Interim report 3, 2012
ZURICH, SWITZERLAND - 8 NOVEMBER 2012
Nobel Biocare reports improved profits in a declining market
* Revenue for the first nine months was up 3.1% to EUR 427.5 million versus
prior year and down 2.4% at CER
* Revenue in Q3 was up 2.2% to EUR 131.0 million versus prior year and down
5.1% at CER owing to further revenue declines in Japan from Q2 to Q3
* Revenue excluding Japan was flat in Q3 (-0.1% at CER) tracing to sequential
quarter to quarter improvements in Implant system revenue, offsetting declines
in individualized copings and small-unit bridges
* Operating profit (EBIT) increased 10.8% to EUR 54.4 million (9M 2011 EUR
* Costs were strictly managed in line with revenue development and expenses
were shifted from administration to R&D and selling and marketing
* Net profit was up 30.9% to EUR 34.7 million (9M 2011: EUR 26.5 million)
Table 1: Selected key figures in EUR million
Q3 2012 Q3 2011 Variance 9M 2012 9M 2011 Variance
Revenue 131.0 128.2 2.2% 427.5 414.6 3.1%
Variance at constant -5.1% 0.2% -2.4% -0.9%
exchange rates (CER)
Gross profit 99.1 96.1 3.1% 322.7 315.3 2.4%
Gross margin 75.7% 75.0% 75.5% 76.1%
Operating profit 11.9 11.6 3.0% 54.4 49.1 10.8%
EBIT margin 9.1% 9.0% 12.7% 11.8%
Net financial result -1.9 -13.2 -7.2 -12.3
Profit before tax 10.0 -1.6 47.2 36.8 28.4%
Tax -3.0 -0.6 -12.5 -10.3
Net profit 7.0 -2.2 34.7 26.5 30.9%
Profit margin 5.3% -1.8% 8.1% 6.4%
Basic earnings per 0.06 -0.02 0.28 0.22 30.6%
Net cash from 31.9 34.0 66.4 50.9
Richard Laube, CEO: "For the first nine months we see clear evidence that our
strategy is working. We are performing on par with our peers for the first
time in four years. Our implant systems revenue is growing quarter to quarter,
excluding Japan, and our individualized components revenue has been redirected
toward implant-based precision components where we have a competitive
advantage. For the first time in 5 years operating expenses in relation to
sales are declining through improvement programs and we have invested in
innovation by increasing R&D expenses by over 15%. We have an exciting
pipeline for 2013, and we are adding meaningful value to our customers'
practice. Simultaneously, we are becoming systematically more efficient and
leaner in conducting our business. We are laying the foundation to perform in
all market conditions, which we are confident, will eventually improve."
Business performance update
Table 2: Revenue by region
in EUR Q3 Q3 * Variance Variance 9M 9M * Variance Variance
million 2012 2011 (CER) 2012 2011 (CER)
Europe, Middle East and 46.8 48.0 -2.5% -3.7% 168.0 173.7 -3.3% -3.9%
Share of total revenue 36% 37% 39% 42%
Americas 54.2 48.2 12.4% 0.3% 167.5 151.9 10.3% 1.5%
Share of total revenue 41% 38% 39% 37%
Asia/Pacific 30.0 32.0 -6.2% -15.5% 92.0 89.0 3.4% -6.1%
Share of total revenue 23% 25% 22% 21%
Total 131.0 128.2 2.2% -5.1% 427.5 414.6 3.1% -2.4%
A new segment "Americas", which reflects realigned management structures,
has been reported since 1 January 2012. As previously announced, the revenue
* of LatAm/RoW has now been included into other regions, mainly North America.
For better comparison, prior year figures have been reclassified to reflect
the new regional segment definition.
In Europe, Middle East and Africa (EMEA), revenue (CER) in the nine months
declined by 3.9% to EUR 168.0 million (Q3 2012: -3.7% CER). Revenue remained
weak throughout the year. The trading pattern in this region was consistent
with market-driven declines in Sweden, Spain, Italy and persistent challenges
in the Netherlands and Germany. France, Russia, both benefiting from the Nobel
Biocare symposia, and the UK continued to report healthy growth.
In the Americas, revenue (CER) in the first nine months of 2012 increased by
1.5% to EUR 167.5 million (Q3 2012: 0.3%). Despite a sequentially improving
performance in Canada, overall growth in North America slowed following a
softening market and a consequently more competitive landscape. Growth in the
company's direct Latin American markets continued at a double digit rate
compensating the decline in the distributor markets.
