ZURICH, Switzerland, Feb. 9, 2006 (PRIMEZONE) --
-- Revenue for the full year was lifted 25% in euro, or 24% in local currencies, to EUR 484.5 million (2004: 388.4 million). In North America the high expansion pace continued with 35% growth in local currencies for the full year.
-- Gross margin for the full year climbed to 82.3% (79.7%(a)).
-- Profit from operations (EBIT) for the full year jumped by 41% to EUR 162.3 million (114.8 million(a)), reflecting a record EBIT margin of 33.5% (29.6%(a)).
-- Profit for the year in 2005 grew 69% to EUR 154.7 million (91.6 million(a)), driven by higher profit from operations and the one-off impact from the divestiture of Entific Medical Systems AB in the first quarter.
-- Basic earnings per share for the full year climbed to EUR 6.05 from EUR 3.58(a) a year ago.
-- The Board of Directors proposes to raise the dividend to CHF 3.50 or approx. EUR 2.26 (CHF 2.65 or EUR 1.72)
Table 1.
Selected income
statement Oct Oct Change Full Full Change
Figures -Dec -Dec Year Year
in EUR million 2005 2004 2005 2004
Revenue 144.4 116.2 24.3% 484.5 388.4 24.8%
Growth in local 20.3% 23.3% 24.0% 22.0%
Gross profit 117.5 93.9 25.1% 398.5 309.6 28.7%
Gross margin 81.4% 80.8% 82.3% 79.7%
Profit from operations 55.7 41.6 33.9% 162.3 114.8 41.3%
Operating (EBIT) margin 38.6% 35.8% 33.5% 29.6%
Profit for the year 43.5 34.0 27.9% 154.7 91.6 68.9%
Net profit margin 30.1% 29.3% 31.9% 23.6%
Basic earnings per share, 1.71 1.33 6.05 3.58
Basic earnings per share, 2.66 2.05 9.38 5.53
CHF
(a)Certain comparatives were reclassified to conform with current
period's presentation. The comparatives were also restated to
reflect the implementation of IFRS 2 Share-based Payment as of 1
January 2005. In addition, goodwill is no longer amortized as of
1 January 2005. Please see Note 4 of the consolidated condensed
financial statements for more details.
High overall momentum, with North America powering expansion
Revenue was lifted organically 24% in local currencies, well above the Company's guidance of greater than 22% revenue growth. As the undisputed market leader, Nobel Biocare outgrew even the most aggressive overall market growth estimates by about 4-6% in 2005. Revenue in the fourth quarter remained strong, with growth over 20% in local currencies to EUR 144.4 million on top of a very strong (+23%) comparative period last year.
All regions grew above estimated market growth. North America and Asia/Pacific continued their high expansion pace with 35% and 32% growth in local currency for the full year. Revenue in Europe was up 14% in local currencies for the full year with Denmark, the Netherlands, Norway, Spain and the UK expanding the fastest. In Switzerland momentum was kept high with growth of 35%. In line with expectations, overall market conditions in Germany, the biggest European market, were negatively impacted throughout 2005 due to confusion surrounding the health care reform and the general economic development, as well as in Sweden due to a change in the healthcare reimbursement system. The impact of price increases on existing products was about 1% for the full year 2005.
Along with its fast expansion pace, Nobel Biocare created a total of 218 new positions world-wide in 2005, the vast majority of which are in direct sales and sales-related functions.
Table 2.
Revenue by region -- 4th Oct-Dec Oct-Dec Change in %
in EUR million 2005 2004 EUR local
curr.
Europe 64.0 58.8 8.8% 8.8%
Proportion of total revenue 44% 51%
North America 54.5 37.2 46.5% 36.4%
Proportion of total revenue 38% 32%
Asia/Pacific 17.5 13.5 29.6% 26.7%
Proportion of total revenue 12% 12%
Rest of the World 8.4 6.7 25.4% 16.7%
Proportion of total revenue 6% 5%
Total 144.4 116.2 24.3% 20.3%
Table 3.
Revenue by region -- full year Full Full Change in %
in EUR million 2005 2004 EUR local
curr.
