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Straumann Falls on Europe Dental Implant Slowdown: Zurich Mover

Feb. 21 (Bloomberg) -- - Straumann Holding AG, the world’s biggest maker of dental implants, fell the most in three months after full-year profit missed analysts’ estimates and the company said demand in Europe will probably remain sluggish.

Straumann shares fell as much as 3.7 percent, the biggest intraday drop since Nov. 15, and was trading at that level at 10:15 a.m. in Zurich, giving a market value of 1.9 billion francs ($2.1 billion).

Net income fell 49 percent to 36.4 million francs in 2012, missing the 59.7 million-franc average of 12 analysts’ estimates compiled by Bloomberg. The company booked an impairment charge of 21 million francs related to the regenerative business, which sells products to spur bone growth, and a one-time charge of 18 million francs for restructuring.

“We don’t currently see a strong enough European recovery to push Straumann to substantial overall revenue growth in the near-term,” Lisa Clive, an analyst with Sanford C. Bernstein Ltd., said in a note today, adding the results were “very weak.”

The company announced the departure of Chief Executive Officer Beat Spalinger Jan. 4 after the company’s shares fell 56 percent under his 2 1/2 years of leadership. Rival Nobel Biocare Holding AG reported a decline in sales for the fourth quarter and said it expects the market to remain challenging this year.

Margin Pressure

“We’re not showing growth and there’s pressure on the margins,” Gilbert Achermann, Straumann’s chairman and interim CEO, said in an interview. “We need to do things more effectively and efficiently and that means looking continually at costs.”

Straumann introduced a cost-cutting plan along with third-quarter earnings Oct. 30 that includes eliminating 150 jobs by early 2013. A more detailed outlook is expected when Marco Gadola takes over as CEO in April. Gadola was chief financial officer and head of operations at Straumann between 2006 and 2008.

Fourth-quarter sales fell 4.4 percent to 167.8 million francs, the Basel, Switzerland-based company said today in a statement. The figure was below the 173.5 million-franc average estimate of 11 analysts surveyed by Bloomberg. Straumann proposed a dividend for 2012 of 3.75 francs, unchanged from a year earlier. Straumann only breaks out fourth-quarter revenue.

Missed Target

The full-year margin for earnings before interest and taxes was 14.5 percent, excluding one-time items. Straumann had forecast an Ebit margin on the same level as the first half of the year at 14.7 percent, excluding restructuring costs.

The company said Oct. 18 it would no longer distribute Align Technology Inc.’s iTero oral scanners because it didn’t want to be in the hardware-distribution business. The scanners are used to design implants.

For 2013, Straumann said it expects to face “continuing constraints” in Europe while North America, China and Brazil should perform well. The company said it aims to deliver improved profitability this year even if the market remains sluggish and targets a “return to solid growth and a significantly higher operating margin” in the mid-term.

The company may introduce its less-expensive Brazilian brand Neodent faster than planned to other parts of South America and southern Europe, Achermann said in the interview.

To contact the reporter on this story: Allison Connolly in Frankfurt at aconnolly4@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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