. In burn wounds, study results showed that treatment with intact fish skin grafts significantly reduced hospital stay of length for severely burned patients compared with synthetic and collagen-based alternatives.

These results further demonstrate the clinical strength of our technology, our conviction in the structurally robust inpatient market where we have a right to win, thus remains high. The fourth priority I set out in Q3 was to create capacity to invest behind our priorities. This requires a more disciplined allocation of resources, concentrating investment behind the opportunities with the strongest strategic and financial potential. Through our Funding the Journey program, we have identified approximately DKK 500 million through the completed rightsizing of our organization in China, lifting profitability in biologics, organizational simplification and lower indirect procurement spending. We expect approximately 75% of the impact from the program in '26, '27 with full effect the following year. These are not savings in isolation. They are part of a broader reallocation resources towards innovation, the U.S. and the capabilities required for the longer-term growth.

The program will deliver this broader shift through continuous improvement, simplifying how we work and stopping or reducing activities that are no longer sufficiently differentiated. Technology will also be an important enabler, both in improving the customer experience and in making Coloplast faster and more scalable. Delivering on these priorities will ultimately come down to our people, which is why our fifth priority remains critical. Building on the people agenda I set out in Q3, we are now sharpening our focus on performance excellence, greater clarity and accountability and execution and faster decision-making. Bringing the 5 priorities together, here is what you should expect from us. In 2026- '27, we expect visible progress against each of these areas. In innovation, we need to deliver the current launch cycle while strengthening the product pipeline beyond Impact4. Over the year, we expect to launch more than 10 products across all categories. In U.S. Chronic Care, we now aim to continue the around double-digit momentum from '25, '26.

This is a notable milestone and one we have been working towards for many years. In Wound & Tissue Repair, the more focused biologics model needs to deliver around double-digit growth and an EBIT margin above 10%. Beyond the coming year, success means a stronger innovation contribution, greater U.S. weight in our portfolio and customer experience at greater scale. Please turn to Slide #5. Looking at the strength of our foundation and the priorities we have set, I am excited about the future. We operate in structurally attractive markets, hold category-leading positions and derive more than 75% of our sales from our powerful chronic care annuity model. Over the past decade, we have broadened Coloplast's growth opportunities through innovation, direct-to-consumer capabilities, acquisitions and investments in the U.S. Our focus now is to translate these strengths into top line growth, stronger innovation contribution and greater U.S. weight in our portfolio. In doing so, we are building on the capabilities that made Coloplast a global med tech leader with the ambition to set the standard of care at scale and extend that leadership for generations to come. Let me now turn to our performance in the '25-'26 financial year.

Please turn to Slide #6. We delivered 6% organic revenue growth and 4% EBIT growth in constant currencies before special items, broadly in line with the guidance provided in April. Return on invested capital was 15%, in line with last year's adjusted level. Chronic Care remained strong and Interventional Urology delivered a better-than-expected start to the strategic period. This was partly offset by U.S. outpatient reimbursement changes, which significantly affected Biologics. Net profit and free cash flow developed strongly. Please turn to Slide #7. Looking at our performance by business area. Ostomy Care delivered 5% growth for the year and 6% in Q4. Growth was broad-based outside of China and supported by the SenSura Mio portfolio. Excluding China, Ostomy grew 7% for both quarter and the full year.

In China, the new channel strategy, inventory reduction and organizational rightsizing weighed on our growth. With new leadership and the principal changes implemented, we are now entering a more stable period. Continence Care grew 7% for the year and 5% in Q4, supported by Europe and Luja. Despite a slower fourth quarter in the U.S., Continence Care delivered double-digit full year U.S. growth with a strong contribution from Comfort Medical. Voice and Respiratory Care delivered 8% organic growth for the year and 9% in Q4, driven by the laryngectomy segment. Wound & Tissue Repair grew 2% for the year and 1% in Q4. Advanced wound dressings grew 9% in the quarter, while biologics declined 12%, reflecting the continued impact from the outpatient reimbursement change. Interventional Urology grew 7% for both the year and Q4, driven by Men's Health in the U.S. With that, I will hand over to Anders, who will take you through our financial performance. Please turn to Slide #8.

Thank you, Gavin, and good morning, everyone. Reported revenue for the full year increased by DKK 1.1 billion or around 4% compared to last year. Organic growth contributed DKK 1.6 billion or around 6% to reported revenue. Foreign exchange rates had a negative impact of DKK 472 million or around 2 percentage points on reported revenue, mainly related to the depreciation of the U.S. dollar, the British pound and a basket of emerging markets currencies against the Danish kroner. Please turn to Slide 9. Gross profit for the full year amounted to DKK 19.2 billion, corresponding to a gross margin of 67% compared to 68% last year. The gross margin was negatively impacted by currencies with around 100 basis points related to the depreciation of a basket of currencies against the Danish kroner and the appreciation of the Hungarian forint and Costa Rican colon against the Danish kroner. Ramp-up costs in Costa Rica and Portugal also impacted the gross margin negatively.

During Q4, we started to see the impact from the Middle East conflict on raw materials prices, which increased by more than 2% and freight prices, which increased by around double digit. We also saw impact from worse business area mix, primarily driven by the decline in Biologics. Operating expenses for the full year amounted to DKK 11.8 billion, a 5% increase from last year. The distribution-to-sales ratio for the full year was 33%, on par with last year. Distribution costs grew 4% versus last year, reflecting Kerecis' one-off costs in Q1 and Impact4 investments during the year. The R&D to sales ratio for the full year was 4% of sales compared to 3% last year. The increase was driven by higher activity levels in Chronic Care and Biologics. Overall, this resulted in operating profit before special items of DKK 7.4 billion for the full year. In constant currencies, EBIT grew 4% compared to last year, while the reported EBIT decreased 3% compared to last year.

The EBIT margin before special items was 26% compared to 28% last year, reflecting around 40 basis points incremental negative impact from Kerecis and around 100 basis points negative impact from currencies. Some of the negative impact from currencies was offset by currency hedges positively impacting our financial items. Coloplast incurred special items expenses of DKK 3.2 billion for the full year, of which DKK 3 billion related to the Kerecis impairment loss. Financial items for the full year were a net expense of DKK 403 million compared to a net expense of DKK 1 billion last year. The net expense included DKK 629 million in interest expenses, partly offset by gains on exchange rate adjustments. The tax expense for the full year was DKK 755 million with a tax rate of 20% compared to 22% ordinary tax rate last year, impacted by the impairment loss on goodwill related to Kerecis. Net profit before special items for the year was DKK 5.6 billion or DKK 418 million increase when adjusted for the nonrecurring tax expenses last year. Adjusted diluted earnings per share before special items increased by 8%. Please turn to Slide 10. Operating cash flow for the full year was an inflow of DKK 8 billion compared to an inflow of DKK 6.6 billion last year. The positive development in cash flows from operating activities was mostly driven by strong development in working capital, which ended at 24% of sales, in particular, related to trade receivables and trade payables.

Lower financial items also had a positive impact on cash flows, while higher income tax paid had a negative impact. Cash flow from investing activities was an outflow of DKK 1.7 billion. CapEx for the full year was 5% of sales on par with last year and includes investments related to the new manufacturing site in Portugal, which became operational in our fourth quarter. As a result, the free cash flow for the full year was an inflow of DKK 6.3 billion compared to an inflow of DKK 5.4 billion last year or a 16% increase. Excluding acquisition costs this year and benefit from the divestment last year, the free cash flow increased 23% in the full year with a strong free cash flow to sales ratio of 22% compared to 19% last year. The trailing 12-month cash conversion was 98%. Turning to our sustainability performance. We are developing in line with our Impact4 ambition across most themes. Key highlights from the year include First, we are making good progress on decreasing our absolute Scope 1 and 2 emissions, which decreased by 52% in the year compared to the base year '18/'19, driven by ongoing efforts to phase out fossil-based energy sources as well as continued progress towards increasing the share of electric vehicles. Another important part of our sustainability strategy is improving access to health care.

This year, we had a key success in the U.S. where the Centers for Medicare and Medicaid Services implemented 3 new codes for hydrophilic catheters from January '26. Finally, we have had a strong focus on organizational health, and I'm pleased to see that employee satisfaction continues to be above the industry benchmark at 78% out of 100% -- now let's take a closer look at our updated 2030 ambition and the financial guidance for the coming year. Please turn to Slide 11. As Gavin already shared, we now expect organic revenue growth in the range of 5% to 7% per year for the rest of the Impact4 strategic period ending in financial year '29-'30. The revised organic growth guidance reflects the reimbursement change in biologics and increased level of pressure from health care reforms, where we now expect neutral to negative pricing impact for the remainder of the Impact4 period. Coloplast operates in reimbursed categories, making pricing pressure from health care reforms a key risk to our business. In '26/'27 financial year, reforms will be implemented in France and Germany, impacting both Chronic Care and our Dressings business.

In addition, we are preparing for the Competitive Bidding Program in the U.S. expected to take effect in January '28, where impact continues to be uncertain. The growth assumptions for business areas are as follows: in Chronic Care, we expect continued good momentum with growth above the market. And Interventional Urology, we continue to expect mid- to high single-digit growth. In Wound & Tissue Repair, we now expect mid-single-digit growth from previously around double-digit growth, driven by the reimbursement change in the outpatient setting in biologics. For the '26/'27 financial year, we expect organic revenue growth of 5% to 7% -- the assumptions per business area are largely in line with our 2030 ambition. Please turn to Slide 12. Turning to profitability. We now expect an EBIT margin in the mid-20s range over the period in constant currencies and before special items. Our updated ambition includes a step-up in investments in key strategic priorities to drive growth and value creation during and beyond Impact4. The updated ambition also reflects the external headwinds from pricing pressure and inflation.

In addition to the investments presented at our Capital Markets Day, we will invest more offensively to support value creation during the strategic period and beyond with a specific focus on innovation and the pipeline before or beyond Impact4 as well as the U.S. To partly offset the impact from the step-up investments and external headwinds, we have initiated the Funding the Journey program, which aims to broaden resource allocation and free up around DKK 500 million with full effect in '27, '28 financial year. Around 75% of the impact will already become visible in our financial year '26-'27. And most of it will impact the operating expenses line, primarily distribution costs. For the financial year '26-'27, we expect an EBIT margin of around 25%, which includes the following assumptions. On gross margin, we now expect inflationary pressure of 3% to 4%, impacting raw materials and freight, which accounted for around 55% of total cost of goods sold of DKK 9.7 billion in the previous financial year.

We also expect continued headwinds from ramp-up costs, in particular, driven by Portugal. Our operating expenses assume impact from the step-up investments planned for the year. At the same time, our Funding the Journey program will support the step-up in investments and partly offset the gross margin headwinds. Please turn to Slide 13. The remaining financial assumptions for '26, '27 financial year are as follows: reported revenue growth in Danish kroner is expected to be 7% to 9% with a positive impact from currencies of around 2 percentage points. While the reported EBIT margin is -- will include up to 50 basis points positive impact from currencies calculated using the current spot rates. Return on invested capital after tax before special items is expected around 16%.

Special items are expected to be around DKK 200 million related to our Funding the Journey program. CapEx to sales ratio is expected to be around 5%. The effective tax rate is expected to be around 22% and net financials for the year are expected to be around DKK 900 million. In terms of phasing, we expect a slower start to the year due to the continued impact on organic growth from the reimbursement change in biologics with improvement already in Q2. The EBIT margin will follow a similar trajectory impacted by the top line development in Biologics. Finally, in terms of our capital allocation priorities, we continue to target a dividend payout ratio of 60% to 80% over the period, while simultaneously bringing our leverage ratio to below 2x EBITDA. We believe that the updated ambition today provides both realistic and ambitious targets, enables us to invest in the long-term strength of the company and allow us to deal with incremental external headwinds while maintaining our position as growth and profitability leader in MedTech. Thank you very much. Operator, we are now ready to take questions.

[Operator Instructions] The first question comes from the line of Anna Ractliffe from Bank of America.

I mean maybe best place to start is the updated midterm targets. What are the areas of conservatism that have been baked into the guide and some of the areas of risk? It feels like the low end is relatively derisked given it's in line with the market growth, but would also be helpful to hear what you think could drive upside or drive you to the high end of the midterm guide.

Thank you, Anna, for the question. It's Gavin speaking. So here's our thinking. like our updated financial ambition towards 2030 reflects changes to the external environment. That includes increased pricing pressure from health care reforms and inflation and step-up investments that are required to grow. And also too, the ambition includes headroom to be able to manage headwinds such as the competitive bidding program in the U.S. in 2028. And we've also had to absorb, as you're aware, the biologics reimbursement change in outpatient in the U.S. But ultimately, our focus is on creating shareholder value by growing above the market and strong development in EBIT and improvement in return on invested capital and free cash flow generation. So net-net, our ambition is, of course, to accelerate growth and improve EBIT margin over the period. However, we wanted to be prudent and reflect the current state of the external environment into our financials.

Great. And then maybe as a follow-up, would you be able to comment on areas of risk like maybe China and how you're viewing that market and what you're seeing on the competitive front locally there?

Let me take that one, Anna. So China, we have talked quite a bit to China over the last couple of years. And as you all are aware, we used to have good growth and some years back, actually double-digit growth. But we have, in recent years, seen our growth decline in the last year, so '25, '26, we actually had a year with negative growth, partly due to inventory reduction, but also partly due to increased local competition, in particular in the consumer sentiment. We expect China for this year, '26, '27 and onwards around flattish. So that is our expectations. And China today is around 4% of total revenue.

The next question comes from the line of Hassan Al-Wakeel from Barclays.

A couple from me, 2, please. Firstly, double-clicking on midterm targets and specifically how we should be thinking about the margin trajectory over the medium term and the puts and takes here. Do you expect year-on-year margin contraction in 2028 as a result of CBP? And is it reasonable to assume that after 2028, margins should expand out to 2030? And secondly, Gavin, you talked about stronger innovation contribution and you're putting investments behind this. When do you expect an acceleration of launch cadence to benefit the top line? And should we expect an acceleration in growth out to 2030?

Hassan, thanks for your questions. Let me take the first one related to the margin development over the period. So I just talked to our assumptions for this year, so '26 to '27. We are expecting to deliver a margin around the 25% level based on the assumptions I just mentioned. Over the period towards '29, '30, we are expecting to deliver within the mid-20s. And based on our current estimates, we are or have included an impact from a competitive bidding from January '28. But I'm not going to be more specific because the competitive bidding is highly uncertain at this point in time. But over the period, we are comfortable to deliver a margin in the level of mid-20s.

And I'll take the question on innovation. So I think I'll split it into 2 parts because if you look at our innovation that we're launching in the current Impact4 period up to 2030, we feel really confident. We're launching new products across all of our businesses. So in Ostomy Care, we will continue with the expansion of our SenSura Mio portfolio. In intermittent catheters, we will expand the Luja portfolio with new product variants, including a product tailored to the U.S. We've also launched product launches that we have scheduled for our smaller categories in bowel care, on voice and respiratory care. And in Interventional Urology, we're preparing for the phased launch of Titan Prime this year over the coming months, which we're really excited about.

And finally, we have new products coming in our Wound & Tissue Repair business, primarily in biologics. So the impact from these product launches is included in the growth guidance of 5% to 7%. When I take kind of the further view, like a little bit of maybe what you're referring to on Funding the Journey program, this investment level is really looking beyond 2030. So what we want to do is invest about 80% of that DKK 500 million in Funding the Journey that's going to be allocated towards step-up investments, while the rest is kind of used to kind of partly offset some of the gross margin pressure. But these investments are going to come in starting in '26, '27, and they will include a focus on innovation and R&D to develop the pipeline beyond Impact4. If we're successful, maybe we bring something into the end of Impact4, but these are specifically to be developed for beyond Impact4 time line.

It's also going to be focused on the U.S. Chronic Care business, which is growing double digit right now. So we want to support this strong continued growth and also prepare for competitive bidding. And we also have selected Chronic Care markets in Europe and emerging markets where we're seeing significant growth. And finally, in Interventional Urology, I did just mention short-term on Titan, but we're also preparing for launch preparation for Intibia in the following year, and we wanted to make sure that we had adequate investment for this launch plan as well. Thank you for the question.

Very helpful. Makes sense. Anders, if I could just follow up on margins. And specifically for this coming year, given some of the biologics softness expected earlier in the year, should we think about a back-end loaded year for the group in terms of margins?

So for this financial year, Hassan, we will start up with a softer growth here in Q1 because of the biologics dynamic, but we should then expect that our growth will improve from Q2 and onwards. And I'm expecting a similar pattern for our margin over the year. So that's the assumption. Just in relation to FX, so we are over the year, expecting our margin to be impacted positively based on current spot rates, but it will be more in the second half, you will expect to see that because the impact from the Hungarian forint, in particular, started from our Q3 of last year.

The next question comes from the line of Verma Anchal from JPMorgan.

A couple of questions from me, please. Firstly, just on the pricing assumptions for the midterm target. Can you just maybe dive a bit deeper on what the assumptions are that are underpinning your midterm targets, specifically on CBP. Can you share any color on the magnitude of price cuts you have assumed and what's baked into the midterm guidance? And on the Funding the Journey program, you've guided to the dkk 500 million of savings. And you've mentioned there will be related costs booked under OpEx. Could you specify or share any color on what associated costs or investments are required to deliver this program? And will it all be booked into FY '27? And just one on this year. For cost inflation assumptions, you shared you assume 3% to 4% COGS inflation. But what are your assumptions for wage inflation in Hungary and for energy prices?

Yes. Let me start with the -- I think it was the second question around the Funding the Journey program and the focus we have on identifying resources that we then can resource allocate to the investments that Gavin talked about earlier. So we are expecting our special items to be around DKK 200 million related to this program, and that will be booked as a special item. The majority of the program will impact our operating expenses, and then it will be resource allocated to the investments that we talked about earlier. The first question, was that related to the pricing? Yes, that was a competitive bidding. So competitive bidding, we are not going to be more specific at this point in time. It's still highly uncertain. But based on our internal estimates, we have reflected it in our '29, '30 guidance on growth and margin. And the final one, I think that was related to inflation and Hungary. Yes, in terms of inflation, our raw material prices and freight, we are expecting that to increase by 3% to 4%. And in relation to Hungary wage inflation, we are working with a high single-digit increase starting from January '27.

Perfect. And anything on energy prices for '27?

Yes. In terms of energy prices, we are largely hedged. So more than 80% of our energy consumption in Hungary that's hedged, and we expect a similar level to our energy prices versus '25, '26.

The next question comes from the line of Martin Parkhoi from SEB.

Two questions. Maybe the first one is a little bit more detailed. Anders, I just wanted to go back to the Q4 margin just to understand the base from where you're coming from. And I was just trying to get an explanation on the significant sequential increase in non-allocated costs in the -- from Q3 to Q4 of close to DKK 200 million. I understand that there is FX and there is ramp-up costs, but we also saw that in Q3. And then, of course, there's something on of course, on the inflation, but still DKK 200 million quarter-on-quarter and actually a 23% increase in non-allocated costs year-on-year. Can you explain a little bit why we have this significant step-up and if you actually have front-loaded some cost in Q4? And then second question, just around your changed target for return on invested capital now being around 20%. What kind of assumption have you made on the development in invested capital during the period?

Yes. So thanks a lot, Martin, for the questions. The first question related to the nonallocated costs. Yes, it has increased. in our Q4. And it is really driven by a number of cost of goods related cost categories. So we have seen increases related to cost of goods. We have seen some increases related to the increased raw material prices that I talked about earlier. And then there are also some additional activity costs, including R&D that has increased in our Q4. So those are the main explanations. To your second question in terms of our ROIC, so we expect to deliver ROIC improvement over the period to hit around the 20% in '29, '30. Our invested capital overall, you should expect that to be flattish -- so it's really the earnings improvement over the period that will drive up our ROIC, and that's the underlying assumption.

The next question comes from the line of Jan Koch from Deutsche Bank.

My first one is on your Q4 EBIT margin, which fell to around 25%, partially because of inflation. You mentioned raw material and freight cost inflation, but could you quantify the combined impact on the Q4 EBIT margin? And how do you expect inflationary pressure to evolve through 2027 in terms of phasing? Should we assume inflationary pressure to pick up throughout 2027? Then secondly, you mentioned that you continue to expect pricing pressure from health care reforms in France and Germany in 2027. How much pricing pressure do you expect across your portfolio in each country? And will be there additional cuts in 2028? And then finally, one clarification. You mentioned that your new midterm targets call for 5% to 7% organic growth per year. Does this also apply for 2028 when the competitive bidding program is expected to take effect?

Yes. So Jan, thanks a lot for the questions. Let me start. I think the first question was related to our Q4 EBIT margin. As communicated, quite a significant impact is related to FX. So we have seen a significant impact from FX around 150 basis points -- and this is back to the Hungarian forint, but also the Costa Rican colon that has really impacted the FX negatively in our Q4. We have also had effect from ramp-up costs related to Costa Rica and Portugal and then also a negative mix from the negative growth in biologics. So that's some of the most important drivers of the margin development. Raw material price increases and freight, it was not significant in Q4. It was a smaller impact.

To your second question around pricing and health care reforms. And the pricing and health care reforms for '26, '27 is really related to France and Germany. So previously, in '26, those reforms were, you can say, communicated. And we expect an impact, low single-digit impact in those 2 markets. So that's our assumptions starting from January 1, '27. And then your final question was related to the growth outlook over the period. And here, we are expecting to deliver in the level of 5% to 7% also per annum over the period.

The next question comes from the line of Jack Reynold Clark from Morgan Stanley.

I have 2, please, on the midterm. So starting with the growth guide. So it's obviously quite a large range, and you talked through some of the risks there. So the question is, should we be thinking that the lower end of the range is the base case and that actually if these kind of headwinds don't come through or less severe than they could be, then there's upside? Or should we really kind of anchor at the midpoint and then kind of adjust up and down as required?

And then I guess, follow-up to the previous question on phasing. Would you expect a fairly even phasing of growth through the period? Or would you expect that to be kind of somewhat lumpy? And then the next question was on the midterm margin. So can I just confirm what you mean by mid-20s? Does it mean 24% to 26%? Or is the range larger or smaller? And I guess what determines where you come out within this range on a 3-year basis? Actually, should we be thinking about growth? -- kind of how important is top line growth for driving where you come out in that range?

Okay, Jack, I'll take the swing factor question just on the base of 5%. And look, I think that the way we looked at it is, clearly, there are some swing factors that can drive growth in the upper or lower range. And these were really kind of based on the key ones being growth trajectory in biologics. We expect to see a slow start to '26, '27 until we get the washout of outpatient that we expect at the beginning of Q2. So then we actually have a clear baseline. And that's once the impact of the outpatient reimbursement change is annualized. The level of pricing pressure in a given year is another swing factor where you're thinking of the 5%, and that can change significantly year-on-year depending on which markets are going through a price reform and what's the magnitude of the form.

We -- Anders gave examples of what we're seeing in Germany and France, but there's always others that can come up on any given year that we wanted to be pragmatic about. And then another swing factor is the U.S. Chronic Care business, where we expect to see strong continued execution and expect to deliver around double-digit growth for the rest of the period, but we also are pragmatic that we've got competitive bidding coming up, and that's something that we have to be prepared for. I think that if you look at it from the longer term out because we're focusing more in the upper end range, there's not really weakness in any other areas that we've kind of highlighted, we actually feel quite strong in the areas that we've been delivering consistent growth. Chronic Care remains intact. We see this strong in the U.S. where we're growing double digit. We've had strength in Chronic Care in Europe, emerging markets outside of China. And in China, Anders had mentioned, too, we do expect stabilization following the inventory reduction.

And we've already gone through the organizational simplification and new leadership is in place there. And then maybe I finish off on Interventional Urology, where we're ahead of plan over the year, and we expect good momentum mid- to high single digit over the range period as we start to launch Titan Prime, which I mentioned earlier. And I think I kind of conclude with where I started. We do see Q2 as more of a clearing event for biologics. And I think that Q1 will be choppy. But once we get into Q2, we've been consistently delivering double-digit growth in inpatient, and we expect that to continue where we don't have the heavy comp on outpatient from before.

Yes. And then Jack, your question around Funding the Journey, as I understood your question, that was more the phasing -- so for the full year, we expect the program to contribute with around 75% of the DKK 500 million that we are aiming for and then the rest into '27, '28. Some of the activities within the program, we have already executed on. China is one. So we are expecting some of the savings already to be visible here in Q1, but that is then going into our investment program as well. So that's how we see it. Did that cover the questions, Jack?

The next question comes from the line of Martin Brenoe from Nordea.

I have 2 left, please. The first one would be on -- I guess we all try to understand the margin trajectory from here and I get the biologic support that you get through the year. But can you maybe give us the other part of the equation, which is what would your margin look like if you didn't have the energy hedges and maybe also the inventory now is getting a bit of -- or sorry, the margin is getting a little bit of support from the fact that you have bought your inventory at a lower spot rate versus the spot rate today.

So if we were to assume that everything else being equal, with the energy prices being where it is today, raw materials being where it is today, how would that impact your margin versus the hedges that you have done and the inventory that you have sitting on your portfolio today? That would be quite helpful to do the year-over-year impact for '28, please.

So Martin, thanks a lot for the question. As I said earlier, for this financial year '26 to '27, we are expecting raw material and freight to increase something around 3% to 4% based on current assumptions. And when we look at the various indexes. I also said earlier in terms of energy that we are hedged for this year and the absolute cost level for our energy is ballpark at the same level as the prior year. So based on current assumptions, the raw material prices, including freight, will increase something around 3% to 4% on our raw material cost base. That's the assumption.

And I think what I'm trying to ask is what would that look like if you hadn't been very clever and hedged at lower prices versus where it is today? What would the impact then have been on the margin next year? Because you have the tailwind this year and then at some point, your hedges, unfortunately, will be rolling off and then we have to assume that you have to buy energy at the spot price. So I just wanted to get that differentiator and maybe also understand on the raw materials, 3% to 4% is including that you have some inventory bought at lower spot prices. So by the end of the year, I assume that the negative raw material impact will be bigger in Q4 versus in Q1 would be helpful to understand if that's correct.

So I talked to this year and the assumptions to this year, and that's also our focus. moving into '27, '28 and starting to discuss the raw material prices and energy at this level, that's definitely something we will be more focused on. When that is said, we have already hedged some of the energy consumption also into '27, '28. So -- and I would also say, Martin, as you know, our energy costs in total is around 2%. So yes, that's where we are.

Very clear. Just one final follow-up. Just you had ex-China growth in your Q3 numbers. I can't find it for this quarter. Can you just let us know what the ex-China growth would be for Q4, please?

The next question comes from the line of Oliver Metzger from ODDO.

Yes. First question, just also on price pressure. For years, you said that you assume a 1% price pressure. Is this 1% also include part of your midterm guidance? Or do you see some higher level? Second question is about your mid-single-digit growth expectations for Wound & Tissue Repair. If you decompose that, how you think about the advanced dressings and Biologics midterm? So is it fair to assume this mid-single digit for advanced dressings? And Yes, these are my 2 questions.

Yes. Oliver, let me start with the pricing. So for the rest of this strategic period, we are expecting neutral to negative price. And when we speak to the negative part, it's really related to competitive bidding. But as we have said a few times during this call, the impact is still very uncertain. And the second question related to our wound tissue repair.

So I think you broke it into 2. The Advanced Wound Dressings market is growing between 2% and 4%. And if you think of our market, there's really our OUS business because we're stronger in advanced wound dressings in Europe. We're less relevant in the U.S. So the U.S. is coming from a much lower base. So we expect actually stronger growth coming from our U.S. business because of that low base. And I think that we would plan to be kind of in the upper end of the range of the 2% to 4% outside of U.S. On biologics, what we expect is our biologics business is primarily a U.S. business. And once we see kind of the annualization of the outpatient concluding in -- at the beginning of our Q2, so from January, we would expect double-digit growth in biologics going forward in the inpatient setting.

The next question comes from the line of Doyle Graham from UBS.

Just a couple, please. Anders, just firstly, on the guidance for '26, '27. Obviously, the last few years, there's been some misses on guidance, primarily driven by inflation and margin pressure. It's a new midterm philosophy. Is it reasonable to think that you've taken a more prudent philosophy in terms of how you look at cost? So we're looking at inflation, have you baked in a level above maybe what you actually have locked in today in terms of what you've hedged such that if things do get worse, you can accommodate that? Just to understand that.

And then secondly, Gavin, on the guide, so the midterm guide of 5% to 7% and you're reinvesting in the business, but you've just done a 6% in a market where you had a lot of pressure on wound. I know there are some pressures out there, but one of your peers is backing themselves to 6% to 8% over the midterm. Given you're investing in the business, should we not see growth accelerate towards the end of this decade? Or should we not see an alternation in terms of taking that investment out of the business towards the end of the decade if it's not showing a return? So just to understand how you're thinking about those trade-offs.

Yes. So Graham, let me start with the first question. So for this financial year, '26, '27, we are guiding a margin around the 25% level. And first and foremost, it's driven by our growth. And here, we are expecting between 5% and 7%. Secondly, on the gross margin, and now we have talked quite a bit about that, we are seeing some external related headwinds. So inflation is impacting us, but also pricing pressure. And then on top of that, we are ramping up in Portugal that is also impacting our gross margin. But in order to offset some of that and also to invest into the business, we have initiated the Funding the Journey program, and we have initiated a number of activities within that program to, as I said, offset some of the external headwinds and to finance the investments that we are planning to do within innovation and U.S. in particular. And when we sum that up, we are expecting to deliver around the 25% margin for this financial year.

And thanks for the question, Graham. Just building on what Anders said, we feel fortunate that we're in a position where we have a lot of growth opportunities to invest in. And so of course, our ambition is to accelerate growth and improve EBIT margin over that period. However, we also wanted to be prudent and reflect the current state of the environment and our financials, as I shared before. So I guess the best way to look at it is to think we want to take a sensible approach. We wanted to create flexibility. And when you look at freeing up the DKK 500 million, 80% of that, as I shared before, is going to be directed to the areas that we talked about from our 100-day reflections, double down on chronic care, where we're strong, start to develop faster innovations and also innovations that will bring us past the 2030 time line. and really double down on our market that we feel like we can get the fastest growth, and that's the U.S. So we're being really specific with these investments, and we're very confident that we're going to be able to deliver strongly over the period.