Europe 216.5 189.8 14.1% 14.1%
Proportion of total revenue 45% 49%
North America 180.1 132.1 36.4% 35.0%
Proportion of total revenue 37% 34%
Asia/Pacific 60.1 45.6 31.8% 31.7%
Proportion of total revenue 12% 12%
Rest of the World 27.8 20.9 33.0% 26.3%
Proportion of total revenue 6% 5%
Total 484.5 388.4 24.8% 24.0%
Addressing the growing patient demand for esthetics, comfort and immediate function
In 2005, Nobel Biocare continued its high pace of innovation to address the swiftly growing market demand for lasting high esthetics and patient comfort combined with shorter, simpler and safer treatment procedures. New products are scientifically proven and are designed to meet those demands.
A highlight of the year was the launch of NobelGuide(tm). This scientifically proven concept gives the dental professional an easy-to-use solution for every indication. It offers the flexibility to choose between a conventional model-based or a computer-based approach for the treatment planning. This, along with the guides and customized templates, provides higher safety and predictability when placing implants. Combined with Immediate Function(tm), the minimally invasive procedure used with NobelGuide(tm) requires no healing time for fully functioning teeth and results in shorter treatment time, reduced pain and no swelling, and as little discomfort as possible for the patient.
The Crown&Bridge&Implant portfolio with the centerpiece Procera(r) technology continues to be a clear competitive advantage to meet the worldwide rapidly growing demand for esthetic dental solutions. Consequently, shortly after the inauguration of the European Ceramics Center in Stockholm, Sweden, Nobel Biocare inaugurated its North American Ceramics Center in Mahwah, New Jersey in the first quarter of 2005. This location features a Procera(r) manufacturing facility and a dental training institute.
Training and education of dental professionals continues to be a key strategy to meet increasing patient demands. The wide variety of new solutions attracted dental professionals from around the world as over 251,000 participants attended the training and education events, clearly surpassing the Company's target of 200,000 for the full year. In June, 6,000 dental professionals attended the Nobel Biocare World Conference in Las Vegas. A very important milestone was achieved with the exclusive cooperation signed in November to integrate a dental implant therapy and esthetic dentistry curriculum into the pre-doctoral dental education program of New York University, the largest dental school in the U.S.
In 2005, Nobel Biocare also expanded its campaigns to educate prospective patients. Features in press and television were supported by the Nobel Biocare Truck tour throughout Europe and the U.S., as well as www.nobelsmile.com, the website dedicated to patients.
TiUnite(r) biomaterial sets standards for surface materials
In the course of 2005, the scientific evidence on the biomaterial surface TiUnite(r) was updated with excellent four-year clinical results proving its leading position on the market. The study confirms and supports clinical benefits of the remarkable osseoconductive properties, allowing bone to grow into the pores of the surface. This results in faster osseointegration and higher biological stability, thus minimizing time at risk for effective and safe Immediate Function(tm).
Overall, the scientific evidence of TiUnite(r) consists of 58 clinical studies, including unique human histology evaluations.
TiUnite(r) is also central to the development of the next generation of implant surfaces, the so-called osseoinductive surfaces. In June 2005, Nobel Biocare announced its exclusive licensing agreement with Wyeth on the bone morphogenetic protein (BMP-2) in combination with dental implants. The combination of TiUnite(r) with BMP-2 has the potential to widen the indications for implant treatment and eliminating the need for invasive and time consuming grafting procedures.
Nobel Biocare is planning to submit an application (IDE) to the U.S. Food and Drug Administration this month to get approval for initiating clinical studies. Overall, the Company's leading position and commitment to science are documented with 1,700 clinical studies. The Quality focus, of utmost importance for a medical device company, was proven with the new global quality certificate, ISO 13485:2003.
Continued strong profitability improvement in 2005
Continued strong volume growth and a favourable mix change continued to drive gross profit and margin. Gross profit for the fourth quarter climbed to EUR 117.5 million, up from the prior year's EUR 93.9 million(b). The respective gross margin improved to 81.4% from 80.8%(b) in the fourth quarter last year. For the full year, the gross profit was lifted to EUR398.5 million compared to EUR 309.6 million(b) a year earlier, resulting in a margin of 82.3% (2004: 79.7%(b)).
Obsolescence cost related to inventory rationalization, recorded under cost of sales, amounted to EUR 1.0 million for the fourth quarter and to EUR 2.1 million for the full year compared to EUR 0.1 million and EUR 2.1 million respectively a year earlier.
