.
In the fourth quarter of 2022, revenue increased by 9.6% to CHF 592 million, making it the Group’s strongest quarter in absolute figures.
Guillaume Daniellot, Chief Executive Officer, said: “2022 was a year of many uncertainties but with our strong teams and innovative solutions, the Group was able to deliver a strong performance. We made great progress on all strategic dimensions, were able to generate double-digit organic growth and impacted 4.4 million smiles globally, improving access to treatment. Continuously working on our culture, we achieved an employee engagement score of 81 in 2022 and set a target to achieve net zero emissions by 2040. While some macroeconomic challenges may persist in 2023, we remain positive and will continue to invest in our growth and transformation. Therefore, in 2023 we expect organic revenue growth to be in the high single-digit percentage range and profitability at around 25% including growth investments.”
STRATEGIC HIGHLIGHTS
Implantology and digital solutions with a strong year and important milestones
In 2022, the Group continued to invest in immediacy and edentulous solutions. This included expanding Straumann BLX and TLX in the premium segment into new countries, further positioning Smile in a Box and launching Anthogyr Axiom X3 and Neodent Zi in the challenger segment. The Neodent Zi ceramic implant strengthens our position in the growing esthetics segment and presents a viable alternative to titanium.
Throughout 2022, the Group gained market share through new customer acquisitions with both premium and challenger brands by expanding geographically. The Group estimates that its market share in implantology increased from approximately 29% in 2021 to around 30% in 2022.
Built a strong foundation to become a leading digitally-powered oral care company
The Group is constantly advancing its digital transformation with the aim to improve the user experience and become a leading digitally-powered oral care company. This includes hardware, software and connectivity solutions. One of the highlights was the launch of Straumann AXS in North America – a new online customer platform bringing all Group solutions under one roof. Additionally, the Group entered a partnership with SmileCloud, a digital smile design and collaboration platform developed by dentists for dental professionals. Another important milestone was the Virtuo Vivo software update which significantly increased the performance and contributed to a successful relaunch of Straumann’s intraoral scanner in 2022. The success of the relaunch also highlights the need for digital dentistry in all regions.
Strengthening our offering to become a leader in orthodontics has been a major focus
In 2022 ClearCorrect continued to expand geographically, received approval in China, built a manufacturing site and treatment planning team in Beijing, and enhanced its treatment planning capabilities globally. A series of new software have been launched to improve clinical features, helping clinicians treat more complex cases and have more control over their treatment plans.
ClearCorrect launched three major versions of the ClearPilot treatment software and introduced Collaborator 3.0 and Clinical Preferences in the Doctor Portal, making it easier for doctors to collaborate on cases. Additionally, ClearCorrect introduced new clinical features, such as anterior bite ramps and cutouts for elastics, providing clinicians with greater control over their cases. To further build medical expertise in orthodontics, the Group established a global clinical advisory board in 2022 and started to release a series of new scientific studies demonstrating the benefits of our aligner material and design.
In addition, ClearCorrect partnered with major intraoral scanner players to develop new direct integrations with scanners such as 3Shape TRIOS, Medit, and Virtuo Vivo. These releases were important steps toward addressing dentists’ and orthodontists’ needs for efficiency in their daily work.
DrSmile becomes the Group’s direct-to-consumer marketing aligner brand in Europe
In 2022, DrSmile gained further market share in Europe and acquired PlusDental. The Group decided to build its consumer presence for the clear aligner business in Europe exclusively under the DrSmile brand. As a result, the Group combined its capabilities in several areas, particularly medical expertise in the orthodontics space, to ensure high-quality care can be offered to health consumers. The new clinical advisory board will add outside expertise as the brand continues to grow.
Strong culture and major progress in advancing the Group’s sustainability framework
The Group continued to work on its culture, achieving an employee engagement score of 81. In the survey, 76% of employees said they have good opportunities to learn and grow. In 2022, 39% of leadership positions were held by females. The Group helped to create 4.4 million smiles and maintained 35% of its educational activities in low- and middle-income countries. The Group increased the usage of renewable electricity to 80% and set the goal to achieve net zero emissions by 2040.
Significantly higher investments in growth with CHF 195 million
To support future growth, the Group invests in building capacities for the core business and its transformation. This year the site in Villeret, Switzerland expanded by doubling the floor space, increasing capacity and making room for future growth. In Curitiba, additional CNC machine lines were added for implant production, clear aligner production was expanded, and a new resin production line was established. Ongoing expansion projects such as the China Campus and the Group Technology and Innovation Center in Arlesheim, Switzerland are progressing well.
