2013 Half-year results

Transcription

1 Half-year results Analysts & Media Conference Basel, 20 August Disclaimer This presentation contains certain forward-looking statements, which can be identified by the use of terminology such as will, guidance, would, prevailing, still be able to, should, confidence in achieving, turnaround, future, anticipated, continue, mid and long term, believes, outlook, or similar wording. Such forward-looking statements reflect the current views of Management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group s products, the potential for the Group s products to become obsolete, the Group s ability to defend its intellectual property, the Group s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group s ability to generate revenues and profitability, and the Group s ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. Straumann is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise. The availability and indications/claims of the products illustrated and mentioned in this presentation may vary according to country. 2

2 Highlights Marco Gadola CEO What is happening in the markets? Weak economy in Europe Consumer confidence still fragile Raising healthcare costs and co-pay levels reduce disposable income for dental treatment Market still receding as patients postpone or take cheaper/inferior options Many practice owners perceive general business conditions as negative Growth potential in North America intact Momentum picks up in Q2 After downward trend in, dental practice activity indicators show improvements in tooth replacement procedures Asia: mixed picture China continues to perform well Japanese market still receding 4

3 What is happening in the markets? Fundamental shifts To lower-cost alternatives Dental labs under pressure to find optimal levels of in-house production, outsourcing, efficiency and quality Role of General Practitioners (GPs) increasing in implant dentistry New technologies Digital procedures and workflows Optimized materials (improved esthetics, durability, pre-shaded) No visible threat from substitution technologies 5 GPs are increasingly important and have different preferences and needs Implant specialists GPs placing implants GPs restoring implants GPs place implants GPs restore but don t place implants Source: idata Research, US data, 6

4 Resolute cost reduction measures bearing fruit without impairing selling power REVENUE KEY PERFORMANCE H1 GROSS MARGIN CHF 355m +6% (organic l.c.) 78% Slightly down on prior year despite acceleration in Q2 in N. America (+11% in Q2); Europe and Japan remain difficult Margin expansion through efficiency gains in manufacturing OPERATING INCOME MARGIN 1 HEADCOUNT STRATEGY 18% 2313 EBIT lifted by initial results from cost optimization measures Reduction program almost complete; some employment contracts still running out Customer-driven solutions Addressing changed market dynamics and unexploited growth markets 1 Excluding cost optimization program costs 7 Business and regional review Thomas Dressendörfer CFO

5 Margins improved on all levels in CHF million Net Revenue 1 H1 H1 Change excl. FX adjusted 2 vs. adjusted exceptionals (1.7%) Gross profit Gross profit margin 77.0% 76.9% 77.8% EBITDA EBITDA margin 19.6% 19.6% 21.0% 22.5% (2.9%) Operating profit (EBIT) EBIT margin 15.1% 15.0% 16.0% 17.6% 2.6% Net profit Net profit margin 12.3% 15.1% Basic earnings per share (EPS) Free Cash Flow Free Cash Flow margin 5.5% 9.8% 1 In, Straumann adopted the revised International Accounting Standard 19 regarding employee benefits. The figures have been restated accordingly. 2 Throughout this presentation the term exceptionals refers to restructuring charges of CHF 13 million and a decrease in pension obligations of CHF 7 million, both in H1 and both related to cost reduction initiatives 9 Gross margin improved despite lower top line In % of revenue -0.1% -0.1% 0.4% -0.4% 1.0% 77.0% 76.9% 77.8% Gross profit H1 FX effect Adjusted gross profit H Volume, Price & Mix 1 itero effect Inventory changes Manufacturing efficency gains Gross profit H1 1 Decreased proportion of gross margin dilutive itero scanner sales 10

6 SG&A savings lift EBIT margin In % of revenue 2.2% -0.6% 0.1% -1.6% -0.1% 0.9% 15.1% 15.0% 17.6% 16.0% EBIT margin H1 FX effect FX adj. EBIT margin H1 1 Higher gross profit SG&A savings Higher R&D Other income EBIT margin H1 2 Exceptionals EBIT margin H1 1 One-time project costs of CHF 6m related to Straumann s reorganization, Neodent transaction and IAS19 11 Large international clinical trials set new benchmark >1000 Straumann Bone Level implants evaluated in Europe, US and Australia Implant survival rates of more than 98% in daily practice with practically no bone loss around implant. Results considerably better than values reported in meta-analysis of studies with other implants Results add to wealth of strong clinical evidence and provide clear reasons for patients and dentists to insist on Straumann rather than undocumented alternatives 12

7 SG&A savings lift EBIT margin In % of revenue 2.2% -0.6% 0.1% -1.6% -0.1% 0.9% 15.1% 15.0% 17.6% 16.0% EBIT margin H1 FX effect FX adj. EBIT margin H1 1 Higher gross profit SG&A savings Higher R&D Other income EBIT margin H1 2 Exceptionals EBIT margin H1 1 One-time project costs of CHF 6m related to Straumann s reorganization, Neodent transaction and IAS19 Straumann 2 13 Restructuring charges of CHF 13 million and a decrease in pension obligations of CHF 7 million Improved cash flow despite restructuring charges Cash & equivalents 31 Dec CHF 141m - Operating cash flow CHF 41m In CHF million - CAPEX (CHF 7m) - Bond proceeds CHF 199m - Dividend (CHF 58m) - Others CHF 1m Cash & equivalents 30 June CHF 317m FCF margin 5.5% Related to restructuring initiatives FCF margin 9.8% Free cash flow H1 Lower gross profit OPEX (cash) Reduced working capital Lower CAPEX Less income taxes paid Others Free cash flow H1 14