In the Asia/Pacific region, revenue (CER) in the nine months was down 6.1% to
EUR 92.0 million (Q3 2012: -15.5%). This was driven by a 13.8% decline in
Japan in the first nine months (Q3: -29.6%) mainly due to adverse media
reporting on implant treatments. Japan generates about 60% of this region's
revenue in this market. APAC excluding Japan was up 7.4% (Q3 2012: +15.8%)
driven by continued strong performance in China, India and improving trends in
Australia and Taiwan.
As previously reported, patient visits for implant treatment have slowed in
Japan by about 20% as a result of adverse media coverage on implant treatments
which reached its peak in Q2. Nobel Biocare is the leader in Japan and has the
majority share of restorations for edentulous patients. These were heavily
affected due to the adverse coverage and the expense of treatment.
Subsequently, the Individualized components for edentulous treatments declined
sharply in Q3. The media coverage is diminishing but short term patient flow
Alpha-Bio Tec (ABT), which operates independently and separately in targeting
customer groups with larger price sensitivity and simpler product and
solutions needs, continued to grow at double-digit rates through organic
growth and expansion into new markets.
Implant systems were down year-to-date 1.2% (CER) while individualized
declined 8.0% (CER). Growth momentum in implant systems picked up in Q3
excluding Japan. NobelActive continued to grow at unchanged double-digit rates
while revenue decline for NobelReplace slowed. Revenue development from the
other implant brands and standardized abutments followed recent market trends.
Regarding Individualized products growth in high-end implant-retained
solutions was offset by a strong decline in traditional tooth-based components
and scanners - a pattern observed throughout the year.
Financial performance update
Gross profit in the reporting period was EUR 322.7 million (9M 2011: EUR 315.3
million), reflecting a gross margin of 75.5% slightly down from the previous
year (9M 2011: 76.1%). A positive impact from business mix (implants versus
individualized) and currencies was offset by an unfavorable product mix and
value-added initiatives for customers related to implants. The gross margin in
NobelProcera was almost unchanged from a year ago.
Operating expenses in the first nine months were EUR 268.3 million (9M 2011:
EUR 266.2 million or EUR 262.3 excluding exceptionals). An unfavorable
currency impact and planned investments to improve competitiveness and
customer proximity were largely compensated by increasing benefits from
ongoing systematic cost management processes. Overall, operating expenses were
62.8% of sales compared with 64.2%, or 63.3% excluding exceptionals, one year
Operating profit (EBIT) for the nine months of the year was EUR 54.4 million
(9M 2011: EUR 49.1 million or EUR 53.3 million excluding exceptionals),
reflecting an EBIT margin of 12.7% (9M 2011: 11.8% or 12.9%, respectively).
Besides favorable currency translation impacts, proactive cost management in
all areas kept the EBIT margin in line with the objective for the full year.
Currencies - The impact from currencies was favorable on revenue (5.5 pp), the
gross margin (0.2 pp) and the EBIT margin (1.1 pp), as mainly the US dollar
and the Japanese yen strengthened against the EUR.
The net financial result for the reporting period was EUR -7.2 million (9M
2011: EUR -12.3 million). A reduction of interest expenses and a favorable
hedging result drove this improvement.
Taxes - Tax expenses in the first nine months amounted to EUR 12.5 million
versus EUR 10.3 million a year ago. Based on the revised full-year profit
expectations, this reflects a base tax rate of 26.5%.
Net profit for the first nine months was EUR 34.7 million (9M 2011: EUR 26.5
million), reflecting a slightly higher net profit margin of 8.1% (9M 2011:
6.4%). This improvement was attributable to both higher operating profit and
the net financial result.
Cash flow from operating activities for the first nine months totaled EUR 66.4
million (9M 2011: EUR 50.9 million). This higher cash flow was primarily due
to exceptional taxes paid last year. Cash & cash equivalents at the end of
September 2012 were at EUR 124.2 million, compared with EUR 188.7 million a
year ago, prior to the refinancing of the maturing convertible bond. Net cash
amounted to EUR 10.5 million compared with net debt position of EUR 83.3
million a year ago.
