ZURICH, Switzerland, Oct. 30, 2007 (PRIME NEWSWIRE) -- First nine-months highlights:
* Revenue up 18% (l.c.) to EUR 485.0 million
* Gross margin maintained at high level: 84.3%
* Profit from operations (EBIT) up 10% - margin at 32.2%
* Profit for the period* up 12% to EUR 121.1 million
* Basic earnings per share* up 14% to EUR 4.88
* 216 new jobs created
* First Procera manufacturing in Japan
* Additional CHF approx. 350 million cash return in 2007
through share repurchase via put option
* Outlook 2007: organic revenue growth of approx. 17% (l.c.);
EBIT margin approx. 33%
Table 1.
Selected Income
Statement figures Q3 Q3 9M 9M
in EUR million 2007 2006 2007 2006
Revenue 143.3 132.5 485.0 429.0
Growth in local currencies 12.0% 25.3% 17.5% 25.1%
Growth in EUR 8.2% 22.3% 13.1% 26.1%
Gross profit 119.9 111.8 408.9 359.3
Gross margin 83.7% 84.4% 84.3% 83.8%
Growth 7.2% 23.7% 13.8% 27.9%
Profit from operations 46.7 42.3 156.1 142.0
Operating (EBIT) margin 32.6% 31.9% 32.2% 33.1%
Growth 10.4% 31.0% 9.9% 33.2%
Profit for the period * 35.5 33.1 121.1 107.8
Profit margin * 24.8% 25.0% 25.0% 25.1%
Growth 7.3% 42.7% 12.3% 33.9%
Basic earnings per share*, EUR 1.45 1.32 4.88 4.29
Basic earnings per share, EUR 1.45 1.32 4.88 4.45
* excluding sale of associate
Interim Report 3, 2007 (PDF), including all financial tables: http://www.newsbox.ch/public/13788/att/15273_interimreportpdfincludingallfinancialtables.pdf
Domenico Scala, CEO: "We posted a further quarter of solid growth in revenues and earnings. Revenue growth of 18% in local currencies for the first nine months continues to be above the estimated market growth. In this transitional quarter we managed to regain momentum in our U.S. business thanks to several measures taken. In some European countries, various factors resulted in a temporary slowdown. First initiatives taken should already have a positive impact in the fourth quarter. In Japan, we successfully opened our first Procera plant which should enable us to continue developing this very important market. In our recent, well-attended Investor Day we again demonstrated the attractiveness of our segment which comes with significant growth opportunities. Our confidence in our business model is also underlined by the additional share buyback for 2007."
Revenues increased in the third quarter by 12.0% in local currencies to EUR 143.3 million compared to EUR 132.5 million a year ago. This compares with a high growth base of 25.3% in Q3 2006 which was driven by five very successful World Tour events. Overall, revenue growth of 17.5% in local currencies in the first nine months continues to be above the estimated market growth.
In Europe, revenues in local currencies grew by 9.4% (Q3 2006: 20.9%) in the third quarter. For the first nine months, revenues in local currencies increased by 17.5% (9M 2006: 20.9%). Different performance patterns could be seen across the region: Consistently high growth was registered in Spain, Italy, the Netherlands, Norway and Poland, with France accelerating in the third quarter. Strong performance was also recorded in Russia and the Baltic States. Other markets, for example Sweden, Germany, the UK and Belgium, were affected by specific issues such as change in reimbursement scheme, phasing of sales between Q2 and Q3, organizational issues as well as the absence of World Tour events which had been conducted in 2006. Measures to address these specific issues have been initiated and should already have a first positive impact in Q4 2007.
North American revenue growth regained momentum to 13.6% in local currencies in the third quarter (H1 2007: 9.8%; Q3 2006: 18.9%). Growth of 11.0% (24.8%) was recorded in local currencies for the first nine months, to EUR 165.8 million (160.7). Measures to address the changing market dynamics and demand patterns have already had an initial impact, including improved performance with our existing major customers in the specialist segment. These measures also include the focus on more cost effective rehabilitative solutions, such as All-on-4.
In Asia/Pacific the Group achieved revenue growth of 16.2% in Q3 (2006: 54.0%), bringing first nine-month growth to 31.8%. The quarterly performance is very good considering the strong prior-year quarter which had benefited from two World Tour events and the FDI conference in China. This year the FDI conference was held in Dubai in October. The highlight in Q3 in Asia was the successful opening of our Procera production center in Tokyo. The opening event was attended by more than 1,200 dental professionals, demonstrating the strong interest and potential for Procera in this region.