8 North America partly offsets weakness in Europe In CHF million (1.9%) in CHF (0.7) (3.0) (8.0) (0.9%) organic 5.5 (0.8) Change organic (0.2%) (0.8%) (3.9%) 6.3% (1.6%) 0.7% Revenues H1 FX Effect itero Effect Revenues FX Europe North America APAC ROW Revenues H1 15 Performance led by core implant business Implants Restoratives / CADCAM Regeneratives 16

9 Strong growth in North America; Europe flat Revenue change (organic) Revenue flat in Q2 (l.c. and organic) Europe 55% 56% -5.3% -5.6% -7.0% -7.7% Q2 Q3 Q4 Q1 0.2% Q2 All countries improve in Q2 and benefit from shift in selling days after disappointing start to the year (H1-4%) France, UK and Switzerland return to growth North America 26% 7.0% Q2 5.1% Q3 1.8% Q4 Q2 organic revenues rise 11% (l.c.) 10.6% All businesses above previous year; Implants grow double-digit: 2.1% Pricing and product mix contribute to growth; fundamentals intact Q1 Q2 Pie chart segment indicates regional sales contribution to the Group. 17 Sequential improvements in APAC and RoW Asia Pacific 14% Revenue change organic 4.2% 0.9% -0.9% -2.4% 56% -4.4% Q2 Q3 Q4 Q1 Q2 Q2 in line with prior year (l.c.) Japan: implant market still to recover from negative public perception Solid performances in China and Australia Rest of World 1 5% -7.4% Q2 1.4% Q3-10.4% Q4-2.6% Q1 4.1% Q2 4% growth in Q2 (l.c.) Mexico posts good growth, while region s largest market, Brazil, reports sales in-line with prior-year Distributor markets in the Middle East recovering gradually 1 Revenue contribution from Neodent will be included after consolidation in

10 Building for the future Marco Gadola CEO Our goal of better profitability Underlying EBIT margin 25% >25% 20% >20% 15% 10% 15-20% 10-15% >15% Straumann Dental benchmark E Mid term 1 Peers comprise Nobel Biocare, Dentsply, Patterson, Henry Schein, Osstem, and Sirona. 20

11 ... and how we will achieve it Prior to Moving forward Organization based on bullish expectations, which have not materialized Restorative franchise & GP segment neglected Innovation and Development technically driven Pure premium focus Lean, high performance organization Target unexploited growth markets Cost reduction measures implemented in and Cost discipline inherent to new Straumann culture New organizational set-up focusing on customer needs Address changed market dynamics Address value segment Increase presence in fastgrowing underpenetrated markets Customer- and market-driven solutions First projects to launch in Q Organization adapted to market reality Lean, high performance organization FY 2010 FY 2011 Q3 FY Q1 Today FY Resizing Resizing 1 At the end of Q2, Straumann had a global workforce of 2313 including redundancies in subsidiaries where employment contracts finished ater 30 June. 22

12 ... and how we will achieve it Prior to Moving forward Organization based on bullish expectations, which have not materialized Restorative franchise & GP segment neglected Innovation and Development technically driven Pure premium focus Lean, high performance organization Target unexploited growth markets Cost reduction measures implemented in and Cost discipline inherent to new Straumann culture New organizational set-up focusing on customer needs Address changed market dynamics Address value segment Increase presence in fastgrowing underpenetrated markets Customer- and market-driven solutions First projects to launch in Q Tapping exciting growth opportunities... Target unexploited growth markets High-tech Ceramic implants Implants for narrow spaces Smaller, less invasive implants Fixed immediate edentulous solutions Esthetic, fast implant solutions with single crown / small bridge Low-tech Standard implant solution packages Simple edentulous solutions Single tooth Multiple tooth Edentulous * Straumann Bubble size illustrates market volume potential 24

13 ...with solutions to suit: Target unexploited growth markets Surgeons customer segments GPs Premium affordability Value Spain local market conditions 25 Outlook

14 Outlook and beyond Barring unforeseen circumstances While positive developments are expected to continue in North America and other underpenetrated markets, Straumann expects the effects of the weak economy and consumer sentiment to continue in Europe, constraining overall revenue development in. Despite a shortfall in full-year revenue, the successful outcome of cost reduction initiatives will drive sustainable profitability improvements as anticipated, with the main savings beginning to have an impact in Q3. In the mid term, Straumann aims to return to solid growth and a higher operating margin. 27 Questions & answers

15 Slight currency headwind expected for the full year Other 21% Revenue breakdown CHF 11% EUR 41% Average exchange rates (rounded) FY H1 EURCHF USDCHF JPYCHF USD/CAD/AUD 27% Straumann s major exchange rates since (indexed to 100) 110 CHF 47% Cost breakdown EUR 21% 80 Other 13% USD/CAD/AUD 19% 70 USDCHF EURCHF JPYCHF 1 These distribution charts represent the total net revenues and the total COGS, SG&A costs as well as R&D expenses in the various currencies. All numbers are rounded and based on figures. 29 Calendar of upcoming events 26 August Investor meetings Stockholm/Copenhagen 27 August Investor meetings Amsterdam/Brussels 28 August Investor meetings Frankfurt 04 September Goldman Sachs Medtech conference London 05 September Investor meetings London 16 September Investor meetings Geneva 17 September Investor meetings Vienna 30 September Investor meetings New York 01 October Investor meetings Boston 02 October Investor meetings Toronto 31 October Third quarter results Webcast 25 February Full-year results conference Basel 11 April Annual General Meeting Basel Detailed calendar on 30

16 Your contacts Fabian Hildbrand Corporate Investor Relations Phone +41 (0) Mobile +41 (0) Mark Hill Thomas Konrad Corporate Communications Phone +41 (0) Phone +41 (0)