ZURICH, Switzerland, Aug. 9, 2007 (PRIME NEWSWIRE) -- Nobel Biocare Group (Other OTC:NBCHF) announces strong organic revenue growth of 20% -- outgrowing the market, and record gross margin of 85% in the second quarter.
First half year highlights:
* Revenue up 20% (l.c.) to EUR 341.7 million * Strong revenue growth in Europe (+21% l.c.) and Asia/Pacific (+41% l.c.) * Gross margin improved to a record level of 84.6% * Reported operating (EBIT) profit up 10% - margin at 32.0% * Net profit* increase of 15% to EUR 85.6 million * Basic earnings per share* increased by 16% to EUR 3.44 * 183 new jobs created, mainly in sales * 2007 World Conference: 10,000 participants from 91 nations * Training and education programs: 195,000 participants, up 17% * Outlook 2007: organic revenue growth of about 21% (l.c.); EBIT margin about 33% Table 1. --------------------------------------------------------------------- Selected Income Statement figures Q2 Q2 H1 H1 in EUR million 2007 2006 2007 2006 --------------------------------------------------------------------- Revenue 178.2 153.8 341.7 296.5 Growth in local currencies 20.4% 23.5% 20.0% 25.1% Growth in EUR 15.9% 24.2% 15.2% 27.9% Gross profit 151.4 128.0 289.0 247.5 Gross margin 85.0% 83.2% 84.6% 83.5% Growth 18.3% 25.2% 16.8% 29.9% Profit from operations 53.8 51.2 109.4 99.7 Operating (EBIT) margin 30.2% 33.3% 32.0% 33.6% Growth 5.1% 29.6% 9.7% 34.2% Profit for the period * 41.7 37.5 85.6 74.7 Profit margin * 23.4% 24.4% 25.1% 25.2% Growth 11.2% 20.2% 14.6% 30.4% Basic earnings per share*, EUR 1.68 1.49 3.44 2.97 Basic earnings per share, EUR 1.68 1.65 3.44 3.13 --------------------------------------------------------------------- * excluding sale of associate
Revenue - outgrowing the market organically
Revenue growth in local currencies (l.c.) increased in the second quarter to 20.4% compared to 19.7% in the first quarter. With an overall growth of 20.0% in the first half year, achieved on top of an already high expansion of 25.1% in the first half year 2006, revenue growth was above the estimated market growth. In three out of four regions we continued to deliver a very strong performance.
Europe reported an increase in revenues in local currencies of 22.8% (Q2 2006:18.1%) in the second quarter. For the first half year, revenues in local currencies increased by 20.6%. This significantly exceeds the independent market growth estimate of 15% for the period. This performance was achieved on top of a high prior year growth of 20.9% that was driven by several World Tour events in this region. Fast expansion was seen across the entire region, in particular in large volume markets like Spain, Italy and Germany and further in the Netherlands, Austria and Norway. The Group has also delivered a very strong performance in a number of new markets with now a direct presence such as Russia and the Baltic States.
On top of a very high prior year growth of 27.8% the North American revenue grew 9.8% for the first half year. The growth has been affected by a temporary slowdown in the U.S. economy as a result of the weakness in the housing market. The U.S. dental implant market is particularly affected in the specialty and larger treatment segments, in which the Group has the highest share. Nobel Biocare is confident about the strong North American market potential and sustains its strategic investments. These investments have allowed the Group to extend its market share seven hundred basis points to 35% over the last two years.
In Asia/Pacific the Group achieved revenue growth of 38.7% in Q2 (2006: 39.4%) bringing first half year growth to 41.4%. The region's rapid growth was headed by a strong performance in Japan where revenues increased by 45% in the first half year. Nobel Biocare is substantially outgrowing the strategically very important Japanese market, with an estimated market growth of 17%, hence gaining market share. Strong above market revenue growth was also achieved in Australia and in the prospective very attractive Indian market. Leading market positions in Taiwan, Thailand, Vietnam, Hong Kong and New Zealand have been further strengthened. Market development in China is also progressing well.