In line with the Company's forecast, the introduction activities of new products and headcount expansion continued in the fourth quarter. Operating expenses in the fourth quarter amounted to EUR 61.8 million compared to EUR 52.3 million(b) in the previous year. Operating expenses for the full year were EUR 236.2 million, up from EUR 194.8 million(b). Despite the continued investments associated with the Company's continued rapid expansion, operating cost in relation to revenue dropped from 50.2%(b) to 48.8% for the full year.
Based on the implementation of international financial reporting standard 2 (IFRS 2, Share-based Payment), cost for staff options amounted to EUR 1.7 million in the fourth quarter of 2005 and to EUR 6.8 million for the full year. The restatement for the prior year is EUR 1.2 million and EUR 4.0 million respectively.
Social charges related to the staff option program were EUR 2.3 million compared to EUR 1.0 million in the fourth quarter a year earlier. For the full year, social charges related to the option program were EUR 6.5 million (EUR 7.1 million).
Profit from operations (EBIT) rose 34% to EUR 55.7 million (EUR 41.6 million(b)) in the fourth quarter. For the full year, EBIT jumped by 41% to EUR 162.3 million (EUR 114.8 million(b)). The EBIT margin for the quarter as well as for the full year marked a new record with 38.6% and 33.5%, respectively. The profitability improvement was driven by the increase in revenue, the improvement in gross margins and the cost savings achieved through the globalization of manufacturing, logistics and marketing processes.
Total capital expenditure on property, plant and equipment for the full year 2005 increased to EUR 19.6 million (EUR 16.1 million).
(b)Certain comparatives were reclassified to conform with current period's presentation. The comparatives were also restated to reflect the implementation of IFRS 2 Share-based Payment as of 1 January 2005. In addition, goodwill is no longer amortized as of 1 January 2005. Please see Note 4 of the consolidated condensed financial statements for more details.
Strong balance sheet providing financial flexibility
As a result of the high number of new products introduced in the course of the year, inventory rose to EUR 30.1 million compared to EUR 27.7 million at the end of the third quarter and EUR 17.6 million at the end of 2004.
In accordance with the terms of the share buyback program initiated in the second quarter, Nobel Biocare acquired 258,000 shares for a total price of EUR 48.4 million in the fourth quarter and 739,650 shares for a total price of EUR 126.6 million since the start of the program until 31 December 2005.
The significant share buyback in the fourth quarter as well as financial investments (with a term longer than 90 days) in an amount of EUR 34.9 million were the primary driver of the reduction in cash and cash equivalents to EUR 129.0 million from EUR 173.0 million at the end of the third quarter.
Dividend of CHF 3.50 per share proposed to the Annual General Meeting
The Board of Directors will propose a dividend of CHF 3.50 (EUR 2.26) per share at the Annual General Meeting scheduled to be held on 3 May 2006 in Zurich, Switzerland. An information meeting for Swedish shareholders will be held in Gothenburg on 12 May 2006.
Corporate Citizenship and Corporate Governance
In line with the Company's aim to be a leader in Corporate Citizenship, Nobel Biocare has become one of the donors of the first SOS Children's Village in Brovary outside Kiev in the Ukraine. Furthermore, in late September the 40 year celebration of the first patient treated with the original scientific dental implant system, the Branemark System(r), took place in Brazil. At the same time, the P-I Branemark Institute was inaugurated. This institute will promote scientific and technological development in osseointegration and is aimed at needy patients who require osseointegrated reconstructions but otherwise would not be able to afford such a treatment. Since the Institute is run primarily on donations to support patient treatment and to cover administration costs, Nobel Biocare announced that the Company will cover the treatment of 1,200 patients over the next three years.
The Company's Corporate Governance was rated top by Ethos, the Swiss foundation for sustainable development. The companies were measured against the Swiss and international Best Practice Rules for Corporate Governance with regards to transparency, capital structure, composition and organization of the board, the auditors and the shareholder rights. Nobel Biocare was acknowledged to have implemented Corporate Governance mechanisms that surpass the requirements of economiesuisse's Swiss Code of Best Practice for Corporate Governance and the Swiss Stock Exchange SWX directive on transparency in Corporate Governance.