That's really helpful. Maybe just come back to Anders. So my point is you've given like a lot of assumptions there. I think what people would love to know is how much room is there for things to get worse and you still hit the key assumption, which is the 25% margin? I think that's the key question I was sort of getting at.

So Graham, we are comfortable that we will hit the numbers we have put into the market today, both the growth outlook and the margin outlook for '26, '27, but also our outlook for '29, '30. So we are comfortable that we are able to deliver on our financial ambitions.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Gavin Wood for any closing remarks.

So thank you for joining today, and we appreciate your support. We appreciate your questions. And maybe just a couple of closing comments. We feel very confident with the revised guidance and our ability to deliver, and we look forward to seeing you at the road shows later this week. And thanks again for all of your support and your questions today. Have a good day.

Ladies and gentlemen, welcome to the Coloplast Interim Financial Statements for 9 months 2025-'26 Conference Call. And I'm [indiscernible], the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Gavin Wood, incoming President and CEO. Please go ahead, sir.

Good morning, everyone, and welcome to Coloplast Q3 2025-'26 Conference Call. I'm Gavin Wood, President and CEO of Coloplast. I'm joined today by our CFO, Anders, and our Investor Relations team. Anders and I will take you through the quarter, and then we'll open up the call for questions.

Please turn to Slide #3. Over my first 100 days at Coloplast, I've spent a great deal of time with our businesses, customers, users and colleagues. When we last met, I spoke about what attracted me to Coloplast, its purpose, its people and its ambition. What I've seen since joining has reinforced that initial view: Coloplast is fundamentally a strong company. We operate in attractive markets, hold leadership positions across our businesses and continue to generate sustainable growth, profitability and cash flow. The Impact4 strategy provides a strong foundation. As we progress through the rest of the year, I will continue to evaluate our priorities and the choices that will be critical to driving growth and long-term value creation to highlight a few.

Starting with the core of Coloplast, Chronic Care. We have to sustain and extend our leadership in chronic care. Chronic Care is the foundation of Coloplast. It represents more than 75% of group sales and is our main engine of growth, profitability and cash generation. We have a #1 position in attractive categories, deep customer relationships and an annuity-based business model that provides a stable and predictable revenue stream. Combined this creates a unique opportunity and a powerful competitive moat.

One of the things that stood out to me is the quality and clinical differentiation of our products. SenSura Mio combines body fit technology with a secure fit designed to prevent leakage and protect the skin. The Luja range intermittent catheters has been proven to enable complete bladder emptying in one free flow without the need for repositioning the catheter. I believe we have an outstanding product portfolio, which gives us a strong starting point as we prepare for the next innovation cycle.

We also have a strong capability in opening and developing markets. This has been an important source of growth throughout the company's history, and there is still considerable potential ahead. In Continence Care, for example, we see strong double-digit growth rates in markets with recent reimbursement openings. Looking ahead, our objective is to extend that leadership. We will increase our investment in innovation, shorten time to market for new products and strengthen commercial execution. We have a solid pipeline today, but we have to look also beyond the immediate launch cycle and develop products that will shape our categories over the longer term. We are well positioned to deliver on these priorities.

The second priority I want to touch on is our U.S. opportunity. We have to capture a larger share of the largest health care market globally. It represents our biggest value creation opportunity and only accounts for around 1/4 of group sales today. We are seeing strong momentum with high single-digit to double-digit growth across Chronic Care and Interventional Urology. At the same time, our position remains below its full potential when we look at current positions. In U.S. Ostomy Care, we're #3 with a market share of around 15% to 20%. In Continence Care, we're #1, but our share is around 30%.

In both categories, our U.S. position is still well below our global average. We also see considerable potential in Men's Health, the fastest-growing part of Interventional Urology. Here, we hold the #2 position and have a strong platform from which to grow. The U.S., in our opinion, should therefore play a much larger role in our strategic and investment choices going forward. We will be more deliberate about where we invest and more focused in our execution with a clear ambition of accelerating growth and strengthening our market positions.

Moving on to wound and tissue repair. We continue to see attractive long-term opportunities in Biologics. The recent market reset in the U.S. has been challenging, but it has also given us a much clearer view of where we can win: the right customer segments, specialties and care settings. We increasingly see Biologics moving toward the inpatient setting. Kerecis is very well positioned there, supported by strong clinical evidence, favorable healing outcomes and clear product differentiation. It is also where the majority of Kerecis sales are already generated. We will continue to concentrate our resources on priority accounts and specialties and continue to deepen our presence in inpatient care.

At the same time, we will restore profitable growth. That means increasing field productivity, sharpening commercial execution and continuing to build on our clinical capabilities. As announced yesterday, Fertram will step down from his position as Executive Vice President of Wound & Tissue Repair and transition into a new role in Coloplast as Chief Innovation and Technology Adviser to the CEO. The Wound & Tissue Repair business will report into me on an interim basis while we sharpen the organization and priorities to support the next chapter of this business. I want to thank Fertram for his exceptional contribution to Coloplast over the past 3 years, and I'm very pleased that Coloplast will continue to benefit from his experience and innovation mindset.

I have now given you an idea of where we will focus and what we believe in will drive value for Coloplast, and we will need to also continue to fund our growth journey and continuous productivity improvement and disciplined capital allocation has to be a central part of it. Coloplast has a strong record of operational discipline, productivity and cost management. These capabilities underpin our industry-leading profitability and remain an important competitive strength. Going forward, we need to apply the same discipline to how we allocate resources and capital. We will direct investment towards opportunities with the greatest potential for sustainable growth, value creation and operating leverage, supported by clear accountability and rigorous investment governance, enabling us to make smarter investments.

I want to conclude this topic with which you've heard me speak about before, the importance of people and culture. I'm deeply impressed by the people I've met across Coloplast. There's a strong sense of purpose and a deep commitment to users and customers across the organization. We will build on this foundation by strengthening accountability, giving teams greater clarity and room to act and aligning our performance expectations to our ambitions and priorities. We will focus on developing the capabilities for the future and ensure that our strongest people are working on the priorities that matter most.

A stronger talent pipeline and clear succession plans will be essential. And an important first step is the appointment of our new Chief People Officer. I'm very pleased to welcome Amanda Rajkumar to Coloplast into the executive leadership team. With 3 decades of global HR experience, Amanda brings deep expertise in leadership dynamics, employee culture, succession planning, remuneration and talent development. So this was a recap of my first 100 days and my perspective on the priorities and choices that will be central to driving long-term value creation. At our full year results, we expect to provide a broader update on what they will mean for our strategic priorities, value drivers and execution within the Impact4 framework.

Let me now turn to our performance in the third quarter. Please turn to Slide #4. I'm pleased to share that we delivered a third quarter with 6% organic revenue growth and 5% EBIT growth in constant currencies before special items. Return on invested capital after tax and before special items was 15%, in line with last year's adjusted level. Performance in Chronic Care and Interventional Urology was also strong, while Biologics continued to be affected by the recent reimbursement changes. Net profit and free cash flow also developed strongly.

Let me take you through the performance by business area. Please turn to Slide #5. In Ostomy Care, organic growth was 5% for the first 9 months and growth in Danish kroner was 2%. In Q3, organic growth was 5%, with growth in Danish kroner of 4%. Across Europe, U.S. and emerging markets, excluding China, Ostomy continued the strong performance and grew 7%. Growth in the U.S. was a strong double digit, continuing the momentum in the first half and benefiting from recent product launches. In China, the implementation of our new channel strategy resulted in a significant inventory reduction in the third quarter. This temporarily affected growth but is expected to improve channel economics over time.

From a product perspective, SenSura Mio remained the main contributor to growth led by the Convex segment. Our latest launches with SenSura Mio continued the good performance with further variants expected to launch next year. In Continence Care, organic growth was 7% for the first 9 months and growth in Danish kroner was 5%. In Q3, organic growth was 8% and growth in Danish kroner was also 8%. Growth was led by the U.S. and Europe.

The U.S. delivered strong double-digit growth supported by Luja and a positive phasing effect between third and fourth quarters. Luja was the main product contributor. Bowel Care also performed well, delivering strong double-digit growth in the quarter. Since launch, Luja Male has been a key contributor to sustained high single-digit growth in the male catheter business and Luja Female has lifted growth in the female catheter business to high single digit today. These are both very encouraging early indicators and demonstrate the value of meaningful innovation.

Voice & Respiratory Care delivered 7% organic growth for the first 9 months with growth in Danish kroner of 5%. In Q4 (sic) [ Q3 ], organic growth was 6% and growth in Danish kroner was 5%. Laryngectomy delivered high single-digit growth in the quarter, while Tracheostomy was softer due to order phasing in the distributor markets with the affected orders expected to move into fourth quarter. In Wound & Tissue Repair, organic growth was 2% for the first 9 months and growth in Danish kroner was minus 4%, with 2 percentage points negative impact from the Skin Care divestment in December 2024. In Q3, organic growth was 3% and the growth in Danish kroner was also 3%.

Advanced Wound Dressings returned to growth, increasing 4% in the third quarter. The improved momentum was driven by strong momentum in the U.S., phasing in Germany and Middle East. China remained a headwind due to the product return initiated in the third quarter of last year. Biologics declined 6% in the quarter, but in line with our expectations. The decline reflects the continued impact from the reimbursement reform in the outpatient setting. In the inpatient setting, momentum remains healthy with double-digit growth year-to-date.

In Interventional Urology, organic growth was 8% for the first 9 months and growth in Danish kroner was 4%. In Q3, organic growth was 7% and reported growth in Danish kroner was 8%. Growth in the quarter was led by Men's Health in the U.S., particularly Titan, our flagship inflatable penile implant. Titan has delivered double-digit growth for several quarters in a market growing at the mid-single-digit rate. Our next-generation penile implant, Titan Prime, has received FDA approval in the U.S., and we expect to launch the product in the next couple of months. We are also seeing strong performance ahead of expectations in Uromedica, the company Coloplast acquired back in February.

And finally, given the recently anticipated FDA review timing for Intibia, we now expect the launch of the product in the U.S. at the beginning of '27, '28. With that, I will hand over to Anders, who will take you through our 9-month financial performance. Please turn to Slide 6.

Thank you, Gavin, and good morning, everyone. Reported revenue for the first 9 months increased by DKK 568 million or around 3% compared to last year. Organic growth contributed DKK 1.2 billion or around 6% to reported revenue. Foreign exchange rates had a negative impact of DKK 595 million or around 3 percentage points on reported revenue, mainly related to the depreciation of the U.S. dollar, the British pound and the basket of emerging markets currencies against the Danish kroner.

Please turn to Slide 7. Gross profit for the first 9 months amounted to DKK 14.4 billion, corresponding to a gross margin of 67% compared to 68% last year. The gross margin was negatively impacted by currencies of around 90 basis points, mostly related to the depreciation of the U.S. dollar, the British pound and the basket of emerging markets currencies against the Danish kroner and an appreciation of the Hungarian forint against the Danish kroner. Ramp-up costs in Costa Rica and Portugal also impacted the gross margin negatively. The negative impact was partly offset by lower inflation on freight compared to last year. We are still not seeing any material impact on the gross margin from the conflict in the Middle East in Q3.

Operating expenses for the first 9 months amounted to DKK 8.8 billion, a 3% increase from last year. The distribution-to-sales ratio for the first 9 months was 33%, on par with last year. Distribution costs grew 2% versus last year, reflecting Kerecis one-off cost in Q1, partly offset by lower sales costs in China and lower logistics costs due to the one-off cost in the U.S. last year. The development in distribution costs were also positively impacted by the depreciation of the U.S. dollar against the Danish kroner. The admin-to-sales ratio for the first 9 months was 4% on par with last year. And the R&D-to-sales ratio for the first 9 months was 4% of sales compared to 3% last year. The increase was driven by higher activity levels in Chronic Care and Biologics.

Overall, this resulted in operating profit before special items of DKK 5.6 billion in the first 9 months or a 2% decrease compared to last year. The EBIT margin before special items in the period was 26% compared to 27% last year, reflecting around 90 basis points negative impact from currencies and around 50 basis points negative impact from Kerecis. In constant currencies, EBIT grew 5% compared to last year. Coloplast incurred special items expenses of DKK 3.1 billion in the first 9 months, of which DKK 3 billion relates to the Kerecis impairment loss. Financial items in the first 9 months was a net expense of DKK 100 million compared to a net expense of DKK 875 million last year. The net expense included around DKK 500 million in interest expenses, mostly related to the financing of the Atos Medical acquisition.

The interest expenses were largely offset by gains on exchange rate adjustments, mostly related to the U.S. dollar, Hungarian forint and the Costa Rican colón. The tax expense in the first 9 months was DKK 533 million compared to an ordinary tax expense of around DKK 1 billion last year. The tax rate was 22%, on par with the ordinary tax rate last year. Net profit before special items in the first 9 months was DKK 4.3 billion or DKK 510 million increase from last year when adjusted for the nonrecurring tax expenses last year. Adjusted diluted earnings per share before special items increased by 14%.

Please turn to Slide #8. Operating cash flow for the first 9 months was an inflow of DKK 5.4 billion compared to an inflow of DKK 4.4 billion last year. The positive development in cash flows from operating activities was mostly driven by favorable development in working capital, in particular, due to improved trade receivables. Lower financial items also had a positive impact on cash flows, while higher income tax paid had a negative impact. Cash flow from investing activities was an outflow of DKK 1.3 billion compared to an outflow of DKK 861 million last year.

CapEx in the first 9 months was 5% of sales, on par with last year, and includes investments related to the new manufacturing site in Portugal, which is on track to be operational here in Q4 '25/'26. As a result, the free cash flow for the first 9 months was an inflow of DKK 4.1 billion compared to an inflow of DKK 3.5 billion last year or a 16% increase. Excluding acquisition costs this year and benefit from the divestments last year, the free cash flow increased 27% in the first 9 months with a free cash-flow-to-sales ratio of 20% compared to 16% last year. The trailing 12-month cash conversion was 91%, and net working capital amounted to around 26% of sales.

Now, let's take a brief look at the financial guidance for the year. Please turn to Slide #9. Our guidance for full year '25/'26 remains unchanged. We expect full year organic revenue growth of 5% to 6%, EBIT growth in constant currencies before special items of around 5% and return on invested capital after tax before special items of around 15%. We continue to expect negative impact from currencies with around 2 to 3 percentage points impact on reported revenue growth and around 80 basis points negative impact on the reported EBIT margin. We are especially seeing negative impact from the Hungarian forint, which saw a notable appreciation against the Danish kroner following the Hungarian election back in April.

We continue to monitor the developments in the Middle East and the impact on the business, including implications for demand, supply and cost inflation. With the knowledge we have today, we expect limited impact on sales, and we maintain our previously communicated assumptions around raw material cost inflation, where we expect around 1% raw material cost inflation in the second half of this year and around 2% to 3% raw material inflation next year. We now expect net financial items of around minus DKK 300 million based on spot rates as of August 14, down from around minus DKK 500 million previously. Finally, by the end of the fiscal year, we expect to reach a gearing ratio of around 2.3x EBITDA.

Thank you very much. Operator, we are now ready to take questions.

[Operator Instructions] And the first question comes from Hassan Al-Wakeel from Barclays.

A couple, please. Firstly, Gavin, just on some of your reflections on Chronic Care and the next innovation cycle. Do you see a need to increase R&D in a material way in order to sustain and extend that leadership? You also talked about the U.S. being a key strategic priority. So could we see some compromise in the margin to drive stronger innovation, commercial execution and ultimately a stronger top line? And then secondly, I appreciate China has been a drag for some years in Ostomy, but it does look to be worsening. So can you unpack the performance here? And how much of the softer growth do you think is market share loss versus market weakness?

Okay. Thank you, Hassan, for the question. I think, look, there's -- it's really clear that we want to invest more in innovation. And as I shared, our group sales, 75% of our business comes from Chronic, and we feel very, very strong about this platform. So this is an area that we do want to invest more in. My answer would be, this is not about committing to an allocated specific percentage of sales to R&D investments. That's more of a mechanical exercise where we don't feel the value is created. What we need to do is we need to ensure that we have the headroom and the flexibility to invest when great opportunities are identified and then we need to ensure that we have a system and a structure that allows the best ideas to surface.

So ultimately, going forward, we want to ensure that we have the best ideas and the most meaningful innovation that's getting adequate funding, and we need to be disciplined and likely stopping some projects earlier when we don't yield the desired outcome. And we need to celebrate more calibrated risk taking. So ultimately, this is what I would say, Hassan, is for the next generation of innovation, like we feel really strongly in our current innovation and the Impact4. This is really about investment in innovation for smarter choices going forward in the next innovation cycle. And then, I'll ask Anders to address your question on China.

Yes. So in regards to China, you're right, Hassan, that China has -- we have had challenges in China for some time. We have seen low single-digit growth, flattish growth. And this year, the underlying expectations for our Chinese growth is low single-digit negative. But on top of that, we have also now a new management in place. We have decided to review our go-to-market strategy where we are really looking into the number of distributors we are having, et cetera. And as a consequence of that work, we have decided to reduce our inventories in China as well. And that's why we see quite a significant one-off here in Q3, and we will also see some one-off related to that in Q4. In Q3, it's a one-off of around DKK 45 million. So yes, China is and has been a challenge. And -- but we are optimistic with the new team in place that we are now working on a new strategy for China. And then over time, we will start to see us improve the Chinese business. So that's where we are.

Very helpful. If I could just follow up, Gavin. You highlight industry-leading profitability in your reflections in the release. I wonder if we should read into the importance of this industry-leading profitability going forward given some of these investments that you've been talking about.

I'm sorry, could you repeat the question?

Yes. It was about the commentary around industry-leading profitability in the reflections in your reflections in the release today. And I wonder if we should read into the importance of this industry-leading profitability going forward in the future over the medium term, given some of these investments that you're flagging.

Yes. So listen, this is going to probably come down to a lot of reallocation. That's kind of the perspective that I have. But I think when you think of longer term looking ahead, I've kind of used the first 100 days to kind of identify choices that were going to be -- help us make longer-term value creation opportunities. And clearly, at the full year '25, '26, we plan to probably give a broader update on the implications of how these kind of play into our strategic priorities, value drivers and the execution within the Impact4 framework.

Then the next question comes from Aisyah Noor from Morgan Stanley.

My first one is on Kerecis, particularly the inpatient business, where we're hearing market volumes haven't really benefited from a decline in the home care setting. Could you talk about this inpatient business? Did it grow double digit in the quarter as you observed in the first half? What are you seeing competition-wise? And where are channel inventory levels today? And then second question is on Intibia. Would love to hear the reasons for the delay of the launch and whether the hurdle to success could now be higher since we've had one more tibial device launch from your U.S. peer in the last month.

Okay. Thank you for both questions. I'll let Anders will start with Intibia, and then I'll answer your first question.

Yes. So thanks for the question. In terms of Intibia, as we said here in our opening statement, we now expect the launch into '27, '28. And it's really driven by the FDA approval process. So we are working hard in order to get the FDA to approve our solution. We are still expecting that the Intibia launch will contribute to our growth within urology, but it's coming towards the end of the strategic period. But we still expect that the urology that is actually off to a better start than we had anticipated will continue with the high single-digit growth that we have seen also this year. But it's really driven by the FDA approval process, and that had a consequence on our launch timing.

Okay. And I'll take your first question. So -- and thank you for the question. And this is one that we have addressed before. But clearly, there's a lot of reimbursement dynamics that have played out in the U.S. Biologics skin substitute space. And I'll start with the outpatient and then move to the inpatient. So in outpatient, we see a continued transition rather than a full stabilization. So the USD 127 centimeter square, that's the fixed payment rate that continues to pressure utilization with providers becoming much more selective and cautious. And we do see meaningful price competition while everyone is adapting to the new pricing level and some use of traditional lower-cost wound care alternatives where clinically appropriate.

However, at the same time, the market is gradually moving through the initial disruption with greater clarity around the new reimbursement environment and increasing adaptation by both providers and manufacturers. And this is where we see Kerecis having a distinct advantage because if you start to look at the inpatient, where most of the market has shifted towards, this is the area where Kerecis has the majority of our sales today and our market position. And we have very strong product differentiation, very strong data on our products. So when you look at inpatient in contrast to outpatient, the inpatient setting remains a much more stable environment with healthy underlying demand and where we've had double-digit growth to date. You did ask about the last quarter that the last quarter was high single digit, but we're still confident that we're going to close the year with a double-digit growth in inpatient, and that remains our focus.

Perfect. If I could follow up also on Kerecis, and this is in regards to the change in executive leadership that you've announced overnight. What should we be reading from your interim kind of taking over as the Interim Head of Wound? Are more serious discussions being had about the future of this business? And I know Anders mentioned in an interview previous to this call that the outlook is now lower for Kerecis. Is there an outcome here where you're actually strategically reviewing this business for the future?

No. I think this is more a natural evolution of a business. So if you think of it, we acquired Kerecis 3 years ago in September. And so the leadership change is really also about strengthening our outlook going forward. So if you think of it, Fertram had been with Coloplast for 3 years. He's now stepping into a technology assessment role. I have very high conviction in the category of Biologics and technology going forward. And Fertram is going to play in an area to his strength where -- I mean, he's incredibly strong at assessing technology and external innovation and brings that innovative mindset that really helped develop Kerecis.

So with his capability focus there, I'm kind of taking an assessment of the business of how do we kind of professionalize and scale this business throughout the U.S. and globally. And I did come with a background where I worked previously in wound care. So I felt taking this on personally would give me an opportunity to really go in and assess the organization and the talent to develop what's the right setup for the future.

And the next question comes from Martin Parkhoi from SEB.

Yes. I'm Martin Parkhoi, SEB. A couple of questions, both for Anders and from Gavin. Let's start with Anders. Anders, can you just -- we, of course, talk about raw material inflation. I don't understand you're not giving guidance for '27, '28, but can you just give kind of solid numbers of how the impact you expect to see on raw material inflation going into next year, what -- given what you know today? And the second question for you is your dividend policy. You haven't seen your dividend per share going down for decades. Is that a firm policy for you also given that the investment you need now and your ambition to go down to a gearing level of 1.5x. Do you still believe that you can keep the dividend intact or even go up over the Impact4 period?

And then just Gavin, it's question maybe in 2. Just to confirm again, China with the change you're making in China, does that impact also the growth ambitions you have in China in the Impact4 period? And related to that, can you just confirm that with the strategic priorities that you're doing and the broader review you're making, are you still comfortable with 7% to 8% top line growth towards '29 to 2030?

Thanks a lot, Martin, for your questions. Let me start with the first ones. So in terms of the raw material, as I said in my opening statements, we are this year, this financial year, expecting some impact to impact the P&L here in Q4. And when we move into next year, I'm still expecting it will have the inflation related to the Middle East crisis will impact our raw material costs with around 2 to 3 percentage points. So that is my current assumptions moving into next financial year.

In terms of your second question, the dividend policy. So last year, when we communicated our Impact4 strategy, we confirmed our dividend policy also with the aim to get the payout ratio down to something between 60% and 80%. And we have a lot of focus on improving our cash flow, and we have a lot of focus also to reduce our debt ratio from -- I'm expecting this year to hit around 2.3x EBITDA and get it down below 2x over the period. So we have a lot of focus on maintaining the dividend policy. And that, of course, requires a strong cash flow in the years to come. Gavin?

Okay. Thanks, Martin. So I'll start with your question on China. So the Impact4 assumption was kind of flattish growth over the period for China. So that's an unchanged assumption. We don't plan that to be any different. Your question on strategic priorities, and I think you're alluding to impact on future guidance. To be very open, I'm currently evaluating the Impact4 as part of my broader 100-day review. So my focus in the last 100 days has been really on getting to know the business, as I shared earlier. I now have a much stronger view on the priorities for the business looking ahead, which I've shared, and also some of the strategic choices that we believe we need to make. So from here going forward, I will continue to progress my view on the overall business. And as we get to the full year announcement, I expect to be able to share more about what implications I anticipate as a result of my 100-day review.

And the next question comes from Anchal Verma from JPMorgan.

A few questions for you. The first one would be just a follow up on Aisyah's question around Intibia delay. Could you outline if the FDA has raised any concerns? Have they asked for more data? Or will you need to do further clinical trials? And then the second one is just when you talk about being more focused on where you invest and making smarter investments, could you give us a bit of flavor on the type of investments you'll be looking at? Are there any gaps you'd like to fill? On the contrary, are there any businesses in the portfolio that are potentially disposal candidates? And to that point, how do you feel about the balance sheet position right now? And what are your thoughts on financing further M&A?

All right. Let me take those questions. The first question in terms of Intibia, we are not -- we cannot really speak more to the clinical outcome at this point in time. So we need to get through the FDA process. And as I said earlier, we now expect that to be complete early '27, '28.

To your second question in terms of M&A, as I understood your question, we are not planning any bigger M&As towards 2030. We are really focusing on executing on the businesses we have. It might be we will evaluate some smaller tuck-ins, in particular within urology. As you know, we did a smaller technology investment earlier this year. It's called Uromedica, and it's a very interesting technology that is really benefiting our Men's Health business in the U.S., and we're actually off to a good start with that acquisition. But you should not expect us to do any bigger M&As towards 2030.

And just a follow-up in terms of potential disposal candidates, are there any that you have identified thus far?

I did not really understand the first part of your question.

I'm just trying to understand when you're talking about reviewing the portfolio you have, if there were any areas you think that could potentially be divested or disposed of.

So that is -- that's not the plan. So...

And the next question comes from Jesper Ingildsen from DNB Carnegie.

I have a couple of questions. You're only growing 5% to 6% organically. It seems like Kerecis inpatient is now below 10%. Intibia is being pushed to '27, '28. China Ostomy Care continues to decline. I appreciate you're going to come with a wide update in November in regards to the 7% to 8% organic growth you currently have for the Impact4 strategy. But is there anything you can point to in terms of what's going to accelerate rate growth in the coming years, assuming the renewed focus on the U.S. will take some time to show in the numbers.

Then my second question would be around your margins. So your priorities imply higher investments in innovation, U.S. commercial execution capabilities. In addition to this, you have headwinds from raw materials, as you just highlighted as well, FX, too, and wage inflation. How do you fund all of that without further margin pressure? I mean, Coloplast already looks like a very lean organization. Where would you find any savings or potentially reallocating from?

Yes. So Jesper, thanks for your question. Let me just start towards the 2030, as I understood your question. So actually, we are off to a good start within our chronic business, if I exclude the China. We're off to a really good start in U.S. Chronic, driven by innovation, driven by commercial execution, and we are really satisfied in terms of where that business is. And we're also off to a really good start with our urology business. Our urology business is already now at a high single-digit growth. We actually anticipated that to come later in the period, but that business is also off to a better start than we had anticipated.

It's clear that this year is really impacted by the Biologics situation. We have talked a lot about it, but it's really impacted by this reimbursement reform that came into play from January 1. And then China, this quarter, we have taken a decision to reduce our inventory levels. But there's actually quite a bit of our business that is either at or above the expectations that we have towards 2030. In terms of question 2, Gavin?

Thank you. So I think that one of the big questions is how to fund the journey when we start to make some of these choices. And specifically, it's on innovation within chronic. It's also looking at other fast-growing BUs, and it's also looking at geography. So I think overall, Coloplast, if you look, we have historically, we've been very strong in driving continuous improvements. And we need to continue to leverage this strength. Meanwhile, we're also reviewing the growth and profit pools across our businesses, and we'll be assessing these against bigger value opportunities. And to be more tangible, we see meaningful opportunities to free up capacity through organizational simplification, operational efficiencies and tech-enabled productivity improvements.

And some of these examples include assessing our overhead spend, especially in noncustomer-facing areas. I mean we're going to be really focused on investing in customer-facing roles, commercial productivity improvements and alignment looking at direct spend optimization. And this means investing more behind innovation and growth while continuously improving productivity, reducing complexity where returns are diminishing. So ultimately, I see meaningful opportunity to sharpen our focus on resource allocation and reallocation, capital deployment and investment governance. And this will ensure that resources are directed towards the opportunities that have the greatest potential to drive growth and create value. And ultimately, we're trying to make smarter choices to drive growth long term.

And the next question comes from Veronika Dubajova from Citi.

I have 2, please, and forgive the bluntness. My first one is just on the priorities, Gavin. If I look at what you're talking about, it sort of seems very much the same thing as what's been going on at Coloplast. And I think we can all objectively look at it from the outside. And for a variety of reasons, there has been very limited earnings growth through the last period in the business. So I'm just curious kind of what are you actually going to do differently?

Yes, I know there's opportunities in the U.S. Yes, I know there's opportunities in wound. Chronic Care is a great business. But just looking at it, it doesn't sound to me like there is a huge amount of change. So maybe you can outline what is going to be different under your leadership versus your predecessor. And then my second question is just on Anders, on your comments around the review of the long-term guidance. Can I just get your perspectives at this point in time, whether the risks that you see are more to the sales guide or to the EBIT guide or to both?

Okay. Thank you, Veronika, for the question. And I think, look, pragmatically, I'm 100 days in, and I'm putting out 5 areas that I think are important for our future. And maybe I'll give you a little bit more context to it, but I think the real answer is going to come at full year implications. But if you look at it from a practical standpoint, we want to continue to be strong in the U.S. So as Anders said earlier, we're starting to see momentum pick up. We've put new leaders in place to lead a couple of our top businesses in the past 15 years, and that's leading our chronic business in Interventional Urology.

We're also making changes in some of our leadership that you heard today on Wound & Tissue Repair. And we're committing to putting more resources in the U.S. If you look at it from a result perspective, we're starting to see double-digit growth just in the past quarter in the U.S. So we want to fuel that. So that's going to be like a lean in that you're going to actually see us start to focus a lot more. And I think that, that's going to be different than the past. The other area is on Wound & Tissue Repair. I think we've been very open that there's been a lot of challenges in the outpatient market.

