Sales of ostomy care products were DKK1,771m, which was in line with the same period of last year. Measured in DKK, revenue growth was adversely affected by the weaker GBP in particular. At 3%, organic growth remained affected by the challenges in the German market. Excluding our operations in the German market, organic growth was 8%. Q2 organic growth was 2%. The SenSura product portfolio continues to drive growth in sales of ostomy care products. In the second quarter, we launched the SenSura URO for patients with a urostomy.

Urology & Continence Care

Urology & Continence Care revenue rose by 7% to DKK1,795 million on 8% organic growth. Revenue growth measured in DKK was reduced by one percentage point due to exchange rate developments. Q2 organic growth was also 8%. Revenue growth in Continence Care was driven by sales of intermittent catheters, as especially SpeediCath and Selfcath sales were very satisfactory. Peristeen and the Conveen product series both also generated very satisfactory sales growth. In the second quarter, we launched SpeediCath Control, a product specifically designed for male users with low dexterity. In the Urology business, growth in the sale of penile implants fell slightly in the North American market during the second quarter, but growth rates are still double digit. Sales of other urology products were satisfactory.

Wound & Skin Care

Sales of wound and skin care products were up by 7% to DKK749 million in the first half year. Organic growth was also 7%, which was in line with last year. Organic growth was 8% in the second quarter and 5% in the first quarter. The growth improvement was due especially to healthy growth in our contract production of consumer products (Compeed), whereas sales growth for skin care products in the US market slowed in the second quarter in line with expectations. The major European markets remain very competitive with prices under significant pressure.


Revenue in Europe was DKK3,307 million, which was unchanged from last year. When adjusted for the lower GBP/DKK exchange rate in particular, organic growth was 4%. Q2 organic growth was also 4%.

The weak organic growth in Europe was mainly due to weaker sales of ostomy care products in Germany. Conditions in the German market are still challenging and the situation is expected to remain unchanged for the rest of the year. Organic growth in Europe excluding Germany was 7%.

In the other European markets, our Continence Care and Urology business generated growth in line with expectations. The market for wound & skin care products remains very competitive.

The Americas

Revenue in the Americas rose by 21% to DKK670m. Organic growth was 12%, whereas the higher USD/DKK exchange rate lifted growth by 9%. Q2 organic growth was 11%, supported by decent growth rates in all business areas but Skin Care. Overall growth for continence care products in the region was supported by improved reimbursement rules for intermittent catheters in the US.

Rest of the world

In the rest of the world, revenue rose by 19% to DKK338 million. Organic growth was 12%, while exchange rate developments lifted revenue by 7%. Ostomy Care accounts for most of the sales in this region, and growth in this business was as expected. Q2 organic growth was 14%.

Gross profit

Gross profit rose by 3% to DKK2,523 million from DKK2,453 million in H1 2007/08.

The gross margin was 58%, against 59% in H1 2007/08. Adjusted for exchange rate developments, the gross margin was 59% and in line with last year. The gross margin remained affected by the increased price pressure, especially in the market for wound and skin care products, and changes in the product mix with the production costs of SenSura and the new generation of Biatain foam dressings still being higher than expected. Finally, the production capacity is not fully utilised due to lower-than-expected sales. This is being offset, however, by the improved production economy resulting from the relocation of production to Hungary and China.

Capacity costs

Distribution costs amounted to DKK1,316 million, equal to 30% of revenue compared with 32% in H1 2007/08. The positive development was due to efficiency improvements in the organisation. Administrative expenses amounted to DKK354 million, which equals 8% of revenue compared with 10% in FY 2007/08. The fall was mainly attributable to cost savings and efficiencyimproving measures. R&D costs were DKK202 million and accounted for 5% of revenue, which was unchanged from the FY 2007/08 level.

Other operating income rose by DKK9 million to DKK65 million. The increase was due to a DKK42 million profit this year from the sale of a production facility in Kokkedal, Denmark, while a DKK31 million profit was recognised in 2007/08 from the sale of a property in Kokkedal.

Operating profit (EBIT)

EBIT was DKK642 million against DKK552 million in H1 2007/08. The EBIT margin was 15% against 13% in the same period of last year. The underlying EBIT margin was 17%, or 3% points higher than in H1 2007/08.

Special items amounted to DKK60 million in H1 2008/09 and consisted of costs related to reducing the number of employees in Denmark working in production and costs related to the organisational changes implemented in the Wound & Skin Care business and the DSU business.

Financial items and tax

Financial items amounted to a net expense of DKK100 million, against a net expense of DKK25 million in the same period of last year. The higher expense was due to a combination of exchange rate adjustments, particularly on HUF, fair value adjustments of options and rising net interest expenses.

The declining price of Coloplast shares has triggered a fair value adjustment of the value of cash-based option programmes expiring during the period until 2013. Finally, the increase in net interest expenses was due to the average net interest-bearing debt of the reporting period being higher than in H1 2007/08.

The effective tax rate was unchanged from last year at 28% for a tax expense of DKK152 million, as compared with DKK148 million last year.

Net profit for the period

The net profit for the reporting period was up by 3% to DKK390 million. Earnings per share (EPS) were DKK9, which was an increase of DKK1 relative to H1 2007/08.

Cash flow from operating activities

The cash flow from operating activities was DKK499 million against DKK354 million in H1 2007/08. The improvement was due especially to higher earnings and a lower rate of increase in working capital. This was, however, partly offset by higher tax payments.

Investments we invested DKK330 million in intangible assets and property, plant and equipment in H1 2008/09, mainly in production equipment for the factories in Hungary and China and in our new US headquarters. Investments accounted for 8% of revenue against 7% in H1 2007/08. The increase was due to the construction of the new US headquarters, which is scheduled for completion in the summer of 2009. The total cost is expected to be around DKK200 million, of which DKK100 million will be expensed in the current financial year.