Market approval of NobelDirect confirmed by Swedish Medical Products Agency
After a meeting with Nobel Biocare and the two professors from Goteborg University, the Swedish Medical Products Agency announced on 7 February 2006 that they found no reason to withdraw the implant from the market.
Nobel Biocare World Conference 2005 success leads to Nobel Biocare World Tour 2006
In 2006, Nobel Biocare will introduce a new continuing and post-graduate education program in a series of 17 training and educational conferences on four continents around the world. The "Nobel Biocare World Tour 2006" will start on 9 March in Frankfurt and will end on 18 November in Barcelona. Nobel Biocare expects around 30,000 participants to attend these training and education events. The Nobel Biocare World Tour 2006 is a completely new format. It will bring together world-leading experts in implant and esthetic dentistry with local experts and conference attendees to share their knowledge in state-of-the-art patient treatments. Live cases transmitted via satellite, including implant surgeries and esthetic restorations, will demonstrate the latest preferred patient treatment options. Additionally, hands-on and in-depth training for all levels of dental professionals will be included. Nobel Biocare will also present the latest research and clinical findings from its pipeline of products and solutions.
Outlook
As a world leader in innovative esthetic dental solutions based on science and with a focus on the patient, Nobel Biocare is committed to providing dental professionals with the most advanced, root-to-tooth solutions that increases the awareness, conveyance and acceptance of the highest standards of dental care.
Nobel Biocare will continue its expansion into emerging markets in 2006 by establishing its own sales organizations in the Baltic countries and Russia as the next countries to be entered.
The C&B&I offering, the pipeline of innovations, the training and education efforts, the Nobel Biocare World Tour 2006 conferences as well as patient information campaigns, will form the base for continued growth momentum and will also require continuous investments. In 2006, we expect to create about another 200 new positions.
The Company's exceptionally strong performance in 2005 sets a high base for the current year.
However, we expect to grow revenue in 2006 by approximately 24% in local currencies in a market that is estimated to grow by 18-20%, and to expand the EBIT margin by about 0.5%.
NOBEL BIOCARE HOLDING AG
Rolf Soiron Heliane Canepa Chairman of the Board President & CEO
A media conference in German will be held today 9 February 2006 at 11.00 CET. Location: CoventionPoint at SWX Swiss Exchange, Selnaustrasse 30, Zurich
An investor and analyst conference in English will be held today 9 February 2006 at 13.00 CET. Location: CoventionPoint at SWX Swiss Exchange, Selnaustrasse 30, Zurich
The conference can be accessed (listen-only mode) via Webcast at www.nobelbiocare.com or via telephone conference, using the following dial-in numbers:
The dial-in numbers for the telephone conference are:
+41 91 610 5600 (in Europe) +44 20 7107 0611 (in the U.K.) +46 8 5069 2105 (in Sweden) +1 866 291 4166 (toll free number in the USA)
For more details, see our homepage: www.nobelbiocare.com
The Nobel Biocare 2005 Annual Report in English can be downloaded from www.nobelbiocare.com
Media Release (PDF): http://www.newsbox.ch/public/5616/att/5671_mediareleasepdf.pdf
Nobel Biocare Group - Full Year Report 2005 (PDF): http://www.newsbox.ch/public/5616/att/5668_nobelbiocaregroupfullyearreportpdf.pdf
Financial Reporting Calendar: Interim Report 1, 2006 3 May, 2006 Annual General Meeting 2006 3 May, 2006 Interim Report 2, 2006 10 August, 2006 Interim Report 3, 2006 19 October, 2006
All reports are available in English, German and Swedish
Disclaimer:
This report may contain forward-looking statements including, but not limited to, projections of future performance of materials and products, financial conditions, results of operations and cash flows, containing risks and uncertainties. These statements are subject to change based on unknown risks and other factors that could cause the actual results or performance to differ materially from the statements made herein.
Nobel Biocare is a medical devices group and the world leader in innovative esthetic dental solutions with its brands Branemark System(r), NobelSpeedy(tm), NobelReplace(tm), NobelPerfect(r), NobelDirect(r), Replace(r) Select, (dental implants) and Procera(r) (individualized dental prosthetics). 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 and clinically documented treatment concepts. Nobel Biocare has around 1,650 employees and recorded revenue of EUR 485 million in 2005. The Company 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 31 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.