Additionally, the Group invested in further training its employees and hiring new people who also bring skills that are important for supporting growth and contributing to its digital transformation. The Group’s global workforce increased to more than 10 400 employees.
REGIONAL PERFORMANCES IN THE FOURTH QUARTER
EMEA region passes one billion Swiss Franc mark
Europe, Middle East and Africa delivered revenue of CHF 271.7 million, with organic growth of 13.7%. Germany, France and Spain were the leading markets, while emerging markets strongly contributed to growth. The orthodontics business showed good growth throughout 2022. With the relaunch of Virtuo Vivo, the Straumann intraoral scanner business grew rapidly. In addition, the Group’s DSO business in this region picked up momentum in 2022.
North America region shows solid growth
North America grew 9.4% organically in revenue in the fourth quarter, with CHF 172.1 million. The performance was driven by premium implantology, the Neodent challenger brand which grew very strongly and supported by the clear aligner business. Digital solutions delivered the highest revenue growth in the fourth quarter.
Asia Pacific continued geographical expansion while facing headwinds in China
Asia Pacific posted CHF 102.8 million in revenue, which represents a decline of 2.9% in organic growth in the fourth quarter. For the first time, the Asia Pacific region registers a negative trend due to China. This was two-fold as on the one hand, Covid-19 had a strong impact in China, especially in the fourth quarter and on the other hand the volume based procurement (VPB) process in China delayed treatments. In the first two weeks of 2023, the VBP has been finalized and the Group’s submission was accepted. All other countries in Asia Pacific grew significantly, in particular, Australia and New Zealand were the region’s biggest growth drivers.
Latin America records double-digit growth in a difficult environment
Latin America (LATAM) was the fastest-growing region, with organic growth of 18.9%, accounting for CHF 45.3 million in revenues. Brazil remains the biggest market in LATAM and had strong growth, though other territories in the region grew faster. Neodent continues with its strong presence in LATAM together with the clear aligner brand ClearCorrect, where increased levels of brand recognition are driving customer acquisition. The Virtuo Vivo intraoral scanner shows strong growth in Brazil and other LATAM countries.
OPERATIONS AND FINANCES
To facilitate a like-for-like comparison, the Group presents ‘core’ results in addition to the results reported under IFRS. In 2022, the following effects (after tax) were defined as non-core items:
Core gross profit stable at 76% despite raw material cost surge
Continued strong volume growth in all businesses allowed core gross profit to increase by CHF 216 million to CHF 1.76 billion. High utilization rates in our production facility combined with continued efficiency improvements to minimize cost increases resulted in a stable core gross profit margin of 76% with only a slight decrease of 50 basis points versus the prior year.
Core EBIT margin at 26%
Core EBIT increased by CHF 49 million to CHF 603 million driven by the topline growth and despite investments in expansion and the return of normal levels of promotion and travel activities after the second quarter. Core EBIT margin reached 26.0% which is 140 basis points lower than in 2021 which was lifted by a low activity level during the pandemic.
The Group’s investments in growth and its geographic expansion led to an increase of core distribution expenses (salesforce salaries, commissions and logistics costs) by CHF 57 million to CHF 433 million. Despite these considerable investments, distribution costs remained almost unchanged with a slight increase of 5 basis points relative to sales.
Core administrative expenses, which include research and development as well as marketing, sales and general overhead costs, increased by CHF 109 million to CHF 725 million. This was mainly due to new product launches, the geographical expansion of brands and the integration of acquisitions. As a percentage of revenue, administrative expenses increased by 76 basis points.
Core net profit margin at 21%
Net financial expenses amounted to CHF 30 million, reflecting interest on lease liabilities and payments as well as currency-related losses. After income taxes of CHF 84 million, net profit increased by 6% to CHF 482 million, resulting in a margin of 21%. Basic core earnings per share increased by 6% to CHF 3.03.
Free cash flow at CHF 221 million
Cash flow from operations amounted to CHF 415 million which is 145 million lower than in 2021, mainly driven by a negative change in net working capital of CHF 191 million. Days of sales outstanding increased to 63 while days of supplies increased to 191.
The Group’s production expansion, acquisition initiatives and strategic digital transformation activities, total cash outflow for investing activities amounted to CHF 435 million, almost one and a half times higher than in 2021, mainly driven by the acquisition of PlusDental and operational expansions. Despite the significant investment levels, the cash position on 31 December 2022 remained strong at CHF 696 million, which exceeds the Group’s interest-bearing liabilities by CHF 208 million (2021: CHF 376 million). The Group’s balance sheet amounted to CHF 3.4 billion versus CHF 3.0 billion at the end of 2021.
