ZURICH, Switzerland, April 24, 2008 (PRIME NEWSWIRE) -- Nobel Biocare: Flat revenue growth (CER) in Q1 -- High gross profit margin maintained -- NobelActive ready for launch in Q2.
* Revenue growth at constant exchange rates (CER) flat at EUR
155.6 million
* Industry-leading gross profit margin maintained at 84.1%
* Profit from operations (EBIT) EUR 48.8 million; margin 31.4%.
* Basic earnings per share* reduced to EUR 1.35
* Operating cash flow up to EUR 33.3 million
* Product launches progressing: NobelActive ready for launch in Q2
after successful pre-launch with 2,000 clinicians; new Procera
materials and new software introduced
* Growth in new customers; expanded strategic partnerships (e.g.
Charite University Berlin)
* Organizational development underway: strengthening of management;
initial efficiency gains in core processes
* Acquisition of AlphaBioTec completed, integration progressing
* Share buyback scheduled to resume in May
* Outlook for 2008: low single-digit growth at CER; EBIT margin
roughly at 2007 level (CER)
Table 1.
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Selected income statement figures Q1 Q1
in EUR million 2008 2007
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Revenue 155.6 163.5
Growth rate based on CER -0.3% 19.7%
Growth rate in EUR -4.8% 14.6%
Gross profit 130.9 137.6
Gross margin 84.1% 84.2%
Growth rate -4.9% 15.1%
Profit from operations 48.8 55.6
Operating (EBIT) margin 31.4% 34.0%
Growth rate -12.2% 14.6%
Net profit for the period 32.9 43.9
Net profit margin 21.1% 26.9%
Growth rate -25.1% 18.0%
Basic earnings per share*, in EUR 1.35 1.76
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*before share split
Domenico Scala, CEO: "As indicated earlier, we expected a slow start of the year. However, the current economic uncertainties led to a more cautious ordering pattern, which will now have an even stronger impact in 2008. This more challenging economic environment is also reflected in a more competitive market. Despite disappointing flat growth, we continue to invest in future market expansion without compromising on profitability. We are successfully gaining new customers in all regions. We are also focused on enhancing efficiencies, reducing complexity and expanding our go-to-market approach to drive future growth. In Q2 we will launch NobelActive, which has been strongly embraced by more than 2,000 clinicians during the pre-launch phase. Moreover, Colored Zirconia crowns were successfully launched at the end of Q1 and will expand our prosthetic ceramic range of products. The medium-term outlook remains attractive, and we will continue to develop our unique platform to deliver sustainable, profitable growth."
Revenue growth (CER) was flat in the first quarter. Reported revenue decreased by 4.8%, mainly due to continuing weakness in the U.S. dollar.
In Europe, Middle East and Africa (EMEA), revenue (CER) declined by 5.1% to EUR 77.5 million. Growth has slowed in most Western European countries as customers displayed a more cautious ordering pattern. Strong growth was still achieved in the emerging markets of Russia and the Baltic States. As expected, management issues in Germany/Switzerland and the UK, as well as the reimbursement change in Sweden, continued to have an adverse impact on first quarter performance. Measures aimed at addressing these issues are underway. Encouragingly, newly gained customers across the region continued to show significant growth.
In North America, revenue growth (CER) was flat at EUR 47.9 million, mainly due to heightened economic uncertainties. While the company continued to expand its customer base, growth from existing customers slowed mainly due to a more cautious ordering pattern. Large-case treatments remained under pressure. All-on-4 continued to perform favorably as clinicians are seeking more cost-effective solutions for an increasingly cost-conscious patient base. In the first quarter, the number of trained users for NobelActive rose significantly; the demand for training exceeded initial expectations.
In the Asia Pacific region, revenue grew by 17.1% (CER) in the first quarter to EUR 24.9 million, a very solid performance when viewed in light of the already strong prior-year quarter (Q1 2007: 44.9%). In Japan, while outgrowing the market in the first quarter, performance was held back in anticipation of the expected Q2 approval and launch of NobelSpeedy and Groovy. The newly opened Procera manufacturing facility in Japan is now also starting to serve other Asian markets. Again, strong growth was generated in China and India, as well as in Southeast Asia.
In Latin America, growth (CER) was flat against a strong prior-year Q1 (55%). Mexico and Columbia showed a stronger start of the year. The company is investing to strengthen management and sales capabilities in most countries following a phase of strong growth.