Table 2.
Revenue by region - quarter Q3 Q3 Growth in %
in EUR M 2007 2006 EUR local
curr.
Europe 55.8 51.0 9.4% 9.4%
Proportion of
total revenue 39% 38%
North America 54.9 51.5 6.6% 13.6%
Proportion of
total revenue 38% 39%
Asia/Pacific 24.0 22.0 9.1% 16.2%
Proportion of
total revenue 17% 17%
Rest of the World 8.6 8.0 7.5% 7.2%
Proportion of
total revenue 6% 6%
Total 143.3 132.5 8.2% 12.0%
Table 3.
Revenue by region -
year to date 9M 9M Growth in %
in EUR M 2007 2006 EUR local
curr.
Europe 218.6 186.1 17.5% 17.5%
Proportion of
total revenue 45% 43%
North America 165.8 160.7 3.2% 11.0%
Proportion of
total revenue 34% 38%
Asia/Pacific 72.4 59.1 22.5% 31.8%
Proportion of
total revenue 15% 14%
Rest of the World 28.2 23.1 22.1% 25.4%
Proportion of
total revenue 6% 5%
Total 485.0 429.0 13.1% 17.5%
Gross profit for the third quarter increased to EUR 119.9 million (Q3 2006: EUR 111.8 million), resulting in a gross margin of 83.7% (84.4%). Gross profit increased to EUR 408.9 million for the first nine months compared to EUR 359.3 million after nine months 2006. The gross margin remains at a high level of 84.3% in the first nine months (9M 2006: 83.8%) and is evidence of Nobel Biocare's pricing discipline. The increase in gross margin was driven by volume growth and a positive mix effect as a result of higher demand for new products and solutions launched over the last two years.
Profit from operations (EBIT) increased 10.4% to EUR 46.7 million (42.3) in the third quarter, with the margin improving from 31.9% to 32.6% - the highest EBIT margin ever in the third quarter. Good cost discipline and a favorable impact from lower social charges in connection with our option program compensated for the one-time effect of the costs associated with the CEO transition. Social charges relating to the staff option program were positive EUR 4.0 million in the third quarter, reducing the total charge for the first nine months to EUR 0.4 million compared to costs of EUR 1.3 million for the same period last year. Profit from operations (EBIT) increased to EUR 156.1 million (142.0) for the first nine months, an increase of 9.9%. Despite continued high investments in strategic initiatives, rapid staff expansion to support growth and adverse foreign exchange impact, the operating profit margin was maintained at 32.2% (33.1%).
Currency - due to the relative weakness of the U.S. dollar, revenue growth was lowered by EUR 16.2 million or 3.9%. Profit from operations (EBIT) was also lowered by EUR 9.6 million or 6.7%, reducing the margin by 100 basis points. At constant currencies, profit from operations would have risen by 18%.
Net financial expense totaled EUR 1.5 million for the first nine months (9M 2006: EUR 3.6 million).
Taxation - the underlying tax rate for the third quarter as well as for the first nine months remained unchanged at 21.7%.
Profit (excl. sale of associate) for the third quarter period amounted to EUR 35.5 million (33.1). Profit for the first nine months increased to EUR 121.1 million compared to EUR 107.8 million last year, despite an adverse foreign currency impact. At constant currencies, net profit would have risen by 20%.
Cash flow from operating activities for the first nine months amounted to EUR 81.8 million (EUR 94.8 million). Inventories slightly increased to EUR 35.7 million from EUR 30.5 million at year-end 2006 and EUR 32.1 million at the end of June 2007. Trade receivables decreased from EUR 159.4 million at the end of June 2007 to EUR 149.9 million at the end of September (31.12.2006: EUR 124.1 million).
Net Cash decreased significantly to EUR 35.1 million from EUR 130.1 million at year-end 2006 (and compared to EUR 35.4 million at the end of June 2007), due mainly to dividend payments and share buybacks.