We are actively shifting our resources from outpatient to inpatient. And we've just spent the last couple of months doing a strategic review on this business to make sure that we're much more laser-focused on specific accounts and specific specialties where we're going to start to align our resources to. And what we believe is that in the coming quarters, this will start to drive more growth than we've seen in the past in the Biologics area. So those are 2 examples. And what I would say is that as I gain more insights over the next 3 months and I get to the full year, I'll share a little bit more about how these come into play with more defined decisions and implications. And I'll pass over to Anders for the second question.

Yes. Thanks, Gavin. So the second question, Veronika, it's basically that we are, as Gavin just mentioned, assessing a number of things currently in order to move forward. And that is back to this whole resource allocation as one of the key ones. And the next period of time, we will continue the assessment of the organization, and then we will conclude when we have the full year announcement in November.

Okay. But I guess I appreciate that, but I guess, is the concern that you have more about the growth targets? Or is it that you want to allocate more resources to the business and so maybe it's about the EBIT targets? Or is it both? I guess I'm just trying to understand, I know it's very preliminary, but just trying to understand where you see the risks to the strategy that was outlined about a year ago?

Yes. So that's what we're currently assessing, Veronika. As Gavin has mentioned a couple of times now, we have shared Gavin's 100 days reflections, and now we move into the next phase where we will evaluate what are the things we will do in a different way, and we will conclude on that when we announce our full year results.

Then the next question comes from Julien Dormois from Jefferies.

I will give you a break on the midterm guidance. First question is a more short-term one, and it relates to Kerecis. I think you have indicated in the release that you expect to bring back profitable growth in that business. So I was just curious as to how long it would take? Is it a matter of a few quarters? Or are we more talking in years to bring that business back to a more decent profitability level? So that would be question number one.

And the second question also relates to the 5 priorities that you have highlighted, Gavin, following your 100-day review. You mentioned obviously great opportunities in the U.S. focusing on Chronic Care, Men's Health, but I could not find any, let's say, commitment on the Wound & Tissue Repair, while I think previously, we were talking about this business possibly in a priority because you're obviously punching way below your league in that business in the U.S. apart from Kerecis. So just curious whether that's more something that we should think more about the next strategic period and maybe not for that one specifically.

Okay. So I'll take your first question. We -- and maybe let me give you just a little bit of background. So the answer is we believe that sometime around Q2 '26, '27 is when we start to see some true recovery. And why that time frame? Because if you look at the outpatient and when reimbursement was lost, we tend -- we plan to see kind of the bleed out where we're comparing apples-to-apples beginning in Q2. And that's when we're going to be able to compare just our focus on inpatient versus our previous focus on inpatient the year before.

But I think that if I give more context, our conviction, and this answers a little bit of your second question, too, our conviction in the long-term Biologics opportunity remains intact. So when I made a comment before about growth coming in chronic right now and seeing really good growth in Interventional Urology, it did not mean I don't believe in Biologics and Advanced Wound Care. They're just in different places of evolution right now. Why I believe that the long-term Biologics opportunity remains intact is primarily what we've seen in the U.S. is a reset, which has been challenging. But this has also forced us to learn. And we've been able to accelerate our learning curve and provide greater clarity on where customer segments, specialties and care settings are best positioned to win.

And so what we see ultimately is that the center of gravity in Biologics is going to shift towards hospitals and specialist care settings. And specifically, that's going to shift into inpatient. So this is fortunate for us because this is a market where Kerecis is particularly well positioned. We're supported by strong clinical evidence. We have favorable healing outcomes and clear product differentiation. And a majority of our business sits in this call point. So going forward, we're going to concentrate our resources on priority accounts and specialty-led growth and a clearer focus on deeper penetration by account.

And I think equally important, we'll be restoring profitable growth in Biologics business through improved field productivity and scaling our clinical expertise. So that kind of answers, I think, a little bit of your second question because I do believe that we're going to see this return to growth. And then we're doing in parallel a review on the Advanced Wound Dressings to really determine how to win in the U.S. because that is an area that I agree, we've been a little bit softer. And now we're going to lean in and put the resources behind it to determine how to win in the U.S. And I'll come back at full year and share more on that then.

Then the next question comes from Anna Ractliffe from Bank of America.

I wanted to pile on, on the wound questions. It seems like contract manufacturing drove a lot of the strength in the quarter. I saw you called out the phasing in Germany and the Middle East. Would you be able to give us any more detail there? How much of that was maybe catch-up from Q2 disruption? And how do you see that playing out in Q4 and into the start of next year? And then maybe to follow up on Aisyah and Anchal's Intibia questions. That product has been a big part of driving Interventional Urology growth to high single digits from mid-single digits. So maybe with the approval push out, should we think about next year maybe as more of a mid-single-digit year ahead of the approval? Or are there any other smaller catalysts that -- or product launches that we should be thinking about that can support organic growth for next year in this division?

Yes. So thanks a lot. And let me start with the first one around our dressings growth in Q3. You're right, we saw a very strong contribution from our contract manufacturing in the quarter. And we actually expect that to some extent, continue into Q4, but not at the same level. We also had a good growth contribution in Germany, but that's more a Q3, Q4 phasing. But then on the other hand, next quarter, we will -- we did a big recall last year in China of around DKK 60 million, as I recall. So we will also see a strong Q4 for our dressings business. But yes, there is quite a bit of underlying movements for our business. Good news actually so far this year is also our U.S. Dressings is actually contributing to our growth as well.

Then question number two. In terms of urology, as we said a couple of times throughout the call, our urology business this year is off to a better start than we thought when we announced our Impact4 strategy last year. So we are already sitting with high single-digit growth, in particular, driven by Men's Health. And we expect this to continue basically due to the launch of our new penile implant, the Titan Prime. We expect to launch a new solution within the next couple of months. And then next year, we will also see contribution to organic growth from the acquisition we did back in February. So the Uromedica acquisition will also contribute to growth. So we are optimistic that our urology franchise will continue to drive high single-digit growth, as we have also said in the Impact4 strategy.

Good. Then we have one more question coming from Graham from UBS.

Can I just ask one, Gavin, on the sort of the timing of some of these changes in terms of priorities. So in terms of investing in innovation, presumably that's a fairly slow burn, right? You can't just like double R&D spend or something overnight. So is that something you intend to do through the period over the midterm? Or is it something you could ramp up relatively quickly? And then the offset to that is in terms of the efficiencies, are those things that are relatively low-hanging fruit in your view and something you can kind of harvest a little bit quicker as well? Just to get understanding of those kind of puts and takes in terms of timing, please?

So to answer your first question, it will be through the midterm. So as I stated before, we recognize that there's an opportunity to invest more in R&D and in innovation. And it needs to be meaningful innovation. But you are right, it takes time to do this. What we are committing to is when you look at the Impact4 timeline, we actually have very solid innovation up until 2029. So we're looking -- like this commitment is now to start the reinvestment into innovation for that time period and beyond. And that is where we're going to start to give you better line of sight as we go forward on what investment choices we're going to make on innovation. But it's really putting the stake in the ground to say that we're going to start to invest for the future. But you are right, it takes time.

And maybe just on the point around actually U.S. expansion in terms of prioritizing that to Veronika's point, obviously, there has been investment in the past, but you've come in with a fresh look. What are the things that you see as like a standout opportunities to really move the dial in the near term there?

I think that short term, the biggest is commercial execution always. It's really looking at your front line. So you come into a company and you're new and you're starting to look around. And when you start to see pockets of growth. And really, I think the best way to answer this is when you took a look earlier at the first slide, 25% of our business comes from the U.S., but it represents the largest market for opportunity in med tech globally. That's for every company.

And we're sitting in position #3 in Ostomy Care between 15% and 20%. And we still have a lot of runway in Continence Care. We're 5% to 10% in U.S. biologics. So you look at that naturally and you start to say, okay, let's start to invest more in our commercial execution, our commercial capabilities because the runway, if we start to make those investments, we believe with our superior products, we can win. And that will be the short term.

Okay. Well, thanks, everyone. We appreciate you joining today, and that's all the time we have for now and grateful for your questions. Thank you.

Ladies and gentlemen, welcome to the Coloplast Interim Financial Statements for H1 2025-'26 Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions].

At this time, it's my pleasure to hand over to Anders Lonning Skovgaard , Executive Vice President and CFO. Please go ahead, sir.

Q2 2026 conference call. I am Anders Lonning Skovgaard, CFO of Coloplast, and I am very happy to introduce our new President and CEO, Gavin Wood, who joined the company on May 1. Please turn to Slide #3.

Thank you, Anders, and good morning, everyone. As Anders mentioned, I joined Coloplast on May 1, and this is my first opportunity to speak with many of you. So let me briefly introduce myself and share what excites me about joining Coloplast for this next chapter. I spent more than 2 decades in global MedTech, leading commercial organizations and multibillion-dollar businesses across different regions and therapeutic areas. Most recently, I served as Company Group Chair of Johnson & Johnson MedTech EMEA with an organization of more than 7,000 employees and ownership across surgery, orthopedics and cardiovascular solutions.

Prior to this, I was the Worldwide President of Ethicon's Wound Closure and Healing business, and before that, the Executive Vice President of Global Commercial at Molnlycke. I started my MedTech career as a sales rep at Ethicon Endosurgery, followed by a series of traditional roles across sales and sales management. It was there that I first saw the impact a medical device can have when it's used by a physician on a patient or a customer. And that experience is what really attracted me to the med tech industry and has motivated me to stay. A bit of context on me personally. I'm Canadian by birth. -- currently living in Switzerland and relocating to Denmark. My career has come across multiple geographies and is shaped by a global mindset and a strong appreciation for different cultures and ways of working. As I begin this new chapter, I want to put a few words to why Coloplast and why now. First, the deep sense of purpose.

Coloplast was born because a nurse saw her sister suffering and refused to accept it and an engineer committed to bringing her idea to life. It was about solving a human problem. Second, the people, the people behind the business. Every conversation I've had has confirmed that Coloplast is full of great talent, passion and commitment. And I can feel that. And as in any company, it's the quality of the people that ultimately determines what's possible. Third, the ambition. Coloplast wants to write its next chapter to become even more impactful towards users, customers and communities, helping 4 million people long term, about twice as many as we serve today. Our 2030 strategy, Impact is designed to build that future by setting the standard of care at scale, anchored in deep customer centricity, and that resonates with me deeply. I'm a builder at heart, and I see something meaningful that we can achieve together. The company has a strong legacy built over many years. And as I approach this role with curiosity and genuine respect for that history, at this stage for me, it's all about building a perspective, forming a clear view of where the future growth opportunities may lie and where the organization may need to challenge itself as we look ahead.

At its core, this is about continuing what Coloplast has done well for many years, converting investment, focus and execution into strong and sustainable returns over time. The way I lead is grounded in a few simple beliefs. I believe value is created when ambition is translated into a number of clear priorities, when decisions are made as close to the customers as possible and when teams are empowered with accountability for outcomes. That's how consistency and momentum are built over time.

And ultimately, I believe focus drives results. And this all starts with people. I place a strong emphasis on developing leaders and creating the environment where teams can perform at their best. because the culture, people and strength of an organization ultimately determines what's possible and what we can deliver together. As I start my new role, I will be spending time close to the business, engaging across the organization and in our key markets, deepening my understanding of the impact for and focusing on strong commercial execution from day 1. This is about seeing how Coloplast operates in practice, how decisions are made and how our teams deliver for impact for our customers each and every day.

My focus is simple, building best-in-class talent to drive performance and results. And I'm looking forward to meeting many of you on the road in the coming months. Coloplast was built by listening closely to our users and our customers, and I'm excited to keep learning, listening and building the next chapter of this company together with the people who make it possible.

With that, I'll hand back to Anders, who will take us through the financial results for the quarter. Please turn to Slide #4.

Thank you, Gavin, and once again, a warm welcome to Coloplast. On April 23, we revised our guidance for full year '25-'26 and preannounced our results for the first half of '25-'26. We delivered a very strong second quarter, excluding wound and tissue repair, with solid underlying performance across the majority of the group. Now let's take a closer look at today's results. Please turn to Slide #5. In Ostomy Care, organic growth was 5% for the first 6 months and growth in DKK was 1%. In Q2, organic growth was 7% with growth in DKK of 3%.

Following a soft start in Q1, we saw the anticipated pickup in momentum in Q2, and we expect this good momentum and continued market share gains to continue into the second half of the year. From a product perspective, our SenSura Mio portfolio continues to be the main growth driver, followed by the Brava supporting products. From a geographical perspective, growth in the quarter was broad-based across regions with solid contribution from Europe, led by the U.K. and Germany. I would also like to call out the U.S., which delivered double-digit growth and continues to deliver strong underlying momentum from Q1. Our U.S. business is in a great shape. In H1, both Vizient and Premier, the 2 largest GPOs in the U.S. renewed Coloplast national group purchasing agreements for Ostomy Care.

And we are seeing good uptake of our latest SenSura Mio launches, the black bags and the new 2-piece offering, which has been well received in the market. Our main challenge in Ostomy Care remains China, which saw another quarter with subdued growth due to the continued weak consumer sentiment and competitive pressures from domestic players in the community channel. For the full year, we now expect sales in China to decline slightly year-over-year. Outside China, the rest of our emerging markets contributed nicely to growth. In Continence Care, organic growth was 7% for the first 6 months and growth in DKK was 3%. In Q2, organic growth was 8% and growth in DKK was 4%. Growth in the quarter was driven by the Luja catheter portfolio, which performed strongly across key European markets and the U.S.

The male catheter continued to perform well, while the female catheter saw a strong uptake in the quarter driven by Europe. Luja is our most important innovation in Continence Care in a decade, and it's encouraging to see how Luja continues to pick up momentum, becoming an increasingly larger share of our growth contribution within intermittent catheters. It's a great example of how customer-centric innovation backed by compelling clinical evidence is setting a new standard of care in the market.

Our Bowel Care business also continued its good momentum and made a strong contribution to growth in the quarter, driven by the Peristeen portfolio in Europe. Vice & Respiratory Care posted 8% organic growth for the first 6 months with growth in DKK of 5%. In Q2, organic growth was also 8% and growth in DKK was also 5%. Growth in laryngectomy in Q2 was high single digit and driven by an increase in the number of patients served in existing and new markets as well as an increase in patient value driven by the Provox Life portfolio. Growth in tracheostomy in Q2 was mid-single digit, driven by continued solid underlying demand, partly offset by phasing in distributor markets. From a geographical perspective, all regions contributed to growth, driven by Europe and the U.S. In Wound & Tissue Repair, organic growth was 1% for the first 6 months and growth in DKK was minus 7%, with 3 percentage points negative impact from the Skincare divestment in December '24. In Q2, organic growth was minus 2% and growth in DKK was minus 6%. Q2 revenue from biologics amounted to DKK 283 million with 0% organic growth and 0% operating profit margin, excluding the PPA amortization. As also mentioned on the extraordinary conference call 3 weeks ago, we continue to see a healthy inpatient business with growth that remains at a healthy double-digit level despite a slight easing of momentum in Q2.

On the other hand, our outpatient business is challenged with significant sales decline, in line with the rest of the market. In Advanced Wound dressings, sales declined 2% in Q2 and 3% in the first half of the year. China detracted from growth due to the product return initiated in Q3 last year with a negative revenue impact of around DKK 25 million in the quarter, similar to the impact in Q1. Outside China, Europe had a soft quarter across markets. In Interventional Urology, organic growth was 8% for the first 6 months and growth in DKK was 3%. In Q2, organic growth was 8% and reported growth in DKK was 2%.

Growth in Q2 was mainly driven by continued strong momentum in the U.S. Men's Health business driven by the Titan Penile implants. From a geographical perspective, the U.S. continued to be the main contributor, followed by Europe. On February 18, '26, Coloplast has completed the acquisition of all shares and voting rights of Uromedica, a commercial stage medical technology company specializing in the treatment of stress urinary incontinence with a solution highly complementary to our existing men's health business. The integration of Uromedica is progressing well, and the acquisition has been well received by our existing men's health customers.

Before turning to the H1 financials, let me make one final remark on organic growth. While performance in the wound tissue repair franchise remains below our expectations, this reflects a set of external headwinds that we are actively addressing. Importantly, more than 80% of our business continues to perform well with solid growth and market share gains. Now with this, let's look at our H1 financials. Please turn to Slide 6. Reported revenue for the first 6 months increased by DKK 171 million or 1% compared to last year. Organic growth contributed DKK 789 million or around 6% to reported revenue. Inorganic revenue mostly related to the divestment of the skin care business in December '24, reduced reported revenue by DKK 70 million or around 50 basis points.

Foreign exchange rates had a negative impact of DKK 548 million or 4 percentage points on reported revenue, mainly related to the depreciation of the U.S. dollar, the British pound and a basket of emerging markets currencies against the Danish kroner. Please turn to Slide 7. Gross profit for the first 6 months amounted to DKK 9.5 billion, corresponding to a gross margin of 67% compared to 68% last year. The gross margin was negatively impacted by currencies of around 60 basis points, mostly related to the depreciation of the U.S. dollar, the British sterling and the basket of emerging markets currencies against the DKK and appreciation of the HUF against the DKK. Ramp-up costs in Costa Rica and Portugal also impacted the gross margin negatively. The negative impact was partly offset by lower inflation on freight compared to last year. Operating expenses for the first 6 months amounted to DKK 5.8 billion, a 2% increase from last year. The distribution to sales ratio for the first 6 months was 33% on par with last year.

The growth in distribution costs were flat year-over-year, reflecting one-off logistics costs in the U.S. last year and lower sales costs in China this year, partly offset by Kerecis one-off costs this year. The development in distribution costs were also positively impacted by the depreciation of the U.S. dollar against the Danish kroner. The Admin-to-sales ratio for the first 6 months was 5% compared to 4% last year and includes around DKK 15 million in one-off advisory costs incurred by Kerecis in Q1 in connection with the recent CMS regulatory changes in the U.S. outpatient setting. The R&D-to-sales ratio for the first 6 months was 4% of sales compared to 3% last year. The increase was driven by high activity levels in Chronic Care and Biologics.

Overall, this resulted in an operating profit before special items of DKK 3.7 billion in the first 6 months or a 3% decrease compared to last year. The EBIT margin before special items in the period was 26% compared with 27% last year. reflecting around 70 basis points negative impact from currencies and around 40 basis points negative impact from Kerecis. In constant currencies, EBIT grew 5% compared to last year. Coloplast incurred special items expenses of DKK 3.1 billion in the first half of the year, of which DKK 3 billion relates to the Kerecis impairment loss. Financial items in the first 6 months were a net expense of DKK 63 million compared to a net expense of DKK 385 million last year, driven mostly by interest expenses related to the financing of the Atos Medical acquisition, which were largely offset by gains and exchange rate adjustments, mostly related to the U.S. dollar, Hungarian Forint and the Costa Rican colon.

The tax expense in the first 6 months was DKK 121 million compared to an ordinary tax expense of DKK 770 million last year. The tax rate was 22% on par with the ordinary tax rate last year. Net profit before special items in the first 6 months was DKK 2.8 billion or a 6% increase from last year when adjusted for the nonrecurring tax expenses last year. Adjusted diluted earnings per share before special items increased by 5%. Please turn to Slide #8. Operating cash flow for the first 6 months was an inflow of DKK 3.7 billion compared to an inflow of DKK 2.7 billion last year. The positive development in cash flows from operating activities was mostly driven by a favorable development in working capital.

Lower financial items also had a positive impact on cash flows, while higher income tax paid had a negative impact. Cash flow from investing activities was an outflow of DKK 1 billion compared to an outflow of DKK 442 million last year. CapEx in the first 6 months was 6% of sales compared with 4% last year and includes investments related to the new manufacturing site in Portugal, expected to be in operation in Q4 '25/'26. As a result, the free cash flow for the first 6 months was an inflow of DKK 2.7 billion compared to an inflow of DKK 2.3 billion last year or a 16% increase. Excluding acquisition costs this year and benefits from the divestment last year, the free cash flow increased 33% in the first half '25/'26 with a free cash flow to sales ratio of 20% compared to 15% last year.

The trailing 12-month cash conversion was 89% and net working capital amounted to around 25% of sales. Lastly, the Board of Directors approved a half year interim dividend of DKK 5 per share, corresponding to a total of interim dividend payout of approximately DKK 1.1 billion. Now let's take a brief look at the financial guidance for the year. Please turn to Slide #9. As I mentioned earlier, we revised our guidance for full year '25/'26 on April 23. For the revised guidance, we now expect full year organic revenue growth of 5% to 6%, EBIT growth in constant currencies before special items of around 5% and return on invested capital after tax before special items of around 15%. We continue to expect negative impact from currencies with around 2 to 3 percentage points, negative impact on reported revenue growth and around 80 basis points negative impact on the reported EBIT margin.

We are especially seeing negative impact from the Hungarian Forint, which has appreciated 6% against the Danish kroner since the Hungarian election on April 12. In terms of phasing, we expect both organic growth and EBIT growth in constant currencies in the second half of the year to be similar level to the first half of the year. We continue to expect net financial items of around minus DKK 500 million based on spot rates as of May 8, down from around DKK 1 billion in '24/'25. Thank you very much. Operator, we are now ready to take questions.

[Operator Instructions] The first question comes from the line of Julien Dormois from Jefferies.

Welcome to the company. Two questions from my side, please. The first one relates -- would probably be for Gavin and relates to your arrival as new CEO of the company. So maybe just to help investors, if you maybe have to name your top 3 strategic priorities for the first 12, 18 months at the firm, what would they be? And maybe also which part of the Impact for strategic plan do you think might need a revision, if any? And the second question is more on the current trends in wound and tissue repair, which obviously has been heard in Q2. What have you seen into the third quarter? Have you seen maybe difference in the performance for either Kerecis or for the rest of the business, especially in Europe?

Julien, thanks a lot for your 2 questions. Let me take the second question, and then Gavin will come back on question number one. So to your second question around the current trend on our wound tissue repair. So as we have been talking about at length, we revised our full year guidance to the organic growth of 5% to 6%. And that was driven by the biologics business in the U.S. as we delivered around 0% growth here in the second quarter. We are expecting to be at that level or slightly below the 0% for the rest of the year. So that is the main driver of the revised guidance that we did 2 to 3 weeks ago. We have also, as I just mentioned, seen some slowdown here in Europe on the dressing side, in particular, in France and to some extent, also in Germany, driven by price reforms.

So that's how we see it, and that's what we are looking into for the second half of this financial year. So Gavin?

Yes. So thank you, Julien, for the kind welcome and my first question. So maybe let me start by sharing a little bit about some of the things that I will bring to Coloplast, then I'll answer your question about priorities and my perspective on Impact I think the first thing for all investors and analysts that are listening, I come from a lot of broad med tech experience, leading large multi global, multibillion-dollar med tech businesses. I've had the opportunity to see all the various priorities across med tech, and I've operated at scale across multiple franchises and geographies and organizations where we tend to focus on consistency, clarity and accountability matters each and every day.

And this experience has helped shaped how I think about driving leadership at scale. and how to keep priorities really, really clear with decision-making that's disciplined and execution that's predictable as organizations grow and become larger. I also bring a background in wound care from my days at Molnlycke across some of the other areas that I've mentioned. The second area, Julien, is really around leadership and talent. I think in large organizations, outcomes ultimately depend on the leaders that you put in critical roles and the standards that you set for them. So I'm going to be spending a lot of time here. I've spent many years building leadership teams and developing talent, which I'm incredibly passionate about and creating environments where people are both empowered, but also held accountable for clear expectations and results.

And I think it's ultimately about instilling an ownership mindset across your entire leadership organization. I think that the third thing is I'm bringing deep experience across both Europe and U.S. So I've spent a lot of my career in both continents, North America and Europe and having the opportunity to lead innovation and a lot of global execution roles. I think that this is something that I bring that also reinforces the speed of execution, being able to see multiple geographies and different ways of doing things, sustained commercial intensity and credibility, building credibility with clinicians over time and working in different environments and environments that establish a very clear benchmark for urgency, so focus and leadership.

And that's something I'm going to be looking towards. And the last thing I just want to share on background, and then I'm going to get into a few of your specific questions is I think commercial experience that's grounded in the front line is something that's needed at this point. I started my career in sales, and I've stayed close to the field throughout. So this matters to me because it always gives you a very direct understanding of how trust is built with customers, how adoption really happens with products and technology and what makes execution work in practice. And I genuinely enjoy spending time with the frontline teams and customers because that's where you really truly learn how an organization is working. And I'm going to be doing a lot more of that.

Now to answer your question directly on my approach then for priorities, I'm really on a listening tour. So right now, like my focus is getting closer to the business, getting to know our teams, our people, our users, our customers. And then I'm going to form my perspective on the value drivers that will enable us to deliver on our ambition. And you can think of that as a listening tour. If I think of the direction of Impact for what you asked specifically. It's really more my role is to create the environment to unlock the potential for our teams to really excel and execute. And so if you look at Impact4, it's founded on 4 principles: driving growth through innovative customer offerings. That's innovation.

I mean that resonates with me, driving -- unlocking next level efficiency gains and operational efficiency, that's super important to keep a company strong long term. And embracing technology through tech and AI is going to be a key enabler for all med tech companies over the next 5 to 10 years to transform. And then finally, cultivating a winning and sustainable company. This is really about driving culture and the talent engine. So if there's one area that I'm probably going to particularly lean into, not change, I'm going to spend a lot of time on really understanding the culture and the talent and the high performance across Coloplast because I believe that organizations that win long term in med tech, they win because they have a winning culture and a talent engine built for the future. Thank you for the question.

The next question comes from the line of Doyle, Graham from UBS.

Gavin, maybe a couple for you, which is -- firstly, just on a sort of follow-up to Julien's question, but maybe a little bit more specific, which if you look at the Coloplast share price, it's obviously been a disappointing share price for the last 2, 3 years. And when you think about what creates most value in terms of things that you can do, so what metrics specifically are you focused on just holistically regardless of whether it's Coloplast when you look at the business in your prior experience, is it organic growth? Is it return on invested capital? Is it margin, EPS? What do you think is the one metric that you're kind of most focused on that can kind of move the dial? And maybe secondly, you talked about being in sort of prospective gathering mode. How long would you anticipate that taking?

Thank you for the question. So just for context, I just want to be very direct with everyone. I'm less than 2 weeks in roll. And clearly, I'm still forming opinions and it's going to take me some time to learn. And I think pragmatically, I'm going to need 90 days to really do this listening tour and learn and start to form some opinions where I can come back and share thoughts. But this is what I can share right now. I think Coloplast has this admirable company and a great legacy that is incredibly strong. This is what attracted me to the organization. And I'm really looking forward to getting into the business and getting to know the company at a deeper level. I'm getting to know the people, the leadership teams, the users, the customers.

And over this next 90 days, this is going to help me form my perspective on the value drivers that will enable us to deliver on our ambition. I think to be fair to you, the one area that I always think you lean in on is people. It's talent. So like if you're saying what's the one metric, you have to get the teams right. So that, to me, is going to be the unlock in the future for everything. If you get the right people in the right roles, you get them engaged and motivated, you get them believing in the strategy, you get them believing in a winning culture, anything is possible. Thank you for the question.

[Indiscernible] Just follow up [indiscernible]. I think people would like maybe something more [indiscernible] on that, which it's not to hold you to anything, but again, it seems pretty reasonable just to -- when you come in and look at the business, any business, what do you think is the best signifier of value creation. It's going to be hard to measure culture, but we can measure return on invested capital, we can measure organic growth. And obviously, for the last years, [indiscernible] been different focuses. So it's just genuine to get a sense as to when you come in and when you assess the business to start with, which were the things financially that you thought were attractive and could be enhanced.

So for me, if I give something more concrete, it would be focusing on value creation. And if there's one area that I typically look at from a strong commercial background, it's commercial execution.

The next question comes from the line of Aisyah Noor from Morgan Stanley.

Good to virtually meet you as well, Gavin. My first question as well is also for Gavin, and it relates to your approach to innovation and R&D. So Coloplast as an organization has a lot of projects underway like Luja and Intibia. But as you look at the organization today, do you see the current level of R&D investment as adequate? Or do you think there's scope to raise that to kind of take the portfolio to a more competitive level? And then I have a financial follow-up for Anders.

Thank you for the question. So first, and I certainly don't want to keep repeating myself, I am less than 2 weeks in. What I can share is innovation is important. There's absolutely no question. And I'm very happy to be very open with you with the innovation that Coloplast has started to put out, and I'm also very deeply committed to innovation going forward. The reality is it's still early days for me to give you a full assessment. And what I see in this organization is an organization that's innovation-driven. It's been embedded in the company's DNA for a long time, has a strong purpose and mission. And it's clear when you meet our people and when I've met with the R&D teams, what makes people proud working at Coloplast is the difference that they make with innovative products that has a meaningful impact on users.

I think what's also clear is this has allowed Coloplast to maintain a number of #1 global market-leading positions in their products and innovation. And without those, we certainly wouldn't be where we are today. So I will finish saying that as a newcomer to the company, I'm excited to start to build my own perspective on what the future holds for Coloplast. I'm excited about where we can take innovation. And to answer your question, I'm really excited about some of the attractive assets that we have like Luja, like Intibia, like biologics. And I think that what we're going to see is more innovation coming out in these lines in the years to come that's going to keep Coloplast strong and keep Coloplast innovative. Thank you for the question.

And my follow-up for Anders is, I guess, one on profitability and margins. Can you just provide for us your assumptions on the cost inflation for raw materials in the second half? And how much safety inventory you have before this inflation headwind starts to kick in?