Table 2. --------------------------------------------------------------------- Revenue by region - quarter Q2 Q2 Growth in % in EUR M 2007 2006 EUR local curr. --------------------------------------------------------------------- Europe 83.7 68.3 22.5% 22.8% Proportion of total revenue 47% 44% North America 57.6 56.3 2.3% 9.6% Proportion of total revenue 32% 37% Asia/Pacific 26.3 20.5 28.3% 38.7% Proportion of total revenue 15% 13% Rest of the World 10.6 8.7 21.8% 26.6% Proportion of total revenue 6% 6% --------------------------------------------------------------------- Total 178.2 153.8 15.9% 20.4% --------------------------------------------------------------------- Table 3. --------------------------------------------------------------------- Revenue by region - half year H1 H1 Growth in % in EUR M 2007 2006 EUR local curr. --------------------------------------------------------------------- Europe 162.8 135.1 20.5% 20.6% Proportion of total revenue 48% 46% North America 110.9 109.2 1.6% 9.8% Proportion of total revenue 32% 37% Asia/Pacific 48.4 37.1 30.5% 41.4% Proportion of total revenue 14% 12% Rest of the World 19.6 15.1 29.8% 35.8% Proportion of total revenue 6% 5% --------------------------------------------------------------------- Total 341.7 296.5 15.2% 20.0% ---------------------------------------------------------------------
Gross profit - new record margin
Gross profit increased to EUR 289.0 million for the first half year compared to EUR 247.5 million in H1 2006. The gross profit margin reached a new record of 84.6% in the first half year (H1 2006: 83.5%). The increase in gross profit margin was driven by strong volume growth and a positive mix change effect due to a stronger demand for new products and solutions launched over the last two years. In Q2 the gross profit margin reached 85% (Q2 2006: 83.2%) demonstrating Nobel Biocare's pricing power derived from its innovative and comprehensive solution offering.
Operating profit - high margin despite high investments
Profit from operations (EBIT) amounted to EUR 109.4 million (99.7) for the first half year, an increase of 10% with the margin at 32%. Despite continued high investments in strategic initiatives and rapid staff expansion to support growth, the operating profit margin was maintained at a high 32.0% (33.6%). In the second quarter the operating margin was 30.2% (33.3%). The Q2 margin was, as expected, impacted by significant costs associated with the 2007 World Conference in May. Social charges related to the staff option program were reduced by EUR 0.3 million in the second quarter bringing the total for the first half year to EUR 4.3 million, compared with costs of EUR 1.3 million for the same period last year.
Currency - revenue growth was negatively impacted by EUR 11.8 million or 4.2% due to the relative weakness of the US dollar. Profit from operations (EBIT) was also negatively impacted by EUR 7.3 million or 7.9 %, reducing the margin by 100 basis points.
Net financial expense amounted to EUR 0.1 million for the first half year (H1 2006: EUR 3.4 million). The financial income was positively impacted by foreign exchange gains of EUR 1.9 million.
Profit for the first half year increased to EUR 85.6 million compared to EUR 74.7 million last year. Profit for the period in the second quarter was EUR 41.7 million (37.5).
Cash flow from operating activities in the first half year amounted to EUR 48.1 million (EUR 58.4 million). Inventories slightly increased to EUR 32.1 million from EUR 30.5 million at year-end 2006.
Cash and cash equivalents (including bank overdraft) decreased significantly to EUR 68.0 million from EUR 130.9 million at year-end 2006 (and compared to EUR 93.7 million at the end of March 2006), mainly due to dividend payment and share buybacks.
Strategic Initiatives - strong momentum maintained
Nobel Biocare World Conference 2007 - dentistry's largest scientific and educational event was held in Las Vegas from 20-24 May 2007 and attracted 10,000 dental professionals from 91 countries. The Conference featured hundreds of innovative solutions in a scientific, interactive learning environment. The Conference covered the entire spectrum of what is possible in dentistry today, from minimally invasive procedures like laminates, solutions such as implant-retained overdentures, all the way to advanced maxillofacial and micro-vascular treatments.