Table 2. ---------------------------------------------------------------------- Revenue by region Q1 Q1 Growth in % in EUR million 2008 2007 EUR CER ---------------------------------------------------------------------- Europe, Middle East and Africa (EMEA)* 77.5 82.8 -6.4% -5.1% Proportion of total revenue 50% 50% North America 47.9 53.3 -10.1% 0.0% Proportion of total revenue 31% 33% Asia/Pacific 24.9 22.1 12.7% 17.1% Proportion of total revenue 16% 14% Latin America/RoW* 5.3 5.3 0.0% -0.5% Proportion of total revenue 3% 3% ---------------------------------------------------------------------- Total 155.6 163.5 -4.8% -0.3% ---------------------------------------------------------------------- *2007 restated to reflect management structure
Gross profit in the first quarter stood at EUR 130.9 million (Q1 2007: EUR 137.6 million), reflecting a gross profit margin that was maintained at an industry-leading 84.1% (Q1 2007: 84.2%). This was driven by an improved product mix (higher share of new products and solutions launched over the past two years), continued pricing discipline, as well as efficiency gains, which more than compensated for adverse foreign exchange impact.
Profit from operations (EBIT) amounted to EUR 48.8 million (Q1 2007: EUR 55.6 million). The reduced operating profit margin of 31.4% is mainly attributable to adverse foreign exchange rates. The company continued to invest in expanding the customer base and preparing for the launch of NobelActive, but also made efforts to improve cost efficiency. However, these measures could not fully compensate for the lower than anticipated growth in revenue.
Currencies -- Mainly due to the relative weakness of the U.S. dollar, revenues were diminished by EUR 7.4 million, or 4.7%. Profit from operations (EBIT) was also affected in the amount of EUR 2.5 million, or 4.9%, and thereby reduced the margin by approximately 10 basis points.
Net financial expense amounted to EUR 6.9 million for the first quarter (versus net financial gain of EUR 0.6 million in Q1 07). The main reason for the increase was a continued adverse currency development in the first quarter leading to a net foreign currency loss of EUR 5.6 million. In addition to the foreign currency result, net financial expense was higher due to increased leverage resulting from the company's issuance of convertible bonds in 2007.
Taxation -- The underlying tax rate for the quarter remained unchanged.
Net profit for the first quarter amounted to EUR 32.9 million (Q1 2007: EUR 43.9 million), down 25.1%. Excluding the adverse foreign exchange loss in net financial expense, net profit would have been down 15.1%.
Cash flow from operating activities in the first quarter increased to EUR 33.3 million (EUR 21.0 million). This increase resulted mainly from lower tax payments and a decrease of inventories in the reporting period.
Cash and cash equivalents amounted to EUR 242.8 million at the end of the first quarter versus EUR 186.2 million at year-end 2007.
Annual general meeting (AGM) authorized further cash returns to shareholders. In conjunction with the release of the 2007 financial results, the company's intention to continue the share buy back program also in 2008 was announced. This year, Nobel Biocare plans to repurchase shares in an amount up to its anticipated 2008 cash flow. The buy back will be executed via a 2nd trading line, which is expected to be opened at SWX Europe mid-May. The maximum repurchase volume of the new repurchase program is CHF 750 million over a maximum time period of two years, subject to obtaining regulatory approval.
The AGM also approved a conversion of the company's bearer shares into registered shares, as well as a 1:5 share split. The first trading day of the newly registered and split shares was 3 April 2008.
The OMX Nordic Exchange approved the company's application for delisting from the OMX Nordic Exchange. Swedish shareholders who wish to dispose of their holdings are currently offered a commission-free dealing service until the last day of trading, which is 9 May 2008.
In the first quarter, the company made progress in enhancing the platform to deliver sustainable growth:
NobelActive(tm) to be launched in the second half of May 2008. This newly designed implant offers dental professionals novel and unique treatment possibilities. The controlled approach to introducing NobelActive continued in the first quarter of 2008. During the pre-launch phase, over 25,000 implants have been sold and more than 2,000 clinicians have been trained in the use of this product. The launch is now scheduled for the second half of May and will be supported by a one-year prospective multi-center clinical study as well as extensive feedback from clinicians. NobelActive demonstrates high initial stability even in compromised bone situations, bone-condensing properties, a built-in platform shifting and a dual function prosthetic connection.
New Procera materials and new software introduced -- At the Annual Chicago Dental Society midwinter meeting, Nobel Biocare introduced its updated Procera CAD/CAM dentistry system featuring a fuller range of all-ceramic products, including three new shades of colored Zirconia crown and a new software platform.
