- aap Implantate AG
- Lorenzweg 5
- 12099 Berlin
- Marc Heydrich
- +49 (30) 75019-134
aap Sales on Product Level Totaled EUR 27.5 Million (+14 Percent) in the Financial Year 2010
aap therefore only narrowly failed to achieve its stated sales on product level growth target of 15 percent in the financial year 2010. We had set our sales forecasts higher, but two main factors led to us falling just short of our target. As previously announced, we decided to postpone our WSG System sales launch in order to evaluate possible marketing strategies. In addition, sales of our human bone material Allograft were below expectations due to a French competitor accusing us of a breach of patent and calling a halt to sales of our products in a number of countries.
2010 Results & Analysis
Product sales in the second half of 2010 totaled EUR 14.7 million and were just below 15 percent higher than in the first half. This illustrates the initial marketing and sales successes in restructuring measures initiated in 2009. Total sales for 2010 amounted to EUR 28.4 million (previous year: EUR 33.1 million).
The aap Group achieves its total sales in two ways: on the one hand from biomaterials and implant products sold under its own label or manufactured for OEM-partners, and on the other hand from project sales and outlicensing.
In addition to sales growth, aap set itself other objectives in its management agenda for 2010. For the first time a corporate manager is in charge of Research & Development (R&D), which will boost efficiency and optimize synergy effects. The merger of two sites has led to the creation of a center of excellence for R&D in Dieburg. Adoption of the so-called Freshness Index (the percentage of product sales achieved by products newly approved in the U.S. and Europe over the past three years) introduced an additional indicator of aap’s power of innovation. In 2009, aap’s Freshness Index performance was 14 percent.
In December, a letter of intent was signed with a globally active orthopaedics company on the development of a new product and therefore we were able to secure a first partner agreement. We are still in negotiations regarding the second project agreement. In addition, aap achieved further progress in the U.S. market. In the fourth quarter of 2010 we shipped an initial delivery of our cannulated screws to a new customer.
At the end of 2010 employee numbers were up 6 percent on the year to 256 from 242. As a part of further cost savings we undertook a further reduction in the number of employees and consultants in November, this will have a positive effect on personnel expenses in the course of 2011.
In 2010 we once more achieved our strategic objective of profitable growth, and EBIT at product level will also show a substantial improvement (previous year: EUR -1.5 million).
In the fiscal year 2010 aap again achieved its strategic targets for capital management: a debt coverage ratio of < 3 and an interest coverage ratio of > 6. We were even able to improve on our forecast by reducing borrowing costs by more than 25 percent.
In the fiscal year 2011 aap concentrates on further optimization in the areas of customers- innovation-finance-organization, which we will be specifying in our management agenda for 2011. The Management Board anticipates sales growth of 10 percent at product level in 2011. Positive cash EBIT (EBIT excluding capitalized development work and depreciation thereof) at product level is intended not only to ensure profitable growth but also to lead to liquidity becoming less dependent on project sales. Working capital is to be reduced by more than 10 percent as a proportion of sales. A further objective is to improve the Group’s Freshness Index performance by launching new products, such as the WSG System, and by launching existing products in new markets.
To develop its sales structure, aap is analyzing its sales organization intensively in attractive European markets and in the so-called BRICS countries. Autonomous growth is its primary objective, but Buy & Build strategies are also under consideration.
As part of the ongoing focus on trauma, cement and infection care we are looking into the extent to which divestment of additional products might be considered.
In the interest of its shareholders and employees, aap would like to adopt a code of conduct that makes the principles of our economical activity transparent.
aap plans to publish the full annual report for 2010 on March 31st, 2011.
This release contains forward-looking statements based on current experience, estimates and projections of the management board and currently available information. They are not guarantees of future performance. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Many factors could cause the actual results, performance or achievements of aap to be materially different from those that may be expressed or implied by such statements. These factors include those discussed in aap's public reports. Forward-looking statements therefore speak only as of the date they are made. aap does not assume any obligation to update the forward-looking statements contained in this release or to conform them to future events or developments.
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