Yes. Let me take that one. So thanks. We also got this question at our call 3 weeks ago. So we are following the Middle East situation very closely. We -- as you know, we have around 50% of our cost of goods sold that's raw materials. In the first half of this year, the inflation levels, raw material prices were around flattish. We have not seen any impact yet, but I am expecting some impact into the -- towards the end of this year, so in Q4. And right now, I'm assuming around 1% impact on our raw materials. And that is, of course, under the assumption that the conflict will end soon. We are also seeing a little bit of impact right now on our logistics costs. But on the energy side, we are hedged and we are not expecting anything there. So my assumption right now is around 1% increase coming into our Q4 based on the current knowledge about the Middle East.

The next question comes from the line of Anna [indiscernible] from Bank of America.

Gavin, congratulations on the new role. I appreciate your commentary that you're only 2 weeks in, but I wanted to ask as you get under the hood, what are your first impressions of the business? What drew you most to the role? And how are you thinking about the different strengths and opportunities? And then maybe for Anders, I wanted to ask to dig a little bit into Interventional Urology and that high single-digit growth for this year. How sustainable is that going forward? How much of that is driven by easy comps from the recall last year? And then any update you could give us on the Intibia launch timing would be helpful.

Thanks, Anna. Thank you for the warm welcome. And maybe let me start with your question on why Coloplast and what excites me and then what have I seen in the first 1.5 weeks. Look, I'll reiterate what I shared earlier. I think the big thing is the purpose. Like it really excited me coming from an organization like Johnson & Johnson, which has a strong credo coming into an organization like Coloplast, where you see something similar with this purpose-led organization where you're trying to develop solutions for users and patients that really need to find a technology. This was extremely motivating for me, especially when you're actually being able to combine innovation to improving patient outcomes.

The second, and I'll say it again, it's really the people. I had a chance through the process to meet more than just the Board. People that work at Coloplast have a deep connection. There's something special about this company that it's not just about talent and passion, they're deeply committed. And this is something that motivated me when you can work with an organization where people have a strong purpose, they put a lot of emphasis on building strong teams and they work together collaboratively. And where you feel there's a lot of talent that you can develop, I think that's something that you can make an organization a lot better long term. And then the last thing was really around the ambition.

I think Coloplast is very sincere. We want to write this next chapter. And part of that chapter is clear and in the impact for and part of that chapter is still to be written. And I think as a new CEO, this is what makes me super motivated to be here that you've got a balance of a great foundation of strength and opportunities to build for the future. And I think maybe to answer your question about what I'm seeing, there's a lot of pride in this organization. And that's something that I saw even -- I mean, I've been walking the halls now for 6, 7 days. People are proud here. They really believe in the purpose of Coloplast, and that's a super power to me. And I also feel that there's an excitement from the organization on what they can build for the future through Impact4, especially around innovation.

We talked a little bit about that. I think that there's going to be some great opportunities for us to innovate in the future. And finally, people want to be developed. And I think that, that's in all organizations. And I came from an organization that was deeply committed to developing talent. I'm excited to be here, and I see that there is an organization that wants to be developed, and that's exceptionally important in the med tech organization. Thank you for the question.

Thanks, Gavin. And to your second question around urology. And as mentioned earlier, our urology business is really off to a good start. So we have been growing around 8% in the 2 first quarters of this year. So it is actually better than we had anticipated. And we are expecting to keep this momentum for the remaining part of this year. It's really driven by our men's health business in the U.S. So we continue to see double-digit growth within our men's health. And so that's one thing. The second thing is that here in Europe, we are now recovering back from the recall we had last year. So that is also impacting our urology business, in particular here in Europe. And to your question around Intibia, that process is running. We are expecting to get approval later this year in order to launch the solution in the first 6 months of next financial year. So it's following the plan we have laid out. So that's the update on urology.

The next question comes from the line of Veronika Dubajova from Citi.

I have 2, please. First of all, Gavin, welcome and look forward to interacting with you going forward. My first question is for you. And I guess I'm going to try to ask this a little bit differently. But I think Graham made a very important point. Looking at the Coloplast share price, it has been a very meaningful underperformer versus the rest of the sector. Normally, in situations like that, when a CEO is arriving, it is with a mandate to fix a bunch of problems. I'm curious whether you feel that this is a mandate that has been afforded to you by the Board or not and whether this is something that you are actively thinking about.

And obviously, appreciate all the great things you've mentioned about Coloplast, but clearly, sometimes even great companies need help. And so maybe if you can talk a little bit around how you're thinking about that. I think that would be super helpful for us to all understand. My second question is a follow-up on Aisyah's question around inflation.

And Anders, I just want to make sure I understood your comments there. So are you assuming inflation picks up in the fourth quarter of the fiscal or the calendar year? And I guess 1% doesn't sound like a very big number to be blunt. If I go back to sort of the type of inflationary pressure that we saw back in 2022, 2023, it was running in the mid- to high single digits. So just maybe help me contextualize that and why you think this is much less severe this time around. And maybe some sensitivity as we move to fiscal '27, assuming the conflict does not resolve might also be helpful.

Yes. Thanks, Veronika. Let me take the second question, the inflation question first. So what we are looking into, as I mentioned earlier, is that with the knowledge I have right now, we are looking at around 1% impact on our raw materials. And that is going to impact us, as I said earlier, here in Q3, but in particular, in our Q4 of this year. And depending on when the conflict is going to finish, there will be an impact into next year. When that is said, we are not at all looking into inflation levels at the levels we saw back in '22 or '23 with the knowledge I have today. So that is by far not the levels that we are looking into currently. And the inflation is driven by, as you know, the higher oil price. Yes, we have some raw materials that are also impacted to some extent by the oil price, in particular, injection molding chemicals, but we are at least so far not looking into inflation levels as we saw in '22. Gavin?

Yes. So Veronika, thank you for your question. So maybe let me try to answer it slightly differently. I'm a big believer that focus drives results. And ultimately, moving forward, the best way to improve Coloplast long term is to execute our strategy. So the impact for strategy, it's all about setting the standard of care and becoming even more impactful towards our users, customers and communities, a strategy [indiscernible] that's anchored in deep customer centricity. And this is one that resonates with me deeply, as I shared earlier. I will say that I'm a builder at heart. And I do see something meaningful that we can achieve together as a company going forward. And that direction has been set. And my focus now is really identifying how we can unlock the potential and create an environment for value creation going forward.

And I think that the last thing that I would share is I need some time to form a clearer view. It's -- and I can sense also from the questions, it's too early. I need time to form a clear view of where the future growth opportunities may lie and then likely where we need to challenge ourselves as we look ahead. And once I have that view, I'll be very open in sharing it.

I appreciate that, Gavin. I guess the question for all of us is there is a strategy that doesn't seem to be yielding the results for a while now. And so I guess what all of us are trying to understand is to what extent are you ready to throw out the rulebook and start from scratch, I'll put it bluntly. But that's really, I think, what we're all trying to understand. I don't know if you can comment on that.

No, I think it's too early for me to comment on it. I think I'm going to stay the course and believe in the strategy that I have.

The next question comes from the line of Martin Brenoe from Nordea.

Anders and Gavin, and a warm welcome to you, Gavin. Veronika was asking most of my also pretty blunt questions here. But maybe just understanding, Gavin, on the wound care business, given your background that you have as an outsider looking at the Coloplast inside the wound industry, I would like to hear your early assessment of Coloplast wound care business. And what shape do you see it? And what level of investments are needed to bring it to a competitive state? And maybe also your view on skin substitutes category. How do you view that market? And how do you see Kerecis playing a part of Coloplast going forward?

Thank you for the questions. And yes, actually, early days, but it's also exciting to be back in wound care. It is an area I know well. And for those of you that don't know my background, I spent 4.5 years at Molnlycke and led this business. So I do know it well. And it's a complex area, as everyone knows. So that's something I think that we're all familiar with. It is the largest market that Coloplast is present in from a market opportunity. There are many competitors, and I'm excited to be on the Coloplast side now to be able to drive our innovation. I think what I see early days, and we're talking very early days, is I see some exciting developments that we can build on. Like just take one example, the new Biatain Silicone Fit innovative technology.

We won the award by Vizient in the U.S. That's an important recognition and an important milestone as we attempt to build a stronger position in the U.S. dressings business. I think longer term, you have to be strong in the U.S. market to win in advanced wound care. And then you asked a question a little bit around Kerecis and my perspective on skin substitutes. I think that this is a very interesting area. And what I like about Kerecis is that we are underpinned with strong clinical data. I think that the market right now, it's a U.S. market and some of the changes in the outpatient setting are a little bit unprecedented at time. And I think it's going to take time for this segment to arrive to a new normal.

So when you look forward, I think the intervention by the CMS in the subsegment of the market was needed to remove some unhealthy incentives that have kind of driven prices and spending to really remarkably unsustainable levels. However, the inpatient setting is governed by a completely different set of dynamics with strong emphasis on clinical evidence and efficacy and lower, more sustainable price levels. And that's where Kerecis has a unique advantage with its proprietary fish skin technology. Kerecis is the only product based on intact fish skin. It comes with benefits from a sourcing, production and logistics perspective. But more importantly, the technology is remarkable in healing severe, difficult-to-heal wounds.

And these wounds are so severe that you're often at times looking at amputations as an alternative and the clinical efficacy of fish skin products are remarkable and the clinical evidence really speaks for itself. So as we look ahead, inpatient in the U.S. is becoming a larger share of our overall biologics business. That's up from 70% today. This is where we feel really confident going forward and winning the inpatient setting is going to be critical to winning the overall category. So I'm still early into the role, as I've said a few times and still learning about the business, but I'm already now encouraged by the clinical efficacy and evidence behind Kerecis. And I also like this balance between wound care and Kerecis together.

So that's what I would say at this point. And I've got a lot of experience in both Europe and U.S. So this is what I intend to leverage as I start to get deeper into the business segments.

That's very clear. If I can just squeeze one follow-up question into Anders regarding the inflation on the costs and the plastic prices. Just wanted to be sure that I understand exactly how you forecast because I've spoken to distributors of plastic, and they are talking about massive price increases over the summer. So it hasn't happened yet, but we're going to see it over the summer. So I just want to be sure that when you talk about you haven't seen sort of the impact yet, whether that is the prices that you are getting now or whether you have actually been in contact with distributors about the price increases that you expect in the coming months?

Yes, Martin, so we are starting to see some of our raw material providers are contacting us. And that's also what I'm basing my assumption for in particular in Q4. But what I said earlier, so far this year, we have not seen any impact yet, but we are expecting some impact towards the end of this year, in particular, on some of the raw materials like injection molding, chemicals, films. So that's how we see it currently.

And what's your opportunity to pass on the cost?

So for this year, we have built that into the guidance that we revised a few weeks ago, and it's not going to be that material. We are going to manage that within the guidance we have given.

The next question comes from the line of Jan Koch from Deutsche Bank.

The first one is regarding Kerecis and to better understand the growth potential for the upcoming fiscal year, could you provide the projected share of the outpatient setting in your guidance by the end of this year? And then secondly, it's more a clarification on your European Wound Care business. You recently mentioned reimbursement pressure in Germany due to announced price reforms. Are you referring to the broader health care reform aiming to reduce overall health care cost in Germany? Or what kind of price reforms are you seeing here in Germany?

Yes. So thanks for the questions. In terms of Kerecis, as we have been talking about at length, our inpatient business is around 70% to 80% of the total of Kerecis business. And this year, so far, we have been growing solid double digits, and we also are expecting that to continue. It's really in the outpatient setting where we have had a significant impact from the reimbursement changes in the U.S. and that is really impacting us, and we expect that to continue in the coming quarters. So we will be sitting around 0% growth for the year. And you should see this year '25, '26 as a reset. We have also talked a lot about that our focus is on inpatient. And as we have mentioned a number of times, we have a strong product portfolio based on fish skin. We have good clinical documentation.

We have actually just released some new clinical documentation. And therefore, we are expecting that our inpatient business will continue to outgrow the market and drive market share gains. In terms of your second question about Germany, yes, there is a general health care reform going on in Germany. We are -- it's still in progress. So there are no, you can say, conclusions yet, but we are just flagging that there might be an impact, in particular, on our dressings business probably more into the coming year with the knowledge we have. However, it's based on what is the conclusions are going to be.

Okay. Great. Just a quick follow-up on my first question. So given that the outpatient channel has declined so significantly this year, how important is that channel for the upcoming for next fiscal year?

Yes. So it's, of course, going to be less important, and our focus will be on inpatient, and that's also how we set ourselves up in our sales force.

The next question comes from the line of Martin Parkhoi from SEB.

Martin from SEB. I only have one question left, and that's for Gavin. And also welcome to Coloplast. You are, of course, joining a great company with actually growth rates, which many companies would envy. But I think that one of the problems which have been in the last many years has been the ability to deliver on both short-term and long-term guidance. Maybe that has been attached too high. So maybe you can share how have you been able to deliver on budgets in your former jobs? And what is your approach to making budgets and guidance? Are you more a conservative kind of guy or a bullish kind of guy? And how should we see that?

So first, Martin, thank you very much for the warm welcome and appreciate just once again, just thrilled to be joining Coloplast and look forward to engaging with you in the future. I think I can't comment on guidance, number one. It's too soon for me to kind of share a perspective here. And I think that when you look at the previous organizations I worked in, it would be a little bit unfair as well. What I can share is I am deeply focused on a couple of things that I think will kind of give you an indication of the type of leader I am. I'm deeply focused on people, developing talent. I'm deeply focused on execution and driving growth. I believe in being a builder, building something for the future. And I also believe that leaders should think like owners.

And when you get a group of people around us that are empowered and held accountable and they have a common goal, I believe that you achieve really meaningful things together. But I'm going to reserve holding back on anything more specific at this time because it's just too new in my tenure.

All right. Thanks, Martin. That was the last questions. So we will conclude the conference call. Thanks a lot, Gavin. And again, a warm welcome to Coloplast, and we are looking forward to see you on the street. Thanks a lot.

Ladies and gentlemen, welcome to the Coloplast conference Call. I am George, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] Conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Lars Rasmussen, Interim CEO. Please go ahead, sir.

Thank you very much. Good morning, and welcome to this extraordinary conference call on the back of the profit warning announced yesterday. I'm Lars Rasmussen, Interim CEO of Coloplast, and I'm joined by our CFO, Anders Lonning-Skovgaard, and our Investor Relations team. We will start with a short presentation by Anders and myself and then open up for questions.

Please turn to Slide #3. Yesterday, we revised our guidance for the full year '25/'26 and preannounced our results for the first half of '25/'26. Before addressing the drivers behind the guidance revision, I want to emphasize that we delivered a very strong quarter, excluding wound and tissue repair with solid underlying performance across the majority of the group. Chronic Care delivered a strong quarter with a pickup in momentum in Ostomy Care, as expected and continued good momentum in both Continence Care and Voice & Respiratory Care.

In Interventional Urology, momentum remains strong. driven by continued growth in Men's Health business in the U.S. In Wound & Tissue repair performance in the quarter was challenging. We are seeing a slower-than-anticipated market recovery in the U.S. skin substitute outpatient setting following the Medicare reimbursement change, which has led us to lower the growth outlook for Kerecis for '25/'26. Additionally, we have seen a lower momentum in our European dressings business, which we anticipate will continue into the second half of the year.

Since November, Kerecis growth expectations have been progressively reset from around 25% in November to around 10% in Q1 and now around 0%. Reflecting this development, group organic growth is now expected at 5% to 6% versus around 7% previously. Since the implementation of the new fixed payment rate of $127 per square centimeter on January 1, outpatient demand has been pressured by elevated uncertainty around payment and claims processing, intensified price competition as existing players try to eliminate inventory and a partial shift by providers towards traditional lower-cost dressings that do not require the same insurance claim process as skin substitutes does.

Together, these factors have resulted in a broad pause in outpatient market activity with providers acting more defensively and delaying utilization. In this environment, market conditions have limited the pace at which conversion and uptake of MariGen can contribute to mitigating the impact from Shield exiting the market, extending the transition period under softer demand. Based on current visibility, we now expect these dynamics to persist into second half rather than Q2 marking a trough as previously anticipated. On a positive note, in the inpatient channel, which comprise more than 70% of our Kerecis business, we continue to see a healthy double-digit growth level. Currently, with a slight easing of momentum compared with previous quarters, but we view this as a short-term impact attributable to overall uncertainty in the category currently and as a reflection of some channel distraction arising from outpatient players evaluating whether to pursue presence in the inpatient setting.

For the group, despite strong performance in majority of our businesses, we are also adjusting our outlook on EBIT growth in constant currencies as a result of the developments in Kerecis. We now expect a group EBIT growth in constant currencies before special items at around 5% from previously around 7%. This assumes a Kerecis EBIT margin of around 7% -- sorry, 0% from previously around double digits. The return on net capital after tax before special items is now expected around 15%. While we are looking at a challenging year for our wound and tissue repair business, we continue to expect a strong year for our remaining businesses with continued good momentum in Chronic Care and high single-digit growth in Interventional Urology.

We see the Medicare reimbursement change as a temporary setback to the Kerecis business. With the updated guidance, we are looking at a reset year for Kerecis where we take -- or where we will take a significant hit on our Kerecis outpatient business. And as a result, we get a lower top line growth. We will see -- we also see the market contraction based on this. However, looking ahead beyond the current fiscal year, we are looking at a derisked Kerecis business with a lower exposure to the outpatient setting, a unique technology based on a strong clinical evidence and an attractive long-term business potential with growth now expected at a slightly lower pace.

With this, I'll hand over to Anders for a brief review of our key financial figures for Q2 and our revised guidance assumptions.

Thank you, Lars. We delivered 6% organic revenue growth and 6% EBIT growth in constant currencies before special items in the second quarter. The Q2 EBIT margin before special items was 26% against 27% last year and includes around 120 basis points negative impact from currencies and around 50 basis points negative impact from Kerecis. For first half of the year, we delivered 6% organic revenue growth and 5% EBIT growth in constant currencies before special items. The EBIT margin before special items was 26% compared with 27% last year in the first 6 months, reflecting around 70 basis points negative impact from currencies and around 40 basis points negative impact from Kerecis.

Net profit before special items was DKK 2.8 billion or a 6% increase from last year, positively impacted by lower net financial items due to gains on exchange rate adjustments as expected. The free cash flow to sales ratio was 20% compared with 15% adjusted last year, reflecting favorable development in working capital and lower net financials, partly offset by higher capital expenditures. Return on invested capital after tax and before special items landed at 15% on par with last year's adjusted figure. As a result of the slower market recovery now anticipated in the outpatient setting, we have recognized an impairment loss of DKK 3 billion against the Kerecis goodwill.

Following the impairment, the total carrying book value of Kerecis amounts to around DKK 6 billion compared to around DKK 9 billion previously. The write-down is treated as special items in the P&L and has no cash flow effect. As Lars alluded to, we view the current fiscal year as a reset year for Kerecis business. Long term, we continue to view Kerecis as an attractive business with a unique technology, strong clinical evidence and long-term growth and profitability potential, albeit with a growth now expected at a slightly lower pace than previously assumed.

Looking ahead to the full year, we are now expecting organic growth 5% to 6% from around 7% previously. As Lars mentioned, the updated guidance assumes continued good momentum in Chronic Care and high single-digit growth in Interventional Urology. For Wound and Tissue Repair, we now expect Kerecis growth to be around 0%, and we now expect a softer momentum within advanced wound dressings in Europe, while we maintain our assumptions of negative impact from the advanced wound dressings product return in China in the first 3 quarters. Reported revenue growth in Danish krone is now expected at around 3% from around 4% previously, reflecting the low organic growth outlook and a negative currency impact of 2 to 3 percentage points.

EBIT growth in constant currencies before special items is now expected to be around 5% and assumes an EBIT margin for Kerecis of around 0%. We expect currencies to have a negative impact on the reported EBIT margin of around 80 basis points from previously around 50 basis points, driven by the Hungarian Forint against the Danish krone. Our expectations for CapEx and tax rate are unchanged, while we now expect return on invested capital after tax before special items at 15% from previously around 16%.

Finally, the updated guidance reflects the current uncertainty related to the ongoing situation in the Middle East, including uncertainty around the timing of a potential resolution. We continue to closely monitor the situation and assess the impact on our business on an ongoing basis. On May 12, we will release our full earnings release for the first half of '25/'26. We will also host our ordinary conference call on the same day, this time with the opportunity to welcome our incoming President and CEO, Gavin Wood.

With this, let's open up for questions. In respect of time, I kindly ask everyone to limit their questions to one.

[Operator Instructions]

Our first question comes from Hassan Al-Wakeel with Barclays.

I will try to stick to the one question, maybe with a couple of parts. But on Kerecis, you've talked to this being a temporary drag in the past that shouldn't spill over to inpatient. The recovery isn't coming through as hoped, and we are seeing some spillover into inpatient. Why couldn't this get worse on the inpatient side and this overall pressure to be more structural than temporary? And related to this, what gives you confidence in the midterm guide and the assumed acceleration from here?

Yes I think that's a super good question. The reason why the health care reform was there was because of the of the cost in the outpatient setting. And as we understand it, it's actually working. So the cost to Medicare has come down very significantly. We also see that as a consequence of this drive, we have been asked to show the efficacy of the dressings that we have in the market. And we have shown that there's a real effect from our dressings. So we think that we are on a longer-term basis, actually standing in a better position than we were before because it's very clear, not just to ourselves, but also to the rest of the people who are using these type of products that we have products that are super well documented and some of the best documented products in the market at all.

And the products that we have addressed a real issue because very often, that's the last resort before an amputation. And we do know that from a society point of view that to avoid an amputation is almost at any cost, a good business case for society. So therefore, we don't see that this should impact the inpatient to a very large extent. But that's, of course, a point of view. But that's based on the fact that the government or Medicare was calling for a substantiation of the clinical data behind the products. And we have been able to deliver that very strongly. So that's maybe the first part of it.

I can't remember the second part of your question, to be honest.

.

And the second part was on the acceleration in guidance towards the midterm targets post this year.

Yes. So let me take that, Hassan. So we still believe that we will see an improvement in our Kerecis business going forward. And this is driven by our inpatient. We have strong products. We have a strong pipeline of new products coming into the market. We have a good setup. There's still a lot of potential to penetrate the accounts where we already are. We have invested significantly into our sales force. So we really believe that we have a good outlook to really drive growth and also take market shares in the inpatient setting in the coming years. So as Lars is saying, we see this year as a setback related to our outpatient. But in terms of our midterm outlook, we really see that it's the inpatient that is going to drive that through strong innovation and strong clinical documentation.

And to top that off, we do have a very healthy pricing environment in the inpatient setting already, and that is based on DAT codes. So it's a very different setup. So we do see a little bit of impact, but we still see healthy double-digit growth rates in inpatient at this point in time. So we actually think that, that will remain a strong growth driver going forward.

The next question comes from Noor Aisyah with Morgan Stanley.

I just have one on the wound market in Europe, where you called out some softer momentum. Could you specify what countries these are that are showing weakness and whether this is reimbursement related or whether you think you are losing market share?

That's France and Germany, and that is based on announced results in the markets.

The next question comes from Doyle Graham of UBS.

So just on the guide for this year, it looks to me that given the momentum you had in the second quarter across most of the businesses and where the comp is for Kerecis, say, particularly Q4, it kind of feels like maybe the revenue guide is very conservative at the 5% level. Is that a fair way of putting it? And I mean, could you give us a little bit of a sense to how you thought about this guide when you cut it to 5% to 6%? I mean how determined are you not to have to cut this again? I just really want to understand how much of a want of better phrase, how much kitchen sinking you've done here?

Yes. So let me take that one. So we revised our organic growth guidance down to 5% to 6%. We are expecting that our chronic business will continue at the current level we have seen in Q2. We're also expecting that our urology business will be sitting something around the current level, so 7% to 8%. So we are expecting that the majority of our businesses will continue the momentum we have seen for the rest of the year. So that's how we see it.

We have said that Kerecis, our current assumptions is sitting around 0% for the year. And that means that second half will be flat to negative. It's also fair to say that we have been maybe a little bit more prudent with the Kerecis outlook also because we have seen a significant reduction in the Kerecis growth outlook throughout the year. So if we are to look into the lower level of the 5% to 6%, then it will mean that Kerecis will be hit to a larger extent than we are currently looking into. And then we have also put in some impact from the Middle East situation. So in the Middle East, it's around 1% to 2% of group revenue, and we have not seen any impact yet, but we have built in some uncertainty in terms of how it will develop into the next 6 months. So we have built in some risks related to the Middle East as well. So those are the main assumptions for the second half, yes.

The next question comes from Jack Reynolds-Clark with RBC Capital Markets.

I had one on kind of trying to understand the different dynamics going on in HOPD versus doctors' offices. Could you comment on that, kind of whether you're seeing any difference in kind of dynamics there?

So you compare the doctor's office to...

HOPD to hospital outpatient?

Yes. But it's the same fixed rate that they have both places. So in that sense, the same dynamic. The dynamic is, as we said, it's just the uncertainty whether other products really cover that the price that we anticipate. And that's why there's a bit of hesitancy for the time being.

Okay. Understood. If I could just be very cheeky and squeeze in another question. Just on the write-down, I'm trying to kind of understand or kind of square your commentary around kind of your confidence in the kind of the longer-term prospects for Kerecis with kind of the write-down of a pretty significant chunk of the value. kind of what specifically has changed to drive the write-down that still enables you to have confidence in the longer-term outlook for the business?

Yes. So let me take that one. So the write-down of -- as a result of the impairment test we have done as a consequence of the revised guidance, it's really due to, first and foremost, this year that we are now looking into a business that is more than DKK 300 million in revenue lower than we had anticipated. We have also slightly reduced our outlook. So those are the main reasons for the write-down of the Kerecis book value. The other metrics we are working with from a WACC terminal growth tax are ballpark unchanged.

The next question comes from Julien Dormois with Jefferies.

It actually relates to the non-Kerecis part of your business because looking back at the past few quarters, I mean, you had already a decline in advanced wound dressing broadly similar to what you reported for this quarter. So we're talking about minus 2%, minus 3%. So I'm just curious to understand why you're calling out softer European market as we speak. Is there something that I'm missing here? And the second very quick question on that front is just, could you remind us what is the share of sales for wound and tissue repair coming from advanced wound dressings. I have 50%, 60% on top of my head, but could you please confirm?

On the first part, the softer growth in Europe is related to Germany and France, where we are currently having some actions from the government to lower prices. And that is really what we talk about when we talk about the soft outlook for the wound dressings.

And Julien, to your second question, our wound tissue repair, around 2/3, that's the dressings and 1/3 around that level is the Kerecis.

The next question comes from Veronika Dubajova, Citi.

Apologies, I'm going to be very blunt because I think we're all sitting here a little bit confused. I think, Lars, when you issued the midterm guide last year, you said, look, this is conservative. We've taken a view that derisks the business. We're committed to delivering. That was something the prior management team couldn't do. We are sitting here now with 1 of 4 years where you're going to deliver 5% to 6% growth rate. And for you to hit the 7% to 8%, you are going to have to grow more than 7% in every single year after this year, given where fiscal '26 is coming in. I'm just trying to understand why you wouldn't take this opportunity to look at that midterm guide and maybe think about it.

And maybe, Lars, from your perspective, I guess, as an outgoing interim CEO, I guess, is this a conversation that the Board is having at this point in time? I'm just a little bit perplexed, right? We've had this issue with overpromising and under-delivering for a number of years now, and we're sitting sort of at the beginning of a new strategic period with a potentially similar problem. Apologies for the bluntness of the question, but it's just, I think, something that's really on every investor's mind this morning. Thank you.

We wouldn't expect anything less from you, Veronika. So -- but if you take the slide that we shared at the meeting and which I guess you can see on the screen, then you have 5 pillars they are showing 4 of them super healthy growth. And we actually anticipated that the wound and tissue repair should be at double-digit growth. So that in and of itself, I think, would explain why we were expecting that 7% to 8% is a reasonable target. I think that the background for the change in Kerecis right now is a health care reform that has both the magnitude, but also a way of being conducted that I think that none of us have ever seen before.

And as far as I'm informed, the idea was to take out -- take the DKK 10 billion spend in outpatient on this category and take that down to 25% of that spend. So down with 75% in one go, and it seems as if it's working. And that does have an impact on this year. There's no doubt about that but we see a strong momentum in the other businesses. We also see that this comes back. It might be outpatient is completely different than what we thought when we went in. But fortunately, that's less than 30% of the business. So that's also why we say that [indiscernible] since taking a setback that we have to recover from, and this is a setback year. But when looking at the numbers apart from that, I see very good reasons why we should be able to do 7% to 8% growth.

The next question comes from Richard Felton with Goldman Sach.

My question is on input costs. Obviously, over the last 6 weeks or so, we've seen big moves on the price of oil and the price of petrochemicals. Is there any preliminary thoughts on how that might impact raw materials and COGS inflation for you and the timing of that? Is that something that you'll start to see at the end of FY '26? Or is that more into FY '27?

Yes. Let me take that question. So in the first half of this year, we have not seen any impact. We've actually seen our raw material prices a little bit lower than the previous year. However, when we start to look into the second half, we are starting to see some impact. And as you know, our raw materials is around 50% of our cost of goods sold. And we are starting to see some negative impact on especially injection molding chemicals fill. And in my guidance in terms of EBIT growth, I've included something around 1% for the second half, also because we still have some inventory and there's also a lag in terms of impact. You will also see a smaller impact on freight. On energy costs, we are fully hedged. And right now, the spot rates are actually at a very decent level. So I'm not expecting any negative impact on the energy side. So yes.

The next question comes from Oliver Metzger with ODDO.

It's about the European wound care market. So we come out of some years where the environment was pretty healthy and with lower price pressure. Now you mentioned Germany and France with some more headwind, and I assume this might last at least until it's annualized. And pretty often pricing in Germany is used as a reference point also for other European markets. And when now the 2 biggest markets in Europe become more tougher on pricing. Do you expect also that we leave a period of low price pressure and move into a more reform-orientated environment?

Yes. Let me take that one. So we are calling out Europe, as Lars also explained earlier, that we are seeing a lower momentum, especially in France, and that is really pricing dynamics. And as you know, France is already at a very low priced market, but we unfortunately continue to see prices becoming lower, and that is impacting our French wound business. What we're also seeing that is Germany. And in Germany, there is potential, you can say, impact also from price reforms that is currently being announced. So our European dressings business here in Q2, we saw negative growth, and we have not seen that for quite some time. And it is driven by those 2 markets.

