-- Operating and net profits rise 23% and 28% respectively
-- Important distribution channels acquired and key technologies
launched
-- More than 200 new jobs created
-- Proposed ordinary dividend increase of 25%
-- 2005 audited Annual Report available at
www.straumann.com/annualreport
Key figures (click on media release for tables)
(in CHF million) 2005 2004
Group Sales 509.6 420.3
Growth in % 21.2 22.2
Growth in local currencies in % 20.7 23.6
Operating profit (EBIT) (a) 155.9 127.0
Margin in % 30.6 30.2
Growth in % 22.8 30.2
Net profit 128.2 100.5
Margin in % 25.2 23.9
Growth in % 27.5 24.2
Earnings per share (in CHF) 8.22 6.44
Growth in % 27.6 24.2
Dividend per share (b) (in CHF) 2.50 2.00
Growth in % 25.0 29.0
Number of employees 1,342 1,104
Growth in % 21.6 22.3
(a) 2004 reclassified due to the reallocation of exchange result
related to operations, from financial result to other operating
expenses.
(b) Dividend 2005: Subject to shareholder approval.
BASEL, Switzerland, Feb. 16, 2006 (PRIMEZONE) -- In 2005, the Straumann Group's (Other OTC:SAUHF) full-year sales surpassed half a billion Swiss francs (CHF) for the first time in the company's history. Straumann delivered full-year sales growth of 21% both in local currencies and in Swiss francs as revenues reached CHF 510 million, ahead of the Group's forecast. Operating profit rose 23% to CHF 156 million, contributing to a 28% rise in net profit, which topped CHF 128 million. Shareholder return increased 30%, and a dividend of CHF 2.50 per share is proposed by the Board of Directors, representing an ordinary dividend increase of 25%.
Operational and strategic achievements
In 2005, Straumann implemented an unprecedented number of important operational and strategic initiatives to expand and consolidate the Group's organization and to launch new product innovations. Each of these influenced the operating performance to a certain degree.
Distribution channels taken over
In 2005, Straumann integrated BIO srl in Italy (acquired at the end of 2004), and established fully-fledged subsidiaries in Australia and Mexico. The Group gained direct access to its Korean distributor and took steps towards acquiring its Danish distributor DenTech. The acquisition was completed at the beginning of 2006. Each of these initiatives is integral to Straumann's strategy of increasing direct access to its customers.
Infrastructure enhanced
In terms of site improvements, the Group completed the relocation of its entire headquarters to Basel, which was a major undertaking at the outset of 2005. As a result, the previous site in Waldenburg became vacant and Straumann succeeded in closing long-term leasing agreements for the property towards the end of the year.
The continuing increase in demand for dental implants made it necessary to expand capacity considerably at the Group's main production site, in Villeret. Similarly, the growing use of oral tissue regeneration products necessitated a major upgrade of the Biologics production unit in Malmo.
Apart from these, there were several other infrastructure initiatives, such as the relocation of the country organization in Austria. However, the Group's most ambitious achievement in this respect in 2005 was the transfer of its North American headquarters to a new site in Andover, with state-of-the art education and manufacturing centers. In mid-year the company inaugurated its first implant component production line outside Switzerland. Both the Andover and Malmo production facilities gained ISO certifications in 2005.
Innovation and new launches
The Group maintained its commitment to purposeful, scientifically proven innovation in 2005, increasing the number of clinical studies and participating centers to support and position new products. With regard to the latter, several significant milestones were passed, including the introductions of SLActive, CARES Titanium and Ceramic, and Straumann Bone Ceramic. Considerable marketing efforts including a strong presence at major congresses and meetings were devoted to these and other products.
Straumann reported that the roll-out of its next generation implant surface technology, SLActive, is proceeding on track and that the product has been very well received. SLActive is now available in Europe and in initial markets in Asia/Pacific. Regulatory approvals are still pending in Japan and Korea and are not expected before mid 2007. SLActive has been cleared by the FDA in the U.S., and will be launched in North America next month.
Increased global workforce and personnel changes
To absorb and sustain the current level of growth, Straumann continued to invest in recruiting and training new talent. More than 200 new jobs were created worldwide. These and the addition of the BIO srl team brought Straumann's global workforce to 1,342 by year-end.
The Group also announced today that Russell Olsen, Executive Vice President Sales North America has decided to leave the company. Mr. Olsen, who has been with Straumann since 2003, has overseen the North American business since early 2004. The Group is particularly indebted to him for the energy and expertise he devoted to the recent build-up of the U.S. organization, culminating in the establishment of the new regional headquarters in Andover. Following Russell Olsen's departure in March, President and CEO Gilbert Achermann will oversee the North American Business until a successor is appointed.
Sales expansion
The Group's overall performance was driven by solid top-line growth, which accelerated in the latter part of the year. Sales expansion was due predominantly to organic growth, which contributed 16% points of overall sales growth. The acquisition of the Italian distribution organization at the beginning of the year and the transfer of distribution in Australia to Straumann in mid-year collectively contributed 5% points, bringing Group sales growth in l.c. to just under 21%. Currency developments, which were influenced mainly by the U.S. Dollar and the Euro, amounted to less than 1% point.
Strong sales growth across all regions
Europe
European sales accelerated in the fourth quarter, benefiting partly from the softer comparative period in 2004. Fourth-quarter regional sales climbed 24% (25% in CHF), contributing to a full-year rise of 20% (21% in CHF). 2005 sales thus reached CHF 316 million, supported by the contribution of the new Italian subsidiary as well as the market recovery in Germany, Straumann's biggest single market. There, sales growth returned to normal in the course of the year with the result that full-year revenues grew in the mid-teens, clearly ahead of the German market. Swedish sales were softer than in the previous year, reflecting recent changes surrounding reimbursement. Elsewhere in Europe performances developed as expected. European sales contributed 62% of total Group sales.