Additional cash return to shareholders in 2007 - the Group's ability to generate sustained cash flow enabled it to acquire 479,150 shares for a consideration of EUR 115.6 million in the first nine months of 2007. Nobel Biocare's confidence in its unique business model and ongoing financial strength, allows the Group to make an additional cash return for 2007. On 7 November 2007, the Group will grant one free put option per share. The put option will give each shareholder the right to sell, a fixed number of shares to the Group at a premium over the spot price. Each put option will have a maturity of three weeks, lasting until 29 November 2007. The put option will be tradable at the SWX Swiss exchange. The exercise of all options will result in the Group being committed to repurchase an additional approx. 900,000 shares at a price of CHF approx. 390. By so doing, the Group will return an additional CHF 350 million to its shareholders in 2007. These repurchased shares will be submitted for cancellation at the next Annual General Meeting on 27 March 2008. In total, the Group will have returned EUR 403 million in 2007. Additionally, the Group will issue a convertible bond. Shares underlying the convertible bond will be sourced from existing treasury shares and by purchasing call options.(1)
Furthermore, the Group will now hedge its existing exposure from the Employee Stock Option program by means of derivatives rather than by holding physical shares - thereby releasing funds totaling EUR approx. 81 million. All these transactions are expected to be priced in the course of today. A letter to the shareholders along with detailed information on these transactions can be found on the Investor Relations page of the Company's website www.nobelbiocare.com.
The existing share buyback program is to be terminated. With this program the Group repurchased a total of 830,000 bearer shares - approximately 3% of the issued capital - over a second trading line. A proposal to cancel these shares will be made at the next Annual General Meeting. The Group intends to continue with the share buyback programs in 2008.
Investor Day - the Group's Investor Day on 27 September attracted high interest. The event was held at the Group's Procera Manufacturing and Training Center in Mahwah, New Jersey. The event was attended by more than 100 participants who were given access to Nobel Biocare's executive management team and gained further insight into Nobel Biocare's approach of providing evidence-based products and clinical procedures for restorative and esthetic dentistry and into the long-term growth opportunities in this industry.
The Group's comprehensive Training and Education programs (T&E) are continuously adapted to respond to the feedback received from previous programs. The courses and programs now feature more customized, smaller learning and training environments in order to enhance the benefits to the participants. The programs attracted 5% more participants, i.e. more than 255,000, around the world in the first nine months.
216 new jobs created in the first nine months of 2007 - to sustain the high growth momentum, Nobel Biocare has created 216 new positions in the first nine months. At the end of September 2007, Nobel Biocare employed 2,209 employees worldwide.
NobelActive(TM) - is a new implant system with an innovative design that offers unique features and benefits not available with existing implants. NobelActive(TM) is designed to condense bone during insertion. The implant is especially effective in regions of diminished bone quality or quantity. The thread design also produces a self-drilling property, which often allows the implant to be inserted with fewer drilling steps and be reoriented during insertion. It also features unique prosthetic connections. It is available in two connection versions, one external and one internal. This implant system is currently in a pre-launch phase, involving a specified group of users and mandatory training. Interim results from an ongoing prospective multi-center study(2) were presented at the recent European Academy of Osseointegration meeting (EAO) held in Barcelona. 110 implants have been followed up after one year and confirm the good results obtained so far.
Procera(r) Software 2.0 - is the latest update of the company's market-leading CAD/CAM dentistry Procera(r) System. Based on a completely new platform, Procera(r) Software 2.0 will provide enhanced features and benefits to both dental laboratories and NobelGuide(TM) users, including a more user-friendly interface, new Order Manager and online updates.
Curvy(TM) Abutment - is a titanium implant abutment designed to stabilize and promote excellent soft tissue seal. This abutment features a unique concave waist that provides more surface area on which soft tissue can grow, enabling better short- and long-term esthetics to be achieved. This new abutment can be used with both NobelReplace and Branemark System(r) implants. A clinical pilot study was conducted on 41 patients involving 54 curved-waist abutments, and the results were published in a peer-reviewed journal 3); additional clinical studies of Curvy(TM) Abutment are currently being carried out, including a prospective multi-center study.