But do you see some implications for the other markets?

Yes. So for this financial year, our European dressings business is impacted by these 2 markets. The other markets are okay. But our 2 biggest markets in the dressings area, that is France and Germany.

So we had actually set up half an hour, but we have 2 more people having one question each. So David and Susannah, we'll take those questions and then we end after that. David, please go ahead.

Next question comes from David Adlington.

Most of my questions have been asked, but maybe I could just touch on the dividend. I just wondering if you had any discussions at Board level about whether there's any need to cut the dividend at all.

So your dividend -- now I have an echo here. But David, you asked about our dividend policy. David? Are we still through?

Can you hear me?

Yes, I can hear you.

Maybe you could lower your...

Mr. Adlington if you finish your question, I will mute your line because there is a [ lup ] coming from your line. Once you finish, I will mute you, then we are going to go with the answer and then in case I will open back your microphone.

Yes, you can hear me. I just wondered if there have been any discussion about the need to cut the absolute level of dividend.

Okay. So for now, our dividend policy is unchanged compared to what we said when we announced the Impact4 strategy back in September last year. So for now, it is unchanged.

And then the final question, question.

Can you guys hear me?

Yes.

.

Okay. Great. My question is on Kerecis in terms of the new guidance. It implies that things can get worse in the second half of the year. And maybe just if you could talk to why you're concerned that you could see sort of a worse environment in the second half of the year given the pricing changes came in as of January 1, i.e., the beginning of your Q2.

Yes. So we talked about that earlier in the call, but our expectations for Kerecis for the full year is around 0%. But it's also fair to say that in our organic growth guidance of 5% to 6%, there's also room for the Kerecis business coming in lower. So we have been quite prudent. And we have done this because it has been very difficult for us to basically forecast, especially the outpatient situation. So if it's becoming more worse in Kerecis, we have also built that into our guidance versus the 0% that we are now aiming at.

Okay. I guess I was just trying to understand if the expectation is just prudence or if there's anything that makes you believe that the outpatient is sort of getting incrementally worse even after the pricing cuts came in?

Prudent.

Okay, great.

Thank you so much and that's all for now.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Coloplast Interim Financial Statement for Q1 2025-'26 Conference Call. I am [indiscernible] chorus Call operator. [Operator Instructions] the conference has been recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Lars Rasmussen, Interim CEO. Please go ahead.

Thank you, and good morning, and welcome to our Q1 '25/'26 conference call. I'm Lars Rasmussen, Interim CEO of Coloplast. And I'm joined by CFO, Anders Lonning-Skovgaard and our Investor Relations team. We will start with a short presentation by Anders and myself and then open up for questions. And please turn to Slide #3.

We delivered 6% organic revenue growth and 3% EBIT growth in constant currencies before special items. Return on invested capital after tax and before special items landed at 15% on par with last year's adjusted figure. We had a soft start to the year as expected. However, with a significant more turbulent quarter in Kerecis than we would have anticipated. I'll get back to that in a moment.

For the year, we maintained our guidance of around 7% organic growth. We lowered our growth expectations for our Kerecis to around 10% amid significant market uncertainty in the outpatient setting, but raise our outlook for interventional urology to high single digits following a strong start and improved outlook for the year.

Before we dive further into the quarterly performance and outlook for the year, let me begin with a brief comment on our leadership team. In December, we announced two important changes to the executive leadership team. EVP of People and Culture, Dorthe Ronnau, has decided to leave Coloplast to pursue the next chapter in her career and Tommy Johns, Executive Vice President of Interventional Urology, has decided to retire after more than a decade in Coloplast and more than three decades in the global life science industry.

An external search is currently ongoing to identify a new leader for the Global People and Culture Function while Kevin Hardage will step into the role of EVP of Interventional Urology on February 9. Kevin brings extensive experience from the global medtech industry, including senior leadership experience from Teleflex in the urology space, and I look forward to welcoming Kevin to Coloplast.

Dorthe and Tommy have both played key roles in ensuring a smooth leadership transition. I want to thank them for the continuity and stability they have provided throughout this period and wish them all the best in the future endeavors. Additionally, I would like to mention that the search for Coloplast's new CEO is progressing well and remains on track. I would also like to put a few words to key developments in Q1.

Interventional, we already delivered a strong start to the year with 8% organic growth driven by the Men's Health business. The product recall in Kidney and Bladder Health is now behind us, and we are looking at a very healthy business expected to deliver high single-digit growth in '25, '26. During the quarter, we reached the important milestone of submitting INTIBIA, our investigational tibial nerve stimulation device to the FDA.

This marks an important advancement towards the future launch of the device and our goal of bringing innovative and clinically differentiated solutions closer to the patients. INTIBIA plays an important role in delivering on our Impact4 strategy for Interventional Urology and I'm encouraged by the fact that we continue to see clear external confirmation of the relevance of the implantable tibial nerve stimulation space. Industry activity and investments in implantable tibial nerve stimulation continues to increase indicating broader confidence in the therapy area and the role it may play in the future management of overactive bladder. These developments reinforce our long-term view of the opportunity within this segment.

I would also like to highlight that we are further strengthening our product portfolio in Interventional Urology through an agreement to purchase the outstanding shares of Uromedica, a commercial stage company with a minimally invasive solution for treating stress urinary incontinence, complementary to our existing men's health business. The transaction is expected to close here in February, and we have an immaterial impact on the group financial performance in '25, '26, while being accretive to Interventional Urology's financial metrics in the second half of the impact for our strategic period.

Finally, I would like to spend a moment addressing the development we have seen in Kerecis in Q1. Kerecis delivered 10% organic growth in the quarter with an EBIT margin of only 1%. While we continued to see a healthy momentum in the inpatient setting in Q1, Kerecis overall performance was subdued due to significant sales disruption from Medicare reimbursement changes in the outpatient setting, which resulted in negative growth in the outpatient setting.

Effective January 1, 2026, Medicare has introduced a single fixed payment of USD 127 per square centimeter for all products in the outpatient setting covered by Medicare. At the same time, Medicare has withdrawn, the already announced LCD also set to go into effect January 1. Combined, this has triggered significant uncertainty in the skin substitute market as the channel adjusts, and we expect the heightened market uncertainty to persist throughout the year.

As part of the shift towards a fixed payment rate, the Shield product brand will be phased out of the Medicare market and replaced by a renewed portfolio of the product brand MariGen which is well positioned to take market shares under the new fixed rate. This shift will create a negative mix effect as MariGen volumes are scaling.

There is no doubt that the many unprecedented changes by CMS and the recent pivot with regards to the LCD in fiscal Q1 has made the operating environment increasingly difficult to navigate as a manufacturer. Similarly, we have seen an increased level of customer hesitancy to place large orders amid the significant market uncertainty. However, we're looking ahead, we remain optimistic about the outlook for the category and Kerecis long term.

We support CMS' efforts to clean up the market. And we see both the now canceled LCD and the fixed payment rate as evidence that Kerecis remains well positioned to compete and win in the skin substitute market. Only 18 out of more than 300 products were in the final LCD and of these, 2 were Kerecis products. That is a clear testament to the clinical efficacy and differentiation of Kerecis products offerings.

Kerecis is the only product in the market based on intact fish skin. It has a high resemblance to human skin and is proven to be more effective than the standard of care in healing severe wounds. In addition to being incredibly potent, the technology is also highly scalable based on its unique waste-to-value proposition, allowing for a highly efficient production setup.

No other products in the markets share the unique characteristics of the fish skin, and we have moved quickly in response to the changes. We have enhanced our go-to-market model to align with the new requirements and will roll out a series of product launches during the year -- or during this year to support this updated approach.

I'm deeply impressed by the agility, ingenuity and the grit of the Kerecis team and the way that they've handled the situation. Long term, we therefore continue to believe Kerecis will see continued strengthening of its competitive position relative to peers due to its unique technology and strong clinical documentation.

With this, let's now take a closer look at the details by business area. In Ostomy Care, organic growth was 4% and growth in Danish kroner was flat in the first quarter. Ostomy Care delivered a soft start to the year as expected due to negative growth in China, a high baseline in the U.S. and order phasing in emerging markets. Rest of the year, we expect the gross momentum to pick up.

In the U.S. business, the underlying performance continues to be strong. And in Q1, Premier has renewed Coloplast Group's purchasing agreement. The contract remains multi-source and effective for 3 years starting April 1, 2026. In China, sales declined in the quarter, impacted by a continued weak consumer sentiment and competitive pressures from domestic players in the community channel, further amplified by a high baseline last year.

From a product perspective, the SenSura Mio portfolio was the main contributor to growth, followed by the Brava range of supporting products. The latest product launches within SenSura Mio, the black bags and the new 2-piece offering both continue to perform well. Additional variance of the black bags were launched in Q1 and further variance are expected throughout '25-'26.

In Continence Care, organic growth was 7% and growth in Danish Kroner was 2% for Q1. The Luja portfolio was the main growth contributor in the quarter, driven by both the male and female catheters in Europe, most notably in the U.K., France and Germany and also in the U.S. Growth in the SpeediCath portfolio was driven by flexible catheters in the U.S. and LatAm. Within our two smaller segments in Continence Care, Bowel Care made a strong contribution to growth, while collecting devices saw a slight decline in the quarter.

From a geographical perspective, growth was driven by Europe and the U.S., while growth in emerging markets was impacted by order phasing. Voice & Respiratory Care posted 8% organic growth for Q1 with growth in Danish Kroner of 5%. Laryngectomy delivered high single-digit growth in the first quarter, driven by an increase in the number of patients served in existing and new markets and an increase in patient value, driven by the Provox Life portfolio. Tracheostomy delivered mid-single-digit growth driven by solid underlying demand, partly offset by phasing in distributor markets. Growth in tracheostomy is expected to be back-end loaded and will pick up momentum in the second half of the year.

In Wound and Tissue repair, organic growth were 5% for Q1. In Danish Kroner, sales declined 8 percentage points or 8% due to 8 percentage points negative impact from the skin care divestment in December 2024. As mentioned earlier, Kerecis delivered a soft quarter with 10% organic growth due to the significant sales disruption from the Medicare reimbursement changes in the outpatient setting.

The Advanced Wound Dressings business declined 3% in Q1 and China detracted significantly from growth, impacted by the product return initiated last year with a negative revenue impact of around DKK 25 million in the first quarter. From a product perspective, Biatain Superabsorber was the main growth contributor. The Contract Manufacturing business posted solid double-digit growth in the first quarter, reflecting a front-end loaded year.

In Interventional Urology, organic growth was 8% and growth in Danish Kroner was 3% for Q1. As mentioned earlier, the Men's Health business in the U.S. delivered a strong first quarter and was the main contributor to growth. Our flagship products within Men's Health, the Titan Penile implant, continue to perform well with the patient funnel positively impacted by our patient support program targeted at prospective patients. The Women's Health business and the Kidney and Bladder Health business also contributed to growth.

With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail. Please turn to Slide #5.

Thank you, Lars, and good morning, everyone. Reported revenue for Q1 increased by DKK 17 million or 0% compared to last year. Organic growth contributed around DKK 393 million or around 6% to reported revenue. Divested businesses related to skin care in December '24, reduced reported revenue by DKK 77 million or around 1%. Foreign exchange rates reduced reported revenue by DKK 299 million or around 4%, mostly related to the depreciation of the U.S. dollar, the British pound and the basket of emerging market recurrences against the Danish Kroner.

Please turn to Slide #6. Gross profit for Q1 amounted to DKK 4.7 billion, corresponding to a gross margin of 67% compared to 68% last year. The gross margin was negatively impacted by currencies of around 30 basis points and ramp-up costs in Costa Rica and Portugal. This was partly offset by a favorable impact from lower inflation on raw materials, freight and utilities. Country and product mix also had a positive impact.

Operating expenses for Q1 amounted to around DKK 2.9 billion or 2% increase compared to last year. The distribution to sales ratio for Q1 was 33% on par with last year. In absolute terms, the distribution costs were also in line with last year. The flat development in distribution costs reflects DKK 20 million in one-off logistics costs in Q1 related to the new distribution center and lower sales costs in China following the organizational restructuring in Q1 last year.

This was partly offset by one-off costs to enhance Kerecis' go-to-market model under the new Medicare reimbursement model. The development in distribution costs were also positively impacted by the depreciation of the U.S. dollar against the Danish kroner. The admin to sales ratio for Q1 was 5%, compared to 4% last year and includes around DKK 15 million in one-off advisory costs incurred by Kerecis in connection with the recent CMS regulatory changes in the U.S. outpatient setting.

The R&D to sales ratio for Q1 was 4% compared to 3% last year, reflecting phasing our costs within the chronic care R&D and high activity levels in Kerecis. Overall, this resulted in operating profit before special items of DKK 1.9 billion in Q1. In constant currencies, EBIT grew 3% compared to last year, while reported EBIT declined 3%. The EBIT margin before special items for Q1 was 26% compared to 27% last year, negatively impacted by the significantly reduced EBIT margin in Kerecis due to lower organic growth and large one-off costs.

Currencies also had a negative impact on the reported EBIT margin of around 30 basis points, mostly related to the depreciation of the U.S. dollar, the British pound and the basket of emerging market's currencies against the Danish kroner as well as appreciation of the Hungarian Forint against the Danish Kroner. Financial items in Q1 were a net expense of DKK 24 million compared to a net expense of DKK 69 million in Q1 last year, reflecting low interest expenses and gains on exchange rate adjustments, mostly related to the U.S. dollar.

The blended interest rate was around 2.6% in Q1, down from around 3.1% in Q1 last year. The tax expense in Q1 was DKK 394 million compared to an ordinary tax expense of DKK 389 million last year and a total tax expense of DKK 725 million last year. Due to a nonrecurring expense of DKK 336 million related to the transfer of Kerecis' intellectual property from Iceland to Denmark. The tax rate was 22% on par with ordinary tax rate last year.

As a result, the net profit before special items and adjusted for the nonrecurring tax expense last year decreased by DKK 14 million in Q1 and adjusted diluted earnings per share before special items decreased by 1%.

Please turn to Slide 7. Operating cash flow for Q1 was an inflow of DKK 2.2 billion compared to an inflow of DKK 2 billion in Q1 last year. The positive development in cash flows was mostly driven by lower financial items, partly offset by higher income tax paid. Cash flow from investing activities was an outflow of DKK 412 million compared to an outflow of DKK 133 million last year. The increase partly reflects a low baseline due to the DKK 192 million impact from the divestment of skin care business last year.

CapEx in Q1 amounted to DKK 414 million with a CapEx to sales ratio of 6% compared to 4% last year. CapEx in Q1 includes around DKK 97 million related to the new manufacturing site in Portugal, which is expected to be in operations in Q4 this year. As a result, the free cash flow for Q1 was an inflow of DKK 1.8 billion compared to an inflow of DKK 1.9 billion last year.

Excluding benefit from the divestment last year, the free cash flow increase in the first quarter was 8%. The free cash flow to sales ratio was 26% compared to 24% last year, and the trailing 12-month cash conversion was 82%. Net working capital amounted to around 25% of sales on par with last year. Finally, the return on invested capital after tax and before special items was 15% on par with last year, adjusted for the impact from the Kerecis IP transfer last year.

In January, we refinanced our EUR 800 million credit facility, retaining the facility's existing terms and conditions. The structure remains a standard credit facility, and the facility now matures in January '29.

Now let's look at the guidance for the '25-'26 financial year. Please turn to Slide #8. For the '25-'26 financial year, we continue to expect organic revenue growth of around 7% and around 7% EBIT growth in constant currencies before special items. We also continue to expect a return on invested capital of around 16%, up around 1% percentage points from 15% adjusted last year. The organic revenue growth guidance of around 7% assumes continued good momentum in Chronic Care.

In Interventional Urology, we now expect high single-digit growth versus mid-single-digit growth previously following a strong quarter. In Wound Tissue Repair, we now expect Kerecis to deliver growth of around 10% versus around 20% previously, reflecting the significant sales disruption from Medicare reimbursement changes in the outpatient setting and the high uncertainty around the timing of the recovery. Within Advanced Wound Dressings, we continue to expect negative impact from the product return in China in the first 9 months of the year.

Reported revenue growth in Danish kroner is now expected at around 4% from around 4% to 5% previously and assumes around 3 percentage points negative impact from currencies, up from around 2 to 3 percentage points previously. The worsened currency outlook is mostly driven by the further depreciation of the U.S. dollar.

For the year, we continue to expect the negative currency impact to be driven primarily by the U.S. dollar, and to a smaller extent, the British pound, the Chinese yuan and now also the Japanese yen. The EBIT growth in constant currencies of around 7% assumes stable inflation levels and continued ramp-up costs related to our manufacturing sites in Costa Rica and Portugal. The EBIT growth guidance also includes the initiation of Impact4 investments, including Global Technology investments and AI, investments towards the new Bowel Care opportunity in the U.S. and investments related to INTIBIA. For Kerecis, we expect a significant EBIT margin uplift rest of the year with Kerecis full year EBIT margin around double digit compared to 1% in Q1.

We expect currencies to have a negative impact on the reported EBIT margin of around 50 basis points, driven by the depreciation of the U.S. dollar and the British pound against the Danish kroner and the appreciation of the Hungarian forint against the Danish kroner. In terms of phasing, we expect the organic revenue growth and EBIT growth in constant currencies to be second half weighted following a soft start here in Q1 as expected.

For '25-'26, we continue to expect around DKK 50 million in special items. And we also continue to expect net financial expenses of around minus DKK 500 million based on spot rates as of February 4, down from around DKK 1 billion in '24-'25. The effective tax rate for '25-'26 is still expected to be around 22%. Net profit is expected to significantly increase year-over-year as '24-'25 was impacted by extraordinary high special items, high financial items due to negative exchange rate adjustments. And finally, the extraordinary tax expense related to the transfer of Kerecis' intellectual property.

The CapEx to sales ratio is still expected at around 5% and net working capital is still expected at around 25%. Our guidance is based on the knowledge we have today and assumes immaterial impact from tariffs as we expect our products to remain exempted.

Thank you very much, operator. We are now ready to take questions.

[Operator Instructions] The first question comes from the line of Hassan Al-Wakeel from Barclays.

Three, please. Firstly, just on the reiterated guidance, can you talk us through the offsets you see, given the Kerecis lower growth and margin expectations for the full year and how they should be a headwind to group profitability?

Secondly, can you help us unpack the further weakness you're seeing in skin substitutes. And why you expect this to persist over the course of the year? And you've obviously noted more favorable pricing versus peers. What is the level of growth you're seeing in the inpatient setting? And how do you see this over the course of the year? And if you can put all of this into context with your longer-term ambition for Kerecis, that would be helpful.

And then thirdly, if you can walk us through the confidence that you have in terms of the raised Interventional Urology guide, where you see Women's Health and Men's Health growing in the first quarter and expectations for the full year. Are we past the risks from bulking agents to the Women's Health business?

Yes. Hassan, thanks for your questions. I will start with the first one. As I understood your question, that was the moving parts on our organic growth and EBIT growth guidance. So as I just mentioned, we are keeping our organic growth and EBITDA growth guidance in fixed currencies of around 7%. We are expecting our urology business to improve after a good first quarter, but also due to the fact that we have now the recall of the product we made last year behind us. The underlying Men's Health business continued to be strong. So that is an important assumption.

Secondly, we see good growth in the rest of the year for our chronic business, and that is then offset by the adjustment in terms of the Kerecis outlook for the year. As I just mentioned, we have reduced our outlook for Kerecis to now around 10%.

In terms of the EBIT growth guidance, I also just mentioned that we are expecting the rest of the year that EBIT growth will improve as a result of higher growth, but also as a result of a significant improvement in the underlying Kerecis margin we had in Q1, quite significant one-offs related to Kerecis, and we expect that to be fully behind us. So that's the other key element. So we are expecting the Kerecis underlying margin to improve to double-digit levels. So that's some of the key moving parts. Lars?

Yes. So on the Kerecis side, this is a really strange situation to be in because we have known for such a long time now that there would be an LCD that was finally announced on the 16th of December. So I can't even imagine what kind of situation we would be in if we had not been on the short list of 18 products having this discussion. So we are very satisfied to see that we -- out of 340 products we're one of the -- two of the products that were mentioned on the list of 18 products that were covered by the LCD. And we had two products in the market. So therefore, it's everything that we had in the market that was covered by that. There was also a time or a price point on this on $127 per square centimeter.

And one of the products could pass that one, and that is the MariGen product. So we have immediately also taken steps to enlarge that portfolio of products to be more competitive, even more competitive in this space in the future. We also see that there are a pretty large number of competitors that would not be able to meet the price criteria. So therefore, we actually see this movement in the, you could say, the 20% of the total sales of Kerecis that are the outpatient Medicare covered part of the portfolio. We actually see that as a positive future omen, so to speak.

The other positive part about this is that more or less the rest of the portfolio we have is an inpatient. And that is an environment where clinical data, historically, have been much more important. And now we basically have Medicare's own verdict that the clinical efficacy of our products are stellar.

So in that sense, we see this really as a short-term disruption. And the disruption is that the payers or the offices, the private offices that are using our products, they don't have clarity at this point in time of what is covered by Medicare and what is not. And that is -- therefore, we basically see some hesitancy from the professionals to buy the products right now. But the fact of the matter is that there are fewer products available in the market to cover the same number of wounds that we had before. So we see this as positive.

And then we have question number 3? Yes.

Yes. Question number 3, Hassan, that was related to urology, as I remember. And I think actually, I talked a bit to it earlier. But overall, the urology business, as I said, is off to a good start in Q1. We had -- or continued to have a good Men's Health development in Q1, actually, as we had last year in the second half as well. So we expect that to continue. And then the other important factor is that now the recall of the product we had last year is now fully behind us. So we're actually seeing a good underlying development within our urology business, and that's also why we see that business to deliver high single-digit growth for this financial year.

The next question comes from the line of Jesper Ingildsen from DNB Carnegie.

Also just I'm curious, you mentioned in the outpatient setting a decline in Q1. I was curious to hear what you have seen here at the beginning of the year after the implementation of the fixed price cap. And then maybe also if you could specify how much one-off effect you had in Kerecis' EBIT margin here in Q1, just to understand where the underlying margin would be? And then also, if you could just give us an indication of what it would take to end up in a situation where you would have to write off this asset?

So in terms of your questions, Jesper, thank you for that. Lars now just talked about Kerecis. We expect that the Kerecis growth for this financial year to be around the double-digit, and we are still expecting some turmoil in Q2 before it's starting to improve in the second half. But overall, for the year, we are looking at growth with the current knowledge of around double-digit.

In terms of EBIT margin, as I mentioned, we have included some one-offs in the first quarter related to advisory in relation to the reimbursement changes. And we have also included one-offs related to our go-to-market model. And in total, it is around DKK 30 million. So that is fully behind us, and that's also why we now expect from this quarter and onwards, that the underlying Kerecis margin will improve, but it will not improve to the levels we had anticipated when we started the year. So right now, I'm expecting the underlying Kerecis margin to be around double digit.

And the last question, can you just repeat that?

Just the -- I mean, clearly, the growth has deaccelerated and margins to some extent compared to what you expected from when you recently bought the assets. I'm just wondering if this doesn't improve, will be end up in a situation where you have to do a write-off of the book value of the asset? What scenario will be -- what will require to get to that?

Yes. So it's clearly that this year, so the third year where after we acquired Kerecis due to the turmoil that Lars described earlier, is not developing as we had anticipated. But we see this as a temporary dip. We are still focusing a lot on delivering on the case, and we also see that the case is intact long term. But short term, we have some challenges this year related to the growth and the margin.

In terms of your other question, the impairment test, it's something we are evaluating on an annual basis. But again, we are looking at a business that we believe will deliver the long-term expectations that we also communicated at the Impact4 strategy back in September last year, where we said that the overall Wound Tissue Repair business would grow around double digit.

The next question comes from the line of Jack Reynolds-Clark from RBC Capital Markets.

I have three also, please. The first is on Kerecis' profitability. So thinking longer term, given the new environment, have your assumptions changed around where peak profitability for Kerecis could be in terms of EBIT margin?

The next question on Wound, on Dressings, so excluding the recall and obviously, the Contract Manufacturing business, growth here still looks challenged. What drove this? And was this in line with your expectations? What are your expectations for the remainder of the year?

And then my last question was on INTIBIA. So now that it is submitted for PMA approval, can you share any data on clinical performance? When do you expect approval? And can you talk about your expectations for launch?

Yes. So thanks a lot, Jack. Your question around the Kerecis EBIT margin. Yes, as I mentioned earlier, we had anticipated that the EBIT margin would improve further this year. Originally, as I explained earlier to a level of around 20%. Now it is sitting, that's at least our expectation, around 10%, including the one-offs in the first quarter. But I'm still expecting that over the Impact4 for strategy, we will improve also the underlying EBIT margin of Kerecis to a level of around the group margin as we have said, when we acquired the Kerecis business 2.5 years ago.

Lars, number two?

On the Wound Care, well, yes, technically, it is a recall. I would say that it's maybe a kind of -- it's basically a consequence of the long-term plan for China to be self supplying inside of pharma and medical devices and we -- there are no product flaws on the product that we have taken out, but it's basically just been replaced with a Chinese product in the market. And that was, of course, unexpected when it came last year, but we can't say that we have not heard that this is a movement that you -- that happens in that country and many other industries and also other competitors have experienced the same.

However, we have still a very large business in China that we are protecting to the best of our abilities, but it means that our growth have temporarily been set back. And it also means that we don't foresee that we will have growth in China, which is more than low single digit in the coming -- in the strategic period that we are in, and we still expect that, that will be the case.

Yes. And your final question, Jack, related to INTIBIA, it is following the plan. We have submitted it to FDA and we are still expecting that we will be able to launch next financial year, '26-'27 and we still have high expectations for this technology to support our long-term growth ambition for the Urology business to be in the high single-digit level. So that is tracking as planned.

The next question comes from Oliver Metzger from ODDO BHF.

First one is also on Kerecis. So you described well also the positive dynamics. So according to your statement, the inpatient setting should be pretty fine. But if outpatient is just 20% of Kerecis and you reduce your segmental guidance for Kerecis by 10 percentage points, it means mathematically that the outpatient sales [ expect ] a very hard stop. Could you, therefore, also comment about some inpatient dynamics, whether do you see there any underlying growth deterioration?

And the second question is on Ostomy Care. So you said about a pretty harsh headwind coming from China. So can you comment how Ostomy Care growth would have been excluding this China effect, please?

So on Kerecis, the -- in a sense, the inpatient part of the sales should be completely unchanged. There is a little bit of effect on it because some of the vendors that has only participated in the outpatient setting, they are now testing their products, of course, in the inpatient setting. So that gives a little bit of turmoil there, but prices and everything else is completely unchanged on the inpatient side.

And as also said, it is a very clinically driven environment and we have just gotten sort of a very strong underlying testament to the fact that our products, they really have strong clinical efficacy. So that's -- we actually see that as an opportunity. But it is a strong growth environment also in the inpatient clinic. So of course, over time, that is also covering for what is happening now on the outpatient side. The whole reform's aim and purpose was to take value out of the outpatient segment seen from a Medicare point of view, and that is definitely happening.

But as I said before, we see this as a potential upside for us. So longer term, we definitely see this as a positive development. We understand the actions that the government are taking and we see ourselves even better positioned than we would have hoped for in this situation. On the Ostomy side, I don't think we give a number when we take China out. But of course, we are market leaders in China. We have a very, very high market share in the community market. So the fact that we have this part is not growing, that impacts the numbers. But we are going to see much better numbers in Ostomy in the rest of the year. We are basically just having a very low first quarter due to comparison numbers. So we see that going up.

Just a very quick follow-up. So for the inpatient setting at Kerecis, so would you describe a 20% growth momentum still as valid?

So I don't have a comment to the exact number there, but it's definitely a very healthy double-digit growth.

Next question comes from the line of Aisyah Noor from Morgan Stanley.

My first one is on the Uromedica acquisition or agreement to acquire. Can you talk a bit about the competitive KPIs of this product versus bulk of it or the standard of care and what you think this product could take share?

And then my second question is on the MariGen phaseout. So what's the mix of the MariGen versus Shield product in your outpatient sales today? And why do you think those customers will shift over to your new MariGen products? And will this come with new costs embedded in the double-digit margin guide for Kerecis?

So on Uromedica side, as I said, this is complementing our portfolio in the Men's Health. So today, in Men's Health, we have the penile implant for erectile dysfunction. And we basically have one competitor in that space, and they also address urinary incontinence in men in the same space, and that's also what we do with this device. The difference is that this is minimally invasive. And therefore, we see it as a very good way to complement our product portfolio and increase our competitiveness in this specific market segment. So those are really the benefits. We know it works. It is in the market already. It is accepted by the professionals, and now we can put effort behind it and thereby also help getting it into the market and educating much more doctors to use it.

Could you take the second question, Anders? I didn't write it down.

So the second question was around MariGen. and Shield. So we have not really disclosed the split between these two from a revenue point of view. We have said that Shield product's price was above the cap of USD 127 per square centimeter and the MariGen is lower then the cap. And the whole work is now about to convert from the Shield to the MariGen. And that's what we have initiated, and that's the focus we are having the rest of the year, including launching new products within the MariGen portfolio. So that's really the focus we are having.

And if I could follow up with Lars on the Uromedica comment. I know you mentioned the impact on financials is immaterial but do you anticipate having to ramp up the sales force for this business? Or can your existing urology sales force sell this product?

So it fits directly into the existing sales force that we have because it's the same call points that we're having. But of course, if we -- when we see it take off, we also are going to step up accordingly. But from the beginning, it's going to be in the hands of us and we have significantly higher sales pressure in the market than the former owner.

The next question comes from the line of Veronika Dubajova from Citi.

