-- Sales grow in the mid-to-high teens across all regions
-- SLActive third-generation surface technology exceeds company's
expectations
-- Straumann BoneCeramic rolled out; Emdogain PLUS launched in Europe
-- Operating profit grows 14% (18% before depreciation and
amortization) as Group continues to absorb costs of production
build-up in the US and new production technology
-- Earnings per share increase to CHF 4.54
-- 180 new jobs created
Key figures
(in CHF million) H1, 2006 H1, 2005
Net revenue 305.4 256.0
Growth in % 19.3 17.8
Growth in local currencies in % 16.6 19.3
Operating profit 91.4 80.4
Margin in % 29.9 31.4
Growth in % 13.6 19.6
Net profit 70.9 68.1
Margin in % 23.2 26.6
Growth in % 4.1 25.0
Earnings per share in CHF 4.54 4.37
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BASEL, Switzerland, August 10, 2006 (PRIMEZONE) -- In the first six months of 2006, Straumann net revenue rose 17% in local currencies (l.c.), or 19% in Swiss francs to CHF 305 million. Operating profit climbed 14% to CHF 91 million, as the Group continues to absorb the costs of the build-up in production and the introduction of new production technology. Net profit grew 4% to CHF 71 million and was constrained by the expiry of a tax agreement that is being renegotiated. The operating and net profit margins reached 30% and 23% respectively, while earnings per share rose 4% from the first half of 2005 to CHF 4.54. Straumann created 180 new jobs in the first six months of the year bringing the total number of employees to 1522. Barring unforeseen circumstances, the Group expects full-year net revenue to grow around 15% in local currencies, with operating and net margins around 29% and 23% respectively.
Strategic achievements
In the second quarter, Straumann completed the purchase of all outstanding shares in Biora AB, which was acquired through a friendly takeover in 2003. Straumann purchased the outstanding shares for the price paid in the original offer and the amount paid, including interest, totaled CHF 4.3 million. The acquisition of Biora has enabled Straumann to build a strong global presence in oral tissue regeneration.
The ramp-up of production in the US is proceeding according to plan and the Andover facility has now completed its first year of operations as a subcontractor to Villeret. Over the past twelve months Andover has obtained ISO 13485 certification and has manufactured almost 400 thousand implant system components for the global market.
Also with regard to Straumann's North American organization, Marianne Burgi, Executive Vice President Market and Product Support, is continuing to oversee the North American business until a new regional Head is appointed. The regional management team was further strengthened by the appointment of Alain Laroche as Head of Straumann Canada. He is a highly experienced executive with a strong international track record in the healthcare/med-tech fields.
Product development and launch program
The Group made further progress with the roll-out of new products. SLActive, Straumann's third-generation implant surface technology which reduces healing times by half, has been well received in Europe and North America and contributed slightly more than expected to overall sales. SLActive is complex to manufacture on a large scale, making it challenging to fully meet demand. A fully-automated production line is currently being established and is to become operational at the beginning of next year.
The roll-out of Straumann BoneCeramic was completed in North America following its launch towards the end of 2005 and progressed well in Europe where it was introduced in the first quarter of 2006. By virtue of its excellent absorption and handling characteristics and fully-synthetic composition, Straumann BoneCeramic provides a highly attractive alternative to bone grafts that use the patient's own bone or materials derived from animals or human cadavers.
The recent EuroPerio meeting in Madrid marked the European launch of Straumann Emdogain PLUS, a convenient product combination for use in periodontal rescue. It combines the regenerative capabilities of Straumann Emdogain with the mechanical stability of Straumann BoneCeramic and is indicated as an adjunct to regenerative surgery in wide defects, for use in periodontal pockets greater than 6mm, or where soft tissue support is required. Additional uses typically include root furcation defects and extraction sites. Data from ongoing clinical trials were presented in Madrid confirming the efficacy of Emdogain PLUS. Pending regulatory approval, Straumann foresees an introduction in North America in 2007.
Straumann maintained its share of scientific voice throughout the first half with well attended high-caliber scientific forums at major meetings including EuroPerio in Madrid and the AO (Association for Osseointegration) in Seattle. Furthermore, highly successful national ITI meetings were held in all continents. A further 10 peer-reviewed publications, including long-term data, supporting Straumann products appeared in the course of the first half(a-j).
Sustained job creation and talent recruited
To support the organization's current and future growth, Straumann continued to invest in talent recruitment, creating 180 new positions worldwide in the first six months of 2006. This increased the global workforce to 1522.
Main shareholder transaction
In May, Dr h.c. Thomas Straumann, who is a member of the Board of Directors and holds the largest stake in the company, sold 645 000 of his shares to Rudolf Maag, Chairman of the Board. This corresponded to 4% of overall share capital and brought the respective stakes held by Messrs. Straumann and Maag to 32.5% and 12.3%.
Double-digit growth continued
Net revenue rose 17% in local currencies. In Swiss francs the increase amounted to 19%, thanks to favorable currency exchange rates. Growth was more or less in line with the company's forecast, with 15% points generated organically. Slightly more than 1% point of 2006 first-half growth came from the newly established subsidiaries in Australia, Denmark and Mexico, -- in contrast to the previous first half, which was boosted by the acquisition of BIO srl at the outset of 2005.
