PresseBox
Pressemitteilung BoxID: 237841 (Nobel Biocare Deutschland GmbH)
  • Nobel Biocare Deutschland GmbH
  • Stolberger Straße 200
  • 50933 Köln
  • http://www.nobelbiocare.com/de
  • Ansprechpartner
  • Süha Demokan
  • +41 (43) 21142-30

Focus on business quality in a demanding market environment; revenue down 4%, cash flow up 26%

(PresseBox) (Zürich, Switzerland , ) .
- Revenue growth at constant exchange rates (CER) minus 4% at EUR 619.2 million
- Change in commercial approach in Q4: reduced discounts and trade receivables
- Japan: Continued high-teens growth in Q4 driven by recent product approvals
- Continued strong market uptake of NobelActive: >130,000 implants sold in 2008
- Strategic Alpha-Bio Tec, Medicim and BioCad acquisitions; ISI and Optimet partnerships entered
- NobelProcera: Most comprehensive technology and product launch ever initiated by Nobel Biocare for 2009
- 50 headcount reduction in Q4 2008; additional 35 in Q1 2009 (in total approx. 3% of workforce)
- Gross margin at 81.1%; EBIT margin at 24.1% (before exceptional items)
- Strong operating cash flow, up 26%; solid balance sheet, high cash reserves
- Basic earnings per share of EUR 0.90 (~CHF 1.33)
- Dividend proposal CHF 0.55 per share; payout ratio broadly unchanged (41%)

Domenico Scala, CEO: "Despite a challenging 2008, Nobel Biocare strengthened its organization and made significant strategic progress. We successfully launched new products, strengthened our portfolio while taking actions to reduce costs. Highlights of the year were the successful introduction of NobelActive and the technology advancements in NobelProcera. Although the revenue growth slowdown adversely affected our margins, Nobel Biocare remains highly profitable and cash generative with very solid financials. For 2009 we expect the economic environment to remain challenging. Our priorities are to build on the success of NobelActive, to launch NobelProcera and accelerate our initiated cost reduction measures."

Corporate performance: Investing in sustainable company health

For the full year 2008, revenues (CER) declined by 4.2%. Reported revenue decreased by 7.0% versus the prior year to EUR 619.2 million. Revenue (CER) declined 13.3% in the fourth quarter (-10.1% as reported). During the course of the fourth quarter, Nobel Biocare changed its commercial approach, reducing discounts and trade receivables to focus on quality business and sustainability. Profit from operations (EBIT) for the full year 2008 was at EUR 132.9 million (2007: EUR 216.7 million). Lower reported sales, a decline in gross profit margin as a result of reduced volumes, exceptional charges for obsolescence, and an exceptional charge for previously capitalized R&D expenses are the main reasons for the lower EBIT and EBIT margin. Net profit for the full year 2008 amounted to EUR 109.7 million (2007: EUR 166.2 million) and to EUR 38.9 million for the fourth quarter.

In 2008, Nobel Biocare focused on improving the company's organizational health and strengthening its dental technology portfolio. To that purpose, Nobel Biocare made three acquisitions, entered into two important partnerships, made several appointments at the senior management level, strengthened its sales force and initiated various programs to improve operational efficiency.

During the year, Nobel Biocare completed three acquisitions and entered into two strategic partnerships. These initiatives started with the purchase of Alpha-Bio Tec, the company that developed the predecessor product to NobelActive. Also in 2008, Nobel Biocare acquired Medicim, a leader in the development of treatment planning software, as well as announced the acquisition of BioCad, the developer of the new NobelProcera prosthetic software application and producer of over-denture bars for more cost-effective yet high-quality denture solutions for patients. Nobel Biocare signed several agreements with leading technology providers, such as its exclusive partnership with Optimet for the new optical scanner, as well as with Imaging Sciences International (ISI), the global leader in cone beam 3-D imaging solutions, in order to increase the market penetration of the NobelGuide treatment planning solution through the pre-installation of the related software on all ISI i-cat cone beam 3D scanners.

In May 2008, Nobel Biocare introduced its new implant NobelActive to the market. This innovative implant design enhances initial stability and allows for more natural-looking esthetics thanks to built-in platform shifting and dual prosthetic connection. NobelActive is the first implant to be launched following Nobel Biocare's new and enhanced go-to-market approach. More than 130,000 NobelActive implants were sold in 2008. The NobelActive launch is already now the most successful product introduction in the history of the company. The implant continued its strong performance also in the fourth quarter. In early 2009, additional diameters and lengths, as well as new innovative prosthetic components will further expand the NobelActive product range. The introduction of NobelActive attracted existing as well as new customers in all regions.