University partnership programs are rapidly gaining momentum. Two new memorandums of understanding were signed with the University of Jerusalem, Israel, and the University of Ho Chi Minh City, Vietnam, to join the Nobel Biocare University program. The partnership network has grown to 20 world leading dental universities. Nobel Biocare supports the universities in changing their undergraduate protocol to include implantology and modern prosthetics (such as CAD/CAM technology) in their curricula. With these undergraduate partnership programs, Nobel Biocare actively supports the advancement of dental education standards and drives a paradigm shift in dental education.
Training & education programs (T&E) were again highly frequented. The Group's comprehensive training and education events and programs attracted over 195,000 participants around the world in the first six months. This corresponds to an increase of 17% over the last year.
Strengthening presence in fast growing Asia - the first Asian Procera manufacturing site in Tokyo, Japan, will be opened on 1 September 2007. The manufacturing processes at this new site for individual prosthetics have been successfully installed. The operations successfully passed an ISO 13485 quality audit already at the beginning of July. The new facility will come into full capacity in the second half of the year and will further strengthen the Group's leading position in the fast growing Asia/Pacific region. With its third Procera manufacturing site Nobel Biocare has further strengthened its leading global presence in all the regions. Currently Procera scanners are installed in 75 countries.
183 new jobs created in the first half of 2007 - To sustain the high growth momentum, Nobel Biocare has created 183 new positions in the first half year. The majority of the new positions were within sales or sales-related departments. At the end of June 2007, Nobel Biocare employed 2,176 employees worldwide.
Solutions - several launches in the second half year
NobelActive(tm) - the implant of the future - NobelActive(tm) features a new advanced design of the implant body. It can be used for all indications. It is especially effective in regions of diminished bone quality or quantity due to its bone-condensing capability, capacity for shorter drilling protocols, and ability to change direction on insertion. NobelActive(tm) provides for quicker treatments, shorter healing times, and less invasive procedures. This implant will be backed by an unprecedented scientific and clinical program, which together with the compelling 5-year data on TiUnite will unfold a new chapter in dentistry. The superior performance of NobelActive(tm) is currently documented in prospective 2 multi-center studies involving 20 centers with over 260 patients; the one-year follow up on 165 implants shows a high success rate of 98%. Another retrospective study with 648 implants in 251 patients shows a success rate of 98.3% for up to 4 years (1).
New Nobel Biocare Solutions for Maxillofacial Rehabilitation - the Nobel Biocare Maxillofacial Concept, based on the research and work of Professor P-I Branemark since more than 20 years, is an advanced surgery technique facilitating facial reconstruction using implants and modern software. Maxillofacial surgeries can correct a number of deformities in the hard and soft tissues of the oral and maxillofacial regions, caused by disease, trauma and genetic defects. The Nobel Biocare solutions for Maxillofacial rehabilitation underline the Group's core competence in dental application and related markets.
Curvy Abutment(tm) - more stable soft tissue by design - the Curvy Abutment(tm) is part of Nobel Biocare's core concepts of Soft Tissue Integration(tm) and Easy Esthetics(tm) for Beautiful Teeth Now. This abutment features an hourglass shape at its base and a curved margin. It has been designed to stabilize and promote an excellent soft tissue seal for better short and long-term esthetics. This was documented in a clinical study with 54 abutments on 41 patients and published in a peer-reviewed journal (2). The abutment is machined from titanium and can be used with both NobelReplace(tm) and Branemark System(r) implants.
Overall, 300 new products and solutions were introduced at the World Conference underpinning the fast pace of innovation including new Procera Software, Procera Maryland Bridge and NobelOverdenture -one-piece implant for overdenture use.