I apologize, but I'm going to come back to Kerecis. And I wanted to ask a couple of questions here. The first one is that, Lars, you've described the disruption at the moment is temporary. I guess I'm curious to hear what give you the confidence? In conversations we've had with physicians, many of them are simply discontinuing the use of skin substitutes and switching instead to traditional wound care dressings. So I'd love to kind of get your perspective as to why you see this issue is temporary? And why you think the market will recover?

And I guess that sort of also fits into my sort of second question, which is, would your expectation be that Kerecis can be back at sort of around 20% growth rate as we move into fiscal '27? And if it's not, what implications does that have on midterm guidance? So that's my first question. And then I have a follow-up, but maybe I'll let you answer this one first.

Yes. So I think that's a super good question, Veronika, because we are talking about the outpatient clinic here and as I said, that's -- of our total sales in Kerecis, the 20% comes from the Medicare reimbursed outpatient setting. And there's no doubt that, that has been an exceptionally fast-growing market. So if you see the market data on it, you just see that it's literally exploding within the last three years. So it makes a lot of sense that is being addressed, of course, by the payers.

So for some doctors, of course, they would discontinue using it because the financial incentive to use it is simply too low compared to what they have been used to. And I don't know the price of the products that they are shifting to. So -- but you also know that these are real businesses that we are selling into.

These kind of wounds, they don't go away. So there will still be lots of need for these kind of products, but it's, of course, a different price level. It is, however, a price level that we have been used to living with. That's what we have been making most of our sales on. And therefore, we see -- we don't see that the need goes away. But of course, since it's both a doctor and a business person, they will find a way to try to substitute in the most sort of -- with a good fit between what is helpful for the patient and what is a good financial outcome also for the doctor. With the prices that we are having and the efficacy of MariGen, we think that we are super well positioned. So that's the reason why we think that we're in that position.

This whole change is then not affecting the biggest part of our business, which is the inpatient part that goes on as it was before. We just think that we have a better position or we have a potentially have a better position than we had before because we have Medicare's own assessment of all the clinical data they have received, and we simply have super strong clinical data that we can take to these payers and users, and that puts us in a better position. And that is such a big part of the business, and it's growing so fast that it is also covering parts of the downside that we see in the outpatient clinic on the short term on outpatient segment. But we see the outpatient segment will have a healthy growth going forward after we have sort of having this shake up. And we think that we are super well positioned for that.

Okay. And then my second question is for Anders. It's a bit financial in nature, but just obviously looking at the year, I know you always said to us, we'd start below the full year guide, but a few especially on EBIT growth, we still have quite a ways to go to get to the full year. So I don't know Anders, if you can give us a little bit of color on how you'd expect the growth phasing, both from an organic sales perspective and from adjusted EBIT perspective to look like through the remainder of the year?

Yes. Thanks a lot, Veronika, for your second question. So for the rest of the year, first and foremost, we are expecting growth will improve from this quarter and onwards, driven by the factors we have been discussing. So we are expecting Ostomy/Chronic business to improve, we are expecting the Urology business to continue at the levels we have seen in Q1. And then we have been talking about Kerecis quite a few times during the call that we are expecting that business to sit around the double digit. So overall, we are expecting growth to improve versus Q1, so that's an important factor.

Secondly, gross margin ballpark in -- at the levels we had anticipated for Q1. However, the FX impact is, yes, real also due to the Hungarian Forint. But I'm expecting the gross margin to develop as we have said previously.

And then on the cost side, I have -- we have talked quite a bit now to the one-off costs related to Kerecis, that is behind us. We are expecting the underlying Kerecis margin to improve. We will continue to also run a prudent cost across the business. But we have also agreed to initiate the impact for investments, especially related to some of the opportunities we see in the U.S. We have this Bowel Care opportunity. We are initiating investments in technology AI. And then when we are ready, we will also initiate the investment to support the INTIBIA launch.

So overall, we are expecting both the top line growth, but also the EBIT growth to improve from this quarter versus Q1 to deliver the full year of around 7% organic growth and 7% EBIT growth in constant currencies.

The next question comes from the line of Julien Dormois from Jefferies.

I have three, and I'm going to give you a break from Kerecis. The first one relates to Voice and Respiratory Care. You have indicated that tracheostomy was a little weaker in Q1 and you ascribe that to the phasing in distributor markets. So just curious what's your visibility on the pickup in the back half of the year. And just remind us of what is the proportion of sales in tracheostomy that are made distributor markets, that would be helpful.

And the second and third question relates to the Wound and Tissue Repair. So the first one is just I would love to know what was the growth in the business overall, if you exclude Kerecis and you exclude the China recall effect, just wondering whether the underlying business was growing when you exclude those two elements.

And the last one, still in Wound and Tissue Repair, you have also commented that the contract manufacturing business helped a lot in Q1. You had double-digit growth, so I just can't recall what's the proportion of sales you made in the contract manufacturing business just to get a sense of how this could impact the remainder of the year.

Thanks a lot, Julien. Let me start with the first one related to our Voice & Respiratory Care business. So we delivered 8% growth in the first quarter. Our laryngectomy business continued to develop really well with high single-digit growth, and we continue to see our laryngectomy business to perform well here in Europe, but also in the U.S. and across our distributor markets, also supported by the Provox Life launch that is still ongoing in a few markets as well.

The tracheostomy business was a little bit more soft than we also anticipated. So it was growing mid-single digit, but it's really due to some order phasing in our emerging markets, and we expect that to improve the rest of the year. But overall, 8% growth in Q1 was okay, but we also expect the total Voice and Respiratory Care business to improve especially driven by the tracheostomy business the rest of the year.

On the Wound and Tissue repair. So we don't break it down to that level where we take the growth when we have taken out a couple of the more programmatic areas, but actually, when we take them out, it's actually quite positive.

And then the Contract Manufacturing, we -- it's double-digit growth in Q1 but we don't have a lot of visibility on it, to be honest. So therefore, we believe it to be flat for the year, but that can vary. We don't expect it to be more negative than that, but we keep it in our own books there, we keep it just neutral.

The next question comes from the line of Tobias Nissen from Danske Bank.

I have a few also stating -- going back to Kerecis. If you can then talk a little bit more to the assumed time line for stabilization here in the Medicare outpatient challenge and what the really key drivers are for this? And what visibility you have at this point? And what -- like the key risks are for driving growth for Kerecis below the 10% you're guiding for, for the full year? Are we looking into like an inflection in the second half of the year or is it likely to remain heavily disrupted?

And then also just on potential spillover to the inpatient segment here. How confident are you that we will not see like a downward pricing pressure over to this area, which is like still like 70% of Kerecis revenue?

And then just the last one on urology, like 8% organic growth this quarter, very strong. Can you talk to how much, if any, was due to some one-off factors related, after this, you can say, post [ recall ] catch-up, and how much of this growth rate is sustainable for the rest of the year?

Yes. I would love to have an answer to the time line on this also. We have not tried this before, to be quite honest. I don't think that the market has seen anything like this before. So what we do know is that the change -- Medicare is changing their prices. It shouldn't be hard because there is a limit to what you can get out $127 but we have asked what is the normal time line when Medicare is changing the pricing. And they have a database with all the prices in them and that's normally three months. So that's at least what we anticipate will happen and it's important that the price list is updated for people who are using Medicare or using products that are covered by Medicare. So it is within three months. That's also why we say that we expect that the effect will be the hardest in this quarter.

Any sort of effect on the inpatient side, it's a very different market dynamic. It's also different products that you have inside in the inpatient setting and in the outpatient setting so we don't anticipate a lot of turmoil going in that direction from it. What the government have been addressing here is the cost -- explosive costs, so to say, in the outpatient setting, and it's not the same picture internally in the hospitals or in the inpatient setting. So we don't assume anything there.

I don't know if it's a help to you, but what I can do here is I can share with you what we know. And of course, we're also guessing how long time does it take for us to be on the safe side, but we expect, in the way that we see it right now, that it is bottoming out in this current quarter.

Yes. The second one, that was again the urology business. So no, there was no one-offs in Q1. And again, the Men's Health business has actually been looking very solid from a growth point of view for quite a number of quarters in a row now. So I just want to remind you that last year, both Q3 but also Q4, so last year, the second half was also at a double-digit level, and we saw that again in Q1. So the underlying momentum in Men's Health is strong, and we're expecting that to continue for the rest of the year. And on top of that, we had this recall last year that we have now fully behind us. So that's why the underlying momentum within neurology, we have increased to now high single-digit versus mid-single digit when we started the year.

And we are a couple of minutes after the hour. So that was, unfortunately, the last question, but we will have a chance to catch up in the near future. Thank you very much, everybody.

It's my pleasure to welcome you to this year's AGM. There is direct translation via the company's website. So welcome to you all, whether you are here or outside. First of all, let me introduce members of Board and management. Together with me up here, we have the Vice Chair of the Board, Niels Peter Louis-Hansen; and the company's CEO, Lars Rasmussen.

The other members of the Board elected by the AGM are Annette Brüls, Carsten Hellmann, Lars Rasmussen and Marianne Wiinholt. And the 3 Board members that were elected by the employees are Thomas Barfod, Roland Vendelbo Pedersen and Nikolaj Kyhe Gundersen.

The other members of the executive leadership team are Anders Lonning-Skovgaard, Dorthe Ronnau, Allan Rasmussen, Caroline Vagner Rosenstand, Rasmus Just, [indiscernible] Thomas Johns Jr.

According to our Articles of Association, it is the Board of Directors that appoints a Chairman for the AGM. And as last year, we have decided to point to law firm Bech-Bruun. Man up here, Mr. Kornerup. You have the floor, sir.

Thank you for appointing me Chairman of this AGM in Coloplast A/S. This has taken place in accordance with Article 10 of the Articles of Association, I hope for a good AGM and a good debate. I encourage you to make sure that your mobile phones are turned off, and I can inform you that the press can access the AGM and that they can record sound but no videos.

My first task as Chairman of the AGM is to conclude whether the AGM has been lawfully and legally convened and is competent to transact the business on the agenda. I can see that the notice has been sent out in time and that the requirements in the Articles of Association and in the Danish Companies Act have been fulfilled.

Therefore, I can conclude that this AGM has been lawfully convened, and I hope that the shareholders can support me in this conclusion. It seems so. Thank you very much. That will appear in the minutes. And that means we have all the formalities in place. Before we started, I can tell you that the access inspection concluded that 122 people are present in the room, of which 90 are shareholders. That means we have 32 advisers, guests, et cetera.

Votes represented are 87.14% and 77.9% of the share capital is represented. We have -- in the Board, we received a number of proxies and postal votes, representing 87.10% and 77.84% of the capital.

Based on the proxies and postal votes already received, I can tell you that all of the proposals from the Board have a broad support. We also need to touch upon Article 101, subsection 5 in the Danish Companies Act, which calls for a complete account of the voting. That means that we have to account for the number of votes in favor, against, et cetera, even though the results are quite clear.

However, the requirement for a complete account can be waived if the shareholders agree. And just like in previous years, I assume that I have the support of the shareholders to deviate from this complete account. That seems to be the case. Thank you very much.

Finally, and in more practical terms, I must ask shareholders who wish to take the floor to speak from the rostrum. And to be fair, I ask for you to make sure that you approach the podium with your voting cards and that you come up here and sit down in the front row when it is your time to speak, particularly if you're seated in the back. And so with all of that in place, we can have a look at the agenda for today.

You can see it on the screen behind me. And Item 1 on our agenda is the report by the Board of Directors on the activities of the company during the past year. Item 2 is the presentation of the audited annual report. Item 3 is the resolution of the distribution of profit in accordance with the approved annual report. Item 4 is the presentation of the remuneration report. Item 5 is the approval of the remuneration for the current financial year. And then we have Item 6, which is the proposals from the Board of Directors or shareholders.

And here, we have Item 6.1, which is an update of the remuneration point. Then we have [ 6.2, ] election items; 7, election of members of the Board; and 8 election of auditors. Item 9 is an authorization to the Chairman of the AGM and then Item 10 is any other business.

That leads me to the agenda itself. And as per the tradition here in Coloplast, we will take Item 1 to 4 on block, and we will take a debate on these 4 items as one. That means that I will now give the floor to the Chair of the Board, Jette Nygaard-Andersen, who will present the annual report for 2024 to '25, give a report of the activities of the year, and she will also present the remuneration of -- the remuneration report and the proposal for distribution of profit. The floor is yours.

Thank you very much. I've been looking forward to presenting this year's report. For almost 70 years, Coloplast has had a clear purpose to make life easier for people with intimate health care needs. This year, Coloplast has helped more than 2 million people worldwide. We produced more than 1.6 billion products. And that means that people with very intimate and private conditions have gained access to our products and solutions with a wish to live life on their own terms.

And in this way, '24-'25 became yet another year in which Coloplast lived up to its purpose and that matters. But it was also a year where not everything went as we wanted. The year was marked by a downgrade and also a couple of operational challenges. These are circumstances that we would certainly have preferred to be without, but which we have learned from and we've used them to sharpen our focus in future.

In '24/'25, Coloplast delivered 7% in organic growth and a profit margin of 28% before special items. And the result was within the updated financial guidance, but lower than the goals that were set at the opening of the year.

Our Chronic business delivered a solid year if we exclude China. On the other hand, we experienced certain challenges in Interventional Urology and in our Advanced Wound Care business, partly due to the product recalls. We also saw volatility in the Biologics market, where the postponement of a U.S. health care reform temporarily affected growth in Kerecis in the second half.

Although there were some challenges in '24/'25, it was also a year of important decisions that will shape Coloplast's future. The company now stands at the beginning of a new chapter with new leadership and a new corporate strategy called Impact4, a strategy that builds upon what we stand for, but also takes us a step further and strengthens Coloplast's position in coming years.

With Impact4, we carry Coloplast's mission forward. We see a considerable potential in helping even more people worldwide, raise standards of care and support health care systems with solutions that make everyday life easier, both for patients and health care professionals. This is the development we will now be embarking on and which I look forward to telling you more about today.

But before I look ahead, I'd like to look back at the strategy period that concluded this year, Strive25. Strive25 was an important period in our history. When it was launched 5 years ago, the strategy marked a shift from focusing solely on organic growth to also investing in a new growth platform by means of acquisitions. At the same time, the company strengthened its focus on innovation and new product launches, increased capacity and efficiency in production and sustainability.

During the period, we made solid progress. We launched new products and innovative products such as our catheter platform, Luja, which set new standards in the market and received fantastic feedback from users and health care professionals. We strengthened our global production setup with new production plants in Costa Rica and from next year in Portugal, and we invested significantly in automation.

We completed major strategic acquisitions of Atos Medical and Kerecis to support our long-term growth and value creation, and we took important steps to operate the company more sustainably. Among other things, we succeeded in reducing emissions from our own operations. This is what we refer to as Scope 1 and 2 by 41% since 2018, '19.

These strong advances during the Strive25 period have made Coloplast stronger and better equipped for the future. That said, the period also involved headwind. This was due not least to the COVID-19 pandemic, rising inflation, geopolitical tensions and new market conditions in China. And as a result, we didn't meet all our targets for growth and earnings, and we acknowledge that. We've taken several important learnings with us that have been turned into concrete actions.

Among other things, we have adjusted our activities in China, strengthened profitability in our Advanced Wound Care business and streamlined costs in Interventional Urology. The end of the Strive25 period also marked a change in leadership. In May, Kristian Villumsen stepped down as CEO after 7 years in the role and 17 years in total with Coloplast.

On behalf of the Board, I'd like to thank Kristian for his many years of service and fantastic contribution to the company. He took us safely through the COVID-19 pandemic, spearheaded Strive25 and played a central role in the acquisitions that will support our growth for many years to come. To ensure continuity, Lars Rasmussen stepped in as interim CEO while the search for the right successor is ongoing.

Together with the rest of the leadership team, he has worked to finalize the new strategy. As part of that process, Coloplast presented a new organizational structure and a new executive leadership team in August to unlock the potential of Impact4. And now I'll elaborate on our new structure and leadership team.

Going forward, Coloplast will be organized into 2 business units: Chronic Care and Acute Care. The new structure reflects differences in markets, customer needs and business models and is designed to make us more focused and better able to deliver on our 2030 strategy. In Chronic Care, we bring together our core business, Ostomy Care and Continence Care with Atos Medical, which we also refer to as Voice and Respiratory Care. These 3 business areas all hold strong positions in attractive markets with structural growth, an estimated combined market value upwards of DKK 50 billion and a rising demand for innovative solutions.

The commercial part of Chronic Care is led by Caroline Vagner Rosenstand, who has many years of experience with Coloplast, most recently as Head of Atos Medical. To strengthen our focus on innovation, we have created a dedicated R&D function for Chronic Care headed by Rasmus Just. Rasmus has returned to Coloplast after several years with Novo Nordisk, and he joins the executive leadership team. In this way, innovation will get an even more central role in the company and focus will be on developing new differentiated products based on customer needs and an ambition to bring them to market faster.

As part of the changes, the Board and Nicolai Buhl mutually agreed that Nicolai would step down from his position. I'd like also here to say thank you to Nicolai for many years of service, and I wish him all the best going forward.

In Acute Care, we are combining our Advanced Wound Dressings business and Kerecis into a new organization called Wound & Tissue Repair. The goal is to build a stronger global business with greater innovation power and better growth opportunities. The new organization is headed by Fertram Sigurjonsson, who has built Kerecis into a fantastic company with a unique technology.

The second business unit in Acute Care is our Interventional Urology business, which will continue to be headed by Tommy Johns. So altogether, Acute Care operates in the market worth more than DKK 70 billion. Within Acute Care, the Wound & Tissue Repair market represents around DKK 50 billion, while Urology represents around DKK 22 billion. And the market grows steadily, driven by the aging population and a rising demand for more advanced and evidence-based solutions.

Besides the new organization of Chronic Care and Acute Care, the remaining executive leadership team is unchanged. The search for our next CEO is progressing as planned. And we will, of course, come with an update as soon as the right candidate has been found. And this brings me to the Board of Directors, where changes are also underway.

On the 9th of October, Lars Rasmussen announced that he will not seek reelection to the Board after nearly 4 decades with Coloplast. He has played a decisive role in developing Coloplast into the global leading medtech company that we know today, both in the capacity of CEO and Chairman of the Board.

I'd like to thank Lars for his many years of service, his strong commitment and his unwavering focus on the people that Coloplast exists to serve. And I'm pleased that we will continue to work together until the new CEO is in place because Lars will continue as interim CEO.

With this decision, the Board is focused on ensuring continuity and a smooth leadership transition as well as securing the long-term leadership of Coloplast. And therefore, the Board proposes the election of Niels B. Christiansen as a new member. Niels comes with strong international experience and insight into customer-oriented companies and is the right profile to support the execution of our Impact4 Strategy where the customer is at the center. It is expected that he will be appointed Chairman at next year's AGM at the latest.

The Board evaluates its work on an annual basis to ensure that collaboration and competencies are aligned with the company's needs. The annual evaluation shows that we have a strong and trusting collaboration with management and high satisfaction with the Board's competencies. The Board also wants to strengthen its focus on company culture and on talent and leadership development with particular attention to building a strong pipeline of future leaders. In connection with the work of finding a new CEO for Coloplast, we will also discuss which competencies will be needed to supplement the Board going forward.

I look forward to continuing our close collaboration with the management team in the coming year, a year where we will truly begin a new chapter for the company with a clear direction towards 2030.

And now I'd like to introduce to you our new strategy, Impact4. Impact4 marks the beginning of a new chapter for Coloplast. We call the strategy Impact4 for 3 reasons. First, it is built on 4 strategic priorities that span the entire company and are essential for our future results and value creation. Secondly, we enter Impact4 after a period of significant investments in organic growth and acquisitions. Now it's about unlocking more value from those investments and realizing their full potential. And thirdly, Impact4 includes a new long-term ambition to help 4 million people with our products and services. That is twice as many as we help today, and that is ambitious. Impact4 is, therefore, a plan for our priorities now as well as a long-term ambition for the future.

To get there, we must challenge ourselves, strengthen our focus on innovation and collaboration and constantly evolve in step with the changing needs of our customers and users. The first priority is, therefore, about putting the customer at the center of everything we do. Our ambition is to be the preferred partner for users, health care professionals and payers worldwide.

In our Chronic business, we have the strongest product pipeline ever. Now we will enhance the customer experience and get even closer to those we help. We want to understand their needs, follow them through treatment pathways and offer integrated solutions that make their everyday lives easier. At the same time, we will continue to set the standards for innovation, supported by strong clinical evidence and strengthen our guidance so both patients and health care professionals can achieve better outcomes.

In Acute Care, we also have a strong foundation and a significant potential for the coming years. By combining Coloplast's Advanced Wound Dressings business with Kerecis, we create a unit that strengthens innovation and expands our position within biological wound care.

Our goal is to set a new clinical standard through new products, technologies and digital solutions that using AI and smartphone-based applications will make it easier for doctors and health care professionals to use and connect our products and services in their daily work. In urology, the expected launch of INTIBIA in the fiscal year 2026 to '27 for the treatment of overactive bladder will be a major growth driver, especially for women. This is an area with a large untapped potential, where Coloplast can make a meaningful difference.

In short, across the business, we will elevate the customer experience at all levels through products, services and partnerships so that Coloplast will remain the preferred choice. Our second priority is about efficiency. We must use our strengths better and create more value with the resources we already have. During the Impact4 period, we will launch initiatives that strengthen both our gross margin and the robustness of our supply chain. We will also increase scaling in our business support center in Poland, where artificial intelligence will play an even bigger role. And to support growth, particularly in North America, we have opened a new business support center in Costa Rica.

Finally, there will be synergies from the integration of Kerecis and Atos Medical, which are expected to be completed during 2025 to '26. The goal of all of these initiatives is to make Coloplast even more efficient and scalable and to position us even better for future growth. The third priority is about technology and how we can use it to create better customer experiences as well as more efficient processes. We're launching a 5-year technology program with additional investments of several hundred million Danish kroner to fully leverage the potential in areas such as artificial intelligence.

New technology will strengthen our contact with users and health care professionals, enabling us to react faster and more precisely while making our internal processes simpler and more efficient. This will free up resources that we can devote to innovation and growth. Technology shouldn't be a goal in itself. Technology will give new tools to our employees in their daily work. And most importantly, technology is a means to create better solutions for the people who use our products.

Priority #4 is about people, culture and sustainability. Coloplast is an attractive workplace. Year after year, we achieved a high score in our employee surveys. This year, it was 8.2 out of 10, which shows that our employees thrive and are engaged in the company's purpose. At the same time, Coloplast today is a more diverse company than before. We have moved from one unified culture to several cultures across the company as a result of acquisitions, all tied together by our shared values and our mission to make life easier for people with intimate health care needs.

With Impact4, we will strengthen Coloplast's culture and make the company even more customer-centric with a focus on leadership, development and collaboration that ensures that we deliver on our ambitions. At the same time, Coloplast will continue to work towards a more balanced gender distribution. In 2024 to '25, women made up 26% of senior leadership, and our ambition is a 40-60 distribution by 2030.

Sustainability also continues to play an important role. Towards 2030, we will reduce our CO2 emissions within our own operations, that is Scope 1 and 2 by 90%. For Scope 3 emissions in the value chain, the goal is to reduce CO2 by 10% per product instead of the previous 50% per product. The new goal is more realistic and builds on the learnings from Strive25 in working with our suppliers. At the same time, Coloplast has set a goal of becoming climate neutral by 2045, a long-term and ambitious target that reflects our responsibility to the world we're a part of.

Impact4 also comes with a new financial ambition towards 2030, an ambition that reflects the reality we are facing with a changed China, geopolitical tensions and greater global uncertainty. All of these place new demands on the company and on our financial goals. We, therefore, enter the Impact4 period with strong ambitions but also with a realistic view of the world around us.

From the base year of 2025 to '26, Coloplast's long-term financial expectations are the following: we will deliver organic revenue growth of 7% to 8% with a 5-year CAGR up to 2029-'30. We will drive EBIT growth in constant currencies at or above revenue growth. And we aim for a return on invested capital of more than 20% in the fiscal year 2029 to '30 with an expected linear improvement throughout the period.

With Impact4, we will increase value creation for our shareholders by generating organic growth above market levels. We will deliver strong EBIT growth, improve return on invested capital and maintain a solid cash flow. That concludes the review of Coloplast's new Impact4 Strategy and our financial ambitions towards 2030.

We enter Impact4 with the strongest innovation pipeline to date and with 2 new companies, Kerecis and Atos Medical as part of Coloplast. And we're investing in new technology and artificial intelligence to strengthen customer experience and enhance value creation. Coloplast is, therefore, in a strong position with new leadership, a strong strategy and many opportunities ahead.

And now I will present the key figures for 2024 to '25. Organic revenue growth was 7%. And in Danish kroner, revenue increased by 3% to DKK 27.9 billion. Operating profit before special items increased 5% to DKK 7.7 billion, corresponding to a profit margin of 28% before special items. Gross profit increased by 4% to DKK 18.9 billion, corresponding to a gross margin of 68%. Return on invested capital after tax and before special items was 15%, in line with last year.

This year's profit before special items was DKK 4 billion. Total assets amounted to DKK 48.4 billion and equity was DKK 16.1 billion. Free cash flow was DKK 5.4 billion. And at year-end, net interest-bearing debt amounted to DKK 21.7 billion. The Board of Directors proposes at today's Annual General Meeting a further dividend of DKK 18 per share in addition to the DKK 5 per share paid at the half year point.

For the full year, dividends will, therefore, total DKK 23 per share compared to DKK 22 last year. This corresponds to a total payout of about DKK 5.2 billion and a payout ratio of 143% after special items. Coloplast's tax rate is extraordinarily high in 2024 to '25 due to the transfer of IP rights relating to the Kerecis acquisition. At a normalized tax rate, the payout ratio is 108% after special items.

On the last trading day of the previous financial year, the Coloplast share was priced at DKK 875 on NASDAQ Copenhagen. On the last day of the financial year, I'm reporting on today, this share closed at DKK 543. The return on the Coloplast share from the 1st of October 2024 to the 30th of September 2025 was a negative return of 35%, including dividends paid out in that period. The day before the Annual General Meeting, the share closed at DKK 579.

And now let's have a look at the financial outlook for 2025 to '26. In the financial year 2025 to '26, Coloplast expects organic growth of around 7% and around 7% EBIT growth in constant currencies. Return on invested capital is expected to be around 16%. The growth expectations reflect continued solid progress in Coloplast's chronic business, excluding China, and an easier basis for comparison in urology due to product recalls in 2024 to '25. The expectations also include our challenges within Wound Care in China, where we have had to withdraw a product due to local regulations. Coloplast expects reported revenue growth of 4% to 5% with a 2 to 3 percentage point negative impact from currencies.

These expectations reflect increased costs related to establishing Coloplast's new factory in Portugal and investments in Impact4. These include investments in new technology, which I mentioned earlier, a commercial opportunity within bowel incontinence in the U.S. and investments related to INTIBIA expected to launch in 2026 to '27.

Coloplast's financial expectations assume that the company's products will continue to be accepted from tariffs in the United States and that there will be no significant impact from health care reforms. CapEx expectations are around 5% of revenue and the effective tax rate is expected to be about 22%.

That concludes [indiscernible] '24 to '25. With Impact4, we have opened a new chapter for Coloplast, a chapter with new leadership, a strong strategy and many opportunities ahead. This gives us a solid foundation for the results we aim to deliver in the coming years. But before I close, I would like to say thank you. Thank you to our customers and partners for your trust and close collaboration.

Thank you to our 17,000 employees worldwide for your dedication, professionalism and the difference you make for our users every single day. Thank you to our shareholders for your support to the company and the direction we have taken with Impact4. And most importantly, thank you to the people who use our products and solutions. You give meaning to our work and your needs drive this company forward.

Finally, I would also like to extend a special thanks to you, Lars, whom we are fortunate to keep with us a little longer to ensure a smooth leadership transition. After almost 4 decades at Coloplast, you have made a lasting impact on the company. You have moved Coloplast forward, developed it into a global leading medtech company and led with attention to both results and the people we exist to help. I know that Coloplast holds a special place in your heart.

And over the past 10 years as colleagues, I have seen your dedication and passion for the company firsthand. That is why I find it fitting to end with a film that highlights what has always mattered most to you and to Coloplast. The people whose lives we strive to make a little easier every day. Here is the film. Thank you very much.

[Presentation]

Thank you, for the report by the Board concerning the financial year 2024-'25, presentation of the annual report and the remuneration report for the same year and the introduction of the distribution of profit. Before I open up for the debate, I can point out that the annual report has been signed by the members of Board and executive team and has also been given an unqualified endorsement by the company's auditor. I can also refer you to Page 158 in the annual report, if you wish to test the correctness of my statement.

Also, I would point out that the proposal from the Board has proposed the payment of a dividend of DKK 18 for fiscal '24/'25. And this is for each share of DKK 1. This is in addition to the extraordinary dividend that was paid out earlier this year in connection with the interim result where a dividend was paid of DKK 5 per share. So the total payment of dividend amounts to 143% of the consolidated financial result this year or DKK 5.18 billion.

I will now open up for the debate. We have 3 speakers on my list. First, ATP, Claus Wiinblad. You're the first person to speak representing pension fund ATP.

Thank you. I am Claus Wiinblad, and I represent ATP. First of all, thank you to the Chair of the Board for the presentation of the annual result and the new strategy. Over the past 2 years, some of the largest listed companies in Denmark have unfortunately seen a lot of turbulence in the upper management layers. And this turbulence has caused uncertainty among shareholders and this is reflected in the share price. And that's why we, as shareholders, are punished.

The same has been seen in Coloplast. There may be many good reasons why you may need to make drastic decisions. But the way it is done is certainly very important. I will not make any comments concerning the process itself. But I would like to talk about where we are today. We now have a new strategy, a new financial goals, considerable change in the structure of the company and also the upper management level. This is a very unusual situation for a company that so much change takes place just before a new CEO joins the company and a new Chairman. It's usually the other way around.

