Nobel Biocare Reports Unexpected Third-Quarter Loss on Europe, Franc Hedge
Nobel Biocare Holding AG (NOBN), the world’s second-biggest dental implant maker, reported an unexpected third-quarter loss on declining sales in Europe and costs from hedging against strength in the Swiss franc.
The net loss was 2.2 million euros ($3 million), or 2 cents a share, compared with a loss of 17.8 million euros, or 14 cents a share, a year earlier, the Glattbrugg, Switzerland-based company said in a statement today. That missed the average estimate of 10 analysts surveyed by Bloomberg for net income of 3.5 million euros.
Nobel Biocare is attempting to win back market share lost to larger rival Straumann Holding AG (STMN) after a reorganization that has been complicated by a succession of three chief executive officers since 2007. Costs related to the introduction of new products weighed on profit in the year-earlier period.
“Much work remains to be done, but we are executing according to plan and are on track,” CEO Richard Laube said in the statement.
Third-quarter revenue decreased to 128.2 million euros from 131.7 million euros, compared with the 125.7 million-euro average estimate of 15 analysts.
Revenue in Europe, the Middle East and Africa dropped 5.4 percent in the quarter, hurt by “increasing economic uncertainty,” the company said. Europe will remain weak, though the company has seen a good response to new products there,Chief Financial Officer Dirk Kirsten said during a conference call with reporters today. Conditions in Southern Europe are a question mark, he said.
The company had a one-time cost of 11.6 million euros from hedges against the strengthening franc. The hedges lost value because of the Swiss National Bank’s Sept. 6 decision to impose a ceiling for the franc against the euro, the company said.
The hedge was made just days before the bank’s decision, Kirsten said. The cost was “exceptional” and won’t be repeated in the fourth quarter, he said.
The results were “a mixed bag,” with sales being positive and developments in Europe negative, Sibylle Bischofberger Frick, an analyst with Zuercher Kantonalbank, said in an interview today. She expected hedging costs to be higher.
Nobel Biocare repeated it expects that 2011 revenue and profit margin to match last year’s figure, excluding currency effects and exceptional expenses. The fourth quarter has typically higher sales and profit, Kirsten said.
The dental market should grow in the low-to-mid-single digit percentage range this year, Nobel and rival Straumann have said.
Nobel Biocare rose 8.4 percent to 11.26 francs at 9:05 a.m. in Zurich. Before today, the stock had fallen 40 percent this year including reinvested dividends.
As for a possible sale of the company, Kirsten said Nobel Biocare isn’t in talks with anyone. Nobel Biocare rose the most in nine years in Zurich trading on Oct. 24 after NZZ am Sonntag reported that EQT Partners AB and Bain Capital LLC were considering buying the Swiss dental-implant maker.
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