NobelDirect and NobelPerfect one-piece implant marketing surveillance ceased -- In February, after having reviewed all submitted data and information, the Swedish Medical Product agency (SMPA) stated "the investigation showed that, on average, the marginal bone level around NobelDirect was normal and did not deviate from what is typically seen around conventional two-piece implants"..."There is no potential hazard associated with the continued use of the NobelDirect and NobelPerfect one-piece implant to the patients, provided the instructions are followed." As a result, the SMPA closed the investigation and ceased marketing surveillance for the two products.
Expanded strategic partnerships -- The University Partner Program was further expanded through the agreement with the dental school of Charite - Universitatsmedizin Berlin. This partnership marked the third European university to join the Nobel Biocare supported University Partner Program. Currently, 24 leading dental schools worldwide have joined the program.
Organizational development underway -- Following last years' appointment of a new Head of Global Human Resources and Head of Business Development and Strategic Planning, Nobel Biocare, on 5 March 2008, announced Dr. Dirk W. Kirsten's appointment as new Chief Financial Officer and member of the Executive Committee. He assumed his new role as of 1 April 2008. The same day, the company also announced the appointment of Dr. Hans Schmotzer as new Head of Research and Development and member of the Executive Committee. Hans Schmotzer will take up his new position on 1 July 2008.
Increasing global presence -- Also in the first quarter, Nobel Biocare announced the signing of an agreement to take over the operations related to its field of activities from its distributor in Hungary, DentalPlus. These activities will be combined into a newly established subsidiary, thereby expanding the company's activities into this very important market in Eastern Europe.
Acquisition of AlphaBioTec, Ltd. closed, integration progressing -- In early February, Nobel Biocare announced the acquisition of the leading dental implant company in Israel and the innovator of the predecessor product to NobelActive. With this acquisition, Nobel Biocare has gained immediate access to some of the fastest-growing market segments in implant dentistry, such as orthodontic mini-screws and small-diameter implants, which we expect to introduce in 2009. At the same time, the company will gain a market-leading position in Israel and further expand its position in Russia, Poland and Latin America. The closing of the transaction was finalized on 2 April 2008.
Outlook -- In view of the current economic uncertainty and elective nature of some of the company's products, Nobel Biocare has reduced its market growth assumptions for 2008 from previously approximately 15% to a revised approximately 8%. Nobel Biocare expects its growth to slightly under-perform the market average this year due to its business mix, which is weighted toward the large-case treatments, as well as several country-specific issues in Europe. Taking into account the revised market growth, the company foresees organic revenue growth in the low single digits (CER) and an EBIT margin at 2007 levels (CER) for the full year.
NOBEL BIOCARE HOLDING AG Domenico Scala Chief Executive Officer
Telephone conferences for investors and analysts will be held today 24 April 2008 at 08.30 CET and at 15.30 CET, respectively.
To ensure timely participation, please call-in approximately 15-20 minutes prior to the time stated below.
The dial-in numbers for the 08:30 CET telephone conference are:
+41 43 456 9368 (Europe)
+44 12 1260 4860 (UK)
+46 8 5051 3703 (Sweden)
+1 866 291 4166 (USA)
The dial-in numbers for the 15:30 CET telephone conference are:
+41 43 456 9368 (Europe)
+44 12 1260 4860 (UK)
+46 8 5051 3703 (Sweden)
+1 412 858 4600 (USA)
Financial Reporting Calendar 2008:
Interim Report 2, 2008 11 August 2008
Interim Report 3, 2008 03 November 2008
The full Interim Report 1, 2008 is available in English and Swedish, while an abridged version of the report is available in German.
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.
The character of the information is such that it shall be disclosed by Nobel Biocare Holding AG (publ) in accordance with the Swedish Securities Market Act (2007:528).
The information was disclosed to the media on 24 April 2008 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 about 2,400 employees and recorded revenue of EUR 665.9 million in 2007. The Company is domiciled and headquartered in Zurich, Switzerland. Production takes place at five production sites located in Sweden, the U.S. and Japan. Nobel Biocare has direct sales organizations in 36 countries. The shares of the parent company Nobel Biocare Holding AG are listed on SWX Swiss Exchange (Ticker symbol: NOBN) and OMX Nordic Exchange Stockholm, Sweden (delisting in process; last trading day will be 9 May 2008).
The entire release, including financial tables, is available at http://www.newsbox.ch/public/16660/att/18504_mediareleaseinclfinancialinformationpdf.pdf