NobelDirect - the Swedish Medical Products Agency (MPA) issued a statement on 31 August 2007 in response to amendments to the instructions for use of NobelDirect and NobelPerfect that Nobel Biocare had submitted to the Agency on 20 August 2007. Nobel Biocare is pleased with the answer and regards it as a significant step towards resolving this issue. The 3-year clinical documentation requested for review by the authority will be available in November. Nobel Biocare is confident that the study will confirm the good results obtained so far. In 2007, four more articles were published in peer-reviewed journals, including the two-year follow up on the prospective multi-center study showing a success rate of 98.8%.(4-7)
Outlook - the premium tooth replacement market is one of the most attractive areas within the healthcare industry. The underlying growth drivers and the market potential are fully intact and remain highly attractive. Nobel Biocare is ideally positioned to address the various market segments and changing environments with a differentiated approach. The Group has applied specific measures to address the temporary slowdown in certain countries. These measures have already shown (i.e. US business regaining momentum) or should soon show (i.e. in several European countries) first positive effects. For the full year 2007, Nobel Biocare expects to outgrow the market organically recording a revenue expansion of approx. 17% in local currencies and an operating (EBIT) margin of approx. 33%.
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(1) The distribution of this announcement and the offering or sale of the bonds in certain jurisdictions may be restricted by law. No action has been taken by Nobel Biocare or any of their respective affiliates that would permit an offering of the bonds or possession or distribution of this announcement or any other offering or publicity related material relating to the bonds in any jurisdiction where action for that purpose is required. Persons, into whose possession this announcement comes are required to inform themselves about and to observe such restrictions.
(2) Evaluation of Nobel Biocare SFB and CFB Implants Ongoing clinical study in 12 centers. Clinical Research Department, Nobel Biocare AB.
(3) Rompen E, Raepsaet N, Domken O, Touati B, Van Dooren E. Soft tissue stability at facial aspect of inwardly-narrowed abutments in the aesthetic are: a pilot clinical study. J Prosthet Dent 2007;97(suppl): s119-s125.
(4) Hahn J. Clinical performance and radiographic evaluation of one-piece implants used for immediate function. J Oral Implantol 2007;33(3):152-5.
(5) SiepenkothenT. Clinical performance and radiographic evaluation of a novel single-piece implant in a private practice over a mean of 17 months. Journal of Prosthetic Dentistry, J Prosthet Dent 2007;97:69-78.
(6) Finne K, Rompen E, Toljanic J. Clinical evaluation of a prospective multi-centre study on one-piece implants. Part 1; Marginal bone level evaluation after 1 year of follow-up. Int J Oral Maxillofac Implants 2007;22:226-234.
(7) Finne K, Rompen E, Toljanic J. Prospective multi-center study of marginal bone level and soft tissue health of a one-piece implant after 2 years. J Prosthet Dent 2007;97:79-85.
NOBEL BIOCARE HOLDING AG Domenico Scala CEO
Telephone conferences for investors and analysts will be held today 30 October at 08.30 CET and at 14.00 CET.
The dial-in numbers for the telephone conference are:
+41 91 610 5600 (in Europe) +44 20 7107 0611 (in the UK) +46 8 5069 2105 (in Sweden) +1 866 291 4166 (toll free number in the USA)
For more details and additional dial-in numbers, see our homepage: www.nobelbiocare.com
Financial Reporting Calendar: Full Year Report 2007 11 February 2008 Annual General Meeting 2008 27 March 2008 Interim Report 1, 2008 30 April 2008 Interim Report 2, 2008 11 August 2008 Interim Report 3, 2008 03 November 2008
The full Interim Report 3, 2007 is available in English and Swedish, while a shorter version media release is available in German.
Disclaimer
This interim report contains forward-looking statements that are subject to various risk and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. The character of the information is such that it shall be disclosed by Nobel Biocare Holding AG (publ) in accordance with the Swedish Stock Exchange and Clearing Operations Act (1992:543). The information was disclosed to the media on 30 October 2007 at 6.45 a.m.
Nobel Biocare is a medical devices group and the world leader in innovative esthetic dental solutions with its brands Branemark System(r), NobelReplace(TM), NobelSpeedy(TM), NobelPerfect(r), NobelDirect(r), Replace Select (dental implants), Procera(r) (individualized dental prosthetics), NobelGuide(TM) (complete patient rehabilitation program) and NobelSmile(TM) (patient education and awareness program). Nobel Biocare is a total 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 2,200 employees and recorded revenue of EUR 601 million in 2006. The Company is domiciled and headquartered in Zurich, Switzerland. Production takes place at five production sites located in Sweden, USA and Japan. Nobel Biocare has direct sales organizations in 34 countries. The shares of the parent company Nobel Biocare Holding AG are listed on SWX Swiss Exchange and OMX Stockholm, Sweden.