Double-digit revenue growth was reported by all regions. European revenues rose 17% in local currencies or 19% in Swiss francs to CHF 195 million, with the region contributing 64% of Group turnover. Sales in Germany, Straumann's largest single market, grew 14% over the six-month period, with a softer second quarter owing to the exceptionally high comparative period in 2005. All other European countries delivered double-digit sales growth.
North American revenues grew 15% in local currencies to CHF 74 million (24% of Group sales). Thanks to a positive currency impact, sales growth amounted to 23% in Swiss francs. SLActive was successfully launched in North America towards the end of the first quarter and has been received very enthusiastically by the implant community.
The Asia/Pacific region continued to contribute 10% of net revenue as first-half sales grew 18% to CHF 30 million on the back of exceptional first-quarter orders ahead of announced price increases. Business continued to expand in Australia, where Straumann took over distribution at the end of the first half in 2005.
Revenues in the rest of the world rose 18% to CHF 6.5 million or 2% of Group sales.
Operating profit rises to CHF 91 million
Operating costs, excluding other income, increased from 69% to 70% of net revenue owing to the following: the cost of goods sold rose to 20% of net revenue (cf. note on reallocation on p. 12) reflecting the overall ramp-up in production, especially in Andover, and the production installation for new products, which the Group continues to absorb. While selling costs remained stable at 38% of net revenue, general administrative costs increased slightly to 8% of net revenue reflecting the increase in personnel and infrastructure costs at the new Swiss and North American headquarters. Research and development costs were maintained at 5% of net revenue, underlining Straumann's commitment to innovation, quality and proven clinical benefits. Operating profit before depreciation and amortization (EBITDA) increased 18% to CHF 108 million. Licensing revenues and rent from the Waldenburg site contributed to the other income of CHF 1 million.
As a result, operating profit (EBIT) rose 14% to CHF 91 million, while the EBIT margin contracted to slightly below 30%.
Net profit increases to CHF 71 million
The financial income of CHF 0.6 million only partially offset financial expenses of CHF 0.9 million, of which CHF 0.6 million were currency related. At the same time, taxes increased. This was mainly because a concession expired and the full tax rate has to be provisionally accounted until a new agreement with the relevant authorities can be reached. As a result, net profit amounted to CHF 71 million resulting in a net margin of 23%.
Capital expenditure returns to normal level
Net operating cash flow reached CHF 58 million, leading to an operating cash-flow margin of 19%. At CHF 23 million, or 8% of revenue, Straumann's capital expenditure returned to normal levels after the significant investments in expansion projects and acquisition activities in 2005.
As a result of all these activities, and the dividend payment of CHF 39 million, overall cash and cash equivalents on 30 June 2006 amounted to CHF 95 million.
Outlook (barring unforeseen circumstances)
On the basis of the first-half developments, the Group expects full-year net revenue to grow around 15% in local currencies. Full-year operating and net profit margins are currently estimated to be around 29% and 23% respectively.
Straumann Holding AG, Peter Merian-Weg 12, 4002 Basel, Switzerland. Phone: +41 (0)61 965 11 11 / Fax: +41 (0)61 965 11 01 E-mail: investor.relations@straumann.com or corporate.communication@straumann.com Homepage: www.straumann.com Contact: Mark Hill, Corporate Communication +41 (0)61 965 1321
Disclaimer
This release contains certain "forward-looking statements", which can be identified by the use of terminology such as "expectations", "continuing", "until", "ongoing", "according to plan", "reduces healing times", "foresees", "future", "outlook", "expects", "estimated", or similar wording. Such forward-looking statements reflect the current views of management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group's products, the potential for the Group's products to become obsolete, the Group's ability to defend its intellectual property, the Group's ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group's ability to generate revenues and profitability, and the Group's ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. Straumann is providing the information in this release as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise.
About Straumann
Headquartered in Basel, Switzerland, the Straumann Group (SWX: STMN) is a global leader in implant dentistry and oral tissue regeneration. In collaboration with the International Team for Implantology (ITI), leading clinics, research institutes and universities, the Group researches and develops implants, instruments and tissue regeneration products for use in tooth replacement solutions or to prevent tooth loss. The Group manufactures implant system components and instruments in Switzerland and the US and dental tissue regeneration products in Sweden. Straumann also offers comprehensive training and services to the dental profession worldwide. Altogether, Straumann employs approximately 1520 people worldwide and its products and services are available in more than 60 countries through the Group's 18 distribution subsidiaries and broad network of distribution partners.
Media and analysts' conference
Straumann will present the 2006 first-half results to representatives of the media and financial community at 10.00 Swiss time in Basel. The event will be webcast live on the internet and a playback will be available. A telephone dial-in service is also offered for analysts and journalists at +44 208 974 7900, Pin-Code: C251817.
Further information and the presentation slides are available at www.straumann.com.
Photographs
A selection of photographs of Straumann, its activities, locations and executives is available at www.straumann.com.
Further key reporting dates in 2006
October 25, 2006 Media release Q3/9M sales
Details of Straumann roadshows and other events for investors are published on www.straumann.com.
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