CAD/CAM-based dentistry is one of the fastest-growing market segments in dentistry. In 2008, Nobel Biocare continued to develop its array of prosthetics and will initiate in early 2009 the most comprehensive product launch in its recent history. As of March 2009, Nobel Biocare will introduce new technologies, materials and products under the NobelProcera brand. The launch includes the most advanced optical scanner, based on the exclusive conoscopic holography technology that offers the highest precision, speed, accuracy, ease of use and impression-scanning capabilities. This product line will be coupled with the launch of a new generation of CAD software, new materials (such as cobalt chrome) and new products including over-denture bars. With the introduction of NobelProcera, the company is also expanding its range of costeffective treatment options, particularly for edentulous indications. The fourth-quarter announcement of the new NobelProcera portfolio, which includes the new scanner and related software was strongly received by the dental community, whereby it also led to hold-backs in scanner sales as the market awaits the launch of these products in the spring of 2009.

Already at the beginning of 2008, group-wide initiatives were introduced to strengthen the company's health and competitiveness. These initiatives center on a new market-oriented organization with an improved go-to-market approach, re-aligned marketing activities with strong customer focus, as well as new product development processes and a new life-cycle management. Sales forces have been reinforced with experienced sales representatives as well as with new, tailor-made sales training programs. Further initiatives, such as corporate Advisory Boards composed of key customers and leading industry experts in the field of restorative and esthetic dentistry, have been implemented in all major markets.

Nobel Biocare has also made a significant investment in the quality of its workforce. The company has managed to attract and retain industry-leading individuals as well as increase the depth of its management talent in key areas. At the end of 2008, Nobel Biocare had a worldwide workforce of 2,541: 299 more than in the previous year. The increase is mainly attributable to acquisitions (approximately 140 FTEs), the entry into new emerging markets (approximately 40 FTEs) and the strengthening of the sales organization. The Executive Committee was reinforced through the appointments of Dirk Kirsten (CFO), Alexander Ochsner (VP/General Manager EMEA) and Hans Schmotzer (EVP Research and Development).

The company's standardized product facilities in Yorba Linda (USA) and Karlskoga (Sweden) have streamlined their production processes, increased their level of automation and were upgraded with state-of-the art equipment. The facility for individualized prosthetics in Tokyo has also been continuously expanded to provide a larger NobelProcera product range. As a result of efficiency gains and the benefits of automation, Nobel Biocare has started to reduce its headcount with a first reduction of 50 employees in the fourth quarter and an additional 35 employees in the first quarter (in total, approximately 3% of the workforce). In 2009, further cost savings will be achieved and the average number of employees is expected to be at a level below that of 2008. This reduction goes hand-in-hand with other cost optimization measures such as an improvement in global logistics, purchasing and IT.

Regional performance: Increasingly demanding market environment

In Europe, Middle East and Africa (EMEA), revenue (CER) for the full year declined by 6.8% to EUR 289.4 million (Q4: -11.8% at CER). The markets in Europe, in particular Spain, were increasingly affected by the current economic uncertainty. Russia continued to show strong growth. A comparison with the prior year has to be viewed in the context of the aforementioned change to the company's commercial approach with the introduction of annual volume-based pricing. Management issues in Germany, Switzerland and the UK were addressed during the course of the year and initiatives to stabilize business performance are being implemented. Early in 2008, Nobel Biocare established a direct presence in Hungary, one of the most promising markets in Eastern Europe.

In North America, revenue (CER) for the full year decreased by 6.3% to EUR 200.0 million (Q4: -20.2% at CER). The substantial slowdown observed in mid-September carried through into the fourth quarter. The economic uncertainties slowed patient demand for implant procedures particularly in terms of larger treatment cases, where Nobel Biocare has a higher exposure. A cautious ordering pattern, combined with the company's transition to a new pricing scheme, led to a further shortfall in the fourth quarter. The improving pricing discipline in North America represents a positive factor. Moreover, the organization has made significant progress in improving the company's reputation and image with its core customers and industry associations by means of the newly adopted go-to-market approach and increased customer orientation. Nobel Biocare has also further stabilized and strengthened its sales organization.