Strategy progress update
Nobel Biocare's strategy is guided by the company mission "Designing for
Life". This aims to help customers treat more patients better for improved
quality of life with superior products and solutions designed to last the life
of the patient. This mission is realized and business performance is achieved
through four strategic pillars:
Innovative products and solutions - The new implant launches, NobelReplace
Platform Shift (PS), NobelReplace Conical Connection (CC) and NobelActive 3.0
have been well executed and are on track. NobelReplace CC, in particular, is
attracting new users. The recently launched NobelClinician treatment planning
software, also uniquely available on Mac OS®, is improving treatment safety
and gaining new subscribers. This tool has sold disproportionally well in
Japan since the media events. The new drill-motor, OsseoCareTMPro, operated by
a uniquely programmed iPad® has received excellent customer feedback and
shipments began in October. OsseoCareTMPro represents another innovation,
aiding treatment workflow and patient safety through the use of digital
technology. Lastly, the new NobelProcera Scan and Design Center began initial
beta testing in early October and will offer customers a convenient way to
access precision individualized components needed to treat edentulous
patients. Pipeline projects scheduled for launch in 2013 are on track.
Customer value add - The Sales Academy sales force training has been rolled
out globally since the beginning of this year, significantly increasing and
improving sales force training in time and quality. Additional sales
representatives have been added in markets where the company is growing such
as the US, China and Brazil while reducing and reallocating resources from
European markets in decline. The new online store went live in the US in
August achieving early increases in order count and value. Further market
rollout is on track for 2013.
Training and education - The Company experienced strong attendance and
interest in its symposia and forums, with over 500 customers attending the
Toronto symposium in October and over a 1,000 customers attending the
symposium in Rimini, Italy. 400 participants followed the successful corporate
forum at the EAO in Copenhagen. The local T&E programs continue to take shape
as our smaller more hands-on approach is helping customers to improve their
quality of treatment care and safety.
Operating efficiency and effectiveness - The continuous improvement programs
are showing clear signs of progress as Nobel Biocare is systematically
reshaping into a fitter performance oriented organization. The objective is
continuous improvement on the operational expense to revenue ratio, while
simultaneously reallocating resources to the three growth drivers above.
Headcount has been redeployed to R&D, sales and production, where volume has
Executive Committee update - Effective 1 January 2013, Mr. Walter Ritter,
currently Global Head of Human Resources, will be appointed to the Nobel
Biocare Executive Committee as Senior Vice President Global Human Resources.
This appointment underscores Nobel Biocare's deep commitment to our people and
team development and continual improvement of the organization's effectiveness
Based on the first nine months Nobel Biocare anticipates the market to decline
modestly for the full year. Barring any unforeseen events, in particular a
further deterioration in Japan, Nobel Biocare foresees decline of its revenue
at CER in line with the market of modest single-digit percentage. The
operating profit (EBIT) for the full year is expected to be about EUR 67 to 70
Nobel Biocare (NOBN, SIX Swiss Exchange) is a world leader in innovative
restorative and esthetic dental solutions. As a complete solutions provider,
Nobel Biocare offers the most comprehensive range of solutions from tooth to
root, for single tooth to fully edentulous indications. The solutions
portfolio covers dental implants (including the key brands NobelActiveTM,
Brånemark System® and NobelReplace®, individualized prosthetics and equipment
(NobelProceraTM guided surgery solutions and biomaterials). Nobel Biocare has
approximately 2'500 employees and recorded revenue of EUR 569.2 million in
2011. The company is headquartered in Zurich, Switzerland. Production takes
place at seven sites located in Canada, Israel, Japan, Sweden, and the US.
Nobel Biocare has 34 direct sales organizations.
Further information is available from:
Nicolas Weidmann Süha Demokan
Corporate Communications & Global Investor Relations
Tel: +41 43 211 42 80, +41 79 372 29 81 Tel: +41 43 211 42 30, +41 79 430 81
The complete Interim Report 3, 2012 is available in English, while an abridged
version of the report is available in German. Both documents can be downloaded
from the Nobel Biocare website at
Conference call for investors, analysts and media
A telephone conference for investors, analysts and media will be held today at
8.30 a.m. CET.
To ensure timely participation, please call approximately 5-10 minutes prior
to the time indicated above.
Dial-in numbers for the call are:
+41 (0)91 610 56 00 Continental Europe
+44 (0)203 059 58 62 UK
+1 (1) 631 570 56 13 USA (new number)
For additional local dial-in numbers, please see the Investors section of our
A recording of the call will be available afterward on the website.
Financial reporting calendar:
Full Year Report 2012 19 February 2013
Annual General Meeting 28 March 2013
Interim Report 1, 2013 25 April 2013
Interim Report 2, 2013 22 August 2013
Interim Report 3, 2013 7 November 2013
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.
Interim Report 3, 2012 (PDF)
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