Proposal to the Annual General Meeting to increase dividend and elect new board member
Based on the 2022 results, the Board of Directors proposes a dividend of CHF 0.80 per share which is subject to shareholder approval and payable on April 13, 2023. In 2022, the Group undertook a share split, followed by a 40% shareholder increase, providing a wider population the opportunity to become shareholders of Straumann Group.
As announced in August, Dr. Beat Luethi has decided not to stand for re-election and the Board of Directors has proposed the election of Olivier Filliol as a new Board member at the Annual General Meeting of the shareholders on 5 April 2023.
OUTLOOK 2023 (BARRING UNFORESEEN CIRCUMSTANCES)
With an estimated globally addressable market of CHF 19 billion, the Group remains confident that it will continue to gain market share and progress in all strategic priorities. While some macroeconomic challenges may persist in 2023, and apart from the impact of the Chinese volume-based-procurement process which will require a year of transition and readjustment to the new industry dynamics, the Group will continue to invest in its growth and transformation. Therefore we expect organic revenue growth to be in the high single-digit percentage range and profitability at around 25% including growth investments.
Disclaimer
This release contains forward-looking statements that reflect the current views of management, and which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this document. Statements are made on the basis of management's views and assumptions regarding future events and business performance at the time the statements are made. They are subject to risks and uncertainties including, but not confined to, future global economic conditions, pandemics, exchange rates, legal provisions, market conditions, activities by competitors and other factors outside Straumann's control. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Straumann is providing the information in this release as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. This release constitutes neither an offer to sell nor a solicitation to buy any securities.
- Full-year revenue climbs organically by 15.7% and reaches CHF 2.3 billion
- Fourth quarter revenue reached CHF 592 million with organic growth of 9.6%
- Core EBIT margin of 26% while core net profit rose to CHF 482 million
- Engagement score of 81 and target to achieve net zero carbon emissions by 2040
- Board proposes further dividend increase to CHF 0.80
- Outlook 2023: Organic revenue growth is expected in the high single-digit percentage range and profitability at around 25% including growth investments
In the fourth quarter of 2022, revenue increased by 9.6% to CHF 592 million, making it the Group’s strongest quarter in absolute figures.
Guillaume Daniellot, Chief Executive Officer, said: “2022 was a year of many uncertainties but with our strong teams and innovative solutions, the Group was able to deliver a strong performance. We made great progress on all strategic dimensions, were able to generate double-digit organic growth and impacted 4.4 million smiles globally, improving access to treatment. Continuously working on our culture, we achieved an employee engagement score of 81 in 2022 and set a target to achieve net zero emissions by 2040. While some macroeconomic challenges may persist in 2023, we remain positive and will continue to invest in our growth and transformation. Therefore, in 2023 we expect organic revenue growth to be in the high single-digit percentage range and profitability at around 25% including growth investments.”
STRATEGIC HIGHLIGHTS
Implantology and digital solutions with a strong year and important milestones
In 2022, the Group continued to invest in immediacy and edentulous solutions. This included expanding Straumann BLX and TLX in the premium segment into new countries, further positioning Smile in a Box and launching Anthogyr Axiom X3 and Neodent Zi in the challenger segment. The Neodent Zi ceramic implant strengthens our position in the growing esthetics segment and presents a viable alternative to titanium.
Throughout 2022, the Group gained market share through new customer acquisitions with both premium and challenger brands by expanding geographically. The Group estimates that its market share in implantology increased from approximately 29% in 2021 to around 30% in 2022.
Built a strong foundation to become a leading digitally-powered oral care company
The Group is constantly advancing its digital transformation with the aim to improve the user experience and become a leading digitally-powered oral care company. This includes hardware, software and connectivity solutions. One of the highlights was the launch of Straumann AXS in North America – a new online customer platform bringing all Group solutions under one roof. Additionally, the Group entered a partnership with SmileCloud, a digital smile design and collaboration platform developed by dentists for dental professionals. Another important milestone was the Virtuo Vivo software update which significantly increased the performance and contributed to a successful relaunch of Straumann’s intraoral scanner in 2022. The success of the relaunch also highlights the need for digital dentistry in all regions.