In the Asia/Pacific region, revenue (CER) for the full year was up 9.4% to EUR 109.5 million (Q4: -0.3% at CER). Growth in the region was supported by continued strong performance in Japan, particularly after the market introduction of NobelSpeedy/Groovy in the fourth quarter. In Australia, revenue growth slowed due to an increasingly challenging market environment.

In the final quarter of 2008, revenues in Southeast Asia, where Nobel Biocare sells largely through distributors, were impacted by a more volatile ordering pattern. Recently entered markets such as India and China achieved high double-digit growth. In the third quarter, Nobel Biocare underpinned its market leading position in Taiwan through the addition of a direct sales organization.

In Latin America / Rest of the world, revenues (CER) for the full year declined by 10.5% (Q4: -23.5% at CER). The negative second half-year performance was mainly caused by Brazil, where revenues were adversely affected after a temporary import interruption for Procera. This shortfall could not be compensated by the strong growth recorded in Mexico and Colombia.

Outlook - For 2009, the company continues to foresee a demanding market environment due to deteriorating economic conditions in most markets. Visibility remains low and does not allow management to provide reliable quantitative guidance for the time being. However, the company has improved its business quality, made significant strategic progress, has a strong operating cash flow and financial position, which in turn allows Nobel Biocare to take advantage of the positive long-term fundamentals of the industry. In 2009, Nobel Biocare will continue to make the necessary investments to grow its business, achieve heightened productivity gains and further improve its cash flow management, while continuing the previously introduced measures to reduce costs. Nobel Biocare will continue to monitor the evolving situation and respond accordingly with additional measures as needed.

Financials: Solid profitability and increasing cash flow

For the full year 2008, revenues (CER) were down 4.2%. Reported revenues decreased by 7.0% versus the prior year to EUR 619.2 million. Revenues (CER) declined by 13.3% in the fourth quarter (-10.1% as reported). During the course of the fourth quarter, Nobel Biocare changed its commercial approach by reducing discounts and trade receivables and focusing on business quality (sustainability). This, in addition to a deteriorating economic environment, temporarily had an adverse effect on revenues.

Gross profit for the full year 2008 amounted to EUR 493.6 million (2007: EUR 559.3 million), which corresponds to a reported margin of 79.7%. Excluding exceptional charges of EUR 8.5 million, mainly for obsolescence in conjunction with the anticipated reduction of the product range, the gross margin was 81.1%. Reported gross profit (excluding exceptional items) for the fourth quarter was EUR 128.1 million, representing a gross margin of 78.8%. The full year decline in gross profit margin is mainly due to lower volumes, increased royalty payments for NobelActive and Nobel Speedy, the integration of Alpha-Bio Tec, as well as additional fixed production costs related to the opening of the Procera manufacturing facility in Japan. Pricing discipline remained high in all regions towards the end of the year.

Profit from operations (EBIT) for the full year 2008 amounted to EUR 132.9 million (2007: EUR 216.7 million). Lower reported sales and a declining gross profit margin, together with exceptional provisions for obsolescence, are the main reasons for the lower EBIT and EBIT margin. Moreover, an exceptional charge of EUR 7.8 million in operating expense, mainly due to an impairment of previously capitalized R&D expenses, also adversely affected reported EBIT and margin. Excluding all exceptional items, EBIT for the full year was EUR 149.2 million and the EBIT margin 24.1%. SG&A costs in 2008 were at EUR 327.8 million (2007: EUR 320.3 million). This cost increase was mainly driven by the hiring of additional sales representatives during the course of the year, as well as expenses related to the acquisitions of Alpha-Bio Tec and Medicim and the direct presence in Hungary and Taiwan. These additional expenses were mostly offset by continued efficiency improvements and cost reductions, which led to a reduction of 50 employees in the final quarter of the year and 35 more in the first quarter.

Currencies - Reported revenues decreased by 7.0% compared to 2007 on a full-year basis. The currency impact on revenues was -2.8%. This was mainly attributable to the, on average, weaker US dollar but also to the weakening of the British pound and several emerging-market currencies. At the operating profit level, the strong Swiss franc had a negative impact, which was partially offset by the weakening of the Swedish krona as of the third quarter. In total, the currency impact at the EBIT level was -2.1% for the full year. In the third quarter, the Group started to hedge its foreign exchange exposure more systematically and thus benefited from net gains (fully compensating the aforementioned negative currency impacts on operating profit), which were accounted for in the financial result.

