Stolberger Straße 200
50933 Köln, de
+41 (43) 21142-30
Market stabilization confirmed
Strong profitability and cash flow
- Reported revenue down 6.1% to EUR 581.4 million (CER minus 7.7%); revenues in line with markets
- EMEA (excl. Spain) reports second consecutive quarterly revenue growth
- North America records positive Q4 revenue growth (+7.4%)
- Gross profit margin up to 80.5%; cost savings compensate lower volumes, mix effects
- Operating profit (EBIT) excluding restructuring charges at EUR 141.6 million; margin at 24.4%
- Net profit at EUR 105.8 million; margin up to 18.2%
- New product launches of NobelActive and NobelProcera with continued positive uptake
- Record operating cash flow of EUR 177.8 million; strong balance sheet
- Basic earnings per share of EUR 0.86 (CHF 1.30)
- Dividend proposal CHF 0.55 per share; payout ratio slightly up
Domenico Scala, CEO: "2009 was marked by the farreaching effects of the global economic crisis, which led, for the first time, to a dental implant market decline. Our positive 2009 results have been achieved thanks to concerted early management actions. Despite lower revenues we managed to improve our profitability, generate record cash flow and deliver a strong balance sheet. At the same time, we invested sizeable amounts in our product portfolio, with NobelActive and the enhanced NobelProcera offer being the main beneficiaries. These investments lay the groundwork for future growth. The rollout of NobelProcera is now underway and will be a key priority in 2010. The company is well poised to take advantage of a recovery, early signs of which are emerging in a number of the world's economies."
Focus on priorities and longterm industry trends yield performance and improving momentum
For the full year 2009, Nobel Biocare managed to deliver strong financials in a highly challenging market environment. Revenues at constant exchange rates (CER) declined by 7.7% versus prior year. Owing to favorable foreign currency influences, however, reported revenue growth was only -6.1% at EUR 581.4 million. The fourth quarter reflected a further sequential improvement, thereby representing the first quarter with positive revenue growth (+0.2%) since mid 2008. Profit from operations (EBIT) for the full year was EUR 128.6 million (2008: EUR 132.9 million). Despite lower reported revenues, the company managed to improve its profitability in terms of both gross margin and operating margin (EBIT) at 80.6% and 24.4%, respectively, before restructuring costs. Net profit margin before restructuring was 19.7%, up from 17.7% in 2008. The reported EBIT margin, which includes a restructuring charge of EUR 13.0 million, stood at 22.1%. Net profit as reported was EUR 105.8 million compared to EUR 109.7 million last year. This reflects only a marginal EPS decline of 4.4% versus the prior year - with this being achieved in one of the most difficult years ever for the tooth restoration market, in which total sales declined for the first time in its history.
Nobel Biocare identified the challenge at an early stage and implemented the necessary countermeasures quickly. The results are improved profitability and a record operating cash flow despite lower revenues, and this without neglecting the investments required to enable future growth. Since 2008, Nobel Biocare has invested approximately EUR 200 million in areas such as R&D, the development of Nobel Procera as well as the acquisitions of Alpha-Bio Tec (implants), Medicim (digital dentistry) and BioCad (bar production and NobelProcera software). These investments take into account the key trends of increased digitization in dentistry and the need to offer broader treatment options through new prosthetic solutions and improved treatment concepts. Milestones in 2009 include:
NobelActive(TM) , launched in 2008, continued to attract existing as well as new customers and enjoyed increasing strong acceptance from leading clinicians worldwide. Thanks to its high initial stability, this implant system expands treatment to also include more compromised bone situations. It has the potential to become the preferred implant system for the esthetic zone. In 2009, the product range was further enhanced with new lengths and prosthetic components that have been included in the treatment planning and guided surgery system NobelGuide. To date, almost 300,000 systems have been sold, thereby making NobelActive the most successful product introduction in the company's history.
The major thrust of activities centered on the launch of the new NobelProcera(TM) generation. The NobelProcera CAD/CAM package features the most advanced optical scanner, a new generation of design software, new prosthetic materials and a wide range of innovative products. This improved and expanded technology and product portfolio makes Nobel Biocare the only company to offer a wide choice of full treatment solutions for all indications of tooth restorations. The advanced NobelProcera system sets new standards in CAD/CAM dentistry and affords laboratories and clinicians significant economic advantages. The product introduction and the related training/educational activities continued in the fourth quarter.