Strengthening our offering to become a leader in orthodontics has been a major focus
In 2022 ClearCorrect continued to expand geographically, received approval in China, built a manufacturing site and treatment planning team in Beijing, and enhanced its treatment planning capabilities globally. A series of new software have been launched to improve clinical features, helping clinicians treat more complex cases and have more control over their treatment plans.
ClearCorrect launched three major versions of the ClearPilot treatment software and introduced Collaborator 3.0 and Clinical Preferences in the Doctor Portal, making it easier for doctors to collaborate on cases. Additionally, ClearCorrect introduced new clinical features, such as anterior bite ramps and cutouts for elastics, providing clinicians with greater control over their cases. To further build medical expertise in orthodontics, the Group established a global clinical advisory board in 2022 and started to release a series of new scientific studies demonstrating the benefits of our aligner material and design.
In addition, ClearCorrect partnered with major intraoral scanner players to develop new direct integrations with scanners such as 3Shape TRIOS, Medit, and Virtuo Vivo. These releases were important steps toward addressing dentists’ and orthodontists’ needs for efficiency in their daily work.
DrSmile becomes the Group’s direct-to-consumer marketing aligner brand in Europe
In 2022, DrSmile gained further market share in Europe and acquired PlusDental. The Group decided to build its consumer presence for the clear aligner business in Europe exclusively under the DrSmile brand. As a result, the Group combined its capabilities in several areas, particularly medical expertise in the orthodontics space, to ensure high-quality care can be offered to health consumers. The new clinical advisory board will add outside expertise as the brand continues to grow.
Strong culture and major progress in advancing the Group’s sustainability framework
The Group continued to work on its culture, achieving an employee engagement score of 81. In the survey, 76% of employees said they have good opportunities to learn and grow. In 2022, 39% of leadership positions were held by females. The Group helped to create 4.4 million smiles and maintained 35% of its educational activities in low- and middle-income countries. The Group increased the usage of renewable electricity to 80% and set the goal to achieve net zero emissions by 2040.
Significantly higher investments in growth with CHF 195 million
To support future growth, the Group invests in building capacities for the core business and its transformation. This year the site in Villeret, Switzerland expanded by doubling the floor space, increasing capacity and making room for future growth. In Curitiba, additional CNC machine lines were added for implant production, clear aligner production was expanded, and a new resin production line was established. Ongoing expansion projects such as the China Campus and the Group Technology and Innovation Center in Arlesheim, Switzerland are progressing well.
Additionally, the Group invested in further training its employees and hiring new people who also bring skills that are important for supporting growth and contributing to its digital transformation. The Group’s global workforce increased to more than 10 400 employees.
REGIONAL PERFORMANCES IN THE FOURTH QUARTER
EMEA region passes one billion Swiss Franc mark
Europe, Middle East and Africa delivered revenue of CHF 271.7 million, with organic growth of 13.7%. Germany, France and Spain were the leading markets, while emerging markets strongly contributed to growth. The orthodontics business showed good growth throughout 2022. With the relaunch of Virtuo Vivo, the Straumann intraoral scanner business grew rapidly. In addition, the Group’s DSO business in this region picked up momentum in 2022.
North America region shows solid growth
North America grew 9.4% organically in revenue in the fourth quarter, with CHF 172.1 million. The performance was driven by premium implantology, the Neodent challenger brand which grew very strongly and supported by the clear aligner business. Digital solutions delivered the highest revenue growth in the fourth quarter.
Asia Pacific continued geographical expansion while facing headwinds in China
Asia Pacific posted CHF 102.8 million in revenue, which represents a decline of 2.9% in organic growth in the fourth quarter. For the first time, the Asia Pacific region registers a negative trend due to China. This was two-fold as on the one hand, Covid-19 had a strong impact in China, especially in the fourth quarter and on the other hand the volume based procurement (VPB) process in China delayed treatments. In the first two weeks of 2023, the VBP has been finalized and the Group’s submission was accepted. All other countries in Asia Pacific grew significantly, in particular, Australia and New Zealand were the region’s biggest growth drivers.
Latin America records double-digit growth in a difficult environment
Latin America (LATAM) was the fastest-growing region, with organic growth of 18.9%, accounting for CHF 45.3 million in revenues. Brazil remains the biggest market in LATAM and had strong growth, though other territories in the region grew faster. Neodent continues with its strong presence in LATAM together with the clear aligner brand ClearCorrect, where increased levels of brand recognition are driving customer acquisition. The Virtuo Vivo intraoral scanner shows strong growth in Brazil and other LATAM countries.