However, I'd like to seize this opportunity to welcome Niels B. Christiansen to the Board. And this in the capacity potentially as new Chair. There is a large job waiting for you. You have to find a new CEO and also work with the strategy in the long term. We now have heard about the new 5-year strategy Impact4 from the Board. And one of the most important initiatives in this strategy is the split into 2 divisions: Chronic Care and Acute Care.

As I see it, it gives Coloplast a better opportunity to diversify its strategy to -- and enable them to focus on the 2 different customer segments and markets. It makes good sense, and it will probably help you generate fine growth in the future. Later today, we will also decide on a new remuneration policy, and I also have a comment to make in this respect. The new level for the variable pay with the short-term bonus part is raised. Well, this is not unusual if you look at the peers in the market. But it's important for the new high level also to be reflected in the KPIs that need to be met so that you really get a strengthening of the performance.

And this is not just another way of giving people a higher salary. There's also the possibility of an extraordinary bonus up to 300% of the total pay package in connection with new people joining the management level. So this is a very high level. Generally, I'd like to say that the use of extraordinary bonuses is something that we don't really welcome. We understand that businesses need some degree of flexibility. This also includes the possibility of being able to get a newly employed person out of the company where he or she is already working, but it should only be used this with high bonuses on very rare occasions.

In connection with the future presentation of remuneration report, we will assess whether we feel that it has been applied in a reasonable manner by a Danish company such as Coloplast. Then to round off, despite the turbulence, I'd like to say thank you to you, Lars, for the huge job you have done in Coloplast, we have had good collaboration and dialogue over the years. We have always appreciated the good and open discussions we've had with you. Thank you very much.

Thank you very much, Mr. Wiinblad from ATP. And let us hear the Chair of the Board.

Well, terminology can be a difficult thing. Thank you, Claus Wiinblad, for your comments and your contribution. First of all, what you said about the changes that we've had at management level and at Board level. It's true. It's been a turbulent year with lots of changes, but we feel that it was necessary to do it. We now have a new organizational structure and a strong team, very strong management team and also an ambitious strategy and a good balance, I think. The introduction of new people at the top level also gives a different kind of dynamism at the level they join us in. So it's good to get new competencies.

You also mentioned the new -- the situation with the new CEO and the new Chair of the Board. It's very important that we have been able to focus both on continuity and stability and also to have a good transition, not least from here to the future so that we know that in the long term, we have the right management for Coloplast. So we think that we have provided a good basis, a good transition from the present CEO to the new, good transition from the person taking my chair after me and the fact that we can set up cooperation between the new Chair and the new CEO at a very early stage.

And we have -- you know that both Lars and myself have been members of the Board for many years. So there will be new winds blowing. We have many years of experience in Coloplast. I think that the employees elected to the Board together have 84 years of work in Coloplast. And that's quite a lot, but it was important for us to make sure that there was continuity and stability and a good transition to the future.

You said that it may not be a very good timing to introduce the new strategy before the new CEO joins us. Well, Strive25, the old strategy expired, and we knew straightaway that we needed -- also to find the new CEO outside our company. And it does take time before you find one and the new person sort of gets acquainted with the business. So it was important for us to make sure that we didn't lose momentum in the process. So this is one of the reasons why we decided to go ahead with that process, and we were pleased to announce our results. But having said that, I also find that we now have made room for a new CEO, and he or she will, of course, have some elbow room when he or she joins us.

Also, thank you for your comments concerning the new remuneration policy and the remuneration report. You said that you would check that we operate on the basis of the right goals, and we agree with you entirely. It's very important that you work with the correct goals. It has almost become rocket science these days. But it is important because it is what will underpin our execution of the strategy.

We hope that we have reached the right level and that it fully reflects the expectations we have. And all this is what we announced in our guidance, as you know. So I think this was all I had by way of comments and replies to your presentation.

Thank you very much to the Chair of the Board for those comments for ATP. We have one more speaker on the list, and that is Bjarne Kongsted on behalf of the Danish Association of Shareholders.

Right. Good afternoon. I would also like to start by thanking the Chair of the Board for a good and comprehensive review of the fiscal year 2024 to '25. My name is Bjarne Kongsted, and I represent the Danish Association of Shareholders. And I would like to immediately recognize the strong position that Coloplast holds, but I would also like to underline a few areas in which I believe the company could be more clear, more transparent and more ambitious in its communication to its shareholders.

I have 3 remarks just briefly. The first area is what I call strategy and investment plans. Coloplast makes significant investments in capacity, in product development and in market expansion. But the long-term continuity between these investments and the expected improvements in margins and competitiveness are still not clearly communicated. Shareholders need more insights into concrete milestones and effects of these investments.

Secondly, market pressures and cost management. The market challenges in recent years are one of the most pressing concerns for shareholders. We would like to see a more detailed description of the challenges and the initiatives you are going to launch in order to make sure that margins are going in the right direction.

Thirdly, what I call ESG transparency and risk management. In a global medtech company, quality control and compliance are crucial. We would like to see more specific reporting on geopolitical risks, supply chains and environmental impacts. Coloplast has a strong financial position in 2024 to '25 with high earnings, stable growth and good cash flows.

But the challenge is the pressure on the market, high costs for transformation and increasing global complexity. Coloplast continues to deliver strong growth and return on investment, and that is a good indicator of long-term financial health. All the while you have the right position to strengthen your portfolio through acquisitions in adjacent medical facilities.

By way of conclusion, I have 3 questions to the Board. Firstly, can the Board make it more concrete what sort of milestones and specific effects you expect as a consequence of the significant investments that you have made in capacity over the next few years? And how are you going to measure whether the investments deliver the expected value creation? Question two, what specific initiatives will be launched by the Board to counteract the continued margin pressure? And how can shareholders expect to see margins going in a positive direction?

My third and last question, can the Board tell us what concrete risks in the value chains you see as the most critical at present and how you handle these risks, particularly in light of the geopolitical tensions and regulatory changes we're seeing globally?

In the Danish Association of Shareholders, we continue to believe that Coloplast will continue its success in the Danish as well as the global market. But this success demands clear goals, strong governance and full transparency towards your shareholders. We encourage the Board to strengthen communication and make it more clear what goals you have set in areas where uncertainty is too high today. Thank you very much for the floor.

Thank you to the Danish Association of Shareholders. There were 3 concrete questions that will be answered by Lars Rasmussen.

Thank you very much, Bjarne Kongsted, for those remarks and questions. I really do understand that you would like us to dive more into these matters. I have been here for almost 4 decades, as we just heard. And it is my privilege to run this company as the CEO right now and since the month of May. And in that period, the changes that we have seen in the company have particularly taken place in China and the U.S. And there are several large changes and more changes than I have seen in the past 15 years put together. So you put together a strategy and each morning when you get up, you have to look at whether the strategy still holds, and it does.

But when it comes to specific milestones, we now have a strategy that in a market growing 4% to 5% and where we have large market shares, we expect 7% to 8% growth. And that means we need to win market shares every day. We have lost EBIT margin in the past year during Strive25, partly due to COVID and what that did to commodity prices, but also due to acquisitions and interest costs that have entered our accounts. And we are very happy about the acquisitions, but we can still see this as an effect on the numbers.

And therefore, the guidance for the EBIT margin is that we expect to grow at or above our top line growth. And that means that we expect to improve the margin in the current year. We also have a new target now that many of our investors are happy about. It's a very investor-friendly goal, which is return on invested capital. And of course, it has decreased as a consequence of our acquisitions. We have only had organic growth in all these years. And now, of course, our return on invested capital is at 16%, and we expect it to surpass 20% in future. That's a very concrete target that we measure on each quarter.

I think that was the easy part of your questions. So now let's move to the difficult part. What do we do in order to counteract the ongoing pressure on margins. It's quite true. We primarily operate in markets where the payer is some sort of public sector institution. And of course, that does entail a certain pressure. At the beginning of this new strategy period, we have a new type of technology. We've all heard of AI, and that's, of course, an opportunity for us to serve our customers better. That's what is most important to us because scaling our business makes it easier to withstand pressure on margins.

And the other thing is we have quite a lot of administrative processes as a company selling things, but we also need to invoice insurance companies, whether they are public or private. And this entails quite a lot of work that can be automated, and we expect to be doing that in the coming period. And then we have the ongoing work to get more out of what we already have, and we are already a big company.

So we have plenty of activities that we do for the sole reason of improving our margins. So you can't just cut back and become a fantastic company that way. But on the other hand, you cannot become a fantastic company without CapEx and efficiencies. For many years, we have invested in order to achieve a strong position in China, and we have more than 60% market shares in Ostomy in a community in China. But in a market where we used to grow 20% a year, now we are around 0% growth on a good day. And that's because we are seeing a whole different kind of competition in that market. And we can see that reflected in our numbers.

So we can see we have -- we are seeing health care reforms in the U.S. and other sorts of reforms. And our task is to make sure that we can again achieve growth of around 7% to 8%. So we definitely feel the pressure, but we are quite sure that we can grow more than the market and that we can improve margins. The final thing were the most crucial challenges in our value chain, which became apparent during COVID.

We diversify our supply chain even more at present. We already had production in the United States, in China, in Costa Rica, in Hungary and a bit in Denmark. And now we will also open production in Portugal, a very large factory that we've invested in and that we will take into use by the end of this fiscal year.

And that means that we will not have to invest in more factory capacity, perhaps more equipment, but not in any new properties. And that will be beneficial to us. But that is absolutely a risk that we have mapped out. And we feel that we are quite well equipped to face that risk. Another very important matter when we're talking about risk is, of course, cybersecurity and the need to be covered in that department. And here, we are even certified as much possibly as we possibly can.

So with what we know today, we are quite well covered. But of course, the risk landscape here is changing all the time, and we do our best to be ahead of the game. And so far, so good. But of course, we cannot rest on our [indiscernible]. Thank you very much again for those questions.

Thank you to Lars Rasmussen. And the last speaker on the list is Bjørn Hansen. Are there any other requests for the floor, then please approach me. And now Mr. Bjørn Hansen, you have the floor, sir.

I am Bjørn Hansen, and I represent a group of small shareholders and large. And I'm also a consultant to people from Norway and Sweden. I have also had contacts in Germany, but unfortunately, for other reasons, they have withdrawn. But first of all, I'd like to say thank you to the Chair of the Board for the presentation of the report. It was a good report. I really think so. And I also wish to thank our current CEO, although he is an interim CEO, it would be fine if there was the possibility of you sort of staying on for about 12 months.

But I think it would be good for Coloplast and good for the shareholders if you remain perhaps as a consultant for a year or so. And then a piece of good news. It's wonderful to hear that Coloplast -- and Mr. LEGO, where are you? Is he here? Or is he not? Niels Christiansen will now join the Board and get to know the business and perhaps become Chair of the Board. He is very good at this, and he knows the business from his work with the C25 businesses and from LEGO. It's -- I know this is a different universe, but he certainly knows a lot of things. So that is certainly a game for Coloplast. And many shareholders are likely, I think, to start buying shares in Coloplast again.

According to Danske Bank, I don't know whether this is correct, but for the past 52 weeks, it has declined 42%. That is a crying shame. But if we look in the -- to things in the long term, then the 3 best shares that we have invested in. And here, Coloplast is one of them. And in some years, they made a good contribution. And you certainly did well as a company, both employees and management.

Then the debt level. We have started looking into the indebtedness of Danish businesses. And it turns out that some of the figures that have been stated by some banks will refuse simply to give the figures. I won't -- Danske Bank [indiscernible] and there were a number of silences while I talk to them on the phone, but they said they would come back to me. A number of years ago, a shipping business talked about -- well, they found out that the figure for their indebtedness had not been corrected, and it was, in fact, DKK 2 billion higher. The indebtedness here is good, and I think it also has to do with the share price.

The number of shares I was informed about an hour ago is reflected correctly in the articles and also the level corresponds with my own calculations. And it also means that there is basis for an increase in the share price. Surely, it could go to around DKK 800. Let's not be too optimistic here. But give us 2 years, and I think you will have attained it, in particular, with the plans you have. And the new strategy, I think, has the possibility of a very good impact power. I don't know what I feel about China, but the new production plant in Portugal will start up next year. And I hope that the products from that production plant, well, there will be more than one product because we have a lot of people in the EU.

What's going on here? Something is happening. I think the rostrum is going up. Oh, I see I pressed -- well, fine. Thank you. The thing is the number of shares that you have, has there been a change in the holding company? I believe there has. And about 2 or 3 years ago, you became a holding company. That was the right move by management to organize that. I think it's especially a good move when there is to be a change of generation. I hope that this is not for the next 20 to 30 years, but still women now live to the 105 and men folded in the street when they're 80. So that's the way it goes.

We should also talk a bit about production plant in Central America. A lot of good products are produced there. It's not only one as far as I have found out. And I'd like to know about whether there are exports to the Unites States from that particular plant. And I have been informed an hour ago that for the time being, no extra customs duties have been placed upon those products. That's fine.

And apparently, Mr. Trump has decided not to penalize this particular kind of products. There have been some problems with workers pay there. On the AI, I hit on Google, it says that you have several production plants. And I tried to look into it and it said, 2 production plants plus others. I thought that there was one production plant in Central America. I don't know if it's 1, 2 or 5, but I'm not sure about these AI hits. Is it Elon Musk that is actually behind all this? And is he capable of making share prices go up and down?

Sometimes you get the impression AI is fine, but it should also be checked. And who checks it, who keeps control of it? This is all very difficult. Unfortunately, this year, there was not a set of accounts in Danish. And this is what I also want. There are many people, many shareholders who would like this in Danish. In Sweden, when you attend a general meeting, it takes place in the Swedish language. And if there are problems, there will be answers given in Finnish or English. That was [indiscernible].

And in Germany, they speak German and sometimes they answer in English. We get answers in English American, but not in Danish. You were one of the last to hold an AGM in Danish, and that is very courageous of you. You bought a company in Iceland that uses fish skin. I don't know whether this is cod or any type of fish or any species will do, but this is good for the treatment of fire wounds or other types of wounds. There is going to be a meeting about this in Nuremberg. I think this stands a good chance in relation to all the victims of the warfare in Ukraine, and it would be fine to start exporting to these people. So do that as soon as you can. And Merry Christmas, everyone, also to the Chairman of the meeting.

Thank you to Bjørn Hansen for these remarks. There were a few concrete questions, and we will hear an answer from the Chair of the Board.

I will just lower the rostrum a bit again. Thank you very much, Mr. Bjorn Hansen, for your remarks and your words of praise. I understand your remarks on AI. As you ask, thus you will be answered as they say, but I'm glad that you appreciate us having our AGM with physical presence. And I can also confirm that neither Lars Rasmussen nor I are chatbots or any sort of robot. We are both physically present here. And your comment about Niels B. Christiansen, that as I said in my report, we are very happy to welcome Niels B. Christiansen.

Unfortunately, he couldn't be here today because LEGO has its own AGM today. So he wasn't able to make it today, but we very much look forward to welcoming him on the Board.

Then you asked a few questions about our debt. And as you can see from the annual report, our net interest-bearing debt was 21.6% at the level of last year. And it's true that our debt has increased due to the fact that we have acquired 2 new great companies, but we also have a plan to reduce our debt in the coming strategy period. So that is a focus area of ours.

Then you asked about the shares. And I think it would be going too far to start reading out the numbers of shares, but the best sources that you can look at are our Articles of Association. They include the ballot numbers. What you hear from Danske Bank or other sources, I can't really comment on that, but you can count on our Articles of Association. And regarding the other numbers you've seen, again, I will refer you to our own website.

That is the best source of information that I can give you. What's that? No. Well, I can definitely confirm that what we write on our website is true. So if you refer to that, then you're quite safe. Then you'd asked about our production plants, and I think I will let Lars answer that question.

Thank you for the questions, Bjørn Hansen. Well, the largest production plant is in Hungary and then we have also built production plants in Costa Rica and in China. And now we have a new one coming up in Portugal. Those are the volume production plants. And then we have smaller plants in other places. And perhaps I should also talk about the fish skins, it's cod, and it works. There's plenty of cod in the sea around Iceland. Thank you.

This was the reply to Bjørn Hansen from CEO, Lars Rasmussen. Any other requests for the floor concerning Items 1 to 4 on the agenda? That doesn't seem to be the case. We have now closed the debate, and I find with your endorsement, of course, that we have now taken notice of the report, and we approve the appropriation of profit suggested by the Board, and we also approved the remuneration report.

So I will enter this into the minutes. And this brings us to Item 5, which is approval of the remuneration to the Board for the current fiscal year. This is a regular recurring item on the agenda, and it has the proposal from the Board, which says that the level of remuneration to the Board for '25, '26 will remain unchanged from this year. There will be a basic fee of DKK 500,000 for ordinary Board members. There will be a fee of DKK 875,000, which is 1.75x the basic fee to the Vice Chair. And the Chair will get 3x the basic fee, which is DKK 1.5 million.

The proposal is also to pay DKK 300,000 in fee to members of the Audit Committee, but the Chair will get DKK 500,000. With regard to members of the Remuneration and Nomination Committee, the proposal is to pay DKK 200,000 to ordinary members and DKK 300,000 to the Chair of the 2 committees. And then it is possible to obtain compensation for a number of different costs incurred as a Board member.

This is a proposal that only requires simple majority. Are there any contributions from the shareholders? That doesn't seem to be the case. I take it then that we have approved the proposal for remuneration to the Board for the present fiscal year.

This was Item 5 on the agenda. This brings us to Item 6. And this is also a recurring item concerning proposals from Board and shareholders. There is one single proposal this year from the Board. It has to do with an update of the company's remuneration policy. The proposal is for an update to be made to the company's remuneration policy. The update involves a number of amendments to the policy as described in the convening notice and the draft for the update, which both have been available on the company's website since the 11th of November 2025.

The purpose of the amendment is to allow the company to remain competitive with regard to attracting and retaining talent and the main features of the amendments are as follows: the ceiling for variable pay under the short-term incentive program will be increased in order for members of the management in future to receive cash bonuses of up to 150% of the fixed pay. The long-term incentive program for the company will be updated in order for the possibility of allocating both performance share units in future and stock options and the time to maturity for stock options will be changed to 8 years and the ceiling for extraordinary allocations in future will enable the company to pay up to 100% of the individual management members total pay package, but that it is possible to give extraordinary allocations of up to 300% of the individual management member's total pay package if the purpose with this allocation is to compensate for a loss of incentive pay from a former employer.

This is what we call a sign-on allocation. And this was also what was referred to by the ATP speaker. And then there is a section about deviations from the remuneration policy. And for the sake of good order, I would also point out that material concerning this proposal and the amendments to the policy have been available on the company's website before the meeting, and we only require a simple majority if we wish to adopt this one.

And then Mr. Bjørn Hansen has asked for the floor.

Right. I have a brief question about your new CEO. How far are you in this process? Are we talking 2 years or 2 days? And do you have a Vice Chair, I mean the new CEO? Thank you.

Thank you to Bjørn Hansen. That was a specific question, not concerning the remuneration policy, but about the Chair of the Board. The Chair of the Board will give an answer.

Right. Bjørn Hansen, as I mentioned in my report, we have an ongoing global process, and it is running quite on schedule. And as soon as we have something more to tell you, we will not hesitate to share that with you. But we are in the middle of a global process. So we knew from the outset that it would take some time, but we will tell you as soon as we have any news.

Thank you very much to the Chair of the Board. Does anyone else wish to take the floor under Item 6? That does not seem to be the case.

Can I then conclude that, that proposal has also been adopted? I will. Thank you very much. That will appear in the minutes. That leads me to the next item, which is Item 7, the election of members to the Board of Directors.

And as the Chair of the Board and several others have said, Lars Rasmussen has decided not to stand for reelection at this year's AGM. Therefore, the Board of Directors proposes reelection of the other Board members who are all running for reelection and they are: Jette Nygaard-Andersen, Niels Peter Louis-Hansen, Annette Brüls, Carsten Hellmann and Marianne Wiinholt.

As you can see from the company announcement from the 9th of October and as mentioned here at the rostrum, the Board proposes the election of Niels B. Christiansen as a new member of the Board of Directors. Mr. Christiansen has considerable executive management and Board experience. And since 2017, he's been the CEO of LEGO. As the Chair of the Board mentioned, LEGO has their own AGM today, and therefore, Niels B. Christiansen could not be with us today.

Niels B. Christiansen also has extensive Board experience. Among other things, he is the Chairman of the Board. He has been the Chairman of the Board at Demant. And Niels B. Christiansen will not run for reelection at Demant at their AGM next spring.

I can also inform you that the other managerial positions of the proposed candidates can be seen from Annex 1 to the convening notice and on the company's website.

Are there any other candidates? That does not seem to be the case. And that means that all of the proposed candidates have been reelected or elected for a 1-year period. Congratulations to all of you. That leads me to the next election item, which is Item 8, the election of auditor. Here, the Board of Directors proposes the reelection of EY Godkendt Revisionspartnerselskab.

And this applies to statutory financial reporting as well as assurance engagement relating to sustainability reporting. Here, I refer to the audit regulation, and I can inform you that this is as recommended by the Audit Committee, which has not been influenced by any third party or been subject to any agreement under which the election of certain auditors or audited firms or audit firms would be restricted.

Are there any other candidates for company auditor? That is not the case. That means that we have reelected EY Godkendt Revisionspartnerselskab. That leads me to Item 9, which is the authorization to the Chairman of the AGM. Here, it is proposed that the general meeting authorizes the Chairman of the AGM, that is me, with full right of substitution to apply for registration of the resolutions passed and to make any such amendments thereto that the Danish Business Authority or other authorities may require as well as to make and apply for registration of linguistic and other non-substantive adjustments to the company's Articles of Association.

Does anyone want to take the floor under this very exciting item? That does not seem to be the case. I will, therefore, conclude that the general meeting has adopted this proposal.

Thank you. And that leads me to the final item on the agenda, which is any other business. Does anyone wish to take the floor under this item? Anything can happen. You can say anything as regards to the company, of course. And Mr. Bjørn Hansen wants to take the floor. Is it to do with the company?

Wound healing. How many pieces of cod skin does it take to heal the wounds of one patient? There are quotas for cod fishing and there's a hell of a fight also in the area of Greenland -- in Greenland waters for getting the cod that you may actually pull out of the water. So how much can these people actually produce?

Thank you and very specific questions regarding cod and catches that is possible to obtain. Lars, do you know anything about this?

Well, as I said this primarily for deep wounds, wounds that will not heal in the same way as superficial wounds. And what you do is that you take away the live tissue from the fish skin and put it on the wound. And it works as kind of a scaffolding process because it allows the cells from the wound to attach to the skin. And a second layer is added subsequently.

I think this is about the size, 5 times 10 centimeters and then you add new layers. Sometimes you use up to 10 skins, but it takes a lot to exhaust the numbers of cods, I think. These people would otherwise have to have their limbs with the wounds amputated. And so this is a very important product. And I don't think that for the time being, there's any prospects of an extinction of the presence of cod in the waters in the north.

This was a reply from the CEO. Anyone else for a comment on the any other business? That doesn't seem to be the case.

We have now exhausted the agenda, not only any other business, but also the entire agenda. Thank you for good order and discipline at the meeting, and this leaves me with signing off as Chair of the meeting, and I will now give the floor to the Chair of the Board for a final conclusion.

Thank you very much. I would like to thank you too for a job well done as Chairman of the meeting, and thank you to all the shareholders that have taken the time to turn up today in the flesh. Meeting is closed, and I wish everyone a Happy Christmas.

Ladies and gentlemen, welcome to the Coloplast financial statement for the full year 2024/2025 and Annual Report 2024-2025 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded.

[Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Lars Rasmussen, Interim CEO. Please go ahead.

Thank you, and good morning, and welcome to our full year 24/25 conference call. I'm Lars Rasmussen, Interim CEO of Coloplast, and I'm joined by Anders Lonning-Skovgaard, our CFO; and by our Investor Relations team. We will start with a short presentation by Anders and myself and then open up for questions.

Please turn to Slide #3. We delivered 7% organic growth and a reported EBIT before -- EBIT margin before special items of 28% for this financial year. That is in line with our revised guidance, but below the 8% to 9% organic growth expectations that we set forth at the beginning of the year. The adjusted return on invested capital after tax and before special items, was 15% on par with last year. Chronic Care, including Voice and Respiratory Care and excluding China, delivered a solid year while we faced performance challenges in Interventional Urology and Advanced Wound Dressings.

Both businesses were impacted by product recalls with significant negative impact on performance. We also saw increased volatility in the biologics market, driven by the postponement of the final LCD policy, which led to a slowdown in the momentum for Kerecis in the second half of the year. In many ways, '24-'25 did not become the year we had anticipated. It became a significantly more turbulent year and one that forced us to take decisive actions.

In the year, we restructured our business in China. Performance during Strive25 was muted. And while we remain committed to serving the Chinese market, we have streamlined our organization to align with the new market reality and ensure a sustainable focused presence. Secondly, we initiated several profitability initiatives in Wound Care, among others, the divestment of our skin care business in December 2024. These initiatives are aimed at simplifying our business operations and improving profitability. Thirdly, we took important steps toward optimizing our cost base in interventional urology. Both to protect our profitability in the light of recent performance challenges, but also to ensure that we have the capacity to invest in new growth initiatives, including in tibial, our implantable tibial nerve stimulator expected to launch in '26, '27, assuming we obtain FDA approval.

At the group level, we have also made significant changes which I'm confident will be vital for a strong strategy execution towards 2030. By structuring our business into 2 distinct units, chronic and acute care, we will, to an even larger extent, be able to honor the differences in market dynamics, customer needs, patient pathways and business models. And with a new and strengthened executive leadership team, we now have a balanced mix of commercial and technical expertise and a strong team to lead Coloplast into the next strategy period.

Please turn to Slide #4. Looking ahead, I believe the investments we have made in Strive25, combined with the structural changes that we made this year, provides Coloplast with a strong foundation and key building blocks for the future value creation. Our addressable market for Chronic Care and Acute Care has a combined value of more than DKK 120 billion, and we have the strongest product portfolio that we have ever had. There's ample opportunity to go for, and we are well positioned to capture it. With our new strategy, Impact4, we'll utilize our solid foundation while setting a new direction for the company with a strong focus on customers and value creation.

The Impact4 focuses on 4 priorities: growth through innovative offerings, unlock next level efficiency gains, embrace technology, including AI, to elevate our user experience and scale, and finally, cultivate a winning and sustainable company. And these promises are supported by clear financial targets. The first is to deliver an organic revenue CAGR of 7% to 8% through '29/'30. Then to grow EBIT in line with or above revenue growth and finally, to achieve a return on invested capital above 20% by '29, '30. By putting customers at the center, we aim to deliver best-in-class products, services and support, reinforcing our ambition to double our impact and reach 4 million people long term.

In the strategic period, we will also maintain a strong focus on sustainability, and we have set clear targets to reduce our environmental impact through emissions reductions and less material used in our products and packaging. Finally, we aim to positively impact society by improving reimbursement, ensuring access for users and health care professionals to the best products and services as well as investing in initiatives that benefits people and communities. Now let's shift gears for a moment and look at today's results in more detail.

Please turn to Slide #5. In Ostomy Care, organic growth was 6% for the full year, and growth in Danish kroner was 4%. Organic growth in Q4 was 7% and growth in Danish kroner was 1%. Our SenSura Mio portfolio continues to be the main driver -- growth driver followed by Brava range of supporting products. Our SenSura and Assura/Alterna portfolios continue to contribute to growth in emerging markets. From a geographical perspective, growth in the quarter was broad-based across regions with good growth in Europe, a high baseline in the U.S. due to the resolution of the supply disruptions in Q4 last year, and strong growth in emerging markets driven by increased tender activity.

Sales in China declined, reflecting weaker consumer sentiment and competitive pressures. In Continence Care, organic growth was 8% for the full year and growth in Danish kroner was 5%. In Q4, organic growth was 9% and growth in Danish kroner was 3%. Luja, our new intermittent catheter with Micro-hole Zone Technology was the main growth contributor in the quarter, especially the female version driven by solid contribution from Europe and the U.S.

From a geographical perspective, all regions contributed to growth. Growth in Europe was driven by France, the U.K. and Italy. In emerging markets, growth was led by LatAm. Voice and Respiratory Care posted 9% organic growth for the full year with growth in Danish kroner of 8%. In Q4, organic growth was 9% and growth in Danish kroner was 7%. The good performance in Voice and Respiratory Care continues to be driven by broad-based contribution from both laryngectomy and tracheostomy, with high single-digit growth in laryngectomy and double-digit growth in tracheostomy. In Wound and Tissue repair, organic growth was 8% for the full year and growth in Danish kroner was minus 3%, which reflects 8 percentage points negative impact from the skin care divestment.

Organic growth in Q4 was 5% and growth in Danish kroner was minus 11%, which includes 11% negative impact from the skin care divestment. The advanced wound dressings business in isolation declined 6% in the quarter as China detracted significantly from growth due to the product return initiatives in Q3. From a product perspective, Biatain Superabsorber and Biatain Fiber continued to perform well. Revenue from Kerecis amounted to around DKK 1.3 billion in the full year, of which DKK 339 million was in Q4. The organic growth in the quarter was 20% and an improvement compared to Q3 as expected. The inpatient setting continued to deliver solid growth and was the main growth contributor. The outpatient setting saw an improved momentum in Q4. This was in line with our expectations that the impact from our LCD postponement and the resulting market shift to higher-priced products would be most pronounced in Q3. In Interventional Urology, organic growth was 2% for the full year, and growth in Danish kroner was flat. In Q4, organic growth was 2% and reported growth in Danish kroner was minus 2%.

Growth in the quarter was driven by good momentum in the Men's Health business. Our flagship product within Men's Health, the Titan Penile implant continued to perform well, with the patient funnel positively impacted by our patient support program targeted at prospective patients. The women's health business also contributed to growth in the quarter. Within kidney and bladder health, the thulium fiber laser drive continued to deliver a solid growth contribution, but the segment overall detracted from growth due to the impact from the product recall. We have begun to see early signs of recovery across key accounts, but expect some negative impact to persist into Q1.