The company also initiated a Preferred Partner Program and established the first such partnership with Ivoclar Vivadent, a global leader in prosthetic and restorative materials for dentists and dental laboratories. The agreement with Ivoclar will provide Nobel Biocare with access to highperformance ceramic and acrylic materials as well as complement Nobel Biocare's recent technology and product launches. This partnership also involves joint research and development programs, the sharing of clinical research and studies, educational and training programs, as well as joint commercial activities.
In 2009, Nobel Biocare celebrated ten years of enhanced osseointegration with its proprietary implant surface, TiUnite®. It has been shown that implants with the TiUnite surface provide better stability during the healing phase, which helps to support the treatment modality of immediate function. During its first five years on the market, more than 80 scientific publications documenting TiUnite's preclinical and clinical success have been published. The benefits have been supported further through the publication of sevenyear results of immediately loaded TiUnite implants as well as scientific posters and expert discussions at major industry events.
Strengthening scientific leadership - With a total of more than 40 scientific publications being generated in 2009, Nobel Biocare reinforced its commitment to delivering the most scientifically proven and clinically documented products. In addition, Nobel Biocare pioneered the PI-Brånemark Scientific Symposium in Gothenburg, where over 200 globally renowned medical professionals, researchers and dental experts were invited to debate osseointegration and new treatment modalities.
Management changes - Also in 2009, Nobel Biocare continued to strengthen its organization at all levels and was able to attract highcaliber individuals. In October, the company announced two management changes: William (Bill) Ryan was appointed President & General Manager for North America, and Ernst Zaengerle was appointed Executive Vice President Global Operations. Today, the company announced the appointment of Hans Geiselhöringer as new head of Global Marketing and Products and member of the Executive Committee (EC). He takes over from Robert Gottlander, who will become head of Key Account Management and will remain member of the EC. At the end of December 2009, Nobel Biocare had a worldwide workforce of 2,242 employees.
Regional performance: All key regions with significant sequential growth improvement
In Europe, Middle East and Africa (EMEA), fullyear revenue (CER) declined by 7.4% to EUR 261.1 million (Q4: -1.5%). An unfavorable country mix played a role in this regard. Spain, where Nobel Biocare historically generated the highest share of its EMEA business, was strongly impacted by the economic crisis. In the second half of the year, most markets began to stabilize. Belgium, France, Sweden and Russia reported positive growth for the year, while Italy, Germany and the UK showed a strong improvement over the first half of the year.
In North America, revenue (CER) for the full year decreased by 6.0% to EUR 196.1 million (Q4: +7.4%). In North America, sales were affected by lower patient flow and the postponement of treatments as a result of a weaker economy. Nonetheless, in North America the company reported a sequential improvement in Q4, primarily due to the base effect, which resulted in positive growth for the final quarter of the year.
In the Asia/Pacific region, revenue (CER) for the full year was down 5.1% (Q4: +2.1%) to EUR 114.0 million. In Japan, where growth for the full year was achieved despite an otherwise declining market, Nobel Biocare was able to further strengthen its marketleading position. In Australia, supported by a relatively favorable economic environment, Nobel Biocare grew solidly for the year. In some Southeast Asian distributor markets, lower order volumes versus prioryear levels were observed throughout 2009 and were the main reason for the yearonyear decline.
In Latin America/Rest of the world, revenue (CER) for the full year declined by 46.9% to EUR 10.2 million. This was attributable to a significant streamlining of the company's operations in the region, tighter credit management and a stricter pricing policy. These measures allow the company to improve its business quality and profitability. Stronger revenue performance is not expected for 2010.
Outlook - Due to the elective nature of certain of the company's products and services, revenues can be affected by economic developments in various countries. Based on our estimates, the dental implant market declined by approximately 7% in 2009. Most markets stabilized towards the end of 2009 and early signs of a recovery are emerging. Visibility is still limited and the sustainability of this recovery is all but certain, thus reliable projections are still difficult to make. However, we believe it is possible that the dental implant market may return to growth in 2010. Nobel Biocare continues to focus on strategy execution and will clearly emphasize the NobelProcera rollout during 2010. Having taking the necessary measures to protect the profitability while investing in future growth, we believe the company is well poised to benefit from a future market recovery.