OPERATIONS AND FINANCES
To facilitate a like-for-like comparison, the Group presents ‘core’ results in addition to the results reported under IFRS. In 2022, the following effects (after tax) were defined as non-core items:
- Amortization of acquisition-related intangible assets amounting to CHF 38 million (mainly related to the accelerated amortization of the PlusDental brand)
- The accelerated amortization of the PlusDental brand as well as the restructuring costs amount to CHF 9 million and were triggered by the Group’s brand conclusion to run its direct-to-consumer clear aligner marketing business in Europe exclusively under the DrSmile brand
Core gross profit stable at 76% despite raw material cost surge
Continued strong volume growth in all businesses allowed core gross profit to increase by CHF 216 million to CHF 1.76 billion. High utilization rates in our production facility combined with continued efficiency improvements to minimize cost increases resulted in a stable core gross profit margin of 76% with only a slight decrease of 50 basis points versus the prior year.
Core EBIT margin at 26%
Core EBIT increased by CHF 49 million to CHF 603 million driven by the topline growth and despite investments in expansion and the return of normal levels of promotion and travel activities after the second quarter. Core EBIT margin reached 26.0% which is 140 basis points lower than in 2021 which was lifted by a low activity level during the pandemic.
The Group’s investments in growth and its geographic expansion led to an increase of core distribution expenses (salesforce salaries, commissions and logistics costs) by CHF 57 million to CHF 433 million. Despite these considerable investments, distribution costs remained almost unchanged with a slight increase of 5 basis points relative to sales.
Core administrative expenses, which include research and development as well as marketing, sales and general overhead costs, increased by CHF 109 million to CHF 725 million. This was mainly due to new product launches, the geographical expansion of brands and the integration of acquisitions. As a percentage of revenue, administrative expenses increased by 76 basis points.
Core net profit margin at 21%
Net financial expenses amounted to CHF 30 million, reflecting interest on lease liabilities and payments as well as currency-related losses. After income taxes of CHF 84 million, net profit increased by 6% to CHF 482 million, resulting in a margin of 21%. Basic core earnings per share increased by 6% to CHF 3.03.
Free cash flow at CHF 221 million
Cash flow from operations amounted to CHF 415 million which is 145 million lower than in 2021, mainly driven by a negative change in net working capital of CHF 191 million. Days of sales outstanding increased to 63 while days of supplies increased to 191.
The Group’s production expansion, acquisition initiatives and strategic digital transformation activities, total cash outflow for investing activities amounted to CHF 435 million, almost one and a half times higher than in 2021, mainly driven by the acquisition of PlusDental and operational expansions. Despite the significant investment levels, the cash position on 31 December 2022 remained strong at CHF 696 million, which exceeds the Group’s interest-bearing liabilities by CHF 208 million (2021: CHF 376 million). The Group’s balance sheet amounted to CHF 3.4 billion versus CHF 3.0 billion at the end of 2021.
Proposal to the Annual General Meeting to increase dividend and elect new board member
Based on the 2022 results, the Board of Directors proposes a dividend of CHF 0.80 per share which is subject to shareholder approval and payable on April 13, 2023. In 2022, the Group undertook a share split, followed by a 40% shareholder increase, providing a wider population the opportunity to become shareholders of Straumann Group.
As announced in August, Dr. Beat Luethi has decided not to stand for re-election and the Board of Directors has proposed the election of Olivier Filliol as a new Board member at the Annual General Meeting of the shareholders on 5 April 2023.
OUTLOOK 2023 (BARRING UNFORESEEN CIRCUMSTANCES)
With an estimated globally addressable market of CHF 19 billion, the Group remains confident that it will continue to gain market share and progress in all strategic priorities. While some macroeconomic challenges may persist in 2023, and apart from the impact of the Chinese volume-based-procurement process which will require a year of transition and readjustment to the new industry dynamics, the Group will continue to invest in its growth and transformation. Therefore we expect organic revenue growth to be in the high single-digit percentage range and profitability at around 25% including growth investments.
Disclaimer
This release contains forward-looking statements that reflect the current views of management, and which are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group to differ materially from those expressed or implied in this document. Statements are made on the basis of management's views and assumptions regarding future events and business performance at the time the statements are made. They are subject to risks and uncertainties including, but not confined to, future global economic conditions, pandemics, exchange rates, legal provisions, market conditions, activities by competitors and other factors outside Straumann's control. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. Straumann is providing the information in this release as of this date and does not undertake any obligation to update any statements contained in it as a result of new information, future events or otherwise. This release constitutes neither an offer to sell nor a solicitation to buy any securities.