Scientific Update - Nobel Biocare's number one position in scientific documentation was strengthened with the publication of 28 additional articles in peer-reviewed journals in the first half year. Overall, the Group's solutions are documented in close to 1,900 peer-reviewed scientific publications.
TiUnite - The success story of TiUnite, the clinically proven biomaterial surface, continues. There are today 84 peer-reviewed publications on TiUnite including excellent results from a 5-year prospective study which covers 51 immediately loaded implants in 38 patients with a success rate of 97.1% (3).
NobelDirect - The Swedish Medical Products Agency (MPA) issued a decision on 25 June 2007, according to which Nobel Biocare has to amend certain instructions and wording in the instructions for use of NobelDirect and NobelPerfect. Nobel Biocare is currently making these adaptations and amendments and will submit them to MPA before the due date of 20 August 2007.
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).
Corporate Social Responsibility
P-I Branemark Honorary leading maxillofacial expert meeting - following the premier at the World Conference, the worlds leading specialists on maxillofacial treatments gathered in Gothenburg to discuss the rehabilitation of patients using a maxillofacial concept. Professor P-I Branemark was also honored for his work at the donation funded P-I Branemark Institute in Bauru, Brazil. The meeting was a starting point for expanding the humanitarian work initiated by Professor Branemark.
Ongoing quality improvements - best in class quality processes confirmed by third-party assessments. The BMP-2 project has passed an FDA audit with zero non-conformity. The new Procera manufacturing facility in Japan has successfully passed an ISO 13485 quality audit beginning of July.
Outlook
Thanks to the Group's global reach Nobel Biocare expects to organically outgrow the market in 2007 with a growth of about 21% in local currencies and an operating (EBIT) margin of about 33% due to one-time cost related to the CEO transition.
The underlying growth drivers and the market potential of the tooth restoration market are fully intact and remain highly attractive thanks to
- Low global penetration of implants - Favorable demographics - Increasing potential in emerging markets - New applications for esthetic and lifestyle
Nobel Biocare therefore continues to estimate the longer term market growth in the high teens.
With its strong global presence, comprehensive portfolio of dental solutions, and strong quality and scientific foundation, Nobel Biocare is ideally positioned to not only benefit from the market growth but to outgrow it.
NOBEL BIOCARE HOLDING AG Heliane Canepa Domenico Scala President & CEO Deputy CEO
A telephone conference will be held today 9 August at 15.15 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: Interim Report 3, 2007 30 October 2007 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 2, 2007 is available in English and Swedish, while a shorter version media release is available in German.
SAVE THE DATE -- Wednesday 26 September 2007
Nobel Biocare Investor Day in Mahwah, New Jersey, USA
Detailed information will be available soon.
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 9 August 2007 at 7.00 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 website). Nobel Biocare is a one-stop shop 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 2,176 employees and recorded revenue of EUR 601 million in 2006. The Group is domiciled in Zurich, Switzerland with headquarters in Zurich and in Gothenburg, Sweden. Production takes place at four production sites located in Sweden and the USA. Nobel Biocare has direct sales organizations in 34 countries. The shares of the parent company Nobel Biocare Holding AG are listed on the SWX Swiss Exchange and on the Stockholm Stock Exchange, Sweden.
www.nobelbiocare.com / www.nobelsmile.com
1 Karmon B, Kohen J, Lor A, Gratciany Y, Laster T, Hallel G, Karmon T. Initial Report from a retrospective multi-centre study on the SPIRAL implant. Poster presentation at the Nobel Biocare World Conference, Las Vegas, USA, 2007. 2 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. 3 Glauser R, Zembic A, Ruhstaller P, Windisch S. Five-year results of implants with an oxidized surface placed predominantly in soft quality bone and subjected to immediate occlusal loading. J Prosthet Dent. 2007;97(suppl): S59-S68. 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 Siepenkothen T. 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.
The entire release, including financial tables, is available at
http://www.newsbox.ch/public/12541/att/13854_mediareleaseandinterimreportpdf.pdf