Financials: Strong profitability and record cash flow despite lower revenues
Reported gross profit for the full year 2009 was EUR 467.9 million (2008: EUR 493.6 million), reflecting a gross margin of 80.5% (2008: 79.7%). Disciplined pricing, the realization of significant cost savings and a reduction of product assortment allowed the company to protect its gross profit margin despite lower production volumes and a less favorable product mix following the launch of NobelProcera.
Profit from operations (EBIT) for the full year was EUR 128.6 million, or 3.2% lower than in 2008 (EUR 132.9 million). The EBIT margin excluding restructuring charges improved slightly to 24.4% (2008 excluding exceptionals: 24.1%); the reported EBIT margin improved to 22.1%, up from 21.5%. This was accomplished through cost savings on IT, purchasing, decentralized nonclient related functions, logistics, finance and manufacturing, and despite the increased investments necessary to underpin the NobelProcera launch.
Restructuring - In 2009, charges for restructuring totaled EUR 13.0 million, of which EUR 0.9 million was attributable to cost of goods sold, and EUR 12.1 million to operating expenses (mainly SG&A). The bulk of the restructuring charges related to the restructuring of the company's activities in some Latin American countries.
Currencies - In 2009, foreign currencies exerted a 1.6% positive effect on revenues, 0.3% on the gross profit margin and 1.3% on the EBIT margin. The latter was achieved through further improvement of the currencyhedging program during 2009.
Net financial result for the full year was EUR 8.7 million (2008: EUR 26.5 million). Excluding exceptional currency gains of EUR 46.9 million in 2008 and 26.1 million in 2009, the net financial result has improved from EUR -20.4 million in 2008 to EUR -17.4 million in 2009 - mainly driven by ongoing interest expenses for outstanding liabilities.
Tax - Reported tax for the full year 2009 amounted to EUR 31.5 million (2008: 49.7 million), reflecting a tax rate of 22.9% (2008: 31.2%).
Net profit for the full year was EUR 105.8 million, 3.6% below the 2008 level. Lower sales were almost fully counterbalanced by reduced expenses and a lower tax rate. Consequently, the net profit margin improved to 18.2% (2008: 17.7%).
Cash flow from operating activities for the full year was EUR 177.8 million (2008: EUR 169.0 million). This record result was achieved due to a reduction in working capital as well as lower tax payments.
Cash and cash equivalents amounted to EUR 240.7 million at yearend 2009 and have further improved since end of Q3 2009 (EUR 194.5 million) as well as yearend 2008 (EUR 163.4 million). Net cash stood at EUR 1.9 million, compared with net debt of EUR 44.8 million at the end of Q3 2009 and EUR 65.3 million at the end of 2008. In addition, the Group has significant financial flexibility based on committed credit facilities of EUR 330 million that were established in early 2009.
The Board of Directors' (BoD) proposals to the Annual General Meeting (AGM), to be held on 25 March 2010 in Zurich, Switzerland, in addition to the approval of the annual accounts, include:
Dividend - The BoD approved an unchanged dividend proposal of CHF 0.55 per registered share. The payment date for the dividend, if approved by the Annual General Meeting, is set for 1 April 2010 (exdividend date: 25 March 2010; record date: 31 March 2010).
Furthermore, the Board proposes to the AGM the election of the following new Board members:
Daniela Bosshardt-Hengartner, Dr Raymund Breu, Heino von Prondzynski and Dr Oern Stuge. The Board of Directors envisaged to elect Heino von Prondzyski as Chairman of the Board of Directors. Dr Rolf Soiron and Jane Royston will not stand for reelection.
The Board of Directors has decided that the Remuneration report 2009 for the group will for the first time be subject to a consultative vote of the shareholders.
This media release contains forwardlooking 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 forwardlooking 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 forwardlooking 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 forwardlooking 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 forwardlooking statements. Nobel Biocare disclaims any intention or obligation to update these forwardlooking statements.
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