Net financial result - The reported net financial result for the full year 2008 was positive at EUR 26.5 million (2007: EUR -4.8 million) and EUR 47.4 million for the fourth quarter. A change of internal funding structures led to the realization of exchange gains totaling EUR 46.9 million in the fourth quarter, which more than compensated for the losses incurred on the financial portfolio reported in the second quarter. Excluding these exceptional factors, the financial result would have been a positive EUR 2.0 million for the full year and EUR 2.8 million for the fourth quarter.

Tax - The reported tax and tax rate was adversely affected by the aforementioned exceptional items, which led to an additional net charge of EUR 7.7 million. Moreover, additional tax expenses of EUR 6.6 million, mainly related to prior years, were accounted for in the fourth quarter. As a consequence, total reported tax expense increased by EUR 3.9 million compared to 2007 (EUR 45.8 million). This corresponds to a reported tax rate of 31.2%. Excluding the aforementioned exceptional charges, the full-year tax rate was 23.4%.

Net profit for the full year 2008 amounted to EUR 109.7 million (2007: EUR 166.2 million) and to EUR 38.9 million for the fourth quarter. The drop in net profit is largely attributable to lower reported revenues and a gross profit margin decline and reflects the high operating leverage of the Group. Total exceptional items had a negative impact of EUR 6.1 million. Net profit before all exceptional items was EUR 115.8 million (18.7% of revenue), which reflects a decrease of EUR 50.4 million versus 2007 (EUR 166.2 million, 25.0% of revenue).

Cash flow from operating activities for the full year increased to EUR 169.0 million versus the EUR 134.1 million recorded in 2007. This represents an increase of 26%. The strong cash flow improvement resulted mainly from a decrease in working capital, mostly driven by improvements in trade receivables during the fourth quarter. Also, lower taxes paid contributed to the higher cash flow.

Cash and cash equivalents (net of bank overdrafts) amounted to EUR 163.4 million at the end of December 2008 versus EUR 186.2 million at year-end 2007 and EUR 147.9 million at the end of September 2008. The strong cash flow development allowed the Group to fund the acquisitions of Alpha-BioTec and Medicim as well as various capital expenditure projects, while further improving the Group's strong balance sheet and increasing its financial flexibility for future growth.

Board proposals to the Annual General Meeting (AGM), to be held on 6 April 2009 in Zurich, Switzerland:

Dividend - The Board approved that a dividend proposal of CHF 0.55/share be submitted to the Annual General Meeting. This takes into account lower reported net profit while leaving the payout ratio broadly unchanged. The payment date for the dividend, if approved by the Annual General Meeting, is set for 8 April 2009.

Furthermore, the Board proposes to the AGM to create authorized/conditional share capital of up to CHF 10 million nominal value (approximately 25 million new shares) to create the necessary flexibility for future growth opportunities as well as to further improve the Group's funding structure.

Cancellation of treasury shares - Since the approval of its new share repurchase program in May 2008, the Group has bought back 532,000 shares for total consideration of EUR 12.4 million. At the 2009 Annual General Meeting, these shares (0.4 percent of the outstanding share capital) will be proposed for cancellation.

Disclaimer

This media release contains forward-looking statements based on beliefs of Nobel Biocare's management. When used in this media release, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the medical field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Nobel Biocare as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Nobel Biocare disclaims any intention or obligation to update these forward-looking statements.

Nobel Biocare Deutschland GmbH

Nobel Biocare is a medical devices group and the world leader in innovative esthetic dental solutions with its key brands NobelActive(TM) , Brånemark System®, NobelReplace(TM) , NobelSpeedy(TM) , Replace Select (dental implants), NobelProcera® (individualized dental prosthetics), NobelGuide(TM) (complete patient rehabilitation program) and NobelSmile(TM) (patient education and awareness program). Nobel Biocare is a full solution provider for restorative esthetic dentistry, offering a wide range of innovative Crown & Bridge & Implant products, as well as training and education, patient information and clinically documented treatment concepts. Nobel Biocare has over 2,500 employees and recorded revenue of EUR 619.2 million in 2008. The Company is domiciled and headquartered in Zurich, Switzerland. Production takes place at six production sites located in Sweden, the US, Japan and Israel. Nobel Biocare has 37 direct sales organizations. The shares of the parent company Nobel Biocare Holding AG are listed on the SIX Swiss Exchange.