With this, I'll now hand over to Anders, who will take you through the financials and outlook in more detail. Please turn to Slide #6.

Thank you, Lars, and good morning, everyone. Reported revenue for the full year increased by DKK 844 million or 3% compared to last year. Organic growth contributed DKK 1.8 billion or around 7% to reported revenue. Divested businesses, mostly related to the skin care divestment in December '24, reduced reported revenue by DKK 352 million or around 1%. Foreign exchange rates had a negative impact of DKK 587 million on reported revenue or around 2%, mainly related to the depreciation of the U.S. dollar and a basket of emerging markets currencies against the Danish kroner.

Please turn to Slide #7. Gross profit for the full year amounted to DKK 18.9 billion, corresponding to a gross margin of 68%, on par with last year. The gross margin was positively impacted by a favorable development in the input cost, pricing increases and country and product mix, partly offset by ramp-up costs at our manufacturing sites in Costa Rica and Portugal. The gross margin also included a small negative impact from currencies of around 20 basis points. Operating expenses for the full year amounted to around DKK 11.3 billion, a 3% increase from last year. The distribution to sales ratio for the full year was 33%, on par with last year. The increase in distribution cost was driven by continued commercial investments in Kerecis and higher sales activities across business areas. The admin to sales ratio for the full year was 5% on par with last year. The R&D to sales ratio for the full year was 3% on sales, also on par with last year.

The special items expenses were extraordinary high in '24-'25 and amounted to DKK 469 million. The special items were related to profitability improvement initiatives including the skincare divestment, management restructuring and the integration of Atos Medical. Overall, this resulted in operating profit before special items of DKK 7.7 billion in the full year and a 5% increase compared to last year.

The EBIT margin before special items for the year was 28% compared to 27% last year. The EBIT margin included negative impact of around 110 basis points from the inclusion of Kerecis, including PPA amortization costs, in line with the expectations as well as around 30 basis points benefit from the divestment of the skin care business. Currencies had a small negative impact on the reported EBIT margin of around 30 basis points related to the depreciation of the U.S. dollar and the basket of emerging market currencies against the Danish kroner. In constant currencies, EBIT before special items grew 6% in full year '24-'25. Financial items in the full year were a net expense of DKK 1.044 billion compared to a net expense of DKK 925 million last year.

The increase in net expenses was mostly due to a noncash effect from currency exchange rate adjustments, which includes losses on balance sheet items driven by the depreciation of the U.S. dollar against the Danish kroner. The ordinary tax expense for the full year was DKK 1.4 billion with an ordinary tax rate of 22% on par with last year. The total tax expense for the full year was DKK 2.5 billion, impacted by the transfer of Kerecis intellectual property from Iceland to Denmark. As a result of the extraordinary tax expense, the effective tax rate amounted to 41%. As a result, net profit before special items for the full year was DKK 4 billion compared to DKK 5 billion last year. Diluted earnings per share before special items decreased by 21% to DKK 17.76. Adjusted for the extraordinary tax expenses related to Kerecis IP transfer, the net profit before special items was DKK 5.1 billion, DKK 123 million increase compared to last year. Adjusted diluted earnings per share before special items increased by 2% to DKK 22.84.

Please turn to Slide #8. Operating cash flow for the full year was an inflow of DKK 6.6 billion compared to an inflow of DKK 2.8 billion last year. The positive development in cash flows was mostly driven by lower income tax paid as '24-'25 included DKK 2.5 billion extraordinary impact from the transfer of Atos Medical intellectual property. Changes in working capital and adjustment of noncash operating items also had a positive impact on the cash flows from operating activities. Cash flow from investing activities was an outflow of DKK 1.25 billion compared to an outflow of DKK 1.336 billion and included a positive impact from the divestment of Skin Care business of DKK 192 million.

CapEx for the full year amounted to around 5% of sales on par with last year and includes around DKK 450 million related to the new manufacturing site in Portugal, expected to be operational in '25-'26. As a result, the free cash flow for the full year was an inflow of DKK 5.4 billion compared to an inflow of DKK 1.4 billion last year. The adjusted free cash flow for the full year was DKK 5.2 billion compared with DKK 3.9 billion last year or a 32% increase. The trailing 12-month cash conversion was 82%, while the adjusted free cash flow to sales was 19% compared to 15% last year.

Net working capital amounted to around 26% of sales compared to 25% last year, impacted by increased inventories and decreased trade payables. Now let's look at the guidance for '25-'26 financial year.

Please turn to Slide #9. For the '25-'26 financial year, we expect organic revenue growth of around 7%, and around 7% EBIT growth in constant currencies before space items. We also expect a return on invested capital of around 16%, up around 1 percentage point from 15% adjusted last year. The organic revenue growth guidance of around 7% assumes continued good momentum in Chronic Care, including Voice and Respiratory Care and an improvement in momentum in both Wound and Tissue Repair and Interventional Urology.

In Chronic Care, we expect good contribution from our recent product innovation. In Continence Care, we expect Luja to continue driving the momentum in intermittent catheters. In Ostomy Care, we expect the recent line extensions such as SenSura Mio Black bags and the new 2-piece Sensura Mio offering to continue their good launch trajectory and support growth. In wound tissue repair, we expect an improved momentum driven by Kerecis, which is expected to deliver growth of around 25%, partly offset by the negative impact from the product return in advanced wound dressings in China from Q1 to Q3. On Kerecis, performance is subject to a higher degree of volatility due to the expected changes to the skin substitutes coverage and payments in the outpatient setting as of January 1, '26.

In Interventional Urology, we expect growth to improve to around mid-single digit in '25-'26, up from low single digit last year. We expect continued strong momentum in our Men's Health business driven by the Titan Penile implant and stable performance in our Women's Health business. In kidney and bladder health, we expect to see a recovery as the impact from the product recall will lapse in December '25, after which we are up against an easier baseline. Reported revenue growth in Danish kroner is expected at 4% to 5% and assumed 2 to 3 percentage points negative impact from currencies, especially the U.S. dollar and to a smaller extent, the British pound and the Chinese yuan as well as 2-month negative impact from the Skin Care divestment.

The EBIT growth in constant currencies of around 7% assumes stable inflation levels and continued ramp-up in Costa Rica and Portugal. The EBIT growth also assumes that Kerecis will deliver an EBIT margin uplift to around 20%, driven by scalability in non-sales functions and sales force efficiency improvements, enabled by a good top line momentum and a high gross profit margin of around 90%.

Furthermore, the EBIT growth guidance includes the initiation of Impact4 investments, including global technology investments and AI, investments towards the new bowel care opportunity in the U.S. and investments related to -- in tibia. In terms of phasing, we expect the organic revenue growth to be second half weighted with a soft start in Q1, where we will have the impact from the product recall in both advanced wound dressings and interventional urology. Furthermore, we expect a soft start in ostomy care due to a high baseline in the U.S. and order phasing in emerging markets. For '25-'26, we expect around DKK 50 million in special items, from acquisition-related integration costs. The integration of Atos Medical is progressing according to plan, and will be finalized during the year.

The net financial expenses for '25-'26 are expected at around minus DKK 500 million, down from around DKK 1 billion in '24, '25, mostly driven by a more favorable outlook on net exchange rate adjustments based on spot rates as of October 31, and to a smaller extent, lower net interest expenses due to lower net interest-bearing debt and lower interest rates. The effective tax rate for '25/'26 is expected to be around 22%.

Net profit is expected to significantly increase year-over-year as '24-'25 has been impacted by extraordinary high special items, high financial items due to negative exchange rate adjustment and the extraordinary tax expense related to the transfer of Kerecis intellectual property. The CapEx to sales ratio is expected at around 5% and includes investment to complete the new manufacturing site in Portugal, investments in new machines for existing and new products and IT and sustainability investments. On net working capital, we expect the net working capital to sales ratio in '25-'26 of around 25%, down from 26% in '24-'25.

Our guidance is based on the knowledge we have today and assumes immaterial impact from tariffs as we expect our products to remain exempted and no impact from health care reforms in the year. On October 31, '25, the centers for Medicare and Medicaid services in the U.S. issued a final rule on the Medicare physician fee schedule for calendar year '26 with a fixed payment of $127 per square centimeter for all products in the physician's private office in the outpatient setting.

We consider both this rule as well as the final LCD policy as positive for the market and Kerecis in the long term, and will be closely monitored or -- and we will closely monitor market developments in relation to these initiatives.

With this, I will hand it over to Lars for final remarks. Please turn to Slide #10.

Thank you, Anders. Coloplast is now entering an exciting phase as we begin to unfold the potential of our new Impact4 strategy. And I look forward to continue leading this work until a new CEO takes office. As we move into Impact4, we do so from a position of strength with a strong product offering, a clear structure, a strengthened leadership team and an ambitious strategy towards 2030. I'd like to thank our customers, my colleagues and our investors for your trust and support in 2024, '25. Your engagement and partnership have been instrumental in advancing our mission, making a positive impact for patients, health care systems and society.

Coloplast is well positioned to set the standard of care at scale, create lasting value for all stakeholders and continue making life easier for people with intimate health care needs. Thank you very much. And operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Hassan Al-Wakeel from Barclays.

I'm going to try and sneak in 3, please. Firstly, can you talk about the China Ostomy business and the increased competition in the community channel and whether consumer sentiment is getting worse given the decline here and how you're thinking about business development in '26? Secondly, if you can expand on the drivers for the Kerecis margin ramp this year, and the phasing of that improvement, given some of the volatility you've observed around reimbursement changes. And then finally, Lars, when we met recently, you talked about slower volume uptake in the U.K. for Halo. How is this trending? And to what extent are you shelving potential launches elsewhere? And in hindsight, what went wrong?

That was a good opening, Hassan. So the China the China situation first. So it's more or less a flat growth that we are seeing. We actually see that we are quite competitive in the market. So we -- in that specific part of the market, we don't see that we're losing traction. But we have a consumer sentiment, which is super important because it's out of pocket in the Chinese market, in the community market. We have a consumer sentiment, which is negative, and that basically reflects on how much consumers are willing to spend. We don't have an increased number of competitors. We still have a lot of competitors in the market, but the total market share is still super low. So we feel that our competitiveness is intact but that the market sentiment basically is the reason why we don't grow in China.

On the Kerecis margin, yes, we expect to have a significantly better margin this year than we had in the year that we are coming out of. And it is basically due to scale. So now we -- now we start to be a little bit more of a mature business. It's not that we are not investing. But we do have more sales per head in the organization. We don't need to scale to the same extent all over the place when we are growing, and that is basically what is sitting in the increased margin for Kerecis. And yes, there is volatility as we go into this year. And as you all know, Friday night, we received news on the LCD and the physician fee schedule changes. And I expect that we'll also talk to that a little bit later, but that means that there is some turbulence as we go into the year. But we -- I would like to say from the get-go, we consider the changes to be positive for us. But of course, it also means that we will have a bit of volatility as we go into the year.

And then for Halo, what went wrong? Super good question. We are addressing the most pronounced problem that any Ostomy patient has to understand how much of the adhesive that are still intact at this given point in time and how much of it have given up, and we can show that via the mobile phone. We haven't found a way to sell this where we get the uptake that we expect to have. We give it still a chance to do that in what we consider to be the most advanced market in the world for Ostomy Care in Great Britain. And we are not going to go anywhere else until we have found a way to solve that in that market.

The next question comes from Jack Reynolds-Clark from RBC Capital Markets.

My first one was on the Atos integration. You mentioned that you're expecting that to be completed next year. I guess what's left to do on that? And when do you expect the benefits to start kind of going through meaningfully there? Then the next question was on tracheostomy. I think for the last couple of quarters, growth here has been a bit lower than it has been in the past. Is this a function of a low -- of a higher base? Or is there something else kind of going on here? How should we think about this going forward?

Jack, let me take the first one. So we are finalizing the integration of Atos into our IT infrastructure and into our processes, our shared services and all of that here during this financial year. And what we are -- it's basically some of the bigger markets that are left. So it's the U.S., the U.K. that we are currently focusing on and then the integration will be finished, and we will also reap the synergies of around the DKK 100 million that we have communicated when we acquired Atos some years ago.

In terms of tracheostomy, yes, we have seen a little bit of a slowdown recently. It's also because we are up against a high baseline. So last year or the year before, we had a quite significant sales uptake due to forward integration. And when that is said, the tracheostomy business is developing very well, also compared to the acquisition case we did some years ago. And we actually expect that our tracheostomy will support our growth within Atos quite significantly towards 2030. We are currently sitting with a market share of around 10%, and we actually feel we have an okay product platform and this will be one of the key focus areas towards the 2030 and also an area we will invest further in. So the tracheostomy business is an area that we are very optimistic about going forward.

The next question comes from Martin Parkhoi from SEB. Please go ahead.

Yes, Martin Parkhoi, SEB. Two, I don't know, 2 questions, I guess. Just on your guidance, I just want to get your confident level because you're starting the year saying it will be back-end loaded, and that gave me some kind of this view for the last couple of years. How are your confident level this year of this actually will materialize? Do you think you have been more prudent this year than you have been in previous year? Are there a buffer or potential hiccups, which you have faced the last couple of years?

And then second question is just on the ASP development. What kind of ASP development have you assumed in your guidance for this year? And maybe you can talk a little bit to that across your business areas?

Yes, Martin, let me take your 2 questions. On the guidance side, as we have communicated today, we expect organic growth to be around 7% for the year. We are, as I also said, seeing some headwinds here in Q1 due to the product recalls that we had last year. So the urology recall will -- we will lap that in December. And the recalls we have in China on the dressings part will still impact us in Q1 but also Q2, Q3. But overall, we are very confident that we are able to deliver on our organic growth guidance also back -- on back of a very challenging year. Last year, where we also had some challenges that we did not expect back to the product recalls.

But also back to, as Lars said earlier, our Chinese momentum did not play out as we anticipated. And so that's how we see it. And I would also highlight that the Continence business, the Atos business is strong, and we also expect those to continue as well as the Kerecis business throughout the year. So then your second question around that was ASP. We are expecting a small positive on ASP development. We are not expecting any bigger health care reforms. So we are expecting small positive impact from ASP, especially within urology. We are also expecting some on the chronic side, and that is, again, primarily in emerging markets, and then we get the yearly inflation adjustment in the U.K. So those are some of the main reasons for us being positive on the ASP.

The next question comes from Martin Brenoe from Nordea.

I'll build a bit on the other margins question here. We learned at the CMD that you held earlier in the year that you have quite normally 2 or 3 recalls during a year. And I just wonder how much you have baked into potential recalls in this year and how you have -- if you have a financial buffer for that potential outcome? And then secondly, on Kerecis, would be interesting to hear how you expect to reaccelerate 500 basis points? A few words on what is going to drive it in terms of product launches, new geographies, anything like that?

So when you produce products in the numbers of billions, then of course, there can be from time to time, recalls. What we saw from urology, primarily is something which we see very, very rarely. And I would like to take this opportunity to remind everybody that the product returns that we have seen in China has nothing to do with products that doesn't work or complaint rates or anything like that. So that was -- the reason for that was actually reasons that we have never seen before and that we could not have done anything internally to avoid, I would say.

So therefore, we do not have a buffer for very large recalls and it is something that we don't see. What we have seen of real events over the last couple of years has been the distribution center event that led to difficulties in delivering and then what we saw in IU. And they were completely unexpected and to a very large extent, internally driven. So we could have avoided them. And that's what we have tightened the system to make sure that we don't get into that situation. Having said that, you can't run a business and never have issues, but that we do have significant or not significant, but realistic buffers for. On Kerecis, the -- your question is how we are going to get the uptick on the EBIT margin?

No. Sorry, on organic growth.

Okay. So as I started by saying, we actually consider this to be the changes to the physician fee schedule to be positive for us. And we also see that we have strong momentum. We are not in a situation where we have fully utilized the -- our sales muscle, so to speak. So we are, of course, still hiring sales reps to go to the market. But we see it as we get more access with what is happening now because there will be fewer companies to serve the same customer group as we had before, and that is definitely going to help us. We just need to see it, play fully out before we start to become too positive, but we think that with where we are now, we can have an uptick because the turmoil that we saw in Q3 is not going to come back.

The next question comes from Aisyah Noor from Morgan Stanley.

My first one is on the competitive bidding program in the U.S. for chronic care products. You mentioned in the press release that any changes would take effect in 2028 at the earliest. But your peers are flagging that this could even be a bit later, so 2029. Just curious what your internal assessments involve towards this time line and whether you have any renewed thoughts on the potential magnitude of the sales impact for you? My second question is just a quick one on the wound recall impact in China. Could you help us quantify the negative impact that you're calling out in Q1, 2 and 3 for 2026?

Yes. Let me take the competitive bidding question. So as you all are aware, this is something that is currently going on, and we expect some kind of an outcome as we understand it during this quarter. We, however, believe that if there will be an impact, and that is still highly uncertain, that it will not impact us until '28 at the earliest. So that's the information we are currently sitting with. In terms of the wound recall in China, as we have said a number of times now, we expect that to have an impact in Q1, Q2, Q3 and my estimate per quarter is something around DKK 25 million based on the knowledge we have. It's DKK 25 million per quarter.

The next question comes from Anchal Verma from JPMorgan.

The first question is just around gross margin. How should we think of gross margin development over FY '26? Can you provide your assumptions around COGS inflation, Hungary wage inflation and the other moving parts? And then the second one was just around if you could provide us an update on how the search for new CEO is going? Or is the expectation still for having announced a replacement by spring next year?

Yes. Thanks for your question. Let me take the first one. So our gross margin, my high-level assumptions are that we are looking into a year with a pretty stable inflation levels. That also means that our raw material prices, utility costs, freight, et cetera, are pretty flattish compared to last year. But we will also have some headwinds still from high salary inflation in Hungary. We are still seeing a very intense labor market and then we are investing in ramping up our facilities still some ramp-up in Costa Rica. But next year, we will really start to ramp up in Portugal. We are expecting Portugal to be in operation in Q4 of '25-'26. So those are the main moving parts on our gross margin into '26.

And on the CEO search, so in a sense, what I have said before, the search is going on. It's like a funnel, right? You start broad and then you -- then the field is narrowing down and that's, of course, where we are now. We haven't signed any contracts at this point in time, but we have a number of qualified candidates. And once we have a signature, you will be the first to know. And then, of course, it depends then on what kind of garden leave or other terms does that person have and that will then put a date on when a person can start. And until then, it will be the team that you are meeting today that will be running the company together with the rest of the leaders in Coloplast.

That makes sense. And maybe just a quick follow-up on margins, please. Are you able to provide or quantify the FX headwind to margins for FY '26, the EBIT margin?

Yes. So what we are saying is that on the top line, we will -- we are expecting a reported growth in the level of 4% to 5%. And that is also again driven by the U.S. dollar to a large extent. On the EBIT growth, we will see some headwind also coming from the U.S. dollar, also some on the British pound and the Hungarian HUF .

The next question comes from Veronika Dubajova from Citi.

I'll keep it to 2, please. One, obviously, looking at the revenue growth and the EBIT growth guidance, and I appreciate, Anders, you don't want to talk about gross margin guidance, but it does seem to me that there is a fairly large amount of investments going into the business, obviously, year-on-year, especially stripping out Kerecis, which is delivering a nice little tailwind to profitability. I was just hoping you could talk about what are some of the areas of the business where you are investing meaningfully with this high single-digit kind of OpEx growth guidance, that would be super helpful.

And then I just want to circle back on the China competition answer because it wasn't clear to me, Lars, from your comments at the beginning. If I look at the press release, you are calling out competition in China for the first time. It wasn't in the prior releases. So just trying to understand what really has changed? What has prompted you to put it into the release? And I guess, is that competition from local players? Or is it from other multinationals that are becoming more focused in the market?

Thanks a lot, Veronika. Let me take the first one in terms of the investments. So now we are entering into the first year of our Impact4 strategy. And as we also said at the Capital Markets Day, we are going to invest into new initiatives, both to drive the top line growth, but also to support our EBIT growth ambition. And what we will initiate this year is investments primarily into our U.S. chronic business. We see quite a few opportunities also with the new opportunity within bowel care. We will also initiate investments in urology to support the launch of INTIBIA.

We are expecting when we get approval from the FDA that we will launch INTIBIA into '26-'27. So we will also initiate investments here. And then we will initiate quite a bit of investments into technology and AI, both to support improvement in our user experience, but definitely also to support activities to automate and optimize back-office activities, especially order management, the prescription management through AI. So those are some of the things that we will initiate basically to support our long-term growth and value creation agenda.

And for China, yes, I think it's actually a very appropriate follow-up. Veronika, thank you for that. That gives me the opportunity to say that we have -- our community market share in Ostomy Care is very, very high in China. And we are not -- yes, well, more than 60%. So -- and as we are not seeing growth like we used to, it is primarily because we have a consumer sentiment that is not super positive. But of course, we also feel the pressure every single day that somebody would like to take away some of the market shares that we are having. We are seeing very able competitors in China. But having said that, the fact still is that we have a very, very -- even though we have many local competitors, they have a very, very small market share, very low single digit, I would say.

And therefore, it is maybe just the way that we are writing it, it's not because we see an increased local competition. But of course, we feel local competition also in China. But it has not worsened. So that's not how you should read it.

The next question comes from Oliver Metzger from ODDO BHF.

Yes. First question is also on Kerecis and you mentioned this market shift towards the higher-priced products. Can you just elaborate a little bit more about the dynamics and how sustainable you regard this shift? And the second question is about still also the operating cost development. So a follow-up on Veronika. So if I do the math and calculate a stable gross margin and, let's say, also a stable EBIT margin and still the amount of operating leverage you should have. It would be great if you can dive deeper into respective costs. And yes, you mentioned the ramp-up to INTIBIA, but I calculate still a quite significant operating leverage, which is according to your augmentation, eaten up. So it would be great to have a little bit more transparency regarding the cost positions and how the math works.

So on your first one, Oliver, so the physician fee schedule changes to the payment as we are -- we are running right now with an average price of USD 110 per square centimeter. And the new fixed price is USD 127.3 per square centimeter from 1st of January 2026. That is, of course, positive on an average basis. There will also be fewer competitors we expect that has not been -- does not come out yet, but we expect before 1st of January that we will have a full list of who has coverage. And that dynamic altogether means that as the year progresses. And as the stocks that have been built, they are being consumed, that we will be in a better position to compete, than we are at this time because there are fewer competitors and what we compete with would have a higher average price. That's how we see it. That's also why we think that this, at the end of the day, is a positive change seen from our point of view.

And Oliver, to your second question around our cost development, I think I talked to the gross margin moving parts earlier. I also talked to where we are going to invest back to Veronika's question. And you should -- as I also said earlier, you should expect our inflation levels or the inflation levels, salary regulation, et cetera, to be pretty stable also compared last year. So we are really -- the leverage effect we have, we really invest that back into new initiatives and I explained those initiatives earlier. So it's the U.S., it's INTIBIA and then also invest into technology, AI to support long-term growth and long-term value creation.

The next question comes from Julien Dormois from Jefferies.

The first one relates to Continence. We should have the coding change taking effect in January of '26. So just curious what are your latest thoughts on this and how you ambition to make the most of that coding change? And whether we should see any positive impact in '26? Or is it more a mid- to long-term benefit we should observe? And the second question is trying to dissect a little more into the guidance for '26, particularly in chronic care. You have highlighted continued momentum in the business, but is it fair to assume that Continence will continue to outperform Ostomy as it has in the recent past and also considering the regulatory changes, the recent product launches and so on. So just curious whether Ostomy should remain slightly subdued compared to the Continence into the next year.

Thanks a lot, Julien. Let me start with the U.S. coding. Yes, it's going to have effect here from January. But we also are aware that there will be quite a lot of operational activities going on in moving the coding from the previous way -- or the previous reimbursement codes and now to specific hydrophilic codes. So there will be quite a big operational activities in our U.S. business to get that fully implemented. And it is still, for us, too early to call out the impact. But over time, we expect this to be positive.

In terms to your second question around guidance on the chronic side, as you have seen also last year, we have a good momentum within the Continence, driven by our intermittent catheters driven by the Luja launch, but we're also seeing good momentum within our bowel care business. And we see that momentum also continue into '25-'26 and remember, the Ostomy franchise, as Lars also has mentioned a number of times now are also impacted by low growth or flattish growth in China. So that is the main headwind on OC versus CC. But overall, we are expecting that the chronic business will continue with good momentum also into '25-'26.

The next question comes from Sam England from Berenberg.

So the first one is just a follow-up on the investment and margins piece. Can you talk a bit about how the Impact4 investment evolves over the plan period? To understand how margins might trend from here? Is it pretty much front-end weighted? Or are there areas like AI and more sort of multiyear investments throughout the plan period? And then in Voice and Respiratory Care. Just wondering if you're expecting any more positive momentum on reimbursement during 2026 following the improved reimbursement that you saw in France for HMEs earlier this year? And then are you expecting any other new markets in Voice and Respiratory Care to open reimbursement in '26 like we saw with Poland this year?

Yes. So thanks, Sam. To your first question around investments during the Impact4 period. The ones we have talked about today, that is, yes, front loading some of the activities to support the growth and also value creation over the period. So we are -- yes, as I said a couple of times now, front-loading activities within the U.S. INTIBIA and technology AI to reap the benefits later in the strategic period. On Voice & Respiratory Care, we expect the momentum we have seen in recent years to continue. We have seen some reimbursement openings in some of our smaller emerging markets, but also in France, but you should not expect any bigger ones, at least not short term.

The next question comes from Graham Doyle from UBS.

Just one for Anders and one for Lars. Anders, just in terms of the Q4, it looked like there was a fairly sizable step-up in other operating income, which seems to be related to a transition services agreement. And it was kind of like 2%, 3% of EBIT. How sustainable is that? And when should we expect that to sort of run off? And then just a point on reimbursement, for Lars here. When you look at the skin subs, is there not a danger if the ceiling reimbursement, i.e., what a doctor receives is capped at $127. Why would there not be a race to the bottom to products for like $20, $30, $40, where you make this spread? So just to understand how you think doctors balance patient outcomes with, I suppose, financial incentives would be helpful.

So thanks a lot, Graham. Let me take the first one. Yes, we have a step-up in other operating income throughout the year. And this is really related to our TSA or our services to the buyer of our skin business in the U.S. But actually, the cost to do these services are sitting in the individual cost items. So when I net it up in our P&L, it's actually a neutral effect. You should expect the other operating income also to continue into '25-'26, and we expect to be done with the services towards the end of the year. But for the total EBIT, it's a neutral impact.

So on the Kerecis, I think you know at least as much as I do about the dynamics, the financial dynamics of the skin care market in the U.S. The way I see this change is that for most vendors, they will get into a space where they have a significantly lower pay per square centimeter than they had before. And we come into a space where we have more. The vendors that are left in that space now -- they can only be there when they have good quality clinical data. And the clinical data that you have to obtain to be in that market, you can only get those when you have a certain investment in the -- in the quality of those data.

And I think that it's hard to see with the kind of investments that you have to do to both create these products, but also to document them that it's going to be a substantial race to the bottom. On the contrary, I think that it's going to be a market that for some of the vendors will be hard to compete in. We just happen to be set up in a way where we have extremely strong clinical data. We also have a very competitive setup when it comes to the cost on this. So we are, of course, prepared to compete but we -- we just don't think that we are in a space where what you described there is there's a logic that, that will just be the right or the first thing that happens. But we might be proven wrong on this, of course. But I really think that what happens, the steps that have been taken here that gives a choice for the society to offer very, very strong products at a reasonable price. And those who would like to compete on that is in that space, that's how I see it.

No, I completely hear you. Just -- it was just something I thought about as we looked at how some of the higher priced products are trending today.

Thanks. Okay. Should -- I think that we'll have to end with the next question because we are over time, but could we take one more?

The next question comes from Carsten Lonborg Madsen from Danske Bank.

I was just hoping that you could talk a little bit about the scenarios for the LCD because that is, of course, a sort of continuous rumors about it not being implemented and maybe being canceled. So what will actually happen with your organic revenue growth guidance for next financial year and if it should be in a situation where the LCD is not being implemented?

Carsten, let me take that one. Our assumption around Kerecis for the coming year is a growth of around 25%. And remember, around 70% of our business, that's the hospital business. And the hospital business, we have a very strong growth quarter-over-quarter. And it's really the outpatient setting when we discuss the LCD and the price levels where we have some volatility. But we are -- we expect to deliver growth of around 25% for our Kerecis business, '25-'26.

And then maybe a quick follow-up to this one in terms of the venous leg ulcers. I cannot completely remember your plans for submitting data and maybe potentially getting on to that list as well. Could you help me remember it?

Yes. So we are in the process of doing clinical studies, and we expect those to finish sometime next year. So that's the current assumption.

Okay. So actually -- I changed my mind, that happens sometimes in life. So yes, but if you're still online, you can ask your questions because you're the last one who is left. So that would be like almost personally if we leave you out here.

The next question comes from Jesper Ingildsen from DNB Carnegie.

Just maybe on the bowel care opportunity that you mentioned in regards to your increased investments into next financial year, could you just elaborate a bit on that opportunity? And what kind of contribution you expect to get from that? And then lastly, on Halo and the special items that you have specified. To my understanding, you don't do capitalization of your R&D. I'm just trying to understand what's specifically driving that? And to some extent, how big that cost is?

Jesper, let me take your questions. When we had the CMD back in September and described our Impact4 ambition also for the U.S., we also talked to an opportunity we are seeing in the U.S. for our bowel care business. So the good news are that we are now getting reimbursement for bowel care in the U.S. And that's why we are now initiating investments into this specific area. And that's what we have been planning for doing this year.

In terms of your second question, the -- related to the Halo, yes, we have evaluated the value of Halo also as a consequence of the current sales in the U.K. and our plans not to launch in other markets. And therefore, we have included a quite significant amount in our special items. And it's related to the IT investments we have done, so to develop the solution and to develop the app and therefore, we have reassessed the -- basically the depreciation for the Halo solution, and that's what we have included in special items.

Thank you very much, guys, and looking forward to seeing many of you over the next period. Thank you.

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