North America
North American sales grew 18% throughout the second half. 2005 full-year sales also rose 18% (19% in CHF) to reach CHF 131 million, corresponding to 26% of total Group sales. On the basis of available figures, Straumann estimates that it continued to grow slightly faster than the U.S. market but not at its target level. This was because, in addition to mastering the challenge of relocating, its U.S. team has recruited and trained many new staff members who are yet to reach their full performance level. Having upgraded its organization and infrastructure, the Group is convinced that the fundamentals are in place to take it into the next phase of growth.
Asia/Pacific and RoW
The remarkable fourth-quarter sales rise of 47% (CHF) in the Asia/Pacific region can be attributed to a modest comparative baseline in 2004 and advance ordering in Asia ahead of Spring price increases. Broad quarterly fluctuations are a characteristic of the distribution model that currently predominates in Asia/Pacific, which generates 10% of Group sales. Over the full-year, regional sales grew 26% to CHF 51 million, driven by good overall growth in Japan and boosted by strong increases in Australia/New Zealand and Southeast Asia.
Elsewhere, in the rest of the world, full-year sales climbed 54% to CHF 11 million or 2% of Group revenues.
Operating profit (EBIT) rises 23%
The strategic expansion of production and our innovative product mix squeezed the gross profit margin. However, the impact was for the most part absorbed by an under-proportionate increase in operating costs. As a result, operating profit (EBIT) rose 23% to CHF 156 million and the EBIT margin expanded slightly to 31%.
The cost of goods sold rose from 18% to 19% of sales with the result that the full-year gross profit margin eased to 81%. This was due primarily to the start-up costs of the new North American production site in Andover and the higher production costs of Straumann's innovative SLActive surface.
Operating costs, excluding other income, decreased by 1% point to 51% of sales, partly due to a reduction in amortization charges on goodwill of less than 1% point. Selling costs and research and development decreased to 37% and 5% of Group sales respectively, while general and administrative costs remained at 8% of sales.
Net profit increases 28%
The development of the Swiss franc against other currencies contributed to a positive financial result. This together with the overall improved operating result and efficient tax management led to a 28% increase in net profit to CHF 128 million. As a result, the net profit margin improved by 1% point to 25% of sales. Earnings per share consequently increased to CHF 8.22.
High levels of investments
Operating cash flow reached CHF 144 million, leading to a continued strong cash-flow margin of 28%. Investments almost doubled to CHF 121 million, reflecting our significant investments in the aforementioned projects and the expansion of our subsidiary network.
The free cash flow of CHF 23 million together with other inflow from financing activities and part of the previous year's cash position were used to pay a dividend of CHF 31 million and to repay short-term loans of CHF 14 million. As a result, liquidity amounted to CHF 94 million at year-end.
Total assets increased by CHF 129 million to CHF 533 million, to a great extent based on the above-mentioned investment activities and the sales expansion, while return on assets (ROA) was maintained at 27%. Net working capital increased to CHF 36 million or 5% of sales.
With the equity ratio increasing slightly to 79%, return on equity (ROE) remained unchanged at 35%, while return on capital employed (ROCE) decreased slightly to 43% due to the operational expansion. Based on a weighted average cost of capital of 9%, Straumann achieved an economic profit of CHF 93 million, an increase of CHF 13 million over the prior year.
30% dividend on net profit
On the basis of the good full-year performance, the Board of Directors will propose an ordinary dividend of CHF 2.50 per share to the General Meeting. This corresponds to a total dividend of CHF 39 million and a payout ratio of 30%.
Outlook
In 2006, barring unforeseen circumstances, Straumann anticipates continued growth slightly above the market, coupled with stable profitability margins, comparable to 2005. Taking into account the significant step-up in fixed costs over the past few years, the higher depreciation charges, the costs of launching multiple innovative products and services with initially lower contribution margins, and the costs of integrating newly-secured distribution channels, the Group considers this to be an ambitious goal for 2006.
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 info@straumann.com Homepage: www.straumann.com
Concerning forward-looking statements
This media release contains certain "forward-looking statements", which can be identified by the use of terminology such as "proposal", "forecast", "strategy", "long-term", "on track", "pending", "expected", "sustain", "will", "outlook", "anticipates", "continued", 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 Straumann Group ("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, the Group's ability to realize expansion projects or projects to establish subsidiaries in a timely manner, and the Group's ability to recruit and retain key employees. 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 release. 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 U.S. and dental tissue regeneration products in Sweden. Straumann also offers comprehensive training and services to the dental profession worldwide. Altogether, Straumann employs approximately 1,340 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's 2005 financial results conference will take place at 09.30 Swiss time in Basel today. The event will be webcast live on the Internet and a playback will be available.
Webcast, presentation slides and further information are available at www.straumann.com
The 2005 Annual Report is available at www.straumann.com/annualreport
Key reporting dates in 2006 24 March 2006 Annual General Meeting, Straumann Holding AG 26 April 2006 Q1 sales 11 August 2006 Half-year report; Analysts and media conference 25 October 2006 Q3 and 9M sales
Details of Straumann roadshows and other events for investors are published on www.straumann.com.
Attachment: http://www.newsbox.ch/public/5705/d12834o5705a5748.jpeg/www.newsbox.ch/public/5705/att/5748_mediarelease